Transcripts

DOORSTOP INTERVIEW CANBERRA 12.30PM THURSDAY 11 FEBRUARY 2010

11th February 2010

DOORSTOP INTERVIEW 

CANBERRA

12.30PM THURSDAY 11 FEBRUARY 2010

Subject: Labour force figures

E&OE………………………………………………………………………………………

JOE HOCKEY:

It was a few months ago now that I warned that the big issue going forward would not be unemployment for Australians, it would be higher interest rates and again I’ve been proven absolutely correct.

Today’s employment numbers are very good, are very strong and it’s very good for Australia to have a lower rate of unemployment and more jobs created. 

This signals the end of the recession rhetoric and it must be the end of the recession spending.

The government must heed the words of the Governor of the Reserve Bank and start pulling back on its massive spending programs, which have not been able to operate within the allocated money in the Budget.

We each day are seeing more evidence of break-outs and blow-outs in government spending of existing programs. However, the government still has more than $40 billion of its stimulus spending to roll out as we approach what is deemed to be an adequate level of growth - which is around three percent according to Lindsay Tanner in Parliament yesterday - and as the unemployment numbers drop.

If the government does not heed the words of the Governor of the Reserve Bank and start pulling back on its spending, Australians are going to have higher interest rates and that’s going to put enormous pressure on family budgets.

JOURNALIST:

Mr Hockey, the Treasury boss Ken Henry this morning said it’s too simplistic to link lower spending to higher interest rates"

JOE HOCKEY:

Well, the government’s Treasury Secretary is at odds with the independent Reserve Bank. and they have been from time to time, it’s no surprise.

JOURNALIST:

Mr Hockey, how did you rate Barnaby Joyce’s performance in Estimates today?

JOE HOCKEY:

Well I didn’t see all of Estimates, I was looking at these numbers. But look, can I tell you Barnaby Joyce is prosecuting an argument about debt and it’s a very good argument because it illustrates the fact that the Rudd government is spending too much money and by spending too much money, wasting taxpayers’ money, they are competing with interest rates and that’s putting enormous pressure on household budgets.

What is alarming is the blow-outs in these budgets. And I must say it was excruciating TV to watch Lindsay Tanner have his first hard interview - and it was on Sky with David Speers - where he was asked about individual blow-outs and individual programs and he was um-ing and ah-ing.

The most telling line from Lindsay Tanner about the government’s expenditure programs is he said - you cannot expect the government to dot the ‘i’s and cross the ‘t’s on expenditure. And those words will come home to damn the government.

JOURNALIST:

Tony Abbott said this morning Australia should, perhaps be better off following New Zealand’s response to the GFC. Unemployment there went to 7.3%. Which would you prefer, unemployment at 7.3% or 5.3%?

JOE HOCKEY:

That’s your interpretation.

JOURNALIST:

Well that’s what he said?

JOE HOCKEY:

That’s your interpretation. That’s your interpretation. Bear in mind New Zealand doesn’t have a resource sector like Australia. New Zealand could only wish to have a mining and resource sector like Australia. And Australia has been an enormous beneficiary of two things: Number one, the Australian financial system has been in incredibly good shape and I want to send this warning to the government, that if you tinker with financial regulation, and the supervision of Australian banks, you may well make mistakes that cost Australia into the future.

Our financial regulation has seen us come through a financial crisis. No Australian financial institution of any scale has been severely harmed during the financial crisis and it is a warning to the government not to simply blindly follow any reform offshore.

The second thing is we are incredibly blessed to have great resources in Australia and the fact that China had a massive stimulus program, which at exactly the right time kicked in for Australia’s terms of trade means we are, we have done very well during a difficult time.

JOURNALIST:

Mr Hockey, the creation of 52,000 jobs. Surely it’s a sign of the government’s great economic management?

JOE HOCKEY:

Where are you from?

JOURNALIST:

From AAP.

JOE HOCKEY:

Well there you go. [inaudible]

JOURNALIST:

Do you stand by your initial criticism when the stimulus was being rolled out and when Malcolm was leader [inaudible] you would say [inaudible] not created one job?

JOE HOCKEY:

Look, you know what the fundamental point is, as of today, we can only hope that one day unemployment will get to the levels that the Rudd government inherited.  Unemployment is still fully more than one percent higher today than it was when the Rudd government inherited it.

The Rudd government still has $40 billion, more than $40 billion to roll out on its stimulus and it’s now time for the government to explain how spending money on school halls in 2012 is going to create jobs and help address the economic downturn in 2008.

JOURNALIST:

Mr Hockey could you explain in simple terms, why even if official interest rates go up half a percentage point over the next couple of months, they will still be lower than just about at any time during the Howard government, when surpluses were supreme?

JOE HOCKEY:

Well, there’s a whole lot of factors that go into interest rates, but the argument put by the Governor of the Reserve Bank in his statement yesterday, which was, - the day before, which was I think it was about page 35 from memory, second paragraph, - where he talks about fiscal authorities, i.e, governments. And if you can see through the words of a Governor of a central bank, you can identify that what he is saying is this; governments have massively increased spending in recent times and I think almost all governments - maybe apart from the Chinese - have borrowed money to stimulate that spending. What he’s saying is, if governments pull back on spending, as interest rates go back to what might be called normal levels, central banks could be more accommodating and have more accommodative monetary policy - lower interest rates than might normally be the case - if governments pull back on their stimulus in the economy.

Lower interest rates stimulate the economy, that’s the bottom line. And it’s either the government stimulating the economy or monetary policy stimulating the economy. And what the central banks are saying is that if governments continue to spend well above normal levels - as this government is, it’s certainly not at the level, it’s nowhere near on its Forward Estimates, it’s nowhere near the spending of the last year of the Howard Government - therefore if they start to pull back on that spending, the Reserve Bank can keep interest rates lower for longer.

JOURNALIST:

Even with the, all the spending if it goes through, still will have on the forward estimates debt peaking at 9.6% of GDP, which David Gruen has said is a very low amount. Do you agree that this is a very low number?

JOE HOCKEY:

Well, I’ll tell you what Hugh, Australia needs to have very low government debt in order to fund the massive expansion of investment over the next few years.  I saw a report the other day that at least $160 billion of new projects are signalled to start this year. And if that is the case, some of that will be borrowed money and whoever’s borrowing that money will be competing with the 800 pound gorilla known as the Federal government in the bond markets.

The fundamental point is, if the government is borrowing money in competition with the private sector, it means less money for the private sector and what money is there is more expensive.

JOURNALIST:

You were quoted in a newspaper as saying that Kevin Rudd can boil in his own boring stew on Sunrise. Can I ask you what you meant by that comment?

JOE HOCKEY:

No comment.

JOURNALIST:

Did the Coalition manage to avoid embarrassment by not putting the ETS down to a division, and not seeing Malcolm Turnbull cross the floor?

JOE HOCKEY:

Well Malcolm Turnbull did cross the floor.

JOURNALIST:

Joe, are you concerned that most of the jobs created last month were part-time jobs, not full-time jobs?

JOE HOCKEY:

Well obviously you want to see more people in full-time employment. It does vary, and you’ve got to be very careful about giving you know, just a month to month analysis of the numbers. The trend is clear, unemployment is coming down. As Ken Henry I understand said, the GFC is over.

The fact of the matter is Kevin Rudd’s recession rhetoric has to stop and his big spending has to stop and Australians have to be able to get on with dealing with the higher cost of everyday life. 

 [ends]