Joe Hockey says tough budget was actually too soft. Treasurer Joe Hockey believes the May federal budget, which triggered a backlash against the government, was not tough enough and he held Prime Minister Tony Abbott responsible for taking a more cautious approach to appease voters. The revelation, contained in an authorised biography of the Treasurer, suggests Mr Hockey wanted reductions in the pension growth rate before the next election and for the deficit tax to apply much lower than the $180,000 salary level finally settled upon. “In reality, the budget was much softer than Joe would have liked,’’ says the book by Madonna King, Hockey: Not Your Average Joe. “He wanted changes to pensions made earlier and the deficit levy to net more taxpayers. “But Abbott, who chaired each of the expenditure review committee meetings, was taking a much more cautious approach than his Treasurer, no doubt with one eye firmly on the reaction of voters.” The book was based on interviews with Mr Hockey, colleagues, and senior members of staff in his office and Mr Abbott’s. With measures worth around $40 billion over four years facing blockage in the Senate, Reserve Bank of Australia governor Glenn Stevens joined the debate by questioning if Australia’s political leaders were capable of solving Australia’s problems. Fixing the budget was vital to fixing the battered “animal spirits” of consumer confidence. “A key question might ultimately be, really, whether the current processes can result in collecting confidence in the country that we can actually grapple with difficult issues; long-term issues; have a sensible conversation,” he said on Tuesday. He also called on businesses to stop waiting for someone else to get the economy motoring. “My sense is that in a lot of areas of business people are sitting around tables saying ‘yeah, somebody needs to do something and we’re waiting for somebody else to do it’,’’ he said. The revelations about Mr Hockey’s views on the budget are bound to be seized upon by Labor and other parties which are opposing many of the key budget measures in the belief they unfairly target those on low incomes. They point to both the division in the government over the severity of the budget and an inclination by the Treasurer to cut harder. Mr Hockey’s view that the changes to the pension should have occurred earlier would be breaking another election promise. After promising before the last election that there would be no changes to the pension, Mr Abbott ensured that the budget measures, which included reducing the rate of indexation of the pension, would not begin until after the 2016 election. And his view on the deficit levy, which was a 2 percentage point increase in income tax on incomes over $180,000, explaining earlier reports that the tax hike would cut in at $80,000. Again, it was Mr Abbott who pushed to increase the threshold. “It wasn’t as tough as Joe would have liked but a good compromise,’’ the book quotes a source on the budget. “Maybe it’s tougher than the Prime Minister would do it Joe wasn’t there to deliver it.’’ Mr Hockey also takes credit for the Medical Research Future Fund which is supposed to be seeded from the proceeds of the Medicare co-payment. Also in the book, Tony Abbott’s chief of staff, Peta Credlin, stops short of anointing Mr Hockey as the obvious successor to Mr Abbott. “Joe’s absolutely a contender and he’s probably got his head above every other contender but I think we’re a long way from saying he’s an heir apparent, and he’d say that too,’’ Ms Credlin said. Mr Hockey, who is in New Zealand on government business, said on Tuesday that the Senate should look across the Tasman to see what could be achieved by adopting a tough budget. “If you need any evidence at all of the benefits of undertaking reform look no further than what’s happened in New Zealand where they are getting to surplus and they have a growth trajectory and a jobs trajectory that Australians could be jealous of,’’ he said. New Zealand also increased the rate of its GST from 10 per cent to 15 per cent after a lengthy public process of selling the idea. Mr Hockey, who will commission a tax white paper to provide policies for the next election, indicated he would copy the New Zealanders. “It’s more the process that I am learning from, the fact that they could put a case to the New Zealand people for that sort of change, and as a result of that they got the dividend in terms of tax change,’’ he told Sky News. But he cautioned any tax reforms that would result in a lower overall tax burden would first hinge on the budget being balanced. “The more we fail to get our expenditure reductions through the Parliament, the less room there is for taxation reform. You cannot on one hand want to spend more money and on the other hand have lesser taxes. It does not work like that,’’ he said. At the forum in Sydney, Mr Stevens said it was unclear what would eventuate out of Canberra. “I never felt the budget was especially contractionary in the short term,” he said of its impact on the economy. “What’s going to emerge from this process? Well I don’t know, nor do you. We can only wait and see.” In calling on business to lift its game on the budget, Mr Stevens challenged the nation’s business leaders to stop waiting for someone else – including the central bank via lower official interest rates – to spur economic growth. In a none-too-blunt reminder that many of the levers to generate investment, jobs and activity lie in the hands of businesses, Mr Stevens said: “if we all wait for someone else to do it, no-one does it.” “My sense is that in a lot of areas of business people are sitting around tables saying ‘yeah, somebody needs to do something and we’re waiting for somebody else to do it’” Speaking before an audience of the nation’s top business economists, he added; “So I guess my message is ‘over to you guys.” The comments came at the end of a speech in which Mr Stevens said the global economy was bound to gather strength as investors eventually shook off their post-crisis aversion to risk, but warned it was no longer up to central bankers to spur the recovery.
Posted on: Thu, 24 Jul 2014 22:33:53 +0000
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