'THE NATION'

Joe Hockey Likes Bill English But Not Tax Imputation

Australia’s likely next Treasurer says the country cannot afford tax imputation on dividends paid to New Zealanders.

Imputation s top of the list of economic measures involving Australia and New Zealand that the Trans-Tasman leadership Forum say needs addressing.

But Liberal Party Shadow Treasurer, Joe Hockey, speaking exclusively to TV3’s “The Nation” said he was prepared to look at imputation “because I have a very high regard for John Key and Bill English who I consider good friends, mates, and it's certainly an argument that Bill has put.”

“It'd probably cost a lot of money to Australia, and therefore we're not prepared to do it,” he said.

“But having said that I'm sure there are other ways that we can get mutual benefit out of closer economic ties.”

Mr Hockey heaped praise on the economic management of the Key Government and said he was fearful that Australians would be moving to New Zealand.

“You're heading in the right direction, and we're heading in the wrong direction at the moment<” he said.

“So we've got to be mindful of that. 

“There are manufacturing plants that are moving into New Zealand because the cost of doing business in New Zealand is less than Australia, about 20% less. 

“So we've got to be mindful of the competition that’s coming from across the creek, and therefore you're our benchmark in many ways, as you were probably you know 20 or 30 years ago. 

“You were the benchmark for economic reform. 

“There are many lessons that we can draw from what the Key government has done in New Zealand.”

Asked if he had a “Plan B” for the Australian economy if he got into office and found the deficit was even worse than the current $30 billion projection he said a Plan B would be the same as Plan A.

“You’ve got to make prudent cuts to expenditure, but also you’ve got to ensure that you don’t kill confidence in the community,” he said.

“We're not afraid to make the right decisions, there's no satisfaction in making hard or cruel decisions, and we just want to make the right decisions.

“And the right decisions are that we need to pare back on the waste, we need to ensure that we live within our means, and we get rid of the taxes that are a handbrake on economic growth, such as the carbon tax and the mining taxes.”

JOE HOCKEY

Interviewed by RICHARD HARMAN

Rachel Across the Tasman a raft of new polls show that Prime Minister Kevin Rudd is heading for defeat, and he could even lose his own seat, the new government will face a deficit blowout of 30 billion dollars, eye watering, and projected growth of no more than 3%. The Liberal MP who'd be in charge of the economy is Shadow Treasurer Joe Hockey. Hockey's father was a Palestinian refugee. He also has strong links to New Zealand as well as a love of rugby. Our producer Richard Harman met him in Melbourne and asked him what an Australian economy would look like under a Liberal government.

Joe Hockey – Australian Liberal Shadow Treasurer
Well Australia should have a more prosperous economy, we should have stronger economic growth instead of unemployment trending up. I'm confident that we can stabilise and start to get unemployment back down. And importantly I think you will see a realignment of interest with the Asian region. We'll be more aggressive in having bilateral agreements with Asian partners and obviously will have very close links with New Zealand, our good friends.

Richard Well over the past year we've seen the Australian deficit forecasts balloon out. Are you worried that there could be more to come, it could be worse to come, it could go beyond 30 billion.

Joe For the last six years it seems to have got worse and worse at every point. Every number's been wrong under the current Labour government, and now we've been proven right that every number's been wrong, sadly. So the starting point will only truly be discovered after the election.

Richard If you got into power and you found that things were worse than your Treasury has already forecast, what's your plan B.

Joe Well it's the same as plan A and that is you’ve got to make prudent cuts to expenditure, but also you’ve got to ensure that you don’t kill confidence in the community. I'm very confident that with a change of government Australia will start the engine again, I have no doubt about that.

Richard Of course many people worry that Tony Abbot might not have the stomach to make the hard choices, to try and bring that deficit under control. One commentator said he was an incorrigible populist. Do you think he can do it?

Joe Well we're not afraid to make the right decisions, there's no satisfaction in making hard or cruel decisions, we just want to make the right decisions, and the right decisions are that we need to pare back on the waste, we need to ensure that we live within our means, and we get rid of the taxes that are a handbrake on economic growth, such as the carbon tax and the mining taxes.

Richard Any other taxes? What about personal taxation, what are you gonna do there?

Joe We can't change the current personal taxation rates because we need to grow revenue in order to address the considerable deficit and obviously nearly 400 billion dollars of debt.

Richard You're promising a review of GST and banking. What do you want those reviews to achieve?

Joe Our system has served us incredibly well during the global financial crisis. What we want to do is lay down a pathway for the next 15 years and ensure that we don’t become a victim of over regulation and zealatory out of Europe and the United States which is going towards over regulation and at the same time we need to ensure that we've got a competitive and you know, and to some degree aggressive financial services sector in Australia.

Richard Australia's banks and New Zealand banks our trading banks are Australian owned. Would you expect the review of competition in the Australian banking industry to have repercussions in New Zealand?

Joe Well I would hope so. I would hope so. If there's more competition in financial services in Australia then that’s obviously going to be to the benefit of New Zealanders.

Richard Another New Zealand favourite are Ford and Holden cars. What's gonna happen there? Are we beginning to see the end of the Aussie built V8?

Joe Well I hope not. I hope we don’t see the end of Aussie built cars, because we're one of the few nations in the world that can build a car from concept stage right through to the showroom. But having said that, these decisions are often in the hands of head office in Detroit or Taco wherever the case may be.

Richard But you seem to have suggested that abolishing the carbon tax may be a way of ensuring that there's more car manufacturing ….

Joe Well there is, it's partly that, and that’s absolutely right but it's more than that, because the Labour Party in Australia just announced a 1.8 billion dollar increase in taxes on motor vehicles here, which is killing off demand. Look you haven't got a market if you kill off demand. You can subsidise supply as much as you want, but if there's no demand for your product you have no market you have no business.

Richard Of course the big Trans Tasman economic issue is tax imputation on Australian dividends paid to New Zealand shareholders. Would a coalition government be willing to consider imputation?

Joe Well I'm prepared to look at it because I have a very high regard for John Key and Bill English who I consider good friends, mates, and it's certainly an argument that Bill has put.

Richard But everyone's had a look at it.

Joe Well it'd probably cost a lot of money to Australia, and therefore we're not prepared to do it, but having said that I'm sure there are other ways that we can get mutual benefit out of closer economic ties.

Richard How do you see the future of the Australia/New Zealand economic relationship unfolding?

Joe Well I think it does make a difference if you have kindred spirits in government in New Zealand and in Australia. Bill English is a friend of mine and John Key I've met on a number of occasions, I have a very high regard for him. My grandmother was a Kiwi born in the Bay of Islands. Very few people know that, so I have a spiritual link to New Zealand, and I'm more than prepared to do what I can to improve economic relations, because after all you're a bigger trading partner for us than Indonesia, and we can never neglect our close – well you are our closest friend, you're family.

Richard If pressure goes on jobs here and Treasury is forecasting that unemployment could rise in the short term, would your government consider any restraint on New Zealand migration?

Joe No. Look your economy's doing so well, you’ve got your act together in New Zealand. I'm fearful that Australians will be moving to New Zealand, because you're heading in the right direction, and we're heading in the wrong direction at the moment. So we've gotta be mindful of that. I mean there's manufacturing plants that are moving into New Zealand because the cost of doing business in New Zealand is less than Australia, about 20% less. So we've gotta be mindful of the competition that’s coming from across the creek, and therefore you're our benchmark in many ways, as you were probably you know 20 or 30 years ago. You were the benchmark for economic reform. There's many lessons that we can draw from what the Key government has done in New Zealand.

Richard There are concerns here aren't there, particularly in the mining sector and in the energy sector about the cost structure in Australia. Is that something you're gonna be able to deal with?

Joe Well we have to deal with it, and that’s one of the reasons why we're getting rid of the carbon tax. We have to deal with cost structures. We've gotta lower our costs but when we look at the performance of the New Zealand economy which has a very small mining and resources industry, compare that with Australia, you’ve done incredibly well in New Zealand, and there's some lessons for us there.

Richard But of course a cynic might say that one of the reasons New Zealand has done well is because it has much lower wages.

Joe Well that’s true but also you’ve got a lot of talent in New Zealand, you're an innovative nation, you're a successful nation. If wages were the only difference between Australia and New Zealand then maybe we could buy Richie McCaw from you, and have a chance at winning that damn Bledisloe Cup.

Richard Well you bought Robbie Deans.

Joe Ah yes well I'm prepared to swap our GDP for Richie McCaw, how about that?

Richard Joe Hockey, thanks very much.

Rachel He's not for sale. Now that was Liberal Party Shadow Treasurer, Joe Hockey, speaking to Richard Harman this week.

ENDS

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