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Australian Treasurer Joe Hockey hints at welfare reform for Kiwis

Australian Treasurer Joe Hockey suggests his government “can move on some” changes to welfare for New Zealanders in Australia.

Mr Hockey, who was in the country Monday through Wednesday, told TV3's The Nation that "We welcome New Zealanders coming to Australia, and they make a massive contribution in many areas

But while his government reaps a full tax take from ex-pat Kiwis, full entitlement reform depends on Australia returning to surplus.

There is no underclass of New Zealanders in Australia and New Zealanders not specifically excluded from ‘job commitment bonus’ in this year’s budget, he said.

Earlier, Mr Hockey told TVNZ's Breakfast programme that " New Zealand's economy "the envy of the world"

"New Zealand has done a splendid job, the Key government is a standout government around the world and as a result of that it is heading towards a surplus," he said.

"New Zealand is starting to live within its means."

Delivering his first budget this year, Mr Hockey said he was forced to slash spending by $10 billion because of the previous Labor government's overspending.

"They took us to a position where if we don't take immediate action we will face much bigger debts," he said.

"If you make the difficult but important decisions up front then you get the benefits down the track. We've got a long way to go to catch up to the budget position of New Zealand."

Australians “may well” think New Zealand is a better place to live and work given New Zealand’s lower tax rates, but are unlikely to move for five year’s extra superannuation, Mr Hockey said.

Despite “black budget” the Treasurer said there was no crisis in theAustralian economy.

“We are exporting our socks off in coal, gas and iron ore," he said.


RAW DATA: The Nation transcript: Lisa Owen interviews Australian Treasurer Joe Hockey

Lisa Owen began by asking him how much trouble the Australian economy was in given his drastic measures in the recent Budget.

Joe Hockey:  The Australian economy is not in trouble. We’ve had 23 years of consecutive economic growth. We want another 23 years of economic growth, and as a result, the reforms you undertake today will build the growth tomorrow. So we need to undertake these reforms.

But there’s no crisis at all in the Australian economy. The fact is you need to move on the budget to fix it now, and you need to undertake structural reform to structure the economy in the years ahead.

Lisa Owen: So if there is no crisis, and a number of economists in your country have said that there isn’t one, is this budget about ideological changes, trying to push through some things that might have been highly unpalatable unless you told people there was a real need to do this?

Well, no, I don’t accept the premise of your question because the fact is if you make decisions now, you’ll get the prosperity in the future. And that’s one of the ways we’ve been able to deliver low unemployment, high economic growth, a diversified economy that has built, unquestionable, advantages for everyday Australian families into our daily living.

Now, if you undertake the reforms, and this is a good lesson out of New Zealand, if you undertake the structural reforms, the benefits flow.

But I’m just wondering, you’re our second biggest trading partner; should we be concerned about the status of that relationship, given you feel that there is a need for quite significant changes in your economy?

Well, our economy is undergoing change. We’ve had a massive mining boom, and the mining boom has involved a huge amount of resources for construction of new mines and gas projects, and so on. Now we are into the production phase so we’re exporting our socks off in coal, in gas, in iron ore, so that requires, obviously, far less labour.

Mining and resources represents 10% of our economy, but just 2% of employment. And agriculture is around 2% and 2 ½%  of our economy, so how do we stimulate the other 88% of the economy to pick up the slack? And that is exactly what we are focusing on. We’re shifting resources from mining and gas into new areas of the economy that help to grow the pie. And, frankly, it is a transition, but that means we will have sustainable growth into the future, and like New Zealand, we’ll capture the huge trading opportunities in the Asian region that lie before us.

So we don’t have anything to worry about in terms of our trading partnership with you?

No. No, not at all. You’re highly competitive. We’re like brothers and sisters. There might be a little competitive tension in the family, but there’s no doubt in my mind that, you know, we’re shared blood.

I want to look at some of the changes that you have made and are making – you’ve raised taxes. Your top tax rate is now 45 cents in the dollar. Ours is just 33 cents. How worried are you that some of your best and brightest might think that New Zealand is the better place for them now?

Well, they may well do, and this is one of the challenges that we have because other jurisdictions, not just New Zealand, but company tax in the United Kingdom is 21%, and far less than that in Hong Kong and Singapore. There are lots of competitive advantages that other countries have, that’s why we need to live within our meansWhen we start running surpluses instead of massive deficits, we have the capacity to further cut taxes. But the only way we can cut taxes is if we start to generate more income and start to live within our means. And that’s why we’ve had a hard budget.

So do you accept, then, while you are rebalancing like that, there is prospect,… you accept that some people could jump across to New Zealand because they see it as a better option.

Of course. Yeah, yeah.

Does that worry you? Your best and your brightest.

We’ve just got to manage. We’ve got to manage the challenge. Never take it for granted. There are other advantages that we have. I’m rolling out, in partnership with state governments, around $125 billion of new additional infrastructure over the next six years. That is a massive, a massive stimulant to the Australian economy, and that will obviously attract businesses to Australia.

We’re undertaking significant reforms in health and welfare and education. That will act as an incentive for people to come to Australia. So there’s twists and turns.

Super. That’s another change to the age of 70. Isn’t it inevitable that New Zealand will have to match that, do you think, over time?

Well, it might be a priority for the people in New Zealand to keep a lower pension age. That’s up to the people of New Zealand. But in Australia, when the aged pension was introduced in the early 1900s for men and women aged 65, life expectancy was 56. Life expectancy now is heading towards 100,, so, obviously, in our case, we had to make the change.

If we stick with 65, do you think older Australians might jump the ditch to get an extra five years of pension out of us?

Well, no, because there’s other things that might cause them to jump the ditch or perhaps stay on the other side. There are many factors…

But what would stop them doing that, because we treat them exactly the same as our own citizens?

Well, there might be the argument that we may have a better health-care system and a better age-care system for people over 65. I’m not saying that is the case, but there might be an argument about it. So there are many reasons why people might not suddenly flood the New Zealand marketplace to get an extra five years of aged pension.

You’ve had a really strong housing market, has your capital gains tax kept those housing prices lower than you would otherwise expect them to have been?

Uh, well, no. There are many factors that play in the Australian housing market. There is arguably an under-supply, and we’ve got a big immigration programme, so our population does grow significantly every year. So there are many other factors at play in Australia. Our housing market is robust. There is a big…

So capital gains hasn’t done a lot?

Capital gains tax is, you know, … it varies. You’ve got to have a competitive capital gains tax regime, but if you’re fishing for with a comparison to New Zealand, I’m not familiar with the New Zealand regime at this moment.

Well, for the first time since 1991, we’ve got migration figures that show New Zealand migrants to Oz have levelled off. Are you relieved by that?

Well, we welcome New Zealanders coming to Australia, and they make a massive contribution in many areas. The fact that they’re choosing to come home is a lot about the strength of the New Zealand economy, and if New Zealanders are coming home, it means that they’re voting with their feet for a strong New Zealand economy and strong future for New Zealand. You should be proud of that.

But the ones who do choose to stay, since 2001, New Zealanders can’t collect welfare in Australia. Most of them can’t access student loans. They can’t vote. I’m wondering, does the Anzac spirit mean anything any more?

Oh, it means a lot. It means a lot. It’s just…. We’re…

So why not treat them the same way?

Because they are not Australian citizens. And the fact is there are a lot of countries that would find it attractive to access all the entitlements that are afforded to the Australian people, but, ultimately, we’ve got to strike a balance when we’re running out of money, and at the moment we are running big deficits. We’ve got to live within our means.

But you said we’re like family. We’re like brothers and sisters, and we treat Australians like brothers and sisters in terms of welfare and benefits and what have you.

Well, that’s right. We are. But if my brother and sister were in very desperate financial trouble, I wouldn’t be asking them for money, and similarly, given that New Zealand’s doing very well, and Australia is not in desperate financial trouble, but we’re short of a quid at the moment because we are running deficits, I think it’s not unreasonable that we both live within our means.

So do you see a time then, if it’s a problem at the moment, do you see a time in the future when that could change?

Yeah. Look, the Prime Minister raised with me… Prime Minister Key raised with me a number of issues. I think we can move on some, but let me go back and speak to my colleagues…

Could you share with us what are the ‘some’ things?

There were a couple of initiatives in welfare that I think the Prime Minister put forward a pretty convincing case…

What are they, Treasurer?

Let me speak to my colleagues first. I want to know what the cost if, but in deference to John Key, I will go back and have a good look at it.

So, maybe unemployment benefit?

I said I would have a look. I’m not going to go through the shopping list.

OK, so do you have any concerns that perhaps there might be an underclass of New Zealand citizens in Australia?

No, not at all because New Zealanders know how to stand on their own two feet. They don’t need to rely on Australian welfare to get ahead.

Then that leaves me to the thought. Is this policy actually not about blocking New Zealanders coming into Australia, but is it a means of stopping citizens from other places, like Pacific Island migrants, coming to Australia through New Zealand?

Well, it’s about placing limitations on the amount of money that the Australian government, the Australian taxpayers, pay out, and the first priority is to Australian citizens. It’s pretty understandable.

But is part of that stopping people from the Pacific Islands coming into Australia?

Well, no, because we’re a very welcoming nation for people from the Pacific Islands, and New Zealand is a great leader in the region. So… Look, it’s a balancing act, and you can afford to be more generous when you have more money, and in Australia, gee, I wish our budget was in the position of the New Zealand government. They’ve done the hard yards. They’re getting to surplus. At the moment, we are a long way from surplus.

There was one thing in your budget which suggested that your government was actually going further than previous governments in terms of excluding New Zealanders. It was this work commitment bonus. The 2500 if you stay in employment for a year. You have specifically excluded New Zealanders from picking up that bonus, haven’t you?

Look, I’m not familiar with any specific exclusion of New Zealanders. I’m going to follow that up. I didn’t know there was… I would be surprised if it was specific to New Zealand, but let me have a look at that.

OK, so, overall,  would you be happy if we treated Australians, coming into our country, the same way New Zealanders are treated when they move to Australia?

Well, look, the relationship is much more sophisticated than any one area of activity, and, look, Australia has a deep and enduring relationship with New Zealand, and will continue to do so. How New Zealanders treat Australians I would hope is to your benefit, and I don’t want to get into it tit-for-tat sort of arrangement…

But as part of that enduring relationship, it sounds like you’re going to give it a nudge for us when you go home, are you?

Well, I’ll tell you what. If you send Richie McCaw over to play for the Wallabies, then I’m prepared to do a deal in other areas.

Oooooh. We’ll have to weigh that one up. Thank you so much for your time today. Very appreciated.

 

Comments and questions
4

Why should Australian taxpayers give Kiwis special treatment? Welfare mentality is not a way of life in Australia Kiwis, if you can't play by Australia's rules like every other migrant then stay stay home.

That's just it, the Kiwis are getting special treatment and still crying about it. Go in as a skilled migrant and you have no issues with residency and welfare entitlements, take the short cut that is only available to Kiwis and accept the limitations that go with it.

Kiwis living in Australia since 2001 don't necessarily pay full Australian taxes. Non-protected SCV holders don't pay any tax on non-Australian source income even while resident in Australia for tax purposes indefinitely.

Soft interview
How's about NZ'ers in Australia are specifically excluded from the NDIS program, even though they pay a levy to fund it!!