Treasurer Joe Hockey grilled by ABC’s Sarah Ferguson on budget night

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Federal Treasurer Joe Hockey has begun the hard sell of his tough first budget, sweating his way through the first of many post-budget interviews.

An unusually subdued Mr Hockey faced the ABC’s Sarah Ferguson on 7.30 just moments after his budget speech.

Ms Ferguson gave him no reprieve, firing the first shot with her opening question: ‘‘Is it liberating for a politician to decide election promises don’t matter?’’

As he sat still in the opposite chair, hands clasped between his legs, Mr Hockey said he would not ‘‘accept the question’’.

“I don’t accept that question. The biggest, most significant promise we made was to fix the budget and strengthen the Australian economy, and we will.”

But the Treasurer soon freed his hands as he set about defending his government’s first budget. A budget that included some controversial measures like the new Medicare co-payment.

‘‘What we’re doing is good policy,’’ he said.

But Ms Ferguson was relentless, orchestrating this abrasive exchange:

Hockey: ‘‘There are only two tax adjustments.’’

Ferguson: ‘‘Is that what we’re going to call them now?”

Hockey: ‘‘Of any substance, any tax changes, if you like, or whatever you’d like to call it.’’

Ferguson: ‘‘New taxes.’’

Hockey: ‘‘There’s two. There’s actually fewer than any of the previous budgets from the previous government.’’

Ferguson: ‘‘They’re still taxes. I don’t need to teach you, Treasurer, what a tax is.’’

Ms Ferguson grilled him on the government’s decison to cut $80 billion from schools and hospitals over ten years.

“Are you starving the states so they beg you, effectively, to raise the GST?” she asked.

“That’s up to them, they are responsible for schools and hospitals.”

It might just have been an off night for the Treasurer. His speech in Parliament was also with a tired voice in a performance that fell short of his typically confident appearances in question time.

On Wednesday, Mr Hockey hit the airwaves, appearing on ABC’s Radio National and AM, Sky News and commercial radio.

At 12.30pm he will speak in Parliament House’s Great Hall in the traditional treasurer’s post-budget address to the National Press Club.

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Budget: Joe Hockey asks too much too soon and puts credibility at risk

Looking like a man in too great of a hurry: Treasurer Joe Hockey’s budget may fall short on fairness. Photo: Andrew MearesRarely has a federal Treasurer laid out so quickly and clearly such stark reforms to the Australian way of life. Rarely have voters been left wondering about the justification and asking, ”Why the rush?”

Dozens of changes to benefits, handouts and programs have been outlined, along with new taxes, curbs to health and savings on higher education.

There have been myriad broken promises. And many surprises.

Joe Hockey’s first budget speech builds a narrative of short-term pain for long-term gain; not by tightening the economy to the extent that a slowdown is imminent, but by drawing on a highly developed ideological framework.

This new user pays world fits snugly with what Mr Hockey admitted was the goal of ”reducing the government’s share of the economy over time”.

”The age of entitlement is over,” Mr Hockey declared in his budget speech, recycling a treatise he delivered in 2012 in London but conveniently omitted to stress during the 2013 election campaign. True, the Coalition in opposition promised to fix the budget, albeit not to raise taxes, or make excuses.

As a result many voters, and the Herald, backed Tony Abbott and Mr Hockey as best placed to embark on much-needed economic and budgetary reforms to end years of Labor dysfunction.

Eight months on and no one can accuse them of not having a red hot go at changing the nation.

The public can, however, ask whether the government’s zeal for shifting the burden of economic change risks jeopardising the sort of national unity needed if Australia is to accept many of the necessary reforms in this budget.

The Treasurer is looking like a man in too great a hurry.

No doubt he is gambling that an unviable opposition under Bill Shorten will pose little obstacle. Mr Hockey will have his fingers crossed that consumer confidence holds up, infrastructure jobs grow and the economy outperforms his relatively pessimistic assumptions. That way, voters who have been hit in the hip pocket through family payment cuts will forget any taint of unfairness in this budget by the time they enter the polling booths in 2016.

True, many of the most severe cuts affecting the middle class – as opposed to the easy targets of jobless youth – kick in after the next election or will be temporary.

But the so-called economic growth dividend from reform will need to come quickly to offset the unsettling 16,500-plus public service job cuts and the uneasy sense that it has suddenly become more comfortable to be a wealthy Australian than someone who needs a helping hand.

Mr Hockey’s narrative tries to keep voters engaged through a series of give-and-take deals. He pledges to recycle health savings and most funds from the new $7 co-payment for doctor visits into a $20 billion health fund. Government assets will be sold and recycled into new job-boosting infrastructure. A hike in fuel tax will be funnelled into road upgrades.

A welfare crackdown will be recycled into a better work culture and a more sustainable safety net for the vulnerable. Capped university fees will be recycled into a fee free-for-all, but with 20 per cent converting to scholarships for the poor.

Labor’s age of entitlement will be recycled into what Mr Hockey calls an ”age of opportunity” under the Coalition. But it all depends on voters replacing their ”age of self interest with national interest”.

”Doing nothing is not an option,” he says – to which some voters may ask, ”But why do so much?”

”Repairing the budget is necessary to protect living standards and prepare for an ageing population,” he says – to which some might ask, ”Explain why this can’t be staged more slowly and why you didn’t tell us at the election?”

”It will allow us to respond to future unexpected events” – to which some will say, ”But our debt position is still the envy of the world”.

To make room for future tax relief and pay it forward – to which many will say, ”At whose cost?”

Many of the easiest ways to reduce budget spending by means testing upper-class welfare or reducing tax breaks for the wealthy on superannuation, capital gains and negative gearing are conspicuously absent from the budget. What’s more, voters must be confused about the need to act so strongly now.

Although the Coalition told Australians before the election the economy was dire, it is now showing signs of recovery. While the prices for our exports remain subdued and may fall further, interest rates remain low, lifting household spending.

Even Mr Hockey says, ”Now is not the time to talk our country down but to talk the facts” – to which many angry at broken promises and policy surprises will respond, ”We aren’t sure we can trust you to tell us.”

Such a potential disconnect between a new government and those who elected it is distressing given the positive aspects of this budget. With more explanation and less aggression, Mr Hockey could have made a strong case for medium-term adjustments to government programs with the burden shared by all.

As it stands, the danger is the necessary pain in Mr Hockey’s plan will become embroiled in the politics of backlash.

The Herald believes Australians do need to realise that the return to budget surplus is a valid goal.

That super tax breaks and other lucrative perks created long-term structural flaws in the budget just as governments should have been banking the proceeds.

That privatisation of some assets is a useful way of freeing up funds for roads.

That indexation of fuel excise does need to be reintroduced especially as the government shrinks the tax base.

That pension assets and income tests do need to be toughened over time in concert with the rise in the retirement age.

But the Herald also believes increased equality of opportunity for education is an investment not a cost and that early intervention will save money on health.

What’s more, a temporary tax on those earning over $180,000 is a poor replacement for removing structural programs that support those who need them least.

Granted, Mr Hockey had to make tough decisions. But if the Treasurer had said no to more Australians who could afford to hear the bad news this would be a better and fairer budget – and it would have a greater chance of gaining acceptance among a rightfully cynical public.

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Garrett takes fall but points finger at Rudd

Former Environment Minister Peter Garrett has taken responsibility for the Labor Government’s failed insulation scheme but revealed Prime Minister Kevin Rudd refused to approve a change to the installation system just weeks before the first installer died.

Mr Garrett told of Mr Rudd’s involvement via a statement given to the Royal Commission into Home Insulation Program, which is sitting in Brisbane.

On Tuesday Mr Garrett became the highest profile minister to appear at the inquiry, which is due to hear evidence from Mr Rudd on Wednesday.

In his statement Mr Garrett said: ”I was responsible for the rollout for the HIP and bore ultimate responsibility for its implementation.”

He also revealed he had tried to introduce a requirement for two quotes for insulation jobs because he ”felt there was a need for a rigorous process that ensured value for money”.

He said his requirement was removed from the initial roll out in phase two on the basis of advice from the Department.

Then on August 27, 2009 he said he sought the Prime Minister’s approval to make the change but Mr Rudd did not approve the request.

Four installers died during the program – the first, Matthew Fuller, was electrocuted on October 14, 2009, less than four months after the main program started. The following month 16-year-old Rueben Barnes was electrocuted.

Mr Garrett confirmed he received a ministerial briefing three weeks before Fuller’s death warning that ”concern about new entrants to the market were not meeting skills competencies”.

He also blamed public servants and ministerial advisors for not providing information to him about safety issues .

Giving evidence as to why he had not seen a key risk assessment raising installer safety concerns Mr Garrett said it would be a matter for his department and advisors to ”highlight” for him if they determined it necessary.

”In the ordinary course of the role of a minister I would have to seek to see it if I’m advised about it … but in the normal practice or necessity I wouldn’t ask to see it,” he said.

He reiterated this in his statement to the inquiry saying at no time were the risks of death or serious injury communicated to him via briefings from the Department.

Mr Garrett confirmed that as a consequence of Matthew Fuller’s death he became distrustful of the advice he was getting from the department including relating to the advice not to ban foil insulation.

Mr Garrett said, in hindsight, he would have recommended the scrapping of the program after the death of the scheme’s first victim, Matthew Fuller.

He said he suggested that mandatory training be introduced for all installers in the wake of Mr Fuller’s death.

However, a briefing from his department titled ”Mandatory Training for all Installers” advised Mr Garrett against the move.

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Barrister calls for full inquiry into ATO’s ‘Keystone cops’

A decision to drop tax and money laundering charges against three high-profile Sydney businessmen is ”another humiliating defeat for the Project Wickenby Keystone Cops”, according to a lawyer close to the trio.

Charges attracting jail of up to 25 years, laid against former CVC Limited chairman Vanda Gould, former Sunland chairman John Leaver and Swiss resident Peter Borgas, were withdrawn by the Commonwealth Director of Public Prosecutions in Sydney Local Court on Tuesday morning.

The men asked the court to order the Crown to pay their costs in defending the charges and a mention date was set for June 10.

They were arrested in October after an investigation by Project Wickenby, the joint Taxation Office-Federal Police taskforce that attacks the use of tax havens by rich Australians.

It was alleged they used a complex network of companies in tax havens including Vanuatu, the Bahamas and Singapore, to avoid millions in Australian tax.

Barrister John Hyde Page, who represented the companies in a related Federal Court civil case, said the amount of public money spent on Wickenby was a ”scandal”.

”Their contempt for civil liberties and due process is disgusting,” he said. ”At the very minimum there needs to be full public inquiry into every aspect of how this unit operates and in particular the people who run it.”

He declined to comment on the Federal Court case, in which a network of offshore companies associated with Mr Gould challenged Tax Office bills of about $40 million. Hearings are completed and the parties are awaiting judgment from Justice Nye Perram.

The ATO alleged the network of companies invested in Australian shares, including those of companies chaired by Mr Gould, and then sent the proceeds offshore without paying any Australian tax.

Mr Gould has long denied any wrongdoing or tax avoidance, saying the majority of the proceeds of the offshore network were distributed to charities in Australia, Africa and Asia.

The civil case also caused ructions in the relationship between Australia and the Cayman Islands when formerly secret company documents showing Mr Gould controlled two Caymanian companies were tendered as evidence despite a court in the Caribbean tax haven ruling they could not be used.

Mr Gould was on Tuesday reappointed as chairman of investment company CVC, a role he resigned following his arrest.

In a statement, Mr Gould’s solicitor, Justeen Dormer, said the charges had caused ”months of disruption to Mr Gould’s life”.

”I am pleased that the charges against Mr Gould have been dropped and he can now return to the work and philanthropic pursuits to which he has dedicated his life,” she said.

In addition, he was chairman of CVC spin-off CVC Property Fund and biotechs Cyclopharm and Vita Life Sciences.

Mr Leaver, who resigned as a director of CVC, does not intend to rejoin the board.

The ATO regards Project Wickenby as a success, boasting on its website it has raised more than $786 million in cash from targets.

However, it has been bitterly opposed by targets including actor Paul Hogan and music promoter Glenn Wheatley, and criticised by the Australian National Audit Office for taking too long and costing too much.

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High-income earners will pay more tax until 2017

Debt levy: The levy will be in place for three years and will affect high-income earners.Federal budget 2014: Full coverageFederal budget 2014: Interactive data explorerFederal budget 2014: Where will your tax dollars go?

About 400,000 taxpayers earning more than $180,000 will pay an extra 2 per cent tax as the government breaks a pre-election promise not to raise taxes, with the introduction of a ”temporary budget repair levy” for three years.

The revenue-raising measure was first promoted weeks ago and forms a key part of the government’s message that everyone will contribute in what is a horror first budget from Treasurer Joe Hockey.

The measure will contribute $3.1 billion to the budget bottom line over three years from July 1, until June 30, 2017.

In his final budget reply speech as opposition leader, Tony Abbott pledged that, if elected, the Coalition ”will keep the current tax thresholds” and that ”no one’s personal tax will go up”.

But someone earning $200,000 will pay 2 per cent more tax on the final $20,000 of their income, which equates to $400. A person earning $300,000 would pay $2400 each year for three years, while someone earning $400,000 would pay $4400 of levy.

Mr Hockey said the levy would ensure his budget – which will scale back family tax benefits, introduce tough earn or learn requirements for the unemployed, and cut into education and health spending – shared the pain around.

”We are asking higher-income earners to pay a temporary budget repair levy,” he said.

”It is only fair that everyone makes a contribution. This includes members of parliament.”

To that end, Mr Hockey said a one-year freeze on the pay of MPs and senior public servant salaries would be put into effect.

”And the gold pass entitlements will be wound back for former and current MPs before the scheme is abolished. As I said, we all must contribute.”

In recent weeks, Mr Hockey and Mr Abbott have variously argued that they have not broken a promise by introducing the levy and that the most significant promise the Coalition made was to fix the budget – and by implication, that the levy could not be avoided.

Several Coalition MPs have already spoken out against the introduction of the levy, questioning the political wisdom of the measure and pointing out that it contributes relatively little to the Coalition’s plan for fiscal consolidation and debt reduction. The government has watered down its original idea of imposing a 1 per cent levy on people earning more than $80,000. And the possibility of the 2 per cent levy beginning at $150,000 was also not adopted because a new tax bracket would have had to be created.

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