I thought my ears were deceiving me when I listened to PM on Tuesday evening. But no – here was Mr Hockey, a former minister in the Howard Government [1], ahead of Malcolm Turnbull as preferred Liberal leader [2] in this week’s opinion polls – admitting that there was an arguable case for the Federal government's not proceeding with the tax cuts promised before the 2007 election, describing as “reasonable” the proposition that under Howard too much money had been spent on middle class welfare, and saying that the previous Coalition government would have been wiser to have squirreled its large surpluses away against such times as we are facing now.
I haven’t been able to source the text of Mr Hockey’s address to the CEDA lunch, but here – finally – is the transcript of the Q&A session that followed his address [3] and that was broadcast on PM on Tuesday evening.
I wonder how much this will help Mr Hockey’s leadership aspirations. Were those his thoughts at the time? In thirty years, no doubt, we shall know.
MARK COLVIN: A senior Opposition frontbencher says income tax cuts in
Joe Hockey, the shadow treasurer, told a business lunch today that the Rudd Government had a case for reneging on its promised tax cuts and it should have considered doing so to rein in the budget deficit.
Mr Hockey also gave a candid assessment of the Howard government's economic record. He conceded that in hindsight the Howard government's family tax benefits were too generous and it should have saved more of the massive tax revenues during the boom years.
Joe Hockey was speaking on a panel chaired by our economics correspondent Stephen Long, who filed this report.
STEPHEN LONG: He's being touted at the alternative Opposition leader, a future prime minister. He'd settle for less.
JOE HOCKEY: Oh how I miss being called Minister. (Laughter)
STEPHEN LONG: Joe Hockey was a senior minister, though not of course treasurer, during the Howard years. But now as the Opposition's treasury spokesman he agrees there were flaws in the Howard government's economic management.
Speaking at a lunch in Sydney today hosted by the independent think-tank CEDA (Centre for Economic Development Australia), Mr Hockey said that in its latter years the former government handed out too much money in tax transfers and benefits and it should have delivered even bigger budget surpluses.
JOE HOCKEY: Oh look I think that's a reasonable criticism. I mean the family tax benefit that we had was very generous.
STEPHEN LONG: Although it all seemed fair enough at the time.
JOE HOCKEY: And that's because we wanted to target families because families were facing the greatest cost burden; the price of residential real estate was, you know, rising significantly; and as we all know in Sydney basically you needed to have a two-income household to pay a mortgage.
Some people call that middle-class welfare but I seem to recall everyone crying out for more childcare, tax deductible childcare - you remember that debate? Everyone remembers that. There's been a whole range of those debates. And they were outraged when we had surpluses of $20-billion. So you know there's a lot of hindsight heroes around at the moment.
STEPHEN LONG: Alright but in hindsight, if you could have your time over again you would have had bigger budget surpluses going into this downturn?
JOE HOCKEY: If we had our time again I would better explain the future fund and I would have set up the other funds earlier; the higher education funds for infrastructure and the health and hospital fund.
STEPHEN LONG: In other words: squirrel away more money for the bad times. He denies that seven consecutive years of personal income tax cuts under the Coalition was too many. But what about the latest lot - Labor's me too tax cuts, now L-A-W law?
Should they have gone ahead?
JOE HOCKEY: Well, um, that's a good question. (Pause) God, I'm just saying it's a good question.
(Laughter)
STEPHEN LONG: Can you give me a good answer?
(Laughter)
And he did.
JOE HOCKEY: Look the honest answer is there would have been a legitimate justification for the Government to say our debt, you know, our recovery, our economic recovery will be slower if we are running a big deficit and I think it should have been considered as part of the mix.
The fact of the matter is that at some point you've got to make hard decisions in government when you're spending money.
STEPHEN LONG: Don't adjust the radio, you heard right - Joe Hockey, a senior Coalition minister says tax cuts may well have gone too far and the Rudd Labor Government should have thought long and hard about scrapping them to rein in the budget deficit.
JOE HOCKEY: Having said that, and I want to make this, emphasise this, the Liberal Party believes in lower taxes and you know it would have been incredibly hard for us to support the removal of the income tax reductions.
STEPHEN LONG: And of course given your statement and very reasonable analysis, it would have been highly unlikely that yourself or Malcolm Turnbull would have been out there saying Labor's broken an election promise by not delivering on the tax cuts?
JOE HOCKEY: You're such a cynic.
(Laughter)
STEPHEN LONG: His deep philosophical support for low taxes is it seems outweighed by Joe Hockey's fear of the evil debt. He says
JOE HOCKEY: If we're an alcoholic and the guys down the road are alcoholics, just because we consume less alcohol doesn't mean we're any less an alcoholic.
STEPHEN LONG: Maybe we're just a social drinker.
(Laughter)
JOE HOCKEY: Binge drinking!
STEPHEN LONG: Joe Hockey was stone cold sober at the lunch. He's in training, walking 14 kilometres a day as he prepares to take on a pinnacle, bigger perhaps, than the party's leadership.
Many of you may not be aware that Joe Hockey is in training to go on a climb up Mt Kilimanjaro. Is it true that that training is to prepare you for the rigours of leadership?
(Laughter)
JOE HOCKEY: You know how many people want me to die on that mountain? (Laughter) It increases by the day.
MARK COLVIN: The shadow treasurer Joe Hockey with Stephen Long.