TONY JONES: Good evening and welcome to Q&A. I'm Tony Jones. Tonight, in the wake of the Intergenerational Report, we're turning the spotlight onto the big challenges facing Australia over the next 40 years. Here to answer your questions: policy analyst and Gratton Institute director John Daley; Council of Social Services Head Cassandra Goldie; the man with his hands on the economic levers Treasurer Joe Hockey; Shadow Treasurer Chris Bowen; and the chief executive of the Chamber of Commerce and Industry Kate Carnell. Please welcome our panel.

Thank you. Now, remember, if you send us a live Twitter question just add @qanda to help us find it. There's plenty of questions to get through tonight. Let's go straight to our first one. It's from to our first question from Dhakshy Sooriyakumaran.

FORGOTTEN GENERATION

DHAKSHY SOORIYAKUMARAN: My question is for the Treasurer. The Intergenerational Report predominantly focuses on the large cohort of older Australians and how they can be equipped to drive Australia's future economy. Has the Government considered the economic cost of not investing in the current generation of young Australians, who will actually be responsible for driving our future economy and how will they be equipped to do so, given the high rates of youth unemployment?

JOE HOCKEY: Well, the level of youth unemployment is just way too high in Australia and it's been a concern that it's been trending higher. That's one of the reasons why we have, for example, extended the loan scheme that applied to universities. We've now extended it to sub-diploma courses which gives young Australians the opportunity to undertake the sort of training in the same environment as university students and the privilege that university students have with a loan scheme. Secondly, we've also extended the apprenticeship program to try and keep young people in apprenticeships because there was a big drop off but there's more work to be done and the biggest driver of job growth in the future is unquestionably going to be small business.

TONY JONES: Okay, I'm going to go - before I go to the rest of the panel, I'm going to go to another question on this topic because we've had several. We've had quite a few in fact. This one is from Ross Cunningham.

YOUTH UNEMPLOYMENT

ROSS CUNNINGHAM: My question is also for Mr Hockey. On ABC's Lateline this past Wednesday, you stated that having 20% of Australia's youth listed as unemployed is, and I quote, "not a crisis" despite the fact that it will cost Australia $13.6 billion in GDP this year. The 20% of unemployed young Australians, combined with the family that's currently supporting them, amounts to a significant percentage of the population who would disagree with you in saying this issue is not a crisis. Are you concerned you may be out of touch with the Australian public on this issue?

JOE HOCKEY: No. I think you've taken it out of context because when you talk about a crisis as I referred to in that interview, a crisis is 50% unemployment, youth unemployment in Spain and parts of Europe, developed economies and they also have significant demographic challenges. 20% is way too high and it's a big challenge for Australia.

TONY JONES: How high would it have to be to be a crisis? I mean, 25, 30?

JOE HOCKEY: Well, that is a...

TONY JONES: Underemployment and unemployment for younger people adds up to 30% already.

JOE HOCKEY: There's considerable underemployment in Australia. I mean we can talk about the words, what matters is the outcomes and the outcomes are that it's way too high at around 20%. We need to create work but also we need to help people to undertake further learning opportunities. That's why we've extended the loan scheme, that's why we've extended apprenticeship programs but there's more to be done. I'm not suggesting for a second that that's enough. It's not.

TONY JONES: All right. Let's hear from the rest of the panel. Cassandra Goldie, first?

CASSANDRA GOLDIE: Well, look, obviously we're really concerned about the future for young people and it was one of the reasons we were so opposed to many of the measures that the Government announced in the last budget because there was a whole lot of defunding of really important effective programs, helping young people to transition out of schools, those particularly who are at risk of really dropping out, to support better linkages with employers. Obviously right now for a young person, if you're unemployed and don't have any financial backing, you're living on just $30 a day, it's really crushing for young people. So we were really horrified, frankly, to see the measures that the Government announced in the last federal budget. Now, fortunately some of those measures haven't got through the parliament yet and we're certainly hoping that the Government is really prepared to rethink this. We think there's - our responsibility is to give young people hope and aspiration and to support the aspiration that's out there and so better investment is exactly what's needed and, of course, a lot of young people, yes, they want jobs but there's also fantastic ideas from young people about the businesses and the enterprises of the future and that's what we'd love to see the Government really focus on, rather than this - playing to this old stereotype, which has never really been true, that young people are just lazy and if we just cut off your income support miraculously you will go out and get a job, because that is not real world and it's certainly not the experience. For the individual young person, it is a crisis right now.

TONY JONES: Joe Hockey, you're going to want to respond, but I'll come back to you to do that. I just want to hear from the other panellists. Kate Carnell first.

KATE CARNELL: Look, thanks very much and thank you for those questions. From the Australian Chamber of Commerce and Industry, we represent 300,000 businesses in Australia. The majority of them are small to medium businesses and it's those sort of businesses that are going to employ the young people that we want to get into jobs. You know, 2 million businesses in Australia that's small to medium businesses, employing up to 7 million Australians. If just a quarter of those businesses employed one person, we'd be significantly better placed. So what do we need to help small businesses employ more young people? Well, we've got to make it easier for small businesses to employ. That means we've got to get rid of a lot of the red tape, the biggest single problem for small businesses. Small businesses tell us it takes them about 11 hours a week, $10,000 a year, to handle all of the red tape the Government - Government at all level problems but also a lot of the training that young people are doing at university or in other places just isn't relevant. It isn't what small business needs. So we've got to get our training programs better in line, not with what universities or training operators want to provide, but what business and young people want to be doing. I'd have to say we also have to change some of our industrial relations laws. We've got to make it easier for businesses to employ, whether it be penalty rates and a range of other things. Quite seriously, most young people get their first job in places like cafes, restaurants, hospitality, tourism and so on and it's become harder and harder for businesses to employ in those places. So let's get small to medium businesses employing in Australia.

TONY JONES: Chris Bowen.

CHRIS BOWEN: Yeah, thanks. Two very important questions and closely related questions and you're right. Investment in education is more important now than ever before because of some of the issues in our economy and the long-term issues that we're dealing with and not just at the tertiary level and not just at universities. Right from early childhood, right from the earliest years, we need to be investing in education. Because we do have, I would use the term crisis. It's not a term I use lightly, it's not a term I throw around easily but it is a crisis because if we do have such high-levels of youth unemployment we're throwing people onto the scrap heap so early that it's very hard for them to recover and get into the work force and their working life is wrecked right from the beginning. So, I would use that term and I would deal with it primarily through investing in education, to give people the skills they need in this rapidly changing world. The entry level jobs that many young people use to get into the work force are disappearing at a rapid rate.

TONY JONES: Well, you just heard Kate Carnell say one of the reasons for that is restrictive industrial relations laws and presumably she means penalty rates in that regard. So would Labor be prepared to step back from its embracing of the current rules?

CHRIS BOWEN: Well, no, I don't think penalty rates are the main issue when it comes to youth unemployment, to be frank. I think education and giving young people the skills to compete in this really fast-changing world where the jobs are changing and a lot of the jobs that will exist for young people in the future just don't exist now. They will be high tech, they will need very good training in science and maths and, as I said, right from the beginning of the educational period, right from before people go to school, we need to be investing and particularly, frankly, people from lower socioeconomic backgrounds. It is unacceptable in Australia today that your parents' wealth have a bigger impact on your educational outcome than is the average in the developed world. It's unacceptable to us and to me from a social justice point of view but it's also really dumb economics that we're losing all that talent from young people.

TONY JONES: Chris Bowen, Kate Carnell wants to jump...

KATE CARNELL: Can I just...

TONY JONES: Keep it brief, because I want to hear from the rest of the panel.

KATE CARNELL: Okay, really, really brief. Chris just made the good comment that it's all about flexibility, it's about a fast-moving world, fast-moving jobs in businesses that have to be flexible and our current workplace relations system just isn't flexible enough. It's that simple. We've got businesses wanting to open unusual hours, wanting to have different ways of employing and we've got young people who want to be employed in different ways and our system doesn't let us.

TONY JONES: John Daley.

JOHN DALEY: Well I think obviously youth unemployment incredibly important issue. In terms of the long-run solutions, obviously they are about education. The question, of course, is what do we do in the short term because in the meantime we have a generation of youth who may well not get on the employment ladder and then it's very difficult to get on thereafter. And one thing we do know is that youth unemployment is very sensitive to rates of economic growth. If economic growth rates slow down the first thing that happens is that youth unemployment goes up and the good news is the reverse is also true. As soon as economic growth rates speed up, chances are youth unemployment will go down. So, the most important thing we can do is ensure that the Australian economy is functioning well. The other thing that we do need to do is think about, well, what sort of programs do we have for people who have unemployed and here I think the literature is very clear. Sending young people out to dig ditches and plant trees doesn't help very much. There is now really good literature that explains that it doesn't work, it doesn't lead to those people winding up with more in the way of employment in the long run. What does work is making sure that they get placements with employers in which they learn genuine skills that they can use in subsequent employment. That's the most important thing that we can do in the short run and those are the sorts of programs we need to see. Now, of course, implicit in what I've just said is because this is all, in the short run, driven by economic growth there's no point in blaming those 20% of people for being unemployed. That's a consequence of what's happening in the economy. What we can do is look at better placement programs that will result in more of them getting a job over the medium term.

CASSANDRA GOLDIE: And we had two programs...

TONY JONES: All right, briefly, Cassandra, because I want to come back to Joe Hockey.

CASSANDRA GOLDIE: Well, as you know, the current Government has this really strong focus on work for the dole. Now, the evidence shows that the work for the dole program is only delivering 19% in terms of employment outcomes for people compared to exactly what John's talking about, which is where you provide a wage subsidy, you help young people to get that break into a small business.

KATE CARNELL: Yeah, we agree.

CASSANDRA GOLDIE: You provide an incentive for the employer. It's a real job, you get that real work experience. This is actually a consensus between business and the community sector about what will work and we're really waiting for the Government to respond to that.

TONY JONES: Okay, well, Joe Hockey, you might want to respond and I did see you nodding actually through John's suggestion that economic growth is the key.

JOE HOCKEY: Oh, of course it is, yeah.

TONY JONES: Well, are you prepared to stimulate the economy then?

JOE HOCKEY: Well, we are endeavouring to stimulate the economy.

TONY JONES: Through the budget?

JOE HOCKEY: Well, interest rates are at - interest rates are record lows. We have let the budget act as a shock absorber for what has been the most dramatic drop in our national income as a result of the falling terms of trade in our history. I mean when I put the budget together last year, iron ore was $90 a tonne. Today it's $57.

TONY JONES: So is it time to restimulate the economy through the budget?

JOE HOCKEY: Well, it is - the best thing you can do is have predictable policy. Now Cassandra said...

TONY JONES: Sorry...

JOE HOCKEY: Wait a second. Wait a second.

TONY JONES: No, but hang on, can you just answer that one question?

JOE HOCKEY: Well, no, I'm not inclined to have fiscal stimulus whilst you've still got significant monetary stimulus as a result of what the Reserve Bank is doing. So, we are dealing in a volatile world where global economic growth has been downgraded on numerous occasions, commodity prices, of which Australia relies heavily, have come down dramatically in the last 12 months and yet we are still - we are still running good growth, not good enough, and he's right. Having said that, if I can just respond to Cassandra...

TONY JONES: Yeah, sure. Sure.

JOE HOCKEY: Cassandra said that unemployment, youth unemployment is too high at the moment. Dead right. But it's based on existing policy, not our policy, so the policies that have been in place - be clear, be clear - the policies that have been in place for years now, which you just said we haven't been able to change, have actually helped to deliver that 20% youth unemployment.

TONY JONES: So where's your industrial relations package, if that what's what you're talking about?

JOE HOCKEY: Well, no, no. No, I'm not. I'm not.

TONY JONES: Because I haven't seen a great push for industrial relations reform coming from your government.

JOE HOCKEY: Well, hang on, we've got...

TONY JONES: We're hearing from business but not from you, with respect.

JOE HOCKEY: Well, that's not quite right. The Australian Building and Construction Commission, which is a huge, a huge cop on the beat for the building industry, which is a massive employer and, of course, the building sector is one of the great bright spots in the Australian economy at the moment, particularly in relation to dwelling construction, the ABC said...

TONY JONES: But you heard what Kate Carnell was saying, she was talking about penalty rates, essentially.

JOE HOCKEY: I understand that and we've said we've got a Fair Work Commission, sorry, a Productivity Commission inquiry into penalty rates and a range of other things. That's an independent inquiry. We've also got the Fair Work Commission which is prepared to consider any applications from business. But just to come back, the existing policies are not working for young Australians. That's why we are trying to change the existing policies, Cassandra. And it's very important because if they were working we wouldn't have 20% youth unemployment now so let's try something else to get young people employed.

TONY JONES: Okay.

CASSANDRA GOLDIE: Well, what...

TONY JONES: No, I've got to move on, I'm sorry, because we've got a lot of questions from our audience. I want to hear from Paul Keary now.

RICH BABY BOOMERS GET RICHER

PAUL KEIGHERY: Thanks, Tony. I'm concerned that retired baby boomers like me are consuming too much of the Government pie and not leaving enough for younger people for educational services and for child care, disability support, you name it. Do you know that a wealthy retired person can have $12 million in their superannuation account, pay no tax at all on the dividend, and be given a tax refund from the Government of $250,000. This is - this is grossly unfair. So my question for the panel is what can the panel recommend specifically that can be done about unfairness and insanity almost in the - with regards to the superannuation concessions, to fix up our slightly ridiculous taxation system?

TONY JONES: Let's start with John Daley.

JOHN DALEY: Well, you're absolutely right that this is an issue and, indeed, 65 plus-year-olds today are paying less income tax than they were six years ago. Everybody else, income tax has gone up. Theirs has gone down and it's essentially, I suspect, largely as a result of superannuation arrangements and those superannuation arrangements do mean that essentially people who are already wealthy are siphoning their money into super. If you look at people over the age of 65 they roughly speak - and you order them by wealth, they, roughly speaking, fall into three classes. There's the bottom 20%, who have very little in the way of resources, pretty much entirely reliant on the aged pension. They're people we really have to look after. There's the middle 60%, who get a reasonable aged pension, also get something in the way of superannuation. That's what superannuation was designed for, to boost their incomes higher than it would be on a pure aged pension and then you have a top 20%, on average about $2 million in wealth, on average earning more outside of superannuation than they would get on a full aged pension and then on top of that, as well, on average, earning almost as much in superannuation as a full age pension. So we have a system in which superannuation has essentially become not what it was originally designed for, which was to support the incomes of that middle 60%, but instead it's become something which is essentially a tax shelter for the top 20%. The precise people who need the least help and our suggestion's about what do we do about this are, first we need to look at the contributions.

TONY JONES: You can't go through them all, John, because we're going to - but if you could just quickly summarise.

JOHN DALEY: Two. So two of them: firstly we need to reduce the amount you can put in out of your pre-tax income to superannuation. At the moment you can put in up to $35,000. That needs to be pulled down to $10,000. The other thing we need to do is tax the earnings of people once they're in pension phase. So, roughly speaking, over the age of 60. At the moment they pay no tax. We think they should pay 15% tax like everybody else on the earnings of their superannuation fund.

TONY JONES: Joe Hockey, what we're talking about here or the questioner was talking about is some form of intergenerational inequity that seems to be built into the superannuation system. Do you agree?

JOE HOCKEY: Well, I think there's more to it than that. I'm interested in the figures that you've presented but I think there is more to it than that because, as John was just saying, effectively if you apply a tax to people that have already accrued their superannuation, then it's almost a retrospective tax because they contributed to the superannuation, their own superannuation, on the basis of the rules that were in place. Now, when the superannuation system was put together by Paul Keating in 1992, life expectancy was about 72. Life expectancy now is around 82 and, as a result of what we've done with the Intergenerational Report, it's indicated that life expectancy will be at least 95 to 100 by the middle of this century. So the question is do we have enough superannuation to actually cover a much longer life and do people, and I get terribly upset when I hear about people that actually did put money aside in superannuation and then find they've run out because they're living to 82, 83, 84. Now, in your case, sir, you're right, if there is that sort of situation, it's something that is worth considering but - but...

TONY JONES: I mean, but isn't that worth considering? Well what we're talking about here is the tax concessions put in place by the Howard Government, isn't it?

JOE HOCKEY: Well, yes and also...

TONY JONES: Are they best described as middle class welfare?

JOE HOCKEY: Tony, I wouldn't - I wouldn't...

JOHN DALEY: Upper middle class welfare.

TONY JONES: Upper middle class welfare.

JOE HOCKEY: Look, you're the commentator and from my perspective - from my perspective...

TONY JONES: Privately what do you call it?

JOE HOCKEY: It is - it is their money. Well, it is their money. Superannuation is their money. It is their money. Now...

TONY JONES: Yeah, but when they - when they don't pay any tax on very large sums of their money and they can put it into what has been referred to as a tax haven or tax shelter?

JOE HOCKEY: Okay. Okay. Well, people...

TONY JONES: Should that be reined in, that's the question, on principle?

JOE HOCKEY: Look, on principle it's worth having a look at and, again, I don't - the reason why I'm cautious is because it's money - it's their money. I'm always cautious about taking people's money off them, right? So, I'm not going to give - well, sorry, I'm excluding the ABC. I'm excluding the ABC.

CASSANDRA GOLDIE: But, Joe, what we're talking about - what we're talking about here is not about people's money. We're talking about the tax concessions associated with people's income and I think there is a real sense, and this is a growing - people kind of understand how this system works. People's literacy around how unfair this is operating at a time when - I mean on the upside of the IGR, again, we see the picture of the future. As we see it on the day you delivered it, we can either further divide us, you know older people against younger people, or we can actually bring ourselves together and have the proper conversations and the retirement income system is a really important area for us to finally be prepared to look at. There's growing support -David Murray in his financial services review, a very conservative voice, said we have to look at the fundamentals of superannuation because, for the people you're concerned about, Joe, the ones that find they don't have enough, we're concerned about them too.

TONY JONES: Okay. Well, let me...

CASSANDRA GOLDIE: They're not getting the benefits out of the tax concession arrangements.

TONY JONES: It sounded like - it sounded like you did concede that you are seriously going to look at this issue and are you going to do it on the basis of your famous phrase, 'The age of entitlement is over'?

JOE HOCKEY: Well, ending the age of entitlement, yes. Look, there's a unity ticket, right? But I just want to make the point...

TONY JONES: Well, we'll find out about that in a moment.

JOE HOCKEY: Well, maybe not. But I just want to make the point, yes, if someone's got $12 million in their superannuation, I mean, that's extraordinary if they're not paying any tax on that. Okay, I understand that situation. But that is not the rule. That is not the common situation. And what we've got to do is have a proper discussion, as Cassandra rightly said, about how are we going to sustain our quality of life for longer and we are, you know, it's got to be an interaction between the pension system, the aged pension system, four out of five Australians over the age of 65 are currently collecting the aged pension. In 40 years' time the ratio is still the same, still the same in 40 years' time, even with all the massive concessions for superannuation.

TONY JONES: Well, I suppose I'm going to ask why you're putting in a system where the aged pension will effectively be lowered?

JOE HOCKEY: Well, I don't accept that because - and I'll tell you why. Because, firstly, there is going to be a greater contribution from superannuation by individuals, and if I could just finish. There are going to be more and more people going on the part pension, as opposed to the full pension, and the issue will be the interaction between superannuation and the aged pension going forward. Not for the current generation over 65 but, as the gentleman identified a little bit earlier, for people in their 50s now, their 40s, the question will be how are we going to maintain a decent quality of life for the next generation?

TONY JONES: Okay. All right. I'm sorry, I didn't mean to interrupt your flow but we have to hear from the other side of the bench here.

JOE HOCKEY: Sure.

TONY JONES: And, Chris Bowen, first of all the superannuation tax concessions...

CHRIS BOWEN: Yeah.

TONY JONES: ...have they gone too far? Would you reign them in in Government?

CHRIS BOWEN: Let me deal with Paul's issue. Thanks for the question, Paul, and I would like to deal with what Joe said at the end there as well. You're essentially right, this does need to be reviewed very closely. When Paul Keating set up superannuation, it was so that those millions of Australians who had been denied it for years had access to a dignified retirement. That's why it was done. But at the moment we have the situation where well over 30% of the value of all the tax concessions in superannuation go to the top 10% of income earners. Now, that doesn't make any sense to me. Particularly if superannuation's going to take pressure off the aged pension, the top 10% of income earners aren't going to darken the door of a Centrelink office, regardless of what tax concessions they get in their superannuation. So, it's not taking pressure off the aged pension.

TONY JONES: So, why didn't you fix it when you were in government?

CHRIS BOWEN: Well, we did have some measures to fix it and Joe's reversed them. But what we're doing now - well, it's a statement of fact.

TONY JONES: Well, no, they were minor tinkering around the edges.

CHRIS BOWEN: They were modest.

TONY JONES: They were modest and you've just admitted it.

JOE HOCKEY: And they weren't implementable.

CHRIS BOWEN: You can say they were modest and they were modest but they were...

TONY JONES: No, you said they were modest.

CHRIS BOWEN: I have but they were a step in that direction. You can say it and I've said it, because they were a step in that direction and even that's too far for Joe to have gone and we actually also fixed up the tax concession at the low end of the income scale and gave a better tax concession for people under $37,000 who currently, at the moment, basically get no tax concession for their superannuation. So what I've said is that, yes, and it's unusual for an Opposition to go out and say this, yes, this does need to be reviewed and we've been consulting with superannuation groups independently and we're going to soon get them all in the room at once because it is a complex area and you can have unintended consequences. You have to have a proper process and that's what we're doing from Opposition and we're happy to lead the debate and to not only be constructive but to lead the debate here because the population is ageing. We do need to have these decisions and these sorts of discussions but what Joe's only answer is is to cut the aged pension over time. It's been a bipartisan policy since the early '70s that the aged pension should be linked to average weekly earnings because the theory has been that as our economy grows and prospers, people who have worked hard all their life should benefit from that. Gough Whitlam started it. Malcolm Fraser kept it. Hawke and Keating kept it. Howard kept it. Tony Abbott and Joe Hockey, with no mandate from the people, have scrapped it. And we know that their changes will see average weekly earnings - and Kevin Rudd actually increased the ratio from 25% to 27% of average weekly earnings. This Government's scrapping that and this will see the aged pension go backwards and it will see it fall to 16% - 16% of average weekly earnings. That's a disgrace. Aged pensioners are the ones who can least afford - least afford - these sorts of changes. We have the second lowest percentage on the aged pension in the OECD and Joe thinks it should be lower.

TONY JONES: Okay, you're going to have to respond to that because...

JOE HOCKEY: Well it's just not right and I'll tell you why. I mean, for example, it is actually now, there are a range of different cohorts that can be used in order to increase the pension. At the moment, increases in the pension are linked to inflation, which is higher than movements in wages. And that's because...

CHRIS BOWEN: It's the highest of the three. It's the highest of the three, Joe.

JOE HOCKEY: And it's the highest of the three but the fundamental point is we are prepared to discuss these issues - discuss these issues.

TONY JONES: Well, you don't have any choice because the Senate probably won't pass that measure anyway.

JOE HOCKEY: Well, maybe that's the case. Maybe that's the case but the fundamental issue is currently the aged pension is 10% of all Commonwealth Government expenditure and it's going to people right up the scale. Now, the - asset scale. So, the question fundamentally is how are we going to make sure those people who haven't got enough money to succeed, who haven't got enough money to survive, are going to get enough in the future? And the current scheme is not going to work to ensure that those most vulnerable are protected in the future.

TONY JONES: All right.

JOE HOCKEY: Okay, so...

TONY JONES: I'm sorry, now I've got - well, you'll have to be brief both of you, so I will give you 30 seconds each.

JOHN DALEY: We do need to look after the people who need to be looked after the most and that's why cutting the basic rate of the pension is such a problem, because those are the people who get affected most when it cut it. What we haven't put on the fable, for reasons that I do not understand, is looking at eligibility for the pension. As the Treasurer says, 80% of Australians over the age of 65 get the pension. Many of them have up to $1 million in assets outside of their owner occupied housing. Indeed we've wound up with a system in which the only way you can fail to qualify for the aged pension is essentially to either be seriously rich or have an incompetent financial planner and we need to tighten up eligibility and surely that is the place that we should be going first to make the aged pension sustainable.

TONY JONES: All right. I'm sorry, we're going to come back to that issue and, Cassandra, you'll be able to respond to it then but let's go to another issue. It's from Oliver Levido, this question.

SUPER HOUSE BUYING

OLIVER LEVIDO: Hi. The IGR shows that we are robbing the youth to pay for the old. I'm 22 years old and by the time I retire there may be no pension for me to claim and, therefore, would need to rely on my superannuation. What does the panel believe - what does the panel think of the Treasurer's suggestion that the young be allowed to access their super to put money towards their first home? Could this change people's attitudes of the core purposes of superannuation?

TONY JONES: I'll start with Kate Carnell.

KATE CARNELL: Look, thanks and just, I suppose, to answer the previous question and yours as well, from a business community perspective we absolutely support having a look at some of the tax concessions that Paul spoke about before. We think at that higher end they really need to be looked at. But what we do need to do is have a superannuation system that allows you to be able to retire on your superannuation at some time in the future. Having that huge group of Australians that are looking to the old aged pension for their retirement rather than their super...

TONY JONES: So, that question - I'm sorry, I'm just going to bring you to the point of the question at the end there...

KATE CARNELL: I'm going to...

TONY JONES: ...which is do you essentially support the Treasurer's proposal that young people should be able to access their superannuation money to buy a house?

KATE CARNELL: Look, I'd have to say we don't and only because we really believe we've got to get more people off the old aged pension and for the old age pension to be a safety net not an entitlement in the future. The only way we'll do that is to get more money into super from young people like you. That said, we absolutely support the Treasurer in having a good look at how we make housing more affordable for young people. It's a real tragedy that so few young people now can really get into the housing market, particularly in Sydney.

TONY JONES: All right. Now, Joe Hockey, I don't know that you can say that too many people, economists, business leaders or otherwise have come out to support this notion. Are you going to back away from it? Can you...

JOE HOCKEY: Well, can I just point out it wasn't my proposal in the first place? But...

TONY JONES: Can I just point out that you are the one going out there, as I said on Lateline the other day, you're the one going out there spruiking the idea and you haven't stepped away from it so I guess the question is...

JOE HOCKEY: Well, because I think we need to have a debate about access to housing for young Australians. It is a big issue. The first person to raise the concept of accessing super for housing was Paul Keating in 1993 as Prime Minister. It was his election pledge in the 1993 election. So, please, it's been around for many years. The issue...

TONY JONES: So you're now citing Paul Keating with your support. Have you read what he said recently?

JOE HOCKEY: Oh, yes, he's changed a little over the years. He's a little greyer and he's obviously changed his attitude.

TONY JONES: No, but you hear what business is saying.

JOE HOCKEY: Well, I do.

TONY JONES: Do you still think it's a good idea?

JOE HOCKEY: Look, I think if it raises the issue of how we are going to help young Australians to get into homes, I think it's a good idea, right? But obviously it's not going to be a total solution. There are countries in the world like Switzerland, Canada, Singapore that had variations of it. But, okay, if there's a consensus in Australia that, really, superannuation should be quarantined to retirement income, the question is how are we going to help this guy here to get into a home? Because the best form of saving...

TONY JONES: Well, have you got another answer because that one is not working.

JOE HOCKEY: Well, the best form of savings - the best form of savings for an individual over the long term is going to be having their own home. That hopefully will be. Now, the key principle in relation to housing is we are still short of housing in Australia. We are trying to get out - trying to stop people illegally buying properties - foreigners illegally buying properties but also we are, importantly, trying to stimulate the housing sector. We've seen a 13.5% increase in dwelling construction in the last 12 months, 20% in NSW, but there's more work to be done.

TONY JONES: All right. Yeah, I think that most of the audience would agree there's more work to be done. Cassandra Goldie?

CASSANDRA GOLDIE: Well, look, we don't support that policy either for the reasons that Kate talked about but I am delighted that the Treasurer wants to talk about housing affordability in Australia and I must say I think that was one of the big gaps in the IGR report because if you talk to most people in Australia if they don't know it's a problem now, you can certainly see that it's going to be the chronic big problem - affordability, mobility, security, dignity, all of these factors, the ability to live on an aged pension in later life. So, the fact that we don't have a coherent national policy on addressing housing affordability at all right now is a serious problem and there is a lot of consensus about what needs to be done here, including doing investment and incentives to get more private investment into affordable housing stock. Now, we had a national rental affordability scheme that was funded under the Labor Government, that needed to stay in place, we were starting to get some traction there and, unfortunately, that was rolled back by the current Government. We've got a serious piece of work to be done around negative gearing and capital gains arrangements. There is a growing consensus amongst the investment community as well that the concessionary arrangements on capital gains and the way negative gearing operates, which is the most - one of the most generous schemes in the developed world...

TONY JONES: Cassandra, I'm going to interrupt you there.

CASSANDRA GOLDIE: ...is driving - driving property prices up.

TONY JONES: Cassandra, I'm not trying to interrupt you, except that we've got a question on this subject, so we'll go to that, then we'll hear other people. It's from Claire Green.

NEGATIVE GEARING

CLAIRE GREEN: My question is why is negative gearing on investment property treated as a sacred cow by both parties? This is an obvious area for reform, given our fiscal situation and the recommendations of several leading inquiries and experts. Does our federal politicians' reluctance to address this issue have anything to do with the fact that parliamentarians own an average of two and a half properties each?

TONY JONES: I'm going to go to Chris Bowen first.

CHRIS BOWEN: Well, I can only speak for myself and say I own less than one with the mortgage that's on it, so I don't own two and a half. I will deal with that. I just want to deal briefly as well with the question about super and then I want to deal with your issue. Super for housing is a really bad idea for three reasons. Firstly, if you turn up at an auction with $20,000 or $30,000 from your super in your pocket, guess what, the other person in the auction has got the same and you're just going to bid against each other with your retirement incomes and the only person who wins is the person selling the house who pockets an extra $30,000. Thank you very much. In the meantime, you've eaten away at the start of your retirement income and you've cost the federal budget by this decision. So it's a really bad idea. A really, really bad idea.

TONY JONES: Negative gearing.

CHRIS BOWEN: Look, what we're doing is going through a process at the moment of looking at housing affordability, looking at the pressures on the budget and consulting and looking at what the situation should be going forward. So what I would say to you is I'm not going to, tonight, announce a policy or start ruling things in or out in relation to this. I don't think either side of...

TONY JONES: But is negative gearing in your sights, along with...

CHRIS BOWEN: No.

TONY JONES: Along with, hang on, the capital gains tax arrangements which Cassandra Goldie was just talking about?

CHRIS BOWEN: I seem to recall you asked...

TONY JONES: Which together - together are driving the housing investment boom beyond what anyone might have imagined?

CHRIS BOWEN: Well, Tony, I seem to recall you asking me exactly that same question on Lateline last year and I will give you the same answer because the situation hasn't changed, is that we're going through developing our policies. It would be irresponsible for me tonight to start ruling things like that in or out. I don't think either side of politics is going to abolish negative gearing tomorrow because it is...

TONY JONES: You don't have to abolish it, you can phase it out.

CHRIS BOWEN: What I am saying is that it's a proper discussion for the nation to have because there is a housing affordability real problem in Australia. We need to look at all the options on it.

TONY JONES: Let's hear from the Treasurer on the negative gearing question and is it a fact that one of the problems here is that politicians own too many houses and they're reluctant to give this away, this entitlement?

JOE HOCKEY: No. No. No, that's a bit of a cheap shot. I think the main point is - well, it is. I mean, let's be fair dinkum. The main point...

TONY JONES: It was actually a question rather than a cheap shot so obviously that's a perception from someone in the audience.

JOE HOCKEY: Well, halfway through the question I heard a bang and I will just say to you that the...

TONY JONES: Really? Could you explain that?

JOE HOCKEY: No. The main issue about negative gearing is this: if you abolish negative gearing on investment properties, there's a strong argument that rents would increase because, you know, rents, when Bob Hawke actually did it in the '80s there was immediately a backlash because all of a sudden people that owned properties, who were offsetting the losses on the property against their primary income, needed to get enough income out of that property that would then replace or then replace the lost income offset. So the net result was you saw a surge in rents and that people who were paying rents are usually, not always, but usually people that can't afford, in many cases, to buy their own home.

TONY JONES: But, sorry, can I just make the point...

JOE HOCKEY: So it actually hurts...

TONY JONES: ...you were talking - you were talking about - you're talking...

JOE HOCKEY: Just, sorry - Tony, ease up. Ease up. Let me finish.

TONY JONES: But you're - but you're making a historical point here.

JOE HOCKEY: No, I'm making...

TONY JONES: And the thing is that history changed when you halved capital gains tax during the Howard era and so the combination of capital gains tax incentives and negative gearing are driving an investment boom beyond what anyone imagined?

JOE HOCKEY: But go back a sec. The negative gearing, you know, Saul Eslake and people like that have an alternate view, right, which is fine, but if you can see some evidence to say that you would not see any increase in rents if you abolish negative gearing there might be a more compelling case but I don't - I don't see that, right.

(MULTIPLE PEOPLE TALK AT ONCE)

TONY JONES: John Daley is...

JOE HOCKEY: Sorry, sorry, sorry. Hang on. Capital gains tax - well, I mean...

JOHN DALEY: The good news - the good news, Treasurer, is there's lots of evidence already provided - provided - provided that the policy class doesn't exclusively come from Sydney because it is absolutely true that when negative gearing disappeared between '85 and '87 rents went up really fast in Sydney, which may well have been because there wasn't a lot of housing being built in Sydney in the couple of years previously because what happened in the same time, between 85 and 87, it was a national policy. You know, you beyond Sydney and the answer is, well, rents were dead, you know, barely moved in Brisbane, didn't go up very far in Melbourne, didn't go up very far in Adelaide. They did go up very fast in Perth, which makes you suspect very strongly that that race memory we have of abolish negative gearing rents will go up, is a race memory built on Sydney. But it didn't happen in most of the rest of the country and that's not surprising because economic theory would tell you that if you abolish negative gearing then, by definition, what happens at the auction is that the investor doesn't win the auction but someone who wants to live in the house does. Net impact, there is one less renter and there is one less rental property. Net impact on the rental market, zero. And so that's what economic theory would tell you.

TONY JONES: Okay. All right. Now, we've got to go back, just we together, and I apologise for this. Together we did interrupt your flow and you were about to talk about capital gains tax.

JOE HOCKEY: Well, the second issue is that yields are very low at the moment, right, and in a low-yield environment you're going to see people pour their money into real estate, which is traditionally lower yield compared to equities and a range of other investments, if you exclude capital gains. Now one of the reasons why capital gains tax was cut was so that we could compete with the rest of the world. The fundamental challenge Australia faces, the big difference between now and the 1980s, is that money is mobile. I mean an Australian can invest in shares anywhere in the world, they can put money in bank accounts anywhere in the world, unlike the 1980s. So with the mobility of money, we actually have to have tax rates that are also competitive and we're not just competing against New Zealand with a top personal tax rate of 33%, or the UK which has, you know, a company tax rate in the 20s, early 20s, we are competing against Singapore and Hong Kong.

TONY JONES: And that is a segue, if I might say, to our next question which is from Mike Yalden.

TAX REFORM

MIKE YALDEN: Yes, panel, this is a question really for the two treasurers or the treasurer to be. Both my wife and I are - both my wife and I are retirees. We're over the age of 65. We have our own self-managed super fund and we still work a little to have some other benefits. We constantly get approached by financial advisers who tell us what wonderful things we can do with our money so that we can access a portion of the aged pension and maybe a full aged pension, which we don't feel is particularly fair. We choose not to do that. The only thing we take is a Commonwealth seniors healthcare card. I've lived in other jurisdictions, in other countries, for example, Hong Kong. You mentioned Hong Kong, Joe, and it was a wonderful situation where the maximum tax rate is 15%. The company tax rate in those days when I was there was 12% and the whole place was zinging along. No one had to go and buy expensive advice and I just wonder whether we shouldn't be looking at a broad-based review of the taxation system because to me it seems to be awfully complicated. We talk about having a review, we're going to review this and we're going to review that and we're going to take a little bit of this and a little bit of that but it never happens and I think I will be pushing up the daisies before we have a fairer tax system in Australia and a more productive tax system.

TONY JONES: Thank you very much, Mike. Joe Hockey, you can start us off and we'll try to keep the answers brief to get through quite a few questions.

JOE HOCKEY: Sure. We're releasing a taxation discussion paper at the end of this month and early April and it will be the beginning of a broader taxation discussion. I think the points you raise are very good and it's got to be a discussion that is based on the Intergenerational Report which, if anyone wants to look at it, just go to your search engine and have a look at the challenge of change. And that gives you the Intergenerational Report. The ...

TONY JONES: Is it, just on that issue though, isn't the problem with the Intergenerational Report and taxation is that it's only looking at government spending, it's not looking at government revenue? In other words we change...

JOE HOCKEY: No, no, it does look at government revenue, yeah, because...

TONY JONES: Well, what tax increases does it suggest?

JOE HOCKEY: Well, no, it doesn't suggest tax increases because that's what we're having a tax discussion paper - not about tax increases, before you misquote me - but about asking the question. I mean, you look at the next 40 years, look at what's happened over the last 40 years, the enormous change Australia's had. The next 40 years you can legitimately ask the question are we going to have company tax in 30 or 40 years' time, given the mobility of capital and the way companies operate over the Internet? Are we going to have a GST, which is the main source of revenue to the States and why? You look at global trade. You look at the fact that people sitting at home are buying goods and services over the Internet now and in a mobile world it's incredibly hard to capture the GST associated with those transactions. So, the question, the fundamental question is where is the revenue going to come from in future years to pay for government services that we need and that's what we're going to focus on when we release the discussion paper on tax.

TONY JONES: So, will it be, and we've already got a bit of a hint of this from you earlier, but will it be focussing on all of the areas where people who are very wealthy are getting major tax concessions, the kind of things that you shied away from calling middle class welfare but which, I would say, quite a few people to be so?

JOE HOCKEY: I think the starting point is to be properly informed about what taxes we have, what are the structural challenges for those taxes, things that people haven't thought about, such as the digital disruption and the impact that's having on GST or having on company tax. For example, Australia has the highest collection of company tax of any country in the OECD. Now, that is probably not sustainable because companies are more mobile and more global than ever before. So, the question is, you know, what is going to give us the revenue and that's where we start from. I mean if you put out a paper and say let's target X, let's target Y, it doesn't give you an answer and it's certainly short term.

TONY JONES: All right. All right. In the interests of hearing from everyone, Chris Bowen, do you have any answers as to where the revenue's going to come from to pay for your own giant promises when you're in Government?

CHRIS BOWEN: Well, that's not the premise that I would accept, to be clear, Tony.

TONY JONES: Well, you never really did explain.

CHRIS BOWEN: Well, that's not quite right. That's not quite right. We had a funding plan for the spending commitments which were very, very important spending commitments, which go to much better funding for our schools through the Gonski model and looking after the most vulnerable people in our community through the disability care scheme. But to answer your question, Mike, I think you're essentially right. The tax system doesn't always make sense because it built up over time in an ad hoc sort of a fashion and it's an area where the Federal Government and the States do need to work very closely together. So, just to take one example, if you live in Sydney here, then a big chunk of your insurance premium is a tax which makes no sense because you're doing the right thing in insuring your house. If you don't insure your house, you don't pay the tax but then that's not the right thing for the community. We want people taking more insurance so that doesn't make much sense and that's something the Federal Government and the states would need to work together on to try to fix that across the board. It varies from state to state. That's just one example. And Joe's got the white paper coming out and that's a process we'll participate in and we'll be constructive in.

TONY JONES: So, do you have any thoughts now for the audience here on where the revenue might come from? What form of revenue streams do you imagine?

CHRIS BOWEN: Well, we've already dealt with, well, we've already announced a multinational tax avoidance package which would raise $2 billion over the next four years. We announced that a couple of weeks ago. Unfortunately Joe thought about it deeply for three minutes before rejecting it but that's something we said...

JOE HOCKEY: No, that's not right.

CHRIS BOWEN: We said if Joe wants to do that in the budget we'll back it. There's one bipartisan policy we could have immediately because multinational tax evasion is a big problem.

TONY JONES: So well, let's quickly find out in the budget, bipartisan policy...

JOE HOCKEY: I'd love to. I've asked for all the details on it and I'm still waiting on them.

CHRIS BOWEN: Oh, Joe.

JOE HOCKEY: Look, I'd just say to you on multinationals, you know, people have to pay tax where they earn the income, right. So, when we were chairing the G20 we drove the international agenda on this and led the way, globally, on it. Number two, I just signed a tax treaty with Switzerland to go after people's bank accounts in Switzerland which have been waiting for years. Number three, we've got people from the taxation office actually embedded in the offices of some of the more prominent companies, which I won't name here, so that we can actually find out what transactions they are avoiding paying tax on.

TONY JONES: And number four...

JOE HOCKEY: And number four...

TONY JONES: No, well, number four, could number four possibly be that you actually are in agree...

JOE HOCKEY: I'm happy to - I'm more than happy to do it. If Chris will give us all the working assumptions associated with the proposal, I promise him I'll get Treasury...

CHRIS BOWEN: We've released a very detailed policy, which is very clear, Joe, about how multinationals spread their debt around and minimise tax in Australia and that's a very clear policy. It's in keeping with OECD best practice guidelines. I'm happy to sit down and talk to you about it but you got up in parliament and bagged it three minutes after we announced it so (indistinct)...

TONY JONES: Well, hang on, hang on, hang on. No. No.

CHRIS BOWEN: ...didn't show a great willingness to engage.

TONY JONES: No need to hold a grudge here.

CHRIS BOWEN: Well, I'd be delighted. I would be absolutely...

JOE HOCKEY: Put down your arms.

CHRIS BOWEN: I would absolutely be absolutely delighted if the Government took up this policy idea because it's a very good one. It's one that we worked hard on over a long period of time, consulted with the business community. If Joe wants to adopt it, I'm more than happy to engage with him.

TONY JONES: This is a tiny drop in the bucket from what you need to raise.

JOE HOCKEY: Well, yeah, well that's exact - I mean, that's a - that's a point. Look, I'd love to work together on that. It represents 0.1 of 1% of revenue.

TONY JONES: That's true.

JOE HOCKEY: 0.1 of 1%.

TONY JONES: Okay, well, let's hear from Cassandra Goldie and John Daley want to get in. Quickly please. We've got more questions.

CASSANDRA GOLDIE: Well, look, I suppose the exchange kind of is an alarm bell for me to say can we please make sure that in such an important discussion about how we are going to ensure that we've got a sustainable tax base that we really do try and have not have policies argued over in such a way which doesn't enable us get into the room together and really have a steady, stable process. Unfortunately...

JOE HOCKEY: Cassandra, I'm with you.

CASSANDRA GOLDIE: Unfortunately, and this is why absolutely...

JOE HOCKEY: On petrol.

CASSANDRA GOLDIE: ...we are - we are...

JOE HOCKEY: Excise.

CASSANDRA GOLDIE: ...we are backing the process of tax reform, we are collaborating with business, we are wanting to bring the community into the debate. I think the community is absolutely out for decent tax reform in this country.

TONY JONES: What about raising the GST, Cassandra?

CASSANDRA GOLDIE: And we need to - we need to look at our politicians to be prepared to hold the line as necessary, to not rule things out, so that we can get a good debate going but I would say...

TONY JONES: Okay, Cassandra, not rule things - not rules things out. GST?

CASSANDRA GOLDIE: What I would - what I I would say - what I would say is that we didn't have that overspending and that's what we're dealing with now, where we had a whole lot of cuts to really vital services where there was no similar stable process for us to really look over the revenue side and so part of what I want to say tonight again...

JOE HOCKEY: Yes, there is, the Commission of Audit.

CASSANDRA GOLDIE: ...is the Government, the cross-benchers have done a really great job on holding the line on some of the worst of that and whilst we get a decent tax reform debate going so that you, as the public - we, as the public can decide what are we prepared to pay in order to have what we think is needed.

TONY JONES: Okay. John Daley?

JOHN DALEY: Well, the problem is that you need whatever taxes you have, you put in place, in order to look after the services that we have and one of the issues is that we, as a society, have essentially decided to spend quite a lot more money on health. Good news it's keeping people alive for a lot longer. Bad news, someone's got to pay for it. We've agreed as a society to have an NDIS scheme. That's terrific, but somebody's got to pay for it and so far we've had relatively little discussion about the fact that taxes will probably have to go up, certainly from where they are at the moment, in order to pay for that and, of course, no politician wants to talk about that fact.

TONY JONES: Let's see if business wants to talk about that. Kate Carnell, taxes have to go up to pay for all the government services, do you agree?

KATE CARNELL: GST has to be on the table. There's no doubt about that. We've got a situation where, as you've heard, Mike, that corporate income tax is or corporate tax is amongst the highest in the OECD. Personal income taxes are high, we've heard already today that superannuation, lack of taxes for high income earners really need to be looked at. There's something like 120 taxes that raise only 10% of the revenue. We can really, I think, we can really have a good look at those sort of areas but we need, as you said, Mike, a full look at what the complexity of tax in this country. You know, one of the examples that was in the Intergenerational Report was a couple - retired couple in their late sixties that had 1.1 million in superannuation, shares and bank savings and they were on a part pension. Now, you know, that's what your financial adviser was saying to you. That's simply not right so a full review is a sensible way and we need our pensions to be a safety net, not some sort of supplement that financial advisers can produce for you when you're trying to look after yourself.

TONY JONES: Thank you, Kate. We've got a few hands up. I'm just going to go to the - we're got two gentlemen there with their hands up. Let's go quickly to both of you, just so you can contribute. The gentleman at the front first, go ahead.

QUESTION FROM THE FLOOR

AUDIENCE MEMBER: Yes, Joe Hockey, you mentioned about having some sort of tax arrangements with Sweden. What about IKEA and Apple who are making big profits but they're not paying their fair share of tax and it's been exploited on another television station that it's happening?

TONY JONES: We'll come back to that gentleman in a moment. I just want to hear Joe Hockey on that. I mean you said you've led the charge but until now, and I guess until the rest of the developed world gets onboard with this and you get into their finance departments, get access to their information you won't be able to do this but is that the future?

JOE HOCKEY: Well, I hope not. I think people and it is a very....

TONY JONES: No, I mean is the future that multinationals who pay no tax - virtually no tax in big areas - big countries like Australia where they raise a lot of revenue - a lot of profit, that that has to stop?

JOE HOCKEY: Well, last year we worked really closely with the finance ministers, the major economies and I led the charge on behalf of Australia and we convinced, in particular, the Americans that their companies needed to be caught in the same net as everyone else about using, you know, selling intellectual property out of Ireland or wherever the case might be and what we've done is we've now got a framework where everyone participates and also we're going after those tax havens like the Cayman Islands and Luxembourg to make sure there is no leakage. The fundamental problem is we can do that but there's still some countries that drop - the company tax rate in Australia is 30%. There are some countries that are dropping their tax rate to 10%. So we've still got extreme competition between the countries. Those companies that you mention, I can't - I'm prohibited from naming companies but I say to you emphatically we have people from the tax office that have moved into companies operating in Australia that are not paying their fair share of tax.

TONY JONES: Large well-known multinationals?

JOE HOCKEY: Correct.

TONY JONES: Not to name those ones.

JOE HOCKEY: Not to name those ones.

TONY JONES: Okay. There's a gentleman with his hand up. I'll quickly go to you, sir. Go ahead.

QUESTION FROM THE FLOOR

AUDIENCE MEMBER: How about taxing the black economy which the World Bank estimates at about 200 billion, which is not taxed for profits of GST and you can do that very simply by following Sweden and not issuing any notes or coins but having digital swipe cards with a tax file number attached?

JOE HOCKEY: Well, it's quite interesting. I saw some data, I think it was from one of the credit card companies today, that said that, you know, tap and go is now 50% of their transactions, which is interesting. But one of the challenges we have is, look, in the modern world the regulated economy is increasingly being massively challenged by new technology. So governments can issue licences, a banking licence is being challenged by Bitcoin or PayPal or even the old Western Union. They're all changing the way banking happened in the past. The same with broadcasting. You're seeing it with broadcasting licences being challenged by Netflix. Even our own taxis, our beloved taxis, are being challenged by Uber and this is the massive change we're facing in the world, where we have laws that are designed for yesterday that are failing to meet the challenge of a new world that is disintermediating and bringing in the consumer at a complete interface with other consumers. So they're (indistinct)...

TONY JONES: You sounded like...

JOE HOCKEY: Bill Gates.

TONY JONES: No, well, I was actually thinking of Kevin Rudd.

JOE HOCKEY: Oh, no. Oh, God.

TONY JONES: Disintermediating.

JOE HOCKEY: I'm sorry. Sorry. I apologise profusely.

TONY JONES: You were becoming Rudd like, so I have to stop you.

TV with him. That was the problem. Too much morning TV.

TONY JONES: Our next question is from Peter Dombkins.

INFRASTRUCTURE

PETER DOMBKINS: Yes. Now, Standard & Poors credit rating outlooks for Australia assume that infrastructure spend will decrease over the next few years as stimulus packages end. Now, Australia's ever growing infrastructure, when combined with proportionally decreasing income tax receipts from an ageing population, are forming a credit ratings perfect storm, if you will, particularly for the State and Territory governments that are going to bear the brunt of Australia's infrastructure deficit. Now, to Joe Hockey or Chris Bowen have any answers?

TONY JONES: John Daley, I'll start with you.

JOHN DALEY: Well, there's a popular belief that we haven't been spending money on infrastructure over the last couple of years and it's not actually true. So, if you look at how much, for example, Australian Government spent on roads from 1987 onwards, it's averaged about 0.8% of GDP. The last four or five years it's been 1.2. So, it's been about 50% higher. So we have actually been spending a lot of money on infrastructure over the last few years.

TONY JONES: Has it gone up under the infrastructure government?

JOHN DALEY: It certainly hasn't gone up. It's probably tailed off but then, at least as a percentage of GDP...

CHRIS BOWEN: That's right. That's dead right.

JOHN DALEY: As a percentage of GDP it's not quite as high as it was.

CHRIS BOWEN: That's dead right.

JOHN DALEY: Certainly if you're looking at state...

JOE HOCKEY: (Indistinct)

JOHN DALEY: Yeah, public (indistinct) infrastructure...

JOE HOCKEY: Well, no, because the States have cut back on infrastructure.

JOHN DALEY: Yeah.

JOE HOCKEY: We've massively increased Federal Government infrastructure spending, to correct you.

JOHN DALEY: Yeah, but the overall gain is about how much governments are spending on infrastructure and that's tailing off and the problem, of course, that we've got is, you know, will we have enough. But as the Treasury Secretary pointed out the other day, actually our biggest problem is not how much we spend on infrastructure it's how much we spend on productive infrastructure and therefore making sure we really choose new projects well and I note that in the last federal budget of the projects that got money for the first time, not one of them had a green light from Infrastructure Australia. So we've got a process, at least at the federal level...

JOE HOCKEY: That's not right.

JOHN DALEY: ...for infrastructure which is not working and, indeed, you can look at the State level, we've certainly seen in Victoria and New South Wales significant controversy over projects where the public doesn't obviously have enough information, even basic information about what assumptions are being made, to assess whether or not a project is a good idea or not and without that kind of assurance, chances are you're going to make quite a lot of mistakes.

TONY JONES: Joe Hockey wants to respond to this. I'm going to get quick answers from both of our...

JOE HOCKEY: Well, it's just not - John's just wrong, right? For a start, we put $1.5 billion into WestConnex here in Sydney. It did have a cost benefit analysis undertaken by the states.

JOHN DALEY: That was a project already under way, Joe.

JOE HOCKEY: Well, no, no, no, I'm sorry, we...

JOHN DALEY: I'm talking about the new ones.

JOE HOCKEY: I'm sorry, we put $1.5 billion in. We've given a concessional loan of $2 billion, the project is under way. Sydney's second airport, yes, we are getting on with with building infrastructure because if you want to build infrastructure to service a big city you have to get on and build it and it's important that you have essential infrastructure like an airport. Other road projects: East-West. There was a cost benefit analysis undertaken by the State Government in Victoria. It's just been torn up by the new State Government in Victoria, 7,000 jobs have gone. In Queensland they, in turn, were trying to have an asset recycling program, $20 billion of infrastructure program now at risk because now the new Queensland Government doesn't know what to do. At least Mike Baird has a plan to get on and build infrastructure here in New South Wales.

TONY JONES: All right. Okay. We want to keep brief answers and again, politicians, brief answers, and I want to hear from business as well.

CHRIS BOWEN: I'll be as quick as I can. John's not wrong. He's dead right. He's 100% right. There's two things that are important here: how much you spend on infrastructure and, from memory I think, when we came to office in 2007 we were 16th in the OECD. Could be wrong around that. It was around there. When we left office we were first in spending on infrastructure and then, secondly, is the cost benefit analysis. We had very strict rules in place that Infrastructure Australia had to show..

JOE HOCKEY: National Broadband would work (indistinct)...

CHRIS BOWEN: ...cost benefit analysis for big infrastructure projects. Joe said there was a cost benefit analysis done on East-West. Yeah, that's true. It wasn't released publicly until Labor won the election and the cost benefit analysis showed it was a terrible project in terms of cost benefit analysis. It would never have gotten through if there was a proper, rigorous process in place.

TONY JONES: Kate Carnell?

KATE CARNELL: Look, from a business perspective, you know, there is a lot of money floating around in superannuation funds, in pension funds globally that really desperately want to invest in government infrastructure. What we've got to do is free up the market and let the private sector invest in these things. Infrastructure Australia has suggested there's something like $300 billion worth of projects that they believe should go ahead in Australia. State Governments have got about $100 billion worth of assets that could easily be sold or leased to the private sector to free up that money to go into public private investments in roads, in all of the things that cities, that the country needs to run. Let's just let it happen. Business wants to invest in this stuff.

TONY JONES: Okay. All right. We've got time for one last question. It's from Narelle Wickham.

EMBRACING DEATH

NARELLE WICKHAM: In 2014, the outgoing director of St Vincent's Hospital, Dr Bob Wright, suggested that we needed to look at the over-treating the elderly at the end of their lives and I think the keyword there is over-treating. Given the high personal, social and economic cost of over-treating the elderly, sometimes at the end of a very dignified life, when is enough enough?

TONY JONES: Cassandra Goldie.

CASSANDRA GOLDIE: Look, I think for us, obviously we want to see is the decent healthcare in place and for the whole population. I think one of the reasons we have such a powerful rejection of the Government's plan on how to address the costs in the health system on the copayment was because people understood that it was taking us further and further down a much more user pays, privatised approach, when I think the public really want to have confidence that, regardless of your income, regardless of your background and regardless of your age, you will have access to good, decent healthcare and there's a big question, of course, for us which we need to work on, about how we properly fund that in a progressive, fair way. I think the particular question you raise is one that will be important for the people who are directly affected by those questions to engage with themselves and as you know, many older people are actively themselves considering about their own pathway of dignity towards the end of life. I think we need to deeply respect those processes and that understanding but I do not think we should be using the pressure on the health budget as a way to drive any discussion about that.

TONY JONES: John Daley?

JOHN DALEY: We actually only spend about $3 billion or $4 billion on people in their last year of life and I think that's probably about the right number, given that the total budget in health is $100 billion. I think that really difficult questions that get raised in this area are things like do we have enough palliative care for people when they get towards the end of life so that they don't die in pain? Do we have enough arrangements in place that people who want to die at home - and actually that's the majority of Australians - do die at home because that's not what happens at the moment. At the moment most Australians don't die at home, even though that's what they want to do, and that's about looking at the arrangements we've got for home care. It's about looking at the arrangements we've got so that people can write advanced care directives, as they're known, to make it very clear to their family and to their doctors what they want to happen to them and many people at the moment don't have those kind of arrangements in place, because it's a really difficult conversation. But it's a conversation that we need to have. It's a conversation that we need to encourage so that more Australians can die well. We will all die eventually and we'd all like to die well when it happens.

TONY JONES: All right. We're just getting close to tend of time, so brief answers. Kate Carnell.

KATE CARNELL: Look, very brief answer. I think what you've brought up is so important. All Australians need to have an advanced care directive or a living will. We need to come to grips with the fact that we are living longer and we need to die with dignity. The cost of health will continue to escalate, there's no doubt. The number of people aged over 65 is going to double. The cost of health for people over 65 is three times that of the rest of the population. We've got to come to grips with how we manage that. Joe came up with some ideas in the budget. I think it's wrong to just say no, that we're not having any changes to health. We simply have to. The costs are escalating too quickly.

TONY JONES: Chris Bowen.

CHRIS BOWEN: Decisions about end of life, I think, can only be made by the individual, if they're capable of making that decision, their family and their doctors together and it's not something that politicians sitting around in Canberra or here can tell people what to do about it. It shouldn't be driven, as Cassandra said, by health cost concerns. Cost to health is a real issue and there's all sorts of things that politicians can and should do about it but end of life decisions and how people deal with the final periods of their life can only be made by them or their loved ones on the best advice of their doctors.

TONY JONES: Joe Hockey, and you might want to reflect on Kate Carnell's statement at the end there as well.

JOE HOCKEY: Well, I must say I find this discussion really quite confronting. The thought that there is a price tag on your last days alive is just unacceptable. From my perspective you need to live with dignity and die with dignity and we have an obligation to ensure that every Australian is in that sort of position and if we have to spend money to make sure that people die with dignity then we will do it to make sure that they've got the best health system available and I understand where you're coming from but, my God, if it was my parent or my wife or whoever it may be, I want to make sure they get the very best health system in the world.

TONY JONES: I'm told we're out of time. I'd like to cross-examination you further on some of the issues on health but we don't have time for that tonight. Please thank our panel: John Daley, Cassandra Goldie, Joe Hockey, Chris Bowen and Kate Carnell. Thank you very much and next Monday the bush comes to town and Q&A when we join hundreds of rural Australians at the Royal Agricultural Show put their questions to the multi-award winning country musician Troy Cassar-Daley, National Party Senator and Assistant Health Minister Fiona Nash, the Shadow Minister for Agriculture Joel Fitzgibbon, corporate financier turned farmer Robyn Clubb and Rob Cook, who uses new technology to run his cattle station from a wheelchair. Until then, goodnight.