Hockey calls for swingeing economic reform in farewell speech

Joe Hockey used his valedictory speech in parliament to lay out a comprehensive reform blueprint. Mick Tsikas/AAP

Former treasurer Joe Hockey has called for superannuation tax concessions to be pared back and negative gearing skewed towards new housing in a valedictory speech that effectively challenged the Turnbull government to be bold.

In the at-times brutally frank and direct parliamentary address, Hockey also said the revolving door of leadership change must be “jammed shut”.

He paid a generous tribute to Tony Abbott – to whose leadership he was tied – but admitted they had differed over budget savings.

Laying out a comprehensive reform blueprint, Hockey said that in the tax review he had tried but failed “to keep all options on the table”. He then set out in detail what should be done.

“We must increase and over time broaden the GST. We must lower all income tax so people and companies are given more incentive to take risks and receive rewards.

"As a minimum, we should aim for a 40-20-20 rule: 40% top personal tax rate at a much higher threshold, 20% tax rate for most taxpayers and 20% tax rate for businesses,” he said.

“We should be wiser and more consistent on tax concessions to help pay for that – in particular tax concessions on superannuation should be carefully pared back.

"Negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property.”

Hockey’s exhortations come as the government considers tax reform with Malcolm Turnbull, in contrast to Abbott, emphatically keeping all options “on the table”.

The speech coincided with the government announcing, after negotiations with crossbenchers and talking to the opposition, a total reworking of Hockey’s 2014 budget family tax benefit savings package, which could not be passed through the Senate.

Hockey said the Coalition had undertaken some welfare reform but there was still a long way to go. “It is unconscionable in 2015 to have non-means-tested welfare”. He also called for industrial relations changes, saying “the current structure of penalty rates is profit murder for small business”.

The Abbott government had been good at policy but had struggled with politics, he said. “We could have done more to win over third-party endorsements and to win over the Senate. And we could have done more to win over the Australian people.”

He strongly defended his controversial first budget, including the measure to raise the pension retirement age to 70.

“Both our superannuation system and our age pension entitlements must be calibrated to our changing demographics. We need a comprehensive and bipartisan review followed by action in this area.”

With Turnbull listening in the chamber, Hockey declared that “the revolving door in Australian politics must be jammed shut. If we don’t show enough respect to each other then how can we hope that the electorate will respect us?

"The stability of the Howard government has been replaced with rapid and unpredictable changes of government on both sides. That turnover has dramatically weakened the policy hand of whoever occupies the government benches.

"Most public servants are very good but some – confused by the inconsistency of policy and the rapid change in the number of ministers – they will simply wait out a minister or a government when they are asked to implement very difficult decisions.

"In this parliament, the Senate has the capacity to turn every policy proposal into a bit of a mess, thus undermining public confidence in the process of government.

"Ultimately, this chamber can end up being responsible for its own undoing.

"We cannot make it normal to have four prime ministers and four treasurers in just four years. Leadership instability and ministerial turnover is the enemy of good public policy.”

He said his controversial speech, delivered in opposition, about ending the age of entitlement had had a wide impact; he challenged anyone to name a speech in the last 20 years that had so influenced the national debate.

It had given Labor a leave pass to start to wind back unfair welfare entitlements. If the Coalition government had not begun by ending the age of entitlement for business there would have been no free trade agreements because the cost to the nation would have been too great, he said.

Saying we needed to build now the infrastructure to facilitate the future, Hockey paid tribute to the former Labor government for initiating the national broadband network, which had been “a very significant commitment”.

Hockey told Turnbull that he genuinely wanted him to be successful and for the government to be “the best government Australia has ever had, because I owe that to the community and I owe that to my children”.

Hockey received a standing ovation from both sides of the House. He will become ambassador to Washington, although the appointment is yet to be announced. He has been in parliament nearly two decades and was a minister through most of the Howard government. There will be a byelection in his safe seat of North Sydney before Christmas.