Santa-to-Scrooge Hockey Takes Economic Reins as Australia Slows

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“You can be a more generous Santa if you make it easier for people to raise money,” said Joe Hockey, shadow treasurer of Liberal Party of Australia. “You can only give away presents if you’ve got something in the bank and we have to make sure we do that.” Close

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Photographer: Brendon Thorne/Bloomberg

“You can be a more generous Santa if you make it easier for people to raise money,” said Joe Hockey, shadow treasurer of Liberal Party of Australia. “You can only give away presents if you’ve got something in the bank and we have to make sure we do that.”

Joe Hockey, who played Santa Claus at a shopping strip in his North Sydney district, is poised to take on a new role as the incoming government’s Scrooge.

Hockey, 48, will be treasurer after the Liberal-National coalition, led by Tony Abbott, won Australia’s Sept. 7 election, pledging to axe 12,000 public-service jobs en route to a budget surplus of 1 percent of gross domestic product within a decade. Hockey last week outlined foreign-aid cuts as part of A$40 billion ($37 billion) in planned savings through 2017.

Known for an affability that saw him share a friendship with outgoing Labor party Prime Minister Kevin Rudd, Hockey will be tested to maintain fiscal discipline. With the jobless rate projected to climb to an 11-year high, the man who clashed with Abbott on a university rugby field will have to restrain spending even as the world’s 12th-biggest economy slows.

“One of the biggest challenges will be to strengthen the structure of the budget by reducing spending and raising more revenue,” said Stephen Koukoulas, a former adviser to ousted Labor Prime Minister Julia Gillard and now managing director of Canberra-based Market Economics Pty. “It’s going to be up to Hockey to take a hard line on spending with Abbott to prevent any prime ministerial thought bubbles becoming government policy.”

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Tony Abbott, opposition party Liberal-National coalition leader, center, speaks as Joe Hockey, opposition party Liberal-National treasury spokesman, left, and Greg Hunt, opposition party Liberal-National environment spokesman, listen during a news conference on the Australian government's climate change plan in Canberra on July 10, 2011. Close

Tony Abbott, opposition party Liberal-National coalition leader, center, speaks as Joe... Read More

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Tony Abbott, opposition party Liberal-National coalition leader, center, speaks as Joe Hockey, opposition party Liberal-National treasury spokesman, left, and Greg Hunt, opposition party Liberal-National environment spokesman, listen during a news conference on the Australian government's climate change plan in Canberra on July 10, 2011.

In an interview on the campaign trail in Sydney last week, Hockey signaled lower government spending would remove competition with the private sector for funds.

Savings First

“You can be a more generous Santa if you make it easier for people to raise money,” Hockey said. “You can only give away presents if you’ve got something in the bank and we have to make sure we do that.”

One present the coalition has promised is a A$5.5 billion a year parental leave program. The incoming administration also plans to lower subsidies for carmakers and cancel handouts to parents of school children.

Hockey’s family history reflects a snapshot of today’s multi-cultural Australia: his father was born in Bethlehem with the name Richard Hokeidonian before immigrating to Sydney, where he met Hockey’s mother Beverley. They ran a delicatessen in the beachside district of Bondi before moving over the Sydney Harbour Bridge to the middle-class suburb of Chatswood, which Hockey now represents as the member for North Sydney.

The youngest of four children, Hockey was educated at Catholic schools, where he received a religious faith he retains to this day.

Photographer: Jack Atley/Bloomberg

Joe Hockey, opposition Liberal Party Treasury spokesman, listens as Glenn Stevens, Reserve Bank of Australia governor, testifies before the House Economics Committee in Parliament House, in Canberra, on Feb. 20, 2009. Close

Joe Hockey, opposition Liberal Party Treasury spokesman, listens as Glenn Stevens,... Read More

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Joe Hockey, opposition Liberal Party Treasury spokesman, listens as Glenn Stevens, Reserve Bank of Australia governor, testifies before the House Economics Committee in Parliament House, in Canberra, on Feb. 20, 2009.

At the University of Sydney, Hockey was a “larger than life” resident at St John’s College and prominent in campus politics as president of the Students Representative Council, according to his university friend and current chief executive of pay television network Foxtel, Richard Freudenstein.

Keg of Beer

“Even at that stage he knew the importance of identifying your core constituency and getting out the vote, which generally involved putting on a keg” of beer, Freudenstein said in e-mailed response to questions. “He’s changed a lot since then. Student politics is pretty undisciplined and he is much more measured now.”

Before he and his now-leader Abbott learned their present restraint, they famously clashed on the university rugby field, with Hockey thumped and given a black eye.

After graduating, Hockey turned to banking and finance law. He worked for the New South Wales government to assist with the state’s asset sales program, then contested the federal seat of North Sydney for the Liberal party in the 1996 election that swept John Howard to power and Hockey on to the backbench.

Brendan Nelson, who would go on to lead the coalition in opposition from 2007 to 2008 and was first elected to parliament at the same time as Hockey, said the new member for North Sydney saw the “funny side” when he was mistakenly allocated a broom cupboard as his office.

Large Backbench

“Howard had a very large backbench and we were both close to as far to the back of that backbench as you could possibly get,” Nelson said in an interview. “I said to Joe, if you made an interjection from where we were sitting it’d have to be passed on to the center of the chamber.”

In his maiden speech in parliament, Hockey described himself as a believer in modern liberalism, defining his core views: “firstly, the recognition of the inalienable rights of the individual; secondly, a belief in parliamentary democracy; thirdly, a commitment to improve our society through reform; and, finally, equality of opportunity for all of our citizens.”

Two years later, he was given his first ministry in the portfolio of financial services and regulation. After the 2001 election, he was appointed minister for small business and tourism. In 2004, Hockey was made minister for human services, tasked with delivering greater customer focus for major welfare and health services agencies.

Selling Workchoices

In 2007, as the “Workchoices” policy reducing union power was undermining voter support for the coalition government, Howard appointed Hockey to sell a watered-down version.

“Howard, with all of his experience, political judgment, judgment of character and the qualities of those with whom he worked, chose Joe as the key emissary” of industrial relations policy, Nelson said. “It showed that John Howard had immense confidence in him.”

Nelson, who shared a Canberra apartment and then a house with Hockey when the two entered parliament, said the incoming treasurer had always shown an interest in economic affairs.

“Whereas I would be wanting to look at a current affairs story or the history channel, he’d be wanting to look at the markets and how things are going there,” Nelson said.

National Profile

Hockey’s national profile was boosted as he sparred with Rudd on the national breakfast television program “Sunrise” from 2002 to 2007. In opposition, Hockey held a raft of shadow ministry positions before snaring what he calls his ultimate portfolio ambition in February 2009 -- treasury spokesman.

That didn’t stop him from reaching for a higher role. Hockey ran as a candidate for the Liberal Party leadership in December 2009. Abbott was elected.

In the shadow treasurer role, Hockey had to endure taunts from his counterpart Wayne Swan in parliament, who badged him “Sloppy Joe.” His reputation took a knock after a gap was found in cost estimates of the coalition’s 2010 election plans. Since then, Hockey led attacks on Swan’s failure to return the budget to surplus last fiscal year, as had been promised.

“Hockey has managed to establish a very high public profile and a reputation as being competent and affable,” said Zareh Ghazarian, a political analyst and lecturer in politics at Melbourne’s Monash University. “He seems to have shaken off the ‘Sloppy Joe’ label that Labor was so keen to give him.”

Budget Blowout

The Treasury last month forecast deeper budget deficits in the next three years and cut its growth estimate for 2013-14 to 2.5 percent from 2.75 percent seen in May. Unemployment will rise to an 11-year high of 6.25 percent by mid-2014, it said.

The Reserve Bank of Australia has reduced its benchmark interest rate to a record-low 2.5 percent in a bid to revive employment-intensive industries including construction as a mining investment boom wanes. Australia’s dollar traded at about 92 U.S. cents in Sydney yesterday, compared with an average of about 76 cents since it was floated in December 1983.

While Hockey has said he has no plans for an immediate austerity drive, he has outlined a small-government ethos.

“The Age of Entitlement should never have been allowed to become a fiscal nightmare,” he said in an April 2012 speech to the Institute of Economic Affairs in London. “But now that it has, governments around the world must rein in their excesses and learn to live within their means. All of our futures depend on it.”

Kilimanjaro Climb

Late last year, Hockey underwent stomach reduction surgery to lose weight as he prepared for the challenges of the election campaign and government. His friends say the operation reflects his determination to perform at his maximum potential.

Hockey’s drive to improve his fitness was demonstrated in an August 2009 charity climb of Mount Kilimanjaro.

“It was a line in the sand for him to get fitter, and he did,” said Paul Francis, who manages tennis centers on Sydney’s North Shore and runs the Humpty Dumpty Foundation, which raises money to buy children’s medical equipment. Hockey’s walk to Africa’s highest peak demonstrates his resolve, while the role as Santa reflects his accessibility, Francis said.

“Hundreds of people turn up at the local shops and I’d say 99 percent of them didn’t realize it was Joe Hockey” Francis said. “There’s going to be pain to get Australia back on track again and I think Joe will make those tough decisions.”

To contact the reporters on this story: Jason Scott in Canberra at jscott14@bloomberg.net; Benjamin Purvis in Sydney at bpurvis@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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