TREASURER:
It’s good to be in Melbourne here today. It is wonderful to be the guest of the Australia-Israel Chamber and particularly today to have the opportunity to set out the second stage of this Staying the Course series that I have been presenting the first one being at Bloomberg, another one here today and in a few weeks’ time I will be at the Lowy Institute I will be talking about the next phase of what we need to do and that is to particularly drive our trade and investment, positive immigration to our country which is always to come and make a contribution and not take one. Today was really about stressing why we have to fight for every inch of growth as an economy. Yes, we have had a very good result when it comes to three [inaudible] growth in the last 12 months and we have had 25 years, but to have another 25 years there are important things we have to do. I particularly want to note that today I made the announcement that we will be tasking the Productivity Commission on a permanent basis every five years to prepare a report that bookends the intergenerational report. That is about ensuring that not only have we got the questions that are being posed by the Intergenerational Report but we now also have a regular series where the Productivity Commission is defining both today’s answers and the answers that are going to have to be contended with in the future. That is welcome as of course is the progress we are making and we are underway with the Australia-Israel tax treaty.
QUESTION:
With the super changes that have been announced recently, is that actually a sign of the Government giving up an inch of growth? Those changes were going to make budgetary savings.
TREASURER:
They are going to make budgetary savings.
QUESTION:
They still are?
TREASURER:
Yes. The issue about the super changes is this, we were always only going to countenance measures that would ensure that the Budget position was not disadvantaged and in fact what we announced yesterday advantaged the Budget position. We are actually going to get a better revenue outcome now than under the previous measures. This is why I say it was a set of changes which made superannuation even fairer, even more flexible and even more sustainable. So, this whole process has shown how the Government can deal with difficult issues and get good outcomes and in fact on this occasion we have got an even better outcome.
QUESTION:
Treasurer, do you think the measures announced yesterday are equitable across the board? Obviously some areas had to be left off the initial measures you announced.
TREASURER:
The most important change was, in terms of the measures you were referring to, delaying the catch up contributions by one year. Now, this is an important measure and we wanted to ensure we can continue with that measure and do it into the future. So, we have had to delay that for one year and that is necessary to ensure that the entire package does not come at a net cost to the Budget. So, that is a necessary change. This is a fair set of changes. This is a set of changes that deals structurally with the problems that we saw with superannuation going out over the next 20-30 years. Now, overwhelmingly more than 80 per cent of this package is completely untouched from what I announced at the Budget. There have been some changes to one particular contentious measure and we have been able to do that in a way where we still hit the objective of what the entire package was designed to achieve. Ensuring that there is this upper threshold upon which you cannot make after tax contributions any longer that protects the system against the build-up of these very large balances which attract what are still very significant tax concessions. So, structurally we have gone and dealt with a very big problem here and it is a problem that previous governments and the Labor Government in particular just kicked down the road. It was in the too-hard basket. The Prime Minister and I and Kelly O’Dwyer the Minister for Revenue got it out of the too-hard basket and we dealt with it and the Labor Party, it is now for them to show their support for that at an early opportunity and to provide the superannuation sector the certainty I think they would appreciate.
QUESTION:
In the context you are making the changes to the Budget Bills to get them through the Parliament, is there scope for compromise on the same sex marriage plebiscite?
TREASURER:
These are different issues. As Treasurer I have carriage of matters relating to the Budget and that is what I will be continuing to focus on. I don’t draw a parallel between those issues. I know others have but I don’t.
QUESTION:
You made some comments about the NBN and Senator Conroy what do you make of his departure?
TREASURER:
I am not aware of the circumstances of his departure. Obviously that is a matter for him and his family. I wish him well. He has served as a Victorian Senator for many years now and he has taken his decision and we wish him well for his future and what he can be rest assured about is that the program he once had responsibility for is now in very safe and successful hands in the Coalition Government and we are ensuring that the project is being delivered at less cost and with greater efficiency and a more productive roll-out.
QUESTION:
Treasurer, the other measure which has been taken off the table was the harmonisation of contributions after 65, which is a big one…
TREASURER:
Well, it was one of the smaller measures in terms of cost of the package but that measure can’t be supported at this time and that is the reality of dealing with the Budget challenge. We still think that is a good measure but it is not a measure that we can afford at this time.
QUESTION:
Have you caved to industry super in terms of making these changes to the superannuation package and…
TREASURER:
You will have to explain your question – on what basis?
QUESTION:
Ian Silk the head of Australian Super has made public comments that you would hope that the $500,000 concessional cap would be removed. He had hoped a whole range of different measures would be changed. Everything that Ian Silk hoped appears to have been changed. Have you caved to Industry Super?
TREASURER:
No, I don’t think that is a particularly useful suggestion. What we have done is we have come to a final landing place that ensures that the most significant changes to make superannuation fairer, more flexible and more sustainable are going to be achieved. Now, that is a good outcome. Now, in getting to that outcome I consulted very closely with my government member colleagues. We sat down with my colleagues across the Party, both the Liberal and National Parties and we worked through these issues and we came to what I think is an even better arrangement than where we were before. That is what I would I would have thought that should be the objective or working on major policy issues. So, I note the commentary on some of these things but frankly the Australian people are just interested in outcomes. They elected us to deliver on this package and to ensure that it was more fair, that it was more flexible and that it was more sustainable. We put that in the Budget, took it to the Australian people and that is the outcome they wanted to be achieved by virtue of the result of that election and that is exactly what we are delivering.
QUESTION:
Port of Melbourne bids were due today, you spoke about this in your speech. Have you given the bidders FIRB approval at this point?
TREASURER:
I won’t be making any commentary on those matters. When those matters are appropriate to have statements on that’s when I will do it.
QUESTION:
You also spoke about the tax treaty in the works with Israel. Will that include a taxation information exchange agreement?
TREASURER:
We have just started that process and the Government hasn’t come to any final view on a lot of these matters. So, we will just work that process over the next 12 months.
QUESTION:
If I was for instance, say for example a casino magnate looking to invest in Israel what would this do for me?
TREASURER:
Look, I don’t think I am going to go into those sorts of details.
QUESTION:
Is it you intention that future changes to super will be linked to the new five yearly economic review done by the Productivity Commission and are you going to introduce any mechanism in the definition of the objective of super to make that link?
TREASURER:
No, that is not currently our plan but it is an interesting suggestion. More significantly I would have thought that the link was more rightly made actually with the Intergenerational Report as opposed to the Productivity Commission Review. The virtue of both the IGR and the Productivity Commission five yearly review is to provide the context for those sorts of decisions that need to be made. We certainly have no plans to go any further than we have on this package because we believe we have dealt with the challenges. Now, that doesn’t rule out positive changes in the future, as we have said, we are very interested in making super more flexible, particularly for those aged over 65 and if there are opportunities to do that and the Budget permits that than of course we would seek to go down that path. I think you are right to suggest that the Productivity Commission five yearly review does provide important policy context for some of the most significant decisions governments have to make. I stress, not just the federal government, and there was commentary made today about regulation and on regulation reform so much of that work has to be done at state and territory and local level at this country. We have already, over our first three years, delivered some $4 billion-odd or thereabouts in compliance savings and regulatory savings through our regulatory reduction program. We would love to see that type of outcome at state and territory and local levels as well. Now, that is not so much advocacy as it is an invitation. This is good for the economy to do this and I will work with the state and territory treasurers to that end.
QUESTION:
You said that income growth was wet and that people…
TREASURER:
Was weak.
QUESTION:
Was weak – I thought you said wet – but you said that people weren’t feeling better off even though the economy was growing. Does that mean that the Government will be more supportive of a bigger increase in the minimum wage for example and maintaining penalty rates?
TREASURER:
I don’t think you were understanding the point I was making. What I was saying is that the economic environment we are in today is different to the one that was pre-GFC. Now, pre-GFC and as we moved towards the peak in the mining investment boom income growth had been a lot stronger. It is a bit like you were getting a $5,000 bonus on your salary every year and you were getting it every year and after getting it for quite a number of years it became an expectation and it was being built into people’s incomes. Now, after the GFC those bonuses aren’t getting paid like they used to and those movements in wages and things have been a lot softer. So, people’s income growth, company profits growth, the prices we are getting for what we are selling has not been as strong as it was previously. So, with a lower rate of income growth, even despite the fact that inflation has been low and interest rates have been low and the other cross pressures that people were previously dealing with, at much more ferocious levels, the feeling one has is that they’re not in as strong a position as they were previously. That is what we have to address. Now, the truth is our economy is growing better than the advanced world and that is a good outcome and it is good to see that in that last quarter and over the last couple of quarters in other areas we have seen living standards rise and that is welcome but we have to build on that. What I am interested in seeing is Australians being in a position to get a job, to be able to be self-supporting in the economy and to be self-supporting in their retirement as well. This is about trying to drive the private economy so people can be more self-sufficient and that is a good outcome. That is a really good outcome. So, the answer is actually in more jobs – not in more wealth.
Thank you.