SPEERS:
With me now is the Treasurer, Scott Morrison. A very good afternoon to you, thank you for joining me. As I say, the rebound in growth here is broad-based. You’ve been pointing this out as well but about half of it – nearly half of it – is driven by exports. Does that signal that we are still heavily reliant on the mining sector, the commodities sector, to drive growth in Australia?
TREASURER:
In this set of numbers we’ve got two things that are happening – one, you’ve got higher volumes and you’ve got higher prices. And that’s what’s contributed particularly to the very strong profits performance in that last quarter and on top of that, that’s a lot of what’s been sitting behind what has happened with nominal growth figure. Nominal growth in GDP is over six per cent, we haven’t seen that sort of a figure for quite – you’d have to go back around six years or thereabouts to see that before. We’ve also seen an improvement in the terms of trade, that’s the third consecutive quarter we’ve seen an improvement in the terms of trade and living standards are up over five per cent. Again, that’s the best result we’ve seen across the year for about five years. These are good results. We welcome those results, they are very dependent on ensuring that we continue to see increases in business investment – it’s the first rise we’ve had in business investment in more than 12 quarters. This was our lucky 13th, I suppose you could say that, and you’d need to see that investment grow, you’d need to continue to see the export performance because that is what our country’s prosperity depends on.
SPEERS:
Let me ask you this, we’ve seen company profits up, a record surge in company profits, that’s reflected in some of these figures today as well but wages are not going up, wages are very flat. We’ve seen, I think, wages growth go backwards in today’s results. Why aren’t companies putting these profits into higher wages and how can you be confident that if you do cut company taxes, they will pass that on with higher wages?
TREASURER:
Well, I think you’ve got to be careful about how you’re talking about the company profits. There’s one quarter and it’s particularly in the minerals sector, the resources sector, so you can’t assume that that is being felt across all the other companies evenly in the economy. That would be a wrong assumption to make about what that data means. Wages, compensation of employees, it’s growth is 1.5 per cent through the year. We know the wage price index is showing growth of 1.9 per cent and that’s admittedly flat but for several years now, we’ve seen companies – particularly small businesses – carrying even that low rate of wages growth and keeping people in jobs and they’ve been paying for that out of their own pocket and going backwards themselves. So I don’t think you can get too focused on that one quarter of company profits, particularly given that it’s the impact of those high prices we’ve seen on met coal and things like that, that impacted on it heavily. But you know, Bill Shorten himself said it, a company can’t employ someone if they’re not making the profit. I found it bizarre today that Chris Bowen was actually thinking it was a bad thing that companies might make a profit but that’s the modern Labor Party – well, modern’s probably not the right word.
SPEERS:
Well, as you would acknowledge though today that it is wages growth that has detracted from today’s overall growth figure, that’s the one area of disappointment. In that context, are you concerned that some might see wages go backwards with a penalty rate cut for Sundays?
TREASURER:
I am concerned that we haven’t seen – and this has been happening for some time, I’ve been making this point as I’ve been making the point about the weakness in business investment over 12 consecutive quarters - there hasn’t been 12 consecutive quarters of decline on compensation of employees but we did see that in business investment and the way you grow wages is the businesses have got to grow and they’ve got to be able to invest in their business and invest in their employees and be able to pay higher wages. That’s how it works. No one gets a pay rise in a business that is going backwards. No one can get a job in a business that’s not open. These are just obvious points and it’s important that we do see this growth in small, medium and large businesses because that’s what wages will rely on.
SPEERS:
As you know – and this was pointed out to you today – the head of your department, the head of Treasury, John Fraser, was asked at Senate Estimates today whether this cut in Sunday penalty rates will lead to more jobs and he said that he does not have an opinion on this. Do you have an opinion on this yourself?
TREASURER:
The Treasury hasn’t been asked to model this because the Government wasn’t making a decision on penalty rates. This is a decision of the Fair Work Commission. That was their job to do that work, they evaluated all the cases and they came back with the decision. That is for Fair Work to do. Treasury was not involved in that decision. The Government wasn’t involved in that decision. So the decision’s been taken, the decision will come into effect. It doesn’t require any action by the Government to bring it into effect any more than a decision in the Federal Court or some other place requires action from the Government to bring the effect of a court’s decision into practice. So I’m a bit puzzled as to the view about somehow the Government needs to take some next step on this. When the Fair Work Commission makes a decision, they make a decision and people get on with it.
SPEERS:
You may not like it but Bill Shorten is now making it a question for the Government. He’s been trying to introduce legislation to stop this penalty rate cut going through so as a Government, you do have to decide whether to…
TREASURER:
Well, he’s embarrassed. The Government is the one that introduces legislation and acts on that legislation. There is no requirement for us to introduce legislation for the Fair Work Commission decision to take effect. That takes effect automatically, that’s how Bill Shorten set it up and the only person to be embarrassed here is Bill Shorten.
SPEERS:
You have to make a decision whether to allow Bill Shorten’s bill to come onto the debate or not. So you are deciding…
TREASURER:
Bill Shorten is engaged in his usual opportunistic stunts and what he’s doing here is trying to cover over the fact that, as a trade union leader, he was the one who dealt away penalty rates more than anyone else in the Parliament. He’s the one who actually asked the Fair Work Commission, picked the judge and the jury and everybody else who was involved in this decision, said he’d back it before an election and back flipped on the other side. So he’s the one…
SPEERS:
Ok but I’m just wondering…
TREASURER:
The Government is consistent with what we said before the election and after.
SPEERS:
On consistency, the Prime Minister yesterday said that the decision on penalty rates quote will provide more jobs for young people. Barnaby Joyce, the Deputy PM, said similar. Why won’t’ you?
TREASURER:
I’m saying that that’s what the Fair Work Commission said and I have no reason to doubt them on that. If you look at the evidence of what’s in the Fair Work Commission’s report, that’s what I mean when I say you can’t get a job in a business that’s not open. The evidence that was received by the Fair Work Commission actually pointed to case after case after case where small business in particular – particularly in the hospitality sector – was saying, ‘look, I’m working on a Sunday and I would rather not be working on a Sunday and actually employing people’. Now, that is the judgement that the Fair Work Commission has come to based on receiving all of that evidence and that judgement is there for all to see.
SPEERS:
Will this ever be tested? Will Treasury measure this down the track and let us know whether this has resulted in more jobs?
TREASURER:
Treasury will take this and every other thing that is happening in the economy into account when they prepare their forward forecasts and projections for the Budget and every future estimate in the mid-year statement and so on. That’s what they do, they look at all of these things and they bring it all together and they produce an aggregate assessment of that and that’s what goes in the Budget. David, why would this matter be any different to any decision of the Commission or any decision of a court, any decision of the Reserve Bank, any decision of any other independent body whose job it is to make these decisions and just move on? I That’s why it was set up that way so if it is being suggested that every time an independent commission makes a decision now and the Parliament have to ratify that decision one way or the other, well that’s absurd. Then don’t have an independent commission.
SPEERS:
Not ratify necessarily but Treasurer, just to answer that, this is the first time that the Commission has actually cut penalty rates in this way. It will affect 650,000 Australians and there is a political argument right now – you can’t miss it – over whether it’s going to generate more jobs or not.
TREASURER:
The Commission has certainly formed a view that it will, as has the Productivity Commission and there’s a lot of strong evidence for that and so the decision has been taken and we are doing simply what we said we would do before the election. Now, I don’t know why this comes as any great surprise. The only person who is not doing what they said before the election, the only person who lied about this issue before the election is Bill Shorten. So this should be no great surprise. If the decision had gone the other way, we would have done exactly the same thing. It’s an independent body, it’s made a decision on the basis that it believes that this will lead to an increase in employment. The Productivity Commission has formed similar views and the Government would have no reason on any evidence presented to it that either of those findings are wrong.
SPEERS:
A final one if I can, just turning to the Budget, Treasurer. The Government is still negotiating with the Senate crossbench to try and get that omnibus welfare savings bill through. You haven’t got a lot of weeks left of Parliamentary sitting after this week. Two weeks, in fact, before the May Budget. At what point will you decide to take those savings out of the Budget?
TREASURER:
Well, the Budget’s in May and all the decisions that are taken through the Budget will obviously be announced then, David. I’m not about to forecast or project what the Government may do at this point in time. But you’re right to say that the Senate has two more sitting weeks to consider this matter and to decide whether they’re going to ask Australian taxpayers to pay for a higher welfare bill when that should not be necessary because we are getting expenditure under control as a Government. We’ve reduced the growth in government spending – from over 3.5 per cent under Labor to less than two per cent under our Government and on top of that we’ve reduced the growth in debt by around two thirds. Now, that’s what we’re doing. If the Senate wants to insist on a higher welfare bill for taxpayers – when we already have eight out of ten income taxpayers going to work every day to pay for this bill – if they want to send that bill to the Australian taxpayers, well, they will have to be accountable for that decision that they are going to force on Australian taxpayers.
SPEERS:
Treasurer Scott Morrison, appreciate your time this afternoon. Thanks very much for joining us.
TREASURER:
Thanks, David. Always good to be with you.