LEIGH SALES:
For now the Treasurer, Scott Morrison, is with me. Thank you for coming in.
TREASURER:
Hi.
SALES:
Could you be the first Liberal Treasurer in history to deliver a Labor budget?
TREASURER:
Well, the difference between a Liberal budget and a Labor Budget is we pay for our Budgets, and our Budgets are honest about the numbers that are in them. What we've done is deal with the problems that are in front of us. We've had to reverse $13.5 billion worth of measures from the 2014-15 and 2015-16 budgets, which the Senate would not pass and that has to be paid for, otherwise you have to increase the debt or you increase the deficit and that is not something we’re prepared to do.
SALES:
On the question of paying for it or not, let's just look at the policy content though. You’ve got a Medicare guarantee, you're paying for Labor's NDIS with a tax, you're implementing Labor’s Gonski education plan, you’re taxing the big banks, you’re taking on debt to pay for infrastructure, you’re even giving more money to homeless people. That can't get more Labor, can it?
TREASURER:
I disagree with you. These are principles that are very important to the Liberal Party. The NDIS is a shared commitment and a bipartisan commitment in this Parliament. Every single parliamentarian, I believe, feels very strongly about the NDIS and we have a shared commitment to make sure it's there for with all people with a disability, their carers, their families, their friends. We're very committed to that. Had been from the outset and we’ve given it support from day one. On other issues, making sure that Australians have roofs over their head – it’s not just compassionate, it’s smart policy because if you don't have a roof over your head, Leigh, if you're homeless, if you have rent which is crushing your income and your ability to support your family, every single one of life's problems gets harder. So I'm interested in solving these problems for Australians, reducing the pressures on cost of living and guaranteeing the essential services that they rely on.
SALES:
You say these are principles important to the Liberal Party. You said in last year's Budget speech: now is not a time to be splashing money about or increasing the tax burden on our economy or on hardworking Australians and their families, such policies are not a plan for jobs and growth. Why such a drastic change in 12 months?
TREASURER:
The only people paying higher taxes after 1 July this year are large banks and the crackdown on multinationals and foreign investors investing in Australian real estate.
SALES:
There’s going to be a 0.5 per cent increase on Australians in the Medicare levy.
TREASURER:
That’s in two years’ time, Leigh, and for a very important purpose which Australians I know have generously agreed in the past…
SALES:
Still a tax increase whichever way you pass it.
TREASURER:
We’ve got to fully fund the NDIS, Leigh. And I believe Australians want us to fill that gap. We've had a fight about funding for the NDIS now for several years. It's time that the politics of that ends and we give disabled Australians and their families the guarantee they deserve.
SALES:
But let's talk about your approach now to how you're insisting on paying for things because you've always said that we have a spending problem, not a revenue problem. Just last month you insisted our first priority for budget repair remains controlling growth and expenditure. And yet the reality is your top move is trying to generate revenue through taxes.
TREASURER:
Well actually, expenditure over the Budget and forward estimates is constrained to less than two per cent. Expenditure of the share of the economy goes down to 25 per cent. Let me finish, Leigh. That's the lowest it's been at that level for some years…
SALES:
I want to pick up on this point.
TREASURER:
You asked, let me finish this point – 26.2 per cent was the share of expenditure, of the economy when I became Treasurer. It's now going to 25 per cent. We’ve got expenditure under control…
SALES:
Treasurer, it’s still a quarter of GDP…
TREASURER: Debt growth is two-thirds lower than when we came to the Government. 25 per cent, Leigh. The long run average is 24.8 per cent. If Labor had their way , it would have headed to 26.7 per cent. So we're controlling spending and we're having to deal with reversing $13.5 billion worth of savings measures which the Senate would not pass. We have to deal with it.
SALES:
$5 out of every $6 of budget repair in this Budget comes from raising revenue, not cutting spending.
TREASURER:
But Leigh, we had $13.5 billion of savings which the Senate rejected. We’ve got two choices – we just ignore that and allow the deficit to go up and blow out over more years and raise the debt, or we take the responsible decision, which is ensure we keep the budget on track for a balance in 2021 of $7.4 billion. So Leigh, not our first preference. Our first preference was to get savings through the Parliament. That was rejected so we’ve acted to keep the balanced budget on track fairly and responsibly.
SALES:
A promise you made to get elected was that the Coalition would address Labor's debt and deficit disaster. Now you're talking about good debt, debt to fund infrastructure projects. The Reserve Bank has been urging it for a long time, borrowing for infrastructure was even part of the G20 agenda when Australia was running it. Why has it taken your Government four years to wake up to the benefits of this?
TREASURER:
From 2013 to the end of the forward estimates, we would have invested $70 billion in infrastructure so…
SALES:
Treasurer.
TREASURER:
I don't agree with your point.
SALES:
You have to acknowledge, surely, that your language on debt and deficit has changed drastically in Government?
TREASURER:
From 2018-19, just one year away from now, we will no longer be borrowing to pay for everyday expenses. That is a major achievement. A major achievement. So you don't borrow in your own home household budget to pay for everyday expenses, you don't put those on the credit card. And from 2018-19, Australia will no longer be doing that for the first time in about a decade and the reason that's true is because this Government has been getting expenditure under control.
SALES:
Treasurer, to get back to surplus you're relying on rosy projections. One of them is that wages growth will hit 3.75 per cent in four years, that’s double where it is now. Where do you think that wages growth is going to come from? It is 1.75 per cent now.
TREASURER:
It's not double what it is now, it’s 1.9 per cent at the moment and that’s where we are this year and that’s going up…
SALES:
That's a drastic increase.
TREASURER:
All of our forecasts sit in the middle of the pack when it comes to consensus forecast on the economy.
SALES:
Where will it come from?
TREASURER:
It’s coming from improved performance in our exports sector, lifting in household consumption, improvements in non-mining business investment – these are all the key contributors to our growths over the next four years. Our growth forecasts, Leigh, are less than what the IMF is projecting for Australia and they sit right in the middle of the deck when it comes to consensus forecasts amongst Australian agencies and institutions.
SALES:
On wages growth, the Budget papers say there is significant underemployment. You'd think there are people who are going to be around to take those jobs to take the extra work, which means there’s not really a supply problem. If there’s not a supply problem, how are you going to see wages go up?
TREASURER:
We're investing in cutting taxes for small business, we’re extending the instant asset write-off, we're investing in cutting red tape for small business – $300 million – so State and Territory and local governments can cut the red tape for small business so they can employ more people and get on. We're cutting taxes, we’re continuing with our Enterprise Tax Plan right across the economy, we're investing in infrastructure, the defence industry plan is up and under way breaking ground, the innovation and science plan, the trade agreements. That's all designed to grow the economy, which means more and better paying jobs.
SALES:
On the bank levy, aren't they immediately going to pass that on to customers?
TREASURER:
It's not a tax on bank deposits like the last one that Labor put in. It's not a tax on mortgages. The ACCC will be tasked to ensure that banks do not mislead customers. If they are going to put people's prices up, then they have to tell the truth about it.
SALES:
There's really nothing you can do to stop them passing it on though…
TREASURER:
The ACCC will monitor them closely and consumers can move their money to a regional and smaller bank. Because this isn't a tax like Labor’s tax that was actually on small and regional banks and on pensioners’ bank accounts. This does not include people's deposit accounts, it does not include their mortgages. It doesn't even include the regulatory required capital for banks to ensure they're unquestionably strong. This is a smart tax. The banks are in a position to support budget repair and we're asking them to do so, which I think is fair and affordable.
SALES:
A lot of the social media chatter while you were doing your speech and while we’ve been on the program is about this Budget being like something Labor might deliver. Let me ask you this – this Government’s four years into its existence, with this Budget you've delivered a reboot on your policies, in your economic thinking as well. It begs the question – if you feel the need for such a comprehensive reboot, what has been the point of this Government?
TREASURER:
As a government, we’ve continued to seek to solve problems. Now where the Parliament hasn't been in a position to support the way we wish to do that, well we do what any sensible person would do and we change tack to ensure we continue to address the problem.
SALES:
Treasurer, it's your job as a Government to put up policies that people can agree on and can pass. So it's not all on the Senate, it’s also the policies that you have put forward.
TREASURER:
That’s what I’m saying, Leigh. I’m saying where we have put forward policies which haven't been able to get the support of the Senate, well we’ve rescinded those arrangements out of the Senate and now we’re taking a fresh approach in some different areas. For what reason? To get the job done. Australians are sick of the politics, they’re sick of the fights. They just want the Government to do its job. So I’m not going to take as a leave pass the fact the Senate doesn't pass something. I just go away and work out a better way to get it done because that’s what Australians want us to do.
SALES:
Scott Morrison, good to talk to you, thank you very much.
TREASURER:
Thanks a lot Leigh, good to be with you.