MICHAEL BRISSENDEN:
The Government is expected to unveil significant changes to family tax payments today, affecting more than 1.7 million families. The changes signal a back-down on billions of dollars’ worth of cuts announced in the 2014 Budget which have been blocked in the Senate set aside to pay for a childcare package announced in this year's Budget. One of the more controversial proposals, stopping the Family Tax Benefit Part B when a family's youngest child turns six, is expected to be lifted to 13. I'm joined now by the Treasurer Scott Morrison. Treasurer, welcome to the programme again.
TREASURER:
Michael, good to be here.
BRISSENDEN:
We are expecting some changes of course. Can you confirm that the threshold will be lifted to the child of 13?
TREASURER:
Well the legislation will be introduced in the House today by Christian Porter, the Minister, and he and I will be holding a press conference a little later this morning. But what I can say is that over the last many months when I was in the previous portfolio we have been re-engineering that package that first went into the 14/15 Budget. Now, the measures that were put forward today achieve roughly about the same level of savings overall which ensures that we're able to afford to pay for the child care package to make child care more affordable and give choice to families. So it achieves the savings target that we've set for that, but importantly, it does it in I think in a more fair and more targeted way, and in a way that actually reforms positively our welfare system. I mean Patrick McClure had made it really clear that there are far too many payments and supplements and in the last budget we were able to get rid of one of those supplements, the seniors supplement. And this addressed more the supplements in family payments, not the core fortnightly payments.
BRISSENDEN:
So essentially if you achieve the same savings then people are going to have to be worse off.
TREASURER:
Well the savings are necessary to pay for child care…
BRISSENDEN:
Okay, but essentially then people will still have to lose a certain amount of money, won't they?
TREASURER:
Well, what we're doing is ensuring that the money we're spending on family payments is better directed. And the judgement the Government has made is we need to get that money not in Christmas and July bonus payments which have outlived their purpose. I mean these payments were first introduced many years ago as a result of an administrative measure to be a balancing item for overestimation or underestimation of income for the family payment system. Now, what we're now doing is that payment has outlived its usefulness so we want to take the resources we were spending in that area and channel it into more affordable childcare, which is what modern families need.
BRISSENDEN:
Okay, so people who were expecting a bonus payment in July and around Christmas won't be getting it then.
TREASURER:
Well, when we met with the organisers of the reform summit recently, and particularly with ACOSS and other members, they made the point that our tax, the taxes that we have, have to be fit for purpose, and I think that's true. It's also true that our payments have to be fit for purpose. Now, if a payment has outlived its purpose, well, why would we continue to spend money on that when we can spend the money on what families really need, which is more affordable childcare?
BRISSENDEN:
Will you get this through the Senate this time? Jenny Macklin told us a short time ago she still has some concerns. She's got some concerns particularly over single parents. Senator Lazarus has just been on Radio National saying the same things. Clearly there are some who you need, the votes that you need in the Senate, who still need to be convinced.
TREASURER:
Well we've been working with the crossbench now for many, many months. And the measures that we'll be putting through the House, introducing to the House today reflect those discussions. I'm pleased that in engaging the Labor Party since the change of leadership they have at least agreed to look at these measures. They have not dismissed the measures. They know what they are. They've been provided to them now over the last couple of days. And, so they're in a position, I think, where at least they have not rejected those and I'll take that as a positive sign. But we need to remain focussed on what the goal here is, and that is to ensure that we can put the Jobs for Families package on child care in and that can be afforded. Now, Jenny Macklin herself has said, well, that's a good package but you've got to pay for it somehow. Well, this is the somehow.
BRISSENDEN:
But it's not going to change the equation in any way? I mean, it's not going to affect the bottom line?
TREASURER:
Well, no.
BRISSENDEN:
Not at all?
TREASURER:
No. I mean, this is the purpose. What we did, it's a bit like what we did with the pensions as some I think in David Crowe's piece in The Australian today is, what we did is we looked back at the original measure that was in the 14/15 Budget and we said, well, how can we do this better? How can we do it in a way…
BRISSENDEN:
It suggests…
TREASURER:
…which is fairer.
BRISSENDEN:
…you accept that you didn't do that one properly.
TREASURER:
Well it means, look, if we can improve the measure, if we can make it fairer, if we can make it more targeted, if we can make the welfare system more efficient and more effective, why wouldn't you want to do that? If the Labor Party wants to call that a back-down, fine, but that's just the old politics rubbish, you know, that I think hopefully most of us have put behind.
BRISSENDEN:
Ok. Can we turn to the Murray Inquiry changes?
TREASURER:
Sure.
BRISSENDEN:
Would you consider extending the credit card surcharge ban to ATM fees as proposed by the Greens?
TREASURER:
Well they're different issues. The ATM issue - look, I pay those $2 fees or whatever they happen to be at any particular time, and I if I don't like doing that I'll go to my actual bank and I don't have to pay them there. But there's a service that's being provided by an ATM provider, so that's one issue. The issue we're dealing with and that Murray has dealt with is where a merchant is charged a fee – it's called an interchange fee – and on average that's about 0.5 per cent, and then the merchant will charge the customer – you and I – a surcharge. Now, that surcharge is on average between about 1 and 3 per cent, but we all know of other examples where they're charging 7 and 10. Now what we've said is, no, you can't have a surcharge that is more than what it's costing you, and that's what we'll be moving to legislate to ban.
BRISSENDEN:
You've also confirmed tighter lending rules on the banks designed clearly to boost their resilience to any future shocks.
TREASURER:
Yes.
BRISSENDEN:
Now yesterday the banks were warning that this will cost. There's no doubt about that. We've already seen Westpac increase their interest rates in anticipation of this. Is that fair and will it result in increased rates across the board?
TREASURER:
Well that's a decision for banks and they have to justify what they charge their customers to their customers because they're commercial decisions. All businesses will have changes in their cost base from time to time for a whole range of pressures. You know, oil prices change, commodity prices change, all these sorts of things change from time to time. Now businesses then make a decision about what they're going to make their customers bear. That's a commercial decision. It's not a government decision. It's not APRA's decision. It's their decision.
BRISSENDEN:
And governments make decisions about what policies they'll put in place…
TREASURER:
Sure.
BRISSENDEN:
…and how industry will respond to it.
TREASURER:
And it's for industry, and particularly the banks, to decide, well, what are they going to do with their customers. Now, we already know some of the smaller banks have cut their mortgage rates. And we know with Westpac, for example, it was a mixture. They…
BRISSENDEN:
So you wouldn't accept, you don't accept the argument then that they…
TREASURER:
No, I don't.
BRISSENDEN:
…have to put up interest rates?
TREASURER:
I don't, because I know a small business who isn't in a position with market power to pass on their increases in costs to their customers, they have to make the commercial decision to absorb it. Now, if large companies who make big profits choose not to let the customers have the benefit of the same level of service at the same price, well, that's simply something for the banks to explain – not the Government.
BRISSENDEN:
On superannuation you say that the changes will mean people's retirement savings will be invested, quote, "for their purpose, for their objectives and for their family."
TREASURER:
Yes.
BRISSENDEN:
What's the evidence current default funds are not doing that?
TREASURER:
What we want to do with default funds is provide more choice. So, I mean, one of the options here which is very possible out of what we do with the Productivity Commission is the individual would be able to select from a potential menu of various funds so it doesn't just come down to one. The other area is to ensure that there can't be enterprise agreements which lock people out of funds, which currently you can do. The unions can get together with whoever they're dealing with and they can say that your super, your mandatory super has to go into a particular fund. Now, that's just not on and we're going to stop it.
BRISSENDEN:
But if you want to give people freedom why not give them complete freedom?
TREASURER:
Well, this is the direction we're heading in, Michael. I mean, you're not going to get a big argument from me on that.
BRISSENDEN:
Well, but people can, you know, can they take their money and invest it however they like?
TREASURER:
Well, I think they should be able to invest - with taxpayer incentive mandatory contributions we obviously want it to go into superannuation funds that are going to be there to ensure when people come to retirement age they won't go on the pension. That was another recommendation from the Murray Inquiry.
BRISSENDEN:
So there do have to be some restrictions on where they, where and how they invest.
TREASURER:
Well, it's got to be a super fund. It's got to be a proper super fund. I don't think anyone is disagreeing with that.
BRISSENDEN:
Ok. Well just finally Joe Hockey of course will be giving his valedictory speech in the House of Reps today. How do you feel about slipping into his job now four weeks into it? Seems a shame that someone that young would be leaving at such an early age.
TREASURER:
Well, I mean Joe's at a position in his life where he can now move on to another very successful career. And I have no doubt that that's exactly what he'll do. I mean, he's given the Parliament great service, some 19 years – 16 years on the frontbench for the Coalition. That's a pretty impressive record. And on top of that, I know this is, he was original state director many, many years ago. I mean he's a great local member too. The people of North Sydney will really miss Joe.
BRISSENDEN:
Is he a casualty of the missteps of the 2014 Budget?
TREASURER:
Oh, look, I'm not going to get into all of that. I mean, Joe's made his own decisions and he gave a very, very beautiful speech yesterday in the Party Room. Bitterness is not Joe's style. It's not mine. Joe was a great contributor to the Australian Parliament public life. As Treasurer, he had some real achievements, particularly when it comes to infrastructure investment. The people of Sydney, in particular, will always be thanking him for the Western Sydney airport when they see it. You know, maybe we should change it from the Bradfield airport to the Hockey airport because he had – look, Joe had been a champion. I'd worked with Joe on the Western Sydney airport for decades. He was a big passionate bloke and I wish him and Melissa and all his family all the best.
BRISSENDEN:
Ok, Scott Morrison, thanks very much for joining us.
TREASURER:
Thanks Michael.