RAY HADLEY:
Treasurer, good morning.
TREASURER:
G'day Ray. I'm glad you missed me.
HADLEY:
Are you out of witness protection?
TREASURER:
Oh, that's a bit cheap, mate.
HADLEY:
No, that was Dennis Shanahan.
TREASURER:
Last Monday, I was meeting with Treasury officials at 9 o'clock and we had a special Party Room meeting at 9.30 because of the Senate Reform legislation that we are bringing in. Now, it may come as a surprise but I have a very busy job and where I am able to join the program I am very happy to do it and I appreciate the opportunity to do that and talk about the issues that are particularly important to the economy. Particularly as we work up towards the Budget those demands get greater and so that was what was happening last week, that is what was going on and I will continue to be able to do this where the schedule permits.
HADLEY:
I give you a fair go, now would you admit that the week preceding the non-interview last week was one of your more ordinary weeks in Parliament after the Press Club address. You are a person who has been commended by my listeners for talking without rehearsal, shooting from the hip, but by judgment of people better addressed than me to judge you it was a pretty ordinary 40 minutes at the Press Club.
TREASURER:
Well, it was a tough week, Ray. The problem was the message that I was delivering was not one that people wanted to hear and the message I was delivering was that the economic circumstances are very tough and the room that we have to room is very limited and that means what we have to control new expenditure coming on to the Budget and limit that as much as possible and in terms of the issues of tax, we made the decision after careful consideration on the GST and we are continuing to work on the other areas. I never said last week was going to be a Budget and people expected it to be. I don't know why they expected it to be. I was setting out what the parameters were for the Budget and the parameters are tough and I think that people just want us to focus on doing the job and that is what I am doing.
HADLEY:
Samantha Maiden wrote an interesting piece yesterday and it is good to look at this because you have been selling the GST and the likelihood of an increase, you know considering it, on this program since we started talking about it. She wrote; Malcolm Turnbull wasn't the only person infuriated by the Treasury Department over summer. It was January 21, Treasurer Scott Morrison had just been told by officials the cost of compensation Australians for the introduction of a 15 per cent GST had blown out by an extraordinary figure. The look on his face at the meeting said it all – the GST was all but dead. Now, you tell us was the mood of everyone in the room. Would it be fair to say that leading in to that meeting on January 21 that you were looking at the GST to fill a big gap in trying to retire debt? And that is no longer available to you.
TREASURER:
That was not the purpose of it ever. The purpose of looking at that was to see how we could significantly reduce peoples' personal income tax. That has always been my objective and still remains my objective. What happened in our analysis of all of that apart from the growth opportunities being limited is that the compensation bill for introducing it would have just put another big massive hit on the Government's expenditure.
HADLEY:
That was unexpected, that is the point I am trying to make. Treasurer, the point I am trying to make is that was unexpected – was it not?
TREASURER:
Well, yes, the compensation bill just kept going up and up and up and one of the reasons for that, Ray, is over the last 15 years more and more people are receiving welfare payments. What was different to back in 2000 when the GST was introduced is today you have a large number of people who are not in the tax system. The Labor Party took about a million people out of the tax system and you have a lot of people on welfare and that means when you make a change like that the compensation just keeps going up and up and up. It therefor overwhelmed all the positive benefits that could have been gained. We didn't rush into that decision, we worked through it carefully. I explained that last week. I don't know if people like that as an answer but that is the reality of it. I'll call things as I see it and that is what we did.
HADLEY:
The story by Simon Benson today in News Limited, a plan being floated by the Turnbull Government to cap negative gearing claims on property to $20,000 a year would only hit 16 – 20,000 investors and would return less than $100 million. He says, some economic modelling commissioned by News Limited, if you set the limit at $10,000 a year, you hammer 300,000 people, he says, and claw back $2-3 billion. Is it off the table altogether, changes to negative gearing?
TREASURER:
I hope The Daily Telegraph didn't pay too much from that advice. That is all I will say.
HADLEY:
What, you don't think the advice is right?
TREASURER:
Look, I don't know what assumptions they made and they are pulling these things together. It often happens in these discussions. All these numbers get thrown around. The Government is just doing the considered work that you would expect us to do, the Budget is in May and any statements that are made before that the Government will decide in due course.
HADLEY:
What about negative gearing?
TREASURER:
We have made it clear that we are continuing to consider all the options but what I have been very clear about because you know Ray I have been a keen defender of those who engage in negative gearing.
HADLEY:
Yes, I know that.
TREASURER:
Because people who negatively gear…
HADLEY:
So, you would agree with the former Prime Minister John Howard then?
TREASURER:
I think you have got to be very careful and I think we are being very careful. We are not going to rush to the crazy idea Labor have put up. Labor want to increase capital gains tax by 50 per cent and not just on residential property – right across the board. In this environment where things are so tight the idea of putting a bigger tax on investment – that is mad. That is what the Labor Party are proposing. They are also saying because they are only going to apply it to new property, the minute you go buy a new property and you put the key in the door and you turn it, it turns into an old property and one in three investors won't be able to buy that property. It is like driving a new car off the lot and how it depreciates. That is what Labor plans to do with negative gearing and they haven't thought through the consequences. It would cause absolute havoc in the property market and undermine confidence in most Australians most important asset – their own home.
HADLEY:
I know you love Australian sport – just interrupting – Adam Scott is about to win the Honda Classic. He is two shots clear on the last hole over Sergio Garcia. He is putting; Sergio is chipping – so he is going to win that tournament.
TREASURER:
Awesome.
HADLEY:
Ok, now, you have gone Shanghai to Shanghai for the G20 – how did you go?
TREASURER:
Well, it was a good meeting. It was particularly good to talk to people like the UK Chancellor George Osborne who has been doing some good stuff particularly on multinational tax and we swapped notes on that. We are doing very similar things in that area.
HADLEY:
Did you talk to him about that DSP or the equivalent over there? How they said, no you are all off it and now you have got to get back on it.
TREASURER:
We did have a good chat about that...
HADLEY:
And what did he say?
TREASURER:
…reform and he encourages us to keep going down the path we had and we are looking at the things that they have been doing over there. I have made that point earlier, when I was in social services and also as Treasurer. The point I was making before the way our welfare system works at the moment can be a real impediment to people actually going out and being at work. That remains one of our big challenges. It is not something that you can fix in a couple of months though it is going to require a lot longer than that. The other thing was, there were some who were turning up there saying we are going to spend a whole bunch more money again and ourselves and the Germans and a few others went “no, we have just got to continue to run our economy sensibly”. We have one of the lowest debt to GDP ratios of all the countries sitting around at that table and others with debt ratios three times ours were saying they wanted to spend more money and we said, “No, we are going to continue to do what we are doing – transitioning our economy from the mining boom, make sure it is diversified because that is where the jobs are and we are going to stick to that plan.”
HADLEY:
I guess that in relation to the announcement about the purchase of the dairy farm in Tasmania, you may well have required that crash helmet again. You copped a fair hammering. I was a bit concerned about it because I obviously have some listeners in Tasmania online and when I started talking about it last week they started emailing me saying, look, you better look at the details of the lady who is making the most noise Ms Cameron down there about buying that dairy and talk to someone. So, in your absence I sought out Senator Eric Abetz and being a Tasmanian he was very, very clear and this wasn't about saying yes it had to be sold to the Chinese. In an ideal situation you would send it to Australian interest despite the fact that for 15 years it has been owned by the Kiwis. He just simply said you couldn't possibly sell it to the Australians from Tasmania because there would be no guarantee that the dairy industry would survive other things they had done in Tasmania in terms of business.
TREASURER:
Well, Eric made all those points very well and I was making the same points. There were 235 jobs at stake including 90 new jobs in that. The new purchaser is investing an additional $100 million and so you have got a proposal where jobs and increased investment in Tasmania is on the table. There was a fair process run by the company that was selling…
HADLEY:
Just stop there because I want people to understand that the Foreign Investment Review Board and the Treasurer make a determination based on the recommendation. At the end of the day you have got a company who owns it that is based in New Zealand – they are the ones selling it. You didn't own it.
TREASURER:
That is right. We are not running the sale process. We get to consider is the person who is contracted to buy it, is that against the national interest? It is not our opportunity to rerun the sales process or become a court of appeal for unsuccessful bidders. Now, Ms Cameron was part of a consortium called TasFoods that has been part of what had been around a two year process of bidding and they had been unsuccessful. Now, the great risk here Ray what would every investor, Canadian, the United States, British, Chinese, whoever they are think if the Australian Government said well if you come and be involved in a sale process in Australia then the Treasurer under a bit of pressure is going to flip the whole thing on its head and so why would you bother. The impact on that for investment in Australia when investment is critical could be catastrophic. Look I knew people would be upset about it and I understand that.
HADLEY:
Oh, they were more than upset, Treasurer.
TREASURER:
I understand that but I have to make decision which I think are going to be in the interest of jobs and growth for Australia. I consider each one carefully on their merits but equally I have got to do what I think is right, Ray. I mean I have been castigated by other sections of the media in the past for my views on border protection. I have been castigated for this decision in other section in the media. I hope people know that regardless of what sort of pressure comes on me I am going to make the calls that I think are in the national interest.
HADLEY:
Look, I have got to say this in relation to that call, I was sort of thinking that you would try and find a way to keep it in Australia simply to stop the attacks on you. Now, I just thought that life would be a whole lot easier if you took the $280 million that was an offer as opposed to the $285 or the original $230 million offer. I thought life would be a whole lot easier for you by doing that.
TREASURER:
Well, easy is not always right and you have got to do what you think is right and that means you have got to cop the criticism when it comes. The other one that everyone, I think, is concerned about is the Kidman sale.
HADLEY:
They are.
TREASURER:
Now, I said no to that on the first time round. Now, they have opened the process. Now, I hope that the process that they are running is giving Australian companies the right opportunity to be able to bid on that. So that is, they need to be carefully making sure they are giving Australians those opportunities because ultimately if they make a recommendation that would be something obviously I would take a close look at. There were no criticisms of the process of the dairy sale. No one said the two year process they ran was unfair of didn't give them a go or anything like that at all. There were no criticisms of that.
HADLEY:
By the way Adam Scott just won that tournament, had a three-footer on the 72nd hole, sunk it without a problem, wins by a shot from Sergio Garcia and guess what? He wins a pile of American dollars.
TREASURER:
Well, the US economy is a bit of a hope of the world [inaudible] at the moment, one of the things that came out of that meeting on the weekend is things will still be tough. Now, we know it is going to be tough but that means we have got to just keep doing what we are doing and transitioning our economy and keeping our spending under control, trying to reduce taxes wherever we can which is what we want to do and innovation – this is the thing that is actually going to give our kids jobs and that is why we are focussed so much on it.
HADLEY:
I had Antony Green on the program because we were talking about a double dissolution which was highly discussed last week and where the Senate lies and how we come to the point where you get rid of half the Senate in three years. He explained it is done by an internal ballot effectively; so half the Senate go – half stay. But then he explained to me the importance of the dates. The really important part of the dates in relation to keeping a hostile Senate or disposing of a hostile Senate and those dates are critical, really critical. Declare just after the Budget – I think May 10 or May 11 is the cut-off date and then go to the polls those first two weeks you know with a six week run up so to speak. So, where are we with it?
TREASURER:
Well, that is an accurate statement of the situation, Ray. The Prime Minister has made it pretty clear that he is not bluffing on any of this, he is deadly serious but that is ultimately a call for him as to what he would do. We have introduced…
HADLEY:
Will he ask you or other senior members of the Government?
TREASURER:
He will take soundings – of course he does.
HADLEY:
And what will you tell him?
TREASURER:
Well, that will be between me and him.
HADLEY:
I just thought you might slip up seeing as you have been away for a week that's all.
TREASURER:
No, I was the one who actually introduced the legislation into the Parliament last week. That was one of the reasons I wasn't with you last Monday because we were having a meeting on that earlier in the day but that legislation will put an end to the system that we have at the moment where you can get elected on a few hundred votes with a backroom deal.
HADLEY:
When will that pass Parliament by the way because you have got the support of the Greens in the Senate. When will that be law?
TREASURER:
Well, we hope that will happen in this sitting – so, in three or four weeks. Now, we hope that is the case provided that Labor and the crossbenches, well, we should be able to carry the numbers with the Greens.
HADLEY:
I checked the numbers with Antony Green; you have got the numbers no matter what they do.
TREASURER:
Provided that the Greens continue with us on a lot of the procedural issues that others might try to use to delay it then that bill, and look I think that is a good reform. We have had it in New South Wales since when I was director of the Party in New South Wales. We have had optional preferential voting above the line for the Upper House of New South Wales since 2003 and it has been a good change.
HADLEY:
And you still get minor parties?
TREASURER:
Of course you do.
HADLEY:
The Shooters and Fishers by another name and the Reverend Fred with the Christian Democrats, you still get them.
TREASURER:
They have got a following.
HADLEY:
But you don't get someone with 500 or 600 votes and .5 or 1 per cent of the vote getting in.
TREASURER:
And, look, it doesn't advantage any one major Party. It advantages the voter so that they can decide where there preferences go.
HADLEY:
Ok, we'll leave it there. Thanks for your time.
TREASURER:
Thanks a lot, Ray.