ROSS GREENWOOD:
We will be joined not long after he delivered his second Budget speech, by the Treasurer, Scott Morrison, who is live in our studio in Parliament House right now. Many thanks for your time Treasurer.
TREASURER:
G’day Ross, always good to be on the program.
GREENWOOD:
Can I just ask the questions, given the fact that right now the Government has got 23.8 per cent of receipts coming in and it’s going to rise to 25.4 per cent, spending right now, payments 25.2 per cent, still at 25 percent in 2021. Do you think your Government can be characterised as a high taxing, high spending Government?
TREASURER:
No, no we can’t. Taxes as a share of the economy will go to 23.7 per cent in 20/21, that is beneath the tax cap of 23.9 per cent which we’ve imposed on ourselves and it’s been imposed for some time. Now our spending is only growing at less than two per cent and spending as a share of the economy will go to 25 per cent by the end of this period. Now that’s the lowest level it’s been at for some time. When I became Treasurer, spending, first briefing I had was it was at 26.2. So we’ve been getting spending down as a share of the economy and we’ve been bringing the Budget back into balance. We’ve had to reverse some $13.5 billion of savings and measures we’ve been trying to get through the Senate. Now we’ve got to be realistic about it. It wasn’t getting through the Senate. We got $25 billion through, after the election no one thought we would get than much through…
GREENWOOD:
Tonight you’ve written that off haven’t you?
TREASURER:
That’s gone. We’ve ruled a line and reset on that because you have to Ross, because the ratings agencies are looking at your books, and if you're carrying measures in your books that they know aren’t going to pass the Senate, they just see through them and write them off anyways.
GREENWOOD:
So I spoke to Moody’s earlier tonight and they believe so long as you are on track and getting back into budget surplus, $7 billion by 2020/21. Do you believe that’s sufficient to keep Australia’s AAA credit rating with all three of the agencies?
TREASURER:
Well it would be quite surprising if that result wasn’t achieved, for one simple reason they have said that A) you’ve got to get the Budget back into balance by 20/21, that’s achieved $7.4 billion. Two, you need to ensure that you're not carrying measures in your Budget that won’t be passed by the Senate. We’ve reset that Budget, $13.5 billion have gone out the door and thirdly you’ve got to have forecasts that are credible. Now our forecasts on growth are actually less than the IMF’s. Our forecasts on commodity prices are also extremely conservative…
GREENWOOD:
Well I note they’re relatively flat, yet even the Reserve Bank has upgraded its forecasts of the economy.
TREASURER:
They have some stronger forecasts than we’ve put in our Budget. So I think these are responsible, modest forecasts. That was critical back at the end of December in retaining the AAA credit rating from all three agencies. So based on the criteria they’ve set before the Government, I think we’ve been listening very carefully and responding appropriately.
GREENWOOD:
Ok, an increase in the Medicare levy, in 2018 and also $6 billion coming out of the banks in a new tax there…
TREASURER:
In 2019, its two years before we put in the new levy to support fully funding the NDIS. It’s two years away.
GREENWOOD:
Two years away, but it’s still there. It’s in the Budget and so as a result that’s one of the accusations that would garner that you’re raising taxes on business, you're raising taxes on individuals to be able to fund some of the initiatives.
TREASURER:
We’re putting a six basis point tax on the banks which will raise $1.5 billion, and they’re declaring profits this year of over $30 billion, so frankly the banks can do their bit for Budget repair.
GREENWOOD:
They’re a soft target aren’t they?
TREASURER:
They are a group that are in a position to help Australia’s Budget and we are asking them to do that, rather than hit mums and dads. The only people who will be paying extra taxes from the first of July this year. It would be the large banks, only the big five, not regional banks. This levels the playing field up a bit for those regional and smaller banks, and multinationals who we’ll continue to crack down on, and those foreign investors seeking to buy Sydney real estate.
GREENWOOD:
Ok, so, that point also then goes to the next step, the increase in the Medicare levy, just explain exactly why you have done that and what it funds.
TREASURER:
The NDIS has a funding gap of over $50 billion over the next ten years. And it starts in that year of 19/20. Now, we’ve been having every attempt to try and get savings measures through the Budget in the past with the Senate so we could fill that funding gap. That’s been rejected. Now, we can’t go on any longer having these political fights about how we fund the NDIS. Disabled Australians, their families, their carers, their friends, those who support them, they need the certainty that this is funded. Now, Australians are generous minded people and they want to support people who are genuinely in need. Now this is a responsibility we all share. This is a half a per cent levy two years from now and we’re only striking the levy when the bills start coming in. In two years, the extra bills for the NDIS will start coming in. And that’s the year the levy comes into force. It is purely and solely to support the funding of the National Disability Insurance Scheme that gives disabled Australians a better quality of life.
GREENWOOD:
Ok there’s a couple of bits and pieces on affordable housing, quite clearly the ability for first homebuyers to save or salary sacrifice through their super fund, then also better tax incentives for investors to put their money into affordable housing, but there is a bit of a tweak of negative gearing rules on the way through as well.
TREASURER:
Yeah, well you don’t get a tax cut, a tax deduction to go and visit your investment property anymore and there’s been…
GREENWOOD:
Do you think there’s been a rort?
TREASURER:
Let’s just say it’s time to close that one down. And similarly, for depreciable items, when you buy an investment property, whatever you buy in it; the curtains and the fixtures and the fittings and the lights and the carpets and all the rest of it, you can continue writing that off, but if you haven’t bought those things and when you’ve acquired a property, you don’t get to continue the depreciation of the previous owner. Now, that doesn’t apply to major capital items; if someone’s gone and put major capital expenditure in a place, those arrangements continue. But also, with the Black Economy Taskforce, we’ve got some really good measures there on reporting and compliance in some of the sectors..
GREENWOOD:
And the crackdown on welfare as well?
TREASURER:
And the crackdown on welfare, which is twofold. One, we’ve sort of straightened up some of the taper rates and things like that to make sure the system is tighter. But the mutual obligation requirements, I mean, 80 per cent of Australians who go to work every day to pay for our welfare bill through their income tax. Now, they’ve got to get a fair go. Now, if someone doesn’t turn up to a job interview, or knocks back work, or doesn’t turn up to Work for the Dole, and their excuse is that they were drunk or drugged, well, no, we’re not going to cop that as an excuse anymore. For repeat offenders on that score, no way. And on top of that if people aren’t living up to their requirements to turn up to these interviews and do the things we need to get them into a job, well, repeat offenders, three strikes you get put on a compliance program and that ultimately if you keep repeat offending means you get your payments cancelled and you get locked out of the system.
GREENWOOD:
Treasurer, I know you’ve got a busy night. Treasurer Scott Morrison in our Parliament House studio with us and we appreciate your time.
TREASURER:
Thanks a lot Ross.