SABRA LANE:
Scott Morrison good morning. Welcome back to AM.
TREASURER:
G'day Sabra. Good to be here.
LANE:
Do you have sympathy with the Australian workers who haven't had a decent pay rise in years?
TREASURER:
Yes.
LANE:
What are you going to do about it?
TREASURER:
We are going to ensure that businesses invest and grow and so the economy in which all of our workers are working can realise the benefits of that through higher wages.
LANE:
Now you're emphasising the need for tax cuts for big business, that that is the best was to boost wages, why not explicitly require those businesses to pass on, to be part of that company tax cut, like we just heard, the Japanese have done. Why not consider something like that?
TREASURER:
The businesses can make comments to that effect right now, they'd be able to outline what they'd be able to do in the event of the tax package passing the parliament. Every business is going to have a different reaction. We're seeing that in the United States now. It was very pleasing to see that after some while now, we've seen wage movement in the US, that's actually what sparked a lot of what we've seen in markets recently. That went up 2.9 per cent, so we're now starting to see that normal transmission of what happens when Labor markets tighten up you get movements in wages. Now we're already seeing that in parts of the Australian economy now with tightness in key sectors, the health sector is one in particular where the movement in wages has been much higher than it has been in other areas of the economy because of the tightness of what has occurred there. Our plan is saying, if businesses and not just big businesses, I notice the reference is always made to big business. I don't think a business that has 60 employees is a big business, but you can have a turnover of more than $50 million, and that doesn't mean you're a big business. So it's tax cuts across the board, now I don't think you're going to get a wage increase in a business that's paying higher taxes. Explain the logic of that to me.
LANE:
The idea that we just outlined in David Lipson's report, the Japanese Government have put it in black and white terms.
TREASURER:
That's a highly regulated approach to doing it.
LANE:
We will give you a tax cut if you guarantee that some of that tax cut will be directly passed on to workers.
TREASURER:
That's a highly regulated way to do that and the story also made reference to what happened with the Accord which happened back during the Hawke/Keating Government. That was one of the slowest periods of real wage growth that we saw. It wasn't until the Howard/Costello Government came in that we saw real strong growth in real wages, and that wasn't done with the sorts of artificial and regulatory impositions that that model would suggest.
LANE:
The Prime Minister said on the weekend that wages are going up but not going up enough.
TREASURER:
Yes.
LANE:
You agree?
TREASURER:
I do.
LANE:
How much would you like to see them go up?
TREASURER:
I'd like to see them go up more.
LANE:
By what?
TREASURER:
What I want to see is businesses be able to pay their employees more. They're not going to be able to do that if their kept on a high tax island which is what Labor wants to do. See Labor can talk about wages all they like but they don't have any plans to grow them. You cannot grow wages in an economy which is being burdened by higher taxes. It just defies all common sense.
LANE:
The public is not behind this. If current polling is a gauge of what they're thinking at the moment, the Australia institute has got polling out today showing…
TREASURER:
Yes, the Australia institute, just remind your listeners who the Australia institute is. Would you call them a highly independent organisation or a left wing think tank?
LANE:
Well, they are a left wing think tank…
TREASURER:
They are a left wing think tank I'll say no more.
LANE:
We have right wing think tanks… why….
TREASURER:
Advocacy research I don't put a lot of stock in, and I'm surprised you do Sabra.
LANE:
They've got polling out today showing 58 per cent of people are opposed.
TREASURER:
What I know Australians are in favour of is more and better paid jobs and last year 403,000 extra jobs were created, the labour market is tightening, we've got an economic plan to drive growth in the economy which will support more and better paid jobs and higher wages. I know Australians support that, so you can look at the Australia Institute all you like but all I know is common sense economic policy says if you give businesses the opportunity to invest, growth their business, grow the economy; More than seven out of ten jobs that were created last year were in the private sector. In the private sector. Businesses generating jobs.
LANE:
If businesses don't deliver wage increases, you've got long time industrial observers like John Buchanan saying that higher profit around the world isn't leading to a boost in wages, that there is something happening here. If those businesses don't deliver wage increases, expectations will be that your tax cuts that you're promising for pay as you go earners will deliver some kind of big relief, can people expect that?
TREASURER:
I just look at the experience in the United States, where I've just been. Already businesses are responding in kind to the signal that is being given by the Trump tax cuts. And it's very early days yet. And they're responding in a whole range of ways, it's not just in wages, there is two sort of rounds to the effect, one is where businesses choose to directly pass those things on, and there was research done recently which I note professor Holden, a good mate of the Labor Party, made it very clear that the people who will benefit most out of these corporate tax cuts, are actually women, people on lower incomes; it will actually help resolve inequality issues. So, there is good strong evidence and that's based on research in Germany over 12 years which has looked at how these tax changes, multiple tax changes in all sorts of jurisdictions within the German economy has produced better wage outcomes and better equality outcomes for people in Germany. So the evidence is there. The GFC and the mining investment boom created quite a shock in the economy and when you go around the world, a flatter wages growth has partly been a hangover from that, and there was some very good work done by Treasury last year which pointed that out. Circumstances started to normalise again, and so as we go into this year, this is why we talk about 2018 as being a great year of opportunity, and Bill Shorten and the Labor Party are standing in the way of Australians realising that opportunity by standing in the way of our plan to increase growth in the economy and higher wages.
LANE:
To the markets now. It was a very volatile market yesterday on the share market. Wall Street has taken another big slide overnight. How worried are you that this could trigger a correction?
TREASURER:
What we've seen in markets, and I don't really commentate on markets there are plenty of people who do that, but we had that, in particularly that wage data that came out of the US late last week and that follows a more bullish sentiment about what's happening with inflation in the United States and we've seen that impact on bond markets. So markets are volatile. When they recalibrate in relation to events like this, you do see a bit of this happening. But people who have watched the markets more and participate in them more closely than I do, I think they'll see this for what it is and see the forces behind it.
LANE:
Retirees and superannuants sweat on this stuff?
TREASURER:
But they also invest for the long-term. They're not putting in and out - they're not trading every minute, and they're wise enough to know that when these things hit, it's best to take a conservative view.
LANE:
The Bank Royal Commission starts next week, you've talked about the need for banks to change their culture, given that were you surprised that the Commonwealth Bank chose an insider, Matt Comyn as its new chief executive?
TREASURER:
It's a matter for the Commonwealth Bank…
LANE:
Is it?
TREASURER:
I'm not the HR manager for the Commonwealth Bank. I'm the Treasurer of Australia.
LANE:
The Government has talked about the need for cultural change within the bank, the man who has headed the retail operations at the heart of many of these scandals, is he a wise choice?
TREASURER:
Time will prove that to be true or not true Sabra, the chairman of the board rang me, told me of her decision and the process that she'd followed, and that's their responsibility. They are responsible for those decisions. I've said the other day, I wish him well, I sent him a message to that effect. He's got a very important job in the Australian economy. Last night the accountability legislation for banking executives passed the House of Representatives and that will go through the Senate as well. That is my view when it comes to executive accountability in the banking sector, it's not just an opinion, it's soon to be law.
LANE:
In 2003, just on the cabinet files when you were Immigration Minister, did ASIO agree to a request from the Immigration Department to delay security checks so that people close to being granted permanent protection visas would instead by granted temporary protection visas?
TREASURER:
I don't know, but what the report in the ABC failed to point out, about that memo, was that memo to me said that the Secretary of Immigration had already written to the Director General of ASIO. It wasn't seeking my approval. They were simply implementing government policy which was what we took to the election. We said, permanent visas would not be given to people who came to Australia illegally by boat, the Department was acting in accordance with Government policy that had just been confirmed thumpingly in a federal election so - headline – public official implement government policy approved by the Australian people.
LANE:
So that request came from the Department not directly you?
TREASURER:
Correct.
LANE:
Minister, thanks for your time this morning.
TREASURER:
Thanks Sabra.