STEVE AUSTIN:
Treasurer Scott Morrison, your growth predictions in the Budget papers appear to be very optimistic, are you confident in those figures?
TREASURER:
Well first of all we’ve revised downwards the forecasts in this year’s Budget from what we said in December. And in December, remember, our AAA credit rating was confirmed on the back of those forecasts by all the three major ratings agencies. Our forecasts on growth are actually less than what the IMF is saying for Australia and they’re smack bang in the middle of what the consensus forecasts are right across markets here in Australia so we think they are conservative forecasts, they are forecasts that reflect currently what the mood is in the market.
AUSTIN:
Total government debt is still increasing. A lot of focus was put on net debt in the Budget, taking into account investments and assets which the Government will borrow. Are the assets positively geared so that the returns over the cost of interest will help your Budget?
TREASURER:
From 2018-19, just a year away, what this Budget shows is for the first time in around a decade we will no longer have new borrowings to pay for everyday expenditure. Things that, the taxes we collect every year, the revenue we collect every year need to pay for. Now that’s a major break from what we’ve seen in the past. So not…
AUSTIN:
So at the moment we’re borrowing to pay pensions and benefits and things like that?
TREASURER:
That’s right and in just over a year we will no longer have to do that because we’re keeping expenditure under control. Expenditure growth is less than two per cent and it’s falling to 25 per cent share of the economy by the end of the forward estimates. Now that is keeping expenditure under control, but our overall level of debt will continue to rise so long as the Budget is not in surplus and we will reach that surplus in 2021 on what we believe is a very conservative but at the same time responsible set of numbers.
AUSTIN:
Total government debt is increasing with a forecast total debt of $930.6 billion by 2021. Are you happy with that?
TREASURER:
Well what gross debt in part is doing is ensuring that we don’t have to draw down on the Future Fund. Now the Future Fund was set up to ensure we paid for unfunded superannuation liabilities well out into the future and, you know, if we hold on by not drawing down from the Future Fund for the next decade then that will actually save taxpayers a century, a century of taxes, to pay down those liabilities. Now that’s an important long term decision. It doesn’t get much more long term than actually protecting a century of taxpayers. But our gross debt, the debt that builds into the future, that debt is actually paying for things that build things like the inland railway from Melbourne to Brisbane. It’s supporting important infrastructure works like the Bruce Highway alone, we’ve got $530 million going into the constructions works between Pine River and Caloundra. There’s another $500 million on twelve other projects right across Queensland from the M1 Pacific Motorway, the Toowoomba Range Crossing and the Ipswich Motorway.
AUSTIN:
So that money from the Future Fund will be quarantined to pay for federal public servants’ superannuation into the future.
TREASURER:
Well, it needs to build up to a point of maturity where you can then drawdown in a decade from now and that means over a century, all of that is covered and future taxpayers won’t have to pay for those liabilities. We have to respect future taxpayers.
AUSTIN:
I’m speaking with federal Treasurer Scott Morrison. This is ABC radio Brisbane, I’m Steve Austin. The inland rail from Melbourne to Toowoomba, eventually Brisbane. Why did you give that priority over the Cross River Rail project? The state government was hoping for significant money for that project. Why did you prioritise the inland rail, which doesn’t have a great population to transfer, to carry on it, whereas the Cross River Rail would alleviate the traffic problems that Brisbane is having?
TREASURER:
Well, the inland rail project is all about dealing with our freight task and our freight movement connecting Melbourne to Brisbane and it supports regions all the way along that route, so that has a very significant spread of economic benefit…
AUSTIN:
So it spreads the benefit.
TREASURER:
Well, the second point I was going to make. Cross River Rail is still there to be made as a proven case and the $10 billion national rail fund can potentially be used to support that project and we’ll continue to work with the Queensland State Government on that and other projects that they’re looking at. So we’ve put money aside to deal with other national rail projects and if we choose to proceed with that one, there is that option, but there are other options as well in Queensland.
AUSTIN:
In your speech you said Cross River Rail subject to a proven business case. The Treasurer, Curtis Pitt, at a business, on ABC radio this morning said they have actually submitted a business case. Are you happy with what the Queensland State Government has submitted to you on the case of that?
TREASURER:
We’ll continue to have our discussions with Curtis and the Queensland Government and I think that’s the best place to have them. But we’ll need to be satisfied on the basis of our assessments, and doing the right thing by Commonwealth tax payers and the Queensland Government, I’m sure, will be trying to do the same thing.
AUSTIN:
So I’m not clear. Are you happy with what they’ve given you so far?
TREASURER:
Well I’ve said I’m going to keep talking to Curtis Pitt directly about those issues and we’ll continue to have those discussions privately.
AUSTIN:
So you’re not able to answer my question?
TREASURER:
No I’m just choosing to keep those discussions practical between two levels of Government and not doing them in public.
AUSTIN:
I’m speaking with Federal Treasurer Scott Morrison. What money are you putting into the Brisbane City Council’s metro projects?
TREASURER:
Well again all of these projects are alternatives that we can be looking at under our national rail program and, you know, it’s important to invest in infrastructure, but you’ve got to get your project selection right. And there are the relative balance of investments that are made at a local level, state level, as well as Commonwealth. So principally these projects are carried by state and local authorities and where we think we can add value for the national economy and for the state economy then we’ll make those choices to do that.
AUSTIN:
In your speech you said you would be rewarding states that continue to cut red tape. Where does this leave Queensland, which has been in employing public servants and bringing in a whole lot of bodies and regulation in this state. Where does it leave us?
TREASURER:
Well, if the Queensland Government is not going to cut red tape for small business, then they can’t be rewarded for it, can they.
AUSTIN:
Simple as that? You’ll penalise them if they don’t cut red tape?
TREASURER:
No I won’t reward them for something they haven’t done.
AUSTIN:
Alright, so is the ability, I’m sorry, is the ability for a young person to put $30,000 into superannuation pointless? When you look at the, if you take the income of the average first home buyer at $80,000 a year. They’re saving the difference between 15 and 34.5 per cent their marginal tax rate. That’s worth about $5,850 in total isn’t that pointless, for that first $30,000 into super a pointless move?
TREASURER:
No I disagree. What this move does is if you're saving to buy a home, under our plan, your savings will be 30 per cent more. You're getting 30 per cent more out of your own savings that you’re sacrificing to buy your first home under the tax cut we’ve given for those first home savings. We’re just simply using the superannuation account as a more simple means for people to do that. It’s already there. You're already contributing into your compulsory contributions, and this just means directing the savings you’re making for your first home deposit into your superannuation account where it gets favourable tax treatment and even more favourable tax treatment from what we announced last night. So it’s a tax cut on your savings for your first house. That can only be good for first home buyers.
AUSTIN:
I’m told I have to let you go Federal Treasurer Scott Morrison, thanks for your time.
TREASURER:
Thanks very much Steve.