BARRIE CASSIDY:
Treasurer, good morning. Welcome to the program.
TREASURER:
Good morning, Barrie.
BARRIE CASSIDY:
Here in Australia, the stock market had its worst one-day fall in a year because investors are worried about weak global growth. Based on what you're hearing in the United States, should they be worried?
TREASURER:
Well, no. Growth today is better than it was in previous months and previous years and it will be better in the next few months and the next few years. Again, I emphasise that we have come through the worst of the Global Financial Crisis and we expect there to be ongoing positive growth, particularly in the Asian region, but even in aggregate around the world.
BARRIE CASSIDY:
It's been slow though; it's six years now since the Global Financial Crisis and still, the global economy seems to be struggling?
TREASURER:
Well, in a sense, Barrie, there was some overestimation of the speed of the recovery but unfortunately, whilst Europe has its challenges, that contagion of pessimism has started to infect other jurisdictions. The United States is looking as though it's strengthening and the US Federal Reserve is certainly on track to start to get towards normal levels of interest rates. Japan is undertaking structural reform, even though it's a bit bumpy along the way. China; I see opportunity for Australia in them moving domestically from an investment phase to a consumption phase. Prime Minister Modi in India is very determined to spend a lot of money on infrastructure. I see good opportunities for Australia and I'm positive about Australia's future.
BARRIE CASSIDY:
So, what the world needs is a bit more optimism?
TREASURER:
Well, it's true, it is true and in fact, in IMF meetings this morning, in G20 meetings yesterday, and at a G20 Finance Ministers’ Meeting and a dinner, and Central Bank Governors’ dinner, there was a general sense that we need to be optimistic because there are positive signs but the temptation in this world is to be pessimistic. So, let's get rid of that pessimism and focus on what is good and if we do that then the rest of the world will share our positivity.
BARRIE CASSIDY:
Well, the world will join Australia at the G20 in November. What sort of a turning point can that be?
TREASURER:
Well, it is a significant turning point. Australia has a unique opportunity to lead the world in relation to infrastructure investment and particularly in infrastructure planning. We've now had four G20 Finance Ministers’ Meetings and we meet together with the G20 Leaders in Brisbane in November. I will be presenting the Prime Minister with a comprehensive plan for world growth that he will share with the leaders of the 20 largest economies in the world. That plan will represent an opportunity to increase world growth by around $2 trillion over the next five years, representing potentially tens of millions of new jobs. For Australia that is a huge opportunity to be a world leader in a number of areas and in particular in relation to infrastructure development and public-private partnerships.
BARRIE CASSIDY:
Well, you did say India is about to spend a lot of money on infrastructure. How much, and how can Australia get a share of that action?
TREASURER:
Well, reports to me were that Prime Minister Modi is talking about an extraordinary $1.1 trillion of new infrastructure in India over the next few years. Now, that's an enormous amount of money just in India and, overwhelmingly, it's going to be privately funded and this is the thing, Barrie, Australia is very good at public-private partnerships. Take tollways or private investment in public transport, we are very good at it. We have the technology and the capacity to lead the world in this regard. Now, I've put a proposal to other G20 countries on behalf of Tony Abbott. That proposal has the capacity to see Australia become the hub of world activity in infrastructure at the end of this year. Now, that would be sensational if it happened. We've still got a bit of work to do but we're hoping that the Prime Minister will be able to deliver that at the G20 meeting in Brisbane.
BARRIE CASSIDY:
And just on that G20 meeting, and clarification if you received any in the United States about the Russian leader, Vladimir Putin, and whether he intends to attend the meeting or will he be sending a proxy?
TREASURER:
Well, I spoke with the Finance Minister of Russia only yesterday. We had a lengthy discussion. I certainly shared with him my views and the views of Australia about Russia's activity in Ukraine and he did confirm that President Putin will be coming to the G20 Leaders Summit in Brisbane. That has certainly been the consensus of other members of the G20 that President Putin should attend, and I think there will be some full and frank dialogue with President Putin at that meeting.
BARRIE CASSIDY:
So, you think it's a good thing that he should be there?
TREASURER:
Well, I think if that is the consensus of the G20 and it's certainly the strong view of the President of the United States, the Chancellor of Germany and others that he should be attending, then we are the hosts, we don't have any unilateral decision making power in relation to that, and he will be attending.
BARRIE CASSIDY:
Now if we can go to your comment that if Bill Shorten is honest about bi-partisanship on the engagement in Iraq, then he should support your measures to pay for it. Is that still your position?
TREASURER:
Well, the fact is, we welcome the bi-partisan support for national security from Mr Shorten. Australians expect us to work together on significant issues and obviously repairing the mess that Labor left on the Budget is a significant issue and I wish the Labor Party would take the same bi-partisan approach in relation to fixing the Budget.
BARRIE CASSIDY:
Do you still link the two though? Do you still think one is dependent on the other; that unless he folds into your Budget strategy then you will continue to question the strength and indeed the honesty of his commitment?
TREASURER:
Well, no, they're you're words, Barrie. My words are that I expect the Labor Party to help us fix the Budget mess that they created. Now, we don't want to have to increase taxes to pay for our national security commitments which now exceed an additional $1.1 billion but the problem that we face is that Labor is blocking $28 billion of savings in the Budget including $5 billion that they promised before the last election and now changed their minds on.
BARRIE CASSIDY:
Yes, but there's a different question here though. You linked it to the engagement in Iraq and so you're no longer insisting that unless he supports your Budget measure to pay for it, you won't be questioning his bi-partisanship more broadly on engagement in Iraq?
TREASURER:
I welcome Mr Shorten's support on Iraq, as does the Prime Minister and I think the Australian people would welcome that as well but Barrie, we have to pay for this. We have to pay for this. Now, we've offered savings in the Budget that help us to strengthen the Budget position, that means that we shouldn't have to increase taxes to pay for the security activity in Iraq and elsewhere but we want Mr Shorten to help us with this and it was Labor that created the mess, Barrie, and we're just asking them to help us fix the mess they created.
BARRIE CASSIDY:
But they're entitled to come up with their own ideas about how to do that. The Prime Minister has said that…
TREASURER:
Terrific, terrific. Absolutely.
BARRIE CASSIDY:
He said the Opposition is absolutely entitled to come up with their own position.
TREASURER:
And we're waiting.
BARRIE CASSIDY:
They don't have to fold in with your strategy.
TREASURER:
We welcome – well, I welcome any suggestions they have. So far – so far, their only suggestions are to reintroduce a Carbon Tax, which Bill Shorten is trying to redefine as a pricing mechanism, but it is a Carbon Tax. They said they're going to reintroduce a Mining Tax, which is an abject disaster for Labor, and Labor is also saying that somehow there is this magic pudding in tax integrity measures, none of which they could deliver and none of which are deliverable according to the Treasury. So frankly, if Mr Shorten is fair dinkum about not only opposing the $28 billion of savings that we've laid down, but he also thinks there are additional savings, I would welcome Mr Shorten explaining exactly where that money's coming from.
BARRIE CASSIDY:
And for the extra money that now needs to be found, not only for the engagement in Iraq but the anti-terror initiatives here at home, what do you do when you address this, whether it be December or May next year? The economics behind this, the politics suggest you look at some of the tax benefits now that wealthier people access through superannuation and investments, business welfare, that kind of thing?
TREASURER:
Well, Barrie, I mean you've just come up with a bit of a list there. When you talk about wealthier Australians, they're paying a deficit levy now and obviously we said we do not want to be in the business of introducing new taxes. In relation to business welfare, my lord, I mean we have cut back massively on business welfare, so much so that Mr Shorten says he's going to reinstitute payments to motor vehicle companies and a range of others and in fact, Barrie, it is the Labor Party that is now opposing our tax integrity measure on R&D that they announced which was going to see an increase in tax for the 20 largest companies in Australia. They're now opposing it after having announced it before the last election. So, they're the ones that are arguing for less tax on big business and more tax on SMEs. So, we're the ones that actually are consistent about this and we are determined to do what is right.
BARRIE CASSIDY:
I'm sure though you saw the survey, or you've been briefed on it, from the University of Canberra and their analysis demonstrates that the Budget measures introduced show that poorer people are doing the heaviest lifting and some of the figures are quite stark. On average, the impact in your electorate, for example, is $139 a year whereas in some Labor seats, in the working class seats, the impact is $700 or $800. Now, does that sort of imbalance have to be addressed?
TREASURER:
Well, I'm not sure that that's the full story, Barrie. I received conflicting advice about that actual - it's the NATSEM Report, I assume that you are referring to?
BARRIE CASSIDY:
Yes.
TREASURER:
And the fact is that the Coalition actually holds a number of seats with lower incomes. So, the stereotype is not necessarily right, as the Labor Party holds a number of seats with higher incomes. So frankly, the stereotype is easy to create but it’s not necessarily right. The second thing is, yes, we are reducing Government expenditure and Government expenditure is going to be less in higher income areas than it will be in areas that have a lower income. So, there are going to be variations. But the fundamental point is this, we as a nation need to live within our means and if there has been any lesson I have learnt yet again here in Washington, is that unless we get out of the spiral of debt, unless we start to reduce the deficits, we will be ill-prepared for the sorts of economic challenges that may lay ahead. So, everything we are doing, Barrie, is about preparing Australia for the future and that includes our Budget initiatives.
BARRIE CASSIDY:
So does that mean when you boil it all down, that when you look for new spending cuts, again, you will be looking essentially at welfare payments?
TREASURER:
Well, we have to look everywhere, Barrie. We have to get rid of waste everywhere, we have to make reductions across the board. We want to help those people most vulnerable in the community and that's why we got rid of the Carbon Tax, which Bill Shorten wants to reintroduce. We have reduced the impact of government taxation on every day Australian families by getting rid of the Carbon Tax. We have left the compensation in place to help households. It's made a massive positive difference for pensioners, for lower income households. We've focused on trying to fix up the mess that we inherited but ultimately, Barrie, you know the best thing for all Australians is to have a strong economy and if we have a strong economy with prosperity, that means more jobs, better opportunity. It actually probably means better revenues and that gives us greater capacity to help those people most vulnerable in our community.
BARRIE CASSIDY:
Well with that in mind, then one simple question to end, is the Budget bottom line right now better or worse than when you were elected?
TREASURER:
Well, you will see our update in December. When we were elected, Labor didn't tell the truth about the state of the Budget. We all know that and we have been dealing ever since, Barrie, with the mess that we inherited but I say this, we are absolutely determined to fix the mess that Labor created and we don't want to do it by introducing a whole raft of new taxes in the same way that Bill Shorten does with the reintroduction of the Carbon Tax.
BARRIE CASSIDY:
Treasurer, thanks for your time. Thank you for taking the time in your busy program in the US.
TREASURER:
Great pleasure, Barrie. Thank you very much for having me.