PAUL MURRAY:
Treasurer, thanks for talking to us on Paul Murray live.
TREASURER:
Great to be with you, Paul.
PAUL MURRAY:
Now, before we get to economic reform and all the rest of it, the sky is falling in because you are part of a parliamentary friendship group for the republic. It’s not quite a mystery that you supported the republic. But what does the friendship group do?
TREASURER:
Well, it’s basically drinks in an MP’s office with other people who think it’s a good idea to support a republic. Look, this is an example where people overreact. There are 77 parliamentary friendship groups, this is one of them. That’s about as far as I’m going on the matter.
PAUL MURRAY:
It’s that thing where, it seems like minded people - and there’s all sorts of groups and friendship groups that exist all over the Parliament - but this is not going to take eight hours of your day…
TREASURER:
This is not going to take eight minutes of my day. The focus of everything I’m doing at the moment is jobs, growth, the economy, about getting tax reform right, about fixing the Budget, they’re the things that matter. The Prime Minister and I have had a laugh about this over the last 24 hours. I said, I’m sorry Tony I didn’t consult with you about the colour of my tie. He came back and said as long as it’s blue I don’t mind.
PAUL MURRAY:
[Inaudible]
TREASURER:
There you go - consultation everywhere.
PAUL MURRAY:
To the important matters that you just mentioned, particularly the reform summit that’s happened this week, what was interesting about that summit was, when people don’t focus on the problem we talk about the solution. In politics there are these, the unenviable position that any decision maker is in, there’s the stuff that’s the perfectly right thing to do, there’s the stuff that politically has its consequences, and then there’s the stuff that’s politically possible. Now it seems that people feel that reform in Australia has now been reduced to the politically possible. Is that where we are now?
TREASURER:
Well, I hope not. I hope not. I mean, the world is changing rapidly. As I said in my short address to the reform summit, we’re seeing change happen more rapidly than any other time in the history of humanity. A lot of it is being driven by consumers. So consumers just want to know how change is going to improve their lives. And they don’t want people in Canberra saying this is good for you and you’re going to cop it. And it was quite interesting Bill Shorten in his address said he believes in, basically, centralised planning. Well, my view is, we provide direction, we facilitate direction, but the main thing government has to do is get out of the way and provide incentives for people to get on and have greater control of their lives – earn more money, be more successful, employ more people.
PAUL MURRAY:
So this comes to this question of bracket creep, income taxes and all the rest. The simple point I’ve been making the past couple of nights has been, if there’s a change that results in me having more money as an individual, it means you the government will have less money, which means we’ve got to cut spending. Is that the correct way to look at a tax cut change? Is that, less income means less spending as well?
TREASURER:
Well, we had government spending as a percentage of the economy coming down over the next few years, as a result of $50 billion of savings we’ve already made. There’s more to be done, there’s no argument about that. If we move faster, there’s no doubt that it will cause pain in the Australian community because as we saw from the capital expenditure data today, you’ve seen this transition from a mining construction phase, where they’re bringing in huge amounts of capital and a lot of equipment, building these massive mines, to a mining production phase. Our volumes in iron ore are at near record highs. So we’re exporting massive volumes. What’s happened is, prices are coming off and that’s affecting our economy. So what we’ve got to do is broaden the economy. Seventy per cent of the Australian economy is services, in health, education, tourism, financial services, communications, but it’s only 17 per cent of our exports. So if we can lift that export opportunity in those areas, particularly into China, Japan and Korea, through the free trade agreements, the rivers of gold will flow to Australians and we’re going to have massive prosperity in the future.
PAUL MURRAY:
Out of all those economic indicators, that can be anything from the ANZ job adds through to unemployment statistics, which you know are difficult at the moment, what is the one number that you might lose a little bit of sleep over? The one that you’re always keeping an eye on with fingers crossed that decisions equal better results?
TREASURER:
Well, I want to see job growth continue. When we came to government, the economy was creating 3,600 jobs a month under Labor - last month 38,000 jobs in one month. More than ten times the number of jobs, on average, a month. If I can keep that up, if we can keep that up, our infrastructure program is kicking in, you’re starting to see the jobs flow there. Our Small Business Package in the Budget, unquestionably it worked. It’s kicking in, giving small business some confidence. Importantly, if we can get the overarching settings right, it gives business the confidence not only to employ more people, but to continue to employ the people they have.
PAUL MURRAY:
I have to ask the question, not only on behalf of Richo, he does talk about it a lot, and it inspires me to ask. Since the Budget came down there’s been a change in the Australian dollar, there’s been a change in iron ore price, there’s been a change in unemployment. When your economic review comes out, December or early January, will the numbers stack up to what we said six months ago before all those changes?
TREASURER:
Well, as we stand, absolutely. In fact, the unemployment number for the last 12 months is better than what we forecast, so that’s good news. The job growth is better than what we forecast. The Australian dollar coming down a bit more is actually pretty good for us at the moment, even though it seems imports are a bit more expensive. Exports are cheaper, now that’s great for job growth in Victoria, South Australia, manufacturing states. It’s terrific for Queensland to offset the losses in the coal industry, and Western Australia is going to get a leg up as well, because education services, tourism services, whilst they’re not the same jobs as mining, it does make our exports in resources cheaper. So, a lower Australian dollar does help us at this particular phase and that’s good news for the Budget as well. But ultimately, Paul, if people are in jobs, they’re paying tax, it’s good for the Budget. If people want unemployment benefits, we’re paying them money out the Budget, we’re not getting an income. The more we can do to create jobs, mate, that will deliver for the Australian economy.
PAUL MURRAY:
I think there is a real frustration when – as yourself and Scott Morrison pointed out – eight out of ten people, they go to work, and every dollar that they send to the government via tax ends up being paid on welfare. It’s just something that’s a wasted energy about that more than anything else. We all want to save a few [inaudible], we all want to take care of people, something’s a bit screwed up if eight out of ten people work to pay for somebody else who doesn’t.
TREASURER:
Well, there’s a lot of work to be done in welfare. It’s by far our biggest area of expenditure. It’s growing at 15.5 per cent in real terms over the next four years, far more than any other area, and of course, the Labor Party left us with a National Disability Insurance Scheme – a very, very important scheme – but only half funded. They left us with a health package that was half funded, a Gonski reform package that wasn’t even properly funded. These are the legacies on top of the massive bills we’ve got. In defence, for example, they didn’t order a ship for our navy in six years, which is appalling. So, we’ve got lots of pressures. Having said that mate, I want to say to you, whether it be quality wines out of South Australia, excellent education services out of Victoria and New South Wales, quality tourism products in Queensland or a lot of great IT services that are coming right around the country and heading up into Asia in the same time zone – and that’s the competitive advantage for us - we’re in the same time zone, Paul. So when you’re broadcasting directly into Shanghai you know, it’s great news, you’ll be able to do it live and they’ll get good coverage.
PAUL MURRAY:
[Inaudible] At that reform summit, it was interesting that there was a slight change in language about the Budget dreams of Bill Shorten. I find this amazing, that this bloke and the Labor Party’s leading in the polls, when there was $40 billion of promises in Budget in Reply, nobody asks how it’s paid for. The 50/50 Renewable Energy Target, which might be a great idea, and we all want more renewables, but the point is, you’ve got to build the wind farms, you’ve got to build the solar farms. That’s billions of dollars either directly to the customer or the government’s paying, no one seems to pull him up on. No one asks him about it.
TREASURER:
Sooner or later, the binoculars will be on Bill Shorten and appropriately so. He can’t pay for his promises. He can’t be trusted for what he promises. I think he is a flawed character, he has no inner strength and quite frankly his team is much the same. They have no fortitude. They are simply populous and I don’t think they’ve got any serious policies that are going to build a stronger Australia.
PAUL MURRAY:
Does it concern you at all, that despite that, and I don’t disagree with the words you just said, the polls say what the polls say, that they’re on track to be the next government? It’s extraordinary.
TREASURER:
Well polls often measure popularism. In fact, in the case of individual politicians, it can often be celebrity. But what Australians want is a plan. They want a plan for the future and they want to know that you’ve got the courage and the determination to deliver on that plan - and we do. We’ve had to make some hard decisions, hard decisions. We can’t write out a cheque to motor vehicle companies. We didn’t write out a cheque to Qantas, they’ve done quite well without that government cheque. We had to make hard decisions in our first Budget, thank God we did, because that helped us prepare for today and tomorrow. We got rid of the Carbon Tax, the Mining Tax, tens of thousands of pages of regulation. We’ve entered into free trade agreements, which are going to create more Australian jobs. We Chaired the G20 and led the world in the economic debate about reform. We’re underway in relation to workplace relations change. We’re obviously underway in relation to taxation reform change and Federation change. I can keep going. But the fact is, there’s more to be done and we have the energy and the determination to see it through.