CHRIS KENNY, PRESENTER:
Treasurer Scott Morrison. Thanks for joining us, Scott.
TREASURER:
Thanks Chris.
KENNY:
Treasurer, look fascinating week we have all got ahead of us but especially for you with a Budget just two weeks away. We had the Moody’s rating agencies this week come out with a report about Australia’s budgetary situation and debt situation. They said effectively that governments here in Australia, including the current Government haven’t been doing enough to tackle debt and deficit. You would have to agree with them wouldn’t you that the government needs to do more to tackle deficit and debt.
TREASURER:
Well, they’ve said we need to continue to get the Budget position consolidated. They said that it was frustrating, effectively, that the Government, we were putting forward saving measures to do that and they hadn’t been successful in the Senate. Now, 85 per cent, in fact more than that, of our measures have been successful through the Senate but we have had some $13 billion of savings that have been rejected by the Labor Party and that comes on top of the $11 billion extra they want to spend and the $34 billion that they would want to reverse and spend more of because they oppose the other savings measures we put through. So, they were saying that we need to continue to save and that is something we are doing and they made another comment about revenues. But let me say this, I never see anything as a leave pass to increase the tax burden on the Australian people. I don’t think the way you grow your economy and you grow your jobs is to put a higher tax burden on the Australian people. If you are…
KENNY:
Sorry to interrupt but Moody’s are saying that the debt is heading up, as you would say, to 38 per cent of GDP by 2018. They are suggesting it may not peak then it may go further unless there is remedial action and referencing the sorts of political problems you talked about. They have basically made the political assessment that it seems to be too hard to deliver Budget savings so they are expecting that what governments will do in this country is increase taxes instead.
TREASURER:
Well, we think it is difficult but we think that is the path you have to follow and we will continue to consolidate our Budget. Over the Budget and Forward Estimates, which was updated at the end of last year, we have the deficit reducing to less than 1 per cent of the economy over the Budget and forward Estimates. Now, that is a significant reduction over those four years. The way we are doing that is one area we are seeing expenditure fall from almost 26 per cent of the economy down to 25.3 per cent of the economy but as the economy grows the revenue rises as well. We are seeing almost a percentage point of the economy being added to revenues over the course of the next four years. So, we are consolidating the Budget position – there is no doubt about that. What is even more significant is at this very sensitive time in the economy globally the Australian economy needs to ensure that it focusses on growth and that it focusses on jobs and it focusses on this transition that we are going through from the investment phase of the mining boom into a more diversified, strong, new economy where there are more jobs and we are doing it. Last year we grew at 3 per cent, we had 300,000 jobs since November of 2014 50,000 extra jobs for young people and the youth unemployment rate today is lower than it was at the last election and the unemployment rate is about where it was at the last election having recently fallen to 5.7. So, the Australian economy is making its way, Chris, but there are great risks to that and the biggest risk is going and taxing our economy with a higher tax burden which is what the Labor Party proposed to do. They are not looking to raise taxes to pay down the deficit – that is not the plan. Anyone who thinks that is what the Labor Party is proposing – check again. They are increasing taxes so that they can throw more money around which means higher debt, higher deficit and higher taxes.
KENNY:
There is no doubt they have got those extra taxes on the table to help pay for the level of spending we have got and there is no doubt that what you say about the trend is true. That there is some action ahead but Moody’s as an independent ratings agency have said that they are not satisfied that what is on the table now is enough to fix our debt and deficit situation. In fact your own Treasury Secretary in a speech this year said we need to do more to actually reign in spending in the federal Budget. Are you suggesting that in your first Budget in two weeks’ time, which is effectively an election Budget as well, you are going to be prepared to take the tough decisions on spending which means of course a tight rein on health, on education, on welfare, on disability services – the big ticket items in the Budget.
TREASURER:
We will continue on this path. This is what we have been doing for the last two and a half years, Chris. We will continue to consolidate the Budget position. I am no stranger to that as part of the major savings we brought down in last year’s Budget and we will continue down that path of consolidating the Budget because that is critically important. Let’s not forget Moody’s only just reconfirmed their rating last month in March. They confirmed it as Triple A and the other agencies confirmed our ratings after the MYEFO statement at the end of last year. And confirmed the position after seeing the trajectory we were on to reduce the debt and deficit over a long period of time but particularly to reduce the deficit over the Budget and Forward Estimates. You do that by getting your expenditure under control and you do it by growing the economy and growing jobs which is exactly what we are doing.
KENNY:
And there will be no increase in taxation in percentage terms relative to the size of the economy.
TREASURER:
Well, there is a current trajectory with what is happening with revenues and that is what is happening with Budget. I mentioned it to you before, revenues will grow by about 1 per cent, just under 1 per cent of the economy over the Budget and Forward Estimates. What we are not going to do is add an additional tax burden to the economy over and above this trajectory because we believe that that actually kills growth. Higher taxes for higher spending is not a plan for jobs and growth and that is why we don’t buy into that.
KENNY:
Now, the 2 per cent debt levy that was put on in the first Abbott/Hockey Budget that comes off at the end of this financial year. You are going to stick with that so there is a 2 per cent income tax levy that comes off the top marginal tax rate. You are going to go ahead with that. Do you see that now as the biggest mistake of the Coalition Government in terms of Budget measures over the last three years? There was a blatant broken promise, it has obviously not fixed the Budget and now it is going to come off anyway?
TREASURER:
Well, 2014/15 was a very difficult Budget because we had to arrest what was happening with the fiscal chaos that Labor left us and the legacy of Labor’s management of the Budget we are still working through now and we will have to work through it for many years to come…
KENNY:
This is my point that the debt levy hardly fixed the Budget all it did was destroy the Government’s credibility on broken promises and no tax increases.
TREASURER:
Well, you will commentate on the politics, Chris. All I know is as a Government what we have been doing is consolidating the Budget, getting the deficit down, getting expenditure down as a share of the economy – that is what you will see over the next four years, that is what is in our estimates. What you will see from Labor is they want to put up $100 billion of additional tax burden on the economy over the next ten years. So, the taxes go up but they don’t cut new taxes, what they do is they lift their spending so you will get higher spending, throwing money around at problems rather than actually trying to fix them and deal with them with higher taxes which means you get a higher deficit, you get a higher debt. Now, if I said, I remember I entered the Parliament in 2007, Chris. When I knocked on people’s doors back then and I said to them back in 2007, you know what, the Labor Party will take us from a $20 billion surplus to a $50 billion deficit; they will let 50,000 people come in on illegal boats coming into Australia; people’s rooves will set fire. I mean if I told anyone that in 2007 mate, they would have locked me up, and they would have said you’ve got to be kidding, that’s just crazy talk.
KENNY:
I tell you what, they wouldn’t have believed you either if you said that a Coalition Government was going to come in and knock off a Prime Minister before he got through his first term either. So, I think politics generally has been pretty unbelievable. I do just want to move on to another issue….
TREASURER:
My point is this, Chris, my point is this, what we are warning about, about a Labor management of the budget is very serious – $100 billion in a higher tax burden. Now, that goes right across the economy and that affects jobs and it affects growth.
KENNY:
Now Labor also wants to establish a Royal Commission into the banks. Obviously a big issue, it’s quite a popular issue, the idea of a Royal Commission into the banks. Have you or your office been speaking to the banks about a way to stave off this Royal Commission by perhaps better resourcing or taking ASIC to look into banks.
TREASURER:
No they’re not the tasks or the conversations I had with our financial sector, I mean, you’d expect the Treasurer to talk to people in the financial sector all the time as I do. What happened is in July last year the Government initiated a capability review of ASIC. So that’s the plan we’ve been on. At the same time, in fact a month after Bill Shorten voted against having a Royal Commission in June of last year, in the following month what we did is we initiated a capability review of ASIC, which is the tough cop on the beat, which has more than the powers of a Royal Commission to look at all of these matters. So we’ve been working through the issues in ASIC over that period of time, the Government is getting close to finalising its response and ASIC, it’s implementation plan and relation to that report. So, that’s what the Government has been focused on, that’s the agenda we’ve been looking at to ensure a very focused ASIC which has got the resources to do the job it needs, which is above and beyond what a Royal Commission can do.
KENNY:
That’s the back story you say, I wanted to hear that, because I want to put to you what Bill Shorten has said about your discussions with banks, he was out on it today, have a look.
SHORTEN: It is very undemocratic that Mr Turnbull is seeking the permission of the banks to do, to find out, exactly what he is allowed to investigate in the banking sector of Australia. In fact it just goes to show that anything less than a Royal Commission into the Australian banking and financial services sector is tantamount to a cover up.
KENNY:
Tantamount to a cover up according to Bill Shorten. Scott Morrison, your response to that?
TREASURER:
Well, I think it’s ridiculous, see this is what happened, apparently in July of last year, the Government somehow prophesised that Bill Shorten was going to change his mind on a Royal Commission and announce one in April. So we decided bank in July to do a capability review into ASIC, I mean it’s absurd. What we’ve been doing, Chris, is just getting on with the job of ensuring the best possible regulation and enforcement in our financial services sector. We initiated the Financial Systems Inquiry, the Murray Review, and we responded to it. When Labor was in power, they actually rejected having a Financial System Inquiry. We did it when we came to office. We responded to it, and when they released their report, and when we released our response, did I hear Bill Shorten or Chris Bowen say, ‘oh we need to have a Royal Commission into the banks?’ No. We hear about it a couple of weeks our from parliament coming back when he has to walk in there and explain to people why we don’t need a tough cop on the beat in the building and construction industry, where there’s 70 per cent of Australia’s industrial disputes and its rife of lawlessness which he seemed to support it would seem. And on top of that he doesn’t want to support us abolishing the Road Safely Tribunal which he set up as a sop to the unions to try and run owner drivers out of business. Now that’s what he has to explain and he’s come up with this distraction of a Royal Commission, and where’s the terms of reference, Chris?
KENNY:
We haven’t seen those yet…
TREASURER:
What’s the Royal Commission actually doing?
KENNY:
Well we might need to see that in parliament this week, given everyone will be there. Of course the focus this week is the ABCC, the double dissolution trigger, you’ve brought the Budget forward, you’ve brought parliament back to put this bill up. That’s plan A obviously, a double dissolution election on July 2. What’s plan B if the independents do roll over, you do get the ABCC, will you still go to an election as early as possible?
TREASURER:
We’ll just get on with the job. I mean the reason we’re doing this is because the Australian Building and Construction Commission Bill which is being, the reestablishment and the establishment of that commission, to have a tough cop on the beat in the construction sector, which is critical to our national productivity, which is critical to growth and jobs in our economy and supporting the transition of our economy and two Royal Commissions have said it’s necessary. That’s why we’re here this week, to get that done. We’re here this week to ensure that owner drivers don’t get run out of business. That’s what we’re here to do this week. And of course the Budget will continue to be prepared and that will be brought down on May 3, that will provide the contingency to ensure that we can go. It’s for Bill Shorten to explain his position on those, and on the Royal Commission, to call it superficial, what he’s proposed, would give it far too much credibility.
KENNY:
Look we are just about out of time, but I do want to give you the opportunity, Scott Morrison, to talk about Bronwyn Bishop briefly, do you think that she should have organised for herself, a more dignified exit from politics?
TREASURER:
Look Bronwyn has been a warrior of the Liberal party over a very long time, a former president of my home division of New South Wales, and look Bron was always one who was always going to go to the last vote she possibly could I’m sure, because that has always been her nature. She is always been a political fighter and she took it to the last vote. And I know there’s been a lot of issues over recent months involving Bronwyn, but I think you’ve got to look at her contribution over a much longer period of time. She’s a good friend of mine and she’s been a great thing for the Liberal Party over a long period of time. I’ll say this for Bronwyn and I’ve got two young girls, Bronwyn was a trailblazer for women in the Liberal Party, when it was tough stuff, Bronwyn was out there running from offices, getting behind other women, getting elected president of the New South Wales division of the Liberal Party, getting elected to the Senate, getting elected in strong Liberal seats, that’s pretty impressive for someone who was doing that in her generation. I take my hat off to her and say good on you, Bronny, and looking forward to seeing you this week.
KENNY:
Thanks very much for joining us Scott Morrison.