DAVID SPEERS:
Do you like these figures better than some of the previous price figures we have seen for the housing sector?
TREASURER:
Particularly when you go beyond just one months’ data. You look at the previous quarter’s data and that had prices up 5 per cent, most recent 0.8 per cent. That was the quarter when the regulator APRA started introducing the second wave of regulatory changes...
SPEERS:
Things like the tougher rules on investment loans.
TREASURER:
Particularly interest only loans. That was the major change they made to ensure that they came from 40 per cent back to 30 per cent. So we have seen some heat come out of the investor top end of the market. But the other thing we saw was some RBA data late last week which was a pendulum swinging back towards owner occupiers in the market as well. So that is welcome as well. So we are seeing I think a bit of a rebalancing there. That is what the measures were designed to do.
SPEERS:
Is it too early to call it though? I know you said soft landing today but you still have to wait a little while to make sure of that.
TREASURER:
Well I said safe landing and that’s what we are looking for in the housing market. What we don’t want is a hard landing. What has always concerned us about the alternative approaches that have been advocated, big changes to abolish negative gearing and these sorts of things, it is not just the impact they would have on a hard landing say in a market like Sydney or Melbourne but you look at those figures over in Perth which has just had one month looking a bit better but also other markets going backwards, the impact on those markets would be even more severe where you want to see an improvement and stability coming in.
SPEERS:
One of the reasons you wanted to see some action in this sector is because of the amount of debt a lot of households have racked up. The latest figures though do show we are now into record territory, the household debt to income ration just over 190 per cent.
TREASURER:
These are figures we need to be rightly focused on and that is why the regulators’ action on interest only loans is important. When we are seeing owner occupied principal and interest loans being more affordable because we have seen five to six basis point drops from NAB and ANZ in those markets whereas they have been increasing interest only. So people taking on debts they are going to repay, not just pay the interest but repay the principal. That is what we want to see more on in the economy and not have an interest only filled investment drive.
SPEERS:
But that household debt to income ratio is still too high in your view?
TREASURER:
This is the reason why we do these things David. I don’t get alarmed by these sorts of things, I just keep focused on the policies that are needed I think to add some stability as a measure and what we have done with the changes through APRA now on two occasions is provide that calibrated – you heard me say it a million times I know – the scalpel not the chainsaw. That is our approach to the housing market because there is a lot of risk. Of the two issues that impact most on our economy, which have the biggest impact on what people will take home in their pay packets and wages growth is the single biggest objective we need to focus on to lift what people are able to earn in this economy - we obviously have the issues up in China which for now we are seeing those and they are looking positive but the other one is what can happen in our housing market. A hard landing in our housing markets would have a quite devastating effect on our economy hence why we haven’t taken the big chainsaw approach that others seem to be adopting.
SPEERS:
The measure you announced in the Budget to help first home buyers get into the market by allowing them to voluntarily contribute up to $30,000 into their superannuation account and then use it to save for a deposit, the legislation still hasn’t passed through Parliament, so should people be doing that, putting money into their super hoping to use that for a deposit?
TREASURER:
I would certainly hope so and the Labor party should end any speculation and say we think it is a good idea to give a tax cut to first home savers. What we are doing here is piggy backing superannuation to give people a tax cut on the money they would otherwise put in a bank account and pay more tax on. I don’t know why they want them to pay more tax on it sitting in a bank account when it could be sitting in their super account paying less tax.
SPEERS:
But if the legislation doesn’t pass there is a risk there isn’t there that if it doesn’t pass if people put money in right now as you are suggesting they should and they can’t get it out until they retire.
TREASURER:
We are very confident of passing it through the Senate. The Labor Party said we would never pass tax cuts for small business, the PaTH program and they have stood in opposition to all of these things but we are making a lot of progress on all these measures. They stood in the way of our affordable child care reforms for two years. We got them passed. We are making the Parliament work, we are making the Senate work, the Budget is passing the Senate and we will continue on that job when we come back.
SPEERS:
You mentioned the PaTH program. Let me ask you about that because today we have seen the Australian Retailers Association sign up. They have announced up to 10,000 new internships will be provided to job seekers in the retail sector. Now the PaTH program to remind people, your income support plus $200 a fortnight but the employer gets $1,000 up front for taking on a young intern.
TREASURER:
To do with the cost of taking on that person.
SPEERS:
The unions don’t like it, as you know. They say this is in fact ‘slave labour’ – are the words used by Ged Kearney the ACTU President. They say they will be earning around $4 an hour.
TREASURER:
This is bunkum. What is their alternative? They have no idea what the challenges and impediments are to get young people who have been unemployed for a fair bit of time into a job. This is simply what we are doing. Three stages. Step one, put them into a brief training program to get them up to speed about what it is like to get into work. What is expected of you when they get into work. How you should dress, how you should behave, how to take instructions, why you need to turn up on time and stay off your phone. Step two, get them into an actual business so rather than being on the dole they are actually in a business getting paid more than the dole by the government to be in an actual job. And it is for four to 12 weeks. The rules say that there has to be a real job at the other end of this. After those four to 12 weeks...
SPEERS:
Tell me about that part of it because this has been the concern that Bill the Butcher might take on one of these interns but does he really have a job for them to go to? If he did, why doesn’t he give someone a job, a proper job?
TREASURER:
Well I will tell you why, because you never know how someone is going to work out and you never know whether that person will be able to move into that next phase. So it is giving them that opportunity. They aren’t getting that opportunity at the moment. For one reason, the cost and the risk for the business is too high. So you know what they do? They just say no. So what we have done is taken the risk out for that early phase so these young people get a go. So they get into a business for those four to 12 weeks. I suspect they are not adding too much value for the employer at that stage and the employer understands that. They are prepared to give them a go, the Government is reducing that financial risk for them and at the end of that period they get a real job with a wage subsidy for six months and then after that well, it’s up to both of them. So this is a way...
SPEERS:
Why wouldn’t Bill the Butcher just get rid of them, bring on someone else, get an extra $1,000?
TREASRUER:
Because they’ll never get another one. That’s how it works.
SPEERS:
So you can only take one?
TREASURER:
No, you’ve got to be fair dinkum about this program, and if you’re going to try and use it to churn, to exploit people. Well you’ll be bumped. You’ll be tossed. You won’t get another go at this. This is for fair dinkum people, who want to give fair dinkum job seekers a fair dinkum job.
SPEERS:
Labor’s other concern is that for the employee, or the intern, they’d be put onto the dud shift, overnight, weekends etc so that the employers don’t have to pay proper penalty rates to someone.
TREASURER:
Look Labor just whinge about everything the Government tries to do to get people in jobs and in the last 12 months we’ve got 235,000 people into jobs. Today, we’ve got the Australian Retailers Association saying we are going to work with the Government to put 10,000 unemployed young people into a job. Now, that is good news. Only the Labor Party could find something to complain about, about this. Seriously, going to unemployed people, getting them off the dole and into a job, 10,000 working small and medium sized businesses around the country and Labor and the unions have a problem with it. Give me a break.
SPEERS:
Let me come back to something you said earlier about the economy generally. Wages growth, I think you said, is the most important thing we need right now. Why then is the Government allowing the penalty rate cut for those in the retail and hospitality sector?
TREASURER:
For people to earn more, businesses need to earn more. I’m not looking for some artificial movement in wages. I’m looking for real increases in wages, which are backed up by real profitability in businesses.
SPEERS:
This is a real cut isn’t it?
TREASURER:
There are the transitional arrangements which the Fair Work Commission has determined, not the Government...
SPEERS:
Sure, but Labor is saying, we’ll stop it, we’ll leave it.
TREASURER:
I’ll tell you what Labor is saying. People need to think carefully about what Labor is saying. Labor is saying if they were in Government, if the Fair Work Commission came up with a resolution, an independent resolution, then that will always be subject to the whim of Bill Shorten and a phone call from whether it’s John Setka, or from somewhere else. Now, that’s a mad system.
SPEERS:
Well they’re saying it’s a wage cut.
TREASRUER:
No, that’s a mad system. Seriously, that’s not an independent commission. There would be no certainty in this country when it comes to the independent process of the Fair Work Commission if all that had to happen was Bill Shorten was having a bad day and got a call from a union official. We don’t support that mad system.
SPEERS:
No, no but you’ve got to acknowledge when you’re saying wages growth is the single most important thing we need, and you’ve got the poor old workers in retail and hospitality getting a wage cut.
TREASURER:
As you know it’s not happening right across the board, it’s happening in quite a specific sector as the Fair Work Commission has decided. Not the Government.
SPEERS:
Is it good for the economy?
TREASURER:
What’s good for the economy is growing for business. You don’t get a wage rise in a business that’s going backwards and you don’t get a shift in a business that’s shut. And so the policies we’re focused on are actually driven on keeping businesses open, and making sure they grow.
SPEERS:
Do you want businesses to pay people more? Do you want employers to pay people more?
TREASURER:
Of course I do.
SPEERS:
Just not people in those sectors?
TREASURER:
I want all workers to be able to earn more because their businesses are doing better, because the economy is growing. That is what I want to see and that is what all of our policies are designed to achieve. But the madness of the Bill Shorten veto on an independent umpire through the Fair Work Commission that he set up himself is a farce.
SPEERS:
Couple of other things Scott Morrison, there is a debate going on in the NSW Liberal Party. You are a former director of the NSW Liberal Party about pre selection rules as you have seen Tony Abbott and others arguing for the plebiscite process to give members a greater say. What do you think about this? What do you think about the idea of giving members a greater say?
TREASURER:
I think the party organisation will decide it by the members. You see as a former director...
SPEERS:
You have an opinion on it though.
TREASURER:
This is an important point. I am a member for the Parliamentary wing. One of the things when I was director was I was always very jealous for the party organisation in saying there are some things we decide as party members and there are some things you decide as the representatives of the members.
SPEERS:
So MPs should stay out of it?
TREASURER:
I think in a public forum MPs will go and score their points or do whatever they want to do but at the end of the day this is a decision for party members. So I haven’t participated in this debate because I am respecting the decisions of the party members. They have a convention coming up where they will talk this through. That is the place to talk about it and to make a decision.
SPEERS:
Will you be part of that?
TREASURER:
Yeah I will be there over the course of the few days.
SPEERS:
But will you put forward a view at that point?
TREASURER:
Again David, I will respect the party membership. If I choose to participate in that forum I will do it with my party members. I think that’s the way to respect the process and that is certainly what I will do. As a former director I respect the party organisation too much to try and force my view on what they might want to do. I think the democratisation process, there are lots of improvements that can be made but ultimately I think that is for party members to decide and I will leave it to them.
SPEERS:
Fair enough. The final one I wanted to ask you about was Donald Trump. Have you see the video he tweeted out today?
TREASURER:
I haven’t seen it.
SPEERS:
Crash tackling a pro-wrestler with a CNN logo imposed on their head.
TREASURER:
I haven’t seen that.
SPEERS:
You will have to catch up on it. Is it the sort of thing you would deem presidential?
TREASURER:
I haven’t seen it so I don’t think you can draw me on something I haven’t possibly seen. When I was younger I used to watch the WWF and I found it quite entertaining. I haven’t watched those things for some time. I am too busy watching my Sharks thump the Roosters on the weekend.
SPEERS:
Ok you need to find some time for social media.
TREASURER:
44-12 did I mention that?
SPEERS:
No you didn’t. I’m glad you squeezed that in. Treasurer Scott Morrison, thank you very much for joining us.
TREASURER:
Thanks David, good to be with you.