DAVID SPEERS:
Treasurer thank you very much for your time. Can I start on the jobs figures, a very slightly improved employment rate but it is largely driven by a big increase in part-time work. There has been another fall in full-time employment. What do you think of these figures? Is this good news?
TREASURER:
Well an unemployment rate going down is always good news and I want to congratulate all of those who have been able to get themselves into work and particularly those businesses who have been providing the jobs for them to be in work. Now whether it is a part-time job or otherwise a job is a job and for a family someone in work is very important. For the economy people being in work whether it is part-time or full-time it is very important for the economy in terms of confidence. We saw confidence levels rise again this week and that is welcome news as well but it is important that we continue to do things like drive investment, particularly private investment in our economy that supports those jobs going forward. But I think what we have been seeing now for some time, David in the part-time full-time front is there is much more flexibility in the labour force with these part time jobs. Now, a part time job could be a second person in a household taking up part-time work principally to have flexibility in their working arrangements to support the household expenses that they have. Now, I know some tend to look down on those sorts of jobs. I certainly don't. I don't look down on any job. A job is a job and more jobs is always a good thing.
SPEERS:
Let me turn to the Budget. You are planning to introduce a Bill that is being dubbed an Omnibus Bill. It will roll in about $6 billion worth of savings that you say Labor supported in the election campaign. Is it fair enough though that Labor gets to have a good look at this before they rubber stamp it?
TREASURER:
Well, they have had a good look at it they put it in their Forward Estimates at the election and the notary that that agreement that they signed with the Australian people before the election was the Parliamentary Budget Office that confirmed all of these measures that we would put in this Omnibus Bill were in their forward estimates that they took to the Australian people. So Bill Shorten has shook on this deal with the Australian people at the election. For him to now say he wants to crab walk away from that I think is dishonourable.
SPEERS:
But you would want to have a look at the detail of the legislation before guaranteeing support?
TREASURER:
But they know what the measures are – they were in the Budget, they were in previous measures and they looked at all of them and then they put them in their forward estimates and they said that to the Australian people that they were going to bank those savings David. So I don't buy it from Bill Shorten who shook on this deal with the Australian people for $6.5 billion of measures the government have been putting forward to improve the Budget that he can just walk away from that. He promised the Australian people by putting that in his numbers that he would support those savings. Now, we will put that to the Parliament and we would expect him to support that given what he said and what they did at the last election. Where we then need to work together more on is on additional budget saving measures to improve the Budget…
SPEERS:
And I want to get to that. One of these measures you put forward the $1 billion cut to ARENA there is a bit of confusion about Labor's position on this. ARENA co-invests…
TREASURER:
There was no confusion about the fact that it was in their numbers, David. There was no confusion at all…
SPEERS:
Ok. So the issue has been how…
TREASURER:
I need to explain to you how - if it is in their numbers…
SPEERS:
Ok, but Labor has said they want to see the detail exactly what you are doing here with ARENA, where that money goes because you are wanting to allocate it in some other area. Why does ARENA not deserve this money? What is the case for it?
TREASURER:
Well, David that matter has already been agreed by the Labor party. That is why they put it in their estimates and I just don't simply buy that they can walk away from that commitment. That policy has been out for some time and in fact we know that because they were saying, "no, no, no, no" all the way as they were sabotaging the Budget in the last Parliamentary term and then they agreed on it. In fact they backflipped on some $47 billion or thereabouts of commitments they have made over the course of the Parliament by the time they got to the election. The obvious ones of that are the school kids bonus and the pension asset test changes but they also backflipped on foreign aid and a whole range of things as we drew closer to the election. The reality is now, after the election they have to follow through on what they committed to do and what we are hearing from him today are just excuses because he wants to continue to Budget sabotage that he engaged in in the last Parliamentary term and I think Australians are sick of that.
SPEERS:
Now, you are also hoping to raise a further $6 billion to help the Budget bottom line through the superannuation changes. Now, Parliament is back in just under two weeks, is the draft legislation ready on this one?
TREASURER:
Well, that will come a little later. Not in those first couple of weeks but we are getting very close to that and we are making a lot of progress on that and I have obviously been consulting with my colleagues and people in the industry as well after the election as we work through the implementation issues and I think we are making very good progress. On the superannuation…
SPEERS:
Have you finalized for example what the technical changes you are going to make? You have signalled there will be an exemption on the $500,000 cap on post tax contributions for so-called life events. Are you able to say now what is and isn't a life event?
TREASURER:
Well, we said before the election, well before the election actually that one of those events was a settlement that might have come from compensation claim or something of that nature. Other issues in relation to family court matters and things like that, the details of that are being worked through. The suggestion of things like…
SPEERS:
What [inaudible] for example if a woman…
TREASURER:
Lotteries and inheritances and things like that are speculation that I haven't confirmed and…
SPEERS:
What about a divorce settlement for a woman who may not have very much in super?
TREASURER:
Well that is what I was just referring to when I was referring to family court matters.
SPEERS:
So, that is still possibly going to be an exemption?
TREASURER:
Well, I think that is an appropriate exemption but you have got to get the detail of that right and you have got to work through it properly so you don't create any unintended consequences. That was always from the time of the Budget was going to be a matter that had to be worked through in that level of detail and that we don't anticipate having any material impact on the estimates.
SPEERS:
Ok, but it could have a perverse incentive for couples to get divorced if it means they can put more money into superannuation.
TREASURER:
No, I don't accept that David. I think that is a ridiculous suggestion.
SPEERS:
Alright, so it sounds like that will be one of the exemptions.
TREASURER:
Well, that is one we have flagged and I have flagged. In relation to inheritances and lottery wins no, they are not things being contemplated by the Government nor have they been.
SPEERS:
Can I just confirm too because some have been confused about this. If you sell a small business or a farm, there is still, isn't there, under your policy an exemption worth up to $1.9 million to put that, the proceeds of such a sale into superannuation?
TREASURER:
Yeah, there are the exemptions that existed before the Budget of $1.4 million for matters that dealt with the assets in a small business or the sale of the business itself. All of those $1.4 million up to $1.4 million could be added into your superannuation and not be included in the lifetime cap. So, you would have that plus the lifetime cap of $500,000 which gets you to $1.9 million. They are appropriate concessions that are there for small businesses that are often very restricted to be able to make those contributions over the course of their working life. So, small businesses can do everything that they were doing before these changes in terms of those exemptions. More broadly on the package though David let me say this, we have a situation where we have fewer working age Australians going forward, having to pay taxes to support more people who are beyond working age. For those beyond working age we have a superannuation system that means that you could have a superannuation account - $10 million – and we know there are accounts that exist like this and the earnings on that account which on a modest return would be some $350,000 in income a year and the tax paid on that is zip, zero and nothing. Now, that sort of a system is not sustainable given the aging of the population and the challenges we have going forward. That is why it is necessary to make these rather broad changes that we are making. But we have targeted them very clearly at those who sit at the top end of the income and the wealth system in the country.
SPEERS:
Now, Ausgrid, Treasurer, your decision last week was a preliminary decision on these two Chinese bids. You gave them until today to come back to you – can I ask has either come back to you with a revised bid?
TREASURER:
Well, I will make an announcement on that when we are in a position to do so. I don't propose to flag anything on that front right now. My preliminary view is out there, it is very clear. These are complicated transactions and we are still working through a few details but…
SPEERS:
Alright fair enough.
TREASURER:
When I am in a position to make a further statement on that I will.
SPEERS:
Ok. You said this wasn't a country specific decision I just want to clarify would any foreign bidder be able to buy a majority stake in Ausgrid?
TREASURER:
Well, it wasn't just about a majority stake. This was a transaction that provided for control, operational control of this asset – so that was one issue. The other issue David was the actual nature of the asset itself and there were some very specific characteristics of this asset which obviously gave rise to the national security concerns and so issues of operational control as proposed became very sensitive. Now that is about all I can go into on that front but each decision on these matters has to give due attention to the very specific characteristics of the asset and the structure of the transaction. And so I know people want to apply some sort of blanket test or rules to these things…
SPEERS:
Ok so there could be a foreign owner as long as it is not operational control outside of Australia?
TREASURER:
Well again David you are asking me to provide blanket rules and hypothetical responses to other scenarios and that is not helpful to the process. What I do is I look at the specifics of every single case and we work through the details of that whether it is with our national security advisers or others and we form a view which is in the best interests of the country and particularly in protecting national security and as Treasurer I have to make that decision.
SPEERS:
Is it possible to have some sort of list of critical infrastructure and I know the Attorney-General's Department does run this critical infrastructure program and runs what is called the Trusted Information Sharing Network where private companies talk to the Government about their critical infrastructure be it electricity, communications, water, to have a list that says this stuff can't be foreign owned or foreign controlled so we know, everyone knows, state governments etcetera what can and can't be sold?
TREASURER:
Well, I think those sort of blunt, black list, white list type of situations can never anticipate the developments in technology and different types of structures and arrangements. So, I think they can be misleading. I mean you can have things that frankly you think are on a white list that can come onto a black list pretty quickly. The same goes for those who are calling for greater prescriptions around the national interest test. What really concerns me about this and I said this yesterday and that is prescriptive criteria rarely can keep pace with what happens in this space. So, it is conceivable that a transaction could come forward that I would consider to be clearly against the national interest but the prescriptive criteria would prevent me from rejecting it. At the moment it is a very broad power to reject something where it is against the national interest and I genuinely thinks that is the best way to protect Australia's interest for these types of matters.
SPEERS:
Just a couple of quick ones, the banks, a number of your colleagues are now calling for a banking tribunal is a good way to hold banks to account. Is that a good idea, something you could look at or is this the sort of cheap political point scoring you have been warning against?
TREASURER:
No, I don't think it is that. What I find helpful about these suggestions, whether that particular outcome is one that is supported or not, is that they are dealing by raising very specific problems. Now, already we have dealt with the issue of ASICs powers and their resources to pursue individual cases with far more rigor and far more ability to do so. So, that was a specific issue that was raised. Systemic wide issues in the financial system were dealt with through the Murray Inquiry and we have got a whole range of legislative and other responses to deal with those things. Then on the issue of accountability and transparency, the Prime Minister and I have put in place this arrangement for banks to appear before the House of Representatives Economics Standing Committee as does the RBA and APRA and others…
SPEERS:
So, you will have a look at the [inaudible] will you?
TREASURER:
Well, what I am saying is they are now raising quite a specific issue in relation to individual cases and importantly the mediation of how these things can be resolved. Now, already back in April we were working with the Ombudsman and others where we have asked to see that more of those cases can be dealt with in that forum because we don't want it to be decided by who has got the most money for lawyers. It is important that you try and get these issues heard and that people can have their cases heard and that you can get to a point of resolution. I think that is what really frustrates people, that these things go into an abyss and the Government is very committed to ensuring these…
SPEERS:
That sounds like a pretty positive response there?
TREASURER:
Practical issues get addressed for people's cases.
SPEERS:
Alright and just another one – 18C where did you stand on this one, changing the Racial Discrimination Act?
TREASURER:
Well, it doesn't help me reverse the deficit, it doesn't help me repay the debt, it doesn't help me get one more person in a job and it doesn't lead to one extra company investing more in Australia so you can appreciate that it is not at the top of my list.
SPEERS:
Alright and what about the other one I just wanted to ask you, Tony Abbott he now regrets blocking Labor's bid for the Malaysia solution. Do you have any more regrets?
TREASURER:
What I know is what Labor were doing at the time was an anything but turnbacks and anything but Nauru approach. What our policies demonstrated was that that was a very mistaken approach by Labor because turnbacks worked. They said they wouldn't work, they wouldn't even try them and perhaps if they had they would have stuffed that up too. But our policies worked David and I was there to implement them and we stopped the boats and I am very pleased about that.
SPEERS:
You were also in the portfolio opposing the Malaysia solution…
TREASURER:
I will let others…
SPEERS:
Tony Abbott now says he…
TREASURER:
I acted in accordance with my leader's instructions.
SPEERS:
Alright, you don't have any regrets about that?
TREASURER:
I have no regrets in stopping the boats. None whatsoever.
SPEERS:
Scott Morrison, Treasurer, thank you very much for joining us.
TREASURER:
Thanks David.