DAVID SPEERS:
Treasurer Scott Morrison joins me now. Thank you very much for your time.
TREASURER:
Thanks David.
SPEERS:
So, the backbench is finally happy about this. The industry is too and that is great – that is an achievement but politicians do need to be held to account for what they have said. The Prime Minister did say the details were iron-clad. You yourself said there would be no changes to this superannuation package – well, there has been, hasn’t there?
TREASURER:
Government is about getting the job done. That is what the Australian people expect of us. You have got to work with the Parliament that you are in and you’ve got to work with the team that we brought together and that is exactly what we have done. The 45th Parliament, I think, will be different. Already this week we have demonstrated that a Parliament that people thought would be very difficult to get achievements and to get progress on important issues and it is not just the Budget task of this, the Budget task is incredibly important because it means better services, it means the Budget can be more sustainable for the future but the sustainable changes to superannuation here means that yes it looks good for this generation but it is going to be better for future generations because our superannuation system was becoming a bit of a house of cards in the way the tax concessions were structured.
SPEERS:
But you argued pretty hard for this $500,000 cap didn’t you. Let me quote you from just a month ago. You said ‘I am saying we should be getting rid of the family tax benefit supplement and those people earn a lot less than those people who put half a million after tax into their super. How can I look them in the eye and at the same time say, oh no I am going to protect this interest over here sitting on half a million bucks they want to load in and stuff more in so they can pay less tax on it.’
TREASURER:
I can look them straight in the eye today because the change today, this is an important change - reducing what you can currently do from $180,000 down to $100,000 a year, that is an important change but even more importantly you can only put it in if they have a balance of less than $1.6 million…
SPEERS:
So they could stuff in more than half a million after tax?
TREASURER:
Well, they can but what I was referring particularly to there in that comment was those who can just pile in more and more well above the $1.6 million. The way the other provision was working and I some were suggesting we should change it would have enabled people down the track for people just to pile large sums into superannuation – well above the $1.6 million cap…
SPEERS:
Not in the original package. You still had a $1.6 million cap.
TREASURER:
No, you are confusing two issues, superannuation is complex so fair enough. What we are saying is previously you weren’t constrained on your lifetime non-concessional cap by what your account balance was. You are now. We have changed it so each year you put $100,000 in but you can only do that as long as you have got a balance under $1.6 million. So, one of the issues that came out in the discussions was you may have had people for whatever reason who hadn’t really started to really invest in their superannuation till later in life. The suggestion was the way we structured the previous arrangement wasn’t giving them enough room and opportunity to actually…
SPEERS:
So, why didn’t you structure it that way originally and why did you argue that you didn’t want people to be able to stuff in more than half a million?
TREASURER:
Again it is to ensure that those investments or stuffing in as you say and I have said and I meant it in that term as well - that was really dealing with those who were putting it in to balances that were well above $1.6. So, we have put that ceiling on it…
SPEERS:
But that did have a ceiling on it originally.
TREASURER:
No, not on that, we had the $500,000 but that could have gone to contributions well over $1.6 million…
SPEERS:
A lot of people [inaudible] within the $1.6 million.
TREASURER:
No, it wasn’t. And what people were asking us to do in changing the measure and bring it forward to Budget day with that particular measure, that would just have allowed people who had potentially put in millions already in after tax contributions to just go and whack more in. So, the objective, the purpose of what I announced on Budget night is exactly what we are achieving in these measures.
SPEERS:
But you have been so definitive about this $500,000 cap. You dug in on this for months.
TREASURER:
Well, it was important that people knew that we were serious about perusing the changes to superannuation to make it more sustainable and we are demonstrating it.
SPEERS:
But why have you changed it?
TREASURER:
Because David governments implement things when they are elected and that is what we are doing now and issues were raised in the course of the election campaign and then we listened and we worked out how can we do two important things; make sure that we remain totally committed to the objective of this policy which we have done and to the Budget repair task.
SPEERS:
In hindsight would that consultation have been better to do before the election?
TREASURER:
A Budget measure is different to implementing a Budget measure. In a Budget, as you know, you don’t have the luxury of spending the last two and a half months going on a broad consultation that you then announce on Budget night. You have been here a long time and you know the way that Budgets work and what normally happens on a Budget, those measures would be announced and you would seek to take them through the Parliament and if there are variations that you might make as we have here then you would have made it in the normal course of after the Budget. Now, after the Budget we went straight to an election and that was our choice to do that and now we have been re-elected we are implementing…
SPEERS:
That was inevitably trapping you into what you have announced?
TREASURER:
That was the plan that we were putting to the Australian people and it was the first time a Budget, in a very long time if in memory at all, that a Budget is being put directly to the Australian people. Now, that Budget was endorsed.
SPEERS:
You did have warnings during the election campaign. It was even reported that Julie Bishop warned you and the PM and others there was going to be a voter backlash over this.
TREASURER:
Well, as we know, in Julie’s seat itself, that had the highest proportion of people affected by those changes and she got a swing towards her. Now, that’s no surprise she is a fantastic local member as well as great Deputy Leader and Foreign Minister but government is all about governing. What this week has demonstrated whether it is the Omnibus Bill, whether we are dealing with the very difficult and an issue with deep feeling on the issue of same sex marriage or indeed dealing with resolving of this issue around superannuation - all three issues mind you, that commentators, not necessarily you David, or others or our opponents said these were going to blow up the Government. Completely blow up the government, could never be done, you’ll never get the savings through, you’ll never get these superannuation issues resolved and when you even talk about same sex marriage inside the Liberal Party and the National Party it will never survive. Now, all of that has been proved to be untrue this week and it shows a government governing.
SPEERS:
You must be feeling pretty good about this outcome at the end of the week. Has this been one of your better weeks as Treasurer?
TREASURER:
Well, it is not really about that. This has been a process since the Budget. Now, I am very proud of what we handed down in that Budget. There are other measures we are now seeking to implement like the Youth PaTH initiative and you know my passion about that. The other one is company taxes and what…
SPEERS:
This was the signature policy of the election campaign. It is a ten year plan to reduce company tax for all businesses, but is that what you will actually introduce?
TREASURER:
I have introduced it. That legislation is in the Parliament.
SPEERS:
In the House?
TREASURER:
Yes. And that legislation is going to the Senate.
SPEERS:
Are you prepared to split it in the Senate though so that it’s what you might actually be able to get through which is a tax cut for those up to $10 million?
TREASURER:
Well, I am still making the case that this is the plan that was endorsed at the election to actually drive investment and support job growth in this country.
SPEERS:
If we listen to your argument earlier about pragmatism, you take what you can get don’t you?
TREASURER:
Well, that is the nature of the 45th Parliament and in Government your job is to govern and to deal with the Parliament that the Australian people elected and that is what we will do. That doesn’t mean that I am any less committed and resolved on the purpose of driving investment, private and business investment in this country and allowing businesses to reinvest those earnings to drive their businesses and drive the jobs and growth they want to generate. So, we believe this is absolutely the right plan to drive investment for the country but that will subject to the will of the Parliament.
SPEERS:
Just back on the super changes, the final package you are putting forward. Labor are looking at the details, one area Chris Bowen did flag some concern about still is the catch-up contribution element. You delayed it by a year but he says he is still concerned about it.
TREASURER:
I don’t understand why Labor is concerned about this and I also don’t understand why they’re opposed to allowing people at home based business or have contractor income or have worked for a small business and can’t access salary sacrifice contributions to their super. Now, what we have done is we have said you can now access the full amount of your contributions regardless of how you earn your income and they are saying no you can’t, it can only come through wages. Now, my [inaudible] on that is, well, if it is a wage income it is all going through a union industry fund or something like that so they are happy for that but if it is a private contractor or home based business they may be using a retail fund, they might use a self-managed super fund in which they seem to be less interested. On this measure in particular, let’s say you are a carer. Let’s say you are caring for a spouse with a terminal illness or who has had a terrible accident and you might have to spend two years or three years or something like that. Now, you may have well have been in quite a [inaudible] position. You take two or three years off and God forbid the worst happens or even better they get better and they can restore and continue on with their normal life, you can now catch up on those three years of concessional contributions that you weren’t able to make. Now, that seem to me that’s fair. Why would Labor be against that? And it is capped at people who have a balance of $500,000 or less. So, that is the sort of thing we are talking about. As well as the contractor issue that makes superannuation more flexible, it makes it better reflect a working life and experiences of Australians today.
SPEERS:
With all of this this week this superannuation package, the deal with Labor on the Omnibus Savings, are we out of the woods with the ratings agencies do you think?
TREASURER:
Well, that is for them. I will be seeing them…
SPEERS:
It’s got to help though, doesn’t it?
TREASURER:
I think it does help but with ratings agencies I don’t think you can ever predict these things. I think it is our job to put forward the best possible case and I think we have been able to do that this week by demonstrating that this Parliament will pass measures. That was one of the issues they specifically flagged. They will continue to have dialogue with us about current account deficits and things like this and that has always been one of the issues that Treasurers have had to deal with in these roles because in the Southern Hemisphere, particularly in the resource based economy, where we’ve always relied on external investment, that is not the experience of other economies in the northern hemisphere that don’t have that balance problem. So that is why Government debt for us is more important in how they look at us say compared with Canada or some of those countries or Japan for example who tend to fund their own debt.
SPEERS:
So, hopefully it settles things down with the ratings agencies. Will it settle things down with the backbench a bit now? You heard the likes of Eric Abetz, George Christiansen and others agitating on superannuation. Other issues as well. Do you expect some calmer waters now?
TREASURER:
We’ve still got other issues we’re dealing with, as you know, and that’s the nature of politics, that’s the nature of Government. There will always be issues, and our members are representing their constituencies and I don’t have any issue with how this process has unfolded. This is how it’s supposed to work. The executive of the Government will work with its backbenchers, its Government members who are you there in their communities. They’ll raise issues with us and we’ll listen carefully. And the consultation process we did was so important because it was about narrowing in on what is precisely the problem. One of the biggest problems we had to address in this package was the sort of person I mentioned before, who may be starting late on their contributions and they may have the means to get themselves to maximise what they can up to that cap of $1.6 million and may not have been able to do that because of some other choices they’ve made. Now, that’s addressed I think, clearly in this. I should stress the small business exemptions for contributions remain as they were.
SPEERS:
They’re unchanged.
TREASURER:
They’re unchanged. As is all of the other measures, the other nine measures that were in the package and in particularly the Low Income Superannuation Tax Offset. Now, that allows people on incomes of less than $30,000 to gain the value of the deduction for their contributions that those higher incomes do. Now, it is true that the previous Labor Government introduced the low income superannuation contribution but they were paying for it with the mining tax which didn’t turn up with the money. So, in the first Hockey-Abbott Budget they got rid of it and rightly so because there wasn’t the money to pay for it. What we have done through these changes is bring that back and bring the revenue to pay for it.
SPEERS:
Now, the final issue away from all of that, Pauline Hanson did you watch her first speech? You didn’t see it?
TREASURER:
No, I have been a bit busy.
SPEERS:
You obviously heard about it though and some of the things she had to say. Can I ask did you agree with what she said about being swamped by Muslims?
TREASURER:
Well, of course I don’t. Of course I don’t. You know my experience in working with the Muslim community in Sydney with Jason Clare and this is really important work that we need to do in engaging to ensure we can be effective not just with national security issues but general harmony issues and Dr Rifi who has been…
SPEERS:
National Security issues are an interesting one isn’t it. I know you have worked a lot in this space.
TREASURER:
It is not just about that to be fair.
SPEERS:
Is there an issue there? We have heard the head of the AFP, we have heard the former Boss of ASIO say language matters here we have got to be careful. We need the Muslim community. When she says that Muslims bear a culture and ideology that is incompatible with our own what does that say?
TREASURER:
You have got to remember everyone who is in this Parliament is voted for to get here and Pauline’s Party more than half a million Australians did. What in particular we have to understand here and I said this in the speech a few weeks ago at Bloomberg and I was talking about that sort of post-Brexit world, many people in Australia are feeling uneasy about the economy and what I mean by that is income growth has been low, inflation has been low and the GFC had its initial impact but its effect on the global economy will run for 20 years or more some economists say. That has changed the environment in all of our western advanced countries and people are feeling a bit discounted from growth in economies, they are feeling disconnected from opportunities in economies. Rather than run a commentary on what someone else said, my job as Treasurer is to help people who feel vulnerable and disconnected from the economy to be able to participate…
SPEERS:
You’re a national leader. You’ve got to call out…
TREASURER:
Well, I just did a few minutes. Of course I don’t agree and my life experience in the way I work on these issues demonstrates my views on that. For me as a Treasurer, and I look and I hear what people are expressing as concerns, not about any one group but what is behind that and what are their anxieties about what is happening with globalisation and all of these things. Now, that’s how they feel so I want to address the things that are making them anxious really. That is about, I think, at least in the economy providing those opportunities for them to have greater control over their own livelihoods and about improving their living standards.
SPEERS:
Treasurer, Scott Morrison, we better let you go. Thank you very much for joining us this afternoon. We appreciate it.
TREASURER:
Thanks a lot David.