GARETH PARKER:
Treasurer good morning.
TREASURER:
G’day Gareth.
PARKER:
Treasurer the independent Reserve Bank Governor Philip Lowe seems to be agreeing with Bill Shorten. Mr Lowe says that inequality is in fact on the rise, and that Australian households are facing a double hit of soaring power prices, and insidiously low wage growth. Is he right?
TREASURER:
What he was referring to on inequality was the wealth measure, and he’s particularly talking about what’s been happening in house prices on the east coast. So that will be not great comfort to people in Western Australia. There are two ways you measure inequality, wealth, so that includes your assets, but the one that really matters is your income. What’s in your pocket. What the income and equality measures show, is that since the GFC, inequality hasn’t got worse in Australia. You go back over 30 years, which is what the Reserve Bank Governor is also talking about, but things are different to what they were 30 years ago. But, the point is what direction is it heading in now, because that is the argument Bill Shorten is trying to use to put up people’s back? And since the GFC, the income inequality measures actually haven’t gotten worse, if anything, they’ve got better. What really matters is the other point that Phil was making, and that was about yeah, people’s wages haven’t gone up, in any real sense in a big way in some time. And there is a lot of pressure on the household budgets and that’s why in our Budget this year, we took the steps we already have, whether it was on housing, or on electricity prices, or guaranteeing Medicare, schools funding, the NDIS, all of this was designed to get people who are under a lot of pressure, recognising that they’re under that pressure and giving them a guarantee about those services. So, that’s what we’re doing about it, Bill Shorten wants to talk up inequality because he wants to tax people more and he thinks you can only do better if someone else is doing worse. That’s not a plan, that’s just envy.
PARKER:
Is he right that some rich Australians aren’t paying their fair share of tax?
TREASURER:
Well, the top 1 per cent of income tax payers paid 17 per cent of tax, the top 10 per cent paid 50 per cent. That’s sounds like a pretty fair share to me.
PARKER:
So you don’t think that there’s anything that needs to change in terms of our income tax structure?
TREASURER:
I think taxes should be lower for everybody.
PARKER:
Bill Shorten, we don’t know precisely what he’s proposing. He says he’s going to announce it on the weekend. But trusts seem to be in the firing line. Is there anything wrong with structuring your affairs, particularly if you’re a small business person, through a trust?
TREASURER:
No there’s not, and Bill Shorten said that himself in 2011. See what Bill’s trying to do is this, he’s talking down the country. Not only has he not got a plan for growth, but he’s saying Australia is not a fair country. Now we’re one of the fairest countries on earth. And we’ve worked hard at that. We’ve got a progressive tax system. We’ve got a system of payments and welfare in this country which some would argue are too generous. We are certainly working on ensuring that people don’t rort the system. But we look after people in this country, and we do it a lot better, than, I’d argue, anywhere else in the world, particularly when you compare us against countries like New Zealand, or the UK, or the United States or others like that. We do look after people in this country and I’m not going to cop Bill Shorten trying to use his ideology to tax people more, and do that on a con line, that he’s trying to say Australians aren’t fair. We are fair. And his notion of fairness is you can only do better, if someone else is doing worse. And particularly so long as it’s not him.
PARKER:
My guest on the program is the Federal Treasurer. Treasurer Scott Morrison. Mr Morrison, speaking on inequality, I don’t want to hammer on about the GST, you and I have been through this before.
TREASURER:
And that’s still a work in progress but we’re getting on with what we talked about last time.
PARKER:
Related to WA’s low GST share, the McGowan Government is in the process of framing its State Budget which will be released in September. And they’re talking about whether they will, or whether they won’t follow the lead of Jay Wetherill in South Australia and implement a bank tax. Now, I’m sure you’ve got views on the merits of a bank tax, but one of the points I want to flesh out is this. It’s my very clear understanding, that one of the reasons that Ben Wyatt, the WA Treasurer, is looking at this bank tax, is because he’s looking for revenue options that won’t be just redistributed away to other states by the Commonwealth Grants Commission. If he hikes mining royalties for example, he might get a one or two year increase in his revenue, but eventually the Commonwealth Grants Commission will give all that revenue to the other states. Whereas the attraction of a bank tax, and I don’t think they’ll go through it in this Budget, but the attraction of a bank tax as far as the State Government is concerned, is if it was to be introduced, because of the perversity of the Commonwealth Grants Commission system it actually wouldn’t be redistributed to other states. Now, that’s a bit of a problem isn’t it?
TREASURER:
Well this is one of the reasons why I’ve ask the Productivity Commission to look at exactly these sorts of things, the way that policies are set, whether you keep your gas under the ground, or other things like that, because of the GST formula, how that might be holding back our economy. And we don’t want to have the GST formula incentivise bad policy, bad tax policy. So these things go together, Gareth, and that’s why I’m very keen to ensure that we have a formula which doesn’t provide the perverse type of incentives you talk about. I certainly hope Ben doesn’t introduce one in Western Australia, the banking and financial system is run at a national level. That’s where taxation arrangements apply, and our bank tax is a fair one, and it’s based on the fact that the banks effectively collect a rent on the basis of how they sit in the financial system, their advantage in that, is up to 40 basis point advantage, and we’ve put on a six basis point levy. But for the State to then try and free ride on that, I think is bad economic policy. It’s lazy economy policy, and it only ends up hurting the State, because I mean you want banks to lend there, and everywhere else, to support businesses and I think it’s a pretty cynical move in South Australia and I certainly hope the West Australian Government shows better sense than they have in South Australia.
PARKER:
Mr Morrison the Prime Minister is coming to Western Australia on Sunday and into next week, are you going to be joining him by the way?
TREASURER:
Yeah I’ll be there on Tuesday I think.
PARKER:
Can we expect any announcements, either on GST arrangements or infrastructure funding?
TREASURER:
Not on GST we’re not finished that work yet, so I don’t want to create any false expectations around that. I’m sure we’ll get plenty of advice while we’re in Western Australia, as I did recently and I welcome it. I think it’s good for us to get to the West and hear, directly, from Western Australians, how they feel about this. I certainly got it in big doses when I was there the other week, and pleased to get it, I mean that’s why I came. I took that message back so my colleagues and we’re all coming across now and I’m sure we’ll hear the same thing as we continue to consider this. But just while we’re talking about the GST, I said this morning in a speech that you’ve got to judge people from what they do, not just what they say. That was about fairness, but when the GST relatively fell under the Rudd/Gillard/Rudd Government by half, it was almost at a dollar and it fell to mid-forties. They didn’t do anything. They didn’t do anything at all. I mean, when we came in it dropped and we effectively put a floor on it by topping it up by several billion dollars in additional payments, to try and relieve it, not saying that fixed it, but we put our money where our mouth is. We think it’s the right outcome because I understand Anthony Albanese was there yesterday saying it’s a terrible thing. Well, he was in a government that did absolutely nothing about it. So why would you trust them to do anything about it if they were in power.
PARKER:
Treasurer yesterday we spoke with your colleague Angus Taylor about the possibility of Perth signing a cities deal to get access to potentially billions of dollars of infrastructure funding, do we stand a good chance of getting access to that funding? Perhaps almost as a quid-pro-quo for a lower GST share?
TREASURER:
I wouldn’t sort of see it in terms of a quid-pro-quo. I’d see it as a good investment. There are things we’ve done as quid-pro-quos and also I’ve ensured how we reallocated the freight link money, with Western Australia. That contribution is being excluded from the GST calculation as well. I put that in place, I let the Government know that the other day. So, we’re doing that. We’re doing some quid-pro-quo things but what Angus is talking about here I think is at another level again. It’s about us working with state and local governments and other private investors on a city deal that we’re doing in other places which really improves our cities, and it makes it more economically viable and functional and supports the economy and makes people’s living standards better in a city that’s easier to get about in, and do what you want to do.
PARKER:
How are you going to judge the success of this trip? For a long time, Western Australia has been Liberal Party heartland, this State has been your biggest backers, but that has according to the polls, really dropped away in the last 18 months. Is this an opportunity to try and reset when it comes to your support levels here in Western Australia?
TREASURER:
It’s not the first time we’ve had a cabinet meeting over in Perth. We’ve done it on a number of occasions. We’re again doing it, and the real measure of this visit when we come across is to just shut up and listen. And that’s what we’re going to do. We’ll also have a bit to say about what we are doing in Western Australia, whether it’s our infrastructure investment, and the tax cuts we’re giving for businesses in Western Australia and all of these sorts of issues, but the real job when you have these cabinet meetings outside of Canberra is to do more listening and less talking.
PARKER:
Scott Morrison, we look forward to having you the state next week, thanks for your time on the program.
TREASURER:
Looking forward to being there Gareth, cheers mate.