KARL STEFANOVIC:
Well, it is the most significant shake-up of the financial system in almost 20 years and will affect almost every aspect of your financial life. Treasurer Scott Morrison is taking aim at surcharges and superannuation and he joins me now. Scott, good morning to you.
TREASURER:
G'day Karl.
KARL STEFANOVIC:
So how much are we going to have to pay to ensure bank safety here?
TREASURER:
Well, that will be up to banks what commercial decisions they make about the rates and how they price themselves, just like any other business. Your cost of businesses changes from time to time but particularly small businesses, they won't often pass those costs on to their customers so whatever costs are passed on to customers will be a commercial decision of the banks.
STEFANOVIC:
So yesterday's changes may not affect anything. We may get charged more?
TREASURER:
Yesterday we also saw that some of the smaller banks actually cut their mortgage rates and even Westpac, who did put up their mortgage rate, also increased their term deposit rate so that is good news for those who hold those, particularly self-funded retirees. So, there will be a mixture of responses from the financial sector and at the end of the day, every player in that sector, every bank, every other provider has to justify to their customer what's they charge.
STEFANOVIC:
Can you explain just so we have got clarity here in terms of the changes to credit card surcharges. Say, for example, we were booking a family holiday through Jetstar online or were using Cabcharge, when will that excess be taken off?
TREASURER:
We would hope to do that no later than 1 July next year and we hope to do it sooner. We have just got to consult a bit longer about how we phase it in. But you're exactly right about what's happening, Karl, is that it is around about half a per cent, what merchants get charged by the credit card providers and we are going to legislate to ensure that they can't profiteer off that. Some companies will charge up to 10 per cent for that surcharge on what was only costing them half a per cent. So, you know, that is a practice that has got to come to an end. We have blown the whistle on that one and we will legislate to ensure that consumers are protected from that sort of profiteering.
STEFANOVIC:
So say, for example, Jetstar wanted to charge 10 per cent more. This will stop them from doing it?
TREASURER:
Absolutely it will. As I said, if they are getting charged say half a per cent or three-quarters of a per cent, then that is basically, with perhaps a small recognition of the technology they have to use to facilitate the payment, but that would be a very fractional cost…
STEFANOVIC:
But you're not categoric on that. It can differ?
TREASURER:
Well, let's say it is 0.5 per cent for argument sake, as best as I can predict, 0.55 per cent is what they could charge, not 10 per cent or 6 per cent…
STEFANOVIC:
But will that be legislated, the actual...
TREASURER:
Yes it will.
STEFANOVIC:
So say, for example, on .05 per cent, what will you legislate?
TREASURER:
We will work through the consultation on that, Karl. The fees that are being charged to the merchants by the cards will be different. So, what we are saying is you can't put a ridiculous mark-up on that…
STEFANOVIC:
But you can't legislate either then. If you are saying you can't…
TREASURER:
No, I will be able to.
STEFANOVIC:
But what number will it be?
TREASURER:
Well, it will be a mark-up on the specific price which is being charged by the card provider.
STEFANOVIC:
And what is that number?
TREASURER:
That number will be different.
STEFANOVIC:
OK, so you can't – therefore you can't legislate a number because it might vary.
TREASURER:
No, Karl, I can legislate to stop people adding a mark-up...
STEFANOVIC:
But what is the mark-up?
TREASURER:
It might be 0.01 per cent but we are getting a bit distracted. What we are saying is - let's say it is 0.5 per cent which is the average of what merchants get charged, those merchants won't be able to pass on any more than that 0.5 per cent, right, they can't charge 7, they can't charge 2, they can't charge 1, they can only charge what it is costing them to actually provide that service. So there is no profiteering. We are ending the profiteering and we will legislate to end the profiteering.
STEFANOVIC:
You seem a bit vague but it may just be because it is early days.
TREASURER:
No, I'm not vague at all. It is absolute. There will be a legislated ban on passing on costs that you are not incurring.
STEFANOVIC:
Why wouldn't these changes be in play by Christmas? You know how much we all spend by Christmas.
TREASURER:
We will introduce it as quickly as we can, Karl, but we have just got to work with the sector to make sure you phase it in properly. There are a lot of businesses and merchants out there that are affected by this. So, we need to ensure that we are working collaboratively and consultatively with those to ensure we get it right.
STEFANOVIC:
This is good news, workers will have greater choice of default superannuation funds.
TREASURER:
Absolutely. As they should – it is their money. We shouldn't have unions and others telling workers where they can put their own hard earned superannuation. I mean, it is a nonsense and that will end as well.
STEFANOVIC:
Ok. Today the former Treasurer will bid farewell to parliament, Joe Hockey, after 20 years. Do you feel responsible for ending his 20 year service?
TREASURER:
No, not at all. Joe has taken the decision to leave the parliament. He has served the country well for over 19 years as a parliamentarian, not just on the frontbench of the Coalition, for I think 16 of those years, but also he was a great local member for North Sydney. I know his constituents really valued the hard work that Joe did in North Sydney. He was a great colleague over many years and he will continue to, I'm sure, offer the country great service.
STEFANOVIC:
Were you two mates?
TREASURER:
Joe and I have known each other for a really long time. Politics is a tough business, Karl. We worked together closely on the last Budget. I was on the ERC with him. We worked on any number of issues together. I think the last time we spoke we were talking about the pension changes. That is what we worked together on. We were professional colleagues who were getting the job done.
STEFANOVIC:
Is it fair to say you aren't mates now if that is the last time you spoke?
TREASURER:
It is not fair to say that, that we are not mates now. There is no bitterness that goes on from these things. That is not Joe's nature – it is not mine.
STEFANOVIC:
Did it feel bad to shaft him?
TREASURER:
That is a ridiculous question and it is quite offensive actually.
STEFANOVIC:
You did do that though, didn't you?
TREASURER:
No, I didn't, Karl. If you want to suggest that you can back it up, mate, but I think that is just playing some pretty pathetic politics over what will be, I think, a difficult day for Joe. He has the support of his colleagues and the best wishes and I don't think it is fair for you to suggest anything…
STEFANOVIC:
You sleep all right at night though?
TREASURER:
I sleep well every night. How do you sleep?
STEFANOVIC:
Pretty well. One final question, when will the Budget return to surplus?
TREASURER:
As I said yesterday, when expenditure is less than revenue.
STEFANOVIC:
When is that going to be?
TREASURER:
In the future when we get to that point. That's why I'm trying to control the expenditure and grow the economy, so we can grow jobs which will increase revenue and get us back to surplus.
STEFANOVIC:
Good on you, Scott. Talk to you soon.
TREASURER:
Thanks Karl.