KIERAN GILBERT:
Mr Morrison in relation to the TPP, The Australian reports modelling which suggests an increase of up to 1 per cent of GDP as a result of this, does that stack up, that sort of modelling do you think?
TREASURER:
Well I think it is consistent with the evidence over a long period of time that trade, is something that Australia must do to have prosperity. Tomorrow we celebrate Australia Day, since then Australia has basically sought to be a trading nation, because as Bill English used to say when he was Prime Minister and Treasurer in fact, countries like us, we don’t get rich selling stuff to ourselves. So trade and free trade, and particularly trade that is in this arrangement as well as China, the Korean arrangement and the Japan arrangement, this is economic common sense. You don’t need modelling to prove economic common sense. Our instincts on these issues are very clear. Labor’s instincts are all over the shop. They don’t have economic instincts.
GILBERT:
Given Australia already has an FTA with the US, this modelling suggests Australia will be better off than other signatories gaining markets like Mexico and Canada and Japan, but we have the US FTA anyway. Is that your view?
TREASURER:
True. That is true. In many of these countries we already do have deals like Japan as so on. This adds value on top of those deals. This all incrementally adds to Australia’s access to markets all around the world. I mean it’s $13 trillion worth of an economy that we’re working with here through this arrangement. 98 per cent over the course of the arrangement where you’d got tariffs being removed on everything from importing things like services where we’re seeing very strong growth in our exports to more traditional areas in the ag sector. You’ve had great responses out from the farming sector, the mining sector, the services sector. This is just part of our economic plan Kieran, this is not an isolated incident. This is something we’ve been doing now since we came back to Government in 2013. It’s core to our economic agenda, and it’s no surprise then that last year more than 400,000 people got a job and almost a million people have got jobs in Australia since the Coalition was first elected.
GILBERT:
You’ve spoken about, and I know the Prime Minister has as well, the Trade Minister, about the benefits. What are we giving in return? Obviously we’ve been speaking about the exports, what are we opening up in return?
TREASURER:
We are backing ourselves as an open market economy to be able to continue to compete, and that’s one of the other reasons why it’s so important we do the parallel changes which we are seeking to do particularly in the tax sector, to remove the tax burden on our own businesses so they can compete as well. This is another reason why it’s important to have an internationally competitive tax rate. Again, our economic instincts are very clear. If you lower the tax burden on Australian businesses, they can invest more in exploring and developing these new markets we are giving them access to. New products, investing in their workers, investing in skills, that’s what helps them drive the growth of the economy, which lifts everybody’s opportunity in this country.
GILBERT:
If it all stacks up so well why not accede to Labor’s request to have a Productivity Commission review of the agreement?
TREASURER:
Labor would think you’d need economic modelling to decide whether to put your pants on one leg at a time. That’s because they just don’t have any instincts on this. They just don’t get it. Every time they look for an excuse and a waffle and they carry on. I mean, it’s a no brainer. We’ve been doing it for 200 years. It’s what has made our country prosperous and will continue to. If they haven’t got it after 200 years, when will the Labor Party ever learn…
GILBERT:
Isn’t it fair enough they want to see the details though. Jason Clare says he wants to see the details.
TREASURER:
They can details of the deal, by all means look at the deal. They’ll do that. But honestly, on every occasion, they were the same on the China free trade agreement. They’ve activity resisted us on lowering the tax burden for Australian businesses. Bill Shorten and Labor’s economic instincts are haywire. They don’t exist. Even when he said that he used to support reducing tax rates for companies to make them more competitive, clearly that was all just waffle. The guy believes nothing on the economy, and that’s why he can’t be trusted on the economy.
GILBERT:
Why are they all secret though these deals? Wouldn’t they be better if these agreements were up front so everyone could have a look?
TREASURER:
They will go through the normal process, there’s the parliamentary committee which goes through the details of all these arrangements as they did with China, as they did with Japan, as they did with Korea. There’s the normal process that these agreements will follow Kieran, as you’re familiar with, and that’s as it should be. We’re very pleased that we’ve been able to show the tenacity, I said this yesterday, about the Prime Minister and Steve Ciobo, these guys, dogs with a bone. Bill Shorten was telling parrot sketch jokes about the TPP a year ago, well he is the punch line in the parrot sketch now, of his own telling. This guy, honestly, he just doesn’t get the economy.
GILBERT:
As trade liberalisation has been agreed to in this by 11 nations, Donald Trump continued his protectionist, America first push, is this important in a broader sense of trying to counter some of those protectionist forces, most notably out of the Oval Office.
TREASURER:
I think the Prime Minister put it well yesterday, we know President Trump’s view, he put that in all fairness to the American people when he went to an election. His view was well known. He is entitled to that view and to pursue that as he promised at his last election. That doesn’t mean the rest of the world stops and that’s what we’ve demonstrated and the leadership shown by the Prime Minister with Prime Minister Abe, I think has been outstanding. There was some issues with this some time ago when leaders last met, and the Prime Minister and Prime Minister Abe, they worked this through, they were able to get the Canadians back on board and I thought that showed a lot of tenacity. Now to have that tenacity you’ve got to have the belief and the instincts and to back yourself that this is the right thing to do for the Australian economy. As we saw from Bill Shorten, he ran at the first sign of grapeshot on this thing. Again, it’s just why at the end of the day, you just can’t count on him when it comes to these economic issues. He turns to water, there’s no ticker.
GILBERT:
Treasurer, the Prime Minister is going to meet President Trump again next month. Yesterday another thing that Mr Turnbull said is that he’ll urge him to reconsider on the TPP, but genuinely, what’s the point given his rhetoric and in fact, pulling out of the TPP, I think from memory, he did it on day one of his presidency.
TREASURER:
His view is well known. They’ve already had many meetings as you know over the course of the last year, both in the United States, they met at the G20, they speak at appropriate times. I’m heading over to the United States next week, I’ll be meeting with the Texas Governor as well as senior businesses all up through San Francisco and Seattle and taking the temperature on what’s happening there in the United States. That economy, as we saw with the IMF forecasts this year, they’ve had a lift in their forecasts in both 18 and for 19 on the back of what they’re doing. I’ll be taking a close look at how that is really translating in companies like Boeing and Amazon and so on. I mean Apple is going to invest $30 billion more in the US economy as a result of the changes the Trump Administration has put in place. I mean that is serious reinvestment in the economy. They get that it’s economic common sense, the French get that it’s economic common sense, the UK Government gets that it’s good economic sense, as do we. But the Labor Opposition here in Australia, they just don’t get it.
GILBERT:
I want to ask you about the IMF projections in a moment, just one final one on the TPP, this commitment to a rules based trade agreement measures such as environmental protections, human rights for example. Does this differentiate this approach to say that led by China in the region?
TREASURER:
What this agreement and other agreements provide for, is that Australia maintains the right to be able to make laws for the welfare of its people. That ensures that particularly in other areas like the environment and so on, that we retain absolutely our sovereignty on these issues. On our tax system, on our environment policies, things like this. I think that’s very appropriate, but this is an open door agreement. Build it and they will come. Well, we’ve built it with 11 countries and other countries are welcome, whether it’s China, Indonesia, ultimately at some point in time the United States. This is an open door agreement that allows other countries to come and participate, and because we’ve been there to make this happen, you know we had to make this happen. It wasn’t just going to fall out of the sky. If it was not for the tenacity of Prime Minister Turnbull and Steven Ciobo, this would not have happened.
GILBERT:
The IMF revised forecasts for international growth, now a fair bit stronger than your budget had the global outlook, it must be encouraging. Obviously we’ll see that revision within your budget. Does that broaden the scope then for those personal tax cuts that you’ve spoken about?
TREASURER:
I think what it does show is that we’ve been constantly taking a very measured and prudent approach to our estimates in our budgets. For the last five statements, going back to the 2015-16 MYEFO, we have had a projected balance in 2020-21 and that has not shifted. You know, there are always a lot of stresses on the Australian economy and there are always a lot of things that ratings agencies are looking at, particularly household debt and things like this. This why we took the actions through APRA last year on household debt, particularly in relation to interest only loans. That’s why we’ve kept a very strong focus on that projected balance in 2020-21. As I said, there are better days ahead and those better days ahead are certainly true for 400,000 Australians who got a job last year. A record, a calendar year record for jobs growth. On top of that, we said this time last year that the world economy is turning. That’s why there were better days ahead. That has proved to be right, and this year we are starting 2018 in another year of economic opportunity where the consensus forecasts are that things are continuing to improve. That’s why it’s so important Kieran, that’s why it’s so important that we get these things right – trade, tax – that enables businesses to seize these opportunities. That’s how wages lift, that’s how it happens. Labor doesn’t have any policy that is going to encourage business to lift wages, because they’re going to tax them more and shut down their trade opportunities.
GILBERT:
The better days ahead in the short term, I want to ask you though about the impact of the Trump tax cut. Given that the Trump tax cuts are unfunded, unlike your government’s tax cuts, they’re fuelled by debt, are you worried that there will be a day of reckoning for the US and therefore the global economy because of that debt?
TREASURER:
The structure of the US fiscal situation is very different to our own. As you rightly say, our Enterprise Tax Plan is fully funded. It’s there in the budget and we are projected to move back into balance in 2020-21 and stay there over the medium term. I should stress this, the personal income tax cuts, the relief for middle income tax payers, that comes before big businesses will ever see a company tax cut. The company tax cuts for large businesses don’t kick in for six, seven years. We’re looking at middle income tax relief a lot sooner than that and I’ll have more to say about that as the year progresses. It really is giving that middle income tax relief as a priority, but ensuring that there is a business tax schedule which signals very clearly that if you come and invest in Australia, if you’re investing in Australia, if you’re investing in your own business, then we’re going to ensure that you can reap more of the rewards of your investment which means you can invest back in your business and your people.
GILBERT:
Mr Morrison, appreciate it. Our first chat for 2018, looking forward to catching up with you throughout the year. Appreciate it.
TREASURER:
Thanks Kieran.