KIERAN GILBERT:
Treasurer Scott Morrison is with me in the Canberra studio, thanks so much for your time. I know you can’t get into the detail of this because it’s before the courts but no doubt, these cases have rattled the industry.
TREASURER:
They’re very serious charges that have been pursued by the ACCC and I think this demonstrates the ACCC along with our other regulatory agencies – particularly after just recently dealing with the matter with Austrac and CBA just this week and the settlement there, the largest ever penalty that’s ever come down in a civil case. We take these issues very seriously and obviously, the ACCC will take that matter forward and it’s for the courts to determine
GILBERT:
Do you see this as a message to others in this sector?
TREASURER:
I’m not going to make any reflections upon that other than to say that the Government’s regulatory agencies are out there doing their job and they’ll take matters forward as they have – whether it was the BBSW issue that was taken with the banks, whether it’s these criminal matters, whether it’s the matters with CBA, with Austrac – under this Government, we’ve had very focused, very determined regulators doing their job.
GILBERT:
When it comes to the Austrac case and CBA and this case as well, is this why you and Malcolm Turnbull held off on the Royal Commission for as long as you did? Because the regulators, as you argue, are doing their job already?
TREASURER:
We’ve always said that from day one we’ve been focused on taking the action you need to take and whether it’s the steps that we’ve taken with Austrac and what followed with APRA and the Laker review that was a very significant retort and I think it really belled the cat on behavioural issues, particularly within that institution within the CBA. It all goes back to accountability so whether it’s the Banking Executive Accountability Regime, the increase in the penalties we’ve announced that came off the enforcement taskforce, the resources we’ve put into ASIC, the actions you’ve seen from Austrac as well as the ACCC as the competition watchdog and working in this competition space. This is the environment and the support we give to our agencies now, the cases of the cases and they’ll be considered before the courts but I don’t think anyone can say that under this Government, there has been any sort of light touch from our regulators.
GILBERT:
So we’re getting the headlines out of the Royal Commission but, in terms of the substantive response, we’re already seeing a lot of that, aren’t we? That’s the reality?
TREASURER:
We are. The Commission will take its course, of course, and I don’t want to pre-judge what comes out of there but what has already happened, the actions that the Government had already taken – I mean, if we had just waited for the Commission to finish its work before we started any of this, well, that wouldn’t have been a Government focused on the real issues. We were focused on the real issues, always have been, will continue to be and I think that’s why Australians can have confidence in the way that we have been holding the financial and banking system to account.
GILBERT:
Do you think the banks have started to get it as well? With, you know, the deal, the Austrac deal with the CBA, Matt Comyn, the CEO of CBA with his statements conciliatory and it sounds like it’s starting to dawn on them.
TREASURER:
Well, in my discussions with the CEOs, I think they’re very focused on rebuilding trust for their institutions and I think the decision by CBA the other day was a good indicator of that and I said it on the day, I think they’ve taken a whole range of actions within the organisation – as they should – I’m sure they’ll be taking more.
GILBERT:
Now to the Income Tax Plan, modelling released by the Greens, they had it done by the independent Parliamentary Budget Office, shows growth in the final phase of your plan of upwards of ten per cent a year – 11 to 12 per cent is what it looks like in terms of the growth in those final years. Is that why you didn’t want to release the full year-by-year costings?
TREASURER:
No, the reason…
GILBERT:
Because it’s expensive at the backend?
TREASURER:
No, the reason is exactly as the Treasury Secretary said at Estimates and that is individual year numbers beyond the forward estimates are unreliable. I mean, we don’t do ten year individual costings. Budgets are done for four years and even at that four years individual estimates, there are – as the Budget papers show – some real sensitivity risks towards the backend of four years so this idea that you’re getting a level of precision, individual years over ten, is a joke. It’s just a joke. Otherwise we would do Budgets on ten year, individual year estimate basis so the Treasury Secretary and now the Treasury officials, I thought made that point pretty well. That’s the reason. It’s just not a reliable way to do budgeting because the numbers are so rubbery when you get out…
GILBERT:
You can see…
TREASURER:
You can’t get the same level of precision. Now, you can make an estimate over ten years combined over the whole ten years…
GILBERT:
Which is over $140 billion.
TREASURER:
And we do that and we break that down as you know, in The House. But what it means is, based in the information the PBO has provided the Greens and the Labor Party. I mean at least The Greens are being honest. The Greens are saying, “no, we don’t want to give you tax relief. We want to spend the money.” Now, that is what the Labor Party wants to do, they just don’t want to be honest about it. So, the Labor Party have no excuses. Decide to give $144 billion worth of tax relief to all Australian workers. Or cut it in half like they sought to do in the House of Representatives.
GILBERT:
They are not going to do that though. They are not going to back that third phase by the looks of it. Looking at this year by year breakdown. I know you say it is questionable. Those projections. But Labor will point to that no doubt and say the growth of upwards of 10 per cent a year for that back-end shows that is where the big cost is going be and they are not going to support that for the higher end.
TREASURER:
Labor wants people to pay higher taxes so they can get more money and spend it. That is what Labor wants to do. Now, that is what Labor should be telling people in Braddon and in Longman…
GILBERT:
But they are making the fairness argument. They want to back the first phase at least.
TREASURER:
It’s not fair to tax people more just to spend their money. That is just a big spending Labor Party who can’t control their spending. That is what it means and they are looking for an excuse just to spend the money.
GILBERT:
But the point is that they believe that more focus should be on the lower to middle income – not the back end…
TREASURER:
Our plan does that.
GILBERT:
…where as I say that growth is going to surge at the end.
TREASURER:
Our plan does that. Our plan does three things. It gives immediate relief for low and middle income earners, it deals with bracket creep, particularly for those anchored around middle incomes and it extends a more simpler tax system which means 94 per cent of Australians won’t face a marginal tax rate of more than 32.5 cents. Now, that is the plan. Labor don’t have a plan. That is why they can’t answer the question will you support it or not – because they don’t have a plan. They just see tax relief as throwing money around and as spending money. We don’t think tax relief is spending money. We think Australians earnt that money and it is theirs and we think they should get to keep it. Labor wants to take it off them and spend it. That’s what they always do.
GILBERT:
You talk about the speed limit on tax 23.9 per cent cap. What happens if there is another shock to the economy and that as a percentage plummets as a percentage of GDP. How do you afford the tax cuts then in the longer term?
TREASURER:
Well, how do you afford spending in the future? There is no difference. If you can commit to spending which is 10 times, 12 times, 15 times what this cost of tax relief is over ten years then why can’t you commit to tax relief for the same period of time? This is the nonsense argument, Labor are happy to legislate spending forever at greater levels than what is provided in the revenue estimates on this tax relief but they are not prepared to provide that same commitment to people that pay the taxes.
GILBERT:
And there’s still no break up of that, not going to countenance breaking up the phases to get it through? Say the first phase?
TREASURER:
It’s a full plan. It passed the House. Labor actually voted for it in the House of Representatives. So, I don’t know how they explain that to the Australian people particularly in Braddon and Longman and say, “hang on, we support it in the House of Representatives, then we changed our mind in the Senate.” All that says to living people in Braddon and Longman is that they don’t know what their view is on tax and they can’t be relied upon.
GILBERT:
You have got the National Accounts today, strong exports and infrastructure construction. This is nudging growth, it looks like towards the 3 per cent mark, and that could exceed your official Treasury and also RBA forecasts. That would be an encouraging start to the year in the wake of the Budget.
TREASURER:
We will see what the numbers say later today when they are released. We went to the last election saying we would provide jobs and we would provide growth and we certainly have had a record year of jobs growth. All of our plans have been designed to create a stronger economy and yes those earlier indicators leading into this set of National Accounts have been very positive but these things don’t happen by accident. We also had the services industry results that came out this week as well and they were very strong, remembering the service industry makes up the majority of our economy.
GILBERT:
Consumer sentiment, still, that is the question mark isn’t it. The wages have been so sluggish.
TREASURER:
Consumer Sentiment gets battered by any number of things but Consumer Sentiment is higher today than when I took over as Treasurer. So, what we are doing today is putting policies in place that drive the economy stronger into the future. That is why you have lower taxes. Whether it is for personal taxes, or more competitive businesses taxes. That is why you have a medical industry plan as we announced in the Budget. That’s why you have a defence industry plan. That’s why you have a public infrastructure plan running over ten years – a rolling program of $75 billion. All of this is creating the environment for businesses to invest which is creating jobs which is driving growth.
GILBERT:
Are you worried, Harry Triguboff, he is warning about the context of the Royal Commission, that it is tightening the lending of banks at the wrong time for some of the housing markets like Sydney and Melbourne?
TREASURER:
Well, a similar comment was made in the Budget papers itself where that is highlighted as a possible risk coming out of the Royal Commission. We do have to watch that very carefully. The Commission will take its course but the response to it is what is really going to be the issue. We have got to be careful that we don’t create a self-fulfilling problem here. Credit is important in our economy. Our banks are the strongest in the world. So, this is a big financial asset for us. We don’t want to go and undermine that by creating unnecessary regulation which basically constricts and suffocates the economy.
GILBERT:
And just finally, it’s good to see you have the Origin Blues tie.
TREASURER:
Here we are. Set to go, mate.
GILBERT:
You ready? Confident?
TREASURER:
I’ll be up there with some locals up in The Shire tonight and am looking forward to that.
GILBERT:
Fingers crossed.
TREASURER:
Yep.
GILBERT:
Apologies to our Queensland viewers.
TREASURER:
It’s going to be a great night and I wish Boyd Cordner and everyone a great night.
GILBERT:
Treasurer, thanks.