LEIGH SALES:
Well, the Government had a victory today with the passage of its superannuation reforms through the parliament. The changes will impose a $1.6 million cap on the amount of tax-free super savings a person can hold in retirement from next year and after-tax contributions will be capped at $100,000 per year. With me now live from Canberra to discuss that and other issues is the Treasurer Scott Morrison, good to have you with us again.
TREASURER:
Good to be here.
SALES:
Treasurer, will the passage of your superannuation reforms today be enough to stop the budget projections in next month's midyear economic forecast, from going backwards?
TREASURER: As you say the MYEFO statements will come out next month it will come out on the 19th and December and that will bring together all the data, we will have the September quarter national accounts by then and that will all be reconciled to give a clear picture of what the situation is at that time. Now our Budget, when we brought it down and what we took to the election, provided a trajectory for the Budget to be in balance in 2021. If we are in a position where those savings that have been part of that are passed, and the primary opponent to that is the Labor Party, then we should be able to stay on track with that trajectory. But there are some more data points to come in. I'm not one, like others in the past, like Wayne Swan, who made bold promises about these things - it is uncertain times with the economy - but the way we achieve the balance is pass the Budget savings and that's what Labor continue to thwart us at doing.
SALES:
Deloitte Access Economics warned this week that the biggest source of income for the Government is the tax that citizens pay on wages and wage growth has been really flat for quite a while.
TREASURER:
True.
SALES:
That is your biggest problem, isn't it, and what can you do about that?
TREASURER:
That is the biggest challenge to revenue, that together with company profits, so the profits that companies earn, obviously, and Australians need to earn more, companies need to earn more. That's why our corporate tax plan, particularly for small and medium-sized businesses is so important because what that does is gives the businesses the headroom to be able to give their workers more hours. We are not the only ones doing this, the United Kingdom is on its way to a tax rate of 17%, and we’ve heard now that the Trump administration will be heading down I think to 15%. We are at great risk if we aren’t able keep down the trajectory we want to go down of having Australian businesses stranded in a high tax environment country, while other businesses in the UK and in the United States enjoy much lower tax rates. Now that's not good for people to be able to earn more and get extra hours because the way you boost your revenue is you help Australians and Australian businesses earn more.
SALES:
A lot of Australian businesses make really, really healthy profits. Why, then, can't they afford to pay higher wages?
TREASURER:
Well, where businesses are in that position and the transition of our economy isn't being felt evenly across the country, I think that is one of the key challenges governments have not just in our country but all around the Western world. The transition of economies - we're coming out of the mining and investment boom, we're moving through the period where we've had a very large advantage of a fossil fuel based economy, we have had energy advantage there, which has supported manufacturing industries for many decades. We're going through that transition and parts of the country are feeling that harder than others. But in the services sector, where we're seeing strong growth, in the exports sector, courtesy of many of the arrangements we put in place, we're seeing strong growth. Where they are doing that they need to pay their fair share of tax. That's why we've also worked on the tax integrity measures, particularly for multi-nationals, which were also successful in passing through the parliament this time last year.
SALES:
Standard and Poor's, the credit rating agency, today warned at a conference that if the return to surplus for the Australian Budget slips beyond that 2021 period, that's going to be very hard for Australia to retain its AAA credit rating. Given that over the past number of years, the projected return to surplus has kept slipping further and further out, that's a very real risk, isn't it?
TREASURER:
It is a real risk and that's why they've issued the warning and they've issued that warning directly to the parliament. I've met with Standard and Poor's in New York, as well as here in Australia, and what they've highlighted is that they know what's in our Budget and they know that includes the corporate tax cuts and they know the savings that are there and they are saying, "Parliament, you need to pass these savings measures".
SALES:
But if the credit rating is cut then you are the government and you are going to wear that.
TREASURER:
This is why we put the Budget plan out, which actually brings the Budget back to a balance projected for 2021. Now, the major obstacle to that is the Labor Party, who don't want to support the full suite of savings measures that are necessary to achieve that. So if that rating goes as a result of savings measures not being passed, then that hangs fairly around the neck of Bill Shorten and Chris Bowen.
SALES:
Just back on superannuation, with your super changes, the initial opposition to that package when you first released it came largely from within your own base. You have a look at what's happening with the conservative vote around Australia and there is a problem with your base. The Shooters Party took the seat of Orange from the National Party in NSW, we had the conversation where George Brandis was overhead talking about the leaking of the LNP vote to Queensland to One Nation and there was some leaked poll data today from Western Australia also showing that One Nation is in a very commanding position. How much of a problem do you think this is for the Coalition and what, in your view, needs to be done to arrest that slide of votes to the right?
TREASURER:
It is a tough time for governments all around, I think, the advanced developed world and there weren't too many governments re-elected this year and we were one of the ones that were re-elected in these difficult circumstances. I think the message for governments is to understand deeply the pain that is being experienced by those who are being left behind in a transitioning economy, globalisation, technological change, the change from fossil fuels based energy sources to others, and how that's impacting on people, and we need to ensure that our economic policies reach into those communities and help them make the transition so they can make their way through and have a better optimistic outlook on the future for themselves and for their children. Now, services play an important role in that, too, Leigh. It's not just them having a wage future but it's also them having a sense of certainty about the services and that's why economic growth is so important. You can't fund hospitals, schools and Medicare if you're going to run big Budget deficits which drain the economy and doesn't support the business to invest and grow jobs.
SALES:
There has been a lot of talk since the election of Donald Trump in the United States, that we're living in a post-truth world where opinion carries more currency than fact, and your side of politics, in fact, raised the same sort of thing here after Bill Shorten's Medicare privatisation scare during our election. What do you think - do you think that the facts are still where the political battles are won? Or are we in a new environment?
TREASURER:
Well, the facts are always important. And here's a few - I mean, the Labor Party thinks the deficit should be $16.8 billion higher. I don't see how they think that's going to improve the rating. The facts are that Bill Shorten lied at the last election and he continues to engage in cynical politics.
SALES:
And he came within a cooee of winning the election, even if you take what you say at face value there. That goes to my point - are we in a different environment?
TREASURER:
It's important to remain rooted in the facts on these issues and the facts about the economy is over the last two centuries we have known our prosperity by being a successful trading economy which has relied on bringing in capital, not only domestically but particularly from overseas to develop our industries, to develop our opportunities. Now, you don't go throwing away two centuries of prosperity and go off pursuing other paths, we don't have that luxury, Leigh, so we're going to continue to be honest with the Australian people. We were honest at the last election about the need for things like businesses being in a lower tax environment to support jobs. We were honest about superannuation. Bill Shorten lied about superannuation at the last election and now he is just being a massive phoney.
SALES:
We are out of time and we've been inviting Mr Shorten to join us, hopefully he will be able to do so soon. Thank you, Treasurer Scott Morrison.
TREASURER:
He will promise you anything, Leigh!
SALES:
I can't really let that stand, that was a sneaky move at the end of an interview! Thanks for joining us.
TREASURER:
Thanks.