LEON BYNER:
Good morning Treasurer.
TREASURER:
G’day Leon.
BYNER:
Now, the business of the backpacker tax is controversial and very important for SA. As you know the agriculturalists here in the harvest trail rely on backpacker labour. If you can’t get it through the Senate today that means there won’t be a backpacker tax, does it not?
TREASURER:
There will be the opportunity for the Senate if they take that view to reconsider that next week as well. I have got to particularly pay tribute to Tony Pasin who has done an excellent job in driving the compromise package that we put to the Parliament. We have said that instead of 32.5 cents it should be 19 cents. We have had a package to attract more backpackers to Australia and to get this thing sorted out by the end of the year. Derryn Hinch is happy to support that and we have had good discussions with Nick Xenophon as well but at the moment, the Labor Party together with the Greens and One Nation seem pretty keen on giving foreign workers a tax cut which I don’t really understand. I think what we have to try and do is two things - we have got to have to have a fair rate of tax that backpackers pay that means they are competitive with other countries and what we have got means that backpackers would have the same amount of money in their pockets and able to spend in Australia than they would if they went to Canada or New Zealand of the United Kingdom. So it is completely comparative. On top of that I think the other thing we have got to do is we have got to find more ways to get Australians to actually go and work in these jobs. Twenty years ago there were only 30,000, 40,000-odd backpackers who came to Australia and Australians picked the fruit. Over that period of time we have had less and less Australians taking on those jobs and we have had the employers taking on backpackers, foreign workers to do those jobs. We have also had some unsavoury things happen with illegal workers and producers using illegal workers which is the subject of Fair Work and other investigations. So we have got a good package, we think it can get support but at the moment Labor, One Nation and the Greens are saying no and they want to send us off to Christmas without this thing being resolved.
BYNER:
Alright. I want to ask you about this business of some Australians not wishing to do jobs. Close to SA, here of course at the Tatiara meatworks and they say, and they are not the only ones by any stretch, they haven’t been able to get much local labour and some of those jobs are pretty well paid. So, therefore they rely on people on various visas. Are you planning any kind of coercion or policy change to encourage Australians to take these jobs they don’t want?
TREASURER:
Well, we are and we have been trying to do this for several years. We have had a measure which we introduced when I was Social Services Minister which says that you have to wait four weeks before you can get the dole. Now, sadly, the Xenophon Team has been opposing that – as has Labor and as have the Greens. The One Nation Party support that policy so maybe we can get some sort of agreement between the Xenophon Team and the One Nation Team if we could get them all to agree, to pass that legislation that says you have to wait four weeks if you are a young person before you can get access to the dole and there are the sensible exemptions which show if you are in a position of hardship and unable to go home because of domestic violence issues or things like that, then those exemptions have already been made. Now, that is the stick approach. At the same time we have been looking at options working with the Xenophon Team about how we can provide some incentives for people who go and do this seasonal work and not have that effect on their level of support payments. Now I am open to that. I am open to the carrot and the stick. What I need is Senators who are prepared to agree with each other and work with the Government to achieve that end. So, we have got the Hanson team who agrees with me on the stick and I have the Xenophon Team who agrees with me on the carrot but I can’t get them to agree with each other to support the package.
BYNER:
So, you are convinced that a four week cessation of benefits would then coerce or encourage people who otherwise would say I don’t want that job to go and take it.
TREASURER:
I think that would have an impact, yes. If there is a job there and it is available to you and the alternative is no other income, well, that is an obvious incentive to get out there and take that job. As I said, 20 years ago Leon Australians were taking those jobs for those reasons.
BYNER:
I want to ask you about another important issue. For example coal exports, they are not the only ones, have gone up in terms of value by about 17 per cent. Has that helped the Budget bottom line much?
TREASURER:
The Deloitte Access report which came out this week, which is their update where they think revenues are at for the Government I think was very telling. What that said was the Government’s revenues are more dependent on how much people earn and how much companies earn in profits. Their estimate shows that Government revenue has been hit by the slower growth and wages and the lower levels of company profits. That is a very true point to make. Now, there is some mitigation of that which has resulted from the better commodity prices that we have seen since the Budget but it doesn’t offset that. You can’t rely on these commodity prices to be a salve to fix the Budget. You have got to get expenditure under control and that is what we are doing. We have cut the growth in expenditure which under the Labor Government was running at 4.4 per cent real, we have got that down from our first Budget to 1.5 per cent real. So we have had a pretty dramatic reduction of spending in this country and that is what we have to do and commodity prices are going up, well that is welcome but that is not an excuse to deal with expenditure. What the ratings agencies have said is that they need the Parliament to pass the Government’s Budget savings and if they don’t then the Parliament is putting Australia’s triple A credit rating at risk. The Government has a plan to get the Budget projected back into balance in 20-21, but that requires the Parliament and the Labor Party to live up to their economic responsibilities and pass these measures which include the one I mentioned before, having young people having to wait four weeks, just four weeks, if they’re not in one of those hardship categories, before they can just go straight from their school door to the Centrelink front door, and start picking up the dole cheque.
BYNER:
Alright, as a former immigration minister, is it embarrassing to you that a government-dominated committee has recommended the proposed legislation to impose a lifetime ban on some refugees as too severe and discriminatory? Does this suggest the legislation is doomed?
TREASURER:
No it doesn’t. That’s not the first time this committee has made observations and I don’t know if I would agree with the characterisation as the chair was keen to correct the record on that yesterday, of that committee. That committee made recommendations against bills that I introduced and successfully took through the parliament when I was immigration minister. This is an important further change, it further strengthens our border protection arrangements and the integrity of our immigration system and what is most interesting about this, is it has demonstrated once again that Labor sometimes talks the talk on this, but they never walks the walk.
BYNER:
What’s the biggest drain on the Budget? Is it that our welfare bill is too high? Is that or is it something else?
TREASURER:
Well the welfare bill is the biggest part of the Budget, $150 billion a year. That’s followed by the health budget and then you’ve got defence and education. That’s just the quantums of the Budget. But the areas where you have strong growth is where you have a dependency, and a growing dependency on transfer payments, welfare payments, and that’s what we’ve been working really hard to get on top of. We’ve already got through this parliament over $6 billion in savings passed through the parliament. We welcome that. But there’s a lot more to come. $15 billion is a further amount that we’re trying to take through the parliament which is being rejected by the Labor Party. They’re actually saying now that they want to have small businesses continue to pay a high rate of tax, they’re going to abolish all of that which we’re proposing to do, they want to take even more tax out of superannuation, and then they still end up with a deficit that just over four years, is almost $17 billion worse off. Now how they think that’s going to protect the credit rating is beyond me. It’s complete hocus pocus budgeting.
BYNER:
Just for the record, you’re changing super as well, what will happen after next year if you get this through?
TREASURER:
On the first of July the three biggest changes are that there is a transfer balance cap, and that means that for those who have a balance in their superannuation, which is just one per cent of superannuants, of more than $1.6 million, then the tax you pay on the earnings on the amount over $1.6 million, will be at 15 per cent, not at zero. Now, 15 per cent is still a concessional rate as you know. That’s a big change, and that is effectively means testing access to tax concessions for superannuation. Now, the other changes that we’ve made, is that we’re limited the amount of non-concessional contributions that you can make, so they’re the contributions you can make after you’ve paid your tax, and that’s limited to $100,000 a year, and there aren’t too many people who can do that, so that’s a reasonable limit that we’ve placed on that. We didn’t go ahead with that lifetime non-concessional cap of $500,000. We listened on that and we changed it. The other change is that the amount of concessional contributions you could make each year is $25,000. And that can be done each year and there is a carry forward that you can have on that if you have a balance less than half a million. For those people who find themselves out of the workforce or having kids, or have caring responsibilities, or they might have variable incomes because of businesses incomes or farmers or things like that, they will have an opportunity to catch up. Interestingly the Labor Party wants to block that measure in particular, like they want to block the measure that if you have a non-wage income, let’s say you run a business as well as having a wage job, well currently you can’t get concessional contributions to your superannuation from your business income in those circumstances which we think is terribly unfair. So we’re going to allow that. The Labor Party is opposing that as well.
BYNER:
Just quickly, sugar tax, would you ever embrace one?
TREASURER:
Well I think the best way for people, I heard you on your program earlier saying would a sugar tax make people lose weight, well drinking less sugary drinks will make you lose weight, there’s no doubt about that. That’s certainly something Jenny and I seek to practise with our own kids and we all know a bit too much sugary drinks, you know what the kids are like in the afternoon. You try and avoid that wherever possible. I think a lot of parents are trying to take this into their own hands. But look, everyone has lots of ideas for new taxes Leon. What I don’t get distracted by, is I don’t see any of those suggestions as an excuse to not deal with the expenditure problem. What people are often saying is, look you don’t have to get expenditure under control, you don’t have to make sure the welfare system is sustainable, you don’t have to do all these important things, we’ll just bung on a tax here and bung on a tax there.
BYNER:
So you won’t do it?
TREASURER:
What I’m saying is that I’m focused on getting expenditure under control and I’m not being distracted by all of these other, I’m sure well intentioned suggestions. The Government is focused on what we put in our Budget and I’m seeking to pass that through the parliament and the ratings agencies are saying; if the parliament doesn’t pass those Budget savings, then the parliament is putting our triple-A credit rating at risk, and the people most responsible for that is Bill Shorten and Chris Bowen.
BYNER:
Scott Morrison, thank you for joining us today.