RAY HADLEY:
Treasurer, good morning.
TREASURER:
G’day Ray.
HADLEY:
Now, the debate continues, I suppose you are over the debate about tax reform – changing the GST. I am interested in this meeting you are going to have with the states. I suppose you are over the debate about tax reform – changing the GST. I am interested in this meeting you are going to have with the states because at the end of the day if they don’t agree to it on mass it doesn’t happen – is that still correct?
TREASURER:
Yes, well the last thing the Government wants to do is act unilaterally on this and what we are looking to do is work with the states and territories. This is a debate which is actually about how we grow the economy and jobs – that is what it is actually about. The Government is not looking to increase the tax burden on Australians. The only people who are actually formally out there proposing an increase in the GST are actually state governments and former Labor Premiers and the odd Member of Parliament. So, what we are interested in is growing jobs and growing the economy and the point I have been making about personal income tax is that it is very high and next year if you are on an average wage you will actually be in the second highest tax bracket. For many people today, I mean you and I remember Ray, getting payslips, we actually remember getting paid cheques – physical cheques. Now, for many people today their money just goes into their bank account.
HADLEY:
You don’t see it.
TREASURER:
You don’t see it. So, you go to the ATM, you pull your money out, what you don’t know is the Government has already pulled out 19 cents, or 32.5 cents, or 37 cents or 45 cents…
HADLEY:
Plus the Medicare Levy.
TREASURER:
Plus the Medicare Levy. So, I think there is an important need, I think, for us to understand just how much tax is being taken out of your income every week. What we want to do for people who want to work harder, who are saving and investing for their future, we want to ensure that the personal income tax system is not getting in the way and holding them back. So, I have been talking about personal income tax, others have been talking about GST – that’s largely what has been raised by states.
HADLEY:
Let’s pretend for the sake of the argument that the Federal Government’s income is $1,000 and $750 comes from personal income tax and $250 – to simplify – comes from GST.
TREASURER:
Yeah, that’s about right.
HADLEY:
Just roughly. So, if in fact you are going to have to reduce the income tax - instead of $750 you get $700 or $675 – whatever you get. You are going to have to get the other $50 or $75 from somewhere else and that is why the focus is on GST.
TREASURER:
But let’s not forget the $85 billion a year that states and territories collect. That is more than the GST and at our next meeting of states and territory treasurers, which you mentioned, what is on the agenda is state taxes and charges. The states are, on balance, as the report was showing in, I think it was The Australian today, they’re actually in surplus. So, we all have challenges at various levels of Government. The states have their challenges with their budgets. We have our challenges with our Budget particularly over the next few years when the NDIS comes into full operation – more than $5 billion a year and growing is what we are going to have to find to fund that and we will find it but we all have our budget challenges. The answer to dealing with those challenges is not to go to the Federal Government and just ask for a big bucket of money. That is not something we are interested in. We don’t want to increase the tax burden on Australians.
HADLEY:
So, how do you balance – not the Budget – balance all this by going to the states and saying hang on a sec you people have got to be more responsible with the money you collect from your people in your own states plus what we give you. So, we want to see you being more responsible and then we might talk about an increased share of GST but we want to see you being responsible. I mean how does that work? Is it the carrot and the donkey?
TREASURER:
You sit down and you talk – that is what you do. That is all that is happening at the moment, Ray. We are having, I think, a pretty genuine, open discussion. Our objectives here are pretty clear – I’ve just outlined them – the states may have some different objectives and what economic leadership is about is being prepared to have those conversations - not be intimidated out of them by people playing rule-in, rule-out games and people playing politics like the opposition and trying to shut the whole thing down but by genuinely having a fair dinkum conversation and that is what we are having. You don’t rush into these things and you take your time. It is not unlike in my previous portfolio I remember those first three months, Ray, you remember them well, we were talking every week. Everyone said you have got to say when a turn-back is starting and how they work, and what will they do and release all that information. Well, you just get it right. That is what you do – you get it right and you get it right by collaborating and working with people.
HADLEY:
But I sense from our conversations which have continued on a weekly basis that the thing that drives you the most is reducing personal income tax for all levels and trying to avoid bracket creep where people all of a sudden go onto the next scale of paying tax. That is my sense that this is really something you want to drive because you think, like most people do, it will be good for business, it will be good, you know, there will be more people employed and all the rest of it. But if you are to drive that, a reduction in personal income tax across the spectrum of the levels of tax that people pay, you are going to have to come up with the money from somewhere and the obvious answer is an increase in GST.
TREASURER:
Well, as I said, there are lots of different taxes, states and territories actually levy many of them themselves. So, that is what you have to talk about but you are right, I do see income tax as an increasingly silent tax, one that people don’t notice and they really don’t appreciate, particularly younger people necessarily, just how much tax they are paying and it holds people back. We have got people out there every single day, people listening to this programme now, who are out there working their tails off and so much has been taken out of their weekly take home pay. That is the equation I want to change. You get a pay rise for two reasons, one is you work hard and your boss gives you a pay rise or you are in a business and it is growing its profit. The other one comes when the Government actually gives you a tax cut on your income tax. They are the two ways that you can see an increase in your take home pay. So, I want to see Australians earn more but I would like to see them take home a lot more as well.
HADLEY:
Just to explain it in further detail to listeners younger than Scott, and obviously younger than me, when I first started work for a pastoral company called [inaudible] I was getting $38 a week and every week [inaudible] and [inaudible] would give me a little yellow envelope and a slip inside there saying you have got $34 net and you have paid $4 tax. So, as it progressed through the years when I was earning more money you would get that either in cash or you would get a cheque – whatever the case may be – and on the slip every week or every fortnight you would see how much you are paying in tax. Because of the way things are now with computers and the like and money goes straight into the account no one really, you know what your net amount is, but no one really sees until they get their group certificate at the end of the year how much tax they have paid. As a result it is a forgotten tax – income tax – because you don’t deal with it on a daily or weekly basis anymore.
TREASURER:
But that is the one that is stinging you. That is the one that is stinging you every day you go to work and every day you try and work harder or the extra contact you take on or where you are trying to get that further bit ahead – that is when the tax hits you the hardest. That is why if we can do better there we think that will help grow the economy and grow jobs. So, this isn’t about trying to raise more revenue to balance the Budget, this is about trying to grow the economy and to try and lift the burdens off people which have an income tax system which is punishing them.
HADLEY:
Ok, one final thing, I get a stack of emails about quarantining self-funded retirees and I know we are only talking about it but a rise in the GST – how do you quarantine people who are on fixed incomes in relation to self-funded retirees but an increase in the Goods and Services Tax. How do they get a better deal?
TREASURER:
Well, with all the options that can be potentially considered in this then making sure that you have got the adjustments or compensations is obviously important. I think that people are right to point to the situation of self-funded retirees and any set of measures that are possibly contemplated would always seek to address those specifically. Now, this has been done before. I think one of the lessons from when Peter Costello and John Howard made changes to the tax system is we now have the history, we now have the data, we now know, we are not guessing about how you can go and make the changes to ensure that people aren’t worse off. In fact you can make sure they are better off. It has been done before, it is not theory, it is actually lived experience and the Government is absolutely committed to ensuring that particularly self-funded retirees who I have described as the heroes of our economy, those who have actually made themselves independent in retirement and we want to make sure more people can be independent in retirement.
HADLEY:
A couple of things on the National Security Committee which you are a member, a story today by Andrew Bolt in News Limited papers and comments that were passed last year about IS where one particular person said “they are just a movement on the other side of the world that seem to be importing people rather than exporting them”. The rules have now changed after the bringing down of that Russian aircraft with 224 souls lost. It is becoming clearer day by day that this is an act of terrorism and likely to be thrust upon us by either IS or a division of IS somewhere across the globe. What sort of threat, across the globe, does this organisation now pose to everyone?
TREASURER:
Well, we have never underestimated the threats of this, Ray, and that is why, as a Government since coming to power, we have done the things that a good government would do in response to these issues and particularly in the area of boosting the resources for our intelligence and our security and other agencies. Over $600 million has gone into that to ensure that we are getting the best intelligence so we can have the best responses. When I was in border security we upped the ante there particularly and reversed the funding cuts that had happened under the Labor Government and we’ve ensured that these agencies are equipped to go and deal with the threat. That threat presents here at home, it presents offshore, and it presents in direct theatres like in the Middle East and we are engaged in all of these places and so we have never underestimated the threat. At the same time, we won’t be intimidated by it either. We will be confident about it, we know that we have the wit and the will and the agencies to be able to properly protect Australia’s interest and to protect Australians and I think there is a commonality of purpose on that. So, we can just get on with our lives and get on with growing our economy and growing jobs and making a better future for all Australians.
HADLEY:
We are talking to the Treasurer Scott Morrison… Are you across any further detail on what has happened on Christmas Island in the wee small hours?
TREASURER:
No, I am not, Ray. That is now a matter for the Coroner and we will allow that process to be properly followed. It is a disturbing event, distressing and I am sure people on Christmas would be very sensitive to that but the proper authorities will deal with that matter.
HADLEY:
The Royal Commission, the news came through when I was on air on Saturday via reports on Friday night that Bill Shorten had been cleared of any illegal behaviour in relation of the AWU. Others are not cleared including Victorian Member of Parliament Cesar Melhem. What did you make of the Royal Commission findings? Well, they’re not findings it is a recommendation by Council Assisting to the Commissioner Dyson Heydon.
TREASURER:
Well, generally I think in relation to the Royal Commission it has revealed a whole range of very dodgy practices – very, very dodgy practices. What I find amazing is that despite all of that being revealed on a daily basis that we still have in this Parliament a Labor Party that is refusing to support governance reforms to trade unions. I mean we are trying to make them more transparent and the same for superannuation funds where there is heavy union involvement. We are trying to actually improve the governance, improve the transparency, make them more accountable so these sorts of things don’t happen again and the people who are opposing us are the Labor Party led by Bill Shorten. So, what he is guilty of is not supporting reforms to the trade union movement.
HADLEY:
I would think governments, be they from your side of politics or from the Labor side of politics must toss and turn, literally, at the thought of more micro-parties in Australian politics, particularly in the Senate. The Australian reports today the preference whisperer Glenn Druery will headline a meeting in Canberra next month where people can learn how to form their own Party and get into Parliament. Having dealt with Ricky Muir because you are the go to man here for the Government, of course the Palmer United Party and this lamentable man David Leyonhjelm from the Liberal Democrats – do you think you need more micro-party Senators or fewer?
TREASURER:
Well, what we are doing is making sure we are a good Government and people will support us. I think that is the fundamental position any major political party has to focus on.
HADLEY:
But what if someone like Druery can, you know, not rort the system but manipulate the system?
TREASURER:
Well, those are matters that have already been looked at by the joint standing committee on electoral matters and there are discussions taking place about those issues with the Senate but for the Government, I mean, I don’t get distracted by it, the Prime Minister doesn’t. We are just focusing on delivering good government that grows jobs and grows the economy. Now, when we are doing that, then I think other options don’t become options because the best option is going with the Government which is showing strong economic leadership.
HADLEY:
What did you make of David Leyonhjelm’s comments at that Senate Inquiry into police dealing with the RBB at the Western Sydney Wanderers game when he agreed that all cops are bastards and they need to un-earn that title? He is a strange fellow is he?
TREASURER:
I didn’t see that report and I haven’t heard that until you have just put it to me now, Ray. Obviously, language like that is deeply offensive. As you know I am the son of a police officer and our police are out there every day putting themselves at risk and I think all Members of Parliament need to be very careful in how they make these comments and not to give offence to people who do more for our country every day than frankly the rest of us.
HADLEY:
Ok, as always, thanks for your time. We will talk next week.
TREASURER:
Thanks a lot, Ray.
HADLEY:
Federal Treasurer, Scott Morrison.