RAY HADLEY:
Treasurer, good morning to you.
TREASURER:
G’day Ray.
HADLEY:
Just before we get to serious matters, I’ll stand up here so you can see I am dressed in shorts today. I instructed my staff on Friday that we would have a short week. That we would wear shorts all week.
TREASURER:
Well, I haven’t obliged I’m sorry.
HADLEY:
No, no, it’s not for guests it’s only for people in the studio who work here. You wouldn’t believe it, I got here this morning very early and I walked into the office and they are all wearing their long pants and I said to Michael our executive producer, what is going on here. I said I have worn the shorts in and we are going to wear board shorts on Friday our last day just to get into the summer holiday festival and they said, “oh, well the Treasurer is coming in – as opposed to being in Canberra and we thought it would be inappropriate to greet the Treasurer in shorts.” You will have to excuse my French, I said “Bugger the Treasurer.” Then I said we should have asked him to wear shorts as well.
TREASURER:
I would have!
HADLEY:
He would have.
TREASURER:
That is Shire attire.
HADLEY:
Exactly.
TREASURER:
That is absolute Shire attire.
HADLEY:
Anyway that is the reason for the shorts. Now, you are meeting with state treasurers this week – the GST on the agenda. They want to talk about increasing it but over the weekend you ruled out making any deals on potential GST models. Now, just so people have an understanding, you can’t as a federal government alter the GST without the full approval of everyone from state and territories – is that basically it?
TREASURER:
That is what the intergovernmental agreement says. Now, if that had to change you would have to change legislation…
HADLEY:
Would they have to agree to that change of legislation? Or would you change it unilaterally?
TREASURER:
No, that is sovereign for the Parliament but we have said all along that we have been trying to work with the states and territories on these issues and we haven’t ruled anything in or out, Ray. What we have said is this week when we meet together at the other meetings we talked about federal taxes, at this meeting we are going to talk about state taxes. Changing the tax system isn’t just about federal taxes, I mean $85 billion are raised every year through state and territory taxes and I would like to know how they think they could make those taxes work better. It is not just about federal taxes.
HADLEY:
If we raise 100 bucks in GST, how much of the 100 bucks goes to the states and territories?
TREASURER:
$100.
HADLEY:
All of it?
TREASURER:
Every single cent, every single dollar raised from the GST goes to the states and territories. It all goes there – all of it.
HADLEY:
But if you want, just say they agree to raise it. What I am sensing from you here is, I mean they get a lot in stamp duty – typically in New South Wales where there is a robust real estate market – they get a lot in revenue and payroll tax and other things. Are you looking to them, if you give them a better lick, in other words you increase it 12.5 or 15 whatever and they get all of it, are you looking for them to pair back other taxes – is that what you are looking for as well?
TREASURER:
Well, that is one of the things they can do. One of the other things we can do is they can then take on some of the expenditure that the Commonwealth has which we have in addition to giving over the GST which all of that money goes to the states and territories there are some $50 billion more in payments made to the states and territories and they can take things on holus bolus themselves. So, there is a, it’s not just about the tax system it is also about the federation and how that can work better and the Prime Minister will be meeting with the Premiers and Chief Ministers later this week as well and they will be talking about those issues but when it comes to tax what troubles me is this idea that we should be raising taxes to pay for higher levels of expenditure. Now, Malcolm and I have made it pretty clear that that is not something we have a great deal of sympathy for and if the proposal is that they just want the federal Government to raise taxes so they can keep spending money the way they are, well, that is not a particularly convincing argument.
HADLEY:
Ok, you mentioned the Prime Minister there, if that is the case, where does the $1 billion innovation that he is going to announce today and it is on the front page of all major newspapers across the country. If it is going to a billion dollars, an extra $100 million in extra funding for the CSIRO, how does that fall in line with what you have been saying as a Government – not you specifically – but what you have been saying about reducing spending over the past two and a half years?
TREASURER:
Because all of it is being offset through MYEFO. When I announce the Mid-Year Budget update – what Mathias Cormann and I and the rest of ERC have been doing for the last three months is continuing the work on savings to ensure that we can get the Budget back to at least where it was in terms of expenditure as it was in May. Now, since May Ray we have reversed the bank deposits tax, Labor’s bank deposit tax, that cost over a billion. We have increased spending on roads by over a billion in order to get the fuel excise changes through. We have had the increase in the refugee intake announced. These are all announcements before I became Treasurer. That is some $600/700 million dollars. So, there has been a lot of additional spending announcements since the last Budget. So, what the ERC and Mathias Cormann and I in particular have been doing has been working to get that level of expenditure - I came into the job a couple of months ago, expenditure was at 26.2 per cent of GDP. At the Budget it was 25.9. It is my job to get it back at 25.9.
HADLEY:
The billion dollars is not money that has to be found, it will be…
TREASURER:
We had to go and find it and we found it.
HADLEY:
Via savings?
TREASURER:
Yes, we have had to go and find it.
HADLEY:
So, it won’t be in addition to the Budget, it will be part of the Budget?
TREASURER:
That’s right, because we have had to do that just like we have had to accommodate all those other measures that I have just mentioned that have been previously announced.
HADLEY:
Now, I have made a lot this morning of this 13.5 per sent swing against the Government even though, and it is bad news for Labor as well, because the swing went to the independent or independents. Labor didn’t file a candidate in the very safe seat of North Sydney. You have been part of the campaign process there. I would think, I can’t think of too many more rusted on blue ribbon Liberal seats than North Sydney when, there may be one or two, but I think it is probably among the top three. Is it a concern that there is a swing of 13 per cent plus against the Government in the by-election, given that the last swing I think was less than 5 per cent for the seat of canning in Western Australia.
TREASURER:
Look, a win is always a win but, Ray, on these things, I have been around in politics a long time and you have got to compare apples with apples. What we had in this by-election was 13 candidates, at the last general election there were six. Labor ran last time, didn’t run this time. The only time we have lost the seat of North Sydney was to an independent. So, when there are independents in the field that is when the seat of North Sydney - I mean we lost it to an independent Ted Mack for many, many years. So, we had some - take the top three candidates…
HADLEY:
But Ted…
TREASURER:
Just let me finish this comparison. Take the top three candidates out, last time around that accounted for just three per cent of the vote. Because there were 13 candidates this time they took up, other than the top three, some 18 per cent of the vote. So, my point is Ray when you don’t have the Labor Party running you have got a lot more candidates running, the primary vote sprays everywhere and that is what happened. That is exactly what happened. Now, the two party preferred vote is being recalculated because they were doing it on the basis of Greens and the Liberal Party on the night. Now, they are doing it on the basis of the independents. So, would we have liked a better result? Of course we would Ray, you would always like to win by more, you would always like to win by more but I think some of the analysis that is being done is not comparing apples with apples. I mean last time the Labor Party weren’t running, there were twice as many candidates this time and the primary vote as a result sprayed over more candidates. It’s just a fact.
HADLEY:
I was agonising this morning about how you would make this sound really good and congratulations you are absolutely magnificent. You have made a 13.5 - you have convinced me now, which is just the best thing that could happen. I mean there is no Labor Party, there is twice as many candidates and Scott you have done it again. You have somehow have got a silk purse out of a sow’s ear.
TREASURER:
Well, I am just calling it how I see it, Ray. I’m just calling it as I see it.
HADLEY:
No, you are…
TREASURER:
There are twice as many candidates!
HADLEY:
You are the best spin doctor of turning bad news into good news. You know you should be knighted – I know we don’t do that anymore…
TREASURER:
I have a sunny disposition, Ray.
HADLEY:
For your ability to take the worst possible news, you are a glass half full man, Scott Morrison. Not a glass half empty.
TREASURER:
Like you, Ray, like you. We are both glass half full people.
HADLEY:
Yes, well, yours is a bit more full than mine based on that explanation. I won’t argue with you because I can’t possibly win. Ian Macfarlane, I noticed that the Attorney-General got a bit, well, I could say mealy-mouthed, but a bit cranky over the course of the weekend which is not Mr Brandis’ normal go. He is normally fairly even about it but he is a bit up in arms about Ian Macfarlane, he had a few things to say about him. Then I heard Peter Dutton say on the weekend that it is not a fait accompli that he can simply go from the Liberal Party to the Nationals.
TREASURER:
That’s true.
HADLEY:
So, how does that, given that the LNP is one Party in Brisbane, how does it work?
TREASURER:
Yeah, just for, and particularly for the information of your listeners, the way this works is the LNP is one Party.
HADLEY:
Yep.
TREASURER:
There is no two parties – Ian Macfarlane won’t have to change one corflute at the next election if this happens because he has got LNP on there at the last election, he will have LNP on it at the next election. They can decide, out of Queensland, which Party Room they sit in. The National Party Room with Warren Truss, or the Liberal Party Room with Malcolm Turnbull. That is all worked out through their local pre-selections. Now, when Ian went to pre-selection last time, which is just a couple of weeks ago, not that long ago, he said he was going to sit in the Liberal Party Party Room. So, that is now what is going to be reviewed by the state executive. It is not a fait accompli and they can decide to do whichever they like. The other point I make about it is this Ray because there has been issues around the Ministerial composition, if there is a change in the number of Nationals or Liberals in the Coalition Party Room that doesn’t automatically trigger a change in the ministry. It would be like if there was a by-election. Say there were five by-elections this weekend and there were more Libs or less Libs or more Nats and less Libs, there would be no requirement to change the Ministry because what the Coalition Agreement says is that when there is a reshuffle that is when the Leader decides to do one or when there is an election then you have to take account of the proportions of the two Parties. So, what this does is doesn’t change anything. There is no trigger event for any reshuffle at all. The LNP state executive still has to decide whether they are going to accept this. At the end of the day we are all on the same bus, Ian Macfarlane has decided to change from one seat on one side of the bus, to the other side of the bus but we are all on the same bus and we are all heading in the same direction and if you vote for Ian Macfarlane at the next election, Malcolm Turnbull remains Prime Minister.
HADLEY:
Yes, I understand that and the people of Queensland for his South Eastern Queensland electorate also understand that. I mean, the stories were late last week that he had gone to the Prime Minister not just to announce that he was defecting, having already done the deal with Warren Truss and Barnaby Joyce two weeks earlier, the allegation was that he said, look, you know it’s not set in concrete yet, if I get returned to the Ministry things might change dramatically. Now, he’s denied that vehemently.
TREASURER:
Yeah, I don’t believe that occurred. I don’t know of that at all. I don’t.
HADLEY:
You didn’t say to the Prime Minister, “Did that happen, Malcolm?”
TREASURER:
Mate, I have no idea but what I do know is that they are the facts of the situation and I have known Ian for a very long time. He is a very good friend and we have dinner down there regularly in Canberra together.
HADLEY:
Yeah, but you have some…
TREASURER:
I am an outgoing fella, Ray. I’m outgoing.
HADLEY:
But your taste in dinner guests…
TREASURER:
If you come to Canberra I’ll take you to dinner.
HADLEY:
Yeah, I know.
TREASURER:
I’ll even go that far.
HADLEY:
I’ll bring a taster with me. Let me assure you that you’re far more forgiving and far more amenable to dinner gusts than I perhaps would be. Just on another matter, two blokes that you have got a whole lot of time for, Josh Frydenberg and Peter Dutton…
TREASURER:
Yep I do.
HADLEY:
Have declared it’s time for honest and truthful discussions on Islam in Australia. Now, it was started by Josh and he was joined by a chorus of other people from the backbench on your side of politics. Now, a Minister in Peter Dutton has joined him and said yes we need to have this discussion. I guess it is in light of comments by the Grand Mufti and others trying to, I guess, blame the messenger as opposed to proponents of a range of things not just in Australia but across the globe and we have has another incident in the underground on Saturday night in London. Is it time for an honest and truthful discussion on Islam and, you know, we have Hizb ut-Tahrir raising their ugly head again over the weekend…
TREASURER:
And it is an ugly head.
HADLEY:
You and I have discussed this up hill and down dale. Why can’t we just say they are terrorist organisation, nick off, go away? And I am not blaming you, I am not blaming Malcolm Turnbull because John Howard wouldn’t do it, Tony Abbott wouldn’t do it, Kevin Rudd wouldn’t do it, Julia Gillard – what is it? Have they got photos of people or something down there at the Hizb ut-Tahrir headquarters that makes them sort of immune from prosecution?
TREASURER:
Well, I haven’t given up on that one yet, Ray.
HADLEY:
Please don’t.
TREASURER:
I know you haven’t. Look, I have been having an honest conversation about Islam for a long time. You know there are obviously, let me put it this way, what someone believes that is their faith, then there is their religion which is all the rituals that go around that and then there is the culture that sometimes goes around these things too. What we want in this country is all of our religions to be very Australian, whether it is mine, whether it is others and I think that does happen over time and people, Australian values have to be at the core of everything we do and that has to be worked out I think in how religions organise themselves in this country that people who are teaching in these religions come to this country and understand the values of this country. All of this is very important. It was as true for the Anglicans and the Catholics 150 years ago today as it is for other religions in this present day and age. I am a big advocate in faith in society and I think it is a positive thing in people’s lives but the cultural way that sometimes these things are distorted and in the most extreme form in the fundamentalism and radicalism that we have seen take people’s lives, well that is where it ends when things get out of whack and we have certainly seen that happen far too often. So, that is a positive discussion but let’s make sure it is a positive one.
HADLEY:
One final thing, the Opposition Leader Bill Shorten has been dragged kicking and screaming in relation to Union corruption with the news that two people have been charged with blackmail in Victoria. He is talking about longer jail terms and larger fines. You wouldn’t want him to be going to the union movement asking for their support just at the moment if they believe him.
TREASURER:
Well, none of this is a great surprise and those issues will play themselves out in the courts. I mean what they were saying about the Royal Commission that it was a witch hunt and all the rest of it, well, the proof is in the pudding and we’ve seen these charges laid and they are very serious charges and the courts will work that out but I think the Australian people have always had the right sniff on these things and they know things aren’t right in the union movement and they know the Labor Party have been soft on it for way too long because they all come from it – they are all part of it. I mean the union movement and the Labor Party are one and the same thing, that is how it works. Not one Labor leader has ever been able to unshackle them from that and Bill Shorten will certainly not be one of them.
HADLEY:
Ok, well, first of all let me thank you for making yourself available every Monday that we have been on air this year and I do mean every Monday because when it has fallen on a public holiday and I have been here and you have been elsewhere we have met on a Tuesday. We have had some battles, some notorious ones and others where I have been criticised for not being tough and then being criticised for being too hard on you. The simple fact of the matter is that you have stumped up every day, even in the middle of the crisis that happened through the course of the year with the change in Prime Minister – for that you should be admired. You are always here to answer questions, people mightn’t like the answers they get from you but you make yourself available and that is half the battle in terms of getting the message out there. Mate, I wish you and your wife and your children a very holy and happy Christmas, a prosperous 2016 and we will chat for the first time on January 18 next year.
TREASURER:
I’m looking forward to it. Thank you also for the opportunity to come in each week, I have always enjoyed it, it has always been spirited and we have also had a few laughs. Can I wish all your listeners too, I’m sure I’ll talk to them through other programmes between now and Christmas, but it has been good to share this Monday morning with them, particularly the listeners down in the Shire. A lot of people in the Shire listen to this every Monday, Ray and they enjoy it a great deal.
HADLEY:
We have got to get something worthy for people from the Shire to do on a Monday morning. I’ll see you later.
TREASURER:
See you, Ray.