18 January 2016
Transcript - #2016001, 2016

Interview with Ray Hadley, 2GB

SUBJECTS: Taxation, Coalition Government’s strong anti-tax avoidance laws, Australian economy, Australia’s role in the Middle East, Queensland Nickel, Cabinet, Coalition Government’s strong foreign investment rules, Trade Union Royal Commission

RAY HADLEY:

Treasurer Scott Morrison has been joining me every Monday since the Coalition won the 2013 election. Despite his huge work load he says he will continue to appear on the program in election year 2016. He is in the studio now. Treasurer, good morning.

TREASURER:

G’day Ray, nice to be back.

HADLEY:

Good to be back. Happy new year. Did you go away, spend any time with the family?

TREASURER:

Yeah I had a great time with the family. My little girl saw some dolphins and a turtle for the first time so we had a great trip.

HADLEY:

Good on you. Back into it now. Details emerged on the weekend about the two main tax reform packages apparently being considered by the government. Now I see you on Sky News this morning and you aren’t prepared to tell us too much about that but the crux of the matter is this - you have two hurdles to overcome and they are fairly significant hurdles. You have the Senate and the states and they are both not making the right noises for any tax reform. Bill Shorten wants to go back, not forward. The states haven’t shown any inclination to come to the party. You will have to give them a very, very big sort of carrot.

TREASURER:

Well there is a more important hurdle than all of that and that is the Australian people. There will be an election this year and anything we seek to do in this area is something we will obviously take directly to the Australian people. We are in no rush here, the Prime Minister has made it clear about that, in terms of timing there is an election and a Budget to bring down in May, there is a tax package to work through with the Australian people and that is what we are doing. The point about changes to the tax system is about trying to ensure that we grow the economy more and we grow jobs more. At the moment we are going to have the average income earner being on the second highest rate of personal income tax next year. Now that is not a system that is working to support people working, saving and investing. That is what we have to change. So we are focused not on lifting taxes we are focused on changing how we tax so people get a more of a go in terms of the effort they are putting in.

HADLEY:

So you go to the electorate and you say "this is what we are going to do" and do you think that will force the issue firstly with the opposition, the crossbenchers and the states?

TREASURER:

Well that will be a matter for them but at the last election you will recall because we spoke about it I don’t know how many times but we said we wanted to restore Temporary Protection Visas and we were successful in getting that change through in this term of Parliament. One of the key factors is we had taken the question to the Australian people. Senator Xenophon and others couldn’t deny that that is what we had done, it was a very clear mandate that we had sought on that issue and I think that played very heavily into the discussions that we had. Now we are going to be upfront with people about what we want to do, there is an election this year and ultimately I think that is the main hurdle and government has to straddle.

HADLEY:

Have you caught up with the story on page three of the Financial Review today? Nearly a third of 26 large foreign banks operating in this country including Goldman Sachs, JP Morgan and Lloyds and others pay no taxable income in 2014 the ATO tell us?

TREASURER:

I did see the story and this does trouble me…

HADLEY:

It should trouble everyone.

TREASURER:

And it does. One of the reasons we worked so hard last year to get those multinational tax changes through, which Labor actually voted against, we got them through on the last day of Parliament. That meant now we have the ability to go into these multinational companies and call out their income and ensure they pay the tax that they should be paying. That will be a key focus of Kelly O’Dwyer who is the Assistant Treasurer and she will be working with the Tax Commissioner to ensure that these companies pay their fair share of tax. So we have got the legislation in place now, if we need to make more changes then we will but all companies large or small should pay their fair share of tax.

HADLEY:

Well I know the Financial Review is not the tome of mainstream Australia but it is a very important story when you realise eight backs with total revenue - these are banks operating in Australia but foreign banks - with total revenue of $9 billion had no taxable income. $9 billion. Nine thousand million and they have no taxable income. They must be very poorly managed.

TREASURER:

Well I am sure their parent companies are making significant profits and they are paying tax in their home jurisdictions. But the work we put in last year which got those tax changes through the Parliament, opposed by Labor, means that this year we will be on a much stronger footing to go after this. Now for six years they did nothing on these multinational tax laws, they talk about it now but they did nothing about it while they were in government and they voted against it when we tried to get these changes in place before Christmas.

HADLEY:

Now I mentioned at the top of the show in about 28 and a half minutes the share market opens in Australia. There was a bad day in the United States of America Friday and this is the first time it has opened since then for us. More than $100 billion has already been wiped off the value of shares so far this year, in January. Are you bracing yourself for more bad news on the share market and for self-funded retirees and the like after 10 o’clock daylight savings time?

TREASURER:

Well it is a worrying time on those markets there is a lot of volatility going around at the moment. There are a couple of things that are happening, there is the adjustments that is being made to the Fed in the United States lifting the Fed rate there - interest rates there in the United States and the world is adjusting to that. Equally in China which is an economy also in transition like our own there managing their own currency issues there and the markets are responding to that. I think now is the time for sober and wise heads. Things will move around but the fundamentals of the Australian domestic economy I think are very encouraging. We have over 300,000 jobs, our strongest jobs performance in around a decade and that has been welcome news and youth unemployment coming down. Oil prices mean that petrol prices are at quite low points, our costs of doing business in that area I think are on the positive and business conditions can encourage investment so domestically I think things are strong. Our economy will continue to grow but we have to do more to ensure it grows more than it is now.

HADLEY:

I should mention that there are many experts saying that they are expecting it to dip by up to 2 per cent this morning but then they are saying the outlook for 2016 is very, very positive.

TREASURER:

They are saying that and that is the thing about volatility it will go up and it will go down but the cool heads, the wise heads, the sober heads can look beyond what is causing the immediate churn and the government certainly isn’t going to get spooked by these sorts of things. We have our plan and our plan is to ensure we have a tax system that supports growth, innovation policy that backs people who are trying to create new products whether in large companies or small companies and to create the jobs of the 21st century which is what we are doing.

HADLEY:

Now, we have got the Prime Minister on his way to Washington to meet with Barack Obama after being in Afghanistan and Iraq but the Simon Benson story I mentioned at the top of the show in News Ltd papers today suggests the meeting might be awkward considering that the Prime Minister knocked back a request from the US for us and other countries to play a greater role in the Middle East.

TREASURER:

We are playing a very big role in the Middle East.

HADLEY:

But they want us to play a bigger role.

TREASURER:

We are the second biggest participant in the Middle East and I think that speaks volumes about the strength of our relationship and our commitment. So I don’t think Australia’s commitment in this regard can be questioned one jot. But at the same time the Prime Minister has made observations about the contribution and involvement of other countries…

HADLEY:

He has talked about Europe basically.

TREASURER:

He has talked about Europe…

HADLEY:

They need to toe the line.

TREASURER:

You only need to look at what is happening in Europe to understand why they need to take a closer interest then they may have up until this time.

HADLEY:

He is probably talking specifically about the Germans and maybe the French to a lesser extent and saying will hang on a sec, you are having all sorts of problems there promoted and sponsored by ISIS, how about getting your hands dirty?

TREASURER:

We have been doing our bit from day one and more than that so I don’t think there can be any questioning of Australia’s involvement and support. I think our involvement is calibrated just right and it is for others to consider their levels of involvement and for there to be a clear plan and a clear strategy about where that conflict goes from here and that is something the Prime Minister will be talking to the President about. He will also be talking to the head of the Federal Reserve over there and I think that will be an important conversation as well because the US economy is doing much better now and while we look at what is happening in China what is happening in the US is something to encourage us. It is still a thumping big huge economy which has a big impact on what happens in Australia. The improvement in the US economy I think is good news for Australia.

HADLEY:

Well this morning the news has come through domestically, Clive Palmer, Queensland Nickel placed into administration after he punted 237 poor blighters in Townsville on Friday. This is the bloke who said last year, or maybe it was 2014 as opposed to 2015 but anyway one of those periods, that he would make a great Prime Minister. Honestly, a choko vine over an outhouse would be in strife with this bloke in charge.

TREASURER:

Well we all feel for those workers up in Townsville. Ewen Jones up there I think is doing a great job as the local member. Look Clive has a lot to answer for up there, they are questions he has to answer for. Asking the Queensland or even the Federal Government to bail him out I think is a bit rich.

HADLEY:

Particularly when we find out that they have been giving money to the Palmer United Party to have them elected then have them all leave.

TREASURER:

Yeah I know. But the most disappointing factor about all this is the impact on those workers up in Townsville and that will have an enormous impact on them and their families this time of the year as well and our thoughts are with them. Look that is why we are so focused on jobs and growth around the whole country. That is why we have to do the things that grow the economy more than we are doing now. Hairshirt economics won’t get you there. Good stable solid responsible common sense economic policy will get you there and a steady hand.

HADLEY:

I know it is old news but I have been away. You have had two Ministers resigning, Jamie Briggs and Mal Brough. I guess in all forms of government you get people who do what is perceived to be the wrong thing and so they in most cases do the honourable thing and resign. Will they come back at some time in the future?

TREASURER:

That is really up to the Prime Minister and their own decisions between now and then. I mean these issues arose, I think the Prime Minister dealt with them very appropriately. He had a proper process around this, I think he made the absolute right decision and they have taken their decisions and we will see where it goes to from here. The Prime Minister is not shy of taking these sorts of calls when they have to be made our standards are there to be enforced and he has enforced them.

HADLEY:

I’ll be talking to Peter Dutton on Thursday this week. I know that you are a prodigious texter being on the receiving end of many of your text messages and I applaud Samantha Maiden’s attitude towards Mr Dutton. I have been guilty of doing this myself. I don’t know how I did it, I have sent a text message to someone about someone else and sent it to the person I was sending it to not supposing to send it to them. So I understand when you are a bit - have you because you are a prodigious texter as I said have you given some sort of olive branch to Mr Dutton and said look we will holding texting classes in Parliament and we will make sure that you understand what happens when you send group messages and all the rest of it and that you are lucky Samantha took the view she did and accepted his apology?

TREASURER:

I think people who work in Canberra know it is a pretty robust environment and…

HADLEY:

By the way have you ever done it before as a prodigious texter? Did you ever send one to the wrong person inadvertently in the early days of texting?

TREASURER:

Not that I can recall.

HADLEY:

Be careful! I may have a text that says "that blokes a jerk" after the bible incident.

TREASURER:

I did send you a text after that and you know it didn’t say that, it said "I’ll see you next time." But look Peter has - I’m glad you raised Peter Dutton. Last year was the first year we had not one successfully illegal boat arrival in this country since the late 1980s. I mean obviously I take some great pleasure in the fact that we have been able to achieve that and it started when I was Immigration Minister but Peter has kept it going. This is a great record of this government. People said this could not be done. We went a whole year without one successful arrival, the first time since the late 1980s. Now that is something I think, particularly your listeners Ray, should take great comfort in. Because it was your listeners who really backed us into the sorts of actions we took there and I really want to thank them for that support.

HADLEY:

Just on this and I am not here to defend Peter Dutton, despite the fact that I do like the fella. I mean I would say this on the basis, if Samantha Maiden was greatly offended and made it much more serious than in fact she did I would take a different view. Given the fact she has accepted his apology I think to a certain extent knocking around the pubs and clubs in Western Sydney as I do and talking to a whole range of people, both men and women, they took they view "Jeez he has done what I have done a couple of times when I was bagging some particularly person about another person and inadvertently sent it to the person I was talking about not the person I meant it to go to." So what he has done is done what many, many people have done in texting.

TREASURER:

Well they are both adults. He made his apology immediately.

HADLEY:

As he should of, I mean she is a very decent woman.

TREASURER:

And she took it in the right way and she made her response really quick and they are both robust people. I know them both very, very well, neither of them are timid. Canberra is an environment like that and they all moved on so I think most Australians felt the same way.

HADLEY:

She will be listening now, Samantha. Send me an email will you please.

TREASURER:

Send me a text.

HADLEY:

Something like that. Now I note this morning there is coverage of these properties that was started of course by your predecessor, illegal foreign investment. Properties at Eight Mile Plains in Queensland and Park Ridge, Robertson, Crestmead. But one that struck me was one in Windsor purchased by a Canadian for a relatively small about of money, half a million nearly $600,000. That is a Canadian, what are the circumstances there? How does that happen? You have got to gain permission have you?

TREASURER:

Yeah, you have got to have the right authorities to do these things. Our point is here that yes we have very strong foreign investment laws in this country but more importantly we enforce them. No good having a law if you are not going to go out and enforce it. We enforce foreign investment laws in this country so whether it is a relatively modestly priced property, there are some in this list today down to less than $300,000 another over many millions. So regardless of where it happens we are being very attentive of the fact that people need to abide by our foreign investment laws. As Treasurer I am going to be pretty tough on that.

HADLEY:

Is there a penalty against the real estate agent that facilities the sale? Or are they on notice not to do it again? How does that work?

TREASURER:

No, it applies to the actual person who buys the property and the penalties there - there was a grace period for when these came in and there are penalties that apply for transactions that took place I think it is after the end of November last year. So we are in that sought of transition period at the moment but anyone out there should know that these are the rules and this government will enforce them.

HADLEY:

How long have they got to dispose of these properties? Is there a sunset clause?

TREASURER:

Well they really should have done it by now, is my point. Any transactions after the end November this will impact in terms of penalties but the divestment order that I can impose that applies retrospectively.

HADLEY:

Just one final thing, the Royal Commission report in trade unions has handed down by Justice Dyson Heydon while I was away. It refers to wide spread and deep seated misconduct by union officials with more than 40 individuals referred to authorise. Now the most amazing thing I thought was the acting Premier in Queensland, Jackie Trad’s reaction to all of this. Where she basically said "no, no, no, the people who destroyed all those documents in Queensland are wonderful people, the unions are wonderful organisations. How dare someone cast some sought of aspersion on their integrity?" I mean it was almost laughable that an acting Premier should behave in that way.

TREASURER:

Well it shows they are in denial I think. Bill Shorten is in denial on this as well. The Royal Commission I think has been vindicated in the findings that it has been able to bring down. It has shone a light on the ugly side of the Trade Union movement. Of course there are decent hard working trade union officials who are out there trying to protect workers interests and that is a fair dinkum job and a fair dinkum role in our society. But there are those who take a big lend of this. The Royal Commission I think highlighted that and particularly at the CFMEU, this was very concerning and the impact that that has on Australia’s building and construction industry. We are still trying to get the ABCC rules through to ensure that we can continue to clean up the construction industry and the dodgy union involvement that is occurring there. Labor continues to resist it. As long as they continue to resist that, resist better governance of unions that they continue to vote against, you know they are just not fair dinkum on cleaning up their own act.

HADLEY:

Well look I am reluctant to get involved in conspiracy theories but given that Jackie Trad as acting Premier defended those various union leaders from the CFMEU in Queensland and is also part of the cheer squad for bikies, and many bikies appear to be part of the CFMEU, I mean there seems to be a link there. I mean she supports bikies and they are dismantling Strike Force Maxima up there, they want the VLAD laws changed and when someone as qualified as Justice Dyson Heydon comes out and says "this is the evidence presented to me, these people are corrupt and should be dealt with," she is a cheer squad for them as well. It seems bizarre.

TREASURER:

Well you can’t go soft on the bikie gangs, the outlaw motorcycle gangs. I am pleased to know that last year Alex Vella’s case was successfully defended which has meant he is staying in Malta, the former head of the Rebel’s motorcycle gang, which was a visa I cancelled when I was Immigration Minister and others have been cancelled since. As a government we take a very hard line on this and we need to because these gangs cause havoc in our communities. They make our communities unsafe. Here in NSW the police do a great job and I would like to see the other jurisdictions get the same sort of support that Andrew Scipione gets here to go after those gangs, as should be occurring in Queensland and Victoria.

HADLEY:

Ok, thanks for your time.

TREASURER:

Thanks Ray.

HADLEY:

Talk next week.