22 January 2018
Transcript - #2018002, 2018

Interview with Ross Greenwood, 2GB

SUBJECTS: Bill Shorten puts Aussie jobs and wages at risk as United States slashes company tax

ROSS GREENWOOD:

Happy New Year to you Treasurer.

TREASURER:

You too Ross.

GREENWOOD:

This is a really interesting hearts and minds debate, because you can understand that a battler who is out there, who hasn't really seen a pay rise for two or three years, who is struggling with the cost of living, with electricity bills, says, why should a big company get a tax cut? Why should not me, the individual, get that tax cut?

TREASURER:

Well it's all companies too, we should stress Ross. Already we've been able to legislate for smaller businesses up to $50 million, we started with businesses as low as $2 million in turnover and we worked that up to businesses of $50 million and their tax rates are coming down. We want to extend that across all businesses. The argument basically comes back to this. Think of a pie, you bake a pie. Now, Oxfam and the Labor Party, all they want to talk about is how you carve that up. What we're about, is we want to see a bigger pie. We want to see the economy bigger, growing, getting larger, and the bigger it is and the stronger it is, that's where the wage increases come from and that's where the jobs come from. If you spend all your time trying to divvy up something, you know what happens? It just gets smaller and smaller and smaller. That's no way to run an economy. It's not how Australia has been able to achieve the success we have over a long period of time now. We've got where we have because we've focused on growing our economy, growing our businesses. Business is employing people. Last year, more than 400,000 people got a job in Australia. That was the strongest year of job creation in Australia over a calendar year on record. We want to see that continue.

GREENWOOD:

Okay, so the whole point about this is, you still would say that the tax cuts, if they do come, mean that there are more jobs in the community. If there are more jobs in the community, then the pay rises start to come as a result of the demand, the need for skilled labour around the place.

TREASURER:

It's also that businesses are investing back in their businesses and growing them. I think, one of the most insulting things about the Labor Party's argument about these tax cuts, is they say it's a giveaway. Well hang on a tick. The businesses earnt the money, it's their money. When you give someone a tax cut, you're not giving them a welfare cheque; you're letting them keep their own money. What we're saying to those businesses, is that the money is better off in their businesses being reinvested in new technology, or new shopfronts, or opening up new markets, developing new products, investing more in their employees, in their training and their skilling, and in wage growth for their own employees. We think that is a better place for that tax to go, by being back in the hands of the people running those businesses than it is in the hands of the government. Because you have groups like Oxfam, and you have other groups saying, look don't cut corporate taxes, because what they want the government to do is just spend more and more and more of your money. We don't think that's the way to grow the economy. We think letting businesses run their businesses, invest in them, expand their workforces, expand their businesses is the way for everybody to be better off.

GREENWOOD:

Okay, it is a key argument though, a political argument that will run all the way to the next election. You have run on a platform of jobs and growth. Quite clearly, the Labor Party has got a totally different view, which is, if the lower end of Australia's income spectrum is to get a break, then it's basically got to come at the expense of those who are earning more and those companies that are earning more.

TREASURER:

It's a very finite view of the world. It assumes that the economy can't grow. It assumes that all the time, the only way you get better off is if someone is worse off. That's not how the economy works. The economy works by growing and expanding, the rising tide lifts all the boats. That is the basis of what we've always believed as Liberals, and what is interesting is that Bill Shorten and Labor Party used to believe it too. Paul Keating did it. Nowadays, they've turned their back on all that and they've embraced all of these very left wing views that we've seen other parts of the world take up. Then we see in places like France, the United Kingdom and particularly in the United States, say no, no, what we need is an enlivened business sector. We need to cut company taxes so businesses can reinvest in their businesses, in their people, in their communities and get on with it. That's what Donald Trump has done, and that's what the Congress and the Senate approved in the United States. Already we're talking about Apple bringing hundreds if not millions if not greater, back into the US economy, Walmart passing on tax cuts in pay rises for their staff. That's what happens.

GREENWOOD:

So you're saying Australia needs a little bit of Trump in it, is that what you're saying?

TREASURER:

It needs some good economic common sense! That's all this is Ross. This is just simply saying that if you get the tax monkey off the economy's back, and that goes for personal income tax as well, as the Prime Minister said before the year ended last year. That is a focus for us as we go into this year and into the next election. We want to continue to demonstrate how we can reduce and relieve people's tax burden, because we always believe at the end of the day that the money is better in the hands of the person that earned it than the government.

GREENWOOD:

Okay, so let's go to that Mid-Year Economic and Fiscal Outlook. Now, just rough numbers, the government collects income tax, not total revenue, but income tax of about $300 billion per year. Companies pay about $81 billion of that and individuals pay $188 billion of that. Now, any person looking at that would say, well doesn't the individual bear the greater burden as compared with companies? I note the OECD says for example, you can have company tax cuts, but the best idea would be to have company and individual tax cuts at the same time.

TREASURER:

Well, we're working to deliver both of them Ross. That's what the Prime Minister signalled, as I did, at the end of last year. We agree that's the direction in which we want to head. By contrast, the Labor Party wants to increase taxes on the economy. Increase taxes on housing, increases taxes on investment, increase taxes on savings, increase taxes on earnings. They're increasing taxes to the tune of $164 billion if they were elected over ten years. Increasing those taxes is not going to increase anybody's wage, because they think the only way to help people on lower incomes is to give them more welfare.

GREENWOOD:

But you say that they would raise taxes by $164 billion over ten years…

TREASURER:

Correct.

GREENWOOD:

… what you would say, and I know that the numbers have come out, that over the next ten years, by cutting company taxes by 25 per cent, you would actually, if you like, give businesses a boost of $65 billion. That money would have to come from somewhere.

TREASURER:

Well it's their money. That's where it came from, they earnt it. The businesses earnt that money, we're saying – you can keep it.

GREENWOOD:

But is there enough to run the government? Is there enough to run welfare if you do all of this?

TREASURER:

Absolutely. That was all in the Budget and it was all in the mid-year statement. The Budget returns to balance as projected in that document in 2021, inclusive of the corporate tax cuts that we've already announced. That's already factored in. The Budget remains in balance over the balance of the decade, and net debt to GDP falls to 7.7 per cent of our economy by the end of that ten year period – and that's with all the company tax cuts.

GREENWOOD:

Okay, you mentioned some of the big companies in the United States, getting the breaks over there. The issue of course, that many Australians still come out, is, do big companies pay their fair share of tax? Do they certainly pay their fair share of tax in Australia, because what we've got to have confidence in if we're to pay our taxes, is that other big players are also paying their fair share.

TREASURER:

That's fair enough. As a government, we have the toughest multinational anti-avoidance laws in the world. We got that way by taking on quite a number of the measures that were put in by the UK Government. On the first of July last year, my Diverted Profits Tax came into being, and that says once the tax office – because we gave them the power to go in and pull apart the books of the multinationals, and determine where the income was earned – if it was earned here in Australia, it gets taxed. If we found that they weren't declaring that way, they'll pay a penalty rate of tax at 40 per cent. So we've acted on multinational anti-avoidance and we continue to do that with measures that the rest of the world are now looking at us, and going, gee you guys are doing it right. We might start looking at how you're doing it.

GREENWOOD:

Just a quick one on the side. Electric vehicles in Australia, a good thing or a bad thing for this country?

TREASURER:

I think they're fine. One of the things is, they don't pay the fuel excise if you're driving an electric vehicle. So when people are running around saying they need more tax incentives, there's one that already exists. If you don't put fuel in it, you don't pay excise on it. That seems like a pretty head good start. Electric vehicles need to stand on their own four wheels, they shouldn't have to stand on the taxpayer. I have no doubt as the technology continues to improve and the infrastructure comes into place, they'll play an increasing role, but they'll do so off the back of just providing value to customers and being a cost effective way to get about.

GREENWOOD:

I tell you what, it's going to be one of those big arguments you're going to have to win this year, convincing people that companies should get a tax cut. The Treasurer, Scott Morrison, always great to have you on the program, and Happy New Year to you Scott.

TREASURER:

To you too Ross, good to talk to you.