1 October 2015
Transcript - #2015008, 2015

Interview with Michael Brissenden, AM, ABC Radio

SUBJECTS: Meeting with National Reform Summit participants, Coalition Government’s commitment to strengthening the Budget, Liberal Party

MICHAEL BRISSENDEN:

GST reform, superannuation tax concessions and company tax are among the topics that will come under the spotlight. A key player in today's summit will be new the Treasurer Scott Morrison and he joined me in the studio a short time ago. Mr Morrison, welcome to the program.

TREASURER:

Good morning Michael. Good to be with you.

BRISSENDEN:

Will this be another talk-fest or can we expect some tangible outcomes?

TREASURER:

Well, the purpose of today is for the organisers of the National Reform Summit to come and brief the key economic ministers of the Government and the Prime Minister about the issues that they are able to form some consensus on. It's an important opportunity for the Government to have a careful listen and really I think to unpack with those organisers the discussions they had at that summit. It's the first step in what I'm sure will be a fairly extensive process in the months ahead.

BRISSENDEN:

There are some big expectations ahead of this obviously. Everyone is clamouring for tax reform but what do you take tax reform to mean?

TREASURER:

What you need to do with your tax system is ensure that it grows your economy so you - I mean the way I see the tax system, it's a bit like the dividend the Government takes out of the strength of the economy. I don't see it as a charge that you put on the economy and the dividend you'll take out of the economy in your tax system will improve when the business itself is doing well, the economy is doing well and as long as that's growing and we're doing everything we can whether it's in the tax system or in productivity reforms or in trade policy, competition policy importantly, then we will see our revenue rise and that will obviously strengthen the budget over time.

BRISSENDEN:

Okay, there are still some big differences in some areas like workplace reform for instance with these parties that you're bringing to Canberra today, do you need to look at something like a Hawke-era accord model, some way to bring people together, some formal structure?

TREASURER:

Well, I think it's important to start off with what we agree on together as the objectives and whether it's in the tax system or whether it's in other areas of policy, it's important to get a consensus on what are we actually trying to achieve? Having a strong budget I think is a worthy objective, having a tax system that rewards people to work, save and invest I think is a strong objective, having a system that helps people transition through this economy, deal with the headwinds that we have but also take advantage of the tail winds that we have as an economy as well at the moment. I mean we have got to agree on what the benefits are first I think Michael before we get locked into a debate about the features. Those features will certainly have their place in the debate, but we all have to agree about where we want to go.

BRISSENDEN:

Okay, but everything's on the table, isn't it? I mean Malcolm Turnbull said it, you've said it. You're talking; you're not putting anything off the table?

TREASURER:

Yeah, I want to grow the economy and I want to do what will help us grow the economy and when we do that people can be more secure in their jobs, they can be more confident about the next job they're going to get. They can be more confident about the investments that they're making and I think having that confidence is very important for our economy and we want to back Australians to make this transition that we need to make over the next five years.

BRISSENDEN:

Let's look at some specifics then. The superannuation tax concessions, the changes that were ruled out by Joe Hockey previously but you seem to be signalling that there is now room for movement in that area.

TREASURER:

Well, I've set a clear rule for what we rule in and rule out and that is, does it help Australians work, save and invest and there's been a lot of discussion about those three words…

BRISSENDEN:

I thought we'd got over three word slogans but…

TREASURER:

Well, the last time someone said I had a three word slogan, we actually achieved the result, Michael and work, save and invest is something that I'm very committed to because let's talk about what it means. If someone has a greater incentive to work more and to be in a job, good. If someone is going to save for their future or save to buy a house and the tax system allows them to do that, good. If someone is going to invest in a new idea, a new business and get the reward for that investment and taking that risk, that's a good outcome.

BRISSENDEN:

Okay, but you have changed you’re - you're not as definitive as Joe Hockey was on some of these things.

TREASURER:

Well, I think we have the opportunity with what has occurred over the last couple of weeks…

BRISSENDEN:

So it's a change of direction and emphasis?

TREASURER:

… is to open up the debate but not open up the debate for ideological reasons. I think to open up the debate for practical reasons and if whatever is considered is going to achieve the objectives we want to achieve because for people sitting at home listening to this, what it means to them is you've got a Government that wants to actually make their situation better, their capacity and resilience to be able to deal with the challenges that we have stronger and if proposals take us to that place, then why wouldn't we consider them.

BRISSENDEN:

Okay, Joe Hockey also promised to go to the election with a new round of tax cuts. Are you still committed to that?

TREASURER:

Well, again, I want a tax system that is going to ensure in the future over time that, I mean, let's go back a step - back in 2000 some 80 per cent of people paid 30 cents in the dollar. That figure now is down to around a quarter. Next year, 16/17, if you're on an average wage, you'll be in the second highest tax bracket. The last time there was a risk of that was in 2000 and there were changes that enabled that not to be realised.

BRISSENDEN:

I think we understand bracket creep is a big problem but tax cuts specifically, are you going to take that to the election?

TREASURER:

Well, what I'm outlining is these are the challenges that we face in our tax system and it's important that we take the Australian people with us to understand why you would even considered changing it and if we're just locked in a debate and a discussion about the features, well, I've described that as a bit of an accountant's picnic. That's not what we want. What we want is for the Australian people to see the opportunity that changing the tax system can bring for them and so I welcome for example the Business Council's announcement that they'll be seeking to engage the community directly in what is in it for the Australian people when it comes to these sorts of discussions.

BRISSENDEN:

So again, that definitive statement about tax cuts specifically at the next election that no longer stands?

TREASURER:

Well, I'm interested in having a set of policies that you can actually implement, that are going to get the support of the Australian people and support of the Australian Parliament and where you can build a consensus around those things based on the Australian people knowing that if you do this, they'll be better off and that they'll be better able to deal with the changes and challenges in the economy and that we can diversify our economy because that is critically important for us as a nation, then they're all good reforms but a reform is only as good as its implementation and that it actually happens. We've had plenty of tax papers over the last 10 years and not too many of them have seen the light of day.

BRISSENDEN:

So I'll take that as you're still thinking about that?

TREASURER:

Well, Michael …

BRISSENDEN:

As you're not being definitive.

TREASURER:

… as usual, you will interpret my answers as you choose to interpret them. I'll let the listeners make their own assessment of what I've said. I think I've been fairly plain.

BRISSENDEN:

Okay, Australia's economy is growing at an annual pace of around two per cent, budget forecasts show revenue will barely climb over the next few years. All the experts are saying we have a spending problem and a revenue problem. Now you've been backwards and forwards over this over the last couple of weeks but you tend to be focussing much more on the spending problem. Why?

TREASURER:

Well, let's go back to 2007/08, since then the percentage of GDP that spending occupies has risen by three percentage points, for revenue it's fallen in this current year by one percentage point since that period. So up three on spending and down one on revenue and over the budget and forward estimates revenue as a percentage of GDP will climb again back over what the long term average is. Now I think those numbers explain the problem. The problem is yes, if you grow the economy and focus on growing the economy so the dividend I talked about before, will mean that our revenues increase, then that's how you can deal with the revenue issue. Now if you take the view that some do on changing the tax system which says you need to draw more tax out of the same level of income, then no I don't share that view because that would increase the tax burden on the economy and be a drag on the economy. So it's important that we focus on getting expenditure continually under control. Now we've had success of that as a government since we were elected. We have been able to flatten the curve on expenditure growth from over three per cent to just over one per cent and we need to continue the focus on keeping the pressure on spending growth down because you don't want revenue to chase your spending.

BRISSENDEN:

It's still over 25 per cent though, isn't it? And community expectations haven't changed, they won't change. The community still expects the Government to spend on healthcare, on ageing, on …

TREASURER:

Of course.

BRISSENDEN:

On all of these things that are going to become, on education, all of these things that are going to become, if anything, more expensive over time.

TREASURER:

Well, spending as a percentage of GDP is over 26 per cent Michael, so that's higher than at the GFC. Are you suggesting that that's a sustainable level? I'm certainly not.

BRISSENDEN:

No, I'm suggesting that it probably won't change.

TREASURER:

No, what I'm saying is you've got to control the growth in spending and the budget measures that we've been able to introduce over the last two years, some $50 billion in budget repair measures now many of those start to kick in next year, the year after that and we will see expenditure as a percentage of GDP fall over the next few years and that is a good thing. 26 per cent is not sustainable and so what I am saying is we need to keep the focus on keeping the pressure on spending growth down. So if you allow expenditure to run and go it will, it definitely will. As a government that is something that you can very much seek to control. You don’t use revenue to chase higher expenditures, that is a very vicious cycle.

BRISSENDEN:

Okay, just finally, there are reports that your party is receiving hundreds of resignation letters from branch members across Australia. Some are even threatening to join or create new parties following the removal of Tony Abbott as PM. What do you say to those angry Liberal party members?

TREASURER:

Well, look, I understand that there are some people because of the tumultuous nature of events who are feeling things deeply but I think the reality, the lived experience has been the transition has gone extremely well. I mean particularly in my own portfolio, I can say that we're getting on with the job; we're moving towards MYEFO at the back end of the year. You know, we're continuing this dialogue today with building the consensus around some important reforms …

BRISSENDEN:

People are unhappy though, aren't they, some people are unhappy?

TREASURER:

Well, look, that's not something I've observed in my own, getting around my own electorate and getting around my own party members. If there are in other places, well look, I think that's part of what happens in these sorts of situations. But the good news is I think the transition has gone extremely well and the Australian people can feel very confident that the Government is just getting on with the job and this is a strong Liberal/National Government which is adhering absolutely and passionate to strong Liberal/National values and the obvious risk to that is what the Opposition would seek to do and I know there's no support for Bill Shorten in the Liberal Party's ranks.

BRISSENDEN:

Scott Morrison we will leave it there thank you very much for joining us.

TREASURER:

Thanks very much Michael.