6 February 2018
Transcript - #2018008, 2018

Doorstop interview, Canberra

SUBJECTS: Jobs, wages, tax cuts, house prices

TREASURER:

Yesterday, the jobs survey showed 178,000 or thereabouts jobs had been advertised every week in January. That is another very strong result and continues the strong economic data we saw over the summer. That takes us into 2018 with a lot of optimism, a lot of strong belief in where the economy can go this year, how Australian businesses can realise significant opportunities – that means more and better paid jobs, more and better paid jobs, that’s what this means. What we’re doing as a Government every single day is to ensure that there are more and better paid jobs and the results are there to speak for themselves. It’s interesting to see in the US just last week, we’re starting to see that movement in wages and that obviously had some other knock-on effects in terms of how that was perceived in markets, but that is showing that the normal rules of economics are really starting to apply again after what has been a very unusual period after the GFC and the mining investment boom. So, I look forward to 2018 this year with a lot of economic optimism and it’s in stark contrast to the wet blanket that Labor and Bill Shorten seem to want to throw over the economy and the aspirations of Australians on a daily basis.

QUESTION:

Treasurer, you mentioned there how the secretary of your department when you were Immigration Minister wrote to ASIO to ask them to slow down those assessments and that obviously followed your comments during the election campaign…

TREASURER:

No, no, it followed our policy at the election which was endorsed by the Australian people – to stop the boats by no longer giving permanent visas to people who came to Australia illegally by boat, and guess what? It worked.

QUESTION:

So you foresaw that message going to the ASIO department about them slowing down. That’s what you envisaged when you had that policy…

TREASURER:

Departments and public officials implement Government policy and it was the Government’s policy – and remains the Government’s policy – not to provide permanent protection visas to people who come to Australia illegally by boat. Now, the Labor Party still has a different view. The Labor Party today will abolish temporary protection visas and it’s their policy to give permanent protection visas to people who come to Australia illegally by boat. So, I make no apologies for that and the scoreboard speaks for itself in the success of that policy.

QUESTION:

Treasurer, on company tax cuts, how can you be sure that it will lead to wages growth? That companies pass it on to employees?

TREASURER:

Economic history; lived experience over a very long period of time as recently as what we’ve seen in the United States. The reason why the UK, the reason why Singapore, the reason why the United States, the reason why France and the reason why Australia is seeking to lower the tax burden on all businesses – large businesses under our Enterprise Tax Plan, large, big corporations – Coles, Woolies, Myer, the big banks, all of those sorts of things, they don’t see these changes until six, seven years from now. The businesses that are seeing our tax cuts first are small to medium sized businesses and this is a very important point. They’re the ones who are getting the immediate benefits of this Enterprise Tax Plan. The next stage of that plan is for businesses between $50 and $100 million. Now, that can be companies of 50 people – that’s not Google. That’s not a multinational. That’s a business that’s in your suburb in part of Melbourne. That’s a business that sits in a regional town and the Labor Party is saying, “No tax cut for you.” People who work in those places, how are they supposed to get wage increases when Bill Shorten and Labor want them to pay higher taxes? It just doesn’t make any sense.

QUESTION:

Do you see any virtue in the government having a wages policy?

TREASURER:

The Government has a wages policy. It’s implemented through the various institutions that we have to Fair Work Australia and follows on from the previous government. We have a retirement income policy, we have a wages policy, but we know that if you grow the economy, if businesses invest, they can seize their opportunities and their workers will get paid more. That’s how the economy works and that’s how it has always been successful in this country. We saw significant real wage growth under the Howard and Costello Government and it didn’t come from the Government going and telling businesses how to run their businesses. Bill Shorten couldn’t run the country, I don’t see how he thinks he can go and tell businesses how they should run their businesses. If Bill Shorten was running your business, there’s no way you’d ever get a wage increase.

QUESTION:

Treasurer, just on another topic. There’s talk this morning about the proposal for smart meters for consumers that would put up the price of power during peak periods and, therefore, ease demand. How is that something that consumers would be happy with given they’re already paying enough in their lives? That the cost of living is going up?

TREASURER:

We favour very much a consumer different approach around these sorts of things and where customers want to use their own sort of demand management devices and with technology – I’ve just come back from the United States, where I’ve seen a lot of this smart technology – where those things are benefitting consumers and they want to take them up to help manage their energy consumption, I think that provides real opportunities for them. But when it comes to how and when, I see that as the customer’s choice.

QUESTION:

On housing, Treasurer, in 2016 you in 2016 said that Labor’s negative gearing plan was going to destroy home prices. Treasury told you it would have a modest downward impact. Around that time, in 2016, why were you saying things that were directly contradicted by your department.?

TREASURER:

I didn’t agree with them. That’s why. My first job was as a research economist in the property sector. At the time, that advice was provided, house price growth was running at around 13 per cent in Sydney. Today, it’s growing at just over one per cent. So, there’s a big difference between then and now but the point I was making in the House is this, for a start, a number of first homebuyers in the market is up by over a third over the past year – that’s good news. House price growth has decelerated from 17 per cent in Sydney to down to just over one per cent and that is principally happened in response to this Government taking action by putting faith in the regulator and working with the regulator APRA to limit access to interest-only loans and to put a speed limit on investor credit growth. We did that because we knew we had to deal with the investor heat that was in particular markets which was a result of a fact that there was undersupply in those markets. So, the reason prices were going up was because of undersupply and then we saw that the growth in credit for investors – in particular, interest-only loans – exacerbating that problem so we took a very careful, calibrated policy response which meant prices growth went from 17 per cent down to just over on per cent in the space of nine months. Now, we believe those measures – and we keep watching them closely, I want to stress this today, at no stage did I ever suggest to anyone, I note your report in the Financial Review, it is completely false. I have not suggested one way or another, and I was very deliberate in the interview about that, that in discussion with the journalist, that I’m not indicating one way or another how APRA would ultimately decide to recalibrate measures, that’s an entirely a matter up to them. It’s disappointing that my comments were reported in that way. But my point is that we’ve taken a very careful approach, so it’s had that effect. You’ve got more first homebuyers in the market. House price growth has decelerated and is back now at a more sustainable level. So what’s the point of Labor’s negative gearing policy? It’s not for housing affordability, unless they actually want to cause a housing price crash. When you’re at one per cent growth in Sydney and that’s as a result of a very careful change to investment credit access, abolishing negative gearing – that’s been around for 100 years and increased capital gains tax, what do you think that will do? What do you think that will do? Labor just doesn’t think this through. Treasury’s advice is their advice but it wasn’t based on any economic modelling or anything of that – there’s been no economic modelling on Labor’s policy. Only the BIS report has done that which Labor don’t accept but that says rents will go up and prices will fall. So if Labor wants to take away the asset values of Australian mums and dads, well, they need to explain why to the Australian people. I’m not going to do that for them.

QUESTION:

Should Australians be concerned that you don’t think much of Treasury’s advice?

TREASURER:

No, I respect Treasury’s advice. If the Opposition respects them in the way they claim to then why are they not passing our company tax cuts? Treasury’s advice on that is also very clear. Now, I’ve always been a minister who has held my views because I’m accountable to the Australian people. I take advice from my officials, but I’ll make my own decisions and based on my experience and based on consulting widely, I think that’s what people would expect of ministers, so I absolutely respect the Treasury and I think John Fraser’s done an outstanding job as secretary. And they’re a fantastic organisation, I love working with them but from time to time, the Treasurer is going to have his view and I’ll have my reasons for that which are based on my own experience and understanding of these issues and I do think that what Labor proposes would be damaging to the interests of the Australian economy and, particularly at a time when we’re in resurgence, I think this puts all of that at great risk like their other tax hikes. Okay, thanks very much.