9 February 2018
Transcript - #2018011, 2018

Doorstop interview, Sydney

SUBJECTS: Open Banking Review, wages, sharemarket, Enterprise Tax Plan, interest rates, Northern Australia Infrastructure Fund

TREASURER:

I was very pleased today to launch the Open Banking Review Report, and we look forward to getting people’s feedback. What this is about is giving banking customers more power to ensure they can get the best deal by using their own information. Whether it's a mortgage, whether it's any credit product, whether it’s a credit card, it's putting customers back in the driver’s seat and not at the mercy of large, big banks. It means they can drive what's happening in banking in this country, and not have it dictated to them, because it puts them in the driver’s seat. Also upstairs today, I made important points about the need for us to ensure that we continue to create more and better paid jobs by having the right policies that achieve that. Last year, more than 400,000 jobs - 1100 jobs a day, the majority of those for women, the highest level of female participation. 100,000 of those jobs in Queensland, by the way. To keep that happening we need to ensure that businesses invest. If businesses are forced to pay higher taxes, if they’re forced to pay more to the government, then they won't be able to pay as much or more to workers. Lowering the tax burden on businesses means they are in a better position to be able to pay workers more. Workers will not get higher wages when the parliament is telling businesses that they want them to pay the government more, and that's why we are standing up for workers, wage earners in this country, by giving businesses the head room to pay them more so they can do better.

QUESTION:

Philip Lowe made it pretty clear last night, that wages need to grow in Australia. Are we at a critical point now where there may be other consequences if this doesn’t happen sooner?

TREASURER:

Dr Lowe last night I think made the important point that the laws of supply and demand still function in this country. I’d say that they’ve even been enhanced in more recent times. As we look forward over the course of this year, then we can expect that what we’ve seen is the labour market tightening. With all of those jobs being created, we can expect that to see pressure for wages to grow, but in a way that ensures that businesses can continue to grow and employ more people as well. That’s why we’re doing what we’re doing to see businesses having more headroom. The less businesses have to pay to government, the more they can pay to their workers, the more they can invest in their businesses, the more they can create a bigger business that employs more Australians. You will not get higher wages with Bill Shorten and Chris Bowen and the Labor Party standing in the way, forcing businesses to pay more to governments rather than being paid to workers.

QUESTION:

Can the government afford though to pay for these company tax cuts as well as the personal tax cuts that you guys planning?

TREASURER:

Yes.

QUESTION:

Coming back to markets, are you able to comment on the market turmoil on the ASX  today?

TREASURER:

What we are seeing here is understood. There is a real difference between the real economy and what happens in the markets. There is also a big difference between what is happening in the Australian real economy and markets and what is happening in the US. In the US, the market grew far more substantially, the earnings ratios were significantly more elevated than what they were in Australia. While we see a correction taking place in the US, that has ripple effects around other market that recalibrate. The longer term investors understand that and will continue to be patient, and certainly, when there’s volatility in markets, others get involved, they see buying opportunities and it tends to feed on itself. That’s how markets work, we all understand that. What I think Australians should rest comfortably about, is that our economy, our real economy where jobs are being created, where businesses are investing, where opportunities are expanding, where our markets are getting bigger, this is what is going to drive their prosperity, and the prosperity for kids and others, as they realise them this year.

QUESTION:

The Senate looks like it’s going to block the rest of your company tax plan, what’s your plan B or other options?

TREASURER:

I want plan A.

QUESTION:

Has the change in Senators with the dual citizenship saga made it any more difficult or any easier for these kinds of things through?

TREASURER:

That is neutral to the equation. The Labor Party may want to wibble wobble when it comes to economic policy in this country. The Labour Party have lost their economic compass, ours is firmly in place and firmly directing us into a prosperous future. That is backed up by the 403,000 jobs created just last year. We are generating jobs as an economy, the government’s settings are right. We want to keep doing that and make sure workers get wage rises by ensuring that businesses can pay them more rather than pay the government more. The Labor Party has lost its way on economics, they've basically adopted the economic agenda of the Greens. They’ve  basically lost their way.

QUESTION:

Building on your comments earlier about the markets, there should be no real cause for concern for investors from the flow on effect of the US market?

TREASURER:

You will continue to see some volatility and I think that’s what we are experiencing. The market’s recalibrating based on what we’ve seen in the US. But let's not forget what triggered a lot of this in the US, and that is an economy that is doing even better than people expected. It is the product of some good economic news, and how that has been impacting on markets and what their expectations of inflation are, where they see interest rates going. Last night Dr Lowe, the Reserve Bank Governor provided a very measured, a very reassuring address about the state of the Australian economy. Where inflation is going, where rates are going, he is the appropriate person to make those comments. I think his comments should have significantly reassured Australian investors, and I look forward to that having a positive influence on the temperance of what we’re seeing.

QUESTION:

It seems the prospect of interest rate rises have dimmed, Treasurer?

TREASURER:

I don't know if they had changed at all, but that really is a matter for the Reserve Bank. They have always been pretty clear about the fact that they’re not a jumpy bunch, they are a very calm and measured group and have always maintained their own clear view about the Australian economy and the world economy. On the way down, they didn’t go as far as other economies did, in some of those countries that have been moving their rates. They have also been a lot more measured. At the Reserve Bank, we’ve got a very steady hand at the till there, that should be very reassuring to Australians.

QUESTION:

Rail company Aurizon has pulled its application for the Northern Australia Infrastructure Fund, saying that there is no real customers at all. Will this affect the future of Adani and the growth in the Galilee Basin?

TREASURER:

That is up to their investors in those businesses, that’s for them to make those decisions. The government has worked through the necessary approvals, which are significant and onerous when it comes to the protection of the environment and how business decisions are ultimately made for those who are making them.

QUESTION:

So it doesn’t change the government’s support for Adani?

TREASURER:

The government has dealt with the environmental and other approvals that are necessary for that project. That’s what the government’s job is; it’s not its job to do any more than that - neutral to any other type of investment.

QUESTION:

Earlier in the week Heather Ridout raised some concerns about polarisation as a result of the proposed company taxes, putting employees against their employers. Are you losing the argument? What do you say to try and, I guess, get rid of this polarisation?

TREASURER:

It is important that within companies, as occurs in small businesses; I mean people who work for small businesses and medium-sized businesses where tax cuts have been passed are very aware of the fact for many, many years now, small and medium-sized business owners put their hand in their own pocket, to pay people’s wages and they didn’t take an income at all. In fact, one of the big lies of Bill Shorten lately, is what he has been saying about profits. When you look over the last five or six years, the total wages bill in this country rose six times faster than company profits. It is a sustained increase in profits that leads to a sustained increase in wages. Bill Shorten may want to talk about the politics of this issue, because he is incapable of dealing with the economics. That's disappointing. The Hawke-Keating legacy, I think the documentary is going to be shown over the next little while, you will find no resemblance between Bob Hawke and Bill Shorten when it comes to economic policy. The leadership shown by Bob Hawke and Paul Keating for the Labor Party back then, they are a distant memory and a vanished ghost in the Labor Party when it comes to economic policy. Bill Shorten and Chris Bowen, they are going back to pre-Whitlam when it comes to where they sit on economic policy. Ok, thanks very much.