8 February 2016
Transcript - #2016013, 2016

Interview with Ray Hadley, 2GB

SUBJECTS: Taxation, Labor’s reckless tax and spend approach to the Budget, immigration portfolio, Stuart Robert, Vale Michael Tynan

RAY HADLEY:

Treasurer, good morning.

TREASURER:

G'day Ray.

HADLEY:

Well, it's going to be the bulk of the interview today after what the Prime Minister said on Friday and said over the course of the weekend about the GST. We have been talking about the GST, and I know you haven't defined what you are going to do, but it has been in the mixing pot. It looks like it is out of the pot.

TREASURER:

I believe the Prime Minister set it out very well on the weekend. We have always known that this was a difficult issue to work through and certainly the Government doesn't make any apologies for wanting to do things that could reduce people's personal income tax. In an environment where you have got no surplus bequeathed to you from the previous government, so you can't fund tax cuts that way, and in the global environment we have at the moment where world growth has been subdued, the only way those sorts of things are really possible is with the sort of measures that are under consideration. They don't come without problems either, Ray, and I suppose, with something as difficult as this, the Red Sea is not going to part every time for you on these things and that is just the reality of life. We will continue to work that through with Cabinet as the Prime Minister said because that is where these things are properly ultimately dealt with. What I think I'd like your listeners to understand, if I can, is the reason we have even been having this discussion is that we won't leave a stone unturned when it comes to trying to reduce the income tax burden for people who go out there and work every day.

HADLEY:

[inaudible] you said this morning and I agree with you, you have got three choices. You either increase the GST, you have a massive tax cut, or you do nothing and it looks to me like we are going to do nothing. I am going to take you back when Mr Turnbull offered himself as an alternate Prime Minister and have listen to what he said.

PRIME MINISTER: It is clear enough that the Government is not successful in providing the economic leadership that we need. It has not [inaudible] with individual ministers ultimately the Prime Minister has not been capable of providing the economic leadership that our nation needs. He has not been capable of providing the economic confidence that business need and we need a different style of leadership. We need a style of leadership that explains those challenges and opportunities. Explains the challenges and how to [inaudible]. A style leadership that respects the people's intelligence. That explains these complex issues and then sets out the course of action that we believe we should take.

HADLEY:

And the course of action, Treasurer, is to do nothing.

TREASURER:

I don't believe that at all, Ray.

HADLEY:

Well, that is where we are up to, mate.

TREASURER:

Well, no, Ray, with respect where we are at right now is we are coming to a conclusion of this process. This was one element of many issues that are under consideration by the Government. We have got a Budget coming up in three months which the Prime Minister made clear on Friday. which is obvious and of course there will be measures we will be able to take forward. But what the Prime Minister, and I for that matter have been saying, is that we've got to work through these issues problem. The reason we have kept everything on the table is because we wanted to give everything the fair go of being - if we can give personal income tax cuts at a higher level that is what has been driving us. Now, the states wanted us to increase GST to give them more money so that they can spend more. We were never going to do that. That was not something we were interested in. We were never interested in raising the GST just to pour money back into the Budget. The way to fix the Budget is to get expenditure under control but if we could try and get cuts to personal income tax through this method which is still very difficult and there are still real problems and that is what the Prime Minister was explaining, then if that is not possible through that method then we are just going to have to go the long road on this.

HADLEY:

Ok, well you have now declared that the GST, from what you have just said to me, is off the table.

TREASURER:

No, I haven't said that Ray.

HADLEY:

  Yes, you have.

TREASURER:

No, I'm sorry I am not going to play word games over it Ray. The Cabinet makes that decision – not me.

HADLEY:

Well, someone has made the decision because you have just basically said we are not going to increase the GST and give it to the states. The states won't agree to…

TREASURER:

We never were going to do that.

HADLEY:

Unless they have a say on how the money is distributed because when it was originally signed you had to have agreement from states and territories to increase it in any way, shape or form. So the answer, and you are the Treasurer, at the end of the day you are the one charged with doing this Budget. If we are not going to increase the GST and one political writer today says how [inaudible] you increase [inaudible].

TREASURER:

I saw that.

HADLEY:

So he says he is sane because he is not increasing it in the Fairfax newspapers today. Mr Keating said maybe 11 or 12 per cent, you'd cop that because you can offset your spending but at the end of the day you are going to have to be rather ruthless if you want to be responsible as you say you wanted to be, all the way since you took this position in order to get the Budget, you know, back into surplus at some stage in the next 50 years.

TREASURER:

The GST was never the answer to the Budget issue. I never said that nor did the Prime Minister. The only reason we were looking at issues, and continue to investigate those, is because it gives the only opportunity there really is for very big income tax cuts. Now if for the reason that other issues prevent that i.e. the compensation bill is too big, if the states only want an increase in the GST so they can spend more money – then they are big problems and those problems do work against the objective. So, that's where we are at. We have been pretty plain with people about it.

HADLEY:

I'm not disputing the fact that you have been open about it and I am happy enough to accommodate the fact that it is off the table because it hasn't been well received by the electorate. It wouldn't matter if you introduced it and you bumped it up to 17.5 per cent it still wouldn't [inaudible] but at the end of the day [inaudible] make decision as a Government just not [inaudible] parliament. How then, as a responsible Government, and we heard the Prime Minister say that he came to power on the basis of economic responsibility, how do we get things, our house in order, if we don't increase revenue, we obviously have to decrease spending and we have to do it really quickly and we have to be really tough.

TREASURER:

In the mid-year statement I released just before December there was $9 billion in further savings. Not tax increases - $9 billion in further savings and that came on top of the almost $85 billion, I think it is in other savings that we would serve to take through the Parliament in the last two years. So, we have continued on that track or reducing, seeking to reduce Government expenditure.

HADLEY:

You attempted to take it through Parliament but you haven't been successful.

TREASURER:

Well, no, 85 per cent of all the measures we have put to this Parliament on these Budget issues have been passed. I think there is a popular perception out there that is very different to that. Well that is the fact. We have been able to pass the overwhelming majority of our saving measures through the Budget. Now, over the last few years there have been other things that have gone and hit the public purse. Things like increased spending on infrastructure, increased spending on security and increased spending on refugees of the 12,000 – I mean they were all decisions taken and you have got to pay for those and what we are saying is and what we have been able to do is where there have been new commitments we have funded them through savings. Now, our opponents want to fund things by raising taxes. There was never any suggestion on our part in this discussion that we wanted to raise taxes to support higher spending. That is not what we do.

HADLEY:

But you did want to raise the GST?

TREASURER:

Not to raise spending. To deliver tax cuts – that is why.

HADLEY:

You wanted to offset tax cuts by getting more income from the GST.

TREASURER:

Because that is the only way, that at that scale, it can be done.

HADLEY:

I just want to go back to your claim that the states and territories wanted you to increase it but only if they got everything out of the pie. I mean was there any possibility that would get something in the pie out of the 10 per cent?

TREASURER:

Well, it violates the key principle. If you do that then you can't deliver the income tax cuts and it defeats the whole point of why you would even consider it in the first place. I mean there is a fundamental difference of outlook here and when what you are trying to do with tax. Some people want to increase taxes because they just want the Government to spend more. Paul Keating made that point and he was really right about that. We were never suggesting and have never been really contemplating the idea of increasing taxes for spending.

HADLEY:

You want [inaudible] spend so to offer tax cuts to middle and high income earners.

TREASURER:

That's right. They are out there working every day. They are out there running businesses every day and my objective in this role will be to wherever I can reduce the tax burden on people who are working hard and running business and do that wherever I can. Now, on every occasion circumstances may not allow it. So, you can't part the Red Sea on everything – but where I can, people should know that is my focus.

HADLEY:

I never thought you would hear me say this but I agree with independent Senator David Leyonhjelm. I am starting to examine myself even by saying that. But it is because we have got these overseas workers on 457s coming here to work on rural properties, cattle, sheep, grain farms, right. And then you read the Courier Mail and they went up to where a lot of where the 457 work is done north of Brisbane and they interviewed a group of teenagers, ‘why don't you go?' ‘oh the money is not good enough.' ‘What do you do?' ‘I am on Centrelink' ‘What about you?' ‘Oh I went out there for a week and crikey it's hard picking mangoes. No I don't want that'. He said, well, yes, ok, we'll get these 457 people here but what about the people who are saying no I won't pick mangoes. I live at Nambour and I am not going to pick mangoes inland because it is too hard so I will stay on Centrelink payments. How does an 18, 19 or 20 year old who has the opportunity to earn money, which doesn't satisfy their aspirations and needs so therefore we have to import labour that is prepared to pick the mangoes. How does that work when you are trying to rein in spending?

TREASURER:

Sure, here is a good idea, how about we not give people who are at that age access to the dole for four weeks and prevent them for doing that so they take up positions like this. We actually have a piece of legislation before the Parliament that I introduced, that this Parliament, in particular the Labor Party refused to pass. So, we agree and we have the clear plans to go and do this and at this next election there will be the opportunity. That is what we have put to the Parliament. The Parliament has said no so we are putting that directly to the Australian people. That and the other measures that we have got which is $10 billion, $12 billion more - $13 billion more in savings that have been knocked back well the Australian people can decide if they want to give us the opportunity to get on and do that. We have a very strong savings agenda. We are reducing expenditure as a share of the economy from 25.9 per cent to 25.3 and we don't want to go down a tax and spend binge like the Labor Party wants to do. They are not funding anything other than by higher taxes.

HADLEY:

Just on your time as immigration minister and we go back a fair way here but 457 visas, I highlighted down towards your electorate on Friday two drivers, international 457 visa holders, driving for Scott's Mount Gambier who for the second time in a week tried to go through the airport tunnel.

TREASURER:

Yeah I saw that.

HADLEY:

And then couldn't back the truck up because they can't back trucks up. Now, I have information which I will be working on tomorrow with Duncan Gay in New South Wales. I am sure it is happening in other states and territories as well, where these blokes are given their licenses basically out of a cornflakes packet and then start driving long haul and we had irrefutable evidence of the most disgusting work practices in relation to using toilet facilities from the back of the truck as opposed to pulling up and actually going to the toilet. All these sorts of things will be dealt with. In general terms how many people do we have in this country at the moment on 457 and legitimately and I mentioned in Roma I met an Irish man who was here on a 457 as a jeweller because the bloke in Roma who ran the jewellery store couldn't get anyone to go out there and work. And I applaud that but how many do we have legitimately doing that sort of thing as opposed to just usurping the labour market?

TREASURER:

Well, it has been a while since I have looked at those numbers Ray but I don't think they have changed. It is around about 100,000 people – less than that I suspect now who are in Australia on a 457 visa. That is the smallest fraction of our workforce. There are more than 11 million people in our workforce. This is a very, very small percentage of those who are out there in jobs in 457s. The regulation of truck drivers and what they should be doing, as you have just said, that is absolutely a matter for the states to ensure that their regulations are being enforced and people's safety is being protected and you are following that up and I am sure Duncan will get on to it.

HADLEY:

Just one final thing. Stuart Robert, the Human Services Minister, I mean I read through the story this morning, it's on the front page of the Courier Mail, he went to China with a friend who is known as a Liberal Party donor, a businessman, who was finalising a mining deal there and met with people from the Communist Party. Well, I expect if you are going to meet with people in Government in China you are going to meet communists. Then I got to the bottom, I mean hello, you are not likely to meet a fascist but I got to the bottom of the story, it said he paid his own way.

TREASURER:

He paid his own way.

HADLEY:

So what is the drama?

TREASURER:

They are all getting upset. I mean what happened was he was there at his own expense, paid his own way, he was actually on leave and he gave the bloke a pin because he was given one. So, he took the pin off his own lapel – which was something he paid for. So, it was his own property and he gave it to him. This is a ridiculous beat-up.

HADLEY:

Having dealt with Chinese people myself in recent times if you go to their home it is almost customary and obligatory that they give you a small gift.

TREASURER:

Yeah, I mean what do you want to do, just not reciprocate? There was no taxpayer expense involved.

HADLEY:

The bottom line is there was no tax payer dollars involved and he has never portrayed it any other way.

TREASURER:

Absolutely.

HADLEY:

Now, if I could just say one final thing on a more jovial matter. I drove down last Wednesday to Parliament from Sydney and I know that you quite often drive that particular route, it is a magnificent drive and I stopped at the Paragon at Goulburn on the way home. May I suggest to many of your colleagues that if you are in Sydney, not necessarily in Western Australia or in Brisbane or other points north, but it is a really nice drive up the highway now and other people should try it.

TREASURER:

Well, it is and I do travel a lot. I don't usually stop because I am trying to get home to the kids as quickly as I can and to get back to my Shire. And just on that particular note I know today at 10.30 the Shire will be gathering in Miranda to remember a great Australian in Michael Tynan OAM. He was a real legend and pioneer of the Shire. He was a great businessman, served on the NRMA, but the best thing about Mike was he was such a loving family man. He was married to Annette 57 years - that is an extraordinary achievement. We are going to miss him terribly. I will just tell you one story about him. When he started his business life he was a jeweller and he had a store in Kogarah…

HADLEY:

Is that right? Before he had a car dealer?

TREASURER:

That's right and that was before the Sharks, my beloved Sharks, were in existence.

HADLEY:

Before ‘67.

TREASURER:

And he used to award the weekly man of the match award and give them a watch for the Dragons. He supported local sport, he supported great causes, he was a great friend of mine, he was a great mentor of mine and many others in The Shire and to Annette and Madeline, Kieran and the whole crew, I am sorry I can't be there with you today but my heart will be with you and I will always remember Mike as just a tremendous, loving, graceful man.

HADLEY:

Lovely man. Thanks very much and thanks for talking to us again today.

TREASURER:

Thanks a lot, Ray.