15 February 2016
Transcript - #2016014, 2016

Interview with Ray Hadley, 2GB

SUBJECTS: Stuart Robert; polls; taxation; negative gearing; kayaking; immigration portfolio

RAY HADLEY:

Treasurer, Scott Morrison, G'day.

TREASURER:

G'day Ray, from The Shire. I had to head back because of that shocking traffic on General Holmes Drive.

HADLEY:

Well, yeah, he was on his way to the studio, the Treasurer, and we got word that you were stuck in it and there is no apparent reason for it Treasurer. It is just really heavy traffic in and around General Holmes Drive for some obscure reason.

TREASURER:

Oh, well, I am sure for the people I was sitting next to in that traffic are still sitting there, sadly for them.

HADLEY:

Ok, new ministry over the weekend. You and I mentioned Stuart Robert before. Then he made declarations that we didn't know about and then was forced to resign as Human Services Minister disclosing he held shares in a blind trust linked to a company owned by Paul Marks which wasn't declared previously. It is understood you argued on behalf of Stuart Robert, but the Prime Minister said "no, he has got to go".

TREASURER:

Well, the Prime Minister and I couldn't have worked more closely on this and I think the Prime Minister handled this in exactly the right way and those reports of any sort of divisions between us on that were complete nonsense. There was further information when Mr Robert cooperated fully and extensively with the inquiry undertaken by Doctor Parkinson as you would expect someone to do – which he did. It ended where it has ended and that is the end of the matter.

HADLEY:

Given this latest poll today in Fairfax has you back at a two-party preferred at 52-48 they quantify that as nine sitting members will be dispatched if it is replicated in a poll later on this year. Would those people that are being identified as going west be nervous?

TREASURER:

Sweeping polls when you apply them generally across seats. I mean I am a former state director and campaign director, no one who actually understands politics believes those polls apply directly into seats. Of course the last couple of weeks have been difficult ones for the Government and I would have been surprised to see anything different. With that all said and done the preferred prime minister, is Malcolm Turnbull 64 per cent – Bill Shorten 19.

HADLEY:

Ok, given that you are not putting much credence in polls in relation to the seat. Let's get to the preferred PM. It would be evident that they have no hope of winning while Bill Shorten leads them. That is indisputable. Because it's not just this, it's Newspoll and other polls over the last six months show that he has absolutely no hope of leading them to victory.
TREASURER: Well, no Government ever takes any election for granted and we certainly aren't and that is why the next few months we are building towards a Budget which will come down in three months. It is not coming down this week. I think people expect us to announce everything in a Budget months and months and months in advance. We are working on the Budget. It will be announced in May and the measures that are in that Budget will be there and critical amongst those measures is to ensure that we can continue to get expenditure under control. You can't have lower taxes if you can't control spending. That is why we have been cutting spending to ensure that we are getting it down to a point of about .6 of a share of the GDP down by the end of the forward estimates. What that means is we are getting expenditure under control and that is the most important thing in the Budget because if you don't do that than your debt continues to increase even more and taxes, the pressure gets on them to be made higher as Labor is clearly planning to do.

HADLEY:

We will get to them in a moment but research in the Australian Financial Review today says that you may have a crack at bracket creep. But it will be, I don't think half-hearted is the right word, but it won't be as extensive as you would like to go or as they would like you to go because it would just costs too much money to accommodate bracket creep. It is something you have been talking about with me even before you became Treasurer and it is unavoidable, it is there, and people are going to be paying more tax just simply without doing any more work or overtime or getting an increase.

TREASURER:

That's right and that concerns me greatly. The only reason that Malcolm and I have been looking at the whole issue of the GST is to try and identify ways in which we can reduce people's personal income taxes. Now, other people wanted us to increase the GST to give the states more money to spend. We said no to that. Other people said you have got to put up the GST on householders so you can give companies big tax cuts and we said no. If we are going to do anything in that area it has to be to give people who are going out there and working and earning for a living a better deal on their income tax. We ran the numbers on that and it came to the conclusion that it did and the thing that was really most debilitating on all of that, Ray, was just the cost of compensation. At the end of the day once you'd compensated everybody for what the potential impact of the GST was the whole thing became self-defeating. Where others wouldn't contemplate this we have worked out we shouldn't contemplate this because we have done the work.

HADLEY:

How then, and you have talked about reining in spending. How do you give tax relief to people who are going to be impacted on by bracket creep without – I mean they haven't got a promotion, they haven't got more money, but they are paying more tax. How does that happen?

TREASURER:

Well, it is extremely difficult. The first thing you have got to do, you have to continue to keep the constraints on expenditure. The best way to deliver tax relief is if you have a surplus and we weren't given that by the previous government, quite the reverse. So, the best way to do it is if you are looking at areas of tax the priority has to be any changes you make in any area of tax. It has got to go back into tax cuts for people who are earning a living. Now, what Labor announced on the weekend was higher taxes but they are not going to put it into tax cuts, they are just going to do it to spend more and more and more. That is the real difference between Bill Shorten and Chris Bowen and Malcolm Turnbull and I. If we make any changes in tax it will be to deliver lower taxes in other areas particularly for those who are working hard and out there earning a living.

HADLEY:

I read an email that you may or may not have heard at the top of the show from a property evaluator from Queensland. It starts by saying that Bill Shorten is an economic moron – negative gearing changes. I read your piece yesterday in the paper about the impact of all of this. He goes into it in chapter and verse. He says, "under Mr Shorten's proposal all the tax incentives are for new property not second hand property. This will be not retrospective but from here on in if he gets into power." He uses this analogy, "Ray, you buy a new investment property in 2017, in 2025 – if you are still with us – try to sell that property for a capital gain. Under Mr Shorten's proposal it is impossible to sell in 2025 because all of the tax incentives are for new stock not second hand property. The property investment people already understand this. His proposal is utter madness. He kills off two industries for no gain. He doesn't even get a boost to the Budget bottom line."

TREASURER:

Particularly on that last point and he is right about the others. Bill Shorten's, what he calls, 'transformational tax reform' raises less than $600 million over four years. That is not enough to pay even one month's interest on the debt that Labor left us. That is what he has proposed on the weekend. Not enough to cover one – just one month of interest on the debt this year. The other points that have been made by the person you referred to I think are very astute, by distorting the way the tax incentives fall in this area what they do is potentially distort the property markets themselves. Now, what Labor thinks about negative geared investors and people listening to this program, and there would be a lot of them, because two-thirds of the people who use negative gearing currently have a taxable income of $80,000 or less. 70 per cent just own one property and 70 per cent of them have a net rental loss of less than $10,000 a year. Now, Chris Bowen thinks that everyone who is on negative gearing is on a rort. He thinks they are big property barons and you have got to tax them and slam them. For most middle income people it is the one chance they have got to build some wealth. If you are a small business, if you are a police man or woman, or a nurse or a teacher – this is your opportunity and on the weekend he just smashed them.

HADLEY:

Well, my property valuer from Queensland who has a great understanding of this says, "Shorten's new negative gearing proposal will kill off both the new residential construction and the second hand property market – probably within three years. Put 50,000 construction workers and subbies out of a job not to mention the 20,000 selling agents, property managers, lending agents, cleaners, etcetera, etcetera, etcetera – utter madness."

TREASURER:

This is what it does, all those wealthy property investors who use negative gearing, they will now all have to crowd in to the new housing market. Mums and Dads who are trying to get a go on negative gearing they will be bidding against them for a small amount of stock. The same for first home buyers out there visiting the housing estates in South Western Sydney and places like that – you will now be bidding against the negative gearing seeking investors on high incomes from other parts of the country and within Sydney. They just don't think this stuff through. They don't understand what negative gearing is used for by most people. I will give you this example, Ray, it is a bit like the Labor Party deciding that they are going to change the tax treatment of buying a new car which gives you an incentive to do that but then give you a tax hit for buying a used car. Imagine what that does to the price of a car after it leaves the showroom.

HADLEY:

Well, your analogy about people competing with investors for the new market, don't forget as my property valuer listener points out that in 10 years' time when you try and sell it as a second hand property there is no incentive to negatively gear that property. So, why would you buy it in the first place, so to speak? Now, I know it is not the biggest issue in the world but you do have the Prime Minister's ear, he set a really bad example today in News Limited papers paddling in a kayak on Sydney Harbour without his life jacket on. Now, in New South Wales, it is against the law if you are 100 metres from the shore line in enclosed waters. Given he is the Prime Minister and given I expect you want him to be Prime Minister at the election he would be much better served to wear a life jacket when he gets in his kayak.

TREASURER:

Well, Ray, you have outlined what the law is. I kayak on Port Hacking all the time.

HADLEY:

But I hope you wear a life jacket.

TREASURER:

I never go more than 100 metres from the shore.

HADLEY:

But do you wear a life jacket?

TREASURER:

No mate I don't because I don't have to because that is the law. I obey the law and I stay…

HADLEY:

But on behalf of your wife and children I plead with you to set an example for all those wonderful kayakers in the Sutherland Shire, do me a favour, because despite my arguments with you I quite like you, I don't want you to perish. Get a life jacket on, Scott. Please take that advice from an older, wiser head when it comes to life jackets as opposed to economic matters.

TREASURER:

Well, if the law needs changing lets change it…

HADLEY:

No, no I'm not talking about the law. I'm asking you, now that you have admitted to it. I want you to wear a life jacket when you go kayaking whether you are 22 metres from the shore or 99 metres from the shore or 108 metres from the shore. I am sure that your family would agree with me.

TREASURER:

Well, Ray, I will raise that with my family.

HADLEY:

I am sure if you sit down at dinner tonight with your wife and said, "Ray's an idiot he wants me to wear a life jacket when I am out there". I bet she says, "Scott, look, I know he is an idiot…"

TREASURER:

I am about 10 metres from the shore when I am paddling.

HADLEY:

No, no, no you have just moved yourself in a bit closer. She will say, "Ray is right, get a lifejacket".

TREASURER:

Look, people should conduct themselves safely, Ray. Look, I appreciate the point you are making but people should comply with the law…

HADLEY:

Set an example.

TREASURER:

…it is there for a reason and people should do exactly that and I don't think anyone is suggesting the Prime Minister has done anything different.

HADLEY:

Well, let's hope he didn't go 101 metres from shore otherwise he could have a problem. Now, the Immigration Minister – you were – Lady Cilento Hospital in Brisbane is refusing to release a baby because it will be sent back to Nauru. Now, we have had this nonsense of churches saying this is a sanctuary come here. Now, we have doctors in a hospital declaring Lady Cilento Hospital and a lot of my 4BC listeners have been a bit angry about this. If the baby is fit and well that baby is occupying a bed that could be occupied by a baby that needs to go in there.

TREASURER:

The difficulty with this stuff, Ray, is always that you have got to just apply the rules as the policy is set out. That is what has been successful in getting the outcome that we have had in terms of this grisly business of people getting on boats. It is not an easy thing to do. I had to argue for it for many years in Opposition against a lot of opponents and do it in government and it is not easy. The risks of departing from the policy in any way, shape or form basically sends an invitation for the trade to recommence so the Government continues to hold its line - absolutely, completely. You seek to be as compassionate as you possibly can within those…

HADLEY:

But you can't direct the doctors at Lady Cilento to send the baby out of hospital can you.

TREASURER:

That is a matter for Queensland Health and how it deals with…

HADLEY:

Well, they have already said they will not be making them.

TREASURER:

I don't deal with those details any more, Ray. I mean Peter is right across this and we all seek to apply these things as compassionately as we can in these circumstances. At the same time we have a regime in place which has been successful and the lesson of Kevin Rudd was when the boats had stopped he thought he could come in and change it, tinker with it and he did that and the horror started all over again. Having sacrificed so much to ensure that we could stop it, I will never be one who would be arguing for that to be eased again because I have lived the horror of what it looks like when it goes bad and anyone who wants to go back there should revisit those events again and think again.

HADLEY:

Quick one to finish Khaled Sharrouf, we though he was dead.

TREASURER:

Yeah.

HADLEY:

And now his barrister Charles Waterstreet. I find it very strange, I mentioned earlier that Mr Waterstreet is blaming a supreme court judge for being duped when in fact I believe that Mr Waterstreet introduced the psychiatric report that said he was as mad as a two-bob watch. So I don't know how Anthony Whealy was duped given that he put some faith into a report from a psychiatrist entered in by the defence but that is another story for another day. Do you believe he is dead or alive?

TREASURER:

I don't know, Ray.

HADLEY:

So, no one knows.

TREASURER:

I don't know but to be honest mate if I did know I don't think I would be authorised to say publically. So, whether he is alive or dead we all know what sort of creep he is and we all know what is going on over there and the way that young people in this country are being recruited and groomed and solicited by these creeps and seeking to take them over there and throw their lives away. That is why the Government has done all of the things we have done. We haven't skipped a beat on those issues over our time in Government under both Prime Ministers and we will always be as far forward leaning and strong on this as anyone could hope us to be.

HADLEY:

Talk next week, thank you and get the life jacket. See you later.

TREASURER:

Thanks Ray. I appreciate your concern.