14 February 2017
Transcript - #2017015, 2017

‘Ticky’ program, Sky News

SUBJECTS: Commodity prices; Labor’s threat to the Budget; Future Fund; Turnbull Government delivering $3 billion boost to responsibly fund the NDIS; Labor out of excuses on business tax cuts; RBA Governor exposes Labor's threat to jobs; Turnbull Government’s bolstered laws to protect consumers in financial services; Energy security and affordability

TICKY FULLERTON:

Treasurer, welcome to the program.

TREASURER:

G’day Ticky, nice to be with you.

FULLERTON:

Can I start with these iron ore prices, they're good news, a lot higher than expected indeed, higher than the mid-year outlook back in December. This has got to get the ratings agencies off your back, the triple-A rating should be secure now isn’t it going into the Budget?

TREASURER:

With commodity prices, as you know, back in December we took a fairly modest view about how that was going to play out and I think that gave us a lot of credit particularly for those who look at those things closely, that we were being so honest about these things. The situation has improved a bit since then, but we’re not going to get ahead of ourselves on those things. We’ve seen those prices go down in the past, and that’s obviously had a very significant impact on estimated revenues so…

FULLERTON:

This has got to start making a big impact now into the Budget bottom line at least for this year hasn’t it?

TREASURER:

If it’s sustained, and if there’s a view that it is sustained, and we’ll be looking at that more closely as we get closer to the strike point for the Budget, but obviously them being where they are today is better than where they’ve been a year or so ago. But, the key issue though, these prices move, parameter estimates move, estimates of nominal growth, estimates of wage growth, all of these things impact on the Budget revenue estimates, but what matters are the structural issues and that’s why we have the measures that we’ve got before the Senate at the moment. Savings measures. That’s why we got the $22 billion worth by the end of last year. They’re the things that really matter, if you’re looking at structural change.

FULLERTON:

That’s a bit of a struggle for you at the moment. What are you going to be offering up to the Xenophon team who are clearly not happy with this? Presumably, it’s going to go through measure by measure, particularly when it comes to some of these welfare cuts.

TREASURER:

That’s not a surprise. That’s always been the case with these measures. We’ll continue to work through those issues with the crossbench. The shame is the Labor Party should be supporting these. They’re the party who were Government and put the Budget into deep deficit and put Australia back into debt, and now they refuse to support the Government which is cleaning up their mess. That’s why we have to talk to the crossbench.

FULLERTON:

Some of these, particularly the family benefits side, the danger is that you get compared with that Abbott/Hockey Budget and this issue of fairness or unfairness. Are you going to actually give a little I guess on the cut backs I guess on the family benefits side?

TREASURER:

We already have on these bills specifically. I’ve had an association with these bills over two portfolios. We’d already made changes to increase the fortnightly payments for family tax benefits, we’d already put forward in response to our discussions with the crossbench to increase the paid parental leave from 18 to 20 weeks. So that’s more than has ever been provided.

FULLERTON:

But you’re going to have to give a little bit more to get this through.

TREASURER:

We will continue to work with them Ticky, but the frustration I suppose for Australian taxpayers is, if the parliament is going to insist that the Government spends more and more money, particularly on welfare then someone has to pay for that in some point in time. There are only really two options for how you do that. You make savings which is our first preference to deal with the country’s expenditure problem. But if you don’t do that, you either have got to have higher debt which is a tax on your children, or you have to deal with it with other revenue measures. Now our preference is to deal with getting expenditure under control and not cave into the demand from the Labor Party which is to spend more and more taxpayers’ money on welfare. We think we should have a targeted welfare system to help those who need it most. That’s what we’re doing. Labor just can’t say no to more and more money being spent on these things.

FULLERTON:

Treasurer you were very strong in Parliament today talking about intergenerational theft actually.

TREASURER:

It is.

FULLERTON:

But, thinking about intergenerational theft, the Future Fund and I’m looking at really the growing interest in the Parliamentary Budget Officer Phil Bowen in this, and the idea that the Government certainly before the end of the current estimates might look at tapping into the Future Fund. This of course is money that has been put there to pay the pensions of civil servants. Now, is that a good idea, will you be dipping into that in order to get to your 20-21 surplus?

TREASURER:

The process and the program that was put in place for how the Future Fund operates was put in place, actually by the Howard/Costello Government and the incorporation of those numbers as you’ve just mentioned was done by the Rudd and Gillard Governments. So this Government has not made any decision on those matters…

FULLERTON:

Will it be in the Budget numbers?

TREASURER:

Of course it’s in the Budget numbers, because, that’s what was put in place by the previous Government, that hasn’t been altered. But given that in 20-21 these matters become relevant to the forward estimates the Government will obviously be making decisions on those issues for this Budget.

FULLERTON:

If you do start taking it out that early the concern is that this will shrink the pie considerably.

TREASURER:

Well I’m only looking at the numbers based on what previous Governments and indeed the Howard/Costello Government set this up to do. It was in 20-21 when the ability to make drawdowns was established by them. Whether we choose to take the opportunity that was provided for in that original design of the scheme, that’s obviously a decision we’ll have to make for the Budget, but if again, if money doesn’t come from one source it has to come from another source Ticky and there aren’t too many sources. You can get your expenditure more under control, you can raise revenue or you can increase the debt.

FULLERTON:

And of course business has a strong voice as well. They want their company taxes reduced. How do you think the crossbench is looking at that now that Phil Lowe the Governor is actually concerned about the corporate tax rate?

TREASURER:

The point Phil Lowe made was very important. He said you had to deal with fiscal consolidation with dealing with things like having a competitive tax system. It wasn’t either or which I think is how Chris Bowen misrepresented Dr Lowe’s comments. He is saying both are important, you have got to do both particularly with the tax competitiveness which is going on. We know where the UK already is, we know where the US wants to go, even the French socialists understand that it is important to bring down those rates of tax to remain competitive. That is important to grow the economy. That is important to support jobs and peoples earnings and that is why we are pursuing that. You have got to have growth and you have got to have fiscal consolidation and as a Government we are seeking to pursue both of those objectives.

FULLERTON:

Treasurer, you had some theatrics with your lump of coal in the Parliament. Just on this whole energy mess that we are in, coal, yes there is a place for coal, no doubt, in Australia but would you go as far as subsidising, the Government subsidising, a new coal operation in Queensland?

TREASURER:

You make an important point and that is you said that coal has a place in the future. Not everybody agrees with that. That is why I literally almost put coal back on the table in the Parliament because that position is not accepted by the ideologues and zealots that are running policy for state Labor Government’s and the Labor Party here in Canberra. They don’t accept that. It is important that we pursue an all of the above resource strategy when it comes to energy security. Whether it is wind, whether it is energy, whether it is pumped hydro, whether it is storage which is a big part of the answer as the Prime Minister has been rightly noting, whether it is coal. All of these things we need to be practical about the decisions we make around this. Now, whether that involves Government dollars or not, or whether it involves how you set regulations and how markets are facilitated, or indeed how competition policy works, or infrastructure is delivered – there is a wide range of things there that form part of a comprehensive, integrated well planned energy security plan.

FULLERTON:

You met with the four chairs of the big banks very recently talking to them about governance. What has been their response and because presumably the Damocles of this Royal Commission is still hanging there?

TREASURER:

I am not in the habit of going into the many discussions I have with all sorts of stakeholders, whether it is in the financial services sector or whether it is in other industries. When and who I meet with on these sorts of things is part of my normal job. Whether it is engaging with the chairs of banks or the CEOs of banks or managers of banks or financial planners and controllers, economists from various organisations, industry leaders, workers, families. I have those conversations directly with them…

FULLERTON:

Do you think bank leaders have got the message on governance?

TREASURER:

I think we have already seen from the Government’s response, which has been significant, we have increased the resources for ASIC, we have increased the powers for ASIC, we have ensured that there is a greater transparency and accountability through the process with the House of Representatives Standing Committee. We have the review already under way which is about more cost effective, affordable dispute resolution for customers of banks, which has been set up by the Minister for Revenue, Kelly O’Dwyer and on top of that we have got the Small Business Commissioner who has done a very significant and thorough working over of the many problematic cases that have been with the banks with small business as clients. Now, why have I gone through all of that? Because that is actually getting outcomes for the concerns of people who have genuine issues with the banking sector. What a Royal Commission does is pump Bill Shorten’s tyres up but doesn’t give anybody anything if at all for years. So, that is a political exercise for a political hack. What we are doing is focusing on delivering real changes and on top of that we have seen Banks respond themselves with their six points which they have been working through.

FULLERTON:

Treasurer, can I just finish with the crossbench and just your response to an idea from Nick Xenophon to raise the Medicare levy as a way of raising revenue?

TREASURER:

The Budget is in May and it is not my practise to go into a shopping list of items and to comment on them. What is happening right now is the Parliament is deciding on these rounds of savings measures that we are seeing to put through the Parliament…

FULLERTON:

But that’s quite a big idea, isn’t it?

TREASURER:

The Budget has to be framed in response and taking into account the decisions ultimately of the Parliament. Now, they will make their view ultimately clear on these and other bills by the end of this session and then the Government has to take that into account as we frame our Budget and the Budget is then looked upon, whether it is by markets or others, in making their assessments about what we are saying the state of the nation’s finances are. So, it is for the Parliament to make a big decision, do they want to spend more and more money on more spending which will have to be paid for by someone or do they want to work with the Government to get that under control so we can deliver on the targets that we have, deliver a well-targeted welfare system and grow the economy so people have jobs and incomes that they need.

FULLERTON:

Treasurer, thank you very much for joining us on our first week.

TREASURER:

Thanks Ticky, all the best for the program.