17 February 2016
Transcript - #2016016, 2016

Interview with Leigh Sales, ABC 7.30

SUBJECTS: Address to the National Press Club, The Turnbull Government’s national platform for economic growth and jobs, backing Australians in our transitioning economy

LEIGH SALES, PRESENTER:

And with me now from Canberra is the Treasurer, Scott Morrison. Thank you very much for your time, Treasurer. You're 5 months into the job as Treasurer; today in this major address what you offered was a walk through the state of the economy and the challenges ahead. Is it logical for voters to start assuming that the Turnbull Government doesn't yet have a comprehensive economic plan?

TREASURER:

No, because what I outlined today is a number of measures that have already been announced and that have come together to support the key objective of jobs and growth. I outlined the innovation statement, in addition to that I outlined our response to the Harper Review which is trying to fix things in government service delivery as well as improving at a microeconomic base the reforms that are necessary to drive productivity. We talked about the free-trade agreements; we talked about multinational tax laws that have been passed in the Parliament. In addition to that, I set out the frame, the economic and fiscal context, for the budget and in that context, of course, in these very uncertain economic times, there needs to be sobriety, there needs to be responsibility and we've been working through a very careful process to make sure measures we put in this Budget are the right ones for our economy and the right ones for Australia.

SALES:

In the introduction to the program tonight I mentioned the comments Malcolm Turnbull made about needing to lay out an economic course and make the case for it and that every month that went by was a wasted opportunity. And I also listed all of these economic areas where we're still waiting to hear your case, superannuation, negative gearing, income tax, bracket creep, industrial relations to name a few, are you missing opportunities here by taking so much time to spell out your key policies?

TREASURER:

Well we're setting out what the problem is and what I've set out in the speech today is that the Australian economy is transitioning and what we have to do is back Australians in because they're the ones who are actually making this transition. Now, a big factor in that has been the increasing tax burden on people who go to work and earn money for a living and pay taxes out of those earnings and what we have to do in terms of restraining government expenditure, that is the best way to ensure that we can have a lower tax environment in the future. All the Opposition have announced is higher taxes. That's it. You listed a whole series there. Superannuation, negative gearing, all of these things, all that is is higher taxes, that's all they've announced.

SALES:

  Yes but nonetheless, whether you agree with the content of what they're announcing, they are methodically laying out some policy ideas that are consistent broadly with Labor's values.

TREASURER:

Which is high taxes.

SALES:

That's your opinion of what their values are, higher taxes and more spending.

TREASURER:

But that's all they've announced, higher taxes.

SALES:

But you can disagree with the content, they are at least laying out policies consistent with their own values. You are yet to lay out a comprehensive suite of policies…

TREASURER:

Well Leigh I have to hold you up there. That's not what I've done. In the mid-year statement last year, the last time we spoke, I updated the budget and I announced further savings and further measures that ensured the budget remained on course, on the track to surplus that we're working towards which is based on expenditure restraint, not higher taxes. Now our opponents believe higher taxes for higher spending is the path. What I'm laying out, and the Prime Minister is laying out, is that lower expenditure for lower taxes is the best way to support jobs and growth.

SALES:

Yet the public debate has been centring around the issues that Labor is announcing policies in - negative gearing, superannuation and its campaign against the GST. Why are you letting Labor take the lead in these areas?

TREASURER:

Well, the only thing they're leading on is a campaign for higher taxes and that's not a campaign that I intend to join. I'm on a campaign to ensure that Australians are paying lower taxes and if the Government is able to make changes in some taxes that increase revenue then we'll be directing that back into tax relief for Australians and for those who are earning, whether they are individuals or they are companies. That's what our priorities are. We're setting out our priorities very clearly. I don't intend to get into a competition with the opposition to see who can tax more to spend more, they're winning that race. Hands down. That is something that they're about and they can pursue that but what the Treasury modelling showed was that if you go down a high tax and high spend path, it retards growth, it holds us back and that's not what our budget will do.

SALES:

I mentioned earlier as well that when Malcolm Turnbull rolled Tony Abbott one of the reasons he gave was that Abbott and Hockey had not established an economic message. But you haven't changed direction in any areas of economic policy?

TREASURER:

Innovation policy was a massive addition to the economic debate…

SALES:

It wasn't a change in direction though.

TREASURER:

No. It was a change in direction. There was not a substantive policy on innovation prior to Christmas other than what we were able to deliver in November of last year. This was a significant boost to the innovation sector with increased investment in a time where fiscally things are very tight to show the priority of a billion dollar investment into innovation to drive innovation in the private sector, in the public sector. This is a significant flip for the economy and we are doing it to boost jobs and growth.

SALES:

Other than jobs and innovation what are you doing different to what Joe Hockey and Tony Abbott did?

TREASURER:

The Harper Review is we're embracing what is going to be a competition policy productivity payment system with the States and Territories to ensure…

SALES:

Are you saying that Tony Abbott and Joe Hockey wouldn't have done that?

TREASURER:

No, that wasn't their approach.

SALES:

Does it strike you as odd today that the main things for which you've tried to seek credit is ruling out a change to the GST, not for something you have done, you've sought credit for something you haven't done?

TREASURER:

All I did today was explain the decision we made. Some months ago, when the PM came into his job and I came into this job, we said we weren't going to play those Canberra games of rule in and rule out which is so popular in this building and what we said - if we wanted to rule out the GST on the basis of politics, then you could have done that last year. But we decided to do the work, to determine whether that would be a good thing to do by raising a GST to fund significant cuts in people's income taxes and whether after compensation that would be a boost for the economy. Now we found out that wasn't going to deliver that outcome and so on policy grounds we decided not to go ahead. Now the GST, as a proposal, didn't come up in terms of any Government consideration until about August of last year when it was raised by the States. It wasn't raised by the Commonwealth Government. We looked at it seriously, we formed a sober and considered view, and we made a decision as a cabinet not to proceed with it. Now having dealt with that threshold tax issue, we can now address ourselves and continue the work on the other measures with the objective of lowering the tax burden potentially for those on middle incomes who are getting hit by an inflation tax.

SALES:

The primary line of the Coalition's attack against the previous Labor Government was its overspending and yet the Turnbull Government still has spending around 26 per cent of GDP. You've had 3 years in office and you've basically done very little to cut spending.

TREASURER:

Spending as a share of the economy will fall to 25.3 per cent in the statement that I released in December of last year. And many of the savings, the $80 billion in savings that have been identified, the vast majority legislated, has ensured that the $70 billion in spending measures that have come onto the budget over that period of time can be paid for.

SALES:

Let me pick you up right there because as you say, you've got $70 billion in new spending measures, you today yourself said that the savings that you'd been able to come up with had been $80 billion so you saved 80, you’ve spent $70 in new measures. Is that a good policy?

TREASURER:

It's $10 billion better than we would have been and if we hadn't identified the $80 billion in savings with the additional commitments, the deficit would be far worse than it is today…

SALES:

It may be $10 billion but that is a drop in the ocean when you look at the size of Australia's GDP and the deficits you're looking at in the long term?

TREASURER:

This is why savings measures and resisting new spending is the message that I was setting out very clearly today…

SALES:

But your Government hasn't been resisting the new spend on the figures you provided today?

TREASURER:

The first budget of the Turnbull Government will be released in May this year and what I said very clear, Leigh -

SALES:

The Turnbull Government is not a new Government though. This is a Government that has been in for 3 years, you're not a new government.

TREASURER:

This is the first Budget of the Prime Minister and myself as Treasurer and what we are focused on is ensuring that we continue expenditure restraint and we particularly focus on ensuring new spending doesn't overwhelm the savings that we are making because only through lower expenditure are we able to deliver a low-tax outcome into the future. Now that's a fairly clear point. It's a clear objective for the budget. My purpose today was to set the frame for the budget and that was the clear priority.

SALES:

But we're in an election year when voters look at the record of the past 3 years of the Abbott-Turnbull Government, what can you point to as your economic record? The deficit's getting worse, spending's barely budged, comprehensive tax reform hasn't happened, comprehensive IR reform hasn't happened. What are you going to go with as your economic record?

TREASURER:

Savings of $80 billion -

SALES:

Of which you've spent 70.

TREASURER:

Can you imagine if we hadn't been able to achieve that $80 billion savings and the previous mob was allowed to come in and keep recklessly…

SALES:

Can you imagine if you hadn't spent 70.

TREASURER:

If you're suggesting we shouldn't have built roads and infrastructure and shouldn't have taken the 12,000 extra refugees or you are suggesting we shouldn’t have boosted our security funding that had been parked away from the previous government you can make that case. This Government made decisions about better spending. A lot of that went into capital which means the longer term impact of that spending means over time that position would be improved even further. All I was simply saying to today is that we've got to watch the new spending Leigh and that's one of the lessons of the last 2 years. But we have been applied to the savings task. Our savings, versus revenue measures to improve the budget, is at 4 to 1. The Opposition, they are taxing higher 20 to 1 on their savings measures. So it's tax and spend under Labor or its lower taxes and lower spending under the Coalition.

SALES:

Treasurer, thank you very much for your time this evening.