7 March 2018
Transcript - #2018020, 2018

Interview with Ross Greenwood, 2GB

Subjects: December quarter National Accounts, Enterprise Tax Plan, trade, CFMEU.

ROSS GREENWOOD:

Scott Morrison is on the line right now. Many thanks for your time, Treasurer.

TREASURER:

G'day, Ross. Good to be here.

GREENWOOD:

Are you pleased with these numbers?

TREASURER:

Yeah, I think they're encouraging numbers – you've described them accurately – the net exports position really took the shine off them I think but what that hides is what was a very strong result for the domestic economy. Consumption was up, the total amount paid out in wages was up and I should stress that a third of that increase in what has happened on the wages bill came from higher average wages and two thirds of it came from more jobs – as you know, last year, we had record employment growth – 403,100 jobs, the strongest year of jobs growth we've ever had as a country on economic record. But on the exports, one thing I think we need understand about those export numbers, there are a couple of quite significant things that underpin them – which I know you'd be interested and I'm sure your listeners will too – what we had was a pretty big crop that was in previous numbers so the agricultural exports were coming down off a pretty high level and so that's fed into that negative number today. The other part was, you've got the closure of the motor vehicle manufacturing – that is now impacting in those numbers now and that will obviously be flushed out of the system over the next 12 months but that's obviously had the impact it was always going to have when that came about. Then there are sort of minor issues that go into those numbers…

GREENWOOD:

You would prefer the economy right now to be growing at a faster rate than 2.4 per cent, wouldn't you?

TREASURER:

I always want it to be growing faster but I think the encouraging news here is what we've seen in private investment. While we're rolling down now the big construction phase of the LNG projects, when you take that out of the system, what we've seen is a really big turnaround in what's happening in non-mining investment. Now, that non-mining investment in the private sector is up 12.4 per cent through the year – I mean, that is a very strong figure and when you look at investment in new machinery, plant and equipment that has turned around a 10.7 per cent decline two years ago to an 8.4 per cent increase today as a growth rate. Now, that's the best we've seen since the middle of 2012 with the peak of the mining boom. So, the numbers that are in there today, if you look at the top line figures, I agree people would have expected them to be a bit bigger but when you take the net exports position out of it, there's some really strong signs of what's happening in our economy with people spending more, the wages bill is bigger, the private investment is picking up and the public sector is doing our job…

GREENWOOD:

It is true to say that the Reserve Bank says that the economic growth rate it's forecasting this calendar year – 3.25 per cent, next calendar year – 3.5 per cent, so it does pick up and also makes a presumption that the unemployment rate will remain relatively steady during that period of time. But just one thing, today in your press release you said, "It is why we need to lower taxes to remain competitive". A lot of people would say, "Yeah, well ok, that sounds absolutely right". The problem is it would appear, to me at least, that your company tax rate cuts are pretty much dead and buried. Pauline Hanson not supporting them and says the Government persists in the false claim that company tax rates drive business and investment and she's quite unequivocally said that One Nation will not support the tax cuts. Does that really mean you can't get them through?

TREASURER:

No, we're a persistent bunch, Ross. We don't sort of walk away from these things like that, we know that they're important to drive investment in the economy, I've just run through the numbers of what we've done already. The instant asset write-off for small businesses, lowering the small business company tax rate, increasing the definition of a small business from $2 million to $10 million…

GREENWOOD:

Yeah, but the company taxes and Pauline Hanson, if she doesn't support them it's going to be pretty tough to get across the line.

TREASURER:

Ross, there's a lot of sitting weeks to go before now and the next election and we remain committed…

GREENWOOD:

Are you telling me that you can convince Pauline Hanson to change her mind?

TREASURER:

Well, I'm certainly not giving up. I'm absolutely not giving up because I'm not going to give up on people's jobs, I'm not going to give up on the wages that can come from businesses investing more, businesses are now investing more because of the things we've done already. We want to do more of those things so we will continue to see sustained profit increases which lead to higher wages.

GREENWOOD:

Is part of the problem of the Barnaby Joyce situation that's happened over the past few weeks but really it's taken the Government's mind – and even the public's mind – off what is not a bad economic story? As you point out, the beginning of this year, you did get a bit of fresh air – 400,000 jobs created, you've got the economy rolling along, you've got economic growth coming this year – to have distractions and significant distractions such as the loss of the Deputy Prime Minister which is no inconsequential thing, it really just takes away from the story the Government could otherwise be telling.

TREASURER:

That is true and that is frustrating and that is deeply regrettable but those matters have now passed and today, we're able to speak of the exact things that you're talking about on your program and I'm happy to be on your program talking about and that's what we can focus on now with those distractions put behind us because this is the main issue…

GREENWOOD:

Is this a point of worry inside the party, Scott? The reason I ask you this is because it seems that every time you get that little bit of fresh air and the economy is travelling pretty well and the jobs are being created but it seems as though there's a misstep from a Minister here and a misstep from a Minister there, you had Michaelia Cash last week again diverting attention to a separate issue. It seems as though you and other Ministers don't get the space to be able to tell the story that Australia is going ok.

TREASURER:

Well, again, it's frustrating but you don't allow these things to distract you as a Minister, as a Treasurer and as a Government you stay focused on making the decisions that keep that economy growing strongly and we've been doing this now for a number of years, when I talked about the jobs and growth plan over two years ago, we're speaking to that plan and it's delivering. The risk is, if you go off in a different direction as the Labor Party is suggesting, well, you put all that at risk. The hard yards are being put in on this plan and we're really starting to see those key indicators turning, the jobs growth figures last year – we all know now, more than 1,100 jobs a day – now, that's great news as I outlined today, that's had a really big impact on our economy and we can expect that to continue and now lead to – I would expect – better wage outcomes as long as businesses keep investing and businesses can keep remaining competitive.

GREENWOOD:

Will Australia continue to be mates with the United States? So, Malcolm Turnbull returned from the US and said that we have had 100 years of mateship with the US, if the US imposes those tariffs and does not carve out any exemptions for Australian businesses, will the mateship remain?

TREASURER:

We'll always be friends with countries with whom we have a deep history and shared values and that survives all administrations but what I think is also important to understand is the Prime Minister has worked incredibly hard on this relationship with the President and the administration. I would say there's arguably not another leader around the world today who would probably have a better insight into what's happening there which enables us to deal with it as we need to but what we've been saying today is the right response and that is keep a cool head, keep a calm head, stick to our plan for the economy, there's no use jumping at shadows. I mean, I heard Bill Shorten's apparently said today, "We stand ready to act in retribution with the Government". Well, you don't want that sort of a hot-headed response. This is the same bloke who went to water the second the US decided not to get onto the trade deal, to the TPP, said it was a waste of time, started telling dead parrot jokes about it and then we were able to ensure that the deal was landed. But the Prime Minister's demonstrated the constancy and the patience and the maturity in this relationship which will stand Australia in good stead in what is clearly a bit of a challenging time.

GREENWOOD:

In hindsight being hindsight, should have the Government done more to have prevented the merger between the CFMEU and the Maritime Union of Australia?

TREASURER:

To be honest, I'm not too across that story. I've been focused on a few other things, Ross. So, I'm going to refer you to Michaelia on that one, it's not one that's had my focus of attention as you expect, I'm preparing the Budget…

GREENWOOD:

But you'd be concerned about a concentration of union power?

TREASURER:

Of course I am, of course I am.

GREENWOOD:

And one that can potentially hold up the country in regards to construction and also docks?

TREASURER:

This is why we've put the Australian Building and Construction Commission in place. This is something the Labor Party opposed us doing tooth and nail, we had to take it to a double dissolution election along with the Registered Organisations Act which basically wanted unions to behave like companies have to behave and observe the same sorts of protocols and codes that they do. The Labor Party give the union movement a blank cheque on these things and we know what damage that would do to our economy so I'm sure my colleagues are looking at that closely but you're not going to see from the Coalition green lights given to militant unions like Bill Shorten will.

GREENWOOD:

I'll tell you what, always good to have you on the program, Treasurer Scott Morrison, the economic growth numbers not too bad and they're expected to pick up even more during 2018. We appreciate your time.

TREASURER:

Thanks a lot, Ross, always good to be with you. Cheers.