1 March 2017
Transcript - #2017021, 2017

Interview with Sabra Lane, ABC AM

SUBJECTS: December quarter National Accounts; Turnbull Government's Enterprise Tax Plan to drive economic growth; Fair Work Commission's decision on penalty rates; Racial Discrimination Act

SABRA LANE:

I'm joined in the studio by the Treasurer, Scott Morrison. Good morning, Treasurer.

TREASURER:

Good morning, Sabra.

LANE:

Will we avoid a recession this morning? Are you confident that the economists are right, that we will get a positive figure this morning?

TREASURER:

That's certainly the consensus and, frankly, it was the consensus not long after the last set of data was released for the September quarter. As you say, it was a surprise contraction and it's my expectation that that will be corrected in today's figures and those figures, of course, will come out later and that will be the opportunity to talk about them when we're advised of those at that time.

LANE:

Many people feel like they're doing it tough. Wages growth has been really flat in recent years. Young people in the big cities think that getting a first home is very unattainable. Big companies continue to record big profits. The Government is still pushing the case for a $50 billion corporate tax cut. Many Australians would think the Government's not listening to them.

TREASURER:

Let's just look at the facts. Over the last five years, profits as a share of our national income has fallen 5 percentage points. Wages as a share of our income has actually increased 3 percentage points. I know wage growth is modest, it's very slow and that's one of the biggest…

LANE:

And lower inflation…

TREASURER:

…at 1.9 per cent or thereabouts on wages growth that we're currently seeing across the year. Now, this is very low wages growth and this has been the case since the end of the GFC and it's not just the case in Australia, it's the case in developed economies all around the world and this is the biggest challenge that we have. That is to boost what we can earn as a country and what we earn as individuals. Now, you don't get people higher wages by taking profits, you don't get people higher wages by making it harder for businesses to be profitable and earn the income which pays wages. So, what we've seen over the last few years is, yes, wages growth has been very, very modest and this is frustrating for everybody but…

LANE:

Power bills have gone up. Utilities have gone up.

TREASURER:

Yes, all of this is true and that's why we can talk about energy as well if you like but what we have seen is businesses have been carrying at the very least the modest wage growth that we've seen. If you're a small business owner, your profit is your wage and what we've seen many small businesses have to do over many years is they've been dipping into their own pockets to keep employees on the payroll and they have been taking the hit themselves personally now for many years. Our Enterprise Tax Plan will see small businesses up to $10 million in this year get a tax cut, get access to the instant asset write-off and ensure that they get broader access to small business deductions. Now, that only helps jobs, it only helps wages.

LANE:

People remain unconvinced at that. The Senate remains unconvinced. Are you prepared for big business to let the tax cut drop off the agenda? Get it through for small and medium businesses and tackle it later?

TREASURER:

Well, that's a decision the Senate's going to make and…

LANE:

It will ultimately be up to you and your leadership group as to what you do.

TREASURER:

The Senate will make a decision about whether it chooses to pass a plan that is designed to drive investment and to support wages growth…

LANE:

Indications are it won't.

TREASURER:

That will be their decision but it's certainly not the Government's decision. The Government's plan is to drive investment and if you want wages to go up…

LANE:

So hang on, you're saying the Senate's in control of the country and the Government's not?

TREASURER:

The Senate's in control of the legislation it passes. That's been the case since Federation – there's been no change to that. The Senate will ultimately decide what measures it passes and what measures it doesn't. What I'm making very clear is that it's the Government's policy that we have a tax policy which drives investment, that supports wages growth and gets people into jobs and staying in job. Now, a vote against that plan is a vote against those outcomes.

LANE:

Ultimately it will be the Government's leadership group that decides whether to pursue the tax cut for bigger businesses or to accept a threshold that many in the Senate want, which is $10 million.

TREASURER:

When the Parliament rises at the end of this month now then the Government will frame its Budget and it will frame its forward plans based on where the Parliament gets to.

LANE:

So you want the business tax cut done by March?

TREASURER:

Of course, I do. I would have liked it done last year and we gave them the summer to think about it and it's disappointing that even still the Labor Party that once supported these changes and once wrote about and published the facts that this would actually support wage growth, it'd support investment, it'd support all profitable businesses – I mean, you don't make employees richer by making businesses poorer.

LANE:

You've acknowledged that people feel like they're doing it tough, and Fair Work's recommendations last week to cut Sunday penalty rates for some awards made people think, ‘hang on a tick, I'm going to have to work longer to get the same amount of pay.' What do you say to them?

TREASURER:

First of all, the process that was set up to come to this decision was set up by the Labor Party, and was actually specifically set up by Bill Shorten.

LANE:

That point has been well made.

TREASURER:

And I'm going to make it again, Sabra, because it's important…

LANE:

I want you to answer the question.

TREASURER:

I'll get to the answer but it's an important part to the answer. What the Fair Work Commission did is they looked through the evidence over 500 pages of a finding, thousands of submissions and they came to this conclusion. I tell you what you can't do, you can't get a job and you can't get hours in a business that is not open. Now, that finding actually went through case, after case, after case, where you had small business owners who are saying, ‘look, I'm working on that Sunday, because I actually can't afford to employ people on a Sunday'. And they're saying, ‘well, on that basis, if I was able to actually not work on a Sunday I could give two jobs to someone on Sunday'. Now, that's what the Fair Work Commission found, and that led them to the decision that they took. Now, you take a place like the Shoalhaven down in the electorate of Gilmore where they've got 20 per cent youth unemployment, they won't get jobs in businesses that are closed.

LANE:

Where is the hard evidence that that will happen?

TREASURER:

I point you to the Fair Work Commission's decision.

LANE:

But Government, where is the hard evidence…

TREASURER:

It's not our decision.

LANE:

It's not your decision but this is the case that you're making…

TREASURER:

It's not my decision to defend Sabra. I didn't make it.

LANE:

Where is the evidence that businesses will actually hire more people as a result?

TREASURER:

I encourage you to read the Fair Work Commission's findings…

LANE:

And I ask, where is the evidence?

TREASURER:

In that report. It's all there. Case, after case, after case where you've got businesses saying that if the Fair Work Commission took that decision that they would be putting more people on and the Fair Work Commission found that to be the case that it would have an improvement on employment. Now, that's not the Government's decision, it's not the Government's finding, it's for the Fair Work Commission to outline the case of its own findings. I make the point again; you can't get a job or have work in a business that's closed.

LANE:

A parliamentary committee has recommended 18C of the Racial Discrimination Act be left unchanged, it's made no consensus ruling on that. There are now claims within the Party that all sorts of things should be happening on this now. Is this where it ends?

TREASURER:

The Committee has brought forward its findings, as Treasurer I'm preparing for a Budget and I know there are a lot of people who are interested in this issue…

LANE:

But you're a senior figure within the Government.

TREASURER:

I know. And I tell you, as a senior figure in this Government, what I'm focused on, I'm focused on the Budget, it comes out in a couple of months, I'm focused on people's wages, I'm focused on people's investment and I know this issue doesn't create one job, doesn't open one business, doesn't give anyone one extra hour, it doesn't reduce the cost of, or make housing more affordable, or energy more affordable. They're the issues that I'm focused on…

LANE:

Your Party is ripping itself apart over this. Is that a message that you're delivering to backbenchers.

TREASURER:

The message I'm delivering is that we've got some economic challenges that we're addressing and we're making progress. Our current account balance at the end of the December quarter was the lowest since 1980. That's the narrowest current account deficit we've seen since 1980.

LANE:

We could talk about the climbing debt as well, but sadly we're out of time.

TREASURER:

Two thirds reduction in the growth in debt under this Government and spending growth has fallen from 3.5 per cent to less than 2 per cent. So, this Government is consolidating the Budget, getting debt under control, and focusing on jobs and growth.

LANE:

But gross debt is rising.

TREASURER:

Well, it's a lot slower than it was under Labor.

LANE:

Ok, Treasurer, thank you very much for joining us this morning.

TREASURER:

Thanks, Sabra.