14 March 2018
Transcript - #2018028, 2018

Interview with Sabra Lane, ABC AM

SUBJECTS: US Secretary of State; Labor’s tax proposal; personal income tax; banking royal commission. 

SABRA LANE:

Joining us now is the Federal Treasurer, Scott Morrison. Thank you for joining the program.

TREASURER:

Happy to be here Sabra. 

LANE:

We’ll get to the domestic issues in a minute. First, has Australia lost another really good ally in the White House with Mr Tillerson getting sacked?

TREASURER:

Well we’ve had an excellent relationship obviously with the foreign secretary Tillerson. We appreciate that and obviously thank him for his service and the service to the Australian relationship. These matters are obviously a matter for the administration, but the incoming  secretary is well known to Australia. The Foreign Minister only met with him in September of last year, there’s an existing relationship there. I think this is what really it says about the existing relationship, it’s deep, it’s wide, the individuals all know each other because we work across many different areas. Particularly in the national security space, with the CIA and others, clearly there is a lot of interaction between those agencies and ours. So we thank Mr Tillerson for his service and we look forward to now working with the new secretary.

LANE:

On domestic issues, Labor is not hiding from the fact that it’s policy will probably be very unpopular in some quarters and it’s having the policy debate, it’s made choices, promises that the proceeds of this will be used in part to fund tax cuts for low and middle income Australians. Yours is to use another $35 billion to deliver the rest of your corporate tax package and as yet, unannounced personal income tax cuts. Voters might like their choice?

TREASURER:

I think you’re right that Labor has deliberately hit 230,000 pensioners. I mean, Bill Shorten just dismissed it today. He just dismissed 230,000 pensioners as being somehow irrelevant. What’s interesting is that back in 1998 it was actually the Labor Party’s policy at the election that they should be extending the full value of franked dividends to pensioners and they took that to an election. It was in response to what the government then had already been proposing. It was fair then, but it’s apparently not fair now.

LANE:

Parties change their minds, and again it’s come to a choice.

TREASURER:

No, this is a fundamental principle of fairness. Why is it fair for you and I to be able to hold shares in companies that have franked dividends, and we can get the full value of those franked dividends to reduce our tax, but a pensioner, someone on a low income, a self-funded retiree, should not get the full value of that? I mean, that’s just simply not fair…

LANE:

… And some would argue, sorry Treasurer, some would argue what’s fair about the rest of the country copping another $35 billion hit to the budget bottom line to deliver another corporate tax cut?

TREASURER:

Because it drives investment, which increases jobs and increases wages.

LANE:

That comes down to a choice and voters might like their choice, Labor’s choice as opposed to yours.

TREASURER:

Voters will get to decide if they want $220 billion of higher taxes under Bill Shorten, on everything from housing to investment to their savings being taxed higher, their earnings being taxed higher, family trusts, family businesses, small businesses being taxed more. They can choose $220 billion of higher taxes where there is no limit on how much the government can tax you. Under our plan, we have a limit, we have a ceiling on what taxes can be as a share of the economy. We support that limit, Labor choose to abolish it which means the only way Labor goes forward is with higher and higher and higher taxes. So it is, it’s a choice between higher taxes under Labor and lower taxes under Liberal and National.

LANE:

When will the Coalition outline your counter-offer on personal income tax cuts?

TREASURER:

Labor haven’t made an offer on income tax cuts.

LANE:

They’ve said yesterday that they will be offering that…

TREASURER:

Well we said that in December.

LANE:

Yeah, when are we going to see the details of what you’re going to offer?

TREASURER:

It’s the same answer I’ve given to you on the interviews for some time, the Budget’s in May and we’ll have more to say about those issues then.

LANE:

Right, to be meaningful it has to be more though than a burger and a milkshake? The tax cut?

TREASURER:

We will do what the Budget can afford, is what the Prime Minister and I have said. We won’t be putting the AAA credit rating at risk, we won’t be putting the return to balance at risk. We will be honouring the principle that we all follow, to keep taxes as low as possible. To ensure we stay under the tax cap that we have, the limit, the ceiling on what we think taxes can be afforded in the economy. Labor don’t agree with that. On the issue you raised before Sabra, this is a key point, 70 per cent of the franked dividends received in Australia go to the people in the top two tax brackets. 85 per cent of the refunds that come under the scheme that Labor wants to abolish go to people in the bottom three thresholds. So they are basically hitting people on lower incomes while allowing people on higher incomes to continue to get the tax benefits that they described as a loophole, and basically a welfare payment to people on lower incomes.

LANE:

It is a concession, the Coalition’s 2015 discussion paper on taxation said this dividend imputation system involves significant costs to revenue. David Murray, who chaired the Government’s Financial System Inquiry, said it had negative consequences for government revenue. Why are you dismissing those opinions?

TREASURER:

It wasn’t just the government who  dismissed those, when that paper was consulted on all of those suggestions, all of those discussion points were roundly rejected in the consultation that followed in the white paper. We don’t think it is a fair principle to allow franked dividends to be available to only high income earners. We think those on lower incomes, as Labor used to believe – and this is the problem – they used to believe that lower company taxes drive investment…

LANE:

Let’s get onto what you believe. I just asked you about those points and I’m asking you as Treasurer…

TREASURER:

Well they’ve backflipped on fairness, and they’ve backflipped on economic policy. I don’t know what these guys believe anymore Sabra. I know what I believe. I believe taxes should be lower. I believe they should be treated fairly, and if you’re a low income earner you should have the full value of franked dividends and not have Bill Shorten steal your tax refund.

LANE:

You’ve got your own Treasury Department and the respected David Murray saying that there is a problem with this policy. 

TREASURER:

That was not accepted by the government, it’s not government policy, it won’t be government policy. Labor used to think it was a fair thing that people on lower incomes got the full value of these dividends. I mean, we’re talking about people that bought Commonwealth Bank shares when the Commonwealth Bank was privatised, who bought Telstra shares. They’re pensioners. Sally McManus today, didn’t even think that pensioners would own shares. That’s how out of touch the Labor Party and their supporters in the union movement are.

LANE:

Just quickly, on banks, the first revelations before the banking royal commission yesterday, evidence that NAB employees took cash bribes in white envelopes to facilitate loans that they knew were put forward on false documents. What did you think about that?

TREASURER:

The same as everyone else, I think that’s abhorrent behaviour and that’s what was reported to ASIC at the time, and ASIC have since dealt with it.

LANE:

Treasurer, thank you for joining the program this morning.

TREASURER:

Thanks a lot Sabra, great to be with you.