3 March 2017
Transcript - #2017029, 2017

Doorstop Interview, Sydney

SUBJECTS: Turnbull Government’s support for business investment; December Quarter National Accounts; Bill Shorten’s failure to recognise economic growth; Labor’s threat to the Australian economy; Bill Shorten’s plans to raise taxes to pay for increased spending; OECD Economic Survey

TREASURER:

Earlier today I visited Aerofloat Industries which is a business actually in my electorate in the Sutherland Shire. This is a business that 18 months ago got a commercialisation grant which they matched with their own money. That business today is worth a turnover of over $2 million. Just 18 months ago they were at about $500,000. Now they’re one of the businesses that I think are the story of our national economy. We saw those great results earlier this week on our national accounts, where we’re starting to see the dividends. We saw investment up. We saw, for the first time in a long time, that really great combination of prices and higher volumes. We saw the importance of investment that was coming from the public sector in our defence industries and today, we've taken the delivery of Joint Strike Fighters, the first instalments of that and that is what the Prime Minister was speaking about earlier today. That’s what’s driving growth in our economy: companies getting out there and investing and achieving profits. Now, for 12 consecutive quarters, we had company profits on average going backwards. Now in one quarter, we have seen that go forward, and that needs to continue if we're going to see that flow through to wages growth in the future. You can't get a job in a business that isn't open, and you can't get a pay rise in a business that is going backwards. I was so pleased to see that wonderful business down there today in the Shire, Aerofloat Industries taking those risks. They now have contracts in Indonesia, in Narrabri, they’ve got contracts across the state, and they're just getting out there with great innovation and making things happen. [inaudible] and that business will benefit from our reduction in company tax from this year. And they'll benefit from the extension of the small business definition to a turnover of up to $10 million. That needs to pass the Senate. It needs to pass the Senate next time we go back, because those businesses and their prosperity depend on it.

QUESTION:

Mr Morrison how did you feel when the economic figures came out and we found out we had avoided a technical recession? That must have been quite a relief knowing that you weren’t going to be the Treasurer overseeing a recession for the first time in 25 years.

TREASURER:

Well, there was no serious suggestion at any time that there was any risk of that occurring. So, no, relief wasn't my reaction. A great pride in the entrepreneurial spirit of Australians was my reaction to that. I find it amazing that neither Bill Shorten nor Chris Bowen could have brought themselves this week to actually acknowledge that result. Have you heard Chris Bowen? I didn’t even hear him come out on national accounts day and say, ‘well done, Australian businesses. Well done, Australian workers.’ This is the guy who will pop up on any statistic that is bad, but when there's a good statistic, he runs for the hills. The Labor Party is wishing our economy ill. They're trying to run down the budget and crash the AAA credit rating by refusing to support the savings in the budget that will return us to surplus. The Labor Party are reckless and dangerous to our economy because they play politics with our economy and play politics with our budget. We are committed to driving investment, driving growth, driving wages, and supporting jobs.

QUESTION:

In the OECD report, house prices have risen quite a substantial amount. What is the next solution to this?

TREASURER:

The Government, as you know, is working on a package that we will release in the Budget, and only the government is working on a comprehensive package. Bill Shorten doesn't have a plan for housing affordability. He just has a plan to raise taxes and raise revenue. You don't build houses by raising taxes. You build houses by dealing with what the OECD report said today and that is to deal with the supply issues, and they also reinforced the prudence of our macro prudential measures – what APRA have been doing. Now, you would have heard testimonies from Wayne Byres this week who went to those issues about those macro-prudential measures and they will continue to have a very close eye on what is necessary in addition to the arrangements they already put in place. Bill Shorten and Chris Bowen are putting out a very cruel hoax on young Australians who want to buy a house. They are saying you will be able to buy a house anywhere you want, for the price you want and all you have to do is put up taxes. I think that is a very simplistic view. [inaudible] Housing affordability needs a comprehensive response and particularly in the area of supply. We’re addressing both demand issues through the work that APRA is doing already, and we’ll be continuing to work on the supply measures, in close cooperation with the states and territories, and we'll have more to say on that in the Budget.

QUESTION:

Are you considering any tax changes as part of that package you mentioned?

TREASURER:

Well, the Budget is in May, and I don't intend to engage in any speculation on the Budget between now and then.

QUESTION:

What do you make of the OECD’s assessment that there could be a rout in the housing market as prices drive down?

TREASURER:

Well, I have always found that with assessments from Northern Hemisphere organisations that they don't always quite appreciate the supply-demand imbalance here in Australia. In overseas markets, and what we saw particularly in the United States, where effectively they have a credit system where they can just throw the keys in the door and walk away. You can't do that in Australia. And we've got a very different structured market. What we have in Australia is that there's an imbalance between supply and demand when it comes to housing. And you’ve got to address the supply issues. The same is true in other overpriced housing markets around the world, whether it's the United Kingdom, Canada or in other places. You must address supply, and to the extent that there are demand measures that are necessary, well, the OECD has said today that the macro prudential response provided by APRA has been very appropriate. The OECD also warned about the effect of a housing shock. The only way you get a housing shock in this market is if you have got the Labor Party’s policy of taking a tax sledgehammer to the housing market. If you want to see a housing shock, then just ask Chris Bowen to deliver one for you because that's what he has got planned.

Thanks very much.