15 March 2018
Transcript - #2018029, 2018

Doorstop interview, Sydney

SUBJECTS: OECD Interim Economic Outlook; ACCC Residential Mortgage Inquiry Interim Report; Labor’s tax proposal; Roman Quaedvlieg.

TREASURER:

Thanks for coming together today, as part of my usual routine I get to sit down with the Reserve Bank board – Governor, I should say – and just talk through the various issues in the economy so nothing I say today reflects on the conversation I’ve just had, I should be very clear. It’s just the logistics of when we’ve be able to get together today.

First of all, I want to draw attention to the OECD report this week where they have revised up the growth forecasts – their growth forecasts for Australia – now, they are in line with where the Government sees the economy going and that just further adds to the economic consensus – not just here but around the world – about the viability and strength of the Australian economy and where it’s heading into the future and I think that is just further confirmation of the optimism and the confidence the Government has been expressing, but clearly understanding that there is always more work to do. I'm very encouraged by the uplift in what we've seen in non-mining investment, in plant and equipment because when you see that, that's what lifts, that's what lifts the value being created in our economy, which provides the confidence and expectation, I think, for stronger wages into the future. And that is the reason why the OECD did lift their forecast for growth in Australia, because of that stronger investment that we're seeing in our economy.

The other point I was going to make today was the ACCC have come out with a preliminary report today. Remember this was the report and the tasking that I commissioned of the ACCC at the same time setting up within our competition watchdog a capability, a capacity, a standing, if you like, cop on the beat, when it comes to competition in the banking sector and many of the findings today I think are unsurprising, but it's important that we give the ACCC those powers and resources to look at what is happening in the banking sector. You would have noted, as I foreshadowed at the time of last year's Budget, that the bank levy was not passed on based on the assessments and the work done by the ACCC that is, I think, an important finding. It is what my expectation was and that is, indeed, what has occurred. We need to ensure that bank customers have all the power in the relationship and that's why we've moved on comprehensive credit reporting. That's why we've moved on open banking. That's why we've moved on the Banking Executive Accountability Regime. It's why we've moved to open the market up for the customer-owned banking sector to get more competition in the sector. What the ACCC has found today is not unlike what we found for the big energy companies – complexity is used against the customer and what we need is greater transparency, more competitive pressures and more power to the customer whether it's the banks or big energy companies or others, I want banking customers to get the best deal.

Now, the third point I wanted to make today was about what we're seeing of the ongoing circus we've seen with Labor's tax policy, the tax on retirees. What we've seen here is an incompetent Opposition that has completely bungled this announcement. I don't know what's worse – Chris Bowen's incompetence in proposing it or Bill Shorten's incompetence in accepting the idea. I mean it was obvious to everyone that a tax refund for dividends was always going to be used by people on lower incomes, on lower tax rates. That's what it was for. Who did they think it was going to hit? I mean it's hitting pensioners – 230,000 of them – who hold their CommBank shares or Qantas shares or any number of these shares that they may have picked up when these big companies were privatised. They hold it there because it gives them a cash dividend and it also gives them the tax refund – which they use for their daily costs of living – and Bill Shorten has come with a cruel and brutal slug on them because he either didn't know or he didn't care and I'm not sure which is worse and we've seen the circus of yesterday, they're saying, “We’ll be compensating pensioners.” And today they say they won't be compensating pensioners. They have no clue. It shows the incompetence of how Chris Bowen and Bill Shorten have pulled this measure together. This is how they would run the country if they were elected – incompetence on tax policy, not knowing where the impacts would be and then a complete circus as they chase their tail because they didn't think the measure through. Thank you.

QUESTION:

Treasurer, did you outline to the Governor your plans for tax cuts?

TREASURER:

I would never go into discussions I have with the Governor and what I do each month with the Governor is have the opportunity to talk about what's happening in the Australian economy and elsewhere. We're both about to head off to the G20 meeting, which will be held next week in Buenos Aires and that will be an important meeting that will be looking at a lot of important matters, in particular issues around digital taxation in the global economy. Earlier this year, I was in the United States, meeting with Google and Amazon and those companies and that was a constant topic of conversation because multinationals should pay their fair share of tax in Australia but they should also pay their fair share of tax in all the other economies around the world and that will be a key topic of discussion next week.

QUESTION:

Treasurer, just on the banks, a two-pronged question if I may?

TREASURER:

Sure.

QUESTION:

Rod Sims says customers should be appalled that banks are essentially punishing loyalty [inaudible]…

TREASURER:

Yes, I agree with him.

QUESTION:

How low is the behaviour within the [inaudible]?

TREASURER:

Well, when you take your existing customers for granted, I think that is a sign that the customer is not getting the best deal, obviously, and the answer to that is to increase the competition in the sector and it's true in the energy sector – as we found last year, and the ACCC found last year – and remember we tasked the ACCC to go and ring the bell on both energy companies last year and we've tasked them to do the same thing on the banks. Now, it's important that customers can move and have choice. The greatest power there can be in liberalising the banking sector, in getting the best deal, is that the customer has the most power and that's why we're doing all the things I mentioned before, customer-owned banks being able to compete more, raise their own capital, customers having control over their own information and data so they can shop around for the best deal. That's how you get more competition in the banking sector and that’s what we’re doing.

QUESTION:

Would you be advising customers to ditch those big four banks?

TREASURER:

I’d always been telling customers to get the best deal – if you’re not happy with the deal you’re getting from your bank, ring them up and get a better one. It’s the same advice we gave them on their energy bills and they’re now saving hundreds of dollars, if not thousands in some cases, because they’re calling these big companies out on the deal they’re getting from them. You’ll get a better deal from your bank if you call them and if they don’t give you a better one, go to another one.

QUESTION:

Isn’t it a bit unfair, though, to put the onus on customers to find themselves a better deal and not banks to actually offer better deals to customers? I mean, it’s very complicated looking for a better bank deal.

TREASURER:

And the work that we have done and will continue to do is try and remove the complexity. I think that customers have more power when you remove the complexity and so they can have a clear understanding of what they’re paying and where they can get a better deal. Now, that’s the work we’re doing to enable that to happen but at the end of the day, if you’re going to buy a major household appliance, you’ll shop around, you’ll go out there and work out what’s the best price and what’s the best deal and what’s the energy rating and all of those sorts of things – customers will need to exercise their power in the market, they already do it on so many household items and that’s why we’ve seen a lot of competition in the retail sector for other products, where you have seen the prices fall, that same powerful consumer who’s looking for the best deal to go and buy a household item – a fridge or a toaster even or a whatever they want to buy – they’ve got to apply that same passion and enthusiasm to their own banking arrangements and I’d encourage them to do it and they’ll get a better deal.

QUESTION:

There are suggestions Labor might be considering pension supplement payments to offset the effect of its dividends imputation changes, will that take some of the heat off your attack if they did?

TREASURER:

The fact that the Labor Party a) wouldn’t front up about how many pensioners they were hitting – and it’s 230,000 pensioners, by the way, that’s how many pensioners Labor is hitting – and Sally McManus didn’t even think that pensioners own shares, that’s how out of touch the union movement leadership was and that same sort of out of touch behaviour we’ve seen from Bill Shorten – who was very dismissive of the impact on pensioners and now, after the fact, yesterday they were talking about compensating it, today they’ve walked away from that. The Labor Party walked away from this today, the truth is they don’t know where they are on this measure because they didn’t think it through. The fact that they’ve even raised the idea of compensation only highlights just how much Chris Bowen stuffed this up. Chris Bowen is demonstrating all the competence on tax policy that he demonstrated as Immigration Minister. This bloke will do to our economy and our tax system what he did to our borders when he was Immigration Minister. He proved to be an incompetent Minister when he was in Government last time and he’s giving you a big, fat taste of what he’d be like as a Treasurer. He’s not up to the job.

QUESTION:

What messages will you be taking to the G20 next week and have you lined up any meetings with your counterparts?

TREASURER:

I’ve got a series of meetings for when I’ll be at the G20 next week – most importantly, with the Treasury Secretary for the United States, Steven Mnuchin, we’ll be meeting again, we meet at this time of the year at this G20 meeting. I’ll also be catching up with the Chancellor Phil Hammond while I’m there and a number of other meetings we’ve got lined up and a lot of the discussions we’ll be having will be around this issue of digital taxation, multinationals, how they pay tax – Australia has been a real leader in this area. We have the toughest multinational anti-avoidance laws of anywhere in the world and the big challenge now is to stay ahead of the game and how the digital environment is taxed – not just in Australia but all around the world – is really important because for the system to work, you’ve got to be working with other countries. You’ve got to know what they’re paying and earning in other countries and they have to know what is being earned and paid here in Australia. So that cooperation is really important, so it will be a very practical meeting next week. There won’t be a lot of fanfare about it, it will just be practical, focusing on the issues that Treasurers and Finance Ministers are dealing with all around the world which is the real work of the G20.

QUESTION:

Will Roman Quaedvlieg be sacked today?

TREASURER:

I have no direct engagement with that issue. I’ll leave it to the Home Affairs Minister…

QUESTION:

Have you spoken to the Governor-General about it?

TREASURER:

Well, why would I?

QUESTION:

Taxpayers have paid half a million dollars to Roman Quaedvlieg – he’s been on leave, not working during the investigation into his conduct – do you think an eight month investigation, two months to make a decision, is ridiculous?

TREASURER:

I’ll leave those matters to the Home Affairs Minister.

QUESTION:

Will you rule out more taxpayers’ money [inaudible]?

TREASURER:

Again, they’re matters for the Home Affairs Minister.

QUESTION:

You’ve got the purse strings Treasurer, half a million dollars…

TREASURER:

But those decisions are taken by the Home Affairs Minister – I’ll refer to him.

QUESTION:

Treasurer, you were Immigration Minister when the ABF was decided upon, has the inaugural commissioner Roman Quaedvlieg damaged its standing?

TREASURER:

Well, again, the Australian Border Force has been an outstanding initiative, together with the creation of the unified Ministry of Home Affairs. These two things have brought a focus to how we manage our border and how we manage our domestic national security in a way that hasn’t been done for generations. I think these big structural changes have been significant reforms that both the Turnbull and the Abbott Governments have put into place and we followed through on those reforms and the leadership of those organisations, you want to meet the highest of standards and we will expect and continue to expect those high standards from those who lead that organisation as indeed of any organisation within the Government. Thanks very much.