28 October 2015
Transcript - #2015030, 2015

Interview with Neil Mitchell, 3AW

SUBJECTS: East West Link funding; health funding; resources sector; superannuation; child care package; interest rates; Joe Hockey; social services portfolio; Kitchen Cabinet.

NEIL MITCHELL:

In the studio with me is the Federal Treasurer Scott Morrison, good morning.

TREASURER:

G’day, Neil. It’s great to be in Melbourne.

MITCHELL:

Now, the $1.5 billion we were given in Victoria earmarked for East West Link – has a deal been done?

TREASURER:

No we haven’t arrived at a final agreement yet but we are in very good faith discussions between Tim Pallas and I. I mean the $1.5 billion was given by the Prime Minister Tony Abbott at the time and Joe Hockey to build the East West Link. It wasn’t a gift voucher for anything people wanted to think about and dream up. It was for the East West Link. The Government decided not to proceed with that. They were elected, they are entitled to do that but what we want to see happen is we want to see that $1.5 billion go to projects, infrastructure projects; things like the Monash Freeway Upgrade that we would love to see happen and engage with them. So, we will work through the projects but we have a forward programme for spending on road infrastructure in Victoria and that fund can be used, if you like, as a prepayment that can be drawn down to fund those works. So, it ensures that Victoria will continue to see road projects happen. Now, this is very important, as Treasurer I want to see projects happen in Victoria and there is a range of projects I think we can get moving on. So, I think it is time to rule a line under that. We also remain totally committed to the East West Link should that proposal ever be put forward again. So, Michael Sukkar who has been a champion of that project out there and he is ensured that we remain totally committed to that.

MITCHELL:

Ok, so it’s not a gift voucher but you are now willing to negotiate it into a gift voucher?

TREASURER:

Well, what we are willing to do is allow them to draw down on it for projects that we agree are priority projects in Victoria.

MITCHELL:

So, they don’t have to give it back?

TREASURER:

Well, it will net off, basically, for funding we might have otherwise had to write new cheques out for they can just draw down on the money that is there and they can use it if you like as a prepayment to these projects. We still have to go through the same processes, the process has to have cost benefit analysis, they have got to be good projects, they have got to be projects the Commonwealth is keen to commit to and the Monash Freeway Upgrade is certainly one of those.

MITCHELL:

Well, I think Tony Abbott and Joe Hockey were saying they wanted the money back – you are no longer saying that?

TREASURER:

I think it’s impractical. At the end of the day what matters is where the projects happen and that we retain our commitment to the East West Link. Now, we have done both of those things and we are happy to work those things out with the Victorian Government but it is, as I said it wasn’t a gift voucher that people would just hold hostage – that’s not how it works. We are happy to ensure that all of those funds get committed to projects in Victoria that go through the proper process and, as I said, the Monash Freeway upgrade is one that we are very keen on.

MITCHELL:

So, you are happy for them to draw down the whole $1.5 billion – spend it all?

TREASURER:

For all the projects that we agree to as part of, over the next four or five years we would be happy for that to occur but it is for projects that are part of our plan and part of our plan for a stronger Victoria, a stronger road infrastructure network in Victoria and other projects for that matter. As the Prime Minister has made clear whether it is on the Melbourne Metro or things like that we will still wait for proposals to come forward on those projects and if there are elements of those projects we want to talk to them more specifically about where stations are and things like that, well that is part of the normal process. What I want to do with Tim is basically sort out the bookwork, make sure the accounting treatment is all above board and then we can just get on with the work.

MITCHELL:

Well, you mentioned the stations on Metro. Are you thinking about South Yarra station? There is still debate over whether we should have one?

TREASURER:

Well, they’re debates that have to be had and they are details that have to be locked down.

MITCHELL:

Ok, we talk about the Monash, the Metro, are there any other projects in mind?

TREASURER:

Well, I will leave that to Warren Truss because he is the one, together with Paul Fletcher, the ministers who will engage with the Victorian ministers here and they should engage in that process and we should get these projects happening because I am sure that is what Victorians want to see.

MITCHELL:

So if they draw down $1.5 billion and then there is a bolt of lightning and they suddenly support the East West Link like most of Victoria, so you then come up with another $1.5 billion for that?

TREASURER:

Well, our commitment to that remains.

MITCHELL:

So, we could get $3 billion, we could spend the $1.5 billion on the Monash and Metro and everything else and then get another $1.5 for East West.

TREASURER:

The East West Link remains our commitment as I said, Michael Sukkar has been the one that has really championed that and I am, they are 100 per cent with him on that as is the Prime Minister and the rest of the team. We are right there on East West Link.

MITCHELL:

So, that gives us potential of $3 billion, well it could, over how long?

TREASURER:

Well, you would have to have a state government that is prepared to put that up Neil and I think this Government has made it pretty clear that they are not going to be able to go forward with the East West Link. Now, we are disappointed about that, we were disappointed, as Joe Hockey said at the time, because the jobs it was going to create and this could be moving now. That is water under the bridge that the current government – the Andrews Government – has said that they don’t want to proceed with that – their call but we want to see road projects continue. So, rather than getting into one of these endless discussions about who is holding the money and where it is, I think people just expect Treasurers to just sort that out and make sure that projects happen.

MITCHELL:

Well, as I have attempted to point out to both Treasurers, it is actually our money.

TREASURER:

Well, that’s right. It is and it is there to build roads.

MITCHELL:

Speaking of which we were talking of the ferry service the possibility of the ferry service. Has there been any approach on that to the Federal Government on that do you know?

TREASURER:

None that I am aware of. We are the ones that have gone to Warren Truss, I couldn’t tell you. The Prime Minister has made it very clear that whether it is marine infrastructure, whether it is rail infrastructure, whether it is road infrastructure, we just want to see the transport systems, the road systems work well and to play our part in that. Now, the large decisions on this are always made by the state governments. The Commonwealth Government provides support to these. We are also looking at ways to better finance these things, Neil, and trying to look at more innovative ways to do that because we have to stand in the gap in many ways and the idea that superannuation funds are going to come along and start building new infrastructure projects, look, I just don’t think that is going to happen. They will take them out further down the track when the returns are clearer and the income streams are clear but the upfront role, they don’t have a great appetite for that because they are looking after people’s savings.

MITCHELL:

So, how hands on do you want to be in the decisions that are made in the projects? Do you want to get down to saying well, we want a South Yarra Station before we subsidise this or we want this done, it has to be this lane and this area on the Monash. Do you want to be that hands on or is it more [inaudible]?

TREASURER:

That’s for Warren and for Paul to negotiate as the relevant Ministers but the projects have got to meet the objective. They are not blank cheques, they are cheques to actually produce infrastructure and transport solutions that actually deliver on what we need them to deliver on. It has got to meet the purpose and if it is not meeting the purpose well it is just a media announcement and a lot of money moving around. It has got to work and we want it to work.

MITCHELL:

We will take some calls as well that you might like to raise with the Treasurer. Nari, hello.

CALLER:

Hi Neil, how are you going.

TREASURER:

Hi Nari.

CALLER:

Hi. My question is, when is the Government going to put more money into public hospital systems. I am currently a patient in the eastern health region, I waited on Monday close to three hours to see the Doctor, then was made to wait another 40 minutes to see a hand therapists, parking at the hospital is paid for but there is only 40 car parks at the entire hospital for patients and then there is street parking. It’s just out of control. I have a chronically ill daughter that we get treated at the children’s hospital for and I cannot fault them but when it comes to the adult system it really sucks.

TREASURER:

Health funding to the states is increasing every year. This year we are spending some $15.5 billion and then it goes to $16.4, sorry, in this financial year, then it goes to $17.4 billion, then $18.1 billion, then $18.9 billion. So, we are increasing our spending on the health system in the states from the Commonwealth every single year it is going up – not going down. We want to keep doing that and we want to ensure that the services are there and we need to do that in a way where when we grow the economy that is actually going to grow the resources that the Government also has available for these things but I agree that there would be frustrations. I mean the state governments run the hospitals but our funding to hospitals is going up every year.

MITCHELL:

Coal – the chief scientist wants to see an end to coal, oil and gas. Coal was worth $37 billion to this country last year. You would be a bit worried about the end of coal wouldn’t you?

TREASURER:

Well, I think the Prime Minister summarised this pretty well yesterday. If they are not buying it from us overseas they are going to be buying it from someone else and it is a big part of our economy, has been one of our areas of competitive advantage in terms of energy and the cost of energy in this country that has supported us for a very long time. I am never one to just be handing away the competitive advantages that we have as an economy and obviously we have our commitments around reducing emissions but that doesn’t require selling out the thousands of jobs that are involved in that very important industry.

MITCHELL:

So we keep selling coal long term? As long as we can.

TREASURER:

Well we do and we do it consistent with the broader policy settings we have around the environment and the controls that are there. We are not going to be mugs about this. You don’t just go throwing jobs away.

MITCHELL:

We have got a fair bit of uranium too though. What about nuclear power?

TREASURER:

Well, again, this debate has been going on for a long time there is a very low emissions form of energy. It is very costly to set it up in the first instance so I don’t think we can be naïve to just how difficult it is to get off the ground., I remember when there was the review into this some years ago that was identified as one of the key hurdles. So, it is not a cost free exercise even though it might be emissions free.

MITCHELL:

We will take a break, more call more questions for the Treasurer Scott Morrison in a moment.

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MITCHELL:

The Treasurer is with me, Mr Morrison on superannuation a very simple point, should people who are earning large amounts on their super savings pay more tax?

TREASURER:

Well, they’re the issues we are looking at right now on superannuation and again the PM has made it pretty clear that we have to look at the whole raft of options we have got there but I think what is really important at this stage of the debate is asking the question; what is superannuation for? Why do we provide tax incentives for superannuation and the answer is because we want to make sure when people reach retirement age that they don’t go on the aged pension.

MITCHELL:

I think there is another question too, which is, will you change things retrospectively?

TREASURER:

I think the superannuation system has to have stability and certainty. So, if people have been investing under particular rules then if you change those rules down retrospectively then that can really undermine confidence in the superannuation system. If you are 27 years old today and you saw something like that happen. Now, it may not have impacted you directly but you would be thinking gee should I be putting more money in my super, they could just change the rules on me later. So, I think Governments have a responsibility to have stability in the system and again that is another principle and the other principles I would want to see in superannuation is I want to see more choice. We have the response to the Financial Systems Inquiry – the Murray Review – where I said we need to have more choice for people to decide where their money goes and not have it locked up in union agreements and not have it directed by people other than themselves. I want to give them the choice about where they want to put their money to achieve the purposes they have for it, not what unions have for it.

MITCHELL:

The transition to retirement pension is getting a lot of attention because there is a quite a tax benefit in that where you can withdraw money – tax free but then salary sacrifice to put money in at 15 per cent. Are you looking at that specifically? Is that short term? Is that doomed?

TREASURER:

While we look at all of those more broader, structural measures on superannuation we are also looking at the integrity measures around superannuation and they come up quite regularly and I think Treasurers over a period of time, they have always sought to tighten up areas where there is a risk to revenue and there are integrity problems.

MITCHELL:

So have there been integrity problems within the law?

TREASURER:

No, in terms of the integrity of the design of the system and whether it is achieving its purpose. You can absolutely expect that I will be looking at arrangements that may present integrity threats to revenue.

MITCHELL:

What do you mean by integrity? Integrity threats do you mean things that are costing you money?

TREASURER:

Well, things that aren’t really achieving the purpose of what super is for and where there are loopholes in the system. Now, loopholes aren’t good for revenue, they are not good for the integrity of the overall superannuation system and so we want to make sure there is a fairness around how that is all worked out and achieves its purpose.

MITCHELL:

So, is transition to retirement pension a loop hole?

TREASURER:

All I am saying is we are going to be looking at measures that we think are and then we will make some decisions about that and then we will be pretty clear about what the actions are.

MITCHELL:

Once again if you wouldn’t make that retrospective. Surely though if someone is eligible for it now surely they will be eligible for it next year it will be anybody new coming in.

TREASURER:

Well, as I said on retrospectivity in superannuation you have got to promote certainty and that is the clear principle. What I am setting out in terms of superannuation are principles. Another principle is that I want flexibility. I made this point earlier in the week, there are people who through no fault of their own have disruption to their working lives. Now, we know that is particularly the case for women but it is also the case, Neil, for carers. People who may be looking after a partner in their mid-thirties and things like this. Young people, very young people who are looking after parents.

MITCHELL:

Sorry, on a principle, do you believe a lot of money is being rorted out of the super system. Are people dodging tax they should be paying by using super?

TREASURER:

No, I think people are complying with the law, Neil.

MITCHELL:

Yes, but you are worried about the integrity of your revenue.

TREASURER:

we started this system 25 years ago and it was originally intended to ensure that people didn’t end up going on the pension. Twenty-five years later a whole bunch of other objectives and a whole bunch of other purposes I think are built around superannuation. Some people see it as an inheritance pool, others see it as wealth creation including for those on high incomes.

MITCHELL:

Super rich people, if you have a couple of billion in the bank you are not going to worry about fiddling about super, you will be going to the Cayman Islands, you will be doing something else that is reducing your tax or building your income.

TREASURER:

It’s not just about the super rich either. It is about those who will be in a position to be independent in their retirement and that is the aim, that is exactly the aim and particularly those on middle incomes who we can ensure over the course of their working life, get themselves into independence I think that is the sweet spot of where you have got to have superannuation really focussed and that is what we want to do. Flexibility, choice, stability and a real focus on the purpose which is tax incentives which are designed to help people be independent in their retirement and not dependent on welfare which is the pension. Now, the pension though will remain, for many people, their retirement income and we need to ensure that is as strong and sustainable as possible for them as well.

MITCHELL:

If I could give gratuitous advice to people to read between the lines I would say if you were about to go to a transition to retirement pension don’t muck around – do it now. If people get into it you are not going to remove it from them are you?

TREASURER:

Again Neil, we will make the announcement on the changes in a systematic and, I think, a way that presents hopefully no surprises. I am setting out the principles of the decisions I think really clearly. People need to know the why not just the what and the why is what I have just been talking about.

MITCHELL:

Darren, go ahead please.

CALLER:

Good morning Neil. While you have the Minister there could you also investigate the superannuation complaints tribunal. My wife died in November last year and it is just a small complaint but I believe her super fund has not allocated the fund accordingly. It is going to take three years to be dealt with.

MITCHELL:

I assume you are not talking about a couple of billion dollars here Darren?

CALLER:

Absolutely not – less than $80,000.

TREASURER:

Well, that is a concerning story Darren and as Neil knows when I have been in other portfolios if there is a particular issue there that I can follow up Darren I would be happy to do that off air.

MITCHELL:

Hang on, we’ll get some details from you off air. Are you still intending to scrap the low income super contribution scheme?

TREASURER:

Well, it already is – it’s gone – that was a previous Budget decision. What is important I think for people on low incomes, a person on a low income, a very low income, they will be on a pension by the time they reach retirement age. I think there are real questions about how can we best support people over their working life so they can be better off week to week. They will be on a pension when they get to that age. So they will have their retirement income I think very much addressed. There are genuine issues, if you are on a marginal tax rate of say 19 cents of the dollar, even at that low level of income, then you would be paying 15 per cent on your contributions to super. But if you are not paying any tax at all because you have got a very low income, well, superannuation you are actually paying more tax on your contributions then you are otherwise. The way the system was working before, you would be flat out getting a superannuation balance by the time you reach retirement of a little more than $15-$20 grand.

MITCHELL:

There has been proposition of a flat tax rate concession of 15 cents, what do you think?

TREASURER:

Chris Richardson made some points about this the other day and he wasn’t the first to outline that and as both the PM and I have said we are looking at all of those options but what we are trying to say as well though is when you get to the retirement phase, that is when you are actually needing to draw down on that income and I think that period I think is a very sensitive area for how people look at the stability of superannuation and I think I have highlighted that quite consistently as the most sensitive phase that the Government has to look at very carefully but also very sensitively.

MITCHELL:

What has happened to Tony Abbott’s paid parental leave scheme?

TREASURER:

Well, that doesn’t exist anymore. That was abandoned – he abandoned it. When I was Social Services Minister we agreed not to pursue that and we agreed to pursue the child care benefit, the childcare reforms in its place and they are the reforms we are trying to get through right now and we have worked out a way to pay for it and Jenny Macklin said well she likes the child care changes but you have got to find a way to pay for it somehow. So, we introduced a Bill in the last sitting which I termed the somehow bill which means payments that we are currently making are supplements to family tax benefits which were introduced more than a decade ago. The purpose for those payments is outdated, it no longer is a necessary payment for what it was designed to do. So, we would like to take that money and ensure that people can get more affordable childcare.

MITCHELL:

And what about the double dipping things on paid parental leave is that addressed as well.

TREASURER:

No, we are still working through those issues with the crossbench in the Senate and the new Minister Christian Porter is continuing those discussions that I commenced. The real issue here on paid parental leave is you want paid parental leave to enable people to spend longer with their children. That is the whole point of it, when you can claim two payments concurrently, what the Labor Party when they were in Government the research they commissioned showed that people actually weren’t because you could take the payments at the same time. So, the idea of having to take payments sequentially rather than concurrently could only lead to people potentially taking longer time off with their children which is the whole point I would have thought.

MITCHELL:

The Reserve Bank Board announces its interest rate decision next Tuesday. The Big Four banks have been going their own way more on interest rates lately, doing what they like and then after you tightened their lending rules. Is it fair what they are doing? Are they, and we are going to see their profits this week which we are told will be around $30 billion. Are they getting too greedy?

TREASURER:

Well, the banks have a pretty healthy return on their equity – they do and particularly compared to banks overseas as well. Now, I know not every banking jurisdiction is the same and they are reasonable things to point out.

MITCHELL:

Are they too healthy?

TREASURER:

Well, it is good to have a strong banking system and we got through the Global Financial Crisis because we had a strong banking system.

MITCHELL:

They put up interest rates.

TREASURER:

I am never going to defend the banks rising interest rates. If they are going to raise interest rates that is their commercial decision. None of us like it – I have a mortgage, I don’t like it. What I say to my bank is the same thing if someone put the prices up at the corner shop. At the corner shop if someone has an increase in their prices they don’t always pass it on, if a bank decides to pass it on it is a commercial decision that they have made. No one has forced them to do it, no one has made it mandatory – they have made their own call and they have to face up to their customers and explain why. They can’t blame the Government, APRA, you or me or anyone else.

MITCHELL:

Are you talking to Joe Hockey yet?

TREASURER:

Yes, we saw each other at Parliament last week. We had that very moving tribute to Joe in the Parliament which I was very pleased to participate in.

MITCHELL:

So is Joe going to Washington or not?

TREASURER:

Well, that is a matter for the Prime Minister to announce.

MITCHELL:

If he does should he get his Parliamentary pension as well? Is it double dipping?

TREASURER:

Well, again that is for Joe to decide. They are the decisions he has to make.

MITCHELL:

You haven’t got a view on that?

TREASURER:

That is Joe’s decision I am not going to second guess his decisions.

MITCHELL:

So you haven’t got a view on it?

TREASURER:

It’s Joe’s decision.

MITCHELL:

Yes, agreed.

TREASURER:

I am not in the business of offering gratuitous advice.

MITCHELL:

How often should a backbencher be in the Federal Parliament? Tony Abbott’s only dropped in occasionally recently. In fact he is in London giving a $40,000 speech.

TREASURER:

Well, I don’t know what he is getting paid.

MITCHELL:

No, I don’t either.

TREASURER:

But to my knowledge Tony only missed two days of the last fortnight of sittings. He is certainly there a lot more frequently than the Member for Fairfax that is for sure. Clive.

MITCHELL:

Is he still not turning up? Clive Palmer?

TREASURER:

Well, we had one the other week and the Member for Kennedy, Bob, and he is a very colourful character. Bob Katter asked a question to Parliament the other week and didn’t even hang around for the answer. He walked out mid-way through the answer.

MITCHELL:

Fair enough because often the answers are really…

TREASURER:

It was a very good answer. It wasn’t me giving it, it was one of my colleagues, I think it was the PM from memory…

MITCHELL:

A couple of quick things and this is a bit of your previous portfolio…

TREASURER:

No it was Barnaby, Barnaby Joyce.

MITCHELL:

You are talking about revenue, is it too easy to rob Centrelink? We have got this situation, a woman has been dead for years and people have been collecting money.

TREASURER:

This is such a disturbing crime. Not just the horror of the loss of those two lives and particularly that young little girl and the police are obviously still investigating this. It is only come to light that they are actually deceased these two individuals so obviously the risk is there for people to impersonate people in those situations. Once sadly the bodies were found and the processes follow that these other crimes have been identified. So that is why I think it is important that law enforcement authorities and Centrelink authorities, and the compliance officers actually work very closely together. When I was Minister for Social Services we actually seconded a Commissioner, Assistant Commissioner I think it was, from the Australian Federal Police to head up the compliance unit of the Department of Human Services to ensure that we had a really strong link between the police and the compliance operators within human services.

MITCHELL:

Have you caught up with this issues of children out at Cranbourne Primary School not being required to sing the national anthem because of their Muslim background?

TREASURER:

Look, this was just pathetic. I mean for goodness sake, we are all Australians, we all love out national anthem and you know I am from Sydney and I have a lot of great friends in South Western Sydney, Jamal Rifi, who many Australians would now know is a very close friend of mine. I know people of Muslim faith – Shia, Sunni, whatever – would be just as offended about this as you and I would and I just shook my head and went that is just doing nobody any favours. Some do-gooder has tried to make a point and they have ended up damaging the whole show. So they get the Muppet of the year award from me for that.

MITCHELL: 

Muppet of the year. You are the guest on Kitchen Cabinet tonight.

TREASURER:

Yes.

MITCHELL:

You have got to be careful with pre-recorded interviews. I believe in the interview you say people are wrong saying you want to be Treasurer. What is your job at the moment?

TREASURER:

Treasurer, and I wasn’t seeing it. I hadn’t sought immigration nor social services, Neil. What I have found in politics is you do the job you are given, they are all great jobs, they are a privilege to serve in every single one of them and it is a privilege to serve in this one and I will seek to do as good a job on this as I have in the others.

MITCHELL:

So, next you are not seeking the Prime Ministership?

TREASURER:

Mate, I’m on my job and I will take whatever job the Prime Minister is happy to ask me to do and he has asked me to be Treasurer and it is a great thrill and privilege and I think we have got off to a good start and we have got to keep that going, keep the confidence up and the jobs and the growth happening.

MITCHELL:

Thank you for coming in.

TREASURER: 

Thanks a lot, Neil.

MITCHELL:

Federal Treasurer Scott Morrison.