5 March 2017
Transcript - #2017030, 2017

Interview with Peter Van Onselen and Paul Kelly, Sky News

SUBJECTS: National Accounts; Budget 2017; housing affordability; Medicare; Coalition ends Labor’s bad deal for workers; WA election; migration; Renewable Energy Target.

PETER VAN ONSELEN:

To start with we are going to take a look at the state of the economy with the Treasurer who joins us here live in the studio. Thanks very much for your company.

TREASURER:

G’day Peter.

VAN ONSELEN:

Good news by and large, is this going to help with getting the Budget where you want it to go, or is this news that you need to put in context given that there are still some economic winds out there?

TREASURER:

It is good news and we are very happy to see that news but as Paul said, cautiously optimistic is the right tone to strike. In terms of the Budget it is consistent to where we were at in the December statement. We will review that as we get closer to the Budget. I don’t think people should get overly excited about what that might mean for the Budget. Often what you pick up on the swing you lose on the roundabout. We remain very concerned about wages growth. That has, frankly, a much bigger impact on revenues and collections and we continue to watch what is happening on company profits too on the collections there.

So, good news for the Australian economy. I was disappointed that Labor couldn’t bring themselves even on the day or afterwards to come out and simply say they are considered numbers. Good on Australia’s workforce and Australian employers for getting out there and rebounding so strongly, but that seems to be the nature of politics these days.

PAUL KELLY:

What is your priority for the May Budget? Is it more fiscal consolidation or is it the growth and jobs strategy? How do you calibrate and balance the two?

TREASURER:

Well it is both of those and more. The growth story must remain the focus of the Budget. It is growth that not only improves the Budget but it is growth that is going to lift wages, it is growth that is going to lift business expansion, it is growth that is going to continue to drive the improvement in living standards. So growth is central to everything. It supports the services that we need to support as well. So, that is the key issue. Services and guaranteed support for those services and the ability to do that on a sustainable basis is critical to the Budget. Fiscal consolidation, getting the Budget back into balance. That remains a critical task. All of these are achievable. The fourth one I stress is this Paul, it has got to be credible. We have to deal with the political environment that we work in. You can’t just go out there and announce a whole range of things which you don’t have a reasonable prospect of being able to implement. I was in New Zealand recently and they have a very different political system in New Zealand, but they effectively go through what is a very public process here with our Senate. They go through that in their Cabinet process because all of the crossbenchers actually sit in some form through their Cabinet committee process. There are many things the New Zealand Government would have liked to done as well but obviously couldn’t proceed as a result of the nature of how their politics sits. So credibility is important. It was massively important in December. The fact that we took a very cautious approach on commodity prices in the mid-year statement I think got a great reception. Not just from ratings agencies but international bond markets as well and we had three absolute cracker bond issuances from our 30 year to two ten years our most successful syndicated bond issuance ever.

VAN ONSELEN:

We are going to stick on this issue but just as a parallel to it, you mentioned New Zealand, and our system. I know Paul has written about this – so have I – the former PM Tony Abbott has weighed in on Senate reform. Is our system, if not broken, is it teetering on the edge of being broken in terms of responsible government and the ability of the executive to be able to do what it says it is going to do? And then be judged according to how well it does it?

TREASURER:

There are frustrations in our system, there are frustrations in the American system, in the New Zealand system, as one of my colleagues Christian Porter often says about the federation, complaining about the states is like complaining about the mountains in Switzerland. There is a certain level of inertia around these things but I would stress we are actually the Government that did undertake Senate reform at the last election. We passed Senate reform in terms of how people are voted in the Senate. A lot of people talked about Senate reform, the Turnbull Government actually did it.

KELLY:

How tough will this Budget be? It is the first Budget after an election. We know that the AAA credit rating is under serious pressure. As Treasurer will you be looking to make significant new spending cuts?

TREASURER:

The Budget will be in May and we will outline what the measures are in May Paul so I don’t think you would expect me to really go into that sort of detail. Getting the Budget back to balance is critical. The projections are for 20-21. You rightly highlight the issue of the Omnibus Bill in your introduction. The $13.2 billion worth of unlegislated measures which are still there. We got over $22 billion through by the end of last year which was a great effort. But there are still $13.2 billion and the Labor Party seem to be engaged in a very cynical process of sabotaging the Budget to try and crash the AAA rating. I think that is a very reckless and irresponsible thing to do. They won’t engage in spending reform, they won’t engage in getting spending under control, they want to see the nation’s welfare bill; be higher. They want to tax people more to pay for a higher welfare bill. That is not our plan. They still have two weeks to come to their senses and support not only that but the pro-growth agenda of what we want to do to take the tax monkey off employers backs so they can employ more people and pay them more.

KELLY:

How realistic is it to think that you can save the AAA credit rating?

TREASURER:

That will be a judgment made by ratings agencies. What I am encouraged by is what I just said a few minutes ago about the incredible response we have had to the three bond issuances in particular. What that says, the last one, $11 billion raised, $20 billion worth of bids, the largest ever syndicated bond issuance we have ever had and the response from the market was very strong. Now, a lot of that also came from domestic, ultimately in the purchase but in the [inaudible] too, the international interest was also very strong. What that says is those who invest in Government bonds around the world look at Australia and go that is a well-managed financial set of accounts. That is why credibility is so important Paul. What is most important, at the end of the day, when people look at the Budget, they believe that this is a credible, very sensible and responsible set of decisions and take into account the obvious challenges you have dealing with the Parliament and it keeps us on this track for growth but also services and a Budget in balance.

KELLY:

What you just said. If we look at what you just said. You are really in effect lining up Labor and the Senate to blame them if the AAA credit rating goes.

TREASURER:

Well, if that were have to occurred it would have been their responsibility as they would have refused to support the Government ultimately on the fiscal plan that we laid out which has been endorsed by ratings agencies. Now, if you pass the measures, notwithstanding the effect of parameter impacts, the things you can’t control but if we were simply in a position to be able to pass the things we put to the Parliament then we would reach that trajectory at 20-21.

KELLY:

That’s a pretty devastating claim then that the Parliament is unworkable.

TREASURER:

That’s a matter for the Parliament to make their own judgments and also to be responsible for the decisions that they take. In politics there are no consequence free decisions. So, if a Parliament chooses not to support the Government’s plan to get expenditure under control and chooses not to support the Government as we choose to get welfare spending under control and keep the pressure down on tax rather than Labor’s plan, which is just let it all go and allow taxes to go through the roof. Our revenue as a share of the economy is already beyond the long run average and rising. It is expenditure which I have highlighted from the day I came into this job as the thing we need to get into control because that is above the long-run average.

KELLY:

Ok, now I want to take you into the commentary made a fortnight ago. If in fact the spending measures are substantially rejected by the Senate and the Omnibus Savings Bill does mean that the Government against its own instincts and wishes may go the course of taxation increases?

TREASURER:

Well, I am not flagging that. What I am simply saying is that the Parliament has some serious decisions.

KELLY:

But you did flag that a fortnight ago.

TREASURER:

I just set out what all the obvious choices the Government had at the time. That also means you can increase debt, you can increase the deficit, you can increase taxes…

VAN ONSELEN:

Can I just ask differently…

TREASURER:

…you can actually take forward new spending reform measures. You can do all of the above. What I am saying to the Parliament is there are still two weeks for the Senate to sit and obviously when we sit down after that, then the Government will have to frame a Budget that has to deal with the situation that we are presented with at the time. I am not about to give up on those things. I am not going to let Labor in particular off the hook for what is their plan to sabotage the Budget for politically cynical motives.

VAN ONSELEN:

Treasurer, can I put it this way, your plan A is the one you have outlined and the one you are aiming to get through the Parliament. If you can’t achieve Plan A it becomes a case of what is more important. Is it more important to drive hard towards where you want the Budget to be, which is what you want to do, or is it more important to try and ensure that you don’t have to put our taxes which you also don’t want to do. It becomes a binary choice if your original plan gets rejected by the Parliament?

TREASURER:

I go back to my answer to Paul a few minutes ago about what the Budget has to achieve. It has to grow the economy. So, growth is the thing that will lift people’s living standards to support their wages. You don’t want to do anything in the Budget that would actually jeopardise that growth.

VAN ONSELEN:

So, any tax increases you would need to take that into account?

TREASURER:

Well of course. Growth is the goal but then you have got to weigh up getting the Budget back into balance so you can affordably provide the guarantee around important services like Medicare and hospitals and schools. You also have to make sure you are spending the money you are currently spending well. A great example of this, this is one of the most disgraceful failures of public spending and this is the amount of money we spend every year on the National Affordable Housing Agreement. It is basically a one way cash ATM to the states which asks for nothing in return. We are handing over $1.3 billion every year and the number of people on public housing waiting lists has gone up. The number of social housing dwellings which are owned by the state governments has gone down. We have basically shelled out billions and billions and billions for a program that isn’t achieving anything.

KELLY:

So, what will you do about this?

TREASURER:

Well, these are matters that we will be addressing in the Budget.

KELLY:

Surely you are going to tackle it the way you are setting this up?

TREASURER:

What I am saying is that we have to spend that money better. We don’t necessarily need to spend less on that, it is a very important issue.

VAN ONSELEN:

You need it to be outcome driven, you want KPIs?

TREASURER:

Of course, of course Peter. The Labor Party signed the states up to an agreement when they were in office which said here is a bag of cash and in return for that we want absolutely nothing. That is madness.

VAN ONSELEN:

So, you are not necessarily threatening the quantum of money but you want outcomes so you are receiving what the money is provided for?

TREASURER:

We spend serious money on a lot of these problems Peter. What frustrates me, as a Treasurer, and I know Ministers, and I know, to be fair, it frustrates state ministers too at the state level on these issues. So, it is not necessarily a criticism of the states. It is an expression of frustration which I think is shared by state colleagues in that we must spend the money that is being spent better. The debate is so often that you need to spend more here. No, just spend what you are spending really well and more effectively and get the outcomes that we are accountable for.

VAN ONSELEN:

But doesn’t this go back to federation reform? The White Paper process didn’t end up being pursued but isn’t this another cry for federation reform so that the compact between the Commonwealth and the states can provide better outcomes.

TREASURER:

It’s a cry for common sense that when you spend money with states that they actually deliver the outcomes that the federal taxpayer is paying for and however we can improve that – that never comes off the table. I know people get focussed well this process is not continuing or that process is going forward. All the objectives remain and our objective and commitment of objectives of getting the best value of how we spend money with the states, whether it is on schools or on hospitals or on housing or any of these areas. The Prime Minister and I and my colleagues as Ministers have laser like focus on getting better outcomes on this. We have to get better outcomes because there isn’t the money to just keep shelling it out as a one-way ATM to the states.

KELLY:

Now, if we look at the issue of housing affordability you have had a lot to say about this issue in recent months. Can we therefore pretty much assume there is going to be some sort of initiative in the Budget addressing this?

TREASURER:

We are working on a package for the Budget and it is a package…

KELLY:

Will that be on the supply side or tax side or both?

TREASURER:

It will deal with the challenges in taxing affordability for those who are reliant on social housing in our community, all the way through to those who are trying to break into the first home ownership market.

VAN ONSELEN:

Would you call it a centrepiece of the Budget. Is housing affordability going to be a centrepiece issue?

TREASURER:

I am sure the commentators will work out what the centrepiece will be.

VAN ONSELEN:

I am asking you though as Treasurer, would you regard it that way?

TREASURER:

You will see how I will be focussing the Budget in May.

KELLY:

But will you address the taxation issue? You have said you will look at housing affordability across the board. I assume from that answer this will include taxation arrangements.

TREASURER:

Well, Paul, I am not about to inform your assumptions one way or the other than to say there will be a very strong focus on the Budget and it won’t just deal with the challenges faced by first home owners. You have got to remember that over 30 per cent of Australians actually live in homes that are rented and when people are finishing it hard to get into the housing market that puts a lot more pressure on the rental market. One of the key failings of that agreement that I talked about before on the states, one of the things, one of the outcomes we wanted to get from that was a reduction of the number of people on low incomes in rental stress. That has gone up. I am as much concerned about someone who is on a low income struggling with their rent, as I am with someone who I know wants to get on the home ownership market themselves. They are both important challenges for Australians...

KELLY:

Point well taken.

TREASURER:

And my focus is right across the board.

KELLY:

Can I just ask you then, will the capital gains tax arrangements be in play?

TREASURER:

Again I am not going to speculate on the Budget on the program.

KELLY:

You’re not going to rule it out?

TREASURER:

I am not going to play those games. I think that is, frankly, just an unhelpful game, and I am not going to engage it. What we are working on is a housing affordability package, for the Budget. We have made it really clear that the primary issue that is at play here are the supply side issues.

VAN ONSELEN:

Is everything on the table?

TREASURER:

Peter, you use the words you want to use. Paul, you use the words you want to use and what I am telling you is there is a focus on housing affordability that is looking at everything from homelessness and social housing which so often gets forgotten in this debate. I am quite passionate about this. I have been talking about these issues for a long time and I think we have got a genuine opportunity to work with the states and territories here. Not in a combative way and I applaud the decision of the Victorian state government on stamp duties today. Good for them. I applaud what Gladys Berejiklian is doing here and Dominic Perrottet and Anthony Roberts are doing here on the package they are working on here in New South Wales. Good for them. We have all got to work together on this problem, it goes right across state, local and federal and it isn’t just about one silver bullet tax issue. It is a cruel hoax for the Labor Party to present a tax increase as a silver bullet that says you will be able to buy a house wherever you like, at the price you want, in the suburb you want, with a lawn and the bedrooms – that is just a cruel hoax. Labor doesn’t have a housing affordability policy. They have a tax policy to increase taxes for revenue reasons and they dress it up as housing affordability. It is a cruel hoax.

KELLY:

I did want to ask you about Medicare. The Government was punished during the course of the election campaign, very, very badly on the Medicare issue in relation to the indexation of the rebate and so on.

TREASURER:

Apparently we were supposed to have sold Medicare by now. That clearly didn’t happen did it? It was never going to happen, it was a ridiculous suggestion.

KELLY:

Well, you have always got the Budget and that is what I am asking you…

TREASURER:

That was such a ridiculous suggestion.

KELLY:

Can we expect that the Budget will address the Medicare issue? I am not talking about the sale of Medicare in the Budget but can we expect that the Budget will address these issues in relation to Medicare. The political problems in particular that the Government faced at the last election?

VAN ONSELEN:

Particularly the freezing of the rebate.

TREASURER:

Again measures will be addressed in the Budget. But whether it is the NDIS, whether it is schools, whether it is hospitals, whether it is Medicare – at a time when wages growth is admittedly and regrettably flat, Australians, particularly hard-working Australians on middle incomes rely more and more and depend more and more on these services that you are talking about. And so the Budget does need to signal and the Government has been signalling this, the need to ensure that people can feel confident about the support for those services.

KELLY:

So, in other words what you are telling us is that this Budget will look after the needs of middle Australia when it comes to health care and education?

TREASURER:

Hardworking Australians, they go out there, they get their wage to support their families and that's been tough. By the way you can’t get a job at a business that’s closed – I have been saying that all week – and you can’t get a pay rise at a business that isn’t making profits and that is why making sure they are in a position to do that is a good thing. I don’t think profit is a dirty word. Bill Shorten seems to think it’s some sort of sin that has been committed by businesses to actually turn a dollar and make a profit. I think that says a lot about modern Labor. But hardworking Australian families also rely on these services and I think an important message for the government is to ensure that we give them that confidence that they can rely on those services and they can rely on hem under a Coalition Government...

KELLY:

That is the precise opposite position to what happened under Tony Abbott and Joe Hockey in the 2014 Budget.

TREASURER:

I will let others talk about that Budget. They were dealing with a very serious fiscal situation and sadly many of the measures that were put up in that Budget we are still trying to pass now. We were able to pass more of the measures I think in that 14-15 Budget in the last six month than had been achieved in the previous term of Parliament. This goes to the whole issue of the credibility of Budgets and what you put in there you have to have a reasonable prospect with ratings agencies and those who are buying government bonds around the world need to have the confidence in what your projections are. Now, no one has a crystal ball on iron ore, on met coal and I think there is a tolerance on the movements of those things – that is why we have taken such a conservative position on that, Paul. One thing I am not going to signal is, if there is an improvement in commodity prices and let’s hope that there will be an improvement in wages going forward in the next year. any improvement that comes from those sorts of things goes toward Budget repair. It is not there to fan a whole bunch of wish lists on spending. It is there to get the Budget under control and it won’t be diverted. To give a guarantee on health and hospitals and schools and on Medicare your structural Budget has to pay for that and that is what our Budget will focus on.

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VAN ONSELEN:

Treasurer let me ask you about an issue over in the west, next weekend they’ve got their election. Polling suggests that the Government, the Barnett Government are in real trouble. During the week, the Treasurer, the State Treasurer Mike Nahan had a real swipe the Prime Minister basically accusing him of not honouring an agreement when it came to changes around the GST, what’s your reaction to that?

TREASURER:

Well on the issue of the GST it’s been a very hard one over in WA. A fairly unprecedented level of GST shares has occurred through no one in particular’s fault, that’s just how the formula has worked. At the same time, they receive quite significant shares previously. The point about it is this, both Treasurer Hockey and myself, we put in an extra billion dollars into Western Australia into infrastructure outside the arrangements to reflect our appreciation and acknowledgement of the difficult situation WA was in. That was a significant investment. On top of that you’ve got things like the Perth Freight Link, now this is one of the top seven high priority projects as identified by Infrastructure Australia. This is a very significant productivity booting piece of infrastructure. That is a central issue in the Western Australian campaign, we’ve backed it in. The Labor Party, just like they did in Melbourne when they abandoned the significant East West Link there, held onto the money, kept it in their account, well there is no money sitting in an account in WA on this issue. That Freight Link project is really important. Remember the Victorian taxpayers end up paying more than a billion dollars in compensation not to build a road because of the Labor Party in Victoria did. I think voters in Western Australia should think carefully about the Western Australian Labor Party’s views on infrastructure priorities.

VAN ONSELEN:

Is McGowan kidding himself when we says we’ll get the money anyway and we can put it into our alternative [inaudible]?

TREASURER:

I don’t think you can make any of those assumptions. The reason for it is, we just don’t invest in anything. It’s not a one way ATM, I know many states often think about it like this but it’s not. If the federal taxpayer is going to invest in an infrastructure project, we want to see the added value. We want to see the productivity uplift. Now the Freight Link is Infrastructure Australia, which was set up by Anthony Albanese, and we supported it in opposition, has said this is one of the top seven high priority projects for Australia’s productivity and economic growth, and the Labor Party are saying no. In the same way, they’re playing silly games over Westconnex, they played games over East West Link. They’re just not serious about productivity boosting infrastructure.

KELLY:

But you have avoided the question on the GST, what is the Commonwealth commitment to WA in relation to the GST.

TREASURER:

We had a nonsensical outcome I think, with the way those shares played out post the resources boom, and the lags. The Prime Minister said that when the level of share gets to a reasonable level again, then we would look at having some type of floor. Now, that is, that is a position that is not arrived at yet.

KELLY:

So there’s an in principal to look at a floor?

TREASURER:

It was a prospective commitment to look at a floor at a point in which it would be, where you wouldn’t be changing the arrangements that other states were then…

KELLY:

So in other words you’re telling us the WA Treasurer has got this wrong?

TREASURER:

Well that’s what you’re saying.

KELLY:

Well I’m asking you.

TREASURER:

There’s an election in Western Australia and I’m not really intervening in that, what I am saying is, in relation to the issue of GST, this Government. Both under Prime Minister Turnbull and under Prime Minister Abbott put in a billion dollars extra, in infrastructure in Western Australia, in recognition of the real hardship that was being faced as a result of the GST distribution. Now that was a serious well intentioned investment, and we just didn’t splash cash over there. We said, let’s invest in infrastructure that boosts Western Australia’s productivity.

KELLY:

Let’s go to penalty rates, the Government has been panned this week for the position it took in the Parliament on penalty rates. Did the Government get it wrong?

TREASURER:

Bill Shorten runs a protection racket for big unions. That’s what he does. He has done it on the building unions with the ABCC. He did in under the CFA issue, he did it on the owner drivers issue, he did it when he was a union boss for the AWU on the Cleanevent deal when he traded away penalty rates like I used to trade footy cards when I was nine years old, and what he got in return, was not something good for the worker, what he got was a big bag of cash for his union.

KELLY:

Let’s talk about the Government not Labor. Did the Government get it wrong by not owning the decision?

TREASURER:

It was the Fair Work Commission’s decision, and there is a process for the issues which applies to four out of 122 agreements. There is a process for how this can be implemented which the Fair Work Commission will now work towards. But what I find troubling about this, is what is the position of the Labor Party now on Fair Work generally? You think about it, so Bill Shorten is saying, that under a Labor Government any decision made by the Fair Work Commission which is independently set up to ensure certainty, about how wage issues are determined in our economy, any decision the unions don’t like, he will reverse it. That’s madness. He should be abolishing the Fair Work Commission if that’s what he thinks, the way it should run. This is a very, very irresponsible and risky policy that both Chris Bowen is allowing Bill Shorten to pursue, but you’ve got to think about this. The independence of the Fair Work Commission, and not engaging in the cynical politics that Bill Shorten is doing, puts the stability of that while wages arbitration system under great risk. What business is going to turn up to the Fair Work Commission under a Labor Government when they know that when they get any decision which is remotely favourable to them, the big unions, will run off to Bill Shorten, and go that’s alight. I’ll just flip it. I’ll just bring in legislation and flip it. I mean that is reckless.

VAN ONSELEN:

It might be reckless, it might be pure populism but…

TREASURER:

I thought you would agree it’s both Peter.

VAN ONSELEN:

I think I probably do. But, politically it’s poison for your side of politics. At the same time as the deficit levy comes off half way through the year, the penalty rates change, there’s no EBA equivalent compensation as a quid pro quo for the adjustment. It wasn’t your decision, it was the fair work commission but the Government is going to wear it.

TREASURER:

Like on Cleanevent when they trade away penalty rates with no compensation…

VAN ONSELEN:

That’s the exception not the rule. Most EBAs trade something advantageous….

TREASURER:

Exactly, not when Bill Shorten was negotiating them, and when his mates were negotiating them either. The Fair Work Commission has a process for mitigating how this impacts on individuals and we’ll support that process going forward. But you make the point about, of course we want to see tax rates come down. They said no one gets a job in a business that isn’t open, and no one gets a pay rise in a business that isn’t making a profit. Now for the last 12 quarters we were talking about the National Accounts, before this latest set of results, for 12 quarters, actually a bit longer, but over 12 the average change in profits over the period of that time was negative. It was down 0.2 per cent, for compensation of employees in the National Accounts the figure that represents wages, on average that went up 0.7 per cent. So for the last 12 quarters, that’s three years, particularly small and medium sized businesses, putting their hand in their own pocket, to actually keep these businesses going, keep paying those wages, keeping the employees, the Fair Work Commission and Productivity Commission formed similar views, has come out and said, this arrangement we believe will improve employment, it will mean that they’ll be more jobs on Sunday, they’ll be more places open, and that will be good.

VAN ONSELEN:

In fairness though, in fairness they called it modest improvement, rather than anything in the Fair Work Commission report, that’s how they referred to it.

TREASURER:

They decided what they decided based on that modest improvement, see I’m not someone who says that growth dividend that’s too modest. We shouldn’t got for that. I’ll take every inch of growth, and I’ll take every inch of job creation. I’ll take every inch of a business being able to open and prosper and succeed so they can employ for Australians every day of the week….

VAN ONSELEN:

What about the flip side to that though…

TREASURER:

…Chris Bowen and Bill Shorten – oh that’s not enough growth, that’s not enough growth. I mean what are these guys on?

VAN ONSELEN:

What about the flip side to that though which is that people who already getting penalty rates as opposed to the hope of the modest improvement in the number who would be employed on Sunday, their wages go down with no quid pro quo, and what about the conservative argument as well that weekends should be sacrosanct?

TREASURER:

You’re making an assumption in saying that which is just not true. The Fair Work Commission has a process that they’ve now embarked on, which deals with the issue of how people will be better off or otherwise, or worse off, and how that can be mitigated going forward. That is the next stage of the process. The Fair Work Commission has a process. Six months or so, they’ve come together, they’ve made a decision, and now they implement it. They implement it with a view to mitigating the sorts of negative consequences you’ve just talked about. That’s the process. Bill Shorten wants to take that, having set it up, picked the umpire, the ball boys, done the line markings himself, put the posts up, all the rest of it. Fixed it with every player on the field, gets one decision he doesn’t like, and he’s going to turn it over. That is a message of great risk, for this chap, who says he wants to run the economy as Prime Minister.

VAN ONSELEN:

What about your Treasury Secretary though, he says in Senate Estimates he doesn’t even have an opinion on the issue.

TREASURER:

Why would Treasury have done any work on this matter when the Government wasn’t making the decision. It was Fair Work who was doing it.

VAN ONSELEN:

Because the Government has a right of response, and can make a submission. The Government chose not to make a submission, but surely those are reasons for the Government to do some internal work on it.

TREASURER:

They may take this into account as they form their forecasts for the economy as we prepare Budgets in the normal course of events. You’re question assumes that the Government had a role in actually taking the Fair Work Commission to the decision they took. And we had no such role, the Treasury had no role.

VAN ONSELEN:

The Government was always going to be called on to offer an opinion of whether it supported the Fair Work Commission.

TREASURER:

The Government is not in the business of offering opinion Peter, the Government is in the business of Governing, putting forward legislation bringing down Budgets, growing the economy, driving jobs, that’s what our job is, it’s your business to have an opinion.

VAN ONSELEN:

The Government has to make a decision about whether or not it’s going to legislatively support any independent body like the Fair Work Commission you made a decision around other bodies that were independent, to abolish them or make changes, and that’s fine, but wouldn’t you, I would have thought that the Government would want to have its own data analytics to work out how useful or valuable a possible decision by the Fair Work Commission would be.

TREASURER:

The Productivity Commission has done work on this already, and in addition to that the Fair Work Commission has done work on this, and they’ve both come to similar conclusions. What you’re saying to me is the Government somehow has to run its industrial relations policy in response to what Bill Shorten throws around with his usual cynical opportunistic politics. I’m saying Bill Shorten is not running this country, thank goodness. If he was, we would have a wages system in this country which is up to him at a whim to turn over any decision of an independent commission, which would cause complete chaos in our Labor markets. Now that is a dangerous way to run a country. Bill Shorten is a massive risk.

VAN ONSELEN:

Shouldn’t the Government back this in hard though?

TREASURER:

The Government doesn’t have to do anything of the sort.

VAN ONSELEN:

As a party, the Liberal Party of IR reform.

TREASURER:

You’re now engaging in ideology. You’re engaging in politics, what we’re engaged in is good administration of Government. The fair work commission has made a decision, it doesn’t require any Government legislation to bring it into effect. It comes into effect, that’s the point of an independent commission. If people think legislation should have to ratify every decision of an independent commission, well you don’t need an independent commission. I don’t understand why people are buying this line from Bill Shorten, that there is a parliamentary response to this. It is a big cruel hoax.

KELLY:

A number of prominent people have argued that we should cut back the immigration programme, what’s your response to that?

TREASURER:

When that argument was last made, we had popular, that was back at the 2010 election, I was Shadow Immigration Minister at the time, population growth was running at 1.8 per cent, and net overseas migration had hit 300,000. Now today, net overseas migration is running at around about 170,000/180,000 population growth is running at about 1.4. So that is a dramatically different situation from the last big Australia debate that we had. The second point I’d make is this, and that is population growth is currently running for the non-working population at around twice the rate of the working population. So it’s over 2 per cent for the non-working population, and around 1 per cent for the working age population. So those who are advocated for cutting back on immigration, what that will simply do it make that gap even wider and it means there will be fewer people in the working age paying for pensions, paying for services, paying for all the things that a very necessary. Now, I’m no great big Australia advocate but I’m a pretty common-sense politician and decision maker when it comes to these sorts of issues.

VAN ONSELEN:

So in other words you’re telling us these people calling for a cut to immigration have got it wrong.

TREASURER:

The Scanlan Foundation said that. If you just look at their data, they have run one of the best surveys on public opinion on these issues for a long time, and the level of concern about immigration levels being too high on their surveys are at one of their lowest levels. Now I’ll tell you why that is, because when the Australian people I think look at immigration issues, their first requirement is the programme is run well and the borders are secure. Well tick, tick, when it comes to the Coalition on those issues. I mean the Australian public had every reason to believe in our integrity and strength when it comes to making sure that we bring people who come to make a contribution, and not take one, and so as long as your immigration programme is focused on bringing people to the country who add value, like has been our experience for a hundred years, then it is a net contributor to our economy.

VAN ONSELEN:

Let’s deal with the elephant in the room. The elephant in the room is that Tony Abbott is one of these people who is arguing on this immigration front in contro to what you are suggestion.

TREASURER:

Well, it is up to him to make his case. I am not making his case so you will have to ask him why he thinks that would be good for the economy. Where there are issues among the population growth debate there has always been a proxy for a discussion about infrastructure and that is an important focus for the Budget. It was in our last Budget and it was in the Budgets under Treasurer Hockey as well. Joe’s Asset Recycling program was an outstanding program with a fixed life and we kept it to that fixed life. The investments to infrastructure whether it is Freight Link in WA or WestConnex here in NSW and the western Sydney road projects or the Inland rail project which we are champions of or what we are doing to the Monash Freeway down the rein Victoria or Bruce Highway upgrades in Queensland. All of this, we are heavily focussed on a $50 billion rolling national infrastructure program which is focussed on productivity. Not just kicking out money to the door in some sort of fob off to the states. We invest , we invest in projects that lift productivity.

KELLY:

Let’s go to the Renewable Energy Target – the RET – you had strong views on this when the debate came up in government. The issue has now been put on the table again by some of the Conservatives in the Party. Is it possible for the Government to amend the RET?

TREASURER:

When that decision was taken there were a number of us who had concerns about it and Mathias was one and there were others. I am not breaking any news there. That has been confirmed in other places. When that decision was taken everybody in the room knew that once you’ve made that decision you can’t then go and change it every other Thursday. You need to have certainty about these arrangements. So, we knew when we made that decision and of course the Prime Minister knew that it would have a cost to the economy and that decision was taken.

VAN ONSELEN:

So what’s he doing?

TREASURER:

It was also taken in the knowledge that once you make it you can’t just flip it. Now, what we did do on that occasion and to the former Prime Minister’s credit on that issue and that was well supported by everybody else in the room including the current Prime Minister was that we were able to get it down from where it might otherwise have been which was well north of 28. So, that was a good outcome and that was negotiated by Minister Macfarlane at the time. So, there were a lot of other constraints that we hadn’t legislated around that number at the time than the outcomes that were far, far worse.

KELLY:

I just want to clarify, I think you made two really important points. You said first of all there was a cost involved on the decision taken by the Abbott Cabinet and secondly you said the Prime Minister was told that once the decision was taken it couldn’t be unscrambled.

TREASURER:

That was all of our understanding because you have to put some stability and certainty around it and whether you’re pro-RET or anti-RET or in-between as a Treasurer what concerns me most is the stability and certainty for investors and others who are bringing money into the economy. So, whether it is having stability and certainty over the Fair Work Commission and not having the madness of Bill Shorten as the protection racquet run of the Big Unions being able to flip decisions on a whim just because the CFMEU gets on the phone or whoever else it happens to be on a particular day or having some stability about investment in energy affordability long term, sustainable, with an all of the above approach which looks at everything from coal, to wind and everything in between, particularly pumped hydro and storage. We are a common sense government who is just focussed on outcomes.

VAN ONSELEN:

Treasurer Scott Morrison we appreciate your time, you have been generous with it, thank you for joining us.

TREASURER:

Thanks a lot guys, good to be with you.