26 March 2018
Transcript - #2018032, 2018

Interview with Fran Kelly, ABC RN

SUBJECTS: Cricket, Enterprise Tax Plan, Newspoll

FRAN KELLY:

The Treasurer, Scott Morrison, is in our Parliament House studios. Treasurer, welcome back to Breakfast.

TREASURER:

G’day, Fran.

KELLY:

Before I come to the tax cuts, can I ask you about the cricket scandal? Malcolm Turnbull yesterday was demanding decisive action from Cricket Australia. Steve Smith was stood down from the rest of the third test as captain, he’s been banned from the fourth test by the ICC, does that go far enough or should he be sacked as captain of the Australian test team?

TREASURER:

That’s a matter for Cricket Australia but, like most Australians, I’m just disappointed and I’m sure Steve Smith is in his own judgement as well so I’m not going to pile on here. They’ve got to make their own decisions – Steve Smith is a good person, he’s made a terrible call and I think he’s still got a very big future and he’ll learn a lot from this error of judgement and I would hope that he’ll be in a position to come back stronger when the time is right.

KELLY:

Okay, let’s get to your tax policy. The clock’s ticking, will you get the two extra votes you need in the Senate to pass the tax cuts?

TREASURER:

We’ll know later this week, Fran.

KELLY:

What are the indications? Tim Storer, we heard there, playing his cards very close to his chest. Derryn Hinch, though, has been a little bit more open. Essentially, it seems like he’s going to support your policy but if he does, he needs something to offer a sceptical public, something perhaps for pensioners and low-income Australians. We know the Government is happy to horse trade, how can you help him?

TREASURER:

We’ll continue to talk to the crossbenchers as we have for some time. It wasn’t that long ago that people were writing this off completely, they said there was no opportunity at all, we’ve just continued to steadfastly work away at this. Mathias Cormann has been leading those discussions, as you’d know, but they’re not concluded yet and the Government is not counting anything that hasn’t yet occurred so we will continue to just work methodically through this and respectfully and patiently as we have done up until now.

KELLY:

Would the Government reverse the decision to scrap the clean energy supplement for new welfare recipients? Is that up for negotiation?

TREASURER:

Fran, I can only give you the same answer that I just gave you and that is we don’t….

KELLY:

Well, no, you could just tell me the answer of whether you would…

TREASURER:

No, no, we don’t conduct these negotiations through the media. We conduct them directly and respectfully and patiently and that’s exactly what we’re doing.

KELLY:

Is it feasible though that the Government could trade on something like that? Give pensioners in acknowledgement…

TREASURER:

Fran, same answer.

KELLY:

Last week, we had business leaders writing to the crossbench, on the weekend it was the welfare lobby arguing that the policy is unconscionable “while almost three million people live in poverty”. Given that lowering the tax rate from 30 per cent to 25 per cent over the next eight years is essentially unfunded, what assurances can you give people like Derryn Hinch and Tim Storer…

TREASURER:

Sorry? What do you mean it’s unfunded, Fran?

KELLY:

How are you paying for it?

TREASURER:

We’re in surplus over the entire medium term, Fran. We‘ve had this in the Budget since 2016, the Budget returns to balance…

KELLY:

But have you shown what cuts you will be making to pay for it?

TREASURER:

We’ve made a host of savings since we were elected and we’re returning the Budget to balance in 2020-21, as projected, that has remained the same for the last five successive statements so I just simply don’t buy what is a blatant Labor lie that you’ve swallowed hook, line and sinker, Fran.

KELLY:

No, I’m just thinking about what you used to say about the Government and Gonski funding, you said it wasn’t funded and they said, “Well, it is. We’ve worked out over the next ten years how we get to surplus and it’s covered”.

TREASURER:

They were in deficit when they were in Government.

KELLY:

Not in the forward projections they weren’t.

TREASURER:

Fran…

KELLY:

You’re in deficit too.

TREASURER:

Exactly and we go back into balance in 2020-21 and that is fully factored in to the Enterprise Tax Plan we took to the 2016 election which we won.

KELLY:

So you’re saying that to pay for this $35 billion spend to cut company tax cuts, you won’t need to make cuts to health, education, social security.

TREASURER:

No, and you can see that in our Budget, Fran. Our Budget is set out  - in 2016-17, we set this out and it showed the trajectory back to balance and we have held to that position for five successive statements and the reason we’ve been able to do that has been a key factor in Australia retaining the AAA credit rating which I note others said we would lose as well and we’ve been able to retain that because we’ve kept to the task, Fran. That’s what we do as a Government. We just keep to the task, we don’t get distracted, we just keep going forward, creating jobs, reducing unemployment, we’ve halved the deficit in the last two years and we just keep getting on with it.

KELLY:

Let’s look at the benefit of this, an analysis we mentioned last week on the program, by the UTS – University of Technology in Sydney – found that more than 40 per cent of the benefits of these tax cuts will go offshore to shareholders and multinational corporations. Goldman Sachs put the proportion at closer to 60 per cent. Does that mean that your forecasts of a 1.2 per cent increase to GDP over 20 years could be overstated?

TREASURER:

No, I actually think it will be understated, Fran. I was in Argentina at the G20 last week – now, that is a country that, like Australia 100 years ago, was in a very similar position and countries like theirs and ours all those years ago have always been very reliant on drawing capital from overseas to develop our opportunities. That’s true today – the fact that Argentina got themselves into so much difficulty over that period of time and now they’re out there trying to attract foreign investment, attracted investment into their country to rebuild their growth and they’re doing that under this new government and I commend them for it. Australia doesn’t get a leave pass on continuing to need capital to develop the jobs and opportunities and higher wages that we need to continue to increase our standards of living so the idea that our tax plan actually draws capital to Australia to create jobs and lift wages, I think that’s a good thing.

KELLY:

So, the plan is that it brings capital to Australia that creates jobs but then what happens to that capital? Hasn’t the Trump tax cut to 21 per cent triggered a record boom in share buybacks, corporate investment actually fell in the US in January?

TREASURER:

It’s actually at over four million people in the United States getting a boost, an immediate boost to their take-home pay...

KELLY:

A one-off bonus, not a tax cut.

TREASURER:

No, that was…

KELLY:

Not a wage increase – I beg your pardon, not a wage increase.

TREASURER:

It was a boost to their take-home pay and I met with Secretary Mnuchin last week and they also expect to see wages improve as well – and investment has already significantly responded, as we’ve seen in our own country in response to the tax cuts for businesses up to $50 million…

KELLY:

But the analysis there is that shareholders are being rewarded not workers…

TREASURER:

Hang on, Fran. I haven’t finished yet. Fran, I haven’t finished yet. We’ve had a 12.4 per cent increase in non-mining investment in the last year. That is a staggering turnaround, it was negative two years ago and this has turned around as a result of the stable and consistent policies of a Government that knows how to manage finances which leads to people’s take-home pay, their jobs being more secure, all improving.

KELLY:

If you do get the tax cuts through the Senate this week, Labor is indicating it will go to the next election with a promise to repeal them, that would give a potential Labor government an extra $35 billion for income tax cuts, more money for health and education, you might win the battle but lose the war – does that concern you?

TREASURER:

Under Labor, people will pay more. They’ll pay more in higher taxes over $200 billion in more taxes, they’ll pay more on housing, they’ll pay more for their investments, they’ll pay more in retirement, they’ll pay more in their savings, they’ll pay more if they’re a family business, a small business, a medium sized business, they’ll pay more on electricity, they’ll pay more on their incomes…

KELLY:

Maybe not more on their income taxes…

TREASURER:

No, they will. They’ll pay more on incomes, they already have a policy to increase income tax.

KELLY:

Not if Labor uses that money to cut them. If Labor takes that $35 billion…

TREASURER:

Fran, you’re always giving the Labor Party the benefit of the doubt. I’m not about to do that and I don’t think the Australian people will either…

KELLY:

I’m not giving them anything, I’m saying what they’re saying they’re going to do.

TREASURER:

People don’t trust, Bill Shorten, Fran, and with good reason. He’s not to be trusted when it comes to people’s money.

KELLY:

Scott Morrison, it’s negative Newspoll number 29 for the Government under Malcolm Turnbull. Labor’s vote has increased again despite voters not really liking that policy on dividend refunds, if an Opposition policy to tax people more doesn’t give the Government a lift in the polls, you haven’t been persuasive enough. Are you surprised at this result?

TREASURER:

There’s more than a year to go to the next election, Fran. But here are the numbers Australians sweat on more than Newspoll: the deficit has been halved, unemployment has fallen from 6.2 per cent to 5.6 per cent during the period that you’re referring to, 673,000 Australians have got a job – including more than 50,000 youths, consumer confidence is up more than 10 per cent as is business confidence over that period of time, business conditions are at record levels and business investment is increasing like I just mentioned…

KELLY:

A beautiful set of numbers but the people aren’t voting for you according to Newspoll.

TREASURER:

These are the things that change people’s daily lives, Fran – Newspoll doesn’t. So we will continue to work hard on getting those results and in just over a year’s time, when there’s an election, people will have the choice about do they trust Bill Shorten with their own money when he’s shown a tendency – not a tendency, an addiction to higher taxes that knows no bounds. They’re off the leash on taxes, they refuse to support the cap on taxes as a share of the economy which they once did for one simple reason: they want your money and they’re coming for it. You talk about a war chest, that war chest is being funded by taking people’s money in higher taxes.

KELLY:

Treasurer, thank-you very much for joining us.

TREASURER:

Thanks, Fran. Good to be with you.