3 November 2015
Transcript - #2015035, 2015

Interview with Tom Elliott, 3AW

SUBJECTS: Interest rates; housing affordability; providing real opportunities for Australians who want to work, save and invest; federal election.

TOM ELLIOTT:

Mr Morrison, good afternoon.

TREASURER:

G’day Tom.

ELLIOTT:

Now, I understand you have been locked up in a meeting with the Reserve Bank this afternoon. The decision to keep interest rates on hold, was that the subject of some debate?

TREASURER:

Well, that is a matter for the Reserve Bank and they make those decisions independently of government. The rates are stable and they are low which I think provides a good opportunity for businesses, particularly to invest and we have seen those conditions for business on the various surveys continuing to improve and that is encouraging. I think what it means also is that the Government is continuing to get on with the job with the policies that are going to continue to support growth and jobs in the economy. The Reserve Bank can’t do the heavy lifting on all of that on its own. It has got to be done in concert with the other suite of policies whether it is infrastructure investment, tax system changes or any of these things that is where we need to look to to get the growth and the jobs of the future.

ELLIOTT:

Now, I know that when rates go down Treasurers, such as yourself, say isn’t that good news for home buyers and when they go up say isn’t the Reserve Bank terrible. Were you secretly pleased though to see the big banks putting up their rates 20 odd basis points a few weeks ago? And I only say this because…

TREASURER:

No.

ELLIOTT:

Well, we do have a bit of a housing boom at the moment and that needs to be nipped in the bud, don’t you believe?

TREASURER:

Well, I don’t know if you achieve it by those types of mechanisms and one of the key reasons why we have had issues about over heating property markets is because of the supply problem. It is simple supply and demand and if you are not building enough houses than the price will go up.

ELLIOTT:

Well, that’s true.

TREASURER:

So the constraints there have been in the planning and zoning systems and all of these sorts of things, not just where you are today but in Sydney where I am and other parts of the country at the end of the day that is what is going to force prices up.

ELLIOTT:

It is also a population issue though. I know we are veering away from what we planned to talk about but if we keep taking 250,000 to 300,000 new immigrants a year, those people all want to live somewhere that also must put upward pressure in the long run on housing prices.

TREASURER:

Well, we are not taking that many, Tom. I mean our net overseas migration is about 240,000 and our population growth rate is about 1.4 per cent and it has been falling over the last few years. It really all comes down to having an economy where you can supply the services that people are looking for and that is one of the key things we have to do to remove some of the shackles on our economy which is inhibiting people from doing just that.

ELLIOTT:

You mentioned planning though before, obviously planning, town planning in general is not the responsibility of the federal government but is there any pressure that you can bring on local councils, possibly on state governments to try and free this issue up?

TREASURER:

Well, this is one of the topics we had at our last meeting of state Treasurers. Some time ago we had the Harper Review which was a review on competition policy in Australia and one of the things that Professor Harper focussed on was the way that planning and zoning laws across the country was basically locking things up and…

ELLIOTT:

Because I can’t understand myself, we have that many councils, I think there is 700-odd councils across Australia and there are a couple of hundred in Victoria alone, each one of them has their own separate planning department, their own rules. A friend of mine is an architect, he says some councils are a nightmare to deal with, others are ok but they are all different. That has got to be a very inefficient way of doing things.

TREASURER:

You are right and that is why what we are talking about with state Treasurers is the opportunity to get a concerted effort on this and to ensure that we work together to remove a lot of those constraints on the economy because it is holding people back, it is costing people and businesses a lot of money and there is a lot of churn in terms of administration and bureaucracy as well. Now, you want to make sure that you have got the right protections in place for the environment and for the amenity of our local areas and the character of our communities, of course, but that is never an excuse for costly bureaucracy which is holding our economy back and holding jobs back.

ELLIOTT:

Speaking of money, the GST now the idea is suddenly back on the agenda I know no one wants to take ownership of it, are you planning in your next Budget which for you is your first Budget as Treasurer, so May 2016, to have an increase in the GST?

TREASURER:

Well, the states have asked us to look at a range of things and report back to them on federal taxes and I have asked the states at our next meeting they are going to come and report through our Treasury on their taxes. What we want, Tom, is a tax system that backs people who are out there working and saving and investing. Now, at the moment if you are on an average wage, next year you will be on the second highest tax rate.

ELLIOTT:

Ok, so does that mean we might cut income taxes but increase consumption taxes i.e. the GST?

TREASURER:

Well, we are looking at all sorts of options at the request of the states and territories and we are working with them but this is the point, it is not about revenue, what it is about is ensuring the tax system is not penalising people who are actually out there having a go.

ELLIOTT:

But it must be about revenue, I mean you and I have spoken about this before you have got spending at upwards, you know close to 25 per cent. You have revenue at around 24 per cent of GDP…

TREASURER:

Well, revenue is about at the long run historical average at the moment. That is why I make the point that revenue is not so much the issue and particularly in terms of how much tax we are taking out of people’s pockets, the issue is growth and the issue is getting expenditure under control – that is the primary objective…

ELLIOTT:

Ok, well that is another thing you do on Budget night though. If it is not an overall increase in revenue it is a cut in spending. So, is that on the cards as well?

TREASURER:

When it comes to tax what it is about is having a tax system and getting the mix in the tax system right so it is not penalising and working against people who want to work, who want to save and who want to invest and we have got Australians out there doing that at the moment and they are dealing with a tax system which is not backing them.

ELLIOTT:

Ok I buy all that and they are very high minded principles but I guess the devil is always in the detail. People want to know, if it is income tax cuts – where? If it is consumption tax increase or possibly a consumption tax broadening – what are the details?

TREASURER:

I think people are getting ahead of themselves on all of that. Right now what we are doing is ensuring that we have the best understanding of the problem and how the tax system is holding people back at both a state and federal level and then working through constructively the good ideas about how we can improve all that. That is where we are at at the moment. I think it is important that we have a good explanation and a good understanding of what that problem is otherwise people will go, well, why are you changing that for? And I think that would be a pretty fair enough question.

ELLIOTT:

Well, I am guessing we are going to see a lot more debate and ideas that suddenly appear out of nowhere about the tax and the spending system. Finally, Malcolm Turnbull has been in power now pretty much two months as Prime Minister, will he do a full year? Will he have the election late next year as was hinted at this morning?

TREASURER:

Well, I can’t add to anything further then what he said yesterday and that is that the Government would be planning to serve out its term. He is the Prime Minister and he makes those calls and that’s what he said – so there you go.

ELLIOTT:

Ok, now, finally Mr Morrison, you and I are about the same age and at the start of…

TREASURER: You look a bit better than me though, Tom.

ELLIOTT:

No, I don’t think that is true actually. You carry what is a very difficult job very well. Do you automatically get more conservative as you get older? I suggested earlier that because once you start paying more tax, you have children, you have a greater stake in the economy and some of the socialist ideas that sounded good at university don’t work well in the real world. I suggested that they are all reasons why you get more conservative as you get older. Has that happened to you?

TREASURER:

It may have, I’m not sure, but the cycle of life, I think, tends to do that to you. Priorities change when you have children and you have different responsibilities. I think you look at all the choices that you have and that can obviously impact on your outlook. I think that has been the case over a long period of time and I think that is just fairly normal.

ELLIOTT:

Were you ever a left-wing radical at university though?

TREASURER:

No [laughter]. It’s safe to say Tom I was never in that camp. I am the son of a police officer so we were a pretty conservative family growing up in that environment.

ELLIOTT:

I will add that to my list – interest in law enforcement. Scott Morrison, thank you for your time.

TREASURER:

Thanks a lot Tom. Good to talk to you.