9 April 2018
Transcript - #2018039, 2018

Interview with Ross Greenwood, 2GB

Subjects: Energy prices; Enterprise Tax Plan; Budget 2018

ROSS GREENWOOD:

Scott Morrison, the Treasurer is on the line right now. Many thanks for your time, Treasurer.

TREASURER:

G'day Ross. It's always good to be with you.

GREENWOOD:

Alright, I want to get to a couple of bits and pieces. First up, Liddell Power Station. What powers do you, as a Federal Government, have to basically nationalise or take control of the Liddell Power Station from AGL?

TREASURER:

My understanding is none. I mean many years ago Ben Chifley, I think, used the Defence Act to send soldiers in but I don't think anyone is seriously suggesting that. These powers are held at the state level, Ross, and as you said earlier in the program, it was the state government who actually sold those assets and those resumption powers whether it is to build roads or do any of these other things. That is only done by states or with the consent of states. So, that is just the situation you have got to work within. So, that's where it sits.

GREENWOOD:

It just strikes me as being a little ironic that you don't have the power to be able to take over a power station like Liddell or at least try and determine its outcome, whereas, say for example, we had a couple of things happen. Say Ausgrid, you were able to step in on Foreign Investment Review grounds and basically say we don't like that bidder. You have done that before, you rejected that on the S. Kidman & Co sale…

TREASURER:

But they were different Acts though. There are foreign investment authority provisions in that Act. What we are talking about here is the ability to nationalise a private asset.

GREENWOOD:

Something which is of strategic national importance which you could also argue about the Cooper Basin when it comes to the Santos exposition that you are going to have to judge about at some stage down the track.

TREASURER:

Sure, but the point is, Ross, do you have the legal power to do it or not and what I am saying is, my understanding of these things, and I have made inquiries about this, that is really confined to the states and the head of power for the Commonwealth is a different matter entirely.

GREENWOOD:

It is still fair to say that the Federal Government, is it right to say that the Federal Government would still prefer to keep the Liddell Power Station open for the interim period.

TREASURER:

[Inaudible]… all of them. My point of view has always been that. Our existing coal fired power stations are the most affordable, most reliable form of energy that we have. We need to keep them running for as long as possible. I think we have been very frustrated re Liddell at AGL. I think people could be forgiven for their recalcitrance on this. I mean I hope they are genuinely looking at this. I think the public are not convinced that they are and that is really an issue for AGL to convince the people, which are their customers by the way, and potential customers, that they will do the right thing by Australians. That is really an issue for AGL. I hope that they are carefully considering that. The Government has done everything within our power but we don't have the power to just march in there and just take the thing over. I mean we are not at war or anything like that. They are fairly drastic circumstances.

GREENWOOD:

But you still have a situation where clearly the ACCC says it is concerned that if Liddell is closed ultimately AGL, which has bought it, will make more money because the wholesale price of power will go up. It controls power. So, isn't this fundamentally a case for arguing that the privatisation shouldn't have gone ahead in the first place?

TREASURER:

Well, that is history. That has happened. The question is what can be done now. I asked the same questions to Rod Sims as Treasurer when it comes to Section 46 and Craig was posing those earlier and Rod's view as he said it to you and he said the same thing to my office. That is that Section 46 case on this would not extend to forcing someone to sell an asset to another person. That is a very different issue from what these cases normally look at. Lawyers will argue about this but Rod is the Chair of the ACCC and I think he is very well placed to know what cases he can bring. And he hasn't been shy in bringing cases, as you know. It's not like Rod will shrink away and he is not up for the fight if he thinks there is a fight to be had that you can win. So, I don't want to unreasonably raise people's expectations. What is important is that we keep as many coal fired power stations operating for as long as possible and I would hope that the owners of those stations would share that national interest objective. If they are seen to act against that then I think the public would have every right to have the iritis with them.

GREENWOOD:

Ok, I want to take you to another aspect. I spoke with Pauline Hanson when the whole company tax bill was going through and ultimately did not go through. It is now held up until the next Budget session when parliament sits. She indicated to us at the time that she felt that the Government is now in a position to be able to hand out personal income tax cuts in this current Budget. Do you believe the Government is in a position to hand out personal income tax cuts in the Budget?

TREASURER:

Well, we have been saying it since last November that a focus for us is to provide that tax relief for middle income earning Australians. Nothing has changed on that. We have been saying that for some time now. Now, the Budget is only four weeks away now so it's not too much longer to wait and we have been working hard on that. As I said that was the task the Prime Minister gave me over summer and we have been working really hard on that.

GREENWOOD:

So, in other words I will take that as a yes. The other thing, also…

TREASURER:

Wait till May 8. You will be there covering it in your usual great style to the benefit of your listeners.

GREENWOOD:

Alright, I am going to take you to something else however I am going to take you to the Australian Government general government sector monthly financial statement of February 2018, only out a couple of weeks ago. I have added it up over the past five months and it would appear to me that over the past five months the Government is almost in surplus. In other words the Government is almost making money. The last February accounts showed that the Government had an underlying cash balance of positive $8.3 billion. That the situation is much improved on even what was forecast last December in the mid-year economic and fiscal outlook. So, from that point of view the Government has got money basically coming in the coffers as a result of the 400,000 new jobs created last year, as a result of iron ore and coal prices being higher. The Government is basically getting more cash in than what you ever expected.

TREASURER:

Well, it is particularly more because of the first point you made about what was happening with jobs. And it has also been because, finally, after many, many years of very flat and negative profit performance. We have just had a very good earnings season for companies which your listeners would be very familiar with but they would be pretty familiar with the pretty ordinary earnings periods that went before that for about five years. So, we have seen that turnaround and I said in last year's Budget, better days ahead they are coming and we have got to make sure we are making the right choices and that we keep them going. Fundamentally, that is what everything is about now. There is a choice. People can have Bill Shorten which means higher taxes, people paying more for energy because he wants a 45 per cent emissions reduction target and a 50 per cent renewable energy target. Now, we all know what that will mean for electricity prices. He wants to get rid of negative gearing for existing properties and all other existing assets and that is going to put people's rents up. He wants to hit retirees with a new tax and particularly self-funded retirees who they won't get their tax refunds when they have just gone and bought franked dividend based shares like anyone else. He is taxing people anywhere he can.

GREENWOOD:

Ok but there is one aspect of this, Scott Morrison, that comes up. You might be in a position to hand out tax cuts but given the strategies that he has got for raising more taxes from dividend imputation, for raising more taxes, as you say, from a range of different areas including negative gearing. That ultimately he might be able to go out there and hand out bigger personal tax cuts effectively more chocolates to the people when they are voting.

TREASURER:

But this is a con. He has already spent it, Ross. Remember at the last election, some of these taxes, most of them actually are not new. He was going to get rid of negative gearing at the last election. He was going to increase capital gains tax by 50 per cent at the last election. He was going to hit people's superannuation at the last election. He has already spent all this money and after spending all that money he still had a $16.5 billion bigger deficit than the government did at the last election. So, he is still spending all that money and what he has worked out is he still hasn't taxed people enough to even come even. So, all I know is under Labor, is they have taxes chase their expenditure. We do the reverse. We actually have a speed limit on taxes in our Budget. We have a clear marker which says taxes as a share of the economy cannot rise above 23.9 per cent. Now, the Labor Party used to agree with that. They have abolished what is called the tax cap in the Budget because they know to spend all the money recklessly like they always do they have got to tax everybody to oblivion. So, while there is a lot of talk about polls today, what people are focussed on is how much more they are going to pay under Bill Shorten. And they are going to pay a lot more under Bill Shorten as we get close to that election that will become clearer and clearer.

GREENWOOD:

Treasurer Scott Morrison, as always we appreciate your time here on Money News.

TREASURER:

Thanks for your time, Ross. Good to chat.