8 November 2015
Transcript - #2015040, 2015

Interview with Peter Van Onselen and Paul Kelly, Australian Agenda, Sky News

SUBJECTS: Providing real opportunities for Australians who want to work, save and invest; National Platform for Economic Growth and Jobs; superannuation, budget; innovation

PETER VAN ONSELEN, PRESENTER:

Our guest today is the Treasurer, Scott Morrison who joins us live. Thanks for joining us today.

SCOTT MORRISON, TREASURER:

Good morning, great to be here.

PETER VAN ONSELEN:

Can I start by asking you, whilst there's been no decision on the GST and that is a debate we may or may not have, tax reform seems to be something that both sides of politics do acknowledge is required in a general sense. Why? Why do we have to do something about our existing tax structures?

SCOTT MORRISON:

The Government understands that the tax system needs changing to ensure that it can back Australians who are already out there working as hard as they can, saving for their future and investing in their own capabilities. The economy in this country is in a transition and more broadly, beyond our shores, there's volatility. And Australians know that we need to move through this period and we need a tax system that supports them to do that, so that's why we understand that it is necessary and I've talked a lot about personal income tax in recent times and when you have the situation that the average wage earner in this country, next year, is going to be in the second highest tax bracket, you know you've got a problem. And that means that you need to apply your mind to what all the potential solutions are to ensure that you come up with a system that is going to support growth and jobs and the economy. We acknowledge that. I can't agree with you that I think that necessarily the Opposition does because they've decided basically not to turn up to the table at all.

PETER VAN ONSELEN:

What about the idea of where the Australian people are at. You say that the people understand. Certainly the economists do. There seems to be universal agreement that tax reform is required. How much effort do you think the Government has to do to be able to bring Australians on board with the fact that this is a requirement before you get down to the nitty gritty of what changes?

SCOTT MORRISON:

I think an enormous amount. I think one of the issues here is that income tax, personal income tax in particular, has become a silent tax in Australia. It's not unlike the wholesale sales tax was back in the late 1990s. Everyone was paying it but not everyone knew how much they were paying. With personal income tax these days, I remember getting a pay cheque. An actual cheque and it had a pay slip with it and it told you how much you get paid. These days, that's not a common experience and you know, equally with income tax, you pay it all year and often don't see what's getting taken out of your pocket every single day, every single week. And you go to the ATM and you pull out your money and it doesn't say on there that you paid 19 cents in the dollar or 45 plus the Medicare levy plus the deficit reduction levy, or 32.5 cents or 37 cents. It doesn't say that. And at the end of the year, people will often get a tax rebate and see the personal income tax system as some sort of vending machine at the end of the year where you get money back. That is hiding something that's happening in the country and that is people are paying more and more income tax every single year because of the inflation tax that comes with bracket creep and we need to have this conversation with Australians and say, you're getting taxed more than you should be. I would like you to take more of your pay home. That's what I'd like to see.

PETER VAN ONSELEN:

Can I ask something quickly? Everything is meant to be on the table. Is it on the table to change income taxing so that it actually rises with CPI, for example? To avoid the bracket creep element?

SCOTT MORRISON:

Last time there was serious changes to the tax system in this country, which was done by Peter Costello with John Howard, others have tried but failed. Tax changes haven't occurred in a meaningful way since. They made very big changes to the personal income tax system and those changes survived a long time. All of these things need to be considered. I think it's right to say, how do you construct your system going forward to ensure there's the right protections in there? But the most important thing is people who are out there every day giving it everything they've got and knowing that they have to deal with it, they're realists. They understand what's happening in the world and what's happening in our own economy. They know things have changed with the mining boom and the next phase we're in and that we need to go through an adjustment and there are changes that they're seeking to make. They just want the tax system to back them, and it's not.

PAUL KELLY:

You've been really critical of the income tax system today in this program and last week. In fact, you were damning about it last week about the cost and the inefficiencies of the personal income tax system. Given the magnitude of this critique, can we assume the logic of all of this is that Government will go to the next election looking at some sort of significant changes to the personal income tax system?

SCOTT MORRISON:

Well, I'm taking it one step at a time and we're engaging with the States and Territories. But my critique, and the Government's and the Prime Minister's critique of what's happening in personal income taxes suggests that if you are going to address that problem, if we can get some agreement that that is a very big problem that we need to fix because it is that that's going to have the incentives that work in the economy so you grow the economy. Now, if you agree with that, then you obviously need a very significant change to bring that about. Now, I've noticed other proposals that are around and of course, everything is on the table. We've said we're going to be looking at superannuation issues. We're already acting on multinational taxation. In fact, we're ahead of the curve and leading the world on making sure that income earned here in Australia by multinationals will be taxed here. And to suggest otherwise, as some have, is to just blatantly lie to the Australian people. We are doing everything that needs to be done - and more - on multinational tax. But these issues themselves, I mean Labor has proposals on two of those, it is $3.8 billion over the forward estimates. That is a change at the margin that they've put forward which won't deal with a substantive issue that we have in our tax system and we're up for dealing with the substantive issues.

PAUL KELLY:

I know no decisions are yet taken, but you've just said that you want to deal with the substantive issues so the logic of all of this is pretty clear. The main way you can create space to do something about personal income tax is to raise more revenue through the indirect tax system.

SCOTT MORRISON:

We're in a position where we don't get to act unilaterally here Paul, and that's why the collaborative process we're engaged in is important. Malcolm Turnbull has been making an important point and that is that we're a pragmatic Government. We're a very pragmatic Government which understands that the one thing the Australian people reward and appreciate is results. And to get the result, you've got to work others. We have a clear objective in this area. We don't want to see the tax burden increased on Australians. We don't think that the way to grow the economy is by increasing the tax burden. That’s why any change to the tax system needs to have in it the swings and roundabouts which means that Australians are better off. You wouldn't do this if Australians weren't better off as a result of doing it. So he's talking about it and I agree. We are a pragmatic government, which means we must engage with the States and Territories to come up with a collaborative outcome.

PAUL KELLY:

You are engaging with the States and Territories and you've been pretty positive about that engagement. But let me ask you is it feasible to think that you can actually strike some sort of overall agreement with them on the principles of a tax package?

SCOTT MORRISON:

The reason why I'm optimistic is the engagement I've had with the States and Territories hasn't had a partisan flavour to it. We have Labor and Liberal States at present having different position. Some for and some against. So what that says to me is that this debate isn't a partisan one between the States and Territories and the Commonwealth, what we all agree is that we have to grow the economies and particularly State and Territory Treasurers and myself as a Treasurer knows that that is our principle goal. That is what is driving our discussions. There isn't the partisan conflict in this, at least between the States and Territories and the Commonwealth. I can't say that for the Opposition, Federally, who have taken a very partisan position on that. But the Australian people will judge them for that in their own way, and I'll leave that to them. But what we're engaged in is a positive dialogue and I am optimistic. But I don't make any presumptions about it, and I think that's always been key to my approach. I'm not going to presume an outcome from someone. I'm going to work with them to try to achieve it.

PAUL KELLY:

OK. I guess the sort of problem here for you, the dilemma for you is we've got is Federal Labor has already declared its position. It's going to oppose any change to the GST, any substantive change, Labor is already campaigning against this. What is the attitude of the Labor States when dealing with them privately? Is that the sort of sentiment that they express privately? Or have they got a different view and a different outlook?

SCOTT MORRISON:

They're their own governments and the difference is they're governments and they know that they have a responsibility to govern and get outcomes and get things done and grow their economies. So that immediately sets them apart from Federal Labor. They actually need to get something done. They're not engaged in the politics of this. They're engaged in the outcome of this, as the Commonwealth Government is. So that gives us a real point of connection to work together. That is the nature of the engagement. We're paid to get an outcome, all of us, regardless of what side of politics we're on.

PETER VAN ONSELEN:

If the primary goal is to reduce income tax though and something like consumption tax and the GST is a State tax, how does that work? That they get more of the GST potentially, but income taxes go down. Does that mean that there are less Commonwealth grants, for example, to the States?

SCOTT MORRISON:

Everyone who's coming to this table has their objectives and the States and Territories have theirs. I think I've been pretty clear about what ours are and a pragmatic government will work through those issues and come to a position of agreement, otherwise you're acting unilaterally. That's the last thing we'd want to do is act unilaterally in this area. We'd like to do it with the support, and not just of the States and Territories, but we're engaging with ACOSS, we're engaging with ACCI, we're engaging with the Business Council and the Prime Minister has met with the union movement. We're engaging with everybody who wants to engage with us. The only people who made it pretty clear they're not going to engage is the Opposition. That raises a question for them. We will get to a point where there is a very clear way forward. We already know what our objectives are. They need to - there is no real credible plan. I mean, they can shout at the clouds all they like and shake their fists and do all of that. But at the end of the day, they've got to come up with a credible plan and at moment, there's no credible plan and they're not a credible alternative.

PAUL KELLY:

Just how important do you think is the attitude of former Labor Premiers. We've had a range of former Labor premiers becoming quite outspoken on this issue. For example, former Labor premier from Queensland, Peter Beattie. Very strong comments from former Victorian premier, John Brumby. What's your response to these comments?

SCOTT MORRISON:

Well, I welcome those comments but I also welcome the others which may be not as supportive of real changes. That's because we're engaged in this dialogue and if you want to participate in it, that's great. Because I think what it highlights is that there are problems that need to be solved. Now, people might have different takes on how they can be achieved. We are certainly forming views about this but doing it in a very step by step way and taking people with us. But I think that's the key to it. For this to succeed, people need to understand that there's a problem you've got to solve in the first place and that's where the Prime Minister and I and the Government is very focused. The problem that we need to solve is our tax system is not backing Australians who are out there doing everything they can to transition our economy, to diversify our economy, to create opportunities for themselves, to save for their future. It's not getting that job done, and that's the task that we've set ourselves – to fix that.

PETER VAN ONSELEN:

Labor says that it won't even consider any changes to the GST consumption tax because they are regressive, full stop, end of debate. What's the Government response to that?

SCOTT MORRISON:

I'm not even going to entertain them because they're not actually a part of the debate. If they want to actually be a part of the debate, well good. But at the moment… look, as we go forward, there will be all sorts of people who come in to this debate, or pretend to. There will be the purists who will want this thing developed in a laboratory, hermetically sealed and then presented to the public. I talked about my good friend, Jim Molan, earlier this week on never rush to failure. Another thing he said, those sorts of plans never survive contact with the enemy and as a result, you've got to have something that's practical and realistic and collaborative and worked up. But there will be others who simply want to be opportunists in this debate and want to engage in the debate to pursue a political advantage. I think the Australian people can work that out.

PETER VAN ONSELEN:

But if you're prepared to leave something on the table which has regressive elements to it. It's not as regressive a tax as Labor suggests…

SCOTT MORRISON:

The Productivity Commission just revealed that recently in a very good piece of work. Yeah.

PETER VAN ONSELEN:

But is there a way to deal with any outlying elements of regressive taxes and a number of taxes in the system are regressive or have elements of being regressive to them. Is there a way that governments can reduce that?

SCOTT MORRISON:

Compensation or adjustments or whatever you want to call them, are not new. Back in 2001 when there was the change to the tax system that took place, there were compensation measures put in place and I've seen no research or evidence which suggested that those compensation measures didn't do the job. In fact what I have seen is that they over compensated and that would be not surprising given that at the time, they were introducing a whole new taxing arrangement and there were a lot of uncertainties. I mean, there were uncertainties about the BAS back then. There were uncertainties about a lot of the implementation issues. That's all settled now. And today we're in a far better position. Whatever changes to the tax system are contemplated to calibrate and design and ensure that there are the appropriate adjustments in place to ensure that Australians are better off. Better off. That's our goal, that they be better off.

PETER VAN ONSELEN:

But not individuals. I mean, the Government is not going to fall into the trap of arguing that there will be no person or persons worse off. Groups, sure. The aim is to ensure that everybody overall is better off. But you can't ensure individuals.

SCOTT MORRISON:

Those questions and raising those issues I think is part of one of the things that has held the debate back for the last eight years and the Government certainly has moved out of the last 8 year period where rule in, rule out, gotcha politics, all of that sort of thing, basically euthanized public policy debate in this country for a very long time. We've moved on from that. It's a refreshing and exciting time now and I think Australians are responding to the Prime Minister's leadership on this. Malcolm has brought that energy back, the animal spirits that Glenn Stevens refers to. And I think that this is very positive. We've seen it already in the lift in both business and consumer confidence. Now, these numbers do move around a bit, but I think now we're seeing some encouraging signs on that front, and particularly in the non-mining sector, particularly when they're looking forward to employment expectations as well. It's already true that employment growth at the moment is ten times what it was back in 2013. That's great but it needs to be stronger and that's why you need to change to the tax system and we need to have a response to Hilmer that works through the states and I'm sure that we can chat about that more.

PAUL KELLY:

We'll come to the economy in just a moment…

SCOTT MORRISON:

Harper, I should say. I just said Hilmer.

PAUL KELLY:

Still on tax, we're all excited but there are some real problems and one of them is how you distribute the revenue given all the demands on the revenue. That is you've got demands for compensation, demand from the States and you'll want to, as you just indicated, do something about personal income tax. How can you meet all these demands?

SCOTT MORRISON:

I think all of these are soluble issues, Paul. I don't think they're anywhere near the concerns that might be being raised in this area. That's why getting people around the table and understanding and coming to a shared view about what can be achieved in this area is important. This is why I do introduce Harper. The Harper reforms and the Harper recommendations are all about liberating important areas of our economy at the micro level at State and Territory level. Whether it is in human services or state and planning and zoning. All of these areas will open up economic growth and greater choice. This is why I've not been very subtle about it. I have linked, as the Prime Minister has, we have linked the competition reforms with this discussion about tax system changes. They're inextricably linked because the Australian people, I don't think will cop any changes in the tax system just to give the States a bucket of money to spend it, as they are now. They would expect to see any changes to result in better services, more choices, better spending. We're controlling our spending. We're getting on top of our spending and spending as a percentage of GDP will fall over the Budget and forward estimates and they'll be expecting the same thing from States and Territories. No-one just gets a bucket of money.

PETER VAN ONSELEN:

We're talking to the Treasurer Scott Morrison. We'll take a break here on Australian Agenda. When we come back, we'll widen the debate beyond tax reform. Back in a moment.

PETER VAN ONSELEN:

Welcome back. You're watching Australian Agenda where Paul Kelly and I are speaking to Treasurer Scott Morrison. Mr Morrison, let me ask you about growth and perception in politics, and I guess one of the problems with forward estimates, particularly during the Labor years was that the growth forecasts never came true and as a result, their claimed return to surplus or at least paying down of debt never actually happened. We've got a situation now where it looks like the growth forecast, even though they were down on what they'd previously been in the May Budget, are going to be down further still when you release MYEFO. At least that's the Reserve Bank's view. How do you deal with the perception, therefore, that the Government is struggling to meet its objectives around reducing debt?

SCOTT MORRISON:

First of all, there are projections in the Budget and then there are forecasts. And the projections, which are in the last two years of the out years, they are based on the long run average. So they're not Treasury saying this is what we think is going to happen. They're simply a default position, and this has been around for some time.

PETER VAN ONSELEN:

Does that need to change, do you think? Because otherwise we always seem to miss them?

SCOTT MORRISON:

I think that's a very interesting question. Treasury are having a very close look at those types of issues, so I need to separate what our projections, which are a simple arithmetic placement of a long-term average in those last years, and the forecast which are in the early years. It would also be a mistake to assume that changes in real GDP growth have a linear implication for issues of revenue and spending. Nominal GDP is far more important on those issues, and from the last election down to the current year, in terms of the adjustment that was made, that's been a 2% adjustment in nominal GDP and that has a fairly significant impact on and has, as you've seen, some of those parameter estimates change over that period of time. So look, the good story about growth is this, though – and Glenn Stevens made this point - the headwinds are at their strongest at the moment in terms of the reduction in commodity prices and the terms of trade and what's happened there. The reduction in mining investment. I mean, they are always going to have a very strong impact on our economy, but despite that, we're growing. Last year 2.3% year average growth. That's more than twice what Canada has experienced.

PAUL KELLY:

I know that, minister, but isn't it the reality, as various people have said, including the governor, that at the moment we are in a phase of below trend growth? Obviously you'll accept that. The question is...

SCOTT MORRISON:

It's an arithmetic fact and of course, the trend growth is based on the biggest commodity boom that the country has ever seen.

PAUL KELLY:

Sure. But I guess the question is how long are we going to be in this phase of below trend growth, and where do we end up?

SCOTT MORRISON:

Both the RBA and Treasury and others and private forecasters have us getting back above 3% in the years ahead. But as the Prime Minister and I have said, we're not pretending to be Nostradamus about any of these things. What we will focus on is what our response is to these issues and what we are seeing is an improvement in the non mining sector. What we have seen and the governor's statement this week also pointed very heavily to the changes happening in the services sector and particularly business conditions in the service sector. They're all very encouraging signs and so our job is to not commentate on the numbers and what they might be down the track. Tom Piotrowski can do that. What we will do is focus on the changes to policy that need to be put in place to ensure that we can drive growth and jobs.

PAUL KELLY:

Sure.

SCOTT MORRISON:

And there are eight issues that I outlined in the speech this week…

PAUL KELLY:

Sure, ok. But if we look at the Budget, isn't it the reality that we do have a revenue problem?

SCOTT MORRISON:

Tell me what you think a revenue problem is?

PAUL KELLY:

Well, a revenue problem is that we've had very substantial revenue write-downs which have damaged the Budget and we continue to have them.

SCOTT MORRISON:

But isn't that because we're not taxing people enough?

PAUL KELLY:

I didn't say that.

SCOTT MORRISON:

No, but that's what a revenue problem is. That's how I design a revenue problem.

PAUL KELLY:

All I'm saying is that clearly we have a revenue problem because the revenue has been falling away. So I'm asking you, I'm asking you, do you think we have a revenue problem?

SCOTT MORRISON:

A revenue problem I would define as not taxing people enough and that you need to tax people more to lift your revenue. I don't think that we have that problem. I think the issue we've had is revenue is below trend at the moment, but is forecast to be above trend over the course of the Budget and forward estimates are projected to do that as well. So as you grow your economy, particularly as we see and seek to support an increase in nominal GDP which would see revenues rise, I mean, our problem at the moment is that Australians aren't earning enough. Not that they're not paying enough tax, but that we're not earning enough. And that's why things like the trade agreements are so important. That's why productivity reforms are so important because that is what can lift real wages. Real wages growth has been very flat in this country for some period of time now. The Government earns its income off people earning more. That's why I said this week - I want to see Australians earn more and I want to see Australians take home more. There are two ways you can get a pay rise in this country. One comes from your employer because of productivity improvements and the performance of the business and the other is because income tax rates reduce.

PAUL KELLY:

All that's fine. Let's talk then about the spending side and spending of course is high.

SCOTT MORRISON:

It is high.

PAUL KELLY:

25.9% of GDP, which you're obviously concerned about. So I therefore ask you, how confident are you that the Turnbull Government can tackle the spending side of the Budget and tackle it more effectively than did Tony Abbott and Joe Hockey?

SCOTT MORRISON:

It is a big challenge, but over the Budget and forward estimates, we will have MYEFO later this year which will give an update…

PAUL KELLY:

Which is going to be pretty ugly.

SCOTT MORRISON:

We'll have an update on where we're at on that task…

PAUL KELLY:

So what will you do about it?

SCOTT MORRISON:

I'm confident that we'll still have a trajectory which will see the deficit reducing, which it is currently projected to do at 0.5% of GDP every year. That we will continue on that track and continue to be at a point where our expenditure as a percentage of GDP will continue to decline, and that's what the forward estimates and projections are and that's what Mathias Cormann and I are laser-like focused on and ERC as we work through the various demands on the public purse. And that is our focus. But you have to control spending…

PAUL KELLY:

I mean, we know all the problems that the Abbott Government got into attempting to do something on the spending side. Spending is too high. You've said spending is too high. You've said you intend to tackle it. How do you do this in a way that is acceptable to the public?

SCOTT MORRISON:

It is already happening, Paul. I'll give you an example. We took through the Parliament the pension reforms earlier this year. They kick in, not this financial year, but next financial year. So as a result, we will see those sorts of savings measures and other things we've done in recent times kick in over the forward estimates. Now, we have got a plan to control expenditure. It was outlined in the last Budget and the Budget before that. And there have been some big changes to the original, the first Budget we brought down as a Government. A lot of the measures, whether it is in pensions or family tax benefits or other things have been re-engineered and to put them in a format where we believe they present a far fairer and far more achievable set of changes which can be supported by the Parliament. Now at the end of the day, the Parliament is sovereign and they'll decide what to pass and what not to pass. But let's understand that the only reason that you would need to have a discussion with crossbenchers in the Senate is because the Labor Party opposes the changes. They have some $62 billion of commitments in terms of expenditure cuts and changes that we put in place that they said, or certainly haven't denied that they want to reverse. They've got their own spending measures and then they've got measures that they themselves proposed when they were in Government and oppose now. They're hanging out there with around $62 billion worth of commitments over and above what are in our books and they've come up with about $5 billion to pay for them. The Australian people can make their own judgment about where Labor sits when it comes to the challenges on expenditure, but our projection on expenditure is that it will reduce as a percentage of GDP over the budget and forward estimates. That's what we're working to and we already have measures in place that are tied to those forecasts.

PETER VAN ONSELEN:

How concerned are you about the unavoidable demographics of the country going forward? The ageing of the population. Yes, there's possible changes around superannuation but the ageing population and the smaller working cohort of the population. The number of handouts that are provided that people have culturally decided are part of their lives and are difficult to therefore remove. And all of that is at the same time as we have a senate which has been a problem and more of a problem for a long time.

SCOTT MORRISON:

Our Government is alive to the issues but I'm not pessimistic about them…

PETER VAN ONSELEN:

How can't you be?

SCOTT MORRISON:

Because I don't see the ageing of the population as a terminal illness for the country, economically. I don't. I actually see the ageing of the population presenting some real economic opportunities for us. For example, in the human services and the aged care sector, if we're able to unlock more of the capital that sits with people in their retirement years and encourage them to be more active in the economy, the opportunities we have in China, particularly that we can now run aged care facilities in China. We have enormous experience in this country of doing that. The opportunities for us to be a service leader for ageing services, not just obviously here in our own country, but around the world, is enormous. And we're not alone in these challenges. Other countries are ageing at a far higher rate than we are. So we are in the box seat, I think, to be able to be the leading provider of ageing services in the world. An ageing boom, Peter.

PETER VAN ONSELEN:

Well...

SCOTT MORRISON:

You need to be more optimistic.

PETER VAN ONSELEN:

I'm glad for it on a personal level, but I wonder at a society level, the sort of changes that need to go with it. For example, you talk about unlocking the wealth from the ageing population. The family home, which is tax exempt and is not required to have the equity drawn on from it for somebody in their retirement. Surely that's the kind of thing that is politically difficult but absolutely economically necessary.

SCOTT MORRISON:

I don't always leap to that conclusion, which I note you regularly do, with some enthusiasm. There are a range of other areas that we're looking at as part of what we are looking at with superannuation that I think can further encourage people to unlock their capital in their retirement years and have a better quality of life as a result and not being held back by some of the weirdness of the system. But at the same time, let's understand what the purpose of tax incentives for superannuation is in the first place. It's so someone can be independent in retirement.

PETER VAN ONSELEN:

Absolutely it is.

SCOTT MORRISON:

So the system needs to reflect that.

PETER VAN ONSELEN:

But the funny thing, the bizarre thing is that for years now, we've had all of the incentives put in place for people to save for their retirement and even though the amount of money that goes in to superannuation has been going up over the years, we haven't seen a change in the number of people, the percentage of the population that draw on the pension.

SCOTT MORRISON:

Yes, but you have seen a change in the split between a part pension and a full pension and if you look at the Intergenerational Report you'll see the statistics on part and full pension completely invert over the course of the next 30 or 40 years.

PETER VAN ONSELEN:

Enough to satisfy you, though?

SCOTT MORRISON:

No, absolutely not. When we look at superannuation, unlike our opponents, we don't look at it as some big tax bucket, which they do. What we see is the need to have a system which ensures people can be independent in their retirement and not drawing on a pension. That's why I've talked about the need for greater flexibility on the contributions side for people who have disruptions to their working life. I'm not just talking about women. I mean, we all know carers in our own lives who, through no fault of their own, through the worst deal of a hand in life's experience, find themselves caring full time for a partner, a loved one, a child, a parent and it's very hard for them to catch up. It's very hard for them to get back and regather the pace. And the system does penalise them for doing that at the moment. And these are the sorts of flexibilities. So what you'll hear from us on superannuation is a program to help people be independent in their retirement and give them more opportunities to do that and have the tax incentive very focused on achieving that goal. Not to develop inheritance pools or things like this. But to ensure that people can be independent in retirement. Fit for purpose. That's what a pragmatic Government does and that's what we're focused on.

PAUL KELLY:

Your opponent, Chris Bowen, has declared yet again this week, “I am a Keynesian.”

SCOTT MORRISON:

Good for him!

PAUL KELLY:

Are you a Keynesian?

SCOTT MORRISON:

I'm a Liberal. And I'm and Australian…

PAUL KELLY:

Are you. Are you a Keynesian? He's put up the flag.

SCOTT MORRISON:

Good for him. I don't intend to respond to how he wants to label himself. What football team he goes for or what faction he's in in the Labor Party. Good for him. He can wear it on his blazer and get a scarf and cheer for Keynes all the way from here to the bank and back again. But I'm focused…

PAUL KELLY:

So that's not your banner?

SCOTT MORRISON:

My banner is a Liberal banner, my banner is a banner for growth and jobs in the economy. I'm a pragmatist. I'm not an ideologue. I'm focused on getting the job done. If he wants to write papers for the ‘Keynesian weekly’ and get terribly excited about that, I wish him all the best. I'm focused on having policies that work, not that satisfies some sort of ideological zealotry. I'm focused on having policies that work because that's what the Australian people want. I don't think that people are that interested on whether he's a Keynesian or a Callithumpian.

PAUL KELLY:

Let's talk about policies that work. The Prime Minister and yourself are busy on the Innovation Statement that will come out next month. We had a warning this week from the head of the Productivity Commission, Peter Harris, that old fashioned tax breaks and R&D incentives when it comes to innovation didn't work in the past and they won't work in the future. Are you going to take that message on board with the innovation statement?

SCOTT MORRISON:

I think that he makes some very good and astute observations about this. You know it's the old thing, if you keep doing the same thing all the time, why would you expect a different outcome? Christopher Pyne has been in the driver's seat of the innovation agenda working to the most excited and focused Prime Minister on innovation we have seen as a country. I don't think anyone will dispute that. The Prime Minister has already, Malcolm has already made it the banner of his approach to government and Christopher as been there working the details…

PAUL KELLY:

But what's going to be different? What's going to be different about the statement? I know that Malcolm Turnbull has talked about it.

SCOTT MORRISON:

You'll know when it is released.

PAUL KELLY:

In terms of the parameters, there's been plenty of talk about an agile economy and we're all excited and there's going to be more innovation. When you boil it all down, is this actually going to be a new policy agenda?

SCOTT MORRISON:

Of course it will be. Of course it will be and the statement will make that clear and you won't have to wait too much longer. I know that there's a keen appetite to see what is happening, particularly in that area. And that's why we've made sure that that will be one of the first big items that is released by the Government under Malcolm Turnbull. Now, that's not to say we haven't already had some key policy announcements. We had the response to the Financial System Inquiry. There will be a response to the Harper Review before the end of the year. There will obviously be MYEFO but I wouldn’t overstate that - MYEFO is a Budget update. That's what it is. That's what it's always been. I have no ambitions for it to be anything more than that. But there is a lot to do between now and the end of the year. The innovation statement will sit at the heart of that and Christopher Pyne together with the Prime Minister and other ministers like myself have been working feverishly on this.

PAUL KELLY:

OK.

SCOTT MORRISON:

But what is it about? It's about ensuring that you can get ideas and innovations into commercialised products. It's about ensuring that you have companies that benefit at not just the - what you'd call the sexy end of the innovation, the hipster beards and the garages and the apps and all that sort of thing. That's all really important. I think it's really important. But how innovation and changes to business processes can change a normal small business or a large business and the productivity that flows from that. I come back to what Australians are earning. Australians won't earn more in higher real wages unless we can lift the productivity performance of the country. That's what the Innovation Statement is really about unleashing. What is productivity? Australians realising their potential at work and businesses realising their potential.

PETER VAN ONSELEN:

Is Christopher Pyne the right person to drive the innovation agenda? He's been in Parliament since he was 25?

SCOTT MORRISON:

Absolutely he is. I don't know of anyone, other than the Prime Minister, who is as passionate about this as Christopher, and he's had a lot of experience in knowing how you actually get things to happen in politics. And that is another key performance criteria for people in this Government. It's based on what you get done and Christopher Pyne is someone who gets something done.

PAUL KELLY:

What's going to be the central issue of 2016 election?

SCOTT MORRISON:

We're still some way away from that, Paul. But what I think it will be about is about growth and jobs in our economy and that's why we were talking this week about this National Platform for Economic Growth and Jobs in our economy. Whether it is the $50 billion national infrastructure plan that we're rolling out, whether it is the trade agreements that we've already had so much success with, but we've still got some distance to travel on things like India and so on. Whether it is what's happening with continued strengthening of our financial system, whether it's what we're doing to deal with workplace productivity and ensuring that we have collaborative workplaces and we have people in those workplaces who can deal constructively with their employers and get better outcomes there. All of this, whether it is tax system or anything else, is all about growth and jobs in the economy. That's the bottom line to our economic plan.

PETER VAN ONSELEN:

Treasurer Scott Morrison. You've been generous with your time. We appreciate you joining us on Australian Agenda. Thank you.

SCOTT MORRISON:

Thanks, gentlemen. Good to be here.