4 April 2016
Transcript - #2016041, 2016

Interview with Michael Brissenden, ABC AM

SUBJECTS: COAG; Labor’s reckless tax and spend approach to the Budget; Labor’s unfunded promises on health and education; ensuring government lives within its means; Mossack Fonseca; Turnbull Government’s action on Multinational Tax Avoidance; Labor’s decision to vote against the Turnbull Government’s Combating Multinational Tax Avoidance legislation

MICHAEL BRISSENDEN:

Treasurer, good morning.

TREASURER:

Good morning, Michael.

BRISSENDEN:

Asking the states to levy their own taxes was never going to fly, was it? Why do it?

TREASURER:

The Prime Minister called the states and territories' bluff last Friday by putting forward that proposal. What was basically put out there was the opportunity for them to have greater autonomy over these issues. They've decided that they didn't want to do that. I mean of course Colin Barnett was supportive of it and Mike Baird was prepared to consider it but there was no consensus and so that's off the table and we go forward. It was a threshold issue and a threshold issue where the states decided that that they don't want to increase income taxes, we certainly don't want to increase income taxes. The only people who will be increasing taxes will be the Labor Party.

BRISSENDEN:

Indeed, you said only last week that you didn't want to see the states increase income taxes. Nobody wants to see people increase income taxes so why abrogate the responsibility yourself?

TREASURER:

The question really put to states was a question about what level of sovereignty and autonomy they wanted to have over the revenue side of their budgets and the Prime Minister called that bluff last Friday. That issue now has been determined and so now we go forward and the Prime Minister, I think, has made the very strong point that we have to live within our means. You can't spend money that's not there. You can't promise money that's not there as Julia Gillard did. We had worked with the states to identify a way to be able to support that health spending that we agreed to last Friday. We can do that within our means but beyond that, we will continue to work with the states on other measures and that will happen over the balance of the year and obviously subject to the next election.

BRISSENDEN:

And one of the key areas, obviously, is the public education system. And the money that was pledged by the Gillard Government, the so-called Gonski out years, clearly the public education system is going to have to take a cut in expectation at least because there will be a shortfall in that funding. Do we just have to accept that?

TREASURER:

The states and territories made it clear that this matter doesn't have to be determined until early next year and that's the timetable that COAG agreed to deal with that matter.

BRISSENDEN:

So there could be more?

TREASURER:

You can't promise money that's not there. Every time you hear Bill Shorten saying something over the next three months, understand what it means is higher taxes because that's how he pays for it. That's what the Labor Party will do. Every time you see Bill Shorten's lips moving over the next three months, or however long it is until the next election, there is one consequence of it – your taxes will go up or the deficit will get bigger because that's the only way that he can afford to pay for anything and it is by increasing taxes. Now, we're not about increasing taxes, whether it's increasing investment taxes like they want to do or increasing other taxes, we want to see the tax burden moderated for Australians and particularly for businesses that are out there employing people and driving the growth that we need to drive jobs.

BRISSENDEN:

Well, let's address that in a minute but firstly, you do seem to be indicating there that there's another discussion that's going to happen about education funding after the election at the beginning of next year – so there could be more money there for states?

TREASURER:

We're always in discussion with the states and territories how to deal with these difficult issues and those discussions will continue. But the states and territories made it crystal clear that those matters don't need to be finally determined until into next calendar year and that's the timetable COAG has set. What we've made clear is that all governments have to live within their means, all governments have to be sovereign over their budgets and ensure that they run their ship as tightly as they possibly can. That's certainly what we're committed to. We don't want to see the tax burden on Australians increase. We don't want, we're not going to be making fantasy promises like the Gillard Government did about these sorts of things and I think unfairly and unkindly raise expectations when she was spending money she just didn't have.

BRISSENDEN:

Well, Labor says it has identified $100 billion over 10 years to fund those promises and it's going to campaign effectively on them.

TREASURER:

The Budget and forward estimates goes for four years for a start and over that period of time let me tell you what they've got. They've got $60 billion worth of additional expenditure commitments on top of what is currently in the Budget. That includes more than $30 billion on savings measures that they opposed and that they would seek to restore i.e. new spending of over $30 billion, some $13 billion or thereabouts in new commitments that they announced since the last Budget and $12 billion or thereabouts in funding commitments of savings that they continue to block in the Senate. Now, that's $60 billion and you know what they've got to pay for it? They've got $7 billion of higher taxes and just $1 billion of savings. This is why I say any time Bill Shorten says how is he going to pay for something, the answer is always higher taxes because he believes, as does Chris Bowen, that Australia has a big revenue problem and when you hear someone say we've got a revenue problem, it means one thing – they want to tax you more.

BRISSENDEN:

With the school funding, the Gonski funding we were talking about, we were talking about 10 years beyond the four-year estimates though, weren’t we? That's where that money was coming from?

TREASURER:

We met the commitments we put to the last election.

BRISSENDEN:

Up to that point, up to the forward estimate.

TREASURER:

That was our commitment and we were able to fund that and we will fund promises that we make. What Bill Shorten will do is he will increase taxes to try and chase the expenditure goals that he has.

BRISSENDEN:

This is an argument we're obviously going to hear a lot of in the next little while for sure.

TREASURER:

Well, it's the truth, Michael, that's the point. I think Australians should know that when people go promising to spend money like that, they will pay for it with higher and higher taxes.

BRISSENDEN:

What does it mean, this spending within your means? Where does it stop? Do we not borrow money for infrastructure, do we not borrow money to build things for the future, do we not allow students to borrow money? Wouldn't this constrain the economy if we took this to its ultimate end?

TREASURER:

I think households and businesses know exactly what living within your means is, Michael. It means that you manage your finances responsibly, it means that if you do need to spend extra money then you find savings – not tax increases – you find savings to be able to afford those things and you ensure that when growth is your major objective…

BRISSENDEN:

You prioritise where that spending is going?

TREASURER:

That's what prioritising is all about but if you can't prioritise, you know what you do? You put up taxes which is what Labor does – $1 billion worth of savings to meet $60 billion of expenditure. That's their math, as it currently sits and they will need to explain that. How on earth do they think they are going to pay for those unfunded fantasy promises of Julia Gillard? The only way they will do it is by increasing taxes or increasing the deficit.

BRISSENDEN:

The Budget process is clearly underway; you're looking at areas where you can save money. Let's just look at education for one. The Federal Government is solely responsible for private school funding, for instance. That funding has been increasing since 2009, are you looking at that as well?

TREASURER:

What we've been doing in education is we've been supporting the education system right around the country and we've been increasing our spending on education over the life of this Parliament. It's not true to say that the Government is not involved in public education. I mean when you take account of all the revenue that is derived from Commonwealth sources, in most states we're funding almost half of public education. So, we continue to fund public education…

BRISSENDEN:

Well, let’s look specifically at private school funding – that is your responsibility.

TREASURER:

We've got commitments right across the education sphere and I think this is something that's built up over a long period of time and we will continue to work with the states and territories to ensure that they can deliver on the things that are needed at that level. But a lot more money's been spent, Michael, but as the Prime Minister said yesterday, the outcomes aren't improving and so the answer is not always more money. You've got to live within your means, you've got to ensure that you’re focussed and set the priorities on the things that make the biggest difference and I think all governments have that responsibility.

BRISSENDEN:

Cabinet Ministers are meeting this week, as we said at the beginning, to decide on budget savings, are you asking for an across the board saving figure? Do you have a ballpark you're asking ministers for?

TREASURER:

It's always been the Government's target to remain on the trajectory we're on and that is to reduce our expenditure as a share of the economy. That's how you bring the Budget back to balance.

BRISSENDEN:

Ok, but you're not asking for specifics?

TREASURER:

Michael, I'm not about to go through what is discussed in Cabinet meetings but what I am saying is currently we have a trajectory to get the spending by the Government as a share of the economy down over the next four years. That was confirmed again last December and we're looking to hold to that trajectory of keeping spending as a share of the economy falling because the way you bring the Budget back to balance is you do a number of things. You get your expenditure under control and you reduce it from the high levels it's at at the moment and getting it down to something approximating the longer run average. Then you grow your economy by supporting investment – you don't go whacking on big investment taxes like the Labor Party is doing. You ensure that your revenues are as tight and as strong as they can and that means cracking down on multinational taxation, that means passing the Bill that we passed last December, which the Labor Party voted against last December, they voted against laws to crackdown on multinational tax avoidance. And today, you know, you guys have got your reports today about those issues regarding the Panama advisers. Now, we've got programs we've been running, particularly since 2014, which have been cracking down on tax avoidance in this country. We've got some $400 million in revenues over the last few years that we've been able to get from acting on sources and information that's come through to the ATO. We've got tax treaties, swap agreements, on information with over 100 countries to crackdown on these sorts of things. So, our record, when it comes to tax avoidance, and particularly multinational tax avoidance, is one of legislation and action. The Labor Party voted against laws to crack down on multinationals. I mean explain that to me.

BRISSENDEN:

We'll have to leave it there. No doubt we'll have plenty more discussions about tax in the coming months, thanks Scott Morrison.

TREASURER:

Good on you, Michael. Thank for your time.