14 April 2016
Transcript - #2016049, 2016

Interview with Michael Brissenden, ABC AM

SUBJECTS: Budget 2016; ‘Clearing a path for jobs and growth’ – address to Business Council of Australia; Bill Shorten and Labor’s $100 billion in new taxes; Bill Shorten playing politics on Royal Commission; ABCC; ASIC; Parliament to consider abolition of RSRT.

MICHAEL BRISSENDEN:

Treasurer, good morning.

TREASURER:

Good morning Michael.

BRISSENDEN:

As you heard the IMF said bold action is needed. Is what you're preparing for the budget going to be bold enough?

TREASURER:

What it will ensure is that we drive jobs and growth for a strong, new economy. That's what the budget is designed to do. It's designed to live within its means because Australians are living within their means, Australian businesses are living in within their means and the government has to do the same thing. You've got to do things that you can afford. And you've got to set very important priorities to ensure that we drive jobs and growth, because, I mean you're right, it is a tough global economy. I mean we do live in a world in which rates are very low and overseas they're in negative rates and the IMF is meeting now, in Washington, Kelly O'Dwyer is there, representing Australia as part of those meetings and the outlook globally is tough. But, Australia's performing extraordinarily well in this tough environment and they need a budget that continues to support that.

BRISSENDEN:

Ok, last night you told the Business Council the Government will invest in education, health and social services. How does that square with your pledge to find savings, and with the cuts to health and education that are still in place from the 2014 budget?

TREASURER:

I said we'd do that in a way tax payers can afford, and the way we can do it sustainably. Now recently you'll know we announced $2.9 billion extra for the states and territories to ensure we maintain the national efficient price, and this was an important commitment but it's something that we can afford and we're setting that out in the budget. The commitments that we make in this budget will be things that we can afford, where we've been able to do the work on the other areas of expenditure to ensure that these commitments can be met. Now that's very different to what Julia Gillard did. What Julia Gillard did was she promised money that wasn't there, and what we've done, is we've gone through this methodically, and we've determined what the tax payer can afford, and what we've been able to do through our own savings and strong fiscal consolidation work. So, that's what you will get from us.

BRISSENDEN:

So, there will be more money?

TREASURER:

Well the Budget is on May 3, Michael. So I invite you to come to the lock up, and you'll have all of that opportunity, or you can watch the speech in the chamber.

BRISSENDEN:

Certainly, but does it suggest also that you're going to wind back some of the 2014 cuts, the 20 per cent cuts for [inaudible].

TREASURER:

Well, the Budget is on May 3, Michael. I'm not going to make those announcements on your program this morning.

BRISSENDEN:

Well, ok, let's talk about company tax cuts, because you have indicated that company tax cuts could be on the cards….

TREASURER:

Well, others have speculated and reported on this, what we're interested in doing, is where the economy is at the moment, what is necessary is to drive investment, because it is investment that will drive growth, and it is growth that will drive jobs. Now you can't drive investment if you're going to jack up the capital gains tax by 50 per cent, as Labor wishes to do. You can't do it if you're going to increase the tax burden on the Australian economy by over $100 billion in the next ten years, which is what Bill Shorten and Chris Bowen have said they are going to do. In fact they've boasted they are going to do it. They call them ‘savings', they're not – they're taxes. $100 billion in an additional tax burden on the Australian economy over the next ten years, that's not a plan for jobs and growth.

BRISSENDEN:

I think it was Arthur Sinodinos who was speculating about company tax cuts, but can you rule them in or out? Are you going to say…

TREASURER:

What I can say is the Budget is going to focus on driving investment and it's going to drive growth and jobs in this new economy. Now we've been very clear that when we're able to drive additional revenue out of other reforms and things that we do, that our priority is to ensure that that goes back to reducing the tax burden on Australians throughout their earning and investing and doing the things that will drive jobs and growth. We're not about increasing the tax budget on the economy, the Labor Party is, that's their plan and we don't think it's a good plan. We think it's a very bad plan.

BRISSENDEN:

Ok Labor says it's proposing a fairer tax mix…

TREASURER:

They're proposing higher taxes, Michael, that's what they're doing.

BRISSENDEN:

Well, they've got an emphasis on cutting some of the costly concessions to the rich and superannuation, in superannuation, and obviously the negative gearing stuff. Is fair one of the consideration you'll be putting in your budget?

TREASURER:

Of course. I mean, it always is. It's always our intention…

BRISSENDEN:

Well, that was the big criticism of the 2014 Budget.

TREASURER:

Well people will make their criticisms and people will judge this budget on its merits. But it's not fair to increase the tax burden on the economy by $100 billion over ten years, and then not offer any relief to Australians on tax. What Bill Shorten is proposing to do is increase taxes, not cut taxes, not cut them anywhere. I mean it was only a year ago, it was only a year ago, Bill Shorten stood up in the parliament and said he wanted to cut taxes, he also got up through the Senate and said he didn't want a royal commission a year ago, so a year on and he's completely changed his mind on both views it would seem. He's against jobs and growth by driving investment and he's against confidence in the banking and financial system and wants to play politics with it on the eve of an election.

BRISSENDEN:

I think you've said you wanted to cut taxes as well, I mean show me a politician that hasn't said that – but will there be personal income tax cuts?

TREASURER:

Well again the Budget is on May 3, and our objective is to drive investment and to support the earners in our economy and we'll do that within our means. I mean this is a very tight fiscal environment as you know, Michael, and there isn't a lot of room to move, but the room there is to move, will be ensuring, that we do things that help support jobs and growth, and $100 billion in higher taxes, with no relief, so that's an increase in the tax burden, that's the key. What Labor are going to do, is increase the tax burden in total terms.

BRISSENDEN:

Well this is an argument…

TREASURER:

Well, it's not an argument, their press statements – they boasted $100 billion over ten years. I mean show me where they say that that's not true.

BRISSENDEN:

Ok, can we move to the discussion and the debate about the banks and the Royal Commission into the banks?

TREASURER:

Sure.

BRISSENDEN:

You met with ASIC Chairman Greg Medcraft yesterday. He acknowledged earlier this week that the cuts your Government made meant they could no longer be as effective with proactive investigations. Do you accept the $120 million cut you made to ASIC was a mistake?

TREASURER:

Well, the efficiency dividend was something that was applied right across the board not just specifically to ASIC and efficiency dividends, as Greg reminded me yesterday, were also applied by the Labor Government to ASIC when they were in power. What we have been doing for the last year with ASIC is we initiated a capability review in July of last year. That process has been followed through, we are now working through the Government response to that and the ASIC implementation plan in relation to that. That has been coming up through the normal budget as well as Cabinet processes. So, we have been doing the work on how we make ASIC even stronger. Chris Bowen doesn't seem to even know what ASIC does and what its powers are in his public statements over the last few days. We have the full force of a standing royal commission in the form of ASIC in relation to these matters. It does have the powers whether it is to compel witnesses or to have public meeting and hearing or do any of these things. It has all of these powers and it has one very important power which a royal commission doesn't have and that is it can prosecute. So we are getting on with it.

BRISSENDEN:

Ok but part of the problem seems to be that they haven't been able to be proactive enough over the last period, the last couple of years. Suggestions, I note today that you might get Treasury to instruct ASIC to conduct a general inquiry into the banks. Is that likely?

TREASURER:

That is a power that Ministers have. I am surprised why, if they haven't even put forward a terms of reference for this Royal Commission. We're not proposing a royal commission.

BRISSENDEN:

No, no.

TREASURER:

So, why would I be proposing a terms of reference?

BRISSENDEN:

You say you are going to leave it to ASIC. I am asking you…

TREASURER:

It's ASIC's job. It is ASIC's job and my meeting with Greg Medcraft yesterday and other meetings he has had with the Assistant Treasurer over time meant that they are very keenly interested in these issues. The capability review, where the Government will announce its response will ensure that they have the focus and the structures…

BRISSENDEN:

To the banks?

TREASURER:

…and the support. Into all of their responsibilities…

BRISSENDEN:

A broad general inquiry?

TREASURER:

…which includes the banks to ensure that these matters are dealt with. Now, let's remember why there has been a particular focus on some areas of the banks activities. It has a lot to do with what has been going through the Parliamentary Joint Committee and particularly issues relating to Comm Bank's takeover of Bankwest. Now, many of those matters have actually been through the courts, many of those matters have actually been dealt with in other forms and those matters also, many of them, have also been looked at by ASIC. So, ASIC has already been looking at the precise issues that have been before the Parliamentary Joint Committee process.

BRISSENDEN:

My point is you are leaving it to ASIC aren't you?

TREASURER:

Well, it is their job, Michael.

BRISSENDEN:

You have said let's leave it to ASIC so what I am asking you is are you going to be specifically tasking them with a broader inquiry?

TREASURER:

Well, that is not something they have sought from me and it is not something that they believe is necessary because they know they already have the powers to go and do it and so they are focussing on that. We remain to have those options available to us. If Chris Bowen knew what ASIC could do, then there would be no need for a Royal Commission because he could have just given them a reference should he become Treasurer. Now, he has chosen not to do that.

BRISSENDEN:

So, you won't be asking ASIC to do a specific inquiry?

TREASURER:

No, Michael, don't put words in my mouth.

BRISSENDEN:

No, I asked if you were…

TREASURER:

Well, you are.

BRISSENDEN:

…and you said…

TREASURER:

No, you are. What I am saying is ASIC has the powers to do all of the things that are necessary. ASIC understands the issues that are going on in the banking and financial system and ASIC will continue to pursue these issues with the full force of their powers. Now, we have a tough cop on the beat. It exists. In July of last year we set about the task of ensuring they would be better equipped to do that task. We will be making our response to those issues shortly. So, we have been taking action. A year ago Bill Shorten said he didn't want a royal commission. Now, he says he wants one on the eve of having to come into the Parliament next week and explain two things. Why will he not support the Australian Building and Construction Commission when it has been recommended by two Royal Commission, so he doesn't want to listen to those; and secondly, will he support our Bill to abolish his road safety tribunal which is nothing more than a union membership grab for the TWU.

BRISSENDEN:

Just quickly, news today that the slump in the price of coal has hit the world's biggest private coal company Peabody Energy. It has filed for bankruptcy protection in the US. Continued commodity slump, we have seen the impact also on our steel industry – are we likely to see more of this sort of stuff in the near future? What do you think?

TREASURER:

Well, the global economy is very volatile, Michael, and I think that is what just reemphasises why in this Budget we need to ensure that we continue to consolidate expenditure and that is what we will continue to do. We have a very credible trajectory to reduce expenditure as a share of the economy. That is a positive thing to strengthen our national finances against the external shocks that come in all of these forms. That is why we are so opposed to the idea that you lift government spending by lifting taxes. That only weakens the national economy. It doesn't support jobs and growth in Australia. It increases our level of debt and deficit. It doesn't reduce it and that is why we are so focussed on this Budget and getting these things right. Now, you have got to look at the things that are happening globally. I released a paper last night also on the transitioning of our economy. That recognises, all of these volatilities and the impact it can have in Australia. That is why in this Budget I have said we have got to focus on the things we need to do in this Budget. There will be an election at some time. This Budget will be focussed on the needs of jobs and growth in this transitioning economy.

BRISSENDEN:

Ok, Treasurer Scott Morrison thanks for joining us.

TREASURER:

Thanks Michael. Good to be with you in Sydney.