14 April 2016
Transcript - #2016050, 2016

Doorstop interview, Sydney

SUBJECTS: Fall in unemployment rate; Jobs growth; 2016 Budget; Bill Shorten and Labor’s $100 billion in new taxes; Labor’s plan to tax and spend; Australia’s credit rating; Labor’s Royal Commission stunt; Cronulla Sharks

TREASURER:

Well, welcome everyone to the Shire, it’s great to be here in the Shire at Modular Walls with Nick Holden the investor and the proprietor of this fantastic business which employs around 35 people here and it is a growing business. This year it is on track to reach a turnover of $10 million, it only started back in 2004. It is in the process of opening up new premises not far from here out at Kurnell and they are just doing tremendous business. Modular Walls is an inventive, innovative company that is forging itself into new markets with its incredible products that operate not just in the residential market with its walls but has moved into road fencing and new areas like this have been benefiting from the infrastructure and investment that is rolling out around the country. So it is particularly good to be here with Nick today because Nick is one of those many businesses that is employing people and employing more people. In just the last 12 months this business – this local Shire business has almost doubled its employment and that is what we want to see happen in this economy. It is a tough economy out there – there is no doubt. But businesses like Modular Walls are growing and they are growing and putting more people on. They are investing in their business and that is how you drive jobs and growth.

That is why today we are pleased again to see the employment figures that show in March we had another 26,000 extra jobs come online. What we also saw was the unemployment rate fall to 5.7 per cent – pretty much what it was at the last election. The other thing we are terribly excited about is the fact that youth unemployment fell to 12 percent. Now that is still too high but since November of 2014 that is more than 50,000 jobs for young people that have been created in Australia and they are working in places like this at Modular Walls and all around the country, in businesses that are growing, investing and backing themselves. That is what our Government is doing; we are focusing on driving investment, to drive growth, which drives jobs. That is what our Budget will be focused on – driving growth and driving jobs. In the last two and a half years, we have been growing our jobs at 2 per cent – that is 10 times the growth rate in jobs that we inherited. We are maintaining that growth rate on jobs at 2 per cent. That is the way you continue to transition through what is a tough economy globally. The Prime Minister is in China today and working on those further relationships will also support growth back here in Australia. But right here Nick Holden is driving jobs and growth with his business so I might invite Nick to talk a little bit about his business and then we can take questions.

NICK HOLDEN [MODULAR WALLS]:

Look, we are growing at the moment, we are pushing heavily into – we are transitioning from the domestic sector more into the commercial sector so we are really going after that infrastructure market. In the next 18 months to two years, we will go from 35 staff to an estimated 70 to 80 staff in the new facility. We are really gearing up; the new facility is geared up to be five times the size of the current capacity here so it is really exciting. We love growth and employing people, particularly within the local area. We do take on the young, we take on the youth and we train them up. We have a high retention rate of staff because we start them young and take them right through to grow with the business. It has been an exciting time.

TREASURER:

Well it’s an exciting story Nick and as a government we want to continue to back you in, not just here in the Shire but in businesses right around the country. And continue to see those job numbers heading in the right direction and growing at the rate they are. Questions?

QUESTION:

Obviously about the upcoming budget, Moody’s said spending cuts alone can’t fix the budget. Is Moody’s wrong?

TREASURER:

Australians will be relieved to know the government doesn’t take this as a licence to tax Australians more, that’s what the Labor party sees this as, they see it as a leave pass to tax Australians more, rather than deal with, as the report noted, the need also to deal with government expenditure. Now one of the points that they’ve raised is that the expenditure restraint that the government is showing hasn’t been supported in the Parliament. And it particularly hasn’t been supported by the Labor party. There’s some $13-billion of savings that would improve the bottom line of our Budget right now, and the Labor party continues to say no to that expenditure restraint.

The other thing is this, the Labor party are not just increasingly the tax burden on the Australian economy by $100 billion over the next ten years, they’re not doing it to improve the budget bottom line, they’re going to spend it all, and more. Just over the next four years, they are going to increase spending by $60 billion if they’re elected, and to pay for that they’ve got $7 billion in higher taxes and just $1 billion in expenditure savings.

Our budget will continue to focus on reducing the government spending as a share of the economy and to grow revenues by growing the economy by backing in businesses like Nick Holden’s business here in Modular Walls to drive growth, which drives revenue, which drives jobs. So that’s our plan. Our plan is to consolidate the budget by being disciplined, by ensuring the government lives within its means. It’s not to say there won’t be revenue measures in the budget, of course they’ll be revenue measures in the budget. But what we’re saying is where we will apply those revenue measures, is to reducing the tax burden in other parts of the economy, and wherever possible to continue to drive down the deficit. So what you’ll get from Labor, is higher taxes, a higher deficit, and a higher debt. Now that is not a plan for jobs and growth. The plan for jobs and growth to clear the way, to clear the path for jobs and growth in our strong new economy is ensuring that we do not saddle our economy with too greater taxes to anchor them down and to not put taxes on investment, that only impede investment going forward but also to keep expenditure under control. Expenditure under this government will continue to fall from its current level down to about 25.3 per cent. The deficit will fall from 2.3 per cent on the current estimates down to 0.7 per cent. We are driving the deficit down. Under Labor that deficit will be higher because they can’t control spending and that’s why they want to increase tax.

QUESTION:

Is it a priority though for this government to retain a AAA rating? [inaudible]

TREASURER:

Next year, revenue will rise to the long-run average of 24.1 per cent. On the current estimates revenue is forecast to rise over the next three or four years. It will continue to rise and it will rise even more if we're able to continue to drive growth in our economy. And that's what we're heavily focused on. The deficit will continue to fall as we continue to reduce expenditure as a share of the economy. So our plan is to see revenue rises through growth and ensuring a better targeted tax system. So our revenue measures that we announce in the Budget and the redeployment of that revenue to easing the tax burden where you can foster investment is the way we believe that you can drive growth and jobs in this economy. The best way to protect our AAA credit rating is to have a strong Budget, a solid Budget that is backing growth and that is backing jobs and that's what our Budget will do.

QUESTION:

Will you take responsibility for the credit agency blaming the policy of not raising taxes for a downgrade of Australia’s credit rating?

TREASURER:

Well, the Government doesn't believe that what has been put out today is a licence to tax Australians more. It's a reminder of the need to continue to consolidate our Budget and to reduce our deficit because that's the way, over time, that you reduce the debt. That is what we're focused on doing. What I can assure you is Labor will have higher debt, they will have higher deficit, they will have higher taxes, and they will have higher spending.

QUESTION:

But you're the ones who are in office, so the Federal Government's actually [inaudible]?

TREASURER:

When Labor came into office they had what was called a net negative position on debt, which meant there was a surplus. What that meant was over the course of their government, they increased the level of debt by about 16 per cent in net terms. Now, in the last few years, we are still in deficit, but we have rapidly slowed the rise in debt in this country. We will continue to see that taper off and top out in the next couple of years. That will happen because we have consolidated the budget. We have consolidated expenditure. We've got the budget under control. We are reducing expenditure as a share of the economy. We are growing revenues by growing the economy. Labor wants to raise revenues by jacking up your taxes. We plan to raise revenues, which is necessary, by growing the economy and not saddling the economy with higher taxes. Let me repeat it again: Labor is not increasing taxes to balance the Budget, Labor is increasing taxes because they can't control their spending. They will spend it all, all $100 billion worth of it, over the next 10 years, and even more to boot. That is what threatens our AAA credit rating.

QUESTION:

Treasurer, you have pointed out the unemployment figure [inaudible] but in South Australia, they're still sitting above 7 per cent. Given the circumstances, the economic circumstances in South Australia, don't you need to do more to ensure that we don't see Arrium go under? Will you be taking any of Labor's 6-point plan [inaudible] to make sure that Arrium survives?

TREASURER:

Well, Minister Pyne has already responded to that and I would refer you to his comments on that. What I can reinforce again is the Government has already acted to bring forward the spending of some $80 million on the rail project in South Australia, which will greatly assist what's happening at Whyalla. The voluntary administrator that's in place at Arrium, we have worked with the banks and others to ensure that I think there is a situation there which is working to ensure that this business continues. The best way to protect the jobs at Arrium is ensure that that business continues, and the right people are in there working to ensure that happens, and I know the banks are supporting that administrator to ensure that the business can continue to operate and support those jobs. Now, it isn't our plan to nationalise the steel industry or go back to those old-economy policies of an old economy Labor Party, looking at ‘Kim-Il Carr’ today, for goodness' sake, you would think it was back in the 1950s. You need to have agile policies for the new economy and that means innovation. It means backing in Australian businesses who are investing. And ensuring that, where we are able to, and where we do, we ensure that procurement policies are supporting local steel producers. But at the same time, not doing that at the expense of the enormous trade opportunities that are being secured by our trade agreements that are creating new-economy jobs. So we want to see jobs in all of these sectors and we have a very new-economy approach, a very innovative approach going forward to how we grow the economy and grow jobs.

QUESTION:

Treasurer, you met with the regulators and ASIC yesterday. You pointed out that you believe ASIC has more powers than a Royal Commission has. Are you planning to order ASIC to do an investigation into the culture of the banks? Are you going to ask Treasury to ask them to fulfil that role?

TREASURER:

This week I met with APRA and I had my regular meeting with the Reserve Bank and I met with ASIC yesterday and I have ongoing dialogues with the banks all the time. We'll have further discussions tomorrow about some of these matters. But what I know is that we're focusing on ensuring that ASIC is properly structured and focused on the job that it needs to do, which includes addressing issues in the banking and the financial system. We've had a capability review, which we initiated last July. So when Labor was voting against a Royal Commission into the banking industry, we were initiating a capability review into ASIC and ensuring that where we stand now in going through our normal Budget process and our normal capability review process through Cabinet we will be able to ensure that ASIC is in an even stronger position to address the mandate that it has. I contrast that with when Labor were in office – they didn't believe there was a need for a Financial System Inquiry. Indeed when Chris Bowen was Assistant Treasurer, he wasn't calling for Royal Commissions into the banking industry or even agreeing with Treasury that there needed to be a Financial System Inquiry. He was engaged in his failed FuelWatch and GroceryWatch before going off to his other failures in immigration.

QUESTION:

How close are you to responding to that ASIC review?

TREASURER:

It's imminent. It will be before the Budget and we have got Cabinet meetings next week. This is part of our normal process. It started last July. So, we've been focused on the things that you actually can do. I mean, Bill Shorten hasn't even told us what his terms of reference are for the Royal Commission. He doesn't even know what he wants to investigate. That's because all he is seeking to do is avoid the scrutiny next week of why he wants to support lawlessness and criminal behaviour in the construction industry by opposing the recommendations of not one but two Royal Commissions which said that the ABCC should be restored, and he doesn't want to explain to self-contracting truck drivers, who are out there, small businesses, family businesses, why he wants to keep the union-driven commission that is designed to run those owner drivers out of business. Now we're taking action on that we'll have the Bill to abolish it. We'll have the Bill to restore the ABCC. Bill Shorten is going to stand in the Parliament in the way of both of those things, just like he and Chris Bowen stand in the way of prudent savings that improve our Budget position, just like they stand there and they talk down the economy even on a day that the Australian unemployment rate is falling. So, we're just going to remain focused on the job of growth and jobs. That's what the Budget will deliver, that's what will protect our AAA credit rating.

QUESTION:

Would you see an ASIC inquiry, if that does come to be...

TREASURER:

Pardon, I didn't hear the start of that.

QUESTION:

If you do ask ASIC to do an inquiry into banking culture, [inaudible] banking sector, would you want them to be public inquiries? Would they be similar to a Royal Commission? Have you had any conversation with...

TREASURER:

ASIC have not raised the need to do such an inquiry. They're not alone in that, David Murray doesn't believe there is a need for a Royal Commission, as has been put forward. The former Reserve Bank Governor, Labor-appointed Reserve Bank Governor, doesn't think there needs to be a one. Warren McKibbin, former Reserve Bank board member doesn't think there needs to be one. Alan Kohler from the ABC doesn't think there needs to be one either. So, I don't think the smart analysis, when it comes to this, is pointing towards the need to try to undermine confidence in the Australian banking and financial system. That's not something that supports jobs and growth. What that is, is a rather reckless and opportunistic and politically driven proposition by Bill Shorten to avoid scrutiny next week on the Australian Building and Construction Commission. So ASIC does have the power to have public hearings. ASIC does have the power to compel witnesses. ASIC does have the power to self-initiate reviews or investigations into any area that comes under its mandate, which includes the banking and financial sector. They have already looked through many of the cases that have been before the parliamentary joint committee, particularly as it related to Comm Bank and Bankwest. It is already pursuing all this but we think it needs to be stronger. That's why we initiated the capability review. That's why we will be responding to that in the next few weeks as Cabinet comes back next week and the Prime Minister returns from China and we seek to conclude the work we've been working on steadily now for almost a year.

Today it's been great to be with you here, Nick. It’s great to have you all here in The Shire. This is a place that's really going ahead. This is a tremendous business. Those numbers which Nick took you through are really exciting. The fact they will double their employment in the next 12 months, that they're taking it up to 80 people, that they're moving into another site which will be five times as big as this one – that is happening in our economy right now. That's why the Australian economy is so successfully transitioning from the investment phase of the mining boom to a more diversified new and strong economy, and it's because of people like Nick and everyone who works here at Modular Walls.

Thanks for being here.

QUESTION:

Could I ask you something about the Sharks?

TREASURER:

Are you going to ask me about the Sharks? They're up against the Raiders on the weekend and they are going to win.

QUESTION:

Malcolm Turnbull says that AFL is the most exciting football code in Australia. They’re in China. So, as a Sharks supporter, what are your thoughts?

TREASURER:

Well, not just as a Sharks supporter but as the Sharks' No. 1 ticket holder, I'm a mad fan in Sydney and from New South Wales of both rugby codes, and I'm always going to be partial to that, but to each their own code. I'm just looking forward to another great win with the Sharks over the Raiders, down in Canberra. Hopefully I might be able to get there before Parliament returns. It was a tremendous win over the Titans on the weekend. It was great to be there with a great crowd. So, go Sharks!