26 April 2018
Transcript - #2018050, 2018

Interview with Sabra Lane, ABC AM

Subjects: Fully funding the NDIS without increasing the Medicare Levy; Budget 2018; Financial Services Royal Commission.

SABRA LANE:

Joining us now on the phone is the Treasurer, Scott Morrison. Good morning and welcome to the program.

TREASURER:

G'day, Sabra.

LANE:

On May the 13th last year, when it was pointed out the Government would face a hostile Senate to pass this policy, you said: "We stand by this policy absolutely." Now you don't. Why not?

TREASURER:

We do stand by fully funding the National Disability Insurance Scheme (NDIS). That's the goal here. The goal was not to increase taxes; the goal was to fully fund the National Disability Insurance Scheme. And tax receipts up to February alone this year are $4.8 billion higher than we estimated back in MYEFO. And so the stronger economy we have been building through our stronger economic policies is actually providing that dividend that enables us to do the job of fully funding the National Disability Insurance Scheme, without the need to increase the levy. So it was not about the levy, it was about funding the NDIS, which we're saying we can do.

LANE:

But the Government made the case specifically last year: you said exactly where the money was coming from. You hypothecated it to this increase. Will you say exactly now where the funds are coming from?

TREASURER:

Well, that will all be set out in the Budget, as your story indicated. I mean, we are now seeing as a result of a stronger economy that puts us into the position to guarantee these essential services – whether it's in the NDIS or anywhere else, for that matter. Because this is the point, Sabra, a stronger economy is what guarantees essential services. And that's what we're focussed on. So I...

LANE:

But respected economists like Chris Richardson have pointed out against baking in permanent spending commitments into the Budget on the back of temporary booms in revenue.

TREASURER:

Well, that's not what this is.

LANE:

It sounds like a temporary...

TREASURER:

Well, no, it's not, Sabra. And you've got no basis for saying that. I mean...

LANE:

Well, 12 months ago, why did you propose this policy to hike the Medicare levy?

TREASURER:

A year ago we took a conservative approach to what we believed the economic performance would be and the receipts that we would come in on taxes. Now, that has been better than we had forecast. It's much better to forecast on the conservative side than on the non-conservative side, and that's what we've done. And as a result of doing that, we've now put ourselves in this position. I mean, as a Liberal-National Government, we don't like putting up taxes. And what I want to do is thank Australians for their generous support of what we planned to do. Now, the Labor Party chose not to do that. What I have never understood was: why was Labor going to put up the Medicare levy? Because they said there was nothing to fund.

LANE:

Actually, Labor is claiming credit today, saying that if it hadn't proposed to block this last year, Australians would be facing this hike next year?

TREASURER:

Oh, that's just Labor playing politics, Sabra. And that's what they've been doing all along. What we've done always is set about to fill the $57 billion hole that was there. And we can now do that because we are focussed on creating a stronger economy. So, it's a win for families and people living with disabilities. It's a win for taxpayers, because they won't have to face a higher Medicare levy. And it's a win for the Budget, because we are still absolutely on track to bring the Budget back into balance on the timetable we have always said. So this is good news, Sabra. This is very, very good news.

LANE:

But you would know, Mr Morrison, and many economists and many ordinary Australians listening to this program would know that revenue since the Global Financial Crisis has not been predictable. This sudden recovery in revenue may not be permanent. If it falls away, where will the money come from to pay for the National Disability Insurance Scheme?

TREASURER:

Well, again, that's why our policies focus on creating a stronger economy. And you don't create a stronger economy by whacking more than $200 billion of taxes on the economy, or allowing taxes to rise uncontrollably as a share of GDP. Now, we don't have policies to do that. We have policies to ensure that the Government lives within its means; ensures that we continue to keep expenditure under control; that, as we deliver the National Disability Insurance Scheme, we do it in the most efficient and effective and compassionate way to ensure people get the services they need but it is well-run. And that means the focus can now, as a result of what I am announcing today, can be absolutely on the delivery of this important scheme. So, what we have done is kept our eye on the goal of fully funding the NDIS. For all of those who want to cheer on tax increases all the time, they will be disappointed that taxes aren't going up.

LANE:

The Medicare levy was a central plank of last year's Budget and you introduced Australia to your brother-in-law Garry last year. He's got MS.

TREASURER:

Yeah, I spoke to him last night.

LANE:

Have you told him that this funding is guaranteed?

TREASURER:

Yeah, I spoke to him last night. He was very pleased.

LANE:

Guaranteed funding?

TREASURER:

Yes, I did. And he is very pleased. I mean, Garry didn't want to see Australians pay more taxes either. But Garry was also keen to ensure that the NDIS was fully funded. See, Sabra, this is the point. The point is about funding for the NDIS.

LANE:

And it's also about making sure that it's secure funding?

TREASURER:

Absolutely, and, under a Coalition Government, it will always be secure because people know that we always focus on running a balanced budget and work towards that balanced budget, which we are doing right now. We always live within our means. We don't let expenditure run away. We keep focussed on growing the economy, because we understand that's what pays for the NDIS. That's what pays for hospitals. That's what pays for Medicare. You don't pay for all these things by just letting expenditure run away and let taxes chase it.

LANE:

The Financial Review reports this morning that your Budget strategy will involve a 10-year, phased-in tax cut for working Australians, starting off quite modestly and then building after a planned returned to surplus in 2021. What's the strategy behind delivering tax cuts, rather than returning the Budget to surplus sooner?

TREASURER:

Well, you're commenting on a piece that Phil Coorey – or whoever has written – that is obviously speculating on the Budget. I don't think you would expect me to confirm that story. I mean, Phil doesn't announce the Budget – the Treasurer does. And it's in just under two weeks' time. So what we plan to do in that area, I'll be announcing on that night. And we have made no secret of the fact, since last November, I think it was, that we have been working steadily to ensure that we can provide some targeted tax relief to, particularly, middle-income earners. But in my first budget, Sabra, we actually changed the threshold of that $80,000 threshold on tax to $87,000. That was an early indication that, wherever we can, the Turnbull Government will relieve the tax burden on Australians, for one simple reason: it's their money. We don't think it's our money. We don't think a tax cut is a welfare payment or a cash splash or a giveaway. We think that the taxes Australians pay to the Government is money they have earned and we would like them to keep as much of it as possible.

LANE:

Why do the big corporates deserve a tax cut, when the big banks and financial institutions have shown they have trashed the social licence they have in Australia?

TREASURER:

Well, you must have forgotten the bank levy I put in last year's Budget which, by the time that the full corporate-wide tax cuts...

LANE:

Tell that to the Senate crossbench.

TREASURER:

Well, let me finish the answer, Sabra. By the time – which is almost 10 years from now – that the economy-wide tax cuts reach companies at that level, the bank levy will have raised over $16 billion from those five banks. So, I don't think people can think we have missed the banks anywhere here. I mean, as a Government we have increased the jail penalties for offenses in this area – this is what we announced last Friday – from five to 10 years. The individual, personal penalties to up to almost $1 million. We have introduced legislation that can forever bar a bank executive from ever working in the banking industry ever again. We have put $124 million extra into ASIC and given them further powers to go and catch the crooks...

LANE:

You've done that...

TREASURER:

So, we have been taking action on the banks and we haven't missed the banks along that process. And when it comes to tax cuts, though, for business, it's pretty simple: if we force businesses to pay the Government more in tax, that means they can spend less on growing their business, creating jobs and paying people better wages.

LANE:

Do you accept now, without a Royal Commission, we would not have heard these horrid stories about dead people being charged fees and officers forging customer signatures?

TREASURER:

Well, I think, that is the case, I mean, those cases were around previously. But they have all had a big light shone on them in the Royal Commission and...

LANE:

They've been around previously? Why haven't the public heard about these before?

TREASURER:

Well, you're talking about matters that have already been settled by the institution with the aggrieved parties with interest. So, they were matters that were actually resolved at the time. But I agree they have been brought into the public spotlight and I don't have any issue with that. And that is one of the reasons that we have been taking so much action on the banks. I mean, at the end of the day, the Royal Commission is underway. We initiated it. We're the ones who put up the penalties, applied the levy, made them more accountable. And at the end of the day, Australians just want to be assured the Government is doing something about it. And we are.

LANE:

Treasurer, thank you. We are out of time.

TREASURER:

Thanks, Sabra. Good to be with you.