26 April 2018
Transcript - #2018053, 2018

Interview with Neil Mitchell, 3AW

Subjects: Fully funding the NDIS without increasing the Medicare Levy; Budget 2018.

NEIL MITCHELL:

Treasurer Scott Morrison, good morning.

TREASURER:

G'day, Neil.

MITCHELL:

That $5 billion extra than expected, you're rolling in money, will there be other tax relief for the average person?

TREASURER:

We made no secret last year of saying a priority was to provide tax relief to middle and lower income families and we've been working away on that, and we'll have more to say about that in a couple of weeks. But it's always been my approach to Budgets, Neil, to forecast conservatively. I think you get yourself into trouble when you over-forecast, previous Treasurers have found themselves in that problem and that's how you get bigger deficits.

MITCHELL:

But you're now in a better position to provide the tax relief for the average person?

TREASURER:

Well, clearly, and that's what we've seen not based on forecasts but the money coming in the door. You've made mention of it, it's about $4.8 billion more than what we've seen in MYEFO at the end of February and most of that is actually coming in on the companies' side, we've seen the companies doing better and profits from companies is a good thing. I think it's a good thing, it means people can ultimately earn more and businesses grow but equally it has a positive effect on revenue. So, the goal was always to fully fund the National Disability Insurance Scheme, that's what was announced in the Budget. Now, at this time last year, the situation was quite different and the only way we believed we could do that was through that measure now you've got to sort of drag me kicking and screaming to increase taxes but that was seen as necessary and thankfully it's no longer necessary. We don't need to proceed with it.

MITCHELL:

Well, I know you won't give us any detail but we should be looking for some tax relief in the Budget?

TREASURER:

We said late last year, Neil, we've been consistent about that but the specifics of it…

MITCHELL:

Yes, but you were saying late last year when you got the money, you've now got the money.

TREASURER:

Yes, and that's why we think a growing economy, a stronger economy that Australians have to share in the benefits of that and we want to make sure that they do but we're going to be very responsible about it, Neil. We will remain absolutely on track to bring the Budget back into balance when we said we would. That's critical. Nothing we're doing is putting that at risk, that remains a core task for the Government to live within our means but also to recognise that people – even as the economy has improved – that isn't being felt by everyone and we want to ensure that those benefits do spread.

MITCHELL:

Hasn't your approach been previously that any extra money would be used to pay down debt and reduce the deficit?

TREASURER:

That is what we have been doing and that's why we've been able to halve the deficit in the last two years…

MITCHELL:

This change, I mean, you could pay this off the deficit?

TREASURER:

Well, what we also think is important, though, is that both for the economy – and I think we've had this discussion before, where consumption in the economy has been weaker than we'd like it to be – we know that if we can relieve some of the pressure on households by ensuring that they keep more of their hard-earned then we also think that's good for the economy. Any tax cut – this is what I think is the fundamental difference between us and the Labor Party – we don't think a tax cut is a welfare payment. We think it's people's own money and they get to keep it. Every time the Labor Party, when we talk about tax cuts, they say, "that's a giveaway." No. It's just letting people keep their own money.

MITCHELL:

So, can we say that any Budget emergency is now over?

TREASURER:

I'm not sure I'd use that phrase.

MITCHELL:

What would you say, Treasurer?

TREASURER:

I would say that we need to keep the tension in the cord on managing the Budget and we've always done that.

MITCHELL:

So the emergency's not over?

TREASURER:

Well, Neil, you use your words and I'll use mine.

MITCHELL:

Well, it's been used by some of your colleagues…

TREASURER:

Not by me and what I've always been consistent in saying, since I became Treasurer, is we need to bring the Budget back to balance, we need to do it responsibly and in a measured way, that's what we've done. It hasn't changed for the last five statements, we've said 2020-21, and it's improved on each occasion.

MITCHELL:

Would you say the Budget urgency is no longer with us? And we've had all sorts of…

TREASURER:

No, it's still urgent, Neil. Australians aren't letting their belts out and neither are we and neither will you see that in this year's Budget. You'll see another responsible Budget that also ensures that as the economy strengthens, we are reducing the burden on those particularly hard-working, income-earning, tax-paying Australians who deserve a bit of relief.

MITCHELL:

Well, does the Medicare levy decision in any way link to deals or discussions with the crossbenchers on the company tax cuts?

TREASURER:

No.

MITCHELL:

Because some of them have opposed them, haven't they?

TREASURER:

They have but the answer to that is no.

MITCHELL:

Okay, you're still going to get your company tax cuts through?

TREASURER:

Working very hard on it and as you know, Mathias is a pretty formidable negotiator and he's been working hard on it and it's important that we do keep working hard on it because for the same principle, if we insist on companies paying more tax to the Government, that's less they can spend on their business expansion, more wages and more jobs but also, returns to their shareholders, mums and dads who hold shares in these companies.

MITCHELL:

Is there a bit of sleight of hand here though? You were probably going to struggle to get through the Senate the increase in the Medicare levy anyway so you dumped something you possibly couldn't do?

TREASURER:

Well, it never went ultimately to the Senate. It did go through the House of Representatives where Labor opposed it and you know what the view of crossbenchers were. The Australian people, I found, since announcing this last year understood why and were very supportive of the reason why we were doing it. I think they were disappointed that the Labor Party took such a political position on it, but they're going to play politics on this again today. But what we've done is we've changed our view…

MITCHELL:

Everybody's playing politics.

TREASURER:

No, I'm funding the NDIS. I'm giving people tax relief.

MITCHELL:

No, no, I'm not arguing about that. The other point to this though, there is a surge in money that's coming through to pay for it may not continue, so how do you guarantee the continued finance in the NDIS?

TREASURER:

That's why this hasn't been taken lightly and we've examined very carefully what's been happening with those receipts. I mean, over the previous almost four years before the most recent one, the position of companies was actually negative when it came to the gross operating surplus when it was applied to private companies. What that means is though companies were going backwards and what we're seeing is a sort of a return to normal transmission, if you like, in the economy where businesses, and in the labour market also, we're seeing the normal economic forces kick back in. The mining and investment boom, as you know, had a massive dislocating effect on the Australian economy – far worse than the GFC. That has actually been the biggest shock to our economy over the last five years and that's what the Government's been managing and the fact we've grown through that is a real testament to the strength of business resilience and Australians.

MITCHELL:

Well, you didn't like this last time, can we call you Santa Claus now?

TREASURER:

[laughs] No, you still can't call me Santa Claus because it's not about handing out gifts, it's about managing the Budget responsibly, living within your means and ensuring that Australians who earn money and pay taxes should be able to keep more of what they earn in my view.

MITCHELL:

What could you do for Victoria, for Melbourne? I think the figures yesterday showed that inflation for the March quarter are just under one per cent in Melbourne and it's 0.3 per cent in Sydney. Why are we doing it so hard here? What can you do about it?

TREASURER:

The GST distribution for Melbourne next year will give Victoria an extra $1.9 billion, one of the reasons why that figure is so much higher is not just because their share has increased but because the Commonwealth has improved the tax base of the GST. The tax base overall for the GST around the country is about $3.4 billion higher and so Victoria's share and what they'll get next year is improved because of those decisions that we've taken. And you know what we're doing with Tulla Rail, you had the Prime Minister on when I was last down there with him. And the other thing we've got to do, as John Farnham sung so proudly, we've got to make ends meet before we get much older, Neil.

MITCHELL:

Yes, you can point that out to the Prime Minister.

TREASURER:

That was his message to me and he's dead right.

MITCHELL:

The thing that came through pretty strongly yesterday too on these ABS figures on immigration, we've got 80,000 new immigrants from overseas in Melbourne. I know you're a supporter of immigration for economic reasons but isn't it time just to have a chat about it, have a reassessment, have a bit of a pause?

TREASURER:

We've got to look at the facts and the facts are the reason population is growing – whether in Melbourne, particularly in Melbourne, or anywhere else – is because of the surge that we've seen in temporary migration, not permanent migration and these are the figures, we spoke about this last time. If you break the figures down about just over 40 per cent, I think, of the increase comes from temporary migration, about 40 per cent comes from natural increase and about 20 per cent comes from permanent migration. So, the big thing that's been driving population growth has been temporary. You know what that is? A lot of it is international students – that's been the big increase. Now, in Victoria, international students are a huge part of the Victorian economy…

MITCHELL:

Ok, 80,000 people extra from overseas settled in Melbourne in that year – 80,000 extra, only 222 of them have relocated to Melbourne [inaudible] from migrants. That's a huge social impact apart from infrastructure. How many of those are students?

TREASURER:

I don't have those figures…

MITCHELL:

No, of course not and I know you don't and I don't really expect you to…

TREASURER:

No, I'm not a walking encyclopaedia on the demography of Australia.

MITCHELL:

But I think this is the sort of thing that we need to discuss and understand. People are worried about it.

TREASURER:

I agree that they're worried about it and that's why the infrastructure investments are so important. That's what we've already announced for Victorian infrastructure and Tulla Rail is a huge part of that. You've got to invest in the infrastructure but when we're having discussions about population pressures, I think we've got to have a factually informed one and what is driving it principally has been the growth in temporary migration. This is around the country but also in Victoria, I will have to get my office to send the precise stats…

MITCHELL:

Yes I would love to see them.

TREASURER:

…but it's international students in particular and tourists – both of which benefit our economy significantly.

MITCHELL:

Thank you so much for your time. You raised John Farnham, how's your 'dragon energy' today?

TREASURER:

My 'dragon energy'? Last time I was down at 3AW with your stablemate, they had me doing a rock quiz so here we go.

MITCHELL:

Kanye West has tweeted Donald Trump today saying that they share 'dragon energy'. Do you know what 'dragon energy' is?

TREASURER:

I have no idea what that is.

MITCHELL:

No neither have I.

TREASURER:

Is that some sort of new hyper drink or something?

MITCHELL:

Have you got 'dragon energy' with John Farnham?

TREASURER:

[laughs] I've got no idea, Neil.

MITCHELL:

Thank you very much for your time, Treasurer Scott Morrison.