29 November 2015
Transcript - #2015060, 2015

Interview with Chris Kenny, Sky News Viewpoint

SUBJECTS: Prime Minister; National Platform for Economic Growth and Jobs; Budget; MYEFO; Bill Shorten and Labor’s job crunching, economy munching carbon tax on steroids; immigration portfolio

CHRIS KENNY, PRESENTER:

Lots to cover tonight with the Treasurer, Scott Morrison. He joins us now live from Canberra. Thanks for joining us, Scott.

TREASURER:

G'day, Chris.

KENNY:

Look, first up I want to get you on this breaking story in the Fairfax media this evening looking back to the leadership shenanigans of the year and suggestions that you were actually offered the Treasurer's job under a Prime Minister Malcolm Turnbull back in February on the eve of that spill that never really eventuated.

TREASURER:

Well, I think that is a pretty enthusiastic description of the conversation. No, that is not my recollection. I mean there were a lot of phone calls taking place in what was a backbench initiated event on that occasion and nothing came of that conversation - there was no outcome from that conversation. So, I think people can get a bit worked up over nothing.

KENNY:

But there was a phone conversation with Malcolm Turnbull and he did raise the idea of you serving as Treasurer?

TREASURER:

No, nothing came of this conversation. There was nothing really of that - that is not my recollection of how this took place. I mean there were a lot of conversations happening over that time…

KENNY:

But you seem to recollect some sort of conversation. You do recollect, then, speaking to Malcolm Turnbull?

TREASURER:

I do recollect talking to Malcolm Turnbull. He is a Cabinet colleague of mine, it wasn't that extraordinary that…

KENNY:

About these leadership issue and the Treasury position?

TREASURER:

Cabinet colleagues would talk to one another. I mean it was a pretty difficult time. We had a backbench initiated spill motion at the time. That's almost a year ago now. I think, frankly, it is all well in the past and as I said nothing came of it and there was no arrangement, there was no deal, there was no offers, there was none of this sort of stuff. I mean I think it is just excited commentary and, you know, it sounds like people are trying to get a lot out the door for Christmas purchases in books.

KENNY:

There is a lot of that going on but you are right…

TREASURER:

There does seem to be a bit.

KENNY:

It is ancient history, nothing did come of it in February but from what you are saying it sounds like you do recall a conversation with Malcolm Turnbull when the Treasurer's job was raised with you.

TREASURER:

No, I said there were no offers, nothing of what was described in those terms. So, what I am saying is, you know, it was a hypothetical that had no consequence.

KENNY:

So, it was a hypothetical that was discussed?

TREASURER:

There was no consequence, Chris. This is my point. You are getting excited over nothing.

KENNY:

I'm not excited - I'm interested though.

TREASURER:

There was no consequence.

KENNY:

There was a consequence actually in September because he ended up becoming Prime Minister and you are now the Treasurer.

TREASURER:

Those two events are completely unrelated. They are completely unrelated. I mean that is a very long bow, Chris. I know you are trying hard and others are trying hard but I caution you. You are going to start getting into all sorts of crazy conspiracy theories now and before we get into that territory I just say mate just have a good lie down.

KENNY:

I'm not particularly excited but I also think it is a bit of a stretch to say that two leadership spill events in the one year, hardly unrelated events, and this is the allegation - that you were talking about the Treasurer's job in February….

TREASURER:

Well, one was initiated by the backbench.

KENNY:

…and you did end up in the Treasurer's job come September.

TREASURER:

Well, here is a crazy idea - perhaps I am in the job because I am the right person for the job right now and that I am doing this job based on merit. Now, I know that is a fairly unconventional media analysis of things in this crazy town but I am focused on the job I have been given to do. In my political career I have always focussed on getting results, I believe I have got those results in portfolios I have previously had responsibility for, and I'm focused very much on the results of the economy and jobs and I will let all of the conspiracy theorists and Christmas reading participants to get about those businesses and I will get about the Budget.

KENNY:

It is a crazy town, as you say. That is why I stay away from Canberra as much as possible but I am up here in Sydney and yes obviously you are in the job on merit but I am just suggesting it sounds like, from what you are saying and what we're reading…

TREASURER:

I am pleased you acknowledge that, Chris.

KENNY:

It sounds like Malcolm Turnbull recognised that you were the man for the job in February should he ever become Prime Minister.

TREASURER:

Well, look, they are matters for him and history has it that after he became the Prime Minister, which is when people actually get to offer you those positions, then he offered me that position and I was pleased to take it but the events of several months ago, similar proposals were put to me on the same day by others.

KENNY:

Pray tell, pray tell.

TREASURER:

All of that frankly is well in the past. I don't think the Australian people…

KENNY:

Feel free to fill us in a bit more on all those conversations.

TREASURER:

…could care less about this anymore.

KENNY:

I think you are right. I think a lot of viewers are very interested in what is happening with the country and the economy as well. I will leave those issues there and come back to a related question, I suppose, and that is if you could tell us what is the most important policy change that has happened since Malcolm Turnbull took over as Prime Minister and you became Treasurer?

TREASURER:

Well, there hasn't just been one. We have had the response to the Harper Review which really has set forward an agenda on micro-economic reform in this country which will be incredibly important because over the next ten years we will not have the benefit of rising commodity prices and terms of trade, we will stand or fall based on our productivity performance and the micro-reforms that are at the heart of what the Harper Report was all about are critical. Equally, we had a response to the Financial System Inquiry and that is all about having a strong financial system to weather the storms and we are facing headwinds at the moment but there are some tail winds as well. So, our economy is going through transition. So, whether it is those two particular initiatives or the innovation statement that is now very soon to be announced - all of these are about trying to drive productivity performance, drive our earnings potential. All of these things, I think, are really saying to the Australian people that the Government is building a strong platform for economic growth and jobs. Now, we have also opened up discussions with the states and territories about how we can have a better tax system and how we can have a better federation. All of this is incredibly important and we are getting about those jobs.

KENNY:

In fact, I would have said one of the most important things you have done and you have been able to do, I suppose, with the fresh leadership transition because it is a new Prime Minister you have been able to turn your back to some extent on the commitments of the previous Prime Minister. You have basically said all options are on the table when it comes to economic reform, Budget repair and all of that sort of thing.

TREASURER:

Well, it's true.

KENNY:

You have got this taxation debate underway. We know there is talk about increasing the GST and or extending it. When will we actually see a concrete proposal put to the Australian public about what you want to do on taxation?

TREASURER:

Well, the Australian people will know what is before them at the next election and that is obviously the backend timetable for any measures that the Government would contemplate. Let's not forget why we are doing this, we are doing this because we want to see the economy grow and we want to see strong jobs growth in the economy. Talking about tax from our side of politics is all about how you make the economy work better. When the Labor Party talks about taxes they just want to have higher taxes and they believe we have a revenue problem in this country which means you have to increase the tax burden on Australians. Now, we don't share that view. We think when we change the tax system we do it to make it a better tax system to ensure that those…

KENNY:

Your point on this has mirrored what Joe Hockey said for many years and that is that there is a spending problem in government - not a revenue problem. Now, can you guarantee then whatever your taxation reform mix is there will be no net increase in taxation?

TREASURER:

Well, it all depends by what you mean by that? I mean if you grow the economy…

KENNY:

I mean you are not going to take any more money. Your tax increase overall is not going to increase.

TREASURER:

Well, of course, if you grow the economy as occurred under John Howard and Peter Costello your revenues rise but you can have a better tax system that treads more lightly on tax payers. One of the problems that we have is that you have got average wage earners in this country going on to the second highest tax rate next year and paying 39 cents in the dollar on every extra dollar they are earning. Now, that is not a tax system that is recognising and backing people who are working, saving and investing. So, the tax system needs to be able to back Australians not frustrate them like it currently is. Now, if you can grow the economy and if you can control expenditure, that is how you balance your Budget. You don't do it by increasing the burden of taxes on individual taxpayers.

KENNY:

Now, there must be a sense of urgency about this because the Coalition of course pointed out that over six years there was no economic reform from Labor. Joe Hockey famously, and Tony Abbott, tried to introduce a lot of economic reform in that first Budget, hit political and Senate brick walls and got very little done. So, are you suggesting that we are going to have to wait another year before we see any significant economic reform or are you going to take decent taxation, federation, perhaps industrial relations reform packages to an election in the first half of next year?

TREASURER:

Well, it is the Prime Minister who decides when the election is and he has said that the Government will serve full term. I mean we are already engaged in these reforms, Chris. We are already engaged with them. The two major responses that I noted so far in the last couple of months; the response to the Financial System Inquiry which also had some pretty serious things to say about choice and transparency and governance reform and superannuation. That process is under underway. When it came to the Harper Review response that process is already under way - so the reform is already happening. We have the MYEFO, a Budget update, which will come out in December after the September National Accounts and that will enable us to finalise our forecasts and projections that will come out. So, what we have been doing over the last few months with the Finance Minister in ERC is making sure that all of the policy measures that have been announced since the last Budget, and some of them were response type announcements such as the refugee and humanitarian support of those 12,000 places or reversing the bank deposits tax - which was Labor's tax which they built into the forward estimates and abolishing that and of course the innovation statement that is coming up - all of these things have to be paid for. So, we have been doing the hard fiscal work to ensure that there would be no net impact on the Budget because of those policy announcements.

KENNY:

You mention then talking about running full term then, that you would be on track to deliver your first Budget in May next year. Given that Treasury has just written down its long-term growth forecast of the Australian economy are you looking at a blow-out even in this $35 billion Budget deficit forecast for this year and do you think that there is any possibility you are going to have to delay the return to surplus which is supposed to be 2019/20 at this stage?

TREASURER:

Well, you return to surplus when expenditure is less than revenue and I have said that before and you just keep working towards that point. I am not going to sort of play the game that previous occupants of this Chair, particularly the Labor Party did, making all sorts of bold projections about timetables. It is a task you apply yourself to everyday in this job and what you make sure you do is that if you are having new commitments like our innovation statement or getting rid of taxes which is what we do like the bank deposit tax then you have to make sure that washes its face in the Budget and that is what Mathias and I and the rest of the team have been doing. Now, there are other impacts on the Budget, parameter estimates and things that happen with commodity prices and so on which work into the forecasts and the projections and they, I mean you don't go chasing those sorts of things down the hole. You can severely damage the economy by doing that. You look after the integrity of what you are seeking to spend and making sure that is paid for and then you have to manage that within the broader changes happening in the economy. You made the point about what Treasury has done, let me be clear, what Treasury has done is dealt with one of the inputs into the projection model that they run on the economy. What they are saying is that because of slower immigration growth and population growth that the rate of growth GDP real that you have to grow at to remain at that full employment level when you reach it again is now 2.75 per cent. Now, that is not a forecast of what the economy is going to grow by, that is just one of the inputs that go into the projection model that they use. Now, I want to be very sure that when we get to MYEFO this year that we have a very, I think, a very robust, but I think a very honest outlook. Australians know we have volatility globally. Australians know that we are transitioning from the high mining investment phase of the economy into a new phase. Glenn Stevens has noted that the economy actually is starting to broaden out but those CapEx figures last week they were disappointing, they were at the very worst end of the spectrum but it is no shock to us that we are coming out of a high mining investment period of our economy and that the non-mining sector investment there will still be some time before we see that pick-up. Australians know that they are transitioning.

KENNY:

They do. Australians want honesty on this. They don't want people promising full Budget surpluses and not delivering any. So, you're up ahead.

TREASURER:

Sure.

KENNY:

That is a pretty low bar you have to better. Just looking at the cost inputs here, you are talking about you are focused on costs, we know Malcolm Turnbull is going to Paris tomorrow, he is going to be talking about the 26 per cent to 28 per cent emissions reductions target for Australia. We know of course there is a renewable energy target that you are committed to of 23 per cent. We know of course about direct action. Do you have an overall view, an overall global figure of what that emissions reduction target is going to cost the Australian Government across all those various measures?

TREASURER:

Well, over and above what we are currently doing, my advice is that it is between .2 and .3 per cent of GDP. Now, this is a real cost and that's why I don't think you rush into these decisions lightly. I think we would be foolish to say that the commitments that are being made in Paris don't come without a cost. They do. What the Labor opposition are suggestion is going to cost the economy more than $600 billion over 15 years. I mean this is just extraordinary stuff. They are going to reduce emissions by crashing the economy. This is a carbon tax in full fury.

KENNY:

How are they going to do that? They're effectively talking about doubling the renewable energy target and almost doubling the emissions reduction target so aren't they effectively going to be close enough to doubling the cost?

TREASURER:

Well, as I've told you, they have already had the Climate Change Authority which did those figures which they, I remember, ran on the front page, when it was leaked out of the Shadow Cabinet and they denied that was going to be their view, well, it clearly was their view and they are quite happy to take an axe to the economy to pursue their views on climate change. I think there is a rational, reasonable, measured response which is what the Prime Minister, Greg Hunt and Julie Bishop are taking to Paris. Then you have got the overreaction that you are seeing from Bill Shorten chasing the Greens and chasing anyone he can find for support on the left to try and sure up his position. Look, I just think it is a very reckless response from the opposition and it would damage our economy considerably. It is basically a jobs tax that he is talking about. We want to grow the economy, Bill Shorten seems to be wanting to do all he can to crash it.

KENNY:

I would like to talk to you, there is so much more I would like to ask you about but we better let you go. There is just one other issue I will get from you before you go, as a former Immigration Minister you must be concerned to see that that asylum seeker boat turned up within sight of Christmas Island last week. Would this have been people smugglers testing out the new Prime Minister?

TREASURER:

Well, they're always having a crack now and then my understanding is and what is important is that there is no change to the policy and there is no change in the resolve. They got the same outcome that everyone else got. I am not surprised by that and you know Malcolm and I discussed these issues over many years in opposition and in Government and he has always been as strong on this as the former Prime Minister. So, look, we, as a team, I think people sometimes forget this, I appreciate the fact that people credit my time in that job with stopping the boats and that was my responsibility but it was done as a Cabinet, it was done under the leadership of the Prime Minister Tony Abbott but the whole team was backed into this approach and so I am not surprised that we haven't skipped a beat and Peter Dutton is doing a great job there and I work closely with him. So, anyone who is thinking of getting on any vessel, they are going to find the same outcome that everyone else has since we've come to government and it will all come to nought.

KENNY:

Scott Morrison thanks very much for joining us on Viewpoint again.

TREASURER:

Thanks a lot, Chris. Good to be with you.