30 April 2018
Transcript - #2018061, 2018

Doorstop interview, Canberra

Subjects: Budget 2018; Release of Gonski 2.0 report; fully funding the NDIS without increasing the Medicare Levy; GST distribution; Financial Services Royal Commission; trade; housing affordability.

TREASURER: 

In just over a week’s time the Budget will be handed down. As always, over the last few years, it has been a tough grind as we have sought and achieved the results of reducing the deficit, of getting expenditure under control, ensuring that we put clear guardrails on when it comes to taxation and improving the compliance and integrity of our tax base. But, most of all, we have been focusing on creating the stronger economy, the stronger economy which, at the end of the day, underwrites everything. It underwrites the essential services that Australians rely on; Medicare, hospitals, schools. It underwrites the job that Australians have, it underwrites the mortgage that they are able to have, it underwrites the wage they have, it underwrites the opportunities that we all have as Australians and the way that we are able to assist those who are less fortunate than ourselves.

A stronger economy is what this Budget will be focused on. It is what this Government has always been focused on. We have stayed very steadfast in pursuing those goals. We were very clear about the plan that we had to put the Budget back on a path to surplus. We were very clear about the destination that we had in mind and the trajectory to get us back into a balance in 2021 and we have stuck to that plan. Of course, we have had our frustrations along the way. Of course there was the election in 2016 which everyone said afterwards that it would be impossible to get anything through the Senate. Well, some $37 billion worth of savings measures have been able to be passed through this Senate. We are a Government that keeps our head down and keeps focusing on the job of delivering for Australians and that is what this Budget will do again this year.

We will be sticking to the plan that has around halved the deficit since 2015-16. It has ensures that we’ve kept expenditure under control at less than 2 per cent real growth over the Budget and Forward Estimates. It is a plan that has ensured that we are no longer borrowing money to pay for everyday expenditure – the first time that has happened in a decade. We will continue to invest in the infrastructure that the economy needs to build and grow. We will continue to invest in the services that Australians rely on. Today, we've had the announcement of the Gonski Review. As you know we put the money in last year’s Budget and that will continue to flow in this year and in the years ahead as we committed to. You can do that because you focus on a stronger economy which delivers on the ground those services that Australians rely on. That is what we will be focusing on this year – a stronger economy that guarantees the essential services and more jobs that Australians rely on and, as always, a Liberal-National Government living within its means.

QUESTION:

Are the rivers of gold back?

TREASURER:

This will be a responsible Budget, Mark. It will be a very responsible Budget. We have been very cautious in our forecast, as people know, over some years now. We will continue to maintain that cautiousness in how we forecast and how we look ahead, but it is true that the economy has been improving. That hasn't been by accident. There are certainly global aspects to this, but there are also very real domestic factors behind that. We are seeing our companies become profitable again. That is a good thing. That supports the economy. That supports investment. It supports wages. The turnaround in non-mining investment alone, up 12.4 per cent when a few years ago, it was going backwards.

That turn around in investment is what has been ensuring our economy goes more strongly. As that supports government revenues, there is something we have done which we have stuck to which is very important. We have a speed limit on taxes which we stick to – 23.9 per cent. That is as high as we believe taxes should be as a share of the economy and we will be sticking to that plan. Every time you hear the Labor Party say the words 'budget repair' know that it means one thing – higher taxes. They haven't got a plan to live within their means. They haven't got a plan to keep expenditure under control. All they have got a plan for is higher taxes. At this election there is a clear choice – the Liberal and National Parties, the Turnbull Government is for lower taxes and Bill Shorten and the Labor Party are for higher taxes. Under Labor you will pay more.

QUESTION:

Treasurer, you just said ‘this election’, but on that point, is there a problem here that you might be spending a temporary lift in revenue on permanent costs?

TREASURER:

No.

QUESTION:

Treasurer, given revenues have been so much stronger than you expected would you prefer to see a surplus before 21-22?

TREASURER:

The Budget is just over a week away now. We have said consistently and we have kept it at five consecutive statements that the trajectory back to a Budget balance is 2020-21. That has, particularly over the last few years, been quite a work to ensure that we’ve stay on that track, that we’ve stuck to our plan. We have kept taxes under control. We have kept spending under control and we have supported growing the economy. With everything from small businesses getting the support of lower taxes already and medium-sized businesses and new start-up businesses getting support and new trade deals for exports to ensure they can go out there and win the markets. Ensuring that we are investing in science and technology, one of the first initiatives of the Prime Minister when he became Prime Minister several years ago, and putting that focus on what can lift, what can lift the performance of our companies by embracing new technologies. So, we’ve always had a plan to grow the economy and that is what is behind a lot of what you are seeing today.

QUESTION:

Will you be sticking by your commitment that has been ongoing for budget surpluses of at least 1 per cent of GDP in the medium term?

TREASURER:

Well, the trajectory of the Budget over the medium term is set out every year and it will be again this year. That trajectory will also be conditioned by ensuring taxes do not rise more than 23.9 per cent of the economy. This is a very important point. Ensuring that you have a guard rail on how much you tax and having a clear understanding of how much you can spend, that is how you manage a budget and stay in the middle. If you take the pressure, if you release the speed limit on taxes, then taxes will just grow off into the future. Remember at the last election Labor's share of taxes on the economy rose to 25.7 per cent. It has never been that high, ever, in Australia. Whitlam could only have dreamed about taxes that high as a share of the economy and every other Labor government. Bill Shorten has got a dream for higher taxes, which is beyond fantasy. But if he is elected, it will be Australia’s reality.

QUESTION:

Do you hit that speed limit over the next four years?

TREASURER:

The Budget is next week. As I have said, our commitment is that we will not exceed that cap.

QUESTION:

Treasurer, the Grattan Institute has said that increasing the super guarantee to 12 per cent hurts people's wages and retirement incomes, is this something the Government might look at in the Budget?

TREASURER:

The superannuation guarantee levy, that’s what you’re referring to?

QUESTION:

Yes.

TREASURER:

Those measures have been in place for some time now. Anything we would have to say about that, obviously I wouldn't be saying today, but this hasn't been an issue that we have been proposing any changes to.

QUESTION:

Treasurer, when it comes to tax cuts, if it’s phased in say over 10 years, why should any population believe a promise that’s over 10 years, which could be three elections?

TREASURER:

Chris, that entire question is based on one speculation which I’m not planning to indulge today. You’ll know what our plans are next week, and then you’ll be in a position to scrutinise those plans.

QUESTION:

You were very critical of six year plans by the Gillard Government, so would ten year plans lack the credibility that six year plans did?

TREASURER:

Again Chris, you’ll have to wait until next week before we get into any details of any plans.

QUESTION:

Treasurer [inaudible]. 

TREASURER:

I’m happy to go to that topic, but anything else on the Budget?

QUESTION:

Treasurer, Chris Richardson says that unemployment benefits become embarrassingly inadequate, with the Government’s new wealth, is there any scope to increase Newstart?

TREASURER:

The Government has always been of the view that the best form of welfare is a job. Under this Government we have got to the lowest, the lowest level of welfare dependency of working age Australians in 25 years. The Government has been able to achieve a lot of things, more than 1000 jobs being created every day. We’ve halved the deficit in the last few years. We’ve turned around the investment story here in Australia by supporting businesses to get on and do that and by providing that economic leadership, but equally, on the other side of that coin has been the fact that working age Australians are nowhere near as dependent on welfare today as they have been at any time in the last 25 years, and that has really changed lives. In my first Budget I talked about the Youth Jobs Path, we have almost 20,000 young Australians who are now in jobs, who were never going to see one and were looking at a life on welfare. They’re not looking at a life on welfare now – they’re looking at a life in work. That is the values and principles of Liberal/National policy at work getting people in jobs.

QUESTION:

Given this new revenue is not permanent wouldn’t it have not been wise…

TREASURER:

Again you’re making assumptions that I don’t think you’re in a position to make…

QUESTION:

[Inaudible]

TREASURER:

I don’t accept the premise because you are making assumptions.

QUESTION:

But Treasurer, the fiscal rules in the Budget set out by yourself last year, say that any unexpected increase in revenue should be returned to the bottom line, no, not should, will be returned to the bottom line. Haven’t you abandoned that if your funding model for the NDIS or, if not, can you explain how you are adhering to it?

TREASURER:

No, I don’t believe we have and all these matters will be addressed next week.

QUESTION:

Treasurer, you made a compelling argument that the NDIS wasn’t funded and that’s forever, not just one or two Budgets, so how can you tell us now that the NDIS will be funded into the future?

TREASURER:

We can fund it from consolidated revenue and when you’ve got your companies in your economies moving back into a positive position and when you look at the outlook that we have then we know we’re in a position now to do that, Chris. If you don’t have to increase a tax, you shouldn’t. As Treasurer, I don’t believe we are any longer in a position where we need to do that. Now, what people and families who live every day with a disability must be assured of – and they have our assurance on that – and that is every single dollar of the NDIS that is committed will be supported by a Turnbull Government. And I’ve heard the Opposition say similar things so that should be a great position of bipartisan reassurance.

QUESTION:

Treasurer, has the self-imposed speed limit if kept the Medicare levy [inaudible]?

TREASURER:

Sorry?

QUESTION:

If you kept the Medicare levy increase?

TREASURER:

Again, I’m not going to go into the details of those things today. They’ll, again, be addressed in next week’s Budget. But it is important that we constrain how much tax is imposed on the economy. This is an important economic principle because if you allow your taxes to just run off, as the Labor Party propose, your economy starts to look like a snake eating itself from the tail. It’s a pretty ugly image but that’s what it does. Labor just thinks they can keep spending and spending and spending because they believe they can just keep taxing and taxing and taxing to chase it. But guess what? With Labor, their taxes never catch up to their spending and that’s why we believe it’s important to have these guardrails on stronger Budget management.

QUESTION:

Refreezing the superannuation guarantee, has that been discussed within Government?

TREASURER:

I don’t go into deliberations of the Cabinet or the Government.

QUESTION:

The critics on this Treasurer would say that you have talked about there being a lack of finance, a shortage of funds, the financial steamroller coming down the road, we needed to find ways to [inaudible]. Now, that we have got this it seems to be what the public might consider a splurge…

TREASURER:

No, I reject that and I don’t agree with that at all. What it is is a Government that has been focused on building a stronger economy, that is ensuring that our companies, and our economy more broadly, is really starting to perform in a way that we would hope it would and invest in it to ensure it had. Now, the dividend of a stronger economy should be experienced by all Australians and as a result, I’m not for increasing taxes. I’m for lowering taxes. Bill Shorten’s the one that wants to increase taxes and remember, anything he promises to give back to you, you’ve already paid for because he has increased your taxes. He is going to take with one hand and pretend to give with the other. One thing you can be assured of, under Bill Shorten and Labor, you will pay more.

QUESTION:

What are your thoughts on the tampon tax, Treasurer?

TREASURER:

This Government already put this matter to the states some years ago and they rejected it. And it ultimately is a matter that falls to the states and as the Premier of New South Wales discussed yesterday, the issues are about narrowing a base and that’s not something that the states and territories have ever supported. And so, I would have thought the Labor Party would have been well aware of that. So, people can draw their own conclusions about the genuineness of that statement they made yesterday. When Tanya Plibersek was Health Minister – as Mark reminded us last night – she didn’t do anything about it. When Chris Bowen was not only Treasurer but Assistant Treasurer, where he would have actually had even more direct responsibility for these things, he didn’t do anything about it then. And they were promising it before the last election and on the eve of that, they then dropped it. So, I think Australians can see through all of that.

But let me tell you what I’ve been doing on the GST. Next year, there will be $1.9 billion extra revenue in the GST pool because we have tightened up compliance on the GST, we’ve improved its integrity, we’ve ensured that it now covers things like digital services and parts of the new economy which it did not provide for before. So, that’s $1.9 billion that this Government has ensured is there for states and territories to pay for schools, for hospitals, for nurses, for police. The Labor Party were banging on about $30 million yesterday, well, this Government has delivered $1.9 billion extra for the states to spend on schools, hospitals and police. We’re doing serious things in the GST area which really help the states. We’re not engaging in the sort of cynical exercises we saw the Labor Party go to yesterday.

QUESTION:

[Inaudible]

TREASURER:

Sorry?

QUESTION:

The AMP Chairwoman standing down, your response to that, your actions to that. Should there be more people taking her lead?

TREASURER:

I’m not surprised by that, any more than I was surprised by the Chief Executive’s decision a little while back. I don’t think any Australians will be tearing up over that today and that wouldn’t surprise me either. Boards are accountable for what happens in their organisations. I’ve been making this point for some time. The Banking Executive Accountability Regime which I had legislated – legislated, that’s happened, that was in last year’s Budget – along with the levy which we put in on last year’s Budget which has not been passed on to customers, the ACCC has found. Those measures extend to board members as well. ASIC had already been investigating these matters for some time and the amplification of those issues through the Commission has produced what we’ve now seen. The Government will continue to take actions to ensure that these things don’t happen again. That’s what Australians want to be assured of and we’ve been taking actions for years now, which ultimately included actually initiating the Royal Commission that is before us now.

QUESTION:

Sorry, just on another matter, has Australia secured an extension to our exemption from President Trump’s steel and aluminium tariff given its expiry tomorrow?

TREASURER:

I’ll refer those matters to the Prime Minister and the Trade Minister, I’m a little focused on the Budget today and over the course of the next week but we’re all very clear about what was agreed between the Prime Minister and the President and I have no doubt that those undertakings will be honoured.

QUESTION:

Can I just ask you quickly about the report on housing affordability. A report’s come out today talking about the growing gap, I know it’s something you’ve talked about previously. This time last year all we talked about was the spiralling cost of housing which shows dramatically how that landscape has shifted. What do you make of this report into housing affordability and the number of people, alarmingly, who are falling behind? What more can the Government do? Is there anything in the Budget?

TREASURER:

In last year’s Budget, we provided a tax cut for first home savers which will enable them to save 30 per cent faster than they were before. I think that’s a very important boost for first home savers. In addition to that, there was a range of measures which have addressed housing supply issues in the states and territories and the Northern Territory has now signed up to that agreement and we will be working that through with the other states and territories. We were able to pass, in the most recent sitting, the legislation that put in place a new housing and homelessness deal with the states and territories which included additional funding for homelessness – permanent funding for homelessness. Under the previous Government, this was all done on a temporary basis. We have made homelessness funding in this country from the federal level permanent. And just this week, sorry, last week – this time last week, I was in Alice Springs, we put an additional just over half a billion dollars into the remote indigenous housing plan there with the Northern Territory Government which is dealing with the very serious issue of overcrowding of indigenous housing in the Northern Territory. So, we have a partnership there as well.

The macroprudential measures that were put in place by the regulator with the Government’s strong support has seen the investor heat, particularly in the Sydney and Melbourne markets, come off significantly. We all know that. We saw double digit growth in the high teens in Sydney now fall back to pretty much zero over the course of this last 12 months and that’s all followed the measures and package we put into last year’s Budget. So, the Government has not sat idly when it comes to this issue – whether it’s tax cuts, whether it’s how we’ve dealt with the regulation of finance for investors, whether it’s what we’ve done to increase supply of accommodation including for homelessness services as well as social housing and other key worker housing. There has been a range of measures, including restricting foreign ownership of residential property in Australia, which I think has also been given a leg-up. We now have first home owner and owner-occupier finance on the rise, whereas a year ago, it was the other way around. So, I think we have been able to turn a lot of this around but I know it’s still tough. Of course it’s tough to save to buy a home. It’s tough to buy a home in any city in Australia. Not just in Sydney and Melbourne, the same to buy one in Adelaide or even Perth where the prices have been falling in recent years. It’s still a tough goal and it remains, I think, a highly worthy goal of all Australians where they’re in a position to do that, to seek to achieve it. And the measures and the decisions we’ve taken, particularly over the last year, are helping them do that.

QUESTION:

Treasurer, sorry, just in a few words, can you tell us what this Budget is about?

TREASURER:

This Budget is about a stronger economy for more jobs, guaranteeing the essential services that Australians rely on and, as always, this Government will always live within its means. Thanks very much.