3 May 2016
Transcript - #2016067, 2016

Interview with Ross Greenwood, 2GB

SUBJECTS: Budget 2016

ROSS GREENWOOD:

Scott Morrison who was only just finishing delivering his maiden speech to Parliament, his maiden Budget speech, I should say, and he joins me now. Scott, many thanks. Just give for people who will never get the experience to do that, you stood up in our Parliament House, the House of Representatives, and you gave your maiden delivery. How does that feel as an individual?

TREASURER:

Well it's a great privilege. I mean there are many great privileges Parliamentarians have and tonight was a special one, but for the most important reason, Ross. We are facing some serious challenges in the economy, you know that, you talk about it every day. And what the country needs at the moment is not just another Budget, you know a list of things and measures and you know, sweeteners and all that sort of stuff. That's not what tonight's Budget was all about. It was the opportunity to set out a national economic plan and that's what we've done. And particularly you know, you can talk to a lot of small businesses and I do too. I can never walk away from one of those businesses without feeling energised by what they're putting into it.

GREENWOOD:

Ok, so just to pick you up there, the tax cuts there. They'll be extended initially to companies that have $10 million worth of revenue over time, 27.5 per cent. Is that sufficient for Australia to get its economic growth going, to fulfil these projections you've got in the Budget?

TREASURER:

Well, that's why over ten years we get it to 25 per cent for all businesses across the board, but in four years we get it up to companies with a turnover of over $100 million and that's more than half of the employees who work for companies covered by businesses then. These businesses are businesses that, as you would know, they are more likely to reinvest their earnings rather than do distributions. They're going to put it back into the business because they're hungry to be bigger businesses. I haven't met a small business that doesn't want to be a bigger business.

GREENWOOD:

Ok, but the RBA today has cut interest rates. That implies a sluggish economy. It does not imply an economy that is flying. Something's out there for the RBA to cut interest rates. Even you in Opposition in the past have indicated these types of things. So tell me this: is the economy sluggish? Can you fulfil these projections that you have got for both spending and revenue inside the Budget tonight?

TREASURER:

Well certainly on spending and revenue on the policy decisions we have made, but I disagree with the other assessment. I mean we grew the economy by $40 billion last year, 300,000 extra jobs, 50,000 additional jobs for young people in the last 18 months. We're growing faster than the US, the UK, the Euro zone, twice as fast as Canada. We're up there with South Korea. Now, we're transitioning the economy well and the RBA Governor acknowledged that today. But the key is now to drive the non-mining business investment and that's why this business tax changes is so important. If you tax their business you tax their enterprise, and if you tax their enterprise then you tax their future – and no one gets a job in a company that has no future.

GREENWOOD:

Fast enough to be able to get these projections of spending down, these cuts of public servants that are being talked about inside the Budget, making a smaller Government, but on top of that to bring the spending of the Government from 25.8 per cent of GDP – which is seen to be dangerous, even the Treasury Secretary John Fraser has talked about it…

TREASURER:

I agree on that.

GREENWOOD:

25.2 per cent in four years' time.

TREASURER:

And that's still too high.

GREENWOOD:

And that's still too high. Where should it be?

TREASURER:

Well, the long-run average is 24.9 per cent and this is why ever since I've been in the job I've been saying the same thing, criticised from many, saying we've got a spending problem in this country. That's the issue that we've got to address as a Government and that's why we're saying the Government has got to live within its means. That's what we've been doing, whether it's changes to the welfare system, or having targeted expenditure. I mean this is not a time to be throwing money around, and we're seeing the Labor Party doing that by increasing taxes. And we found out last night that one of the taxes they wanted to increase raises $20 billion less than they thought – so where does that leave their promise to meet the education funding commitments they've put out? What we've done on education and health is we've made sure every dollar of that has been covered off by the savings we've made in the Budget. We have not spent more than we've saved in this Budget. And on taxes we've re-invested it all back, particularly the stuff on multinational tax; that is all getting reinvested back to support middle income earners, as well as small and medium sized businesses.

GREENWOOD:

Just a small question for you, one thing: superannuation. I know we'll get calls about this this evening. The $1.6 million lifetime cap for –

TREASURER:

The transfer balance cap.

GREENWOOD:

Transfer balance cap into annuities and allocated annuities. Just explain, if a person has more than $1.6 million – what happens to them?

TREASURER:

From 1 July next year they would transfer the funds they have in excess of $1.6 million back into an accumulation phase account which attracts a 15 per cent tax on earnings.

GREENWOOD:

So, in other words they would not be able to put it into their allocated pension? They'd put it back into a super fund and then pay tax on the income?

TREASURER:

On the 15 per cent. So it would be kept in the accumulation phase.

GREENWOOD:

I understand.

TREASURER:

Or here's another idea, maybe they want to take some of that capital and go and invest it in another start up business or go and invest it in other industries where those returns are there.

GREENWOOD:

Ok, so would they be allowed to set up two allocated pensions and have $1.6 million in each?

TREASURER:

No.

GREENWOOD:

Would they be able to split it with their spouse and have $1.6 million in each?

TREASURER:

Well, the spouse can have their own account, and they can have their own account, and tonight we have made some changes which allowed those on lower incomes, that the other partner in the relationship, to have…

GREENWOOD:

Because that's where you have [inaudible] savings there don't you?

TREASURER:

In a one relationship where you have someone on a high income and another on a small income, which is pretty normal in a lot of households, someone's working part time someone's working full time, then the person on the higher wage will be able to contribute more into their partner's superannuation account which means that as a family they're going to be better off as they're working and saving.

Now, we also made changes in superannuation to extend the age to which you could make contributions up to 75. So people, take for example someone who sells their house when they're 72 and they may make $100,000 perhaps on the moving and downsizing. Now, at the moment if you're 71 you can't put that in your superannuation fund. You will be able to as a result of these changes.

GREENWOOD:

Will the Budget be back in surplus in five years' time?

TREASURER:

That is the projection for 2021.

GREENWOOD:

Lots of Treasurers have projected similar things in Budgets.

TREASURER:

Well, I don't make those sorts of commitments. I just know what the projections are on the current numbers. What I am saying is that is where the numbers are projected to go to, but you won't hear those sort of bold claims – I'll leave those to Wayne Swan. He made plenty of them and he got them all wrong.

GREENWOOD:

Last question: what is the biggest risk to Australia's economy and this Budget right now?

TREASURER:

That we maintain the momentum of this transition. This transition, we're doing really well Ross and we're seeing businesses that are out there making it happen, and the reason we're giving them that tax cut is so that they can keep doing it. We know how this economy is going to keep growing, it will only keep growing if we keep backing the people who are making it happen. Now, I suspect many of them are listening to your program.

GREENWOOD:

Treasurer you've got a busy night, I know that. We appreciate you time this evening, and we'll let you get on with it. We'll speak to you some time down the track.

TREASURER:

That would be great Ross, take care.