1 May 2017
Transcript - #2017069, 2017

Interview with Ben Fordham, 2GB

SUBJECTS: Budget 2017

TREASURER:

G’day, Ben. I can assure you that I’ve been doing my homework.

FORDHAM:

Have you? I bet you’re working more than probably eight hours a day at the moment.

TREASURER:

Well, it’s quite a bit more but that’s the job and, as you’ve just introduced to them, there are a lot of important choices that have to be made in the Budget and what that’s about is what people are going through every day. The politics, people will commentate on, but frankly, you’ve got to put that aside and focus on what are the right decisions.

FORDHAM:

It might seem like a silly question but before we get to some detail, I know you’re not going to give too much detail away. But just to satisfy my curiosity, have you made up your mind on all of this stuff? Or are there still issues up in the air one week out?

TREASURER:

There’s still one or two things that we’re fine-tuning in the Budget at this stage and that will happen over the course of this week. I’ve moved into the Treasury building today in Canberra where we do that over the last week or so. But the Budget process goes on for many, many months as you work it up – and once you’ve finished doing one, then you start working on the half-year update. It’s like the Harbour Bridge, you paint from one end to the other then you go back the other way.

FORDHAM:

Alright, you’re in the Treasury building at the moment. Does that mean we’ll see you smoking cigars with Matthias Cormann as Joe Hockey so famously did after one of his Budgets?

TREASURER:

Not one of my habits.

FORDHAM:

What are the three areas that are the greatest focus for you in this Budget. I know that you’ll say they’re all important but, come on, we all know when we’re tackling an issue or when we’ve got some kind of big assignment or homework before us. We know what the big three are, what are the big three for Scott Morrison?

TREASURER:

There are four things that I have been talking about, Ben, and the first one is that without the economy growing and doing the things you need to drive growth – whether that’s what we’ve already said on taxes or what we’re doing on infrastructure – if you don’t grow the economy then people aren’t going to get a pay rise. You can’t get a job in a business that’s not open or get a pay rise from a business that’s not going forwards. So that’s always the most important thing, the economy needs to grow so people’s standard of living can rise. Secondly, I know because wage growth has been so modest – which is a pretty generous way to describe it – that people are even more reliant on the services like Medicare and things like that than they have been before, so that has to be delivered on. And the cost pressures on living, I’ve talked a lot about housing but on energy, the Prime Minister has had a lot to say about as well. We’re also very conscious of these things, when you’re not getting these pay rises like used to happen before the GFC, all the expenses - you’re a lot more acute to all of that – more sensitive to it. And, of course, you’ve got to make sure that you live within your means as a Government. It doesn’t matter whether it’s on a household budget or a Commonwealth Government Budget of $440 billion a year, you’ve got to make sure you live within your means.

FORDHAM:

When it comes to that debt, Labor left the country with a net debt of $153 billion. Under the Coalition, net debt is now at $317 billion, who’s to blame for this? Is it the Government – your Government – for not fixing it? Is it the Senate for blocking savings measures? Or is it the Australian people for not being prepared to go without for the good of the country?

TREASURER:

Well, your debt will always keep going up as long as you’ve got a deficit and we’ve been working hard to get that deficit down as a Government. And the current projection is that we’ll be back in Budget balance in 2020-21.

FORDHAM:

That’s looking shaky though, isn’t it?

TREASURER:

The Budget’s next week, mate, and we’ll update those projections then. But since we came to Government, we have reduced the growth in debt by two-thirds. When we came to Government back in 2013, gross debt was increasing by 34 per cent every year. Now, we’ve got that down by two-thirds. That is a significant slowing in the rate of growth of debt so why is the debt still going up? Well, we still haven’t got the Budget back into balance and that’s why it’s important that we continue to achieve that and in this Budget, we’ll certainly be doing that.

FORDHAM:

Ok so, Chris Richardson from Deloitte predicting a worsening in the Budget figures next week, he reckons you’ll struggle to achieve that promised surplus by 2020-21 and it sounds like today, you’re not going out of your way to go against what Chris Richardson is saying. I know you’re saying that you’ve got to wait until next week…

TREASURER:

That’s exactly what I’m saying.

FORDHAM:

It doesn’t sound like you’re standing too firm to that 2020-21, does it?

TREASURER:

It just means that the Budget is updated on Budget night. Not in the week before and others will speculate on what that number is and Chris puts together a very comprehensive analysis but he also doesn’t have access to all the same information that Treasury does. So, look, that will be announced next week as it should be but I think that what Chris does say today is worth bearing in mind. First of all, he says the Budget is all about choices and I totally agree with that. And he also highlights the fact that the Government has endeavoured to get a lot of savings through. Now, we’ve had some $25 billion worth of Budget improvement measures that we’ve been able to implement since the last election – that’s about two-thirds – but it’s clear, the Labor Party has been working against us getting those savings measures through and it would only seem to be about politics when they talk about the AAA credit rating. Well, if they’re worried about it, they would have passed our savings measures to ensure that the Budget would be even stronger.

FORDHAM:

Scott Morrison, the Federal Treasurer, with us one week out from the 2017 Budget. The temporary Budget repair levy, Treasurer, was brought in in 2014, two per cent for people earning more than $180,000, is there a chance that that’s going to go in this Budget or can we not afford to lose it when debt doesn’t seem to be shrinking?

TREASURER:

It was introduced to come off on 30 June this year. That’s what the Parliament legislated, that’s what we voted for and we’ll be keeping our promise.

FORDHAM:

Ok, that’s good to know. I know you’re not going to give away the game, so to speak, when it comes to housing affordability but you’ve seized on reports from CoreLogic today showing that prices in Sydney are finally showing signs of slowing, UBS is ringing the bell on the Australian property market. Is the feeling that we may be seeing the top of the cycle?

TREASURER:

I wasn’t surprised by that information. What you have to do in the housing market is you’ve got to be very careful. That’s why our opponents run around with a chainsaw on this sort of stuff with abolishing negative gearing and all this sort of thing. Well, if you want to cause a housing shock and if you want to have that ripple into the rest of the economy then that’s what you do. But we’ve never thought that that was a sensible thing to do. We’ve made some very targeted changes on the regulations – interest-only loans – the regulators have reduced how much they can be used and that is all designed to just take that heat off. Now, if you overreact on something like that – as we’ve already seen with this data on the market today – you could be making things a lot worse, not better. You’ve got to be careful. That’s what we’ve been doing. Our opponents, well, they’re just playing politics on this stuff or are just trying to raise taxes – probably both.

FORDHAM:

I’m told that you feel that your challenge in the housing affordability space is as much about renters as it is about first homebuyers?

TREASURER:

That’s true. I know we focus a lot on the challenges faced by first homebuyers, particularly in Sydney and in Melbourne, but people struggle with their rents all around the country. And that’s actually the area where the Commonwealth Government – through Commonwealth Rental Assistance and other things and State Governments with social housing and affordable housing and homelessness programs – that’s where most of the money is actually spent. I can’t say I think it’s spent terribly well and it’s important that we get those programs right. Yes, we need more houses built and that deals with the supply problems. Prices go up when supply is less than demand but that also happens for people who are on affordable rents or on lower rents or social housing. We’ve spent $9 billion since the Labor Party started shovelling out money to the states and the number of public housing units has gone backwards.

FORDHAM:

I’ve got a caller on the board, Chris, I won’t take it live but what he says: “The way to solve the Budget is to reduce foreign aid.” I reckon every time we talk about debt and the Budget, someone will always make this suggestion about foreign aid. How big is the foreign aid budget and is this one of the considerations you have as you head towards next week?

TREASURER:

The foreign aid budget was one of the first areas we started cutting when we first came into Government and we’ve stripped that right back – billions of dollars over the Budget and forward estimates were taken out, and we continue to make sure that program is tight. But equally, that program now is focused on not-for-profit organisations in places like Papua New Guinea – that’s where we put most of our aid, into places like that – and we all know that the dire straits countries like the PNG are in. They’re our nearest neighbours and that also goes to the stability of our region, and so we have some broader regional responsibilities as the most prosperous economy in this part of the world. We’ve just gone through ANZAC Day and how many of us stood there and remembered the ‘Fuzzy Wuzzy Angels’ on ANZAC Day? It’s the 75th anniversary of Kokoda. We will always have a special obligation to countries in the Pacific – PNG in particular – the Australian Government will continue to do its bit for our neighbours.

FORDHAM:

Just briefly, universities are seeking guarantees that there will be no cuts coming for higher education. I’m guessing that’s not a guarantee you’re able to make?

TREASURER:

Well, three numbers: funding’s been increasing by 15 per cent, the actual cost of delivering those services has been increasing by nine per cent and they’ve effectively got a profit there of around six per cent. Now, if you add companies running around today saying that they’ve got six per cent profits, when on average it’s less than one per cent, you’d be thinking there’s a bit of room there – and you’d be right.

FORDHAM:

I’ve just got another challenge for you, I know you’ve got enough on your plate leading into this Budget, but Prime Minister Malcolm Turnbull was in Townsville this morning announcing a $100 million boost of Federal Government funding to go towards a new sporting stadium for the North Queensland Cowboys. You love a Rugby League analogy, I mean, whenever you’re being interviewed you’re always talking about the Cronulla Sharks – although today you were talking about the Sydney Harbour Bridge which was a bit of a change. You may just need to help him a little bit. He had a bit of an awkward encounter, Malcolm Turnbull, where the Cowboys’ second rower Gavin Cooper where he started talking about the try line. Have a listen:

Prime Minster:

We’ve just marked the try line. You’ll be crossing and scoring, you know?

FORDHAM:

Can you have a yarn to the PM and help him with his Rugby League terminology?

TREASURER:

Well, he’s a big Roosters fan but can I tell you, just on Townsville, you wouldn’t…

FORDHAM:

[laughs] Wow. How quick was that one? How quick was the step there? The big side step from ScoMo. He’s a big Roosters fan, is he? Does he know what a try line is, Treasurer?

TREASURER:

Well, he does talk  to me about the Roosters actually. We were talking about that just on the weekend, but putting that to one side…

FORDHAM:

What did he say? “Who are the Roosters?”

TREASURER:

Ewen Jones was the local Liberal member up there in Townsville and he was the bloke that they should thank more than anyone else for ensuring that that support was given at the last election and Ewen’s a top bloke – we’d love to see him back in the Federal Parliament – and Townsville was well-served by Ewen in getting that support.

FORDHAM:

Alright, good luck. We’ll talk to you the day after the Budget.

TREASURER:

Thanks, Ben.