4 May 2016
Transcript - #2016079, 2016

Interview with Michael Brissenden, ABC AM

SUBJECTS: 2016 Budget - A National Plan for Jobs and Growth

MICHAEL BRISSENDEN:

For more I'm joined by the Treasurer Scott Morrison. Treasurer welcome back to the program.

TREASURER:

Thanks Michael.

MICHAEL BRISSENDEN:

This Budget could be described by some and has been described by some as cautious. Is this what Malcolm Turnbull had in mind when he promised economic leadership the country wasn't getting under Tony Abbott?

TREASURER:

What he said we needed a national economic plan and that's what we delivered last night. A national economic plan for jobs and growth for a stronger new economy. That's what it was about. It wasn't just another Budget, we don't need another budget, we need a national economic plan to see the economy through the transition which we are succeeding in, ensuring is positive, but there's still a lot more work to do yet and we've got to stay on that course that we outlined last night.

MICHAEL BRISSENDEN:

Clearly the optics of this are important coming as it does just before an election. Would you have gone further if it hasn't been in this environment?

TREASURER:

No, we've spent the time to get these decisions right and I think we have got them right. We're investing in earnings; we're investing in people who are out there making things happen in our economy. Small and medium size enterprises, they're the ones putting people on, particularly young people on. And the enterprise tax plan we've put in place, those tax cuts for small and medium-size businesses is going to provide the backing in power that is needed to drive jobs and growth.

MICHAEL BRISSENDEN:

Well let's talk about those company tax cuts. That's where the big fight is clearly going to be with the Labor Party over the next short period.

TREASURER:

Yeah I'm surprised by that Michael because last year Bill Shorten said we needed to get to 25 per cent and now they're saying companies between two and 10 million dollars of turnover…

MICHAEL BRISSENDEN:

I think it's the definition the Labor Party has a problem with.

TREASURER:

They seem to have a problem with small business actually.

MICHAEL BRISSENDEN:

Well you've shifted the goals, haven't you? You've said that a small business is no longer a business that earns up to $2 million, it's a business that earns up to $10 million and after ten years this is going to effectively help businesses that earn up to $1 billion.

TREASURER:

It may come as a surprise to some people, but companies are the people who employ people. If you want to drive jobs, then you need to ensure that businesses are investing, and small and medium sized businesses, so as we progressively lift that threshold, what we're saying to small and medium size businesses is we're backing you in to make the investments and put the people on that we need to put you on.

MICHAEL BRISSENDEN:

And eventually very large businesses?

TREASURER:

Well company tax cuts right across the board, ultimately ten years from now will make Australia more competitive which means the people who work for those businesses will also be in a position where they know they're getting the support that their companies are able to provide in giving them a job.

MICHAEL BRISSENDEN:

Aren't you giving a tax cut though to very large corporations ultimately who earn very large amounts of money?

TREASURER:

Ten years from now, what we need to ensure is that our company tax rate is competitive with the rest of the world. I mean we are not living in some sort of bubble down here in Australia. We have to compete in the broader world and Australians understand that. I don't think enough credit is being given to Australians who understand the challenges that we face globally, and they know that, they're getting out there and doing it. So they understand if you increase the taxes on business, you are increasing the taxes on enterprise, and the jobs that that enterprise provides.

MICHAEL BRISSENDEN:

You've put a 10 year plan in essentially what is a four year document. How much will it cost over the 10 years, because Labor says quite rightly that it's uncosted and unfunded outside the forward estimates?

TREASURER:

Well what we've done with our tax plan, is we've got tax increases in some areas like multinationals in particular. I mean that's $3.9 billion over the Budget and Forward Estimates and those revenues continue out beyond the Budget and Forward Estimates. The tobacco excise, now I admit the tobacco excise figure that we have in the Budget is a lot lower than the Labor Party had. I know they've got a $20 billion hole now in their funding commitments because they want to use higher taxes to pay for their commitments. What we're doing is we are making savings in the Budget to pay for our commitments in health and education and in roads and all of these areas. That's real money because we found it in savings; not by jacking up taxes as Labor propose.

MICHAEL BRISSENDEN:

Specifically on this tax plan though, you can't really say how much it's going to cost after the forward estimates?

TREASURER:

It's covered over the Forward Estimates and it's covered beyond.

MICHAEL BRISSENDEN:

Yeah but not beyond…

TREASURER:

Well it is because the multinational tax arrangements, the superannuation tax incentives that have been closed off for those on high incomes, they continue, they continue beyond the Budget and Forward Estimates and what the difference is, is where we are putting the proceeds from those changes in the tax system, is back into supporting small and medium size businesses and middle income earners to ensure that they can go out there, continue to work hard, continue to invest and not be taxed more for the privilege.

MICHAEL BRISSENDEN:

Let's talk about the deficits because we've had 11 years of consecutive deficits in this country as you well know. You're now saying that you'll get the Budget back to balance by 2021.

TREASURER:

Well that's the projection and the projection is always subject to the parameters and other things and I have not made a big song and dance about that. It was Wayne Swan who got up and said the four surpluses I announce tonight, I mean you didn't hear that from this Government, what you had I think was a very honest account of where things are at. The forecasts in this Budget for growth are below the long run average, both on nominal GDP and on real GDP and they're actually reduced from what we actually put forward just last December so I think it's a very sober assessment.

MICHAEL BRISSENDEN:

The Budget also does mention China. I think in the Budget paper itself it says that China's growth figures of 7 per cent down to 6 per cent in four years, the Budget papers admit that a larger than expected slowdown in China would have a significant impact globally. I think everybody would agree with that.

TREASURER:

The IMF would too and others and our forecasts are consistent with what people are saying globally too.

MICHAEL BRISSENDEN:

It's hard to find an economist that thinks that those growth figures in China of 7 per cent are right. Many think 5 per cent is optimistic. Is it optimistic?

TREASURER:

Well our forecasts are consistent with what the IMF, the World Bank and others are saying about what's happening in China. Now China is slowing down, I mean there is no secret about that, there's no great surprise about that. But what is happening in China, is there is a change in their economy to more of a consumption-based economy, which is looking for the services that Australia provides. So their economy is transitioning, our economy is transitioning and these two things are in-sync. While of course China's growth has been slowing down, but it's still above 6 per cent. This is a thumping big economy, going towards the world's largest, and that economy growing at more than 6 per cent and we're in there with the best trade deal with China that anyone has. I would say that positions us well.

MICHAEL BRISSENDEN:

I guess the point is it does make it very difficult doesn't it to do, I mean I admit I agree with you, it makes it very difficult to do a four year forward estimate about what's going to happen with our budget when there's so much uncertainty out there?

TREASURER:

Well in this Budget, it has been the smallest variation we've had since a previous statement in many, many years. I think that just goes to the fact that last December, I said I was looking to call it as clearly as I could and we revised down the growth forecasts in MYEFO last year from 3.5 down to 3 per cent. Now let's not forget last year we grew at 3 per cent, we grew at 3 per cent real last year and the only real change in these forecasts is, apart from a slight downward revision in both the nominal and real GDP, the changes to nominal GDP are basically changes to the inflation estimates.

MICHAEL BRISSENDEN:

But we still do have a deficit and…

TREASURER:

Yes we do.

MICHAEL BRISSENDEN:

… even the projections say it'll balance out in 2021. Why remove the deficit levy if we still have a deficit?

TREASURER:

Well we made a promise in law. We said it was a temporary levy for three years. That's what we voted for, that's what the Labor Party voted for and Michael I don't know how I could look at…

MICHAEL BRISSENDEN:

But you can change it and the deficit's tripled in that time.

TREASURER:

But Michael we said it was temporary and I don't know how I could look the Australian people in the eye and say that when we introduce a law and we vote for it and we say it's temporary, that we turn around and say, oh no we've changed our mind on that law. Now the Labor Party, they do that all the time. You'll remember Paul Keating's L A W tax cuts, and Labor break those promises. Now if Labor want to increase taxes, if Labor think increasing taxes is the way to actually support jobs and growth, well they'll make that case. Bill Shorten was making very different arguments when it was introduced.

MICHAEL BRISSENDEN:

You were making that case about a budget emergency and a budget crisis, or your Government was making that case a couple of years ago.

TREASURER:

Sure.

MICHAEL BRISSENDEN:

And you're not anymore?

TREASURER:

No this Budget shows that we get to $6 billion as a deficit over the next four years, 0.3 per cent of the economy. It shows that over the Budget and forwards that expenditure as a share of the economy falls from 25.8 to 25.2 and importantly we have not increased the tax burden on the economy on the projections that were previously there. So that's our plan for jobs and growth. Labor's plan, spend as much as you can, tax as much as you can. That means the deficit goes higher and the debt goes higher. That's not a plan for jobs and growth.

MICHAEL BRISSENDEN:

Just quickly on this general issue of fairness. It won't be seen in the same light as the 2014 Budget obviously, but there are measures of 2014 that are still inherent within it. There is also a Medicare freeze until 2020, there's a new rule for people on Newstart which will effectively give them less money. Voters who earn less than $87,000, and in fact a worker on an average income of around $60,000 won't get anything. Does this pass the fairness test? Because there are a lot of people who miss out in this Budget?

TREASURER:

Well in our first Budget we gave tax cuts by turning Labor's compensation into a real tax cut for those earning under $80,000 and that's worth around about $300 a year. Those incomes, particularly less than $60,000 are also quite significant recipients of transfer payments, welfare payments and income support payments and things like that. Now obviously those rightly don't go to those on higher incomes or average full-time earnings. So what we've done in this Budget is we've expanded the middle income tax bracket. We're not claiming that some large amount of money for those who are affected by that, but what it says to people is, is wherever possible, wherever we can afford it, we think a dollar in the hand of someone who's earned it to be able to keep it, is better than a dollar in the hands of Government. We're committed to those principles, we think they're the right principles that drive the sort of policies that produces growth in the economy and jobs.

MICHAEL BRISSENDEN:

Ok we'll leave it there but just quickly and finally, do you think it is the manifesto that'll win you the election?

TREASURER:

That's for others to decide. What I know it is a national economic plan for jobs and growth for a stronger new economy.

MICHAEL BRISSENDEN:

Treasurer Scott Morrison thanks for joining us.

TREASURER:

Thanks a lot Michael.