10 May 2017
Transcript - #2017080, 2017

Interview with Sabra Lane, ABC AM

Subjects: Budget 2017

LANE:

Scott Morrison, good morning and welcome to AM.

TREASURER:

Good morning, Sabra.

LANE:

You’ve hit the reset button on the budget, how confident are you that this will reset your relationship with the electorate?

TREASURER:

We understand what Australians are going through, I think we’ve demonstrated that very clearly. Not just in the way that I think we’ve described the situation, but also in the way we’ve addressed the measures in this Budget. We remain absolutely focused on the growth that their jobs and their wages depend on, we have absolutely committed to delivering the services that they rely on and putting that downward pressure on the cost of living and we’ve done all that at the same time as living within our means. It’s been a tough job to be able to bring the budget back to balance of $7.4 billion over the budget and forward estimates, and to do that from a starting point, from $13.5 billion behind the line because of the rejection of savings measures in the Senate, but we’ll achieve that with I think a balanced set of measures which keep the budget on track for a surplus projected in 2020-21.

LANE:

You’ve argued for many years the country doesn’t have a revenue problem, but it looks like you’ve found a revenue solution to fixing the budget.

TREASURER:

Well, we have expenditure savings which have been consistently rejected by the Parliament and you have to deal with the reality of that, Sabra, and what I can say though is our payments remain at growth of less than two per cent, so we’ve continued to keep our expenditure under control. Expenditure as a share of the economy falls to 25 per cent of the economy. That’s the lowest it’s been at for some time.

LANE:

But still $21 billion tax hike over the next four years?

TREASURER:

We need to balance the budget and we’ve done that through a series of measures, starting with ensuring that the banks are making their contribution to budget repair.

LANE:

We’ll get to that in just a tick. You’ve stressed many Australians have not had a pay increase in many years, yet you’re asking more people to pay more through a hike in the Medicare levy, an $8 billion tax hike in three years. How does that square away with saying we feel your pain?

TREASURER:

In two years’ time, what we have done is ensure that the funding gap for the National Disability and Insurance Scheme will be closed once and for all. There’s been enough politics about this. The NDIS is an important program, we have to focus on explaining to Australians just how it will benefit disabled Australians and we need to ensure it’s fully paid for – $55 billion in a funding gap over the next 10 years.

LANE:

But still, how does that square away with saying to…

TREASURER:

It’s a dollar a day…

LANE:

…Australians we understand that you’re feeling pain, but here, you’ve got to help us cover this cost?

TREASURER:

I think Australians are fair minded about the National Insurance and Disability Scheme. I think they know this is a scheme where we’re helping out our mates who are in a situation less fortunate than ourselves. We all have experience, I think, with people who live with a disability in one way or another, and I think Australians have a big heart for that. They demonstrated when the NDIS was first set up and a similar levy was imposed. It’s a dollar a day. In two years’ time, for those on an average wage, and I think Australians have a big heart for that.

LANE:

The Government’s lectured the banks about trying to lift their game. The banks CEOs have been hauled before Parliament, now they’re paying a new tax. I think some within your party will call it the “great big new bank tax”, is that punishment for failing to improve their culture?

TREASURER:

We’ve taken action on the banks. I mean others want to spend years and years running around with lawyers around the country. The Turnbull Government has just taken action and I think that’s what this Budget says about a lot of things…

LANE:

But is it again, punishment being a phased, gradual increase in action against the banks…

TREASURER:

…it’s been right across the spectrum, you’re right about that Sabra. What we’ve done is we’ve sought to make the banks more accountable, particularly at the executive level. We’ve sought to ensure the banks are paying their fair share when it comes to getting the Budget back into balance. We’ve ensured that there is a proper opportunity and an affordable opportunity for customers of banks to have their complaints and issues with banks resolved through our new one-stop shop, Financial Complaints Authority, and we have taken action previously to that on any serious misconduct with the increased resources for our regulators, not only to just deal with misconduct, but now through the ACCC, our regulator, acting on competition issues with the banks as well.

LANE:

How do you respond to claims that it’s a dangerous new precedent?

TREASURER:

Well I haven’t heard that, I haven’t heard that. It hasn’t been put to me. All I know is…

LANE:

Business leaders are arguing that this morning.

TREASURER:

Well what this is is action to address the issues which Australians have raised in terms of dealing with the banks. We’ve taken action, others want to wait years.

LANE:

What do you want to say to shareholders who might feel the pain as a result of this, with the share price dropping as a result? Everyone has super funds that have exposure to the banks. Banks might also pass this on to mortgage holders.

TREASURER:

If banks were to do that, they’d be offending their customers. The ACCC is funded in this Budget, and tasked, to ensure that banks do not mislead their customers when it comes to these issues. Let’s not forget that the major bank levy applies to just the five major banks. It is at six basis points, 0.06 of a per cent. I mean banks see more variation in their business on a weekly, if not monthly basis when it comes to these types of measures. Now this isn’t on shareholders capital, it’s not on depositors’ accounts, it’s not on mortgage holders, so if the banks tell you they’re changing their pricing because of this on your mortgage or on your deposit interest rates, they’re not telling you the truth.

LANE:

And your message to them? Cry me a river?

TREASURER:

My message to them is they have to do their fair share for budget repair, and that’s what they’re being called on to do. The Senate have rejected $13.5 billion net on savings measures that the Government has been pursuing for many years. That has to be paid for and the banks will be doing their bit to ensure that we can pay for that.

LANE:

The establishment of the Medicare Guarantee Fund, is that a Coalition political vaccination plan, inoculating yourself against any future ‘Mediscare’ campaigns?

TREASURER:

I think it’s important that Australians are absolutely reassured about the Turnbull Government’s commitment to their services and Medicare is top of that list, together with schools funding, and we’ve acted on both of those issues in this Budget and I think Australians have every reason to wake up confidently this morning. Now when it comes to Medicare, when it comes to the Pharmaceutical Benefits Scheme, when it comes to schools funding, when it comes to the National Disability Insurance Scheme, the Turnbull Government has their back.

LANE:

And, such a fund has never been required before, it’s never been hypothecated fund before, why now?

TREASURER:

Because Australians have said that they want to have a guarantee and an assurance about the Turnbull Government…

LANE:

But fiscally there’s no need for it.

TREASURER:

The Turnbull Government is committing itself to give that guarantee to Australians on this issue. I think they have sought that guarantee from us and we’ve delivered it.

LANE:

The unfreezing of the Medicare rebate, is that a kiss and make up job with the electorates? Sorry we got it wrong on this co-payment idea in 2014 that undermined your confidence in us, this Government.

TREASURER:

Well, we’ve reversed those measures as you’ve just said and I think again that provides that reassurance to Australians that we’re committed to Medicare, we understand that these issues are very important to Australians who have had low wages growth for some time and these issues are very sensitive.

LANE:

Do you concede though that that co-payment idea eroded trust?

TREASURER:

Well, what I do understand is that Australians were asking that question of us and I think we’ve answered that question definitively in the Budget that we’ve committed to Medicare.

LANE:

Was it a mistake?

TREASURER:

It was something that we’ve ensured that we’ve, I think, dealt with in this Budget so Australians can have every confidence.

LANE:

The measure to help young people buy a home by putting their savings into superannuation, won’t that just further fuel house prices as some are suggesting?

TREASURER:

Not at all. What we’re simply doing is Australians who are saving, already saving, will be able to do that in an accelerated way. It’s $15,000 a year per person, it’s $30,000 in total per person and it enables them to save 30 per cent faster than they can now. It’s their money, they’re paying out of their own salary and we have a ready-made account in superannuation which is tax advantaged so it’s simple, it’s fairer for them and it gets them into their own home faster.

LANE:

The superannuation funds argue that this is a back door plan for people to use their superannuation entitlements and that perhaps they won’t have enough when they retire.

TREASURER:

Well, the compulsory superannuation contributions will continue as they were, we’re simply using a ready-made savings vehicle to deliver this tax cut for home savings. I think it’s a practical plan, I think it’s a sensible plan. I mean previous they tried to do it with different accounts and it didn’t work because it was too hard.

LANE:

It might be practical now but you won’t be around when they retire and maybe they’re left short.

TREASURER:

But it’s not drawing away from their superannuation, Sabra, one cent. This is their own money, this is their own salary, they’re sacrificing it to save it for a house. They can either put it out of their after tax income in a bank account and get meagre interest or they can put it in their superannuation account and only pay 15 per cent on the earnings, 15 per cent on the contributions and their marginal rate less 30 percentage points on the withdrawal.  So this is a much fairer plan for first home buyers, they’re the ones putting in the work, they’re the ones doing the saving, we’re just making their savings go further.

LANE:

Despite railing against Labor for years for increasing the debt ceiling, you’re lifting it again to $600 billion. If this was Labor you’d argue that they’re not living within their means.

TREASURER:

No I think that’s, I think that’s a very careless analysis, I mean the debt ceiling has to be raised to $600 billion because if we didn’t you’d have to shut the Government down and that’s obviously not a practical option. I mean the debt will rise so long as the deficit’s rising and the deficit has been rising for many years, it’s been in place now for around a decade. Now, what I said last night and demonstrated that from 2018-19, just a year away, the Government will no longer be borrowing to pay for its everyday expenditure. Now that is a significant achievement in this Budget that ensures that our borrowings from 2018-19 will be going to longer term items, infrastructure spending, our defence commitments, all of this, so this Government from 18-19 absolutely is living within its means.

LANE:

The Australian newspaper headline this morning has you stealing Labor’s dream and it’s got you as a caricature looking into a mirror and seeing Wayne Swan. How do you feel about that?

TREASURER:

Well I think this is just sort of more political insider analysis. The Australian people are fed up with all that sort of nonsense. All they want to know is the Government is solving the problems that are in front of them in a practical way. Those who want to talk about politics will today and I can tell you what, if you haven’t had pay rise for a while, if you’ve been dealing with the challenges that your facing in a small business and gone without to keep your employees in a job, all you care is about is the Treasurer and the Prime Minister are focused on your needs, what others will play around with, you know, going on about politics.

LANE:

Treasurer, thanks for your time this morning.

TREASURER:

Thanks a lot, Sabra, good to be with you.