13 May 2018
Transcript - #2018091, 2018

Interview with Barrie Cassidy, ABC Insiders

SUBJECTS: Budget 2018; by-elections; Ryan pre-selection

BARRIE CASSIDY:

Scott Morrison, good morning, welcome.

TREASURER:

G'day, Barrie. Happy Mother's Day to all the mothers.

CASSIDY:

And as it happens, you’re celebrating a milestone, turning 50 today. Happy Birthday.

TREASURER:

Thanks very much, Barrie.

CASSIDY:

Still young for a Treasurer, but the fact is though, if you were to lose the next election and you would have probably not another opportunity to produce a surplus, no Liberal National Government has ever failed to produce a surplus. This might be a missed opportunity for you.

TREASURER:

This is why we have a strong plan for a stronger economy, and that's what is in this year's Budget, that's what we're putting forward to the Australian people and that’s what we're putting forward to this Parliament and we will be working with this Parliament to see that Budget passed, just like we have with the last two Budgets I've presented.

CASSIDY:

But you have priorities. You could have stuck with the NDIS levy, you could have resisted the tax cuts and produced a surplus. You decided to go another way?

TREASURER:

Well, we believe that too much tax is too much tax, and we believe that if you allow taxes to rise as a share of the economy, to too high levels it suffocates the economy, it weakens growth, it costs job – it costs investment. So we've set a clear tax speed limit in our Budget and that is to constrain just how much tax can be out there and impacting negatively on the economy. That's why that tax relief is there, and that’s why it is there as a plan. Not as some political promise but as a clear plan to deal with real issues in the tax system. Bracket creep, for example, simplicity in the tax system, making it more simple so that over that seven years, 94 per cent of Australians will not face a marginal tax rate higher than 32.5 cents in the dollar. We think that's a big and good change.

CASSIDY:

Obviously we'll come back to that, but again on the surplus and it is wafer-thin to begin with, $2.2 billion, but it may be even thinner than that with a story at the weekend suggesting the illicit tobacco crackdown. You say you’ll pick up $3.6 billion over three years, the Tax Office says half that.

TREASURER:

Well, our figures are based on the Tax Office advice and the Treasury is working with the Tax Office and the key change we're making here, Barrie...

CASSIDY:

But how can it be based on the Tax Office if this story…

TREASURER:

Because that is how Budgets are prepared, Barrie.

CASSIDY:

But this story says the ATO is saying $1.8 billion.

TREASURER:

Well, that story can be that story, all I know is what the advice is that we receive when we put Budgets together, Barrie. That's how Treasury does it, by consulting with the Tax Office and putting these estimates together. The change here is simply this: what it does is it actually moves the taxing point to the border, not in some warehouse where between the border and the warehouse, all sorts of tobacco can leak off the back of the truck and out the backside of the warehouse or anything like that. So, it is about making the taxing point the border and this has been a plan we've been working on for 18 months or so with Michael Andrew and the Black Economy Taskforce. It’s an important integrity measure and it has been well thought through.

CASSIDY:

We go back to the point that Chris Bowen made off the top there. Why would the Parliament sign up to a seven-year tax plan, commit now to tax arrangements seven years away?

TREASURER:

I'm always surprised by this. Why is the Labor Party always prepared to sign up to expenditure into the future forever and ever and ever, but aren't prepared to sign up to tax relief in the future? I think it tells you a lot about the Labor Party.

CASSIDY:

Probably because it's too big a guess to figure out what the economy will be like seven years from now?

TREASURER:

But that applies to expenditure as well, Barrie. If you are prepared to run up expenditure permanently into the future – and they can make that judgment and they did that the other night, spending more money – then why is it that they are never prepared to give people certainty about tax relief into the future? That’s what we are doing. The cost of that is $140 billion over ten years. It’s $13.4 billion over the Forward Estimates and that is a clear setting out of the costs. We are the first Government, by the way, to provide 10-year costings on these significant individual measures. It never happened under the Rudd-Gillard-Rudd Government, it never happened under the Howard Government or indeed under the Hawke-Keating Government.

CASSIDY:

Not year-by-year costings though.

TREASURER:

That has never happened, Barrie. You've been around politics for a long time. You tell me when a government in their Budget has ever provided detailed within year costing post the Forward Estimates and up to the medium term. It has never happened. Chris Bowen hasn't even done it for his retiree tax. So, when people want to apply the same standards to the Government that they apply to the Labor Party, fair enough, but on this score, we have provided, absolutely, the clear costing of this over 10 years and Labor is just looking for an excuse not to provide tax relief to Australians because they don't believe in it.

CASSIDY:

So you are saying to the Parliament that it is unreasonable to ask for year-on-year costings?

TREASURER:

No, the Treasury in fact says that the within year estimates beyond the Forward Estimates are not reliable, but over 10 years you can make a general estimate of the costs which we have done, in the same way that we don't provide within-year estimates as the Labor Party never did on cost for expenditure items. So, Barrie, we've provided more information than the Labor Party ever has and what they are simply doing is looking for an excuse not to give people tax relief because they just want to spend the money. They want to spend people's tax relief into the future and more. That's what Labor do.

CASSIDY:

Why won't you decouple the short-term tax arrangements with the long-term?

TREASURER:

Because it is a plan, Barrie. It is a plan that’s dealing with problems in the tax system. It is dealing with bracket creep. Now, someone who is earning full-time average wages today, they will face higher tax rates in the future unless we deal with bracket creep. Even under what the Labor Party is proposing, if you are on an average wage now, five years from now, you will be paying more tax under Bill Shorten. They don't deal with bracket creep, they don't deal with simplifying the system. See, we have provided a comprehensive plan to deal with problems in the tax system. Bill Shorten has engaged in a political Dutch auction. He can do that, but our plan is set out and it's dealing with real problems and that's why it is a holistic plan. Low and middle-income earners first, bracket creep, simplification, it is a clear plan.

CASSIDY:

Why not deliver to the low income earners now and you have plenty of time to have the argument about the long-term tax cuts?

TREASURER:

It takes one vote, just one, in the Parliament to give Australians understanding about the tax relief they will get over the next 10 years because this Budget is a plan for the next 10 years. It is a plan for a stronger economy over the next 10 years. It is about the economy that Australians are all going to live in, in the next 10 years and we want to say very clearly to them, “we don't want taxes strangling the economy and strangling your job and your wages and this is the plan to do that,” and the Parliament, we’re asking to support that now.

CASSIDY:

Pauline Hanson says it's too far down the track to be voting on the third part of it. If it comes to that, if again you hit gridlock, Labor, the Greens, Pauline Hanson, the rest of them oppose it – you really will deny this tax cut to the low income earners?

TREASURER:

People have always underestimated us, Barrie, when it comes to dealing with the Senate. We've passed $41 billion worth of important savings measures since the last election alone and we will continue to work respectfully and in an engaged way with the crossbenchers. It is a shame that the Labor Party, once again, don't want to vote to provide tax relief to Australians. They simply don't want to do that because they don’t have a tax speed limit. We have one. It is 23.9 per cent. Labor needs to say very clearly what the share of taxes will be of the economy under them because what they're doing, and this is a very important point, and maybe you were going to ask me about company tax cuts. Let's understand this; over the Budget and Forward Estimates, there is not a single cent more, or less, that big companies will pay over the next three, four years. Their tax rate is 30 per cent. It doesn't change until the mid-2020s. So, this idea that somehow big companies will be paying more tax for Bill Shorten is actually a big fat lie. I tell you who will be paying more tax – it is the retirees' tax. That is the single biggest tax measure they have announced. It is over $10 billion over the Forward Estimates. So, it's Mother's Day today. Under the Labor Party on Mother's Day, you will have to go and thank Nanna for paying more tax to pay for whatever Bill Shorten says he is going to be spending it on.

CASSIDY:

In the longer term, that's true, it will be a while before the Labor Party can get its hands on the money you have set aside for the company tax cuts.

TREASURER:

Yes, so it’s retirees who are paying for whatever comes out of his mouth at the moment.

CASSIDY:

Because of the dividend imputation, you mean?

TREASURER:

Yes, the tax refund grab. That’s $10 billion and more over the Budget and Forward Estimates, that's what's paying for what's coming out of the Bill Shorten's mouth. It’s not big companies, it’s not multinationals. They will be paying the same tax under both parties for many years to come. It's Nannas, Nonnas, and Yia Yias who are going to pay the tax for Bill Shorten.

CASSIDY:

And those with lots of negative gearing properties as well.

TREASURER:

Which is one in five police officers who negatively gear, 50,000 teachers, I understand, more than 60 per cent of people on incomes of less than the average wage who actually engage in negative gearing. So, you're right, Barrie, we are not putting taxes up on housing, we are not putting it up on investment, we are not putting it up on savings, we are not putting it up on small businesses, we are not putting it up on family businesses, we are not putting it up on Nanna, Yia Yia and Nonna either.

CASSIDY:

Ok, you put that argument about negative gearing the whole time. How many teachers have five or six properties negatively geared?

TREASURER:

That is such a small proportion of the revenue that comes from negative gearing. It is such an extreme outlier, Barrie and this is what the Left always does. They use the extreme outlier to guarantee a position that otherwise can't be sustained. Police, nurses and teachers, negatively gear their properties, small businesses do it, to ensure they can provide for their future from out of their hard-earned.

CASSIDY:

And the policy is not retrospective so they can go on doing that.

TREASURER:

It’s like driving a car off the lot, Barrie. What do you think it will do to the value of people's homes if the market you sell it into is different from the market you bought it in? When you drive a car off the lot it depreciates in value.

CASSIDY:

Tell me this, why do you allow multiple investments? Why do you allow people to negatively gear 10, 20 properties? If your concern is, as you say, for school teachers, and police officers and the rest of them, why not limit it to two or three?

TREASURER:

Barrie, it's either income people are earning on the basis of making investments or it's not. Let's think about your proposition. If the concern is that what it does to properties in Sydney and Melbourne, which is where the house prices were running at double-digit growth and now are not because of the interventions we've made on the controls on interest-only lending. So, the issue was about curtailing that overheated investor interest – well, that's actually happened. We've already done that. Now, if the issue was that, where do you think the negative gearing buyers are going to go? They are not going to go to Hobart or Perth. They will keep buying the properties in Sydney, Barrie. So, this thing is a hoax, to use Bill Shorten's own term. He is unbelieva-Bill but this is a complete hoax. He told a lie on MediScare at the last election – he told a lie on that. We didn’t sell Medicare you have probably noticed. We were never going to. Now, he is telling people that he is going to pay for their tax relief by taking it off big businesses. That's another lie. Eighty per cent of reversing the Enterprise Tax Plan over the Forward Estimates actually hits small and medium-sized businesses. That’s who it hits. Twenty per cent is just those who go up to the next level which is about $500 million. The big companies don't even come into it over the Forward Estimates. So it’s just another big lie.

CASSIDY:

Well, why don't you put that argument to the two seats in Perth that are now facing by-elections?

TREASURER:

Well, the West Australian division has made a judgment that they are going to focus on a State by-election there at the moment. We know that those two seats, they have been long-held Labor seats, bucking a trend, as you said in your intro, back to 1911, you focus your efforts where you need to and the Western Australian division is focusing it on a State by-election and they are doing that and that's how the Liberal Party works. The divisions make those decisions and they've made that and I think that's fair enough.

CASSIDY:

So, it’s just a pragmatic decision?

TREASURER:

Of course.

CASSIDY:

What do the 42 per cent who voted for the Liberal Party at the last election, what do they do this time?

TREASURER:

They will make their own decisions. We don't go and tell people what to do. We don't do Show & Tell in the Liberal Party, Barrie.

CASSIDY:

Well, you usually do. You ask them to vote Liberal. This time they haven’t got that option. What do they do?

TREASURER:

They will make their own judgements and I trust their judgements.

CASSIDY:

And in Queensland with Jane Prentice losing pre-selection it’s a big call to boot out an Assistant Minister.

TREASURER:

Well, I think Jane has done a great job particularly in the sensitive area of disabilities. I thank her for all her work over many years of serving the people of Ryan but it is a contestable process, politics, and this has been a rank-and-file pre-selection and we're all subject to those as members of parliament. But I remind everyone we had one not long ago when Amanda Stoker was sent to the Parliament, in Queensland, taking over from the former Attorney George Brandis and Amanda, I know, will do a great job and is doing a great job already. Politics is a contestable process and in the Liberal Party there are no quarantines on that.

CASSIDY:

You're still well short of women in Queensland. Is there any prospect the Prime Minister will intervene on this?

TREASURER:

I couldn't see why. It is a matter for the LNP. That's how these things work, Barrie. It is done by the LNP, it is done by the West Australian division of the Party to decide, that's the nature of the Party that we are. It is a contestable process. I feel for Jane, she has done a great job, particularly as an Assistant Minister and I think she has had the great opportunity to serve Australia in the roles she has had and I know she would be very appreciative of that.

CASSIDY:

So even a woman who does a great job can't hang on?

TREASURER:

This is the thing about politics. We all put ourselves forward every three years and if you have a genuine rank-and-file party, then they get to make these decisions about who represents them. I don't recall people getting terribly upset when Amanda Stoker was sent, and nor should they. She is going to do a great job. Jane won't be going to the next election in that role, she has done a great job and we thank her for her service.

CASSIDY:

Thanks for your time and enjoy the rest of the day.

TREASURER:

Thanks a lot, Barrie, and Happy Mother's Day, everyone!