6 June 2018
Transcript - #2018105, 2018

Press conference, Canberra

Subjects: March Quarter National Accounts; tax relief for working Australians; ACCC investigations; drought tour.

TREASURER:

Well, I'm hoping that this evening the Blues will get as decent a result as the Australian economy has been given in these National Accounts today. Apologies to Queenslanders listening and people in other parts of the country who probably couldn't care less when it comes to that big fixture this evening, but I'm sure there will be plenty of those on the eastern seaboard showing a lot of attention.

In this year's Budget I said that everything that we endeavor to do depends on a strong economy. Today's National Accounts show that the Turnbull Government's plan for a stronger economy is working, and we need to stick to that plan. At the last election, we said that we would deliver jobs and growth. More than one million jobs have been created since we came to office in 2013, and since the last election, in the last calendar year, we had the strongest jobs growth on record, at more than 1000 jobs created on average every day. Today's National Accounts show that growth is also being delivered.

The Australian economy grew by 1 per cent in the March quarter and was up 3.1 per cent through the year, that's up from the 2.4 per cent growth that we saw in December. That, as you can see, is once again back up above the long-run average again. It validates the forecasts and the outlook that we set out in this year's Budget and has been subsequently in recent times also endorsed by the Reserve Bank and the OECD, who have made very similar assessments about the outlook for the Australian economy. Australia has climbed back to the top of that leaderboard, which we've been seeking to do now for the past few years, and we are up again, leading the advanced economies of the world, bettering the average growth in the OECD, and, of course, all of the G7 nations once again.

We turn to the individual components of the growth. You can see the growth in the National Accounts was broadly based. I'll come back to the issue of new business investment. That gross figure masks a much more positive trend that we're seeing in non-mining business investment. Dwelling investment grew and made a contribution, and that was principally due to the improvement in alterations and additions – that was up 3.8 per cent. The positive contribution of inventories, that netted off a drawdown in mining inventories, and there was a very strong surge in vehicle inventories, particularly commercial vehicles, in utes, you are going to hear me say utes a few times today. We are seeing that trend following through quite a lot of the numbers which we're seeing here. Household consumption softened in the quarter, but was still up 2.9 per cent, as you can see there through the year. As you can see, it's been a bit of a lumpy series over the last little while. What we did see on consumption was an improvement in things like utilities, in particular electricity, but also in furniture and those sorts of household items. But we did see a drop-off in things like cafes, restaurants, alcohol – all these things. We did have the Rugby League World Cup in the previous quarter and I did make the point at the time that that actually had had an impact in the quarter's result. Not saying that's the only reason the alcohol consumption or cafes and restaurants went back in this last quarter, and I don't think it had much to do with my FebFast either in February of this year. But what we have seen is a contraction on that side on consumption, but it's still making a positive contribution to the economy. This underscores the need to deliver the personal tax plan that we outlined in the Budget, that personal tax plan is there to support all working Australians, not just some, and importantly, our personal tax plan is not being funded by punishing other working Australians with higher taxes.

Higher taxes on the economy are not going to support improved consumption. The Coalition is not proposing higher taxes on the Australian economy. We are not proposing to abolish how negative gearing is applied, or capital gains tax. We're not proposing to put up the top marginal tax rate. We're not proposing to hit retirees with a $5 billion annual tax. We're not proposing to do any of those things. All of those things hurt consumption. We are proposing to provide tax relief with a considered and responsible plan which delivers that relief across all working Australians in the economy and that plan remains very important, not just because of its composition but because it's not funded by hitting others with higher taxes, which choke our economy.

New public final demand was also a consistent contributor to the accounts this quarter, as it has been now for some time. That new public final demand, which was up 1.5 per cent in the quarter, 5.6 per cent through the year, that has coincided with the continued – we'll go to the next slide – you can see the harder part of that growth, I should say, the stronger part of that growth, has been on the new investment side. So, that's what you're seeing from the infrastructure plans being rolled out, which, of course, are done by states and territories and the expenditure there is recorded by the states and territories and that includes the funding that we provide to the states and territories for that infrastructure spending.

You can see the program that we've been running now for several years of investing in public infrastructure to support growth in the economy works very much like our Enterprise Tax Plan. It provides a clear guide as to the investment being put in and the support being provided for additional investment to come from the private sector. This has continued to be an important part of the government's plan for a stronger economy.

It's again in non-mining and business investment where we continue to see a very encouraging trend. Up 10 per cent through the year, and just shy of 2 per cent for the quarter. This is the eighth consecutive quarter that we have seen an improvement in growth in non-mining and business investment. I'll give a prize to the student or the commentator who can find a time where that has occurred when data was available. I don't think you will. That's at least as good as we've seen in around 20 years. This turnaround in non-mining business investment, which you've heard me speak about at each of these briefings, has been critical to the turnaround in what we've seen in the Australian economy and it doesn't happen by accident. It's not luck. It's businesses investing in their growth and operating in an environment where a government values that investment. You'll hear plenty of people when numbers look better say it's all luck. You make your own luck and the Turnbull Government is making the country's economic luck by having the policies and plans in place that support exactly those outcomes. That's what we're seeking to continue to do through our Enterprise Tax Plan, is to drive that investment, and we are seeing that investment happening in the non-mining sector. So, it is five times – you can see there – the annual growth in non-mining investment through the year is five times the long run average. As I said, it is backed in by the Enterprise Tax Plan, and what's quite interesting, and you can see that flow into what they're investing in, new machinery and equipment again made a positive contribution. It is up 9.3 per cent for the year. That new machinery investment is twice the long run average and, once again, what features in that is utes. It's utes, commercial vehicles. We've seen that in the inventories data, we are seeing it in what people are purchasing, and this is a good sign. We move to exports, they bounced back in the quarter to be up 2.4 per cent and 4.6 per cent through the year. Mining played an important role in the quarter when it came to that outcome and it made a 0.3 per cent contribution to overall growth in the quarter. What's interesting on imports is they were softer, but when you look at the capital imports, and we'll start on this chart, on what is going into these imports, on capital imports, machinery and equipment were up 12.2 per cent for the quarter – 28 per cent for the year. Now that's 30 per cent of all the capital imports that come into Australia, is for machinery and equipment. So when you see businesses doing that they are investing, they're building the capacity of their business and what that means is when you increase the capital per worker, then you will also lead to increases in productivity. We are seeing the investment going into the right things, to boost how companies will perform in the future, which is what will always underwrite stronger wages in the future; that boosting in productivity by putting the investment into the sector.

So, 28 per cent for the year. Interestingly, industrial transport, which including utes, was up 26 per cent for the quarter. So, why am I talking about utes so much? One of the signs of a strong economy was always cranes on the skyline. Every time an Australian sees a ute driving around a suburb of one of our metro areas or regional towns with a phone number on the side, that's the sign of a stronger economy. We are seeing this played out with all of our trades, we're seeing it played out across the economy, and the fact that people are building up their inventories to sell more utes, that businesses are out there buying more utes, they can do that because they're working on sites or they're working in sectors that are providing their businesses with the future as a result of the investment we're seeing take place in the economy. They are good signs.

On the income side, and then I'll wrap up and we can go to questions, on the income side we've seen a 5.1 per cent improvement through the year, on compensation of employees that's of course the total bill paid to employees around the country. That was up 1.2 per cent in the quarter. Now what I want to make very clear is the indicator that most determines what supports the revenue estimates of the Government on personal taxes, is not the wage price index. That's a furphy when it comes to determining what the revenue estimates are. It is actually compensation of employees. More people employed and how much they are paid. That is what drives the tax base for personal taxes in Australia. So, it's the compensation of employee estimates and forecasts that actually underpin what we're seeing going out over the next four years, and beyond. I make that point because I think some of the commentary that has been made around the wage price index has been very misleading in terms of its impact either way on what revenue estimates might be. So, we've seen compensation of employees lift and we have been seeing that occur now for a while. What is quite pleasing is that for the fourth consecutive quarter, private sector compensation of employees has now grown by 1 per cent or more.

We are seeing in the private sector an improvement when it comes to compensation of employees. Now, it is no surprise that those four quarters of 1 per cent growth in compensation of employees in the private sector has occurred at exactly the same time when we've been seeing an improvement in company profits, and company profits running at about 5.5 per cent through the year growth, and 5 per cent for the quarter, that 5 per cent in particular, that jump up there was again heavily supported by commodity prices. And you would have seen that in the Budget when I talked about what we were estimating in 17-18, in terms of our revenues out of company profits. I said that there was a very strong component of that coming through commodity prices. What does that mean? That means that not every business saw a 5 per cent improvement in their profits, some would have seen more, particularly in the mining sector, others who aren't so dependent on commodity prices would have seen something different. So, it would be very misleading to put it generously, to draw some average right across the corporate sector when it comes to those figures.

Just finally, to make the point about compensation of employees, the grey line there is what the contribution is of compensation of employees that come from more people in jobs. The red bar is what is provided by the improvement in the average compensation per employee. And so what we've seen over these last four quarters is an improvement in this red bar. So, this is a good sign. It means there is still a long way to go, but if we go back just over a year, particularly these years when we weren't seeing any improvement in compensation of employees coming from an improvement in the average pay to employees, we are now seeing that start to build back up again. And that is a sign of an economy strengthening, that is the sign of employees, on average, receiving more. Now, that won't be uniform across all sectors of the economy, across all states and territories, metropolitan and rural areas – of course that's true. But the aggregate figures show that the average, the average compensation per employee has now been building in each of the last four quarters, and that is obviously contributed to a better overall outcome when it comes to compensation of employees, which underpins, at the end of the day, things like our personal taxation revenues.

So, just to finish up, the National Accounts affirm this year's Budget. The National Accounts affirm the plan for a stronger economy that I outlined in this year's Budget. It affirms and validates the outlook and the forecast that was set out in that Budget, and, as I said, that has also been backed in by the more recent statements made, I think, by the Reserve Bank and the OECD. And it highlights that we need to stick to that plan. If we want to guarantee the essential services that Australians rely on, whether they are up in Longman or down in Braddon or out in Mayo, or back in Cook, for that matter, in the Sutherland Shire, the services that Australians rely on that I know are always very top of mind – health, education. The commitments, and they are substantial commitments from the Government, to support increasing investment in health, in education, in disability services, in aged care – all of this, our commitments, are backed up by our plan for a stronger economy. And if you don't have a plan for a stronger economy, you cannot promise the Australian people anything.

Thank you.

QUESTION:

You say that these affirm the Budget. They go much further don't they? The Budget forecasts 2.75 per cent economic growth by the middle of the year. You've already got 3.1 per cent. Does that mean that, in fact, your revenue projections, all of your economic forecasts from hereon have got to be lifted a notch?

TREASURER:

Well, we'll do the update in December, Peter, and as we always do.

QUESTION:

Pretty rapid change though.

TREASURER:

I always ensure, when I put Budgets together with Treasury, that we seek to be very modest in how we look at the future. And the forecasts we put in our Budget – because there's an important reason for this, if you don't do that, you run the risk of spending money you don't have and why don't we just – I'm glad you asked that question, Peter, because it just so happens I have a slide. This is the 'bat and ball' chart. What this shows is what was estimated as revenue in Budgets and what was achieved in revenue in Budgets. So, the ball is what was estimated, the bat is what happened. The purpose of this exercise is make sure the bat hits the ball. And as you can see, throughout all of those Labor years, and even in some of our earlier years, the ball was nowhere near the bat. Nowhere near it. I mean, I'll forgive Swanny this one here because it was the GFC and virtually no one picked that but after that, frankly, a mile wide. Way out offside and continued to miss. Now, if that wasn't bad enough, they kept spending this money in the Budget and that's how you got the deficits. That's how you got the debt. You can't spend money that doesn't show up and they kept rolling in the spending and their estimates of revenue were way out. Now, in more recent years – and we have other charts, I won't trouble you with them today, about how we looked at commodity prices and things like that – we've taken a much more conservative approach. So, that means if there's a surprise, under the Turnbull Government, the surprise is on the upside – not on the downside. And as you know, in previous Mid-Year Updates and Budgets, to get us out of this habit and to get us into this habit required some significant write-downs and change to forecasts which I began doing back in December of 2015. It's no accident, it's not luck that for the last six Budget updates, we have been able to project a return to balance in 2020-21 and, indeed, in this Budget, we've been able to bring that forward one year, albeit modestly, and I'm not overstating that and you'll recall in the Budget speech, I was very careful to qualify it.

QUESTION:

Other than the ute-led recovery, what other areas…

TREASURER:

Sorry, I couldn't hear the start of the question.

QUESTION:

Other than the ute-led recovery, what other areas do you see sustaining growth as it is now?

TREASURER:

The big part of what we're seeing in the economy is obviously in the services sector and I didn't put that chart up but you would have seen it in the ABS' works. What that shows is particularly in the health sector, the medical sector, we are seeing very strong growth in those areas both in what people are getting paid but also in the profitability of companies that are in that sector, the investment plans that they have. That's why in this year's Budget, we set out a medical industry plan – in the same way that we have a defence industry plan. We're seeing strong growth in those sectors as well and we're seeing a transformation of our manufacturing industries. They won't be as employment intensive as they were before but they'll be profit intensive and manufacturing in these latest National Accounts actually made a positive contribution to the quarter's results and we welcome that. So, the transition we've seen occur in our economy, I think, has been quite remarkable – $80 billion ripped out of the Australian economy as we come off the top of the mining investment boom, a 30 per cent fall in the terms of trade, all of that had a profound impact on our economy. Now,, having worked through that transition, seeing the jobs growth, seeing the economic growth, now seeing average compensation for employees lifting, this is where we're starting to see that, I think, start to kick in and that's welcome. Look, it's still subject to speed bumps in the future. It's still subject to things that can happen external to Australia but that sector, in particular, I would say the health sector, has been one where we've seen very strong growth and we can't just see it as public sector growth. We've got to see it as an industry, as a sector. The Government has to deliver services in health but equally, we can have a very dynamic and vibrant and growing health industry in Australia.

QUESTION:

You linked the income tax cuts to household consumption. About half an hour ago, Labor put out a statement tactically confirming that they won't be backing stage three – claiming it costs too much and too much of the benefit is skewed towards male workers – I assume because they're on higher incomes. Are you going to have to split this package if that's your only option or is it still your intention to…

TREASURER:

We're putting the whole package to the Senate. Labor doesn't believe in tax relief for all Australians. Their tax plan is driven by envy. They're not driven by economics. Labor seem to apply to personal income tax the same philosophy that, you know, you would apply to try to stop people from smoking. You put taxes on smoking up because you want people to stop smoking. Labor wants to put up taxes on investment, they want to put up taxes on housing, they want to put taxes up on what people earn – which they've just confirmed to you again. Because it's not just that they're going to do by not supporting our plan, they're going to put the top marginal tax rate up by two per cent – not just temporarily, permanently. There's no suggestion that they're not going to do it permanently. Permanently. So, Labor's plan is put taxes up on what people do at work and that means they will do less of it.

QUESTION:

On the argument that men are going to benefit from that tax cut more than women, is there an argument there or is it a form of gender-baiting?

TREASURER:

I don't accept the premise of the question at all. You're making assessments about what the labour force split and income split will be about men and women ten years from now.

QUESTION:

Is that right to be having that argument?

TREASURER:

No, the tax system doesn't discriminate by gender. It's an absolutely ridiculous proposition. It looks at someone's income, not their gender. That's what it does and the more women that we have in higher paid jobs then the more they will benefit from that arrangement.

QUESTION:

I guess what I am saying is, is it deliberately divisive, that argument?

TREASURER:

In terms of what the opponents are putting?

QUESTION:

Yeah.

TREASURER:

Well, look, the higher tax club have been out today throwing shoes at our personal tax policy – like they always do – because they have one simple view. They want to tax people more because they want to spend their money. That's their agenda. That's why they've got their shoes off and hurling them at great speed because they want to tax Australians more because they want to spend Australians' money. We think that Australians should be able to keep what they've earned. So, yes, we will be in violent disagreement with the high tax club on this and they'll make their case but while they're making their case to you, just check your pockets because they'll have their hand in it.

QUESTION:

This gender breakdown today went through different components of your tax plan bit by bit. It showed that in terms of gender, you know, the revenue breakdown basically being 50/50, the one element where that was strongest was the low income tax offset – the increase to that comes further down the line. So, what's your comment on why not say make the LITO a bigger part of your tax package because that would be more gender fair compared to say…

TREASURER:

No, no, David, I'm sorry. I think the premise of the analysis is false. The tax system does not discriminate on gender. You don't get pink forms and blue forms to fill out your tax return. That's not how it works. They're one colour, they assess one thing – what you earn – and you pay tax on what you earn. So, it's just a nonsense of an argument. I'm sorry, I reject it and I'm surprised people are giving it this much credibility. I would have thought you would have seen through that.

QUESTION:

Treasurer, what would you say is the weakest point in this report? It strikes me that the consumers sector is the sort of Achilles' heel, the spending that did happen from consumers or the increase in spending was for things they have no choice about; utilities…

TREASURER:

That isn't completely true. There is improvement, I said, in furniture and things like that as well. There are non-discretionary items.

QUESTION:

How long is it going to take for that to lift?

TREASURER:

Well, if we look at the last quarter when it was up by one per cent, we saw actually off pretty much the reverse of what we've seen in this quarter. We saw discretionary items actually fuelling consumption growth in the December quarter. So this will change from quarter to quarter and we've got to be careful about not reading too much into one quarter's results. But when you're still looking at consumption at the range that it's in at the moment, obviously you'll want a closer – you know, on the other side of 0.5 per cent, not on the side that it's on in these numbers. Now, it was on the other side of 0.5 per cent in the previous two quarters, or on 0.5 per cent in the one before that. So, the consumption side of things will always be important and that's why the personal tax plan that we have laid out, we believe is incredibly important. And I want to stress this – forgive me for doing this – Labor's personal tax proposal is funded by higher taxes on the economy. Ours is not. So, it's one step forward, three steps back when it comes to the economy. We don't believe, and we think it's very bad economic policy to drive changes in the tax system based on punishing others in the tax system which is what Labor's basically saying.

QUESTION:

On the banking executives who are charged with cartel behaviour…

TREASURER:

Is there any more on National Accounts? I'm happy to go to those questions but we'll just cover off on the National Accounts.

QUESTION:

How comfortable are you with the savings ratio? That's been coming down, that's how people are obviously making ends meet, isn't it? There's a long way down…

TREASURER:

I want to stress this. It's positive. Often times when, it's just over about two per cent in the figures that you've seen today, that means people are saving and they're still saving and it's still above, largely, where it was pretty much over most of the Howard-Costello period during that time. Remember the cash rate is where it is at 1.5 per cent so that's actually designed to encourage people to be consuming in the economy – not saving. So, when you've got rates set where they are, that is actually the intended purpose of that monetary policy setting amongst many other things. It's interesting that our savings rate is as high as it is, I suppose, in that context when you look back at where the cash rate was back during that earlier period that I've just referred to. So, it flattened out in this last quarter and what it's saying is that people, yes, they're continuing to save. One of the areas where they're continuing to save is they're ahead of their mortgages. That's one of the reasons why in the housing market, we're a bit quarantined if you like, we're a bit inoculated from any sort of movements in the housing markets because Australians have been pretty conservative in getting well ahead of their mortgages. There's about two and a half years' worth on average of these offset accounts that are actually inoculating from any sort of shock in the housing sector. So, in the housing sector, as you know, things – particularly in Sydney and Melbourne – have come right back. It was getting pretty excited there for a while in Sydney and Melbourne, the macroprudential measures that were introduced by APRA, I think, have had their intended effect. We continue to watch those very, very closely. The virtue of those measures that APRA have is they can be readily recalibrated any afternoon, any morning. The problem with what Labor's proposing with their extreme changes to negative gearing and capital gains tax is once you legislate that, lock yourself in because you're on the rollercoaster and it's only heading one way.

QUESTION:

Sorry, just on the households savings ratio, you mentioned before, fell to 2.1 per cent. What does that say to you obviously about mum and dads who are trying to get by, to turn it around, and what is your Government going to do to get that number to improve?

TREASURER:

You're arguing that it should and there's a range of different theories on where it should sit. If it's sitting at about two per cent, that's a positive savings ratio and where cash rates are at the moment, I don't think that's remarkable at all. When Australians feel they want to save more – the savings ratio was highest when the GFC was at its worst. When people are saving at those rates and they were up in the double digits, that means people have got in their cave, they've rolled the rock over the front and they're sitting, shivering in the back there. That's not what you want happening in your economy. The fact that the savings ratio is where it is, I think, is an indicator of the confidence that remains amongst consumers. That they believe that they can continue to participate the way they are in the economy and I think that's very welcome. The Australian economy is strengthening, is continuing to strengthen, but we cannot take its strength for granted and this is the point the Government's making. We have a plan for a stronger economy, Labor puts all of that at risk. There's a lot at risk now, a lot at risk. The hard work to get us where we are now can all be put up against the wall…

QUESTION:

I wonder if what's happened, Treasurer, in these National Accounts weakens the case for a company tax cut. We've had investment in machinery and equipment, we've had imports of capital equipment. The argument for a company tax cut is that Australia is running short of capital and yet the process that you've been describing where by the equipment will lead to higher wages and so on, is exactly the argument made for a company tax cut. Perhaps we don't need it as much as we did, that's what I'm asking – as much as…

TREASURER:

That's a strange story you've put forward, Peter…

QUESTION:

It's fairly straight forward.

TREASURER:

No, what we're saying is we want more investment. We want more investment. Of course we want it. I want heaps more investment. I want shiploads of investment. Shiploads. And it's important…

QUESTION:

Shiploads.

TREASURER:

I was very careful to say that. It's important that we have a competitive economy that is always investing more and to say, "oh, we've got enough now. I think we can tax the economy higher." I think is a very dangerous argument and it's certainly not one that would be entertained by this Government. It's certainly one that is being, not just entertained, but completely embraced by the Labor Party. They think they can tax the economy to 26 per cent share of the economy and it won't have an impact on growth. I mean, that's nuts.

QUESTION:

When are people going to get a decent pay rise?

TREASURER:

Well, you've already seen average compensation for employees lift now in successive quarters. That has come off the back of companies continuing to do better and their profit performance. So, we are already starting to see that work in the economy now. And it's the same comment that Phil Lowe has made – from the Reserve Bank – he has also said that he believes that we'll continue to see wages lift but the thing that's got to drive wages is this – and it goes to Peter's question. Wages are driven, not by some deal done by a union, they're done by the business doing better and investing in that business and seeing it earn more and productivity lift. That's where sustainable, higher, affordable, dependable real wages are driven. They're not driven by just some union deal. That doesn't deliver that outcome and what we're doing through our economic policies is to drive that investment which leads and supports the higher wages that Australians are working for. That's how you deliver it. Someone who tells you something different is not telling you the truth. Labor lie about a lot of things but one of their – I mean, a lot of things – but somehow they believe they can just magically produce higher wage growth by forcing companies, people investing in housing, retirees, people earning at the top marginal rate – you will get higher wages if they pay more tax. I mean, it's nonsense. It just doesn't stack up and that's why Australians at the end of the day, they see all that and they go, "you're right. It doesn't stack up." This is why they don't trust the Labor Party when it comes to the economy. They just don't trust them because they know this stuff that they put about just doesn't add up. Good news is the National Accounts today are certainly adding up and those National Accounts are showing a strong economy, a strengthening economy. We've got a Government that has a plan for a strong economy and we're going to stick to that plan. On other issues, yes?

QUESTION:

On the banking executives charged with cartel conduct, I think somebody said recently, "It seems each time a rock is turned over, we find another cockroach when it comes to the banks." Do you want the book thrown at these banking executives if they're actually found guilty of this behaviour?

TREASURER:

I'm not going to prejudice a matter that is proceeding to the courts. So you would expect me to, I think, respond to that responsibly. The fact that these matters are being brought to the courts is as a result of the rock turning over of the government regulator which is the ACCC. And what you've seen under this Government is the ACCC, ASIC and Austrac on the front foot, doing their job, turning those rocks over and bringing forward the prosecutions – whether they be civil or, indeed, criminal. That is the sign of a system and a regulatory environment, overseen by a Government that's serious about these things, ensuring that they get on and do their job. Now, the ultimate decisions will be decided in the courts as they should be and guilt or innocence will be determined there, not here.

QUESTION:

Mr Morrison, on the drought, the Cabinet is going to discuss soon possible extensions of the allowances and so forth of short-term relief measures following the Prime Minister's tour. Do you also agree with the Prime Minister that perhaps you've got to think longer and smarter about forms of assistance to the rural sector due to climate change, things like incentives for storage facilities, those sorts of things, rather than just the focus on short-term assistance? Is it time you adjusted your thinking as a Government in terms of how you can help farms adapt to the changing climate?

TREASURER:

Well, a couple of things. I wouldn't be canvassing what or when Cabinet would be considering anything…

QUESTION:

[Inaudible]

TREASURER:

Well, you can write your commentary pieces, Phil, I don't intend to add to them. Cabinet will consider things in the way that Cabinet should in the confidentiality of Cabinet but I think what the Prime Minister and the Deputy Prime Minister and other Ministers are doing at the moment is very important to take those soundings as, you know, we're obviously very, very concerned. The main thing that needs to happen is it needs to rain, that's what needs to happen. But neither the Prime Minister or anyone else is engaging in any climate wars over this. That's not what this is about. I think the Prime Minister is making some important observations about how things are changing, what causes those things has been the subject of those other debates, that's not the debate we're having. The debate we're having – well, not the debate but the focus is what's going on out there and what sort of longer term transition arrangements or structural issues do we need to think about? Not just for the livelihoods of those who are directly involved in our ag sector out in rural and regional Australia but also the economic impacts of all of this as well. It's very important for our economy. You would have seen in these National Accounts that there hasn't been a strong ag contribution in this set of accounts. Now, that comes off a bumper crop of a little while ago and it wasn't that long ago that we were talking about very strong ag results. Now, we're not seeing that in this set of numbers. It is important for governments to think about the longer term impacts of all of this. I want to stress that the Prime Minister's not engaging in the ideology wars over this. That's not the point and I think…

QUESTION:

[Inaudible]

TREASURER:

I know, I know you're not but I've noticed that others have and I think that would unfairly characterise the serious consideration of these things. Not everything's about the ideology wars and the climate wars. I don't think this is either at all. This is about what practically do you need to think about to support transition or continuing practice in these places and how do you go about it differently. That's the sort of the practical conversation that people in rural and regional areas want to have with the Government. I know that's exactly the conversations they're having out in rural Queensland and New South Wales this week and I think they're very constructive, very practical conversations to be having and we're listening very, very carefully to those farmers and those regional communities as well. It's not just the farms, it's the towns that are impacted by this as well. Thanks very much. Go the Blues.


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