6 June 2018
Transcript - #2018106, 2018

Interview with Ross Greenwood, 2GB

Subjects: March Quarter National Accounts; tax relief for working Australians; Enterprise Tax Plan

ROSS GREENWOOD:

Treasurer Scott Morrison is on the line. Many thanks for your time, Treasurer.

TREASURER:

G'day, Ross.

GREENWOOD:

Alright, the numbers, they are terrific, there's no doubt about that – 3.1 per cent. What does it actually mean for your Budget bottom line? Does it mean the economy and, therefore, tax receipts are going to be running faster than what even you predicted in the Budget?

TREASURER:

It completely validates what we're saying in the Budget for a start – I mean, every Budget, people go, "Oh, this is too optimistic or that's optimistic." Well, the numbers we could see coming through and we forecast conservatively and we'll see what happens at the end of the June. As you know, Ross, this is the end of March quarter numbers. There's still the June quarter numbers coming in to finish off the year but they're obviously looking very positive and so the Budget has clearly been backed in by what we've seen today. But what we've also seen here is, yes, it's true what you said about the export side of things driving a good part of that growth but we've also got to talk about the services exports as well. It's not just those commodities – the iron ore and so on and coal, etc. – but it is also very strong services exports and a big part of it is the fact that we've been running a very strong public infrastructure investment program now for some years. That's been supporting growth. In fact, right across every area – whether it was inventories or whether it was dwelling investment – all of these were positive and even in business investment, where we saw mining investment come down, that was overwhelmed by what's been happening in the non-mining sector. I mean, non-mining investment is up 10 per cent. That's five times the long-run average and it's the utes I was talking about today. When you see a ute on the road out there with a tradie driving it, that means the economy is going well.

GREENWOOD:

So in other words, the other thing I also note is there's plenty of cranes around our capital cities right now…

TREASURER:

Sure.

GREENWOOD:

Some of that construction activity may slow down in due course. We can actually see that through the housing numbers in our major capital cities right now. Is that of concern? Because some are suggesting that the back end of this year you might not be getting the same level of growth as you are right now. Does it sort of concern you at all when you start to see those capital city house prices?

TREASURER:

Well, two separate issues. Firstly, the pipeline on residential construction is pretty strong. The approvals in the past were running very hot so there's a good pipeline of work there on the residential side. What we saw with dwelling investment in this quarter was actually a strong pick up in alterations and additions which is something people do when they think they're in a position to have confidence and go out there and put on an extra room or redo the kitchen or do something like that. So I think that's welcome news. With house prices more generally, in Sydney and Melbourne, we've seen them flatten off after we had APRA – the banking regulator – restrict access to those interest-only loans which were really driving those prices up and so that's sort of come back to earth a bit. But we'll be keeping a close look at that in the weeks ahead but when someone buys a house, they tend to hold on to it for long periods of time so there's been very strong house price growth in Sydney and in Melbourne over the last seven years or so – so, if it's come off a bit of the top of that, well, people still own their house they bought for a lot less some years ago.

GREENWOOD:

Okay, just a couple of things. You've actually noted today, I noticed you put out a Tweet a short time ago, observing that Australia's economic growth really now is at the top end of the top performing economies in the western world, in fact, of the G8, Australia is now running faster than any of those but it is also noted that, of course, Australia's population growth has been running faster than any of those countries. Is much of the economic growth that we're seeing in Australia right now due to the faster than average population growth in Australia? And if that slows down, is it likely that Australia's economic growth would also slow?

TREASURER:

It supports it but it's not the only thing driving it. The investment we're seeing businesses make – as I said – is five times the average that we've seen in the past so there's a lot of positive business conditions out there and businesses are responding by investing. So that's why it's really pleasing to see that's starting to flow into some better profit outcomes for those businesses and that's flowing through to employees. By that I mean, people are getting jobs but also the average payment to employees – which comes out of these accounts – that's up half a per cent as well in the March quarter. So, they're positive outcomes that we're starting to see as the labour market tightens, as the economy continues to do well, then we'll see the benefits of that stronger economy reaching more and more and more Australians – and that's really what we're focused on now. I mean, someone asked me today, "Have we got too much investment? Should we be putting taxes up to slow investment?" I wondered what they were on. That's just nonsense. We want to see much more investment because it's the investment that drives the productivity which lifts wages and we don't take the economy for granted. In fact, we've got a plan for a stronger economy and that's what the Budget was all about.

GREENWOOD:

Okay, a couple of bits and pieces in regards to tax, because clearly if the economy's running well, there's more money coming into the Government coffers. You have the scope to be able to provide tax relief, as you have said in the past. You've also indicated today that when Parliament resumes on 18 June, you'll put your personal income tax package as a whole. Labor will then have to either accept it or reject it. You won't split it. Tim Storer is one Independent Senator who says he will not support the package unless it's split and has vowed not to do any deals with Government in return for his support. Is it going to be difficult to get this through the Senate?

TREASURER:

The Labor Party, the crossbenchers, they're always standing in the way of what the Government is trying to do to make our economy stronger – whether it's trying to make business taxes more competitive or providing tax relief to all working Australians – this is something we're always trying to do and we often come up against these obstacles but the good news is, we put our heads down and we just keep going, Ross.

GREENWOOD:

But isn't the problem of it is if they don't get the support in the Senate then nobody gets a tax cut. There's your fundamental problem unless you then decide you're going to split this bill.

TREASURER:

Let's not get ahead of ourselves. The Senate still has two weeks' worth of sitting and they'll make their decisions and then we'll make ours but what we won't step back from is sort of accept someone who got less than a few hundred people vote for them dictate policy to the Government. We were elected at the last election to create jobs and to drive economic growth and more than a million jobs have been created since we were first elected. We had a record year of jobs growth last year – 415,000 – 75 per cent of them according to the Australian Bureau of Statistics were full-time jobs and now we've got this growth performance in today's National Accounts which, as you said, puts us on the top of the pack of the world's leading advanced economies so we promised jobs and growth and that's what we're delivering under the Turnbull Government's plan for a stronger economy.

GREENWOOD:

Do you make much of what the Parliamentary Budget Office has said today – what they've given to Labor and the Greens? Saying that the third stage of your tax package would see the benefits overwhelmingly flow towards men over women at a ratio of three to one. Is that an issue for you?

TREASURER:

It's such a ridiculous thing to say. I said today, you don't get a blue and a pink form to fill out your tax return. There aren't different tax rates that apply to males and females. You get assessed on your income and your income, it doesn't discriminate, and so what's next? We're going to have to change tax rates for left handed and right handed people? I mean, it is really a nonsensical argument. The Labor Party has been making this argument today, it's why you can't trust them on the economy because they come up with this rubbish. The Tax Act is designed to treat people's income the same and so you pay tax according on what you earn. Now, what we want to see is all Australians who work hard, be able to have tax relief and the big difference between what we're saying on tax and what the Labor Party is saying is this, we're not putting anyone else's taxes up. The Labor Party thinks they have to put taxes up on the top rate of income tax on getting rid of negative gearing and putting up capital gains tax and hitting tens, if not, hundreds of your listeners who will pay this retirees tax on imputation credits changes which Labor have proposed which will rip away their tax refunds which will means tens of thousands of dollars in income, which I know your listeners depend on, will be stripped away from them. Now, the Labor Party believe that will give them $5 billion a year. Now, that's why they run around and say, "We're going to do something over here on tax cuts." Well, I'll tell you what, they're giving with one hand and they're taking with the other many times over.

GREENWOOD:

Okay, couple of quick things before I let you go. Number one, Clive Palmer says he will consider reopening the Queensland nickel refinery given the fact that the Federal Government is in court in Queensland trying to get money out of Clive Palmer and his companies in regards to the collapse of that business. Do you think it's appropriate that he be trying to reopen that nickel refinery right now?

TREASURER:

He's got to settle up with people up in Townsville. I mean, he's left a bitter taste in the mouths of a lot of people up in Townsville and I think it will be a while before people trust him again and there are cases on foot there and I'll leave it to my colleagues who are directly responsible for the carriage of those cases to comment on those but this guy's got a lot of spadework to do to get himself back where people will trust him again.

GREENWOOD:

And finally, in regards to the State of Origin this evening, who's going to win?

TREASURER:

Blues by eight.

GREENWOOD:

There you go, Scott Morrison.

TREASURER:

Down in Melbourne, the Blues have always done better than Queensland and the first games are pretty even so I'm pretty confident, I think, our debutantes – I think we've got 11 debutantes tonight – are really going to shine tonight and it's going to be the start of a new era for the Blues. I'll be heading up to the pub to watch it very shortly.

GREENWOOD:

Federal Treasurer, Scott Morrison. The Blues by eight he says. Thanks for your time.

TREASURER:

Cheers, good on you.