18 June 2018
Transcript - #2018116, 2018

Interview with Leon Byner, 5AA

SUBJECTS: Treasury costings of Labor’s retiree tax revenue; Tax relief for working Australians; Enterprise Tax Plan; Newspoll; by-elections; Clive Palmer; ABC

LEON BYNER:

Scott Morrison, how are you?

TREASURER:

I’m good, Leon, good to be with you and all your listeners.

BYNER:

Likewise. Now, your Department has done some costings on Labor’s policy to tax extra franking credits that retirees may earn as part of their share portfolio. There’s a $10 billion black hole, is that right?

TREASURER:

That’s right, that’s absolutely right. It’s not just a cruel tax and for your listeners, what this means is that people who have invested in Australian companies, they get a tax refund to the value of the tax already paid by that company and what Labor is proposing to do is strip away that tax refund. Now, that’ll hit almost a million Australians and most of them are retirees. They’re also small business owners who also draw income as a result of this. Now, when Labor first came out, they said it would raise $59 billion then they said, “oops, nah, we got the policy wrong. It will actually only raise $55.7 billion.” Now, Treasury has done the work because Labor refused to release their details of their costings and it will actually raise $45.8 billion. So this is the incredible shrinking tax and we’ve seen this before. Labor with the mining tax said, “we’ll raise all this revenue.” It ended up raising nothing but they spent all the money. That’s the real problem with this, Leon, that they go and spend the money when it doesn’t turn up.

BYNER:

You see, this franking debate is pretty much over a lot of people’s heads. They don’t understand it. Can you clear the air on this?

TREASURER:

Look, I do think that the people who are affected by it understand it and if you’re – you could be a pensioner and be hit by this – but let’s say you’re a retiree and you’ve bought some shares in Commonwealth Bank, for example, or maybe not the best example at the moment, but people have those shares. What they do is they get dividends paid to them, they get income from that and where the company has paid tax on those dividends, they also get that tax back in the tax refund they get through the tax office. Now, for some people, it can be 20 per cent of their income and Labor are just saying, “You’re not getting it. You’re not getting it. We’re just taking away the tax refund”. Now, it will still raise just shy of $5 billion a year and that’s an enormous slug on people and they can’t just go and get it from somewhere else. They bought these shares – Australian shares, by the way, in Australian companies – they’ve bought these shares knowing that they get this tax refund and they get the dividends and that’s what they live off. In the majority of cases, they’re doing it so they don’t have to be on the pension and draw that payment from the taxpayer. So, they’re doing the right thing and it’s the ones who actually don’t have big balances in their superannuation or their assets that get hit the most. What this costing showed was those who are on higher balances and have lots of arrangements, well, they’ll just change their affairs so they don’t get hit but those who don’t have that flexibility, they get it right between the eyes. So, they stuffed it when they released it and they’ve stuffed it on the costings and that means they’ll stuff the Budget. Their Budget is always a house of cards, it just comes tumbling down like we saw when they were last in Government.

BYNER:

You’re going to spend the next couple of weeks trying to get your tax changes through, this week will focus on income tax cuts. How confident are you of convincing the remaining crossbenchers – and I think that’s going to be One Nation – that you need to pass this policy?

TREASURER:

We’ve proved to be quite persuasive since the last election. People said we’d get nothing through and we got $41 billion worth of Budget savings and measures through. So, look, our form is pretty reasonable, pretty good actually compared to what people said it would be. So we’ll continue to back ourselves in in the Senate over the next fortnight. We’ll continue to make the case carefully and respectfully, listening to what they’re saying. We’ve had very good meetings with the South Australian Senators and we’ll keep having those discussions. Ultimately, they’re going to have to make a decision about what’s going to happen. The Government believes the plan we’ve put forward is a good plan, it’s a responsible plan, it says to people on low and middle income earners that: “You get the tax relief first.” Over the course of the plan, we deal with bracket creep and we ensure that around 95 per cent of Australians don’t pay more than a higher marginal tax rate of 32.5 cents. So we think that’s a good plan and it should be supported.

BYNER:

Why is it so important to pass these cuts over the next fortnight because, in reality, you’ve got until June of next year, 2019, to get them passed because low to middle income earners will not be able to claim their $530 rebate until then.

TREASURER:

That’s largely true but, remember, we’re also changing the tax threshold from $87,000 up to $90,000 and that commences from 1 July. So people would have their annual withholding tax adjusted from that point should we be able to pass that by that time.

BYNER:

Ok, so you want these measures passed because obviously, you want to take them to the election…

TREASURER:

Of course and I think it’s reasonable that people should have that certainty. If the Labor Party want to go to the next election like they are on tax cuts for small business and say, “Well, the Parliament legislated that, if we get elected, well, we’ll reverse that, we’ll put those taxes up.”

BYNER:

Alright.

TREASURER:

If that’s the Labor Party’s view, well, they can go to the next election and argue that they want to put people’s personal taxes up. They’re already doing it for the top marginal rate of tax. They’re going to put that up by two per cent. That’s what they’ve said, that will be a permanent change and what do they think that’s going to do to the economy?

BYNER:

The tax cuts for business are proving to be a little more problematic. Is there any chance this measure will ever happen given that One Nation has said no and you need their two votes. You can’t do it without them.

TREASURER:

Well, you’ve seen some of the things that are happening with One Nation and I don’t really want to comment on that, that’s for them to be working through but we’ve been pursuing this for two years, Leon, as you know. We believe in it very strongly because we know that these are the things that you do to create a stronger economy that results in more jobs and the jobs growth you know about. I mean, a more than a million people have got a job since we were first elected. We had record jobs growth last year and it’s all because of the hard work of Australian businesses. Those we’ve already given a tax cut to, they employ one in two Australians and we want to make sure the other Australian who’s not working for those businesses, gets the benefit too.

BYNER:

The Newspoll, I want to focus on this for a sec because on one hand you’ve got now the Prime Minister, his highest personal ratings since 2016, yet if you went to the people, you would lose the election. What do you think is the problem here where you’ve got a helmsman like the Prime Minister who is much more popular than his Opposition, but the Government couldn’t win the election – what does that tell you?

TREASURER:

It tells you when you look at history that that’s not how it always plays out and John Howard is a good example of that. I remember before one of his elections, they were down 60-40 with Labor on 60, them on 40, and John Howard was preferred. You’ve got to lead the country between elections and when you do that, there are decisions you take from time to time which can affect people’s opinions but this is the difference with elections. At an election it’s not an opinion that you put in on the ballot box, you put a vote and a vote has a consequence and I used this example on the weekend. It’s one I learned from – I know South Australians wouldn’t be familiar with this – from my rugby days and it’s the bacon and egg principle. Now, the chicken is interested, I’m sure it has an opinion on the whole process but the pig is committed. He understands the consequences of the bacon and eggs and the votes are the same. There are consequences for how you vote so there will be lots of opinions in between elections that at the time of an election, when Australians look at the consequences of voting for a Labor Government, more than $200 billion of higher taxes, the retiree tax, hitting almost a million Australians in this cruel tax just to try and let Labor spend like drunken sailors – that’s what they’ll look at and they will make decisions. Will voters, will Australians have a stronger economy and be safer under the Labor Party and Bill Shorten? No, they won’t. The economy will be weaker and they won’t be as safe.

BYNER:

Why do you think the Liberal candidate, Georgina Downer, is struggling to resonate with voters in Mayo given that the seat, traditionally, has been a blue ribbon Liberal seat in the past?

TREASURER:

Well, this isn’t a Labor-Liberal contest in Mayo. There’s an independent candidate there…

BYNER:

Yeah, sure.

TREASURER:

So, I think that the nature of the contest is a little different but I believe she will be resonating because she’s focusing on policies that will mean a stronger economy for South Australians. Now, obviously, we’re very buoyed about the change of Government in South Australia and what Steven Marshall will be bringing, the same sort of leadership to the economy that we’ve seen in Will Hodgman frankly bring in Tasmania.

BYNER:

Can you give a guarantee, well, maybe Treasurers don’t like giving guarantees but there’s a lot of concern about what will happen if you were to change the GST mix. Will South Australia be any worse off in the future when this decision is made?

TREASURER:

Well, we haven’t made a decision and the Productivity Commission has given me their report and we’re considering that at the moment but I can say, South Australia will receive more than they’re receiving now.

BYNER:

More?

TREASURER:

Yes, of course they will. Do you know what the key reason is for that?

BYNER:

Because we get $1.47 for every dollar we spend…

TREASURER:

I’m talking about what they receive because it means the relativities go up and down now, Leon.

BYNER:

Yeah.

TREASURER:

I mean, under the current formula, South Australia’s relativity will change and it will go up and it will go down. So you’ve got to assess it against what will it be in the future but I’ll tell you what will have a bigger effect on the GST revenue that South Australia receives than anything else and that’s the strength of the economy. If the economy’s weaker, less GST is collected. So it’s no good getting a bigger share of a smaller pie. What we’re doing is we’re growing the pie by growing the economy. We’ve also dealt with some serious integrity issues in the GST, we’re making sure that big companies selling products into Australia from overseas that GST is paid on that and in next year alone, 2018-19, there is $1.9 billion in extra revenue that will come from the GST because of all the changes that we made over the last couple of years. Now, that gets distributed around all the states. So relativities, they can move a point here like 0.1 either way but if the pie’s getting bigger, everybody’s getting more and that’s what we’re focused on delivering.

BYNER:

A little later on this morning, it appears One Nation Senator, Brian Burston, is expected to give Clive Palmer’s United Party, he’s going to join them, which is pretty amazing stuff. Given all the drama with Clive Palmer, to think this could happen, are you disappointed with Senator Burston’s move? Because surely the Government would not be comfortable accepting his vote given that the workers of Mr Palmer’s company have been gutted.

TREASURER:

Well, Mr Palmer has a lot of explaining to do to people, especially up there in Townsville. I think he’s got to settle a lot of scores up there. As you know, the Government had to step in and guarantee people’s entitlements out of the scheme we have up there and we’re pursuing that matter and that is before the courts, so I won’t say any more about that. Mr Burston’s, Senator Burston’s decisions are matters for him and I’m not going to commentate on those and he’s obviously had some differences of view in the party he’s been in. I will say this, when he shakes on something, he sticks to it so you’ve got to respect that. In terms of Mr Palmer, thinking of him quite separately, we’ve seen that movie before and I’m not sure Australians want to see it again.

BYNER:

I’ve got to say, your Federal Council amazed me recently when they made a decision that they wanted to sell an asset like the ABC when clearly it never could have got up anyway in practice. All they have served to do is make your life a little more difficult, is that not the case?

TREASURER:

Look, the party membership has the right to do these things and we don’t tell them what to do and it plays the other way around too. The Parliamentary Party in the Liberal Party decides what policy is but the Government is not privatising the ABC, that’s not going to happen. So I think I can set everybody’s minds who is concerned about that at rest. I have no doubt that you have many listeners, Leon – because that’s probably why they’re listening to you – might feel that the ABC doesn’t, they have the perception that it doesn’t always tell the whole story. Well, that’s a problem for the ABC to rectify and give people confidence that that is occurring and I don’t think that’s unreasonable. But it’s no reason to change their ownership arrangements, we’re not doing that. I see Bill Shorten today is out there grabbing onto this like someone grabbing for a life raft on his own leadership. I mean, this bloke, honestly, will cling to anything to try and save himself. The suggestion that it would happen is not true. It’s a complete falsehood, it’s a lie and he’s out there trying to beat it up today for one simple reason, he is in a world of trouble.

BYNER:

Now, you need to win at least one seat in this by-election scenario, you may not get Mayo but Longman, for example, if you win that, you’ll be able to go out there and crow that your policies are working. Is that the way you’re going to see it?

TREASURER:

No, look, those are matters for the electors in each of those seats. I would say this that has never happened in more than 100 years, Leon. A Government has not won a by-election off the Opposition in Australia in more than 100 years. So I think we need to set the bar appropriately on that basis. That said, we’re contesting all of those three by-elections very vigorously with great candidates – Georgina down there in South Australia but, of course, Brett Whiteley over there in Tasmania and Big Trev up there in Longman, he’s enormous this bloke, I was standing next to him, now I don’t consider myself of small stature when it comes to physical height but this bloke, I think I came up to his shoulder. I’m glad he’s not playing for Queensland in the State of Origin next Sunday night – another topic which I’m sure South Australians have not the faintest idea what I’m talking about so I apologise for that.

BYNER:

Okay, one last question and I appreciate the fact that you’ve given us some time this morning…

TREASURER:

No worries.

BYNER:

And that is that there is a very big bid – $13 billion from Li Ka-shing whose Hong Kong company working via the Cayman Islands wants to acquire about half the gas pipelines that APA own. What are your thoughts on that?

TREASURER:

I can’t really canvas those, Leon, you’d understand. I’m the ultimate decision maker on this under the process and it would be totally inappropriate for me to offer any comment one way or the other and I’m sure you and your listeners would understand that for the integrity of the process.

BYNER:

You’re expecting an application?

TREASURER:

Again, Leon, I can’t comment on it.

BYNER:

Alright. Mr Morrison, thank you for joining us today. That’s the Treasurer of Australia, Scott Morrison, on FIVEaa.