22 June 2018
Transcript - #2018125, 2018

Interview with Jon Faine, ABC Melbourne

Subjects: Lower, fairer and simpler taxes for all working Australian; Turnbull Government delivering record jobs growth; Enterprise Tax Plan; house prices

JON FAINE:

Scott Morrison is the Treasurer in the Turnbull Coalition Federal Government. Mr Morrison good morning to you.

TREASURER:

G'day Jon.

FAINE:

Personal tax cuts of $140 billion plus you want corporate tax cuts of $80 billion. How on earth can Government continue to provide the services Australians require if you slash revenue by more than $200 billion?

TREASURER:

All of this was set out in the Budget Jon. As you know the Budget comes back into balance in 2019-20 – a year ahead above what we had previously said it gets to 1 per cent of our economy in surplus over the next ten years. And all of that is achieved while at the same time providing tax relief to Australians and to ensure competitive taxes for businesses so that they can provide jobs and continue to invest in the future of our economy. Our plan for lower taxes is part of our plan for a stronger economy. A stronger economy is what delivers the services you are talking about, not promises from politicians.

FAINE:

So, they are reducing the welfare bill for instance by beating up on people at the lower end of the economy while providing massive tax relief to people on incomes over $200,000 – how is that fair?

TREASURER:

Jon, we have been able to reduce the welfare bill by getting people into work. We now have the lowest level of welfare dependency for the working age population at 15.1 per cent than any time in the last 25 years. I used to be the Social Services Minister, I know how you reduce the social services bill – you get people in jobs. That is what we have been doing and with record jobs growth last year, and in the last most recent figures there were over 80,000 jobs created for young people in the Australian economy. That is what is getting the welfare bill down and we want people as they earn more to be able to keep more of what they have earn. Regardless of what they earn we want them to keep more of what they earn.

FAINE:

But those jobs are short-term, part-time, insecure…

TREASURER:

That is rubbish, Jon. Jon, that is rubbish…

FAINE:

…and at the lower end of the income stream.

TREASURER:

Jon, that is absolute crap, with great respect.

FAINE:

Which part of it?

TREASURER:

That 75 per cent of the jobs in the record year of jobs growth that we had was full time jobs. So, where are you making these figures up from?

FAINE:

The casualisation of the workforce, the growth of the gig economy, the contracting and rip-offs of people…

TREASURER:

I just gave you the official figures.

FAINE:

…at that end of the economy is notorious, Treasurer.

TREASURER:

Jon, I just gave you the official figures…

FAINE:

There is nothing crap about it at all if you want to get down to that level of language which usually we don't do on the ABC but if you want to go there I will go there too.

TREASURER:

I'm sorry to offend the ABC sensitivities, Jon.

FAINE:

We normally have a respectful conversation.

TREASURER:

Jon, it is very difficult when you speak such falsehoods like that.

FAINE:

What? This is fake news now, is it?

TREASURER:

Well, Jon, 75 per cent, according to the Australian Bureau of statistics of the record year of jobs growth – 415,000 were full time jobs.

FAINE:

But they're not career jobs, they are casual, they're short-term, gig economy and fake contracting jobs.

TREASURER:

Jon, a full time job is not a casual job. A full time job is a full time job. You can't make this stuff up. I am sorry to get upset with you but Jon you can't go and say things like that are simply not true.

FAINE:

The trend in the economy absolutely is as I've described. There is no denying it.

TREASURER:

I'm sorry there is denying it – 75 per cent of the jobs created in the record year of growth were full time jobs and more than half…

FAINE:

…And there has been zero growth in income. After inflation income and income growth at 2 per cent, inflation at 2 per cent, most people in the economy who don't earn over $150,000 or $200,000. Most people are in fact feeling things are getting worse – not better.

TREASURER:

More than half of the million jobs we have created in the economy since we came in at the election in 2013 have been full-time jobs. Wage growth has been running at about 1.9 per cent over the recent figures but the more recent figures are showing, as the Reserve Bank Governor has said, that wage growth has turned the corner – it is starting to edge up. Now, we want to see those benefits of a stronger economy reach all Australians. That is why our plans for a stronger economy, which include more competitive taxes for business so they don't have to face businesses overseas that pay lower rates. Bill Shorten talks about the big end of town. He is for the big end of town in New York, in San Francisco, in London, in Singapore, in Tokyo, in Shanghai.

FAINE:

In what way?

TREASURER:

Because they are the people, their companies benefit from paying lower rates of tax and they are competing with companies in Australia who Bill Shorten wants to ensure pay higher rates of tax.

FAINE:

Someone on $50,000 or $60,000 a year in the next year or two gets double the tax break from the Labor Party's proposal than they get from yours.

TREASURER:

Jon, no one believes the Labor Party on tax.

FAINE:

Well, I hate to break the news to you but some people don't believe you either.

TREASURER:

I have a record of delivering tax cuts Jon. I have a record of 415,000 jobs created in a record year of jobs growth in the economy. I have the record of halving the deficit over the last two Budgets and ensuring that we turn the corner on net debt and maintaining the AAA credit rating. They are my credentials. I am saying that the Labor Party is putting up taxes by $200 billion on everything from retirees at $5 billion a year, to small business with a turnover of $2 million. They are hitting people making contributions to their superannuation and now they are going to put an additional $70 billion tax burden on personal income taxes over the next ten years. Now, their argument is vote Labor, pay more tax.

FAINE:

Is Pauline Hanson a reliable partner for the Government in the Senate?

TREASURER:

She has voted for our legislation on this occasion and we welcome that.

FAINE:

In exchange for what?

TREASURER:

For lower taxes for Australians.

FAINE:

In exchange for what specifically? Other than the apprentices deal you have also introduced changes to the family court, you have introduced cuts to the ABC – are they all part of the trade-off with Pauline Hanson?

TREASURER:

No. they are Government policies that we stand by.

FAINE:

They are Government policies tailored specifically to get her support in the Senate for your tax cuts are they?

TREASURER:

No.

FAINE:

They are Government policies you would have introduced whether Pauline Hanson wanted you to or not?

TREASURER:

Yes.

FAINE:

Do you use the tax system as a redistributive tool or does inequality not concern the Turnbull Government?

TREASURER:

Well, Jon, the progressive system we have on taxation has not been altered by our personal tax plan. At the end of our plan if you are earning $40,000 a year your average tax rate is 11.1 per cent. If you are earning $200,000 a year your average tax rate is 32.6 per cent.

FAINE:

Yes, because you earn a lot more money you pay a lot more tax. It has always been thus and most Australians seem to understand that is a good way to run the country.

TREASURER:

And that is my point and that is what we are doing. I just told you what the figures were on the tax plan that was just legislated yesterday.

FAINE:

So, the effect of your cuts and my question is about inequality and the redistributive power of the tax system. The effect of your policy is that seven years from now rich people get a big tax cut, a huge tax cut, people who earn as much as me. Yet, at the same time I would have thought I was fairly low down on the list of people needing a bit of a hand out from the Government.

TREASURER:

Jon, do you know what happens seven years from now? The percentage of people on the top rate of tax will increase. They will pay for a bigger share of the personal tax burden in Australia. They will pay 36 per cent of the tax burden seven years from now – that is 30 per cent today. It's 4 per cent of the population today – it will be 6 per cent then. 94 per cent of people who pay tax in Australia won't face a marginal tax rate of higher than 32.5 cents in the dollar. So, this argument that somehow progressivity has changed or altered in any significant way by this proposal is again absolute rubbish.

FAINE:

Given that it is 4, 5 or 6 per cent of the population, why go through all of the political pain that is involved in giving them – me – other high income earners a big tax cut. Is it really worth it?

TREASURER:

Jon, is someone earning $95,000 today on a big income?

FAINE:

Well there are people who feel poor on $200,000.

TREASURER:

That's not what I asked you, I said is someone who is earning $95,000 today, are they on a high income?

FAINE:

That depends on your circumstances, there is no simple answer. If you are a single person…

TREASURER:

Now you're sounding like a politician.

FAINE:

Treasurer, if you are a single person and you have paid off your house and you are making that much money I think you are fairly well off. On the other hand if you are the breadwinner supporting a family on that much – no you're not.

TREASURER:

Exactly, and someone on $95,000 under our tax plan will be paying a lower rate of tax over the next seven years, every single one of those next seven years. And as their income goes up because of even just inflation let alone taking shifts and all the rest of it, they won't be facing a 37 cent tax rate which they will under Labor. So, this idea that somehow this is for the other end of the spectrum it just doesn't bear up to scrutiny. It's just the lines that are run up by Labor and others who think all Australians should be paying more tax.

FAINE:

I'm nearly out of time Scott Morrison, a couple of other things quickly if I may. Wages are still not growing so really the tax cuts don't really offset the growth that should have been coming in wages, do they?

TREASURER:

Do you know how we boost wages in the country, Jon? We do it by a stronger economy, businesses investing, businesses actually growing their businesses, taking more people on. The Labor market is tightening, the Reserve Bank is tightening. The Reserve Governor no less has made that conclusion and you will not get higher wages if people have to pay higher taxes and if businesses have to pay higher taxes. The counterfactual just doesn't stand up.

FAINE:

Just very quickly on housing prices, depending on which newspapers headlines you follow or which television or radio station news you listen to housing prices going down or a correction as it is called of either 5 or 10 per cent – is that to you good or bad news?

TREASURER:

Well, in Melbourne they are running over the last year at about 2 per cent growth and they were up around 13 per cent growth just over a year ago.

FAINE:

But if they turn around is that good news or bad news because depending on your perspective you can see it either way.

TREASURER:

I am sure I do but I think what I would describe and others like the Governor describe is this pause in house prices. They were running at very hot rates and that was making it hard for first homebuyers to get into the market. Now, under the changes that we introduced and what implemented through the regulatory changes that APRA made, we have seen a moderation in house price growth both in Sydney and Melbourne and what that has meant is that we have first homebuyers that are coming back into the market at a rate that we haven't seen in many years. Now, that isn't just because of what we have done as a Commonwealth Government. I would acknowledge the work that has also been done by the Victorian Government as has been done by the New South Wales Government – different Parties. I think there have been some real gains made for first home buyers whether it has been the tax cuts we have provided them, the changes we have made to investor lending rules which has taken the advantage that many of those investors have had over first homebuyers out of the market. We have seen house price growth moderate but we watch these things very carefully and there is still solid underpinning to where house prices will be into the future. So, that gives our consumers and people who own houses that assurance. At the same time first home buyers have been getting a better shake lately and I think that is a good thing.

FAINE:

I hope this hasn't been too crap for you Scott Morrison...

TREASURER:

[laughs]

FAINE:

…and I am aware that I have run over time and am making you late for your next media engagement. I better let you go.

TREASURER:

Not a problem, Jon. Always good to be with you.

FAINE:

Thank you indeed.