24 July 2017
Transcript - #2017138, 2017

Interview with Fran Kelly, RN Breakfast

SUBJECTS: Bill Shorten’s surrender on economic growth; 240,000 jobs created last financial year; Labor’s vote against the Turnbull Government’s multinational anti-tax avoidance legislation; Bill Shorten’s attack on trusts; ATO Trusts Taskforce; Parliamentary terms; same-sex marriage; NSW Liberal Party

FRAN KELLY:

Malcolm Turnbull, he seems willing to have a sensible conversation with Bill Shorten about fixed parliamentary terms. Do you think he and you would be willing to have a sensible conversation with Bill Shorten about tax reform? Maybe find common ground?

TREASURER:

Bill Shorten has given up on growth in the economy. That’s what his speech last Friday said. What he’s basically saying is he doesn’t think Australia can do better by their wages increasing by the economy growing, by businesses doing better. For Bill Shorten now it’s all about how he carves it up, not how he grows the overall economy. He is playing heavily into this idea of envy and he is saying quite bluntly to Australians that he doesn’t have any plans to grow the economy, and he just wants to have a discussion about how it’s all divvied up. Now, we have a very different view to that, Fran. We have a very different view. Our view has always been, as Liberals and as Nationals, our task is to grow the Australian economy. In the last fiscal year, we saw more than 240,000 jobs created in this country, as a result of the hard work and enterprise of Australians and a Government that believes in growth, not just how you divide it all up.

KELLY:

But growth, to be effective, has to be inclusive. There’s pretty broad agreement on that and you and the Prime Minister, particularly in the last Budget, were all on about fairness. Now, that’s the word Bill Shorten has used. He says we have a two-tiered tax system, one that pay-as-you-go tax payers can access and another quote – “where if you have enough money you can basically choose to opt out many of the taxes”. And he’s saying that’s not fair.

TREASURER:

Well then why did he vote against multinational tax avoidance? I mean, this is a great hypocrisy of Bill Shorten, he comes out and he says all these things, but look at what he actually did. As leader, he voted against our multinational tax avoidance laws. We raised almost $3 billion extra just last year, because of those laws, and he voted against them.

KELLY:

Well it’s interesting, $3 billion because that’s the sort of figure people are talking about in terms of a closer look at trusts too, that seems to be where Labor is heading. We haven’t got the announcement from Labor yet, but it does appear that they’re going to zero in on trusts. People use trusts to minimise tax bills, that’s legal, and not uncommon. A report by the Australian Institute has identified more than $3 trillion sitting in trusts, which means the Tax Office could be missing out on [inaudible].

TREASURER:

We don’t believe trusts are any form of tax avoidance, we see trusts as a legitimate feature of how Australians conduct their financial affairs – that’s what Bill Shorten said in 2011. Now, we have…

KELLY:

That’s a fair time ago now, is it time to look at them?

TREASURER:

We have a Trusts Taskforce within the Tax Office that’s looking at integrity issues in trusts. But what Bill Shorten is saying to small business people, in the charitable sector, he’s saying to farmers, he’s saying he’s coming after you. He has already said, they have already made it really clear – the Labor Party – that they will put small business tax rates back up if they’re elected, and now…

KELLY:

They haven’t said that.

TREASURER:

No, I’m sorry, Fran. When you go through it clearly, what they have said is to pay for the promises that they have put out there, whether it’s education, anything like that, they are going to reverse the full Enterprise Tax Plan, Fran. And that means, that includes, the tax cuts that we have already legislated for small business. So, I am not going to let people let them off the hook on putting small business tax rates up because that’s what they’ll do and now they’re coming after small businesses’ trusts, they’re coming after farmers’ trusts. I mean, this is a guy for whom too much tax is never enough. The bottom line with Bill Shorten is more tax.

KELLY:

By-and-large it is fair to say isn’t it that lower income people don’t use trusts, they can’t afford the accountants and lawyers to set them up, and again to quote that Australia Institute Report, it found that people on incomes of more than $500,000 are the ones most likely to run all their incomes through trusts. So they might be legal, they are legal, but are they fair?

TREASURER:

Where they are used legitimately, I agree with what Bill Shorten said in 2011. Where they are used legitimately, that’s why we have…

KELLY:

So to split incomes, to stream incomes?

TREASURER:

Well, where they are used legitimately, and what we’ve said is – and what we’ve done, Fran, more importantly – what we have happening now, as part of our broader compliance and integrity initiatives at the Tax Office, we have a Trusts Taskforce, within the Tax Office, that is constantly looking at ways to improve the tax system, but what we’re not going to do is what Bill Shorten is engaged in which is give up on growth. We’re not going to engage in a tax first policy, we’re going to engage in a growth first policy, because we agree that’s the way that you can improve the economy and how people live. Bill’s only promise to people in this country is this, you’re going to get more because we’re going to take it off somewhere else. Our argument is this, we’re going to grow the economy, so every Australian can benefit, and we’re going to govern for every single Australian, not in the vested interests of the unions, or big business or whatever Bill Shorten’s agenda is.

KELLY:

Ok, but to then quote Bill Shorten, and he’s been talking a lot about this in the last few days which is one of the reasons you are here with me, he said inequality has hit a 75 year high in this country, to quote him it’s the “biggest threat to our health as an economy, and our cohesion as a society, inequality kills hope”. Do you accept trickledown economics hasn’t work for a lot of Australians, especially those who are suffering record low wages growth?

TREASURER:

Well, you know what I said in the Budget, what I said in the Budget was that despite the fact that we have now had 26 years of annual economic growth, despite the fact that while the rest of the world had gone into recession at various times since the GFC, Australia has been able to work its way through, and grow its way through. At the same time, there are parts of this country and there are many Australians that haven’t felt that. That’s exactly what I said in the Budget, and that’s why the Budget was very keenly focused on addressing important essential services, Medicare, education, the National Disability Insurance Scheme. We’ve increased funding for homelessness over the next four years and guaranteed the funding that is there for housing as we speak. So, we addressed the important service needs, as well as looking at the essentials on housing costs, on electricity prices. And we know that’s all important, Fran, and that’s why the Budget focused so clearly on ensuring that if you like the services wage that people get as a result of what is done by the Government, they can have great confidence in the Turnbull Government – and we did that. But what I don’t accept, and this was borne out and the lie was called out by the Melbourne Institute, and those who run the HILDA Survey, the Household, Income and Labour Dynamics survey in Australia – they said very plainly on Friday that this idea that people and inequality of incomes has been going in the wrong direction, that’s not supported by the facts. The latest census showed on the global measure of inequality – which is the Gini coefficient – that is the accepted global measure of income inequality around the world, that figure shows that it hasn’t gotten worse – inequality – it’s actually gotten better. And so, at the last election, Bill Shorten went to the Australian people with a lie. He said the Turnbull Government was going to sell Medicare. Now, it hasn’t been sold, it was never going to be sold and he’s going to the next election with another lie.

KELLY:

But do you think all those people who haven’t had a pay rise for two, three years now will feel the gaps are getting worse for them?

TREASURER:

Our objective, as I outlined in two Budgets now, is to ensure we grow the economy so they do better and their wages increase. That’s the way you address their problems. You don’t address their problems by just jacking up taxes across the board.

KELLY:

Ok, it’s quarter to eight, our guest is the Federal Treasurer Scott Morrison. On other issues, would it be easier to achieve structural economic reform if our Parliament ran fixed four year terms.

TREASURER:

I don’t think Bill Shorten should be given three years, let alone four.

KELLY:

What about your lot?

TREASURER:

Look, it’s not a top priority for the Government. I mean, Bill raised this. He’s the one that seems to be pushing it. The Prime Minister agreed to have a conversation about it and I know that my colleague across the river – David Coleman – has put forward some sensible views around this. It’s not a top order issue for the Government. It’s not one that the Government has initiated from that perspective. What we’re focused on is delivering a Budget and we had 17 pieces of legislation pass the Parliament since the Budget, so the Budget is passing the Senate. We’ve had 126 pieces of legislation pass the Parliament since we were re-elected a year ago, so we’re getting on with it. We’re focusing on energy prices, house prices – these are the things that have got us very focused.

KELLY:

Well, it’s not going to get anywhere at all unless there is bipartisan push for some kind of changes saying the Government’s not really going to facilitate that…

TREASURER:

No, what I’m just saying is it’s not a top priority for the Government. Bill Shorten, the one who’s raised it, he hasn’t even had the election yet and he already wants four years and I don’t think he should be given three.

KELLY:

Another issue unresolved for the Government is same-sex marriage. Your Cabinet colleague, Peter Dutton, on the weekend proposed a postal vote as an alternative to a plebiscite – an idea that he’s talked about before. What do you think of this as a way of dealing with the issue, getting it off the agenda before the next election?

TREASURER:

Well, I’m not dealing with that issue, Fran. I’m focused on growing the economy and our policy we took to the last election, I think that’s very clear [inaudible], these are not matters that have got my mind very focused.

KELLY:

But have you turned your mind at all to the issue of a postal vote, whether it would have any authority?

TREASURER:

The only issues I turn my mind to as Treasurer is how I’m going to grow the economy, see people’s wages improve, get more people into jobs, ensure that we’re funding sustainably the essential services that Australians rely on. I’m working on power prices with the Prime Minister and Josh Frydenberg and Matt Canavan. Our trade deal with Indonesia, the Prime Minister importantly said again on the weekend that we’re looking to conclude by the end of the year. That’s what’s got me focused, Fran. Other issues, they can look after themselves.

KELLY:

Ok, and just finally, because I know you probably have been thinking a bit about this over the weekend, the State Liberal Party NSW Division – your division – adopted the Warringah motion on party reform by a very comfortable margin yesterday. Do we read this as a pretty big win for Tony Abbott?

TREASURER:

We read it as a win for everyone who thinks the plebiscite’s a good idea and that includes Malcolm Turnbull, Tony Abbott, Scott Morrison and a whole range of other members of the NSW Division so I’m pleased that they had a good meeting out of the weekend. It’s always been my view that that’s a matter for organisational members and Jim Molan – who you know is a good friend of mine, Jim and I worked closely together when we stopped the boats – Jim’s been very passionate about this and I think he’s drawn a lot of people to that cause and good for Jim and now the Party has to get on and work through practically how they can make it happen on the ground.

KELLY:

So on that front, just a word of advice to State Council – you used to be a Director – should this go through without amendment?

TREASURER:

My State Council and State Director days are behind me and I’m happy for them to work on those issues and as Treasurer, I’ll keep focused on people’s jobs.

KELLY:

Treasurer, thank you very much for joining us.

TREASURER:

Thanks a lot, Fran. Good to be with you.