18 July 2018
Transcript - #2018150, 2018

Doorstop interview, Penguin

Subjects: Enterprise Tax Plan; Instant Asset Write-off; Defence industry plan; trade agreements; Official Cash Rate; Newstart; Bill Shorten’s address to the ACTU Congress

BRETT WHITELEY:

Welcome everybody to Penguin Composites. It's great to be here with John and obviously great to have here the Treasurer of Australia, Scott Morrison. It's always great to have Scott in Braddon. He's seen a lot of changes here as many of his cabinet colleagues have been saying over the last few weeks. There is change afoot, and this Government is about providing a strong plan for this region. It's about providing that confidence, and we've seen this morning in the national media where Tasmanian confidence, business confidence, is at record levels. And certainly those levels are flowing through here right onto the North West Coast, the West Coast and Kind Island. I'm excited, as the candidate for this great electorate, that there is so much hope and aspiration in this electorate. And my focus, as you all know, has always been on continuing to provide the environment for businesses like Penguin Composites to grow their business, to make more money so that they can invest more in their business, and ultimately to put more and more younger, and older, Australians into work here in this region. And that is working, the plan is working. It's a strong plan – over 1,800 new jobs have been created over the past five years compared to the mess that was left by Labor and the Greens. But more excitingly, looking to the future: what an exciting three weeks it's been in Braddon. To see the confidence levels of our mining sector, not to mention the continued hope that's building in the agricultural sector on the back of free trade agreements. But over 500 jobs that are now being sought out by our mining sector and then we've seen Julie Bishop here more recently discussing the pre-qualification of Direct Edge and the 25 jobs that they'll immediately need to put on. We're here at another supply chain in the defence industry in Penguin Composites. They're building their business. So I just want to say to people that are possibly watching from across the country, Tasmania is open for business. We need workers, we know you want to come and live here, you've always wanted to do that, but you've been held back by the lack of employment opportunity. Well those days are passed. The new days are ahead. And we are about delivering jobs and confidence in this local economy.

So without any further ado, it's great to have here the Treasurer in Braddon. Over to you.

TREASURER:

Thanks a lot, Brett. And to John, thank you for having us here today at Penguin Composites. It's great to be back here in Tas but it's also great to be here in Penguin. And it's great to see the confidence that is here in the Tasmanian economy. Now, I want to pay credit to Will Hodgeman and Peter Gutwein for the strong economic leadership they're providing for the state of Tasmania. We have a plan for a stronger economy for the nation. They have a plan for a stronger economy for Tasmania. John's got a plan for a stronger Penguin Composites. You can see all the elements of that plan coming into play where we're standing here today.

I mean we are standing by John here and his business here in some very important ways. First of all, we have legislated to bring the tax paid by this business from 30 per cent to 25 per cent. The Labor Party will reverse that change to 25 per cent and not just for this business, but for every single business that has a legislated tax cut to 25 per cent. So, from the smallest corner shop to businesses like this, and even bigger businesses up to $50 million that have a legislated tax cut to 25 per cent, Labor have said they will reverse that legislation. And that means this business will pay more tax as a result of a Labor government.

The second thing I'd say in addition to what we're doing on the instant asset write-off, this is a business that has benefitted from the fact that the instant asset write-off threshold was moved from $2 million to $10 million by our government and it's been extended for a further year where you can purchase equipment up to $20,000 and immediately write that off. And that's been achieved as well by the changes that, when I was here last in Tasmania, we talked about how we were going to do that and bring in that legislation. We brought in that legislation. We passed it. The Labor Party voted against it. Justine Keay voted against the legislation to give the instant asset write-off to this business, specifically, by opposing the tax cuts that we put in place for these businesses.

The other thing we're seeing is the defence industry contracting plan. Penguin Composites is part of Australia's global defence industry supply chain and the expansion we've just walked through - the materials, the new products, the new investment that has gone into making it capable of delivering on that defence contract is a result of our defence industry plan. I know that Minister Pyne was here yesterday talking about that and this is one of the key businesses that is employing more people because of that defence industry plan.

But another reason I think for the strong confidence here in Tasmania has been the success of our trade agreements. I mean those trade agreements, particularly for agricultural exporters out of Tasmania, has been a real shot in the arm and a real boost to their business and that's why we, as a government, are absolutely committed to ensuring that we keep the doors open to trade all around the world. Later this week - in fact on Friday - I'll be heading to Buenos Aires for the G20 meeting where, of course, trade will continue to be an important and serious topic of discussion. We have been fighting to keep the doors open to trade. That's good for Australia. It's good for Tasmania. It's good for agricultural producers and other producers here. John's business here actually exports. It exports what it's doing up here into Thailand and other places. So this is an economy in Tasmania that is becoming more and more resilient and more and more future-focused because of the environment we're creating with lower taxes, investments in our defence industry, ensuring that we're delivering trade agreements on the ground and, on top of that, we're investing in infrastructure, some $400 million on the Bass Highway, we drove in here on that today, and that was announced in this year's budget.

So the investments are going in. Businesses like John's are responding. That's what it means to stand by business. It means to do the things that I've talked about and to ensure that they can see the growth occur in their business and across the economy, employing more people. That is what is plan for a stronger delivers, whether it's here in Tasmania or anywhere else around the economy. And Brett is the champion of that plan here in Braddon and that's why he deserves the support of locals here in Braddon at the upcoming by-election.

QUESTION:

While we're talking about trade, the Reserve Bank says that global trade tensions are undermining confidence and could leave Australia vulnerable or open to an economic shock. What are you going to do to talk the US and China out of a trade war?

TREASURER:

We will continue to provide the strong leadership we have on the issue of trade. I mean, it is Australia that took the lead on ensuring that the Trans-Pacific Partnership deal did not fall over. It was Prime Minister Malcolm Turnbull specifically who teamed up with John Key and Prime Minister Abe, which got that back on track.

You remember the Labor Party said it was a dead deal? I mean Bill Shorten made parrot sketch jokes about the TPP and ended up becoming the butt of his own joke, because he did not believe that keeping the doors open to trade is good for Australia. Now, we believed it. We went out there. We secured that agreement. We've secured so many other agreements. We've protected manufacturing jobs in steel and aluminium in terms of what happened with the changes in the US. Why? Because we had the credentials of keeping the doors to trade open with the US and we have become the standard.

Australia has become the standard that the US sees that they would like to see with other countries to ensure that the doors to trade remain open. There are definitely issues that have to be discussed and resolved between the US and many of its trading partners, but all of these countries now are so much more tied up in the global supply chain, whether it's China, whether it's Canada, the United Kingdom, Australia of course, and indeed the United States. No-one wins from a trade war. No-one wins from a trade war. And we need to ensure that we continue to provide the leadership and the advocacy for trade that prevents economic self-harm being done to the global economy and that's certainly the sentiments that I'll be expressing at the meeting later this week.

QUESTION:

(Inaudible) … within a hundred days of becoming PM, he'd reverse the arbitrary cut to Sunday penalty rates to 700,000 workers. Would the Government oppose that?

TREASURER:

I don't believe anything Bill Shorten says because he changes his mind on so many things it's hard to follow him. He's back flipped on any number of issues and his position changes from day to day. What Bill Shorten did when he was a minister is he put in place the very arrangements which led to the decision which you've referred to. So he actually created the architecture, he created the commission, he made it independent, and he put that in place. So the reason we have the outcome that has been produced by that result is because of the design and the machine that Bill Shorten himself built. So Bill Shorten has to take responsibility for his own decisions. What we respect is the independence of the commissioner and for the decisions that they take and we don't think it's a good thing for the Australian economy for that independence of that commission to be undermined.

QUESTION:

Given your time in politics, how would you describe the incredible actions of Donald Trump in the past 48 hours?

TREASURER:

It's not for me to offer a commentary on that here. What we're focused on is Australia's interests and Australia's interests involve standing up to those who threaten our interests and there's no doubt that the actions of Russia in relation to MH17 were disgraceful and we've taken a very strident view on that and we continue to take a strident view on that and that is shared, I think, by everybody within the political spectrum in Australia. And we should continue to do that.

And you don't have to compromise on those issues to ensure that you continue to advance the interests of your country, as we have demonstrated on the global stage now, whether it's on trade or diplomatic issues or anything else. Australia is well respected for calling it straight, for calling it honest, and for calling it the way it should be and standing up for principles that lead to greater economic prosperity, not just in this country, but all around the world.

At the end of the day, that's what it's about. It's about the jobs that are being created here at Penguin Composites - jobs that are being created by investments that inspire other investments and inspire confidence. This is what's at stake. This is what's at stake here in Australia, let alone the rest of the world. We have an opposition that wants to put up taxes on this business, put up taxes more than $200 billion on the entire economy over the next 10 years. That will hurt jobs. That will hurt wages. That will hurt business. That will hurt the confidence that has been so hard fought and won here in Tasmania. We don't want to see that go the other way by embracing policies and candidates like Justine Keay, who want higher taxes on business and higher taxes on the confidence of the Tasmanian economy.

QUESTION:

Do you accept that Donald Trump, that he misspoke when he said there was no reason for Russia to meddle in the US election?

TREASURER:

Look, I've seen those reports today. I said what I had to say about it yesterday. I'm disappointed, as all Australians are, at the tone of that meeting and I think there have been plenty of commentary on that from others.

QUESTION:

Treasurer, are there any businesses in Braddon that would actually directly benefit from your plan to cut the company tax rate for companies with a turnover above $50 million?

TREASURER:

Absolutely. Take a company like Qantas, okay? Qantas have 13,000 businesses in their supply chain, and that includes businesses here in Tasmania. Big businesses, large businesses, all exist in the same economy. We don't have an economy just for small businesses which is completely separate to large business and we don't have an economy which is just for Tasmanian businesses which is not connected to businesses in Queensland or Western Australia or indeed Thailand. I mean, it's all one economy. And if you punish one part of the economy, then that hurts all parts of the economy. That's why we believe that competitive taxes for Australian businesses is good for all workers. But you make the point about taxes. Bill Shorten wants to reverse the legislation that was passed by the Parliament that would take the tax rate for businesses of less than $50 million in turnover, so down to $1 in turnover, effectively. He wants to reverse the legislation that would take their taxes down to 25 per cent. He wants every single business in the country, large or small, every business here in Tasmania, to pay higher taxes. Now, I don't understand how making a business pay higher taxes helps them invest more, employ more people, give them a wage rise. I mean explain it to me. I don't get it. I just don't get it. If they have to pay me more as Treasurer, how can they pay the employees more? How can they invest nor more in the equipment they need if they have to pay the Treasurer more? It just doesn't make any sense.

QUESTION:

Treasurer, just on interest rates, there have been a number of calls from economists for the official cash rate to go up… [inaudible]. Do you think the official cash rate is too low?

TREASURER:

Of course the Treasurer is not going to comment on what the cash rate should be because we've got an independent Reserve Bank that makes those decisions and has made that consistently to keep them where they are now for quite a long period of time. I will continue to leave that to their judgment. The bank has made it pretty clear that they're not seeing anything moving in the short term and even into next year potentially. So that's for them to, I think, set expectations around that, not for me. But what is clear is that until we're starting to see inflation moving back into the target band, and particularly until we see wages moving into a stronger position of growth, then the bank has made it pretty clear that they're pretty comfortable where the settings are right now.

There's been a lot of stability, I think, in our monetary settings for quite a period of time and businesses have been able to get on with things. As a government, we're working through APRA, we've been able to take some of the heat out of the pressure that would have potentially led to other movements in rates by addressing the house price movements particularly in Sydney and Melbourne. Now, you know, what's really important is that you have a policy that deals with these things that just doesn't focus on Sydney and Melbourne. You've got to have - and this is I'm sure what the bank does as well - they've got to be thinking about the monetary policy settings that impact here in Penguin and Burney and Devonport, as much as they impact on the suburbs of Sydney or Perth or Darwin. So it's very important that they maintain that perspective and I have absolute confidence in Governor Lowe and his entire team in the way that they've been managing this issue. They're obviously keeping a close eye on issues like household debt, but let's not forget one of the reasons why Australia's household debt is as high as it is, is 80% of that is actually in mortgages and, in this country, the rental stock of properties in this country is actually held in the household sector by mums and dads, as opposed to what you'd see in other parts of the world. So that structurally makes the household debt, which is attributed to the housing sector, much higher than it would be in other countries.

So they're keeping a close eye on that but they've also been, I think, very commending of the measures, whether it's been in infrastructure investment or our fiscal programs that has ensured that they could have the confidence and stability that they need to make the decisions that they are.

QUESTION:

The former head of the Digital Transformation Agency says that the My Health Record system isn't secure and is urging people to opt out, do you need to do more to convince Australians…

TREASURER:

I'll leave those matters to Greg Hunt.

QUESTION:

Do you think...

TREASURER:

I'll leave them to Greg Hunt.

QUESTION:

Are you opting out?

TREASURER:

No.

QUESTION:

Do you support an increase to the Newstart allowance?

TREASURER:

I support getting Australians off welfare and into work and that's what this government has done and that's what's happening right here in Penguin Composites by creating jobs. I mean the way you get control of your welfare bill in this country is you just get people into work. That's the way you achieve it. Last year we had record growth, 412,000 jobs created across Australia, which has seen more and more people get into those jobs and what it's also meant is that the proportion of Australians today that are actually earning wages or having an income, which is, you know, below effectively the poverty line, less than half of weekly wages, that has actually been falling and has been falling ever since we've come into government. And the reason for that? People are getting jobs. So you want to improve people's living standards? Get them into jobs and get businesses growing like Penguin Composites are.

QUESTION:

Just on that, can I ask John, are you hiring more people here? (inaudible)…as a result of company tax cuts?

BUSINESS OWNER:

Look, we're definitely employing people and we are paying people more at the moment. The tax cuts are obviously going to affect us into the future, not currently.

QUESTION:

But are you committing to hiring people once that comes through?

BUSINESS OWNER:

It will depend on cash flow and our ability to be able to hire. If we haven't got the cash, we can't hire.

QUESTION:

[inaudible]

BUSINESS OWNER:

For a start, you do have to be in a profitable situation before you actually start paying that tax.

QUESTION:

You Haven't got a ball park figure of how much you'll save… [inaudible]

BUSINESS OWNER:

That depends on the business, doesn't it? It's not easy to answer that.

QUESTION:

Are you making a profit at the moment?

BUSINESS OWNER:

No. We haven't been for a few years. We've been reinvesting constantly for the last five years, so it's very important that when we do get over that hurdle, that we're not being lumped with a big tax bill.

TREASURER:

This is the whole point of the Enterprise Tax Plan. When I announced it in the 2016 Budget, it geared up over a decade and whether it was for small and medium-sized businesses for whom the lower tax rate kicked in pretty much immediately or for businesses at the higher end of the scale, they could look down the track and know that by the end of that program, they would have a competitive tax rate and they could be making the larger-scale investments that larger companies do in the knowledge of what the tax rate would be at that time. And that's why it still needs to be legislated right now. For larger businesses to have the certainty about the investment that we want them to invest into, they need the certainty about what those tax rates are going to be and that's why we put it in place and that's why when the parliament comes back, we'll be continuing to pursue the legislation of competitive taxes for the entire economy. We will have the second highest tax rate for business in the OECD unless this legislation is passed. And if you think that's good for jobs, if you think it's good for investment, if you think it gives people confidence, then you're kidding yourself. You've got to get competitive tax rates because it's a globally competitive world and our tax rates for businesses are too high and they'll cost jobs if we leave them where they are.

QUESTION:

Just one more on Bill Shorten. The media was locked out of Bill Shorten's address to the ACTU Congress. Do you think he's hiding?

TREASURER:

There's a bunch of why I suspect Bill Shorten is in hiding at the moment. Mainly he's in hiding from Anthony Albanese, I suspect. But, look, that's for him to explain, why he doesn't want to tell the truth about what he's talking to Australian unions about. What's his deal with John Setka? What's his deal with the CFMEU? What're his plans to let unions drive his policymaking in government? These are all, I think, legitimate concerns that Australians should have about Bill Shorten. There has never been, I think, a Labor leader that has been more beholden - and this is the difference, it's not just that he's close to unions or he's come from unions. There's been plenty of Labor leaders that have come out of the union movement. But there's never been a Labor leader like Bill Shorten that's been more dependent on them and more beholden to them. He is dependent on those unions for his very leadership of the Labor Party. He is dependent on the CFMEU for the millions of dollars that they channel into his election campaigns. Bill Shorten can never say no to John Setka and the unions and what the unions would want to do to businesses and jobs and investment in this country. So it's for him to explain why he is the most owned Leader of the Labor Party by the union movement and particularly the militant unions in this country. Sure, there's plenty of unions out there doing the right thing by their workers and good for them. But it's the militant unions, the Setka unions, the CFMEU, those ones who own Bill Shorten, and if they own Bill Shorten as the Leader of the Opposition, imagine what they'd do if he was prime minister.

QUESTION:

[inaudible]

TREASURER:

Yes. Thank you.

QUESTION:

On Braddon, what did you make of Bill Shorten... [inaudible]?

TREASURER:

Bill Shorten, I know last time he came to Tasmania, struggled to get an audience amongst the business community, so the Prime Minister doesn't have that problem and I don't see why he should be trying to enlist the Prime Minister to try and get him an audience. Thanks very much.