17 August 2017
Transcript - #2017159, 2017

Interview with David Speers, Sky News

Subjects: Turnbull Government acting to fully fund the NDIS, providing certainty for Australians with a disability and their families; Bill Shorten’s politics of envy; wages; media reform; citizenship

DAVID SPEERS:

Treasurer, thanks very much for your time. So, tell me why did you introduce today this bill to increase the Medicare Levy. You have got a couple of years really before it comes into effect. So, why now?

TREASURER:

As I said at the Budget you need to provide certainty to Australians living with disability. You need to provide certainty to families who are caring for them and their friends and importantly we need to settle the issue of the funding of the NDIS so that we can get on with the even more important job of delivering the NDIS. It has always been my intention to introduce a Bill at this time. I made that fairly clear, I believe, at the time of the Budget that we had to get on with this and provide certainty.

SPEERS:

Some have interpreted this as a sign that you have got some extra support on board. Is there any suggestion from crossbenchers that they’re itching towards a deal?

TREASURER:

We are not at that point yet and we are not suggesting that. What we have simply said is we have had very constructive discussions with the crossbench and the Greens as well and we continue to work through the issues that they are raising. It is disappointing though that this hasn’t got the unanimous support of both Chambers as it did last time when the Medicare Levy was introduced to support the NDIS. It went through with everybody supporting it. Now, only the Labor party are opposing it at the moment.

SPEERS:

How willing are you to shift on some of things that are nagging, in particular the threshold which this increase should apply?

TREASURER:

We are listening to what the crossbench are saying but it is important to frame this very clearly. This is about disabilities. This isn’t a debate about income redistribution. It is not an opportunity for Bill Shorten to once again engage in his politics of envy and bring a lot of politics into this. This is about people with disabilities. We are talking to the crossbench about the things that relate to people with disabilities. I look forward to continuing to progress that. The other point to make is this. The Medicare Levy is a broad based levy. The more you earn, the more you pay, that is true as it is a percentage of your total income – not your marginal income – your total income. The great problem with what Labor has proposed is that adding an extra half a per cent above a particular income would create a ginormous effective marginal tax rate. You just go from $87,000 where you are paying no extra Medicare Levy on all of your income up to that point. You earn a dollar more and now you are paying an extra half a per cent on all $87,000. Now, that is a tax cliff. It’s bad design. It’s not good policy. But worse than that, he is just raising it because it is about his politics of envy.

SPEERS:

Just on that though when you call it the politics of envy, it maybe, but for the average income earners out there they probably are quote happy to go with Labor’s suggestion that it is the higher income earners who should pick up the tab.

TREASURER:

Forty per cent of Australian households now don’t pay any net tax. The top one per cent pay 17 per cent of income tax. The top 10 per cent pay 50 per cent. We have a progressive tax system.

SPEERS:

But most average income earners are probably happy with that.

TREASURER:

Well, it’s a fair society and what is a fair deal? We have got 10 per cent of taxpayers paying 50 per cent of the tax. The Medicare Levy when it was used to fund the NDIS the first time, it was totally accepted by everyone in the Parliament and out there in the community that it was a fair enough thing. The Medicare Levy has cave outs for vulnerable Australians. You can be earning as a family in the mid-$40,000s and not have to pay the Medicare Levy.

SPEERS:

But do you take the point that a lot of lower income earners, average income earners are facing additional costs these days particularly on energy? I know you realise that and accept that and that is a pretty flat structure. That doesn’t distinguish between whether you are a high income earner or low income earner. The lowest pay just as much to heat a four bedroom house as a high earner.

TREASURER:

That’s true. That’s why the Levy increase comes in two years from now. We are not introducing it now but two years from now when the bills come in, the extra bills come in, on the National Disability Insurance Scheme. So, that is why we will continue to focus on everything we are doing to get electricity prices down, getting housing costs down, guaranteeing essential services as we did in the Budget – everything from health and education. So we are addressing those issues in all of those areas.

SPEERS:

Well, I guess this comes to the whole debate about equality or inequality…

TREASURER:

No David, that is the point. It doesn’t. This is not about that debate. This is about people with disabilities. This is about an insurance levy on all the eligible Australians who pay the Medicare Levy to ensure that all Australians…

SPEERS:

It is an increased tax. You can call it a levy but it is increasing the amount of tax…

TREASURER:

It is an insurance scheme, David. It is an insurance scheme that you will benefit from. I will benefit from. People who have no income. People who have a lot of income. Everyone puts in. Everyone has the ability to take out. Disability does not discriminate based on your income. It doesn’t and I know that those who want to oppose this measure want to make this a debate about income redistribution and wages. I don’t but it, I don’t buy it.

SPEERS:

[Inaudible] it is the question of how you pay for it. And it does come out in the way tax comes out of your salary. So people will see this increase in tax.

TREASURER:

In two years from now when the bills come in, if you are on a low income it is less than a dollar a day. It is less than a dollar a day if you are on a low income.

SPEERS:

For an average income earner it is $400 a year.

TREASURER:

Yes, so it is just a little over a dollar a day to ensure that all Australians have this incredible disability safety net which we all agreed was important, which we all agreed the Medicare Levy previously, with its existing carve-outs and protections for vulnerable Australians, was sufficient to protect them. So, we agreed to it just in 2013. It’s only four years since then, only four years and apparently everything has changed. The only thing that changed is Bill Shorten is the Leader of the Opposition and he is full of the politics of envy.

SPEERS:

Let me ask you about the debate around inequality. Do you think there is a problem right now?

TREASURER:

I think our tax system and our welfare system protects against rising inequality. That is what we have seen post the GFC period on incomes. That is the point I have been making. But I openly accept and acknowledge that household incomes have remained very flat. The issue is so what do you do? Do I help your income go up by taking more off someone else? No I don’t. The way any Australian’s income, anyone’s wage goes up, is if the business that they work for grows and does better.

SPEERS:

And they are not going up, the wages. We saw yesterday confirmation of the longest run ever of low wage growth. Why is that?

TREASURER:

Well, we are seeing that not just in Australia but we are actually seeing it in virtually every developed economy around the world today. It is part of what we have seen as the global economic funk since the Global Financial Crisis and that has been vexing developed economies now for some years...

SPEERS:

What is your answer to that?

TREASURER:

Our answer to that is growth. Our answer to that is to invest in infrastructure to reduce small business and medium sized business taxes, it’s to let start-up companies get off the mat. It is to increase competition for banking services...

SPEERS:

You have been in Government four years now. Why is it so flat? Why aren’t wages going up?

TREASURER:

Because it has been a tough global environment over this period of time. And guess what? All through that period we’ve grown. Last financial year 240,000 jobs. The strongest jobs growth we have seen since before the Global Financial Crisis.

SPEERS:

Which for those who’ve pick up a job, great. Company profits are looking pretty good to. We have seen a number of companies posting record profits. [Inaudible]

TREASURER:

Simple. I want to see improving profits flow on to higher wages.

SPEERS:

So you are saying to companies, come on your profits are pretty good. It’s time to pass them on.

TREASURER:

Well, they haven’t been good for a long time...

SPEERS:

The Commonwealth Bank has been posting record profits.

TREASURER:

Well, the banks, we are happy to talk about the banks. I think I have addressed the banks fairly comprehensively in recent times. I don’t think anyone is going to accuse me of going light on the banks, particularly them.

SPEERS:

They’re not the only ones though. There are plenty of companies posting record profits, last week, this week.

TREASURER:

I think profits are a good thing. Of course they are a good thing. 

SPEERS:

Should they pass them on?

TREASURER:

I think those who generate the profits, the workers in those companies, the investors in those companies, the shareholders in those companies, they should reap the dividends of the higher profits. But the way to improve people’s wages is not to tax profits more. The way to grow your economy is not to tax people more and that is not what we are doing. Since I have become Treasurer we have cut personal income taxes. We have cut business taxes. We are now seeking to cut taxes for first home savers. We have cut taxes for those investing in new start-up companies, in research. We have done all of this.

SPEERS:

Getting back to wages growth, why is it so flat? If companies are posting these record profits…

TREASURER:

For most companies, David, particularly small businesses it is true that for most Australians it has been a long time since they have had a decent pay rise. That is true. For most small businesses they weren’t just not getting pay rises, their profits were going backwards. Small business owners were taking on, in their own families, from their own pockets, carrying employees through what has been a very difficult time and they have been able to even achieve flat to modest wage growth for those employees and you know who paid for it? The small business owners. They did it out of their own pocket. We are backing them to lead the economy back to stronger growth.

SPEERS:

What about the big companies? You want to give them another tax cut.

TREASURER:

As Bill Shorten and Chris Bowen have already agreed, if you lower the corporate tax burden. Particularly comparatively to the rest of the world…

SPEERS:

They used to think that. They don’t anymore.

TREASURER:

Well, they change their mind on everything. That is true. Bill Shorten said yesterday he doesn’t want to change the date of Australia Day. That’s today. I don’t know what he is going to say next week or a month from now. He was for corporate tax cuts. Now, he is against them. He was a trust booster when he was in Government. Now he is a trust buster.

SPEERS:

My question is why do big companies, take Commonwealth Bank for example…

TREASURER:

Because it drives investment David and that is the economic [inaudible].

SPEERS:

But they are getting these record profits. We are not seeing wages going up. What is a company tax cut going to mean for those workers?

TREASURER:

Let’s look at where wages did move yesterday, where we had higher rates…

SPEERS:

Public wages.

TREASURER:

Well, no actually in the health sector and in the private sector in the health sector as well. The areas where we did see some better movement in wages were actually in the human services industries which are proving to be a much bigger provider of employment. There is a lot of research and technology going into those sectors. There are a lot more companies starting up in those sectors and people ask me about where some of the future jobs are coming from, we are seeing it happen in human services and particularly in the health industry. So, we are seeing that already happen there. And that is where we have seen wages move. We have seen wages move in some companies where they have had strong growth. Now, I would agree that there are others where that hasn’t occurred and I think I want to see that happen in those companies. But for most small to medium sized businesses, their profits growth has been negative on the National Accounts in the three years on average to the September Quarter last year. So, while their profits were negative, wages were modest in terms of their movement and flat but they weren’t going backwards. Small businesses have been carrying this economy for some years now.

SPEERS:

Let me turn to another couple of matters quickly, the other big reform the Government want to get through the Parliament is media reform. Nick Xenophon, his vote is going to be critical on this, he wants some tax breaks for small media companies. Is that something you would do?

TREASURER:

I will leave that to Mitch. He is working those issues through and he will raise those issues as …

SPEERS:

[inaudible]

TREASURER:

…necessary. The media reforms are important but equally the Government doesn’t look at these issues with blank cheque books.

SPEERS:

So, that would presumably be a message to the Greens who want more money for the ABC and SBS to get their support.

TREASURER:

Well, we are getting things through the Senate and on a number of occasions that has come at a price and on other occasions we’ve been able to move things through without that. As you know in the last Budget $14.7 billion of savings were frustrated by the Labor party and then in the Senate as well. And we had to pay for that. And we did. So, any time we have to enter into these arrangements and there is a bill, well the bill has to be paid.

SPEERS:

Sometimes there is a cost to that?

TREASURER:

Of course there is. But that is why, like on the NDIS for example, I don’t see why we can’t just back this in.

SPEERS:

But there might be a cost to this as well. You might have to give a bit of ground.

TREASURER:

Personally, I don’t think this is something we should be haggling over. I think it is something that we should just do. It is the right thing to do.

SPEERS:

But to get to the pragmatism you are talking about there you might have to give a bit of ground.

TREASURER:

Well, we will have to work with the Senate that the Australian people elected.

SPEERS:

Speaking of the Senate, the Australian people elected in the House, the people have elected, finally this question over the Government’s majority. A lot of people have been asked this question this week. Why did Matt Canavan resign from Cabinet but not Barnaby Joyce? Both are now before the High Court.

TREASURER:

The circumstances are different as I said this morning. But, also, the advice the Government had particularly in relation to the Deputy Prime Minister was very strong. The Prime Minister has acted on the basis of that and I think he is in a very strong position to do so.

SPEERS:

And finally, you’re a former party operative, would you be dusting off a by-election plan right now for the seat of New England?

TREASURER:

Well, I don’t think the Labor party necessarily would want to go up against Barnaby Joyce in a by-election.

SPEERS:

Probably not. I’m not sure if they did last time either.

TREASURER:

I think Barnaby has a very strong position. Let’s just get it clear. The Labor party says that Barnaby Joyce is not true blue. Give me a break. I think that, not just the electors of New England but the entire country goes, you’ve got to be kidding me, Barnaby Joyce is not true blue.

SPEERS:

I think it was Barnaby Joyce himself who discovered that he was a Kiwi.

TREASURER:

No, they have gone further than that in the way they have sought to smear and kick up dust and crawl around other parliaments. I think they have been really shifty on this. I think Bill Shorten has demonstrated, once again, that he is a very shifty guy.

SPEERS:

At the end of the day it is up to Members of Parliament, particularly the Deputy Prime Minister to work out if they are eligible to sit in Parliament.

TREASURER:

I think Barnaby’s statement to the House was very clear about what he knew and didn’t know.

SPEERS:

Scott Morrison. Thank you for your time.

TREASURER:

Thanks a lot David.