31 August 2017
Transcript - #2017167, 2017

Interview with Matt Wordsworth, ABC 7.30

SUBJECTS: Tax to GDP; wages; The Turnbull Government’s comprehensive plan to put downward pressure on electricity prices for households and businesses; same-sex marriage.

MATT WORDSWORTH:

Treasurer, welcome. Firstly, the amount of tax you have been taking as a percentage of GDP, it has risen since you took office, but in the Budget you said there would be a ceiling, 23.9 per cent of GDP, but the Budget papers said it does not represent a government policy or target. So does your speech today make it a government policy, make it a government promise?

TREASURER:

It has always been a government commitment. We are not going to see the tax to GDP, what I call the tax speed limit, rise above 23.9 per cent and, interestingly, Labor believed that, too, once upon a time. In fact, they said when we came to government that one of the key tests for us would be whether we could keep it below that tax speed limit. Now we achieved that and they have decided to abolish it. So I think there is a very clear distinction now between both sides of politics when it comes to tax.

WORDSWORTH:

So Labor is saying in its pitch to voters that inequality is on the rise and you acknowledged that many people might be feeling that way because wage growth has been so poor, so when is that going to change?

TREASURER:

We are starting to see much better data coming through now, but I do acknowledge that we haven't seen that flow onto wages as yet. But the profits numbers are starting to improve and today, in fact, we saw some of the best non-mining investment data come through today. That went up 2.6 per cent in the June quarter, but, more importantly, what is projected for next financial year is up over 5 per cent. So we are starting to see that investment come through and the investment which leads to the profits, which leads to the wages growth.

WORDSWORTH:

So you're saying that two things need to happen: Productivity, which is already high or rising…

TREASURER:

On labour productivity that is the case, yeah.

WORDSWORTH:

And profits, that also needs to change.

TREASURER:

Yeah.

WORDSWORTH:

But does profit in a company always lead to a decent wage rise?

TREASURER:

Well, I think it should. That is certainly the view that I hold, but let's not forget that for many consecutive quarters we saw profit growth going backwards by 0.8 per cent and when you take out the big financial and the mining sectors from those figures, we're seeing it going backwards by almost 2 per cent every year. Now, that was quite a burden for the economy to drag on the private sector for companies for many, many years. Now, the last two quarters we have seen in the national accounts, we have seen those profit performances lift but largely off commodity prices. Now, we need to see that sustained and I believe that once you see that sustained productivity and that sustained profit, then that should flow through to wages.

WORDSWORTH:

So, the Reserve Bank Governor, Philip Lowe, said quite famously a month or so ago, "That workers should be starting to ask their employers for a wage rise and that would be a good thing". So what are you saying to workers?

TREASURER:

Well, what Phil actually said was just a fairly, I think, common-sense economic observation that when you see unemployment coming down, and you see profits starting to improve and create a tightness in the labour market, well the obvious consequence of that is you are going to see wages move. Now that is what we are starting to see. We are seeing it in things like the IT security sector, we're seeing it some parts of the construction sector where there is big construction going on, jobs going on, particularly because of a lot of the public investment that is going in. So we are seeing the economy really starting to respond and work. I said in May that there were better days ahead. The more recent data since that time, I think, is bearing that out and this is becoming the emerging economic consensus.

WORDSWORTH:

I want to go back to another episode from a little while ago. In Parliament, you produced a lump of coal and said to Labor, "Don't be afraid, don't be scared."

TREASURER:

I am still not afraid.

WORDSWORTH:

Well, do you think the Federal Government should use its $5 billion Northern Infrastructure Fund to help fund the coal-fired power station in Queensland, a big issue up there?

TREASURER:

Well, that would be a decision that the NAIF (Northern Australia Infrastructure Fund) would make. They are independent of government. They do their own assessments.

WORDSWORTH:

The PM said this program on Monday night "no plans to fund the power station" but now you are saying… can you clarify?

TREASURER:

No, there is no distinct difference between the Prime Minister's and my position. The NAIF is an independent agency that makes assessments on the commercial basis of any of these projects and if they formed a view that that was something they were going to support, well that would be a matter that they would have to determine. We know that a Nicholls Government in Queensland would look to fast-track the development of a coal-fired power station.

WORDSWORTH:

They would love to see the Northern Australia Infrastructure Fund kick in for it.

TREASURER:

Well, if they are going to make an application to that fund then they will go through the same processes that anyone else would. Our point is this, whether it is coal, whether it is wind, whether is pumped hydro storage, whatever it happens to be, we need to build the reliability and base-load capacity over time for our energy sector. So we are resource agnostic, we are technology agnostic. We just think prices should be more stable and lower.

WORDSWORTH:

What about the clean energy target? Are you going to set a threshold that would allow for incentives for coal-fired power stations?

TREASURER:

We want to ensure that the regulatory environment gives certainty to investors to invest in greater power generation and greater power certainty for the entire economy but particularly for households and businesses. So that is something we are working hard to land that at the moment. We have been doing the work on it and we will continue to exercise the strategic patience to get this right and to get everybody on board.

WORDSWORTH:

So is that a yes or a no.

TREASURER:

It is we are working hard on it.

WORDSWORTH:

You are open to it?

TREASURER:

We are working hard on it. (Laughs) I will phrase my answers and you can phrase the questions.

WORDSWORTH:

Okay, on same-sex marriage John Howard said this morning the question of what religious exemptions apply should be part of this debate, do you agree?

TREASURER:

My view on the topic is as important as everyone else's. That is why we are having a survey on it. My view is, I am voting no. It is okay to say no, people should know that.

WORDSWORTH:

But do you think they should sort that out before we have the vote of yes or no.

TREASURER:

Well, that is not the process.

WORDSWORTH:

Your own MPs are saying we need to sort this out.

TREASURER:

Let's understand what this is. There is a survey, effectively the plebiscite that we promised to the people of the last election. If that is passed, then a private members bill would be facilitated. The Government is not bringing forward a bill on this. A private member would be facilitated on this and then the Parliament would then work through that bill.

WORDSWORTH:

Well, I am just saying that some Liberal MPs, some Coalition MPs might say well, if it wasn't discussed before the survey, they might use it as a delaying tactic or a reason to vote "no" after the survey.

TREASURER:

How members vote is up to them ultimately. The plebiscite, the survey, will give us a very clear picture about whether the Australian people want to see a bill like this come into the House and be dealt with by the Parliament. But let's not get ahead of ourselves. I am going to send my survey back. I encourage everyone else to do the same. My opinion as a politician is as important as anyone else's in this survey and that is why I think it is important that we've given Australians an opportunity to have their say. It is OK to say "no". It is OK to say "yes", but just make sure you have your say.

WORDSWORTH:

Alright, Treasurer Scott Morrison, thanks for your time.

TREASURER:

Thanks a lot.