2 December 2016
Transcript - #2016174, 2016

Interview with Michael Brissenden, ABC AM

SUBJECTS: Working Holiday Maker tax arrangements delivered through the Parliament; Bill Shorten and Labor’s wrecking approach to policy; Mid-Year Economic and Fiscal Outlook; Turnbull Government’s enterprise tax plan to drive economic growth; Council on Federal Financial Relations

MICHAEL BRISSENDEN:

I’m joined now by the Treasurer Scott Morrison, Treasurer Good Morning.

TREASURER:

Good morning Michael.

BRISSENDEN:

You’ve only just managed to save face on this backpacker tax thanks to the Greens. You’d have to concede it was a pretty messy end to the year wasn’t it?

TREASURER:

It was the achievement of 70 per cent of what was originally in the 15-16 Budget and then carried into the 16-17 Budget and that’s the 45th Parliament. On occasions these deals will go right down to the wire. It would have been preferable for that not to have played out that way and for this matter to be resolved some time ago but there was a lot of politics being played and at the end of the day the Labor Party played themselves into the ground.

BRISSENDEN:

Sure was a lot of politics. How did it come about, did you approach the Greens when it became apparent you couldn’t muster enough support or did they approach you?

TREASURER:

Late yesterday morning the Greens approached Senator Cormann and then we had some discussions, Senator Cormann and I with the Prime Minister, and we came to an arrangement which was accepted by the Greens and so I pay tribute to Senator Cormann. He and I worked very closely on these matters and it came off the back of the very clear position which we had communicated late the previous night and again the next morning, that unless there was support at the 15 per cent rate, which is the same as the seasonal workers rate, then the Government wouldn’t be able to return the Bill to the Senate and clearly at that point, after all other parties had made their positions very clear, the Greens made the move.

BRISSENDEN:

So clearly the Greens saw a political opportunity?

TREASURER:

This is the 45th Parliament. A similar thing happened a year ago when we were dealing with the multi-national anti-avoidance legislation which I and Senator Cormann were seeking to have passed through the Senate and we were able to come to an understand with the Greens there. Back in, I remember the 15-16 Budget, we’d come to an arrangement with the Government on the pensions assets test. So look, getting things done is what it’s about and on occasions it takes a while and has many permutations and rotations. But at the end of the day the Government was determined to get a result and we got one.

BRISSENDEN:

At any price, I mean this has cost what, an extra $100 million?

TREASURER:

All of these issues will be made clear in MYEO. These arrangements will be fully dealt with in MYEFO. This will not come at any additional cost to the Budget. I stress, this will deliver $560 million net of the commitments we made, for Nick Xenophon on getting Australians into these jobs, the measures for Tourism Australia as well as the compliance arrangements. So $560 million, that’s around about 74 per cent of what was originally in the Budget measure which Joe Hockey put in in 15-16. Just over 70 per cent of something Michael in the 45thParliament, you get that, you take it.

BRISSENDEN:

It’s clearly a difficult parliament for you to deal with. Did you learn a thing of two about dealing with this crossbench? I mean your own performance was questioned at one point, when you thought you had a deal with the crossbenchers and you said frankly the Labor Party can go and take a flying leap. Is that the approach you’ll take to other difficult negotiations?

TREASURER:

The Labor Party never engaged on this issue in good faith. They’ve engaged in other issues in a much more I think practical way. On this issue, they were only out to spoil, wreck and play politics. So they never engaged as a good faith partner in this exercise. So they ruled themselves out on that basis. Now we had sought to compromise to 15 per cent and had the support of One Nation and I thank Pauline Hanson and One Nation for that, and Nick Xenophon’s team had also been very supportive. After Senator Hinch and Senator Cullerton took the view they had, well, that meant we had to keep working the issue and that’s exactly what we did.

BRISSENDEN:

You finished the year by getting this backpacker tax passed, and the ABCC Bills. These are niche obsessions aren’t they as Bill Shorten says. What’s happened to the focus on jobs?

TREASURER:

This was a $560 million improvement to the Budget at the end of the day. In this place Michael, I think sometimes whether it’s the media or others they can become very casual about these sorts of things but I don’t think these numbers are causal to Australians. That’s why we progress, whether it was on this issue, I mean more than $21 billion now have passed through the Parliament as a result of our determination as a Government to continue to work to improve the Budget. I’m pleased that now, I will be able to write again, to S&P, the ratings agency to update them on the significant progress that the Government was made in having our Budget measures pass through the Parliament. That’s the issue they’ve raised as a concern. But more than $21 billion later since the election, and then you add to that the Australian Building and Construction Commission, and Registered Organisations, what was done with VET fee help last night, and a whole range of other measures, it’s been a very successful first six months since the election for the Government.

BRISSENDEN:

2017 just around the corner unfortunately perhaps. Everyone needs a bit of a break I think. But clearly the big thing on the agenda next year is going to be the company tax cuts, if you’ve had so much trouble getting all of this through, what hope is there that you can negotiate a deal on that one. That’s going to be even more difficult isn’t it?

TREASURER:

Given the Labor Party took the view that the New Zealand rate of tax for backpackers should be the reference rate for Australia, I’d be very surprised now if they don’t think we should be ensuring that Australians should be paying a lower rate of tax like they do in New Zealand for our businesses. And there are two parts to this I should stress. There is the part of the package which says that a small businesses would be defined as a business up to $10 million turnover. Their tax rate would reduce to 27.5 per cent. Now by extending that definition you’re including 100,000 additional companies employing 2.2 million Australians with an average number of employees of around 22. Now, that’s a very important change. Then there’s the broader change over the 10 years. We’re already seeing in the capital expenditure figures that were released yesterday the very real issue of getting private investment moving and the way to do that is to have more competitive tax arrangements for businesses to invest. Now the United States will be doing that under the Trump administration. The May and previous Cameron administrations are taking their tax rates down to 17 per cent and may indeed go further. If we don’t want to be left stranded for private investment in the Australian economy then we will need to keep pace.

BRISSENDEN:

What else have you got then on the agenda for 2017?

TREASURER:

Well the other issues we’re going to have to address, and Josh Frydenberg was talking about them out there today; the issues in the energy markets and making sure that people’s energy prices are more affordable, and that we have a real national market in this area and the infrastructure is being put in place to support a new energy advantage for Australian companies and for householders in the future. I think this is very important. Today, at the meeting of State Treasurers we are receiving back a report I initiated not long after becoming Treasurer on affordable housing. This is for housing that is, we’ve got 30 per cent of Australians, just over, who rent…

BRISSENDEN:

Any thoughts to moving on negative gearing? I notice New South Wales obviously has expressed some desire to actually see some changes.

TREASURER:

The report focuses particularly on the rental market and those who are most at risk in the rental market, those on lower incomes. And what I can tell you about negative gearing is if, as we saw in Sydney last time that is was abolished, and now that you’ve got markets like Brisbane and Melbourne which are very different to what they were back at that time, if you want to put up rents, if you want to put more stress in the rental market, where you have more people on lower incomes and people saving for their first house, then abolishing negative gearing would drive up rents for those people. That’s why I’ve never been a supporter of it. Particularly because mum and dad investors are who own the rental stock in Australia. Institutions don’t invest in rental stock in Australia like they do overseas, it’s one of the issues highlighted in this report. But for mum and dads to continue to provide that solid base of rental stock in Australia, well these arrangements are important.

BRISSENDEN:

No doubt they’ll be lots of difficult issues head for next year, thanks very much for joining us Treasurer Scott Morrison.

TREASURER:

Thanks you Michael and all the best. I’ve enjoyed our regular conversations and I look forward to taking them up with Sabra in the new year.