5 December 2016
Transcript - #2016177, 2016

Interview with Ray Hadley, 2GB

SUBJECTS: Mid-Year Economic and Fiscal Outlook; Working holiday maker tax arrangements; Senate negotiations; Social services; Triple-A rating; Adler shotgun; Superannuation.

RAY HADLEY:

Treasurer good morning.

TREASURER:

G’day Ray.

HADLEY:

So no break for you yet?

TREASURER:

No, we still have a lot to do between now and Christmas. We have got National Accounts out soon and then that’s followed up with the MYEFO statement – the mid-year statement – two weeks from today.

HADLEY:

You see I was sitting here last week and reporting it as it was happening and Hinch fell over, Culleton fell over and I thought, well, they have really gone now. I left here on Thursday afternoon saying well that is the end of them. ABCC is gone. The white knight coming over the horizon on the white stallion; it’s not Hinch, it’s not Culleton it is the Greens. You could have knocked me down with a feather. Then I say oh no what have they done and then I hear $100 million for Landcare. I know people might think, their eyes glaze over when you talk about Parliament being fascinating and the whole process – but it was fascinating because you had a couple of rogue Senators trying to hold you to ransom. Then out of the most unlikely circumstance the Greens come and rescue you.

TREASURER:

A very similar thing happened this time last year with the Multi National Anti-Avoidance legislation. Labor had been very belligerent on that – refused to pass it. These were laws that were actually making multinationals pay their fair share of tax. You would have thought Labor would have supported that. We ended up having to come to arrangement on that with the Greens because Labor wouldn’t. Here on this occasion I am pleased we have been able to resolve the issue for many listeners in the regional and rural areas. They will be pleased that was able to be settled and Landcare is a great program.

HADLEY:

Well, it is now. It’s a wonderful programme.

TREASURER:

And of course all these costs will be fully offset so the Budget will not be worse off.

HADLEY:

Now, I know that you would like to tell me the truth most of the time without your fingers crossed or anything.

TREASURER:

My hands are in the air.

RAY HADLEY: My mail is that the Greens approached your colleague Mr Cormann.

TREASURER:

Correct.

HADLEY:

Now, when you got the call or the confrontation or the discussion, did you sort of say, were you like the poor old Manuel who passed away last week?

TREASURER:

As I said we have had discussions with them on other issues and what was originally put to us was not something we could do and then the Prime Minister and I looked at what the options were and we put back an alternative proposition through Senator Cormann and we were able to land it. It was a pretty unpredictable week. There were people doing some unpredictable things despite what had been said. I am just pleased at the end of the day it was able to be resolved. This thing had been around, it had been a very difficult issue coming out of the 15/16 Budget and it is important the backpackers pay tax, pay a fair share of tax. They use the roads like everyone else, while they’re here, and now it is being settled we just get on with it and it is the end of the year on that issue.

HADLEY:

Will the ABCC be a little toothless because of certain clauses that were inserted into to cross the line in terms of companies that have done deals with the CFMEU and they can’t be undone?

TREASURER:

Well, there was the two year backdating which is the provision I suspect you are referring to. Going forward we are significantly better off with this. This is something we have been trying to…for three years we’ve been trying to get…

HADLEY:

What even allowing for that two-year backdating?

TREASURER:

As with all of these things, Ray. You get as much as you can get and I think the suggestions that that makes it toothless I think are completely disingenuous. This is a significant achievement, particularly for Senator Cash, who has done an extraordinary job pulling this together, together with the registered organisations. I stress these were the two reasons that we decided on an eight week campaign for a double dissolution election. Two Bills that had proved not possible of passing under the previous Parliament and now they are passed so I think that is great and to boot backpackers and a whole range of other issues were able to be addressed even the VET fee help debt issue was resolved late on the Thursday night as well. On top of that other controversial issues but difficult issues, necessary issues on superannuation and income tax cuts all of this getting done over the course of the last six months and more than $21 billion in Budget improvements have been passed since the election.

HADLEY:

I imagine despite Derryn Hinch’s extensive media experience he copped a new experience on Thursday come Friday when he thought he was a really big cog in the wheel and became not even a tiny cog in the wheel by Friday. I am talking about him being inexperienced in government and how it all works. You are a seasoned campaigner. You have seen these things happen, as you mentioned, in the last term of Government. It would have just absolutely blind-sided him.

TREASURER:

There are three channels we can work with to pass legislation, we have demonstrated that. We can work through the channel of working with the Labor Party where they are going to deal with us in good faith and they were not doing that on the backpacker tax, they just have done a search and control mission on that one. We can work through the crossbench if we can reasonably get them to a position as we did we the ABCC and the Registered Organisations, or if we have to, we will do it with the Greens if that is done on terms that are acceptable to us and on this occasion it was and matters settled.

HADLEY:

Now, I pick up the front page of the Australian today and I see where we are at $4 billion of welfare wrongly paid to recipients and if I read the story it is being traced back to the previous Labor government. To a certain extent your eyes glaze over when you start reading these stories because this has been attempted by many Governments before to rein in and it is admitted to here that some of it may have been a mistake by a person but some of it is fraud.

TREASURER:

That is true.

HADLEY:

Now, you are a Government that says it wants to rein it in and we have to rein it in. We can’t afford to keep going the way we are going and people have to actually be accountable for the money we gave them. Are you any more confident this time then previous governments were about doing the job?

TREASURER:

We are, the measures that you are talking about that are in the paper today, that was something we put in the 15/16 Budget when I was the Social Services Minister and then we further strengthening of that this time last year. What we are basically doing is using the technology we have available to us with databases to match people’s records to ensure that they are accurately reporting what their income is. Now, 20,000 I think or thereabouts a month where we are able to identify where these problems are. We are initiating the notices and we are following through and we are budgeting to pull in almost about $2 billion over five years and that is just by simply doing the work better, using our technology better. We are building a much better payment system in welfare which this government has put in place. So, whether it is the welfare policies themselves and under this Government the number of people on the DSP is actually falling – that hasn’t happened in a long time. On top of that, so that is a policy setting change, but there is also the administration and whether it was Stuart Robert or now Alan Tudge getting on with doing that job, that is what Governments should do, we are doing it and I think people should be encouraged by the steps we are taking there. People who need welfare, really need it I am talking about, I am talking safety net welfare, that is what the system is for. You can guarantee the safety net for people who really need it by ensuring that you run the system well by ensuring those who don’t are trying to have a loan of it or is there are genuine errors or things like that and that occurs as well, resolving those properly.

HADLEY:

You would hate to think that genuine errors are lumped into the same category as those who are just dudders. I mean that can happen. People listening to us now say I got this when I shouldn’t have got it. It was a mistake I made but then you have got the others that can be prosecuted where they actually sign up for various pensions that they are not entitled to. You get reports of women getting a pension with four or five kids in the house and the bloke living in the same house.

TREASURER:

It’s just not on. If people feel they have made a mistake they should get in contact with Centrelink, sit down with them and sort it out.

HADLEY:

Now, my eyes also glaze over when I hear from the former Liberal Leader John Hewson, who is not one of these former media commentators. I always find it fascinating how [inaudible] you have got a Labor bloke there and a Conservative bloke there and they are all great buddies and they carry on. Even Christopher Pyne and his counterpart get on there and have a bit of a go at each other. John Hewson was the bloke who couldn’t enunciate his own GST on a cake. It doesn’t matter what else he does in life, he will always be remembered as the bloke who lost the election because he couldn’t figure out what would happen with a cake and GST which he was trying to convince the electorate they should vote for. He now says it is inevitable that Australia will lose its triple-A credit rating. Is he right?

TREASURER:

That would be a matter decided by S&P. Remember there are three credit rating agencies. Two of those agencies have affirmed our triple-A stable rating since the election. S&P have also affirmed our triple-A rating but put us on negative watch for two years. The issue they raised was we understand the Government’s trajectory. The plan to get us back to surplus in 20-21 and that is contingent on the savings passing the Parliament. That is what they have said. That is why we have been working hard this year to get more than $21 billion and that is more than half way of our process to get the Budget back into balance by 2021. I will be writing again this week to S&P over in New York to update how we have been able to get that through in these last few months. Now, what S&P ultimately do is up to them. They will make their own decisions but what the Government has to do is focus on what we can do and that is get savings passed. I had a meeting with state Treasurers last Friday and not surprisingly they all asked for more money and they asked, what is the Government’s response? I said ‘you talk to the state’s house, which is the Senate, because the Senate is the one with the Labor Party’s key role there of blocking a lot of the savings needed to guarantee this. So, that is where it is at Ray. Where they go will be up to them but we just need to keep doing it. I get lots of advice from lots of quarters whether they are formal Liberal Leaders in the Parliament or other places. People say that we should spend less, spend more, we should spend more on infrastructure, spend less on infrastructure. Borrow more, borrow less. All I know is I want to keep taxes as low as I can. I want to keep working on getting expenditure under control and arresting the debt and make sure we keep prosecuting this $40 billion plan to get the Budget back into balance and we are more than halfway there.

HADLEY:

The Adler shotgun, you and I established when we discussed it last time; we probably know as much about shotguns as each other. The Prime Minister will meet with the Premiers this week and the Adler shotgun is there again. We are agonising over the rules of the seven shot Adler which becomes and eight shot as I am instructed by my friends who own guns because there is one in the chamber and seven in the cartridge and we have got already available I have established previously a five shot Adler and no one will discuss the difference between a five and a seven. It is a category B the five shot and can be used by farmers, professional shooters. Is the debate worth all the fuss we have had over the last few months about a five or seven shot Adler? Because the five shot is available already. I don’t understand why there is this absolute hysteria about making sure we have a seven shot Adler or a five shot Adler.

TREASURER:

This is a decision that needs to be made by states and territories. The Federal Government does not decide what category it is in. It has to be decided by consensus between all the state and territory governments. We are really the ones who decide what are the custom laws and things like this. So, we have said quite plainly that without any resolution to this issue our ban is in place and there is no change to that and there has been no change to that this week either. Now, COAG is meeting on Friday, I am sure they will have further discussion on that and what the NSW position is ultimately we will see on this issue because they have been one of the ones who had a different views than the rest of the states and territories on how it should be classified. Once it is classified and once those things are settled than the issue becomes a matter of enforcing that at a customs level.

HADLEY:

By a strange coincidence I started perusing in recent weeks the Mayor of Bathurst about council amalgamations and his fervour to support his mate Paul Toole, in NSW Government, the Local Government Minister to amalgamate councils in western NSW which didn’t prove to be really favourable to the Nationals in the Orange by-election. I have been talking about him owning acompany, Spectrum Windows Fashions, and not paying his workers their compulsory superannuation. In the second hour I’ll have an explosive interview with one of those workers but I pick up the paper today, almost by fate, and see that it is just obscene, $3.6 billion worth of super a year, close to a third of workers are missing out. Now, you get your statement every year from your super company but how, you’re in Bathurst, you want to keep your job, you don’t ruffle anyone’s feathers so you just keep thinking ‘this is going to come good and the money will be there eventually’ but if we’ve got a third of people not paying what they should pay in superannuation what can we do?

TREASURER:

Those reports are alarming and how those figures are arrived at, obviously Treasury and the tax office will have a closer look at that. It involves three components, those would be being denied, illegally, their superannuation payments, and that is just breaking the law. There would be some lag effect in terms of the catch up these things have four months to go through and so to what extent that is captured and I understand that figure includes that to some extent. The third one is this area which has been in place since these super laws were first put in place and that was this arrangement of if you have got your own contributions to super, voluntary contributions to super whether that can be used to offset any of the 9.5 per cent. Now, if you are on a higher income then those sorts of flexibilities are quite useful but if it is being used against people on a lower income then I think that is arguably even close to the first category. We have already put significant resources, particularly chasing down multinational tax and serious financial crime taskforce which is looking at a lot of these areas where people are not paying their fair share of tax. We are onto this one as well. It is important for people to have a look at this. Just in the same way if they are getting paid below award rates, their employer is doing them over in some sense. They are breaking the law. They shouldn’t be doing it and this is the same.

HADLEY:

What you need to understand in a small company with three, four or five or six or 10 employees in a country town.

TREASURER:

I understand that.

HADLEY:

And they get their statement and their compulsory – not their voluntary – their compulsory super has not gone in at the 9.5 per cent you just quoted they go to the boss and say, ‘hey mate this is part of my salary.’

TREASURER:

It is.

HADLEY:

‘It has to go in there’. It is like payroll tax. It is like any other tax – you have got to pay it. The state tax or federal tax it must go in there.

TREASURER:

They are deferred wages. That is exactly what it is. It’s their money.

HADLEY:

It’s their money.

TREASURER:

It’s not the Government’s money it is theirs.

HADLEY:

But the boss says ‘cash flow is a bit of a problem don’t whinge about it you know I am going to top it up next month or next quarter or next year.’

TREASURER:

Well, there is a four month period but that is breaking the law and it shouldn’t happen and it is the tax office’s job is to police that and that is what they will be doing.

HADLEY:

With no reference to a particular company, if the company then goes broke what happens to the money that wasn’t paid? I am not talking about the voluntary amount, I am talking about the compulsory 9.5 per cent. Are they any hope of getting that money back? Is there legislation to make sure that…

TREASURER:

That would be covered in terms of the outstanding wages and things of that nature of workers entitlements…

HADLEY:

But they’re unsecured creditors.

TREASURER:

But they’re also funds just like we had with the workers up in Townsville where we had… at the Nickel factory and we had the issue there and we put in place the fund which ensured that worker’s entitlements were addressed.

HADLEY:

But what happens to a small company in rural NSW or rural Queensland where the bloke or the person running the company hasn’t put the compulsory money in and they go into administration, what happens there?

TREASURER:

It would be the same as if they hadn’t paid them wages, outstanding wages, it would be treated exactly the same as I understand it.

HADLEY:

And that would be an unsecured creditor though…

TREASURER:

This is why people should obey the law and if people are worried about this anonymously or otherwise they should, the ATO needs to work on information just like the police need to work on information and others who are enforcing the laws – Borderforce or others – they need to work on the basis of tips and information.

HADLEY:

In the case of three people I have spoken to out of Bathurst with this bloke’s company, they have gone to the ATO months and months ago and the ATO said, ‘yes, we are going through all of this,’ if this company goes into administration tomorrow, the day after or the day after doesn’t matter the report to the ATO, its gone, all that money is gone.

TREASURER:

We need to make sure people obey the law Ray.

HADLEY:

Well, let’s hope so. The problem I have with a company I am not describing any particular company, the person goes broke, they go into administration, they are bankrupt, a couple of years later they come back, they start up again, Bob’s your uncle and the poor buggers who didn’t get the money don’t get a cracker.

TREASURER:

Next year, one of the things we will be introducing is changes to insolvency laws and that is something we have been working on for a while. The thinking behind this, it is not quite the chapter or situation they have in the United States. The best thing that can happen to a company that is going through trouble is you try and keep the company in business. Now, you have to be careful with the creditors and all the rest of it and the system can’t just work for the banks. If you have a company that can get through and can get to the other side, and keep trading, everybody keeps their job.

HADLEY:

I’ll take you up on that point, I had a phone call from the Minister in NSW over Bob Day’s company and this was six months ago and I was getting all these complaints from these people who were getting their houses built ‘Huxley Homes’ and I said to the Minister and I am happy to be quoted and I am sure he was. He said Ray we have got to be careful here – both of us – because if we keep talking it down we will tip them over the edge. Now, as it turns out, they were over the edge about three years ago. So, I take your point but too often people in business rely on the fact that bloke spoke about it in the paper, that Minister spoke about it they forced me over the edge and I am sure in the case of this bloke in Bathurst I will get the blame if things don’t work out, whereas the money has been owed for 12 months or more.

TREASURER:

Well, the key point is people should check are they getting paid their proper super. Check it on your payslip, or if you get it electronically these days and you should check that out and talk to your super fund and if you are concerned then please raise it with the authorities because it is illegal for them to not pay you super. They must pay you super.

HADLEY:

Are you coming in next Monday or are you going to have a day off?

TREASURER:

No, no mate, I will be here.

HADLEY:

You’ll front up.

TREASURER:

I will be here. I look forward to seeing you then.

HADLEY:

Don’t come the following Monday.

TREASURER:

The following Monday I will be handing down the mid-year economic statement so I will be very busy.

HADLEY:

Well, I won’t be here.

TREASURER:

You can listen from afar.

HADLEY:

Luke will be here. Thanks very much.

TREASURER:

Thanks mate.