19 December 2016
Transcript - #2016186, 2016

Doorstop interview, Canberra

SUBJECTS: Mid-Year Economic and Fiscal Outlook; Rod Culleton.

TREASURER:

Today we will be releasing the mid-year statement. In today’s statement you will see the Turnbull Government continuing on the job of delivery in this term of commitment, delivering on the election promises we took to the last election. Not only just delivering on those promises but delivering on the way in wich we do things in this Government. That is we don’t spend more than we save and what we spend we make sure that there is money there to support it. That is why since the 2013 election, as a Government, under two prime ministers we have worked to ensure that we always spend less than we save. We've done that time in and time out, and today you will see that again.

The other thing that you will see today is an update of our progress on the legislated measures we've been able to take through this 45th Parliament. More than $22 billion has now been brought into effect just since the last election. Now, this demonstrates a significant progress in the Government being able to put through its Budget improvement measures which are obviously so critical to ensuring the health of the Budget going forward. Now, there still remains measures that need to be passed by this Parliament and you've heard me and the Prime Minister, the Finance Minister and others repeat time and time again that we're looking for the partners in this Parliament who will join us on the task of returning the Budget to balance. It does need the support of the Parliament. The Government can put forward the measures, as we do, and those measures are carefully considered and they are well targeted, but they need the support of the Parliament to ensure that we maintain that trajectory of returning the Budget to balance that we've spoken about so often.

So these election commitments today, whether it is the Wi-Fi on the train from the Gold Coast, whether it's the city deals in places like Townsville, whether it's the Flinders Rail project, whether it's the commitments we've made in medical areas, in health and in education – in the MYEFO today what you will see is the Government coming good on all those election commitments. You will also see us doing it in a way that does not, does not, retreat from the job of Budget repair that is so important. Now, that is in stark contrast. At the last election, one thing I tell you today, the numbers you see today, if the Labor Party were delivering this statement today, the figures would be at least $16.5 billion worse. That's not from the Government – that's from the Parliamentary Budget Office. At the last election, they took policy decisions in their own commitments which would make the Budget $16.5 billion worse over this Budget and forward estimates. So, the Government has not gone down that path, the Government resisted that path, the Government showed restraint and fiscal discipline when we went to the people at the last election, and today you will see in the MYEFO statement the Government delivering on those commitments.

QUESTION:

Has the deficit blown out beyond what was forecast in May?

TREASURER:

MYEFO will be released just after lunchtime today and all the figures will be in there.

QUESTION:

How confident are you that this document will ward off the ratings agencies from downgrading our AAA credit rating?

TREASURER:

That's a matter for the ratings agencies. The MYEFO today is a very prudent, it’s a very conservative and careful document that uses all the best information available to us, taking into account the many things that have happened over the last 5 or 6 months; we’ve had major shifts in commodity prices, there have been weaker positions on wage prices and things of that nature, that all has to be taken into account. The September quarter National Accounts results, that has to be taken into account. So, Treasury has come together and prepared a set of forecasts that reflect, I think, cautiously those conditions. But I make this other point; when people decide to invest in Australia, what they know and what they have seen is a record of 25 years of consecutive economic growth, our Commonwealth debt levels at a gross position, are about a third of what the debt position is as a share of GDP for advanced economies on average around the world. Our economic growth is still, is still in the top of the pack when it comes to advanced economies around the world. And what they can also see is what is an extraordinary result for our economy, and that is evidence, not theory, but evidence of successful transition from the mining investment boom through to a more diversified economy. As a result not only of the Government's national economic plan, which has been deliberately seeking to diversify our economy, to take us out from the transition from the mining investment boom, but it is the support and hard work obviously and most importantly of all Australians out there who are going to work every day, running businesses and making things happen. So, that is why people look at Australia and decide to invest, and that's why we believe they will continue to invest. So, ratings agencies will make their assessments. Our bond issuances have performed extremely well. Most recently our 30-year bond issue performed extremely well and that's based on the assessments that are made by sovereign wealth funds, hedge funds, other central banks and others who make their own assessments at the end of the day about Australia's position. So there are many making assessments about Australia's position and I will leave them to make those assessments. Our statement today shows a very prudent, a very conservative and, I think, a very responsible outlook of where the Australian economy and our fiscal position is.

QUESTION:

How worried are you that you are going to end up as you always accused Wayne Swan of, always promising a surplus but never delivering one?

TREASURER:

The information we are presenting today is based on the best information available to the Government and to the Treasury, as I believe is always the case. Those assessments have been made, those reconciliations have been made and we will be outlining them just after midday today.

So the Government, most importantly, I mean, parameters change. Revenues, as was experienced post-GFC, we have seen multiple revisions to revenues since the GFC. So, what really matters is what does the Government specifically impact on? What the Government specifically impacts on in statements such as these is what is the net impact of policy decisions, so where you have taken a decision to increase spending, or you have taken a decision to curb the growth in spending, or to do things in the revenue space, that is what the Government has control over, and once again today you will see that the Government has ensured that the net impact of our policy decisions is positive to the Budget, positive to the Budget. So, what we have control over is improving the Budget position. Now, by contrast, if it was the Labor Party delivering this statement today, it would be $16.5 billion worse, because that was what they took to the last election.

QUESTION:

Why haven't you asked Treasury to model the impact of Australia losing its AAA credit rating, considering it is a possibility?

TREASURER:

I've received plenty of advice both from Treasury and from the Reserve Bank and from markets and otherwise about what the potential impacts of these issues are and the Government is well acquainted with what the impacts are and you would have seen many market commentators and economists and most recently Shayne Elliott from the ANZ Bank talk about that impact and my answer to your question is the answer I just gave a few minutes ago which is at the end of the day the impact on Australia's cost of borrowing is based on the assessments made by those multitude of funds that sit around the world and decide whether they are going to invest in Australian bonds. Now, the evidence is that the judgement being placed on Australian debt by markets around the world is favourable.

QUESTION:

If Government is just about the decisions that it specifically impacts on, does that mean you refuse to take responsibility for the lower tax receipts, lower income tax, lower company tax?

TREASURER:

It's important that your economic policies drive growth, and this is, I think, the very difficult fiscal challenge and economic challenge that the country faces, and I think we need, continue to need, I think, a strong wake-up call about the need to understand the depth of these challenges. We both need to keep the Budget on a positive track towards balance, but we also need to ensure that we have a set of economic policies which is driving investment. Now, that means in investing in infrastructure, and you will see that again today in MYEFO, and that is why you will see the Government continue to pursue our national plan for jobs and growth which not only addresses issues such as our innovation and science and the defence procurement plan and the export trade deals and all of these matters, but it also deals with ensuring a more competitive tax rate. I mean, the Trump Administration is planning to take the company tax rate to 15 per cent. That would be half what Australia's corporate tax rate is. Now, if you leave that situation in place, and you're unable to get the support of the Parliament for that, then the Parliament leaves the Australian economy at the risk of being stranded. So it's important that you have both tax policies that encourage investment. Remember, at the last election, Labor planned to spend $30 billion more and tax Australians almost $15 billion more. So that's why I say today that if they were delivering this statement the Budget would be $16.5 billion worse than what the figures will demonstrate today. So you've got to have policies that grow the economy, so you've got to have good investment, in infrastructure, and the economic policies that drive investment, because that's where the jobs and the growth comes from. That's why delivering on our election commitments is so important and those election commitments were heavily focused in regional areas of the country. Those are regional areas of the country which haven't had, in many cases, the same experience of those parts of the country where there has been the strong growth, where there has been the benefits that have come from trade and globalisation and things of that nature, but mind you, trade in particular and agriculture and the deals done with China and others have really been delivering some important benefits in those areas.

QUESTION:

Rod Culleton has quit One Nation to become an Independent. What will that mean for the Government's negotiations for legislation to pass the Senate?

TREASURER:

The Parliament will resume next February and we will wait to see the composition of the Parliament then.

QUESTION:

Are you surprised he has quit?

TREASURER:

I don't make commentary on others political parties. Today I am handing down MYEFO and that is my 100 per cent focus. Thanks very much for your time.