20 December 2016
Transcript - #2016190, 2016

Interview with Chris Smith, 2GB

SUBJECTS: Mid-Year Economic and Fiscal Outlook; Turnbull Government’s Enterprise Tax Plan to drive economic growth.

CHRIS SMITH:

Treasurer, welcome, Merry Christmas.

TREASURER:

Merry Christmas to you and all your listeners.

SMITH:

It must be a Merry Christmas come early for you with the release that the credit rating remains intact but I must say it is by the hair of your chinny, chin, chin.

TREASURER:

I am not surprised at the reaction of the ratings agencies. I think we have been very upfront and transparent and we have been very sober in our assessment of things like commodity prices. I think they have seen that and seen that we are not pulling anything on here. It is a very honest set of numbers and I think it sets out the situation very clearly and starkly and I think that removes any fog of misapprehension out there. We have very difficult economic and fiscal challenges, the fiscal ones are inherited obviously from the spending days of the Labor Party and their fiscal stimulus, when they were sending out text to people left right and centre, even to pets and people who were deceased, burning rooves as part of the insulation program and all of that. We are paying the price for that in the debt that we now carry. As long as there is a deficit, that debt continues to increase, that is why we need to get the Budget back to balance as soon as we can.

SMITH:

But the Government hasn’t done enough to stop it’s spending – has it?

TREASURER:

We have cut the rate of growth and spending from over four per cent to less than two per cent.

SMITH:

But you could have done a lot more though – couldn’t you?

TREASURER:

You might like to suggest to me which measures we should have implemented that we haven’t, Chris. What we have done just in the last six months, what we have seen since the Budget is that spending will now be actually $18.5 billion less over the Budget and Forward Estimates - $18.5 billion. That is through changes in variations but importantly by a $2.5 billion improvement in our Budget position through the decisions we have actually taken. That is after we have provided for all of our election commitments.

SMITH:

Two things I can suggest, seeing as you have offered, the Gold Card – why didn’t we have time during that last session in Parliament to get that through? You wouldn’t have had to convince the Crossbench Senators. And what about this Federal Government signing off on $36 million wage increases for political staffers? 900 advisers we now have for MPs federally.

TREASURER:

We will be pursuing the other measure that you mentioned and at the end of the Parliament you will recall the Parliament tying itself in knots over the backpacker tax which we were trying to get through. They spent a lot of time to-ing and fro-ing and reversing their positions and those sort of thing. The less we have of that next year and the more sober way of dealing with those sorts of matters I think that will help be able to progress a lot more other measures. The other thing is we have got to make this Parliament work, Chris. We have responded to the requests that have come, particularly from other Parties, for increased support so they can work through the legislative program. I want to see the Parliament pass legislation. That is the way we are actually going to continue to get this Budget under control and we passed $22 billion worth of improvements to the Budget in just six and a half sitting weeks.

SMITH:

On one side of the ledger you know you have got to start cracking down even further on spending but what seems to be the greatest worry is that growth is down two per cent on predictions. How is you, how is the government going to reverse that and what guarantee can you give us that you won’t see a similar figure in May.

TREASURER:

First of all growth has been revised to 2 per cent. It hasn’t gone down 2 per cent and a 2 per cent growth rate in today’s global economy – most advanced economies would bid for. That would be a revision upwards for most advanced economies, we are still at the top of the pack when it comes to economic growth around the world today. The way we continue to drive growth is small business, medium sized businesses, businesses more generally – we need to encourage them to invest more. That is where the extra hours come from that people want. That is where the extra wages come from. That is where the growth comes from and that is why our plan to reduce the level of tax paid, particularly for small and medium sized businesses up to a turn-over of $10 million. That is not a multi-national – that is not Google. That is a company that has on average between $2 and $10 million in turnover, 22 employees, there are 100,000 of them around the country. They are the businesses that we believe we need to back in and support and the Labor Party used to support those sorts of changes but because they are in the act of sabotage and wrecker and they think; if we can wreck the Budget that is good for our political interests. Well, Bill Shorten has signed up to that plan and Chris Bowen is just tagging along.

SMITH:

One final question before we let you go, given the fact that fees and charges and cost of living always increase no matter what the economic condition, you are telling us that wages will plateau, understandably plateau, over the next few years as you are trying to get us back into surplus. The truth is that living standards of average Australians will fall – won’t they?

TREASURER:

Living standards measured at the top level has a lot to do with commodity prices and the mining investment boom that we saw in previous years that lifted national income.

SMITH:

But they will fall?

TREASURER:

Well, it depends on which measure you are talking about. What I want to see happen is I want to see people’s wages grow through two ways. One is they have a job and they continue to keep a job, that they get more hours and that their business is doing better and they are able to pay them more. That is what I want to see happen. That is what everything we are doing in our economic plan is designed to achieve that outcome. Now, the statement, we have to grow the economy, but we also have to bring the Budget back to balance. Now, what I do know for sure is that if Chris Bowen and the Labor Party had handed down that statement yesterday the news would have been $16.5 billion worse. They would have abolished any cuts for business to go and employ more people, that wouldn’t be there, and they still would have made the Budget $16.5 billion worse off. We made it $2.5 billion better off on the back of our own decisions and we are going to keep on getting on with that plan next year. That is the big challenge, as well as dealing with the oppressive cost of energy both on households and on businesses. That is a massive issue for businesses around the country and we know it is pressing on household budgets as well. For now Chris, I think Christmas is coming, I know the kids are pretty excited about that and all the families out there. I wish you a very Merry Christmas and to all your listeners and we will be back at work as soon as you can say Merry Christmas.

SMITH:

A big year 2017 – a year of consolidation. And thank you very much for your time this morning and Merry Christmas to you and the family too.

TREASURER:

Thanks Chris.