9 October 2017
Transcript - #2017192, 2017

Interview with Gareth Parker, 6PR

SUBJECTS: Productivity Commission Draft Report on Horizontal Fiscal Equalisation

GARETH PARKER:

The Federal Treasurer, Scott Morrison, joins me on the program. Good morning Scott.

TREASURER:

G’day Gareth.

PARKER:

Thanks for your time again today. What happens now?

TREASURER:

Well, they have got the final report now and they have a lot more work to do as I said when I made my comments on the report today. As you said in your intro, what they have found so far is that, yes, it’s real, what is happening in WA but it is not just a Western Australian problem. The question I ask the Productivity Commission was is this holding our national economy back? And the answer to that was yes. So the case I think for really fixing this was greatly assisted by doing this work because it isn’t just about Western Australia versus Queensland, New South Wales or anything like that. It is actually about the national economy now which I think gives us very strong grounds to go forward from where we are. The Productivity Commission needs to do a lot more work, they have got to firm up what they believe the answer is, although they have given some good hints of that today. Secondly, they have also got to work out a transition plan so that we can get from A to B. It’s not enough to know where B is, you have to work out how to get there and that is what I have tasked them to do between now and the final report. So, there is still a lot of work to do, but as I said when I was on your program last time, this was an important bit of work to do. There is a lot more still to do but we are heading in the right direction and for guys like Steve Irons and Ken Wyatt, and Christian Porter and Mathias Cormann, Julie Bishop, all of whom have been on this issue pretty strongly, this is one of the things that they really supported us doing, we are on the right track.

PARKER:

So, the final report is due out early next year, you are hoping that there will be a plan of implementation that comes with that as well?

TREASURER:

That is exactly what I want. A plan without a plan of implementation is pretty useless. So, that is what we can now work on. The Productivity Commission will be driving that process to make their recommendation next year. I am going to leave it to them when they believe they will be in a position to bring that back to me. We want to get it right. I think patience has proved to be a virtue on this because it has enabled us to do this work. When Bill Shorten went over to WA he basically offered a Band-Aid and the Productivity Commission’s draft report has binned Bill Shorten’s Band-Aid now. It said that is not an answer. This is what I have been saying for some time, I get it that it is a big problem but you can’t just have a knee-jerk response to this. You have got to have a solution that is going to stick. So, I am very keen to get that Gareth. Very keen.

PARKER:

It has been Bill Shorten’s Band-Aid solution you’re right, however it is also, it hasn’t endorsed Malcolm Turnbull’s proposal of a floor. It says that would treat a symptom, it wouldn’t treat the problem. So, it is not, I have got to say, the Productivity Commission draft report, particularly complimentary of either side of politics’ solutions.

TREASURER:

With respect I think you are misreading that. It was the Turnbull Government that commissioned the Productivity Commission report because we had concerns about the various measures that were out there to address this. That is why we wanted this report. It was the Turnbull Government, the Prime Minister with myself as Treasurer, who commissioned this. So, our ultimate position on this will be driven by this very solid piece of work. Bill just came up with a Band-Aid and they binned it.

PARKER:

Treasurer, are you prepared to cop the political pain from South Australia and Tasmania to do the implementation?

TREASURER:

This is why we have to work through this with all the states now to ensure that we don’t push another state off a cliff in seeking to fix this. That is why it will require a lot of good will right across the country to land at a transition plan that can get us to a more efficient system, a fairer system, a system that is more understandable. That said, we should acknowledge that the report also said that having a fair go principle for how GST is distributed is a good thing, we’ve just got to work out how to do that better and more fairly. They came up with this quite interesting phrase about “unfair equality” but that’s largely what the system is currently delivering, because it’s just wound up too tight and it hasn’t been about to have the flex to deal with, particularly what we’ve seen in Western Australia. But it isn’t just about resources because as what has happened over the last five years has demonstrated, it has actually proved to be an impediment to states doing other things that might be good for their economy.

PARKER:

9221 1882 is the number to call, we can hear from you on this today. You’ve heard from the West Australian Treasurer Ben Wyatt you’re now hearing from the federal Treasurer Scott Morrison about this Productivity Commission report. Treasurer could I just play a little bit of what Ben Wyatt had to say in an earlier interview today and just get your reaction to it.

WYATT:

They have created a lot of expectation in this report. I expect some firm response in respect of the recommendations and I don’t want to hear any form of crab walking away from this report because it’s something that they did, they created, and they need to have a key role in any implementation.

PARKER:

And the “they” that Ben Wyatt is referring to is you and the Prime Minister.

TREASURER:

Well Ben has got to decide whether he wants to work with the Commonwealth Government to get a solution or he just wants to play politics. I’m not going to have a crack at Ben. I’m happy to work with Western Australia, I think I’ve demonstrated that by going down the path we’ve gone down. I’m not trying to get a political quick fix on this, I’m trying to get a fair dinkum solution. So if they want to engage with that, great. He can do a lot of work to help convince the Labor states in South Australia, Queensland and Victoria to get on board. That’s what he can do to actually be quite helpful to Western Australians. The Commonwealth Government is a partner in trying to solve this problem. Not the enemy. So I would encourage the Western Australian State Government to put the politics aside and work with fellow travellers here, which the Commonwealth Government is, to get a good outcome here. For that the happen he’s got to convince his Labor mates in South Australia, in Victoria and Queensland and the Northern Territory to get on board. So if he wants to help, he needs to pony up, and start focusing on those issues.

PARKER:

Alright, no one…

TREASURER:

I should stress it’s a draft report, so we don’t have final recommendations yet. When we have final recommendations then the Commonwealth can obviously make a response, but until then, they’re draft recommendations.

PARKER:

No one in Western Australia, even those who are the most ardent advocates of reform would expect this to be solved overnight or in one year. I think that sensible people understand that it’s going to take time to arrive at a solution. What can you tell me and the listeners about when that solution might actually arrive, what is a realistic timeframe for the beginning of a reform process and then the end of a reform process? What’s legitimately realistic now that we have these draft recommendations?

TREASURER:

Well that is really the task of the next few months, to look at those issues Gareth. That’s what I’ve asked the PC to come back to us on early next year. So, I’m not going to pre-empt that. There’s a lot of hard work to be done with other states and territories, some of which will not like this.

PARKER:

Will you commit to a concrete plan of action before the next federal election?

TREASURER:

This issue, obviously we have to have a solution in place before then. I’ve always been working to that timetable. But also, I wasn’t going to be bullied into it by Bill Shorten or anyone else who doesn’t have a solution on this which has just been made palpably clear or engage in the sort of show ring politics where you’ve got state Premiers and Treasurers wanting to carry on about it. I just want to get the answer. What I’m pleased about is that my instinct was that there was not just a Western Australian problem here, but a genuine national problem here. The problem with the way it was done was deeper than just the relativities and what had happened over a few years. So we’ve got a fix for that. I’m going to do the work, and work with others that want to work with me in good faith to get it done.

PARKER:

Thanks Treasurer.

TREASURER:

Thanks a lot mate.