27 October 2017
Transcript - #2017208, 2017

Press conference, Sydney

SUBJECTS: Council on Federal Financial Relations; Referendum Council.

TREASURER:

I was pleased today to chair the meeting of the Council on Federal Financial Relations here in Sydney and pleased to confirm the more optimistic outlook for our economy and the better the days ahead, is a view that is shared around the Commonwealth and that is a pleasing sign to be able to reflect on. Particularly, the improvement in jobs numbers over the last 12 months and the strength of the economy as it moves forward in the years ahead.

It was also an opportunity to deal with some very weighty issues that the Commonwealth has been taking a strong lead on. Most significantly in relation to energy costs, a good and open discussion about the National Energy Guarantee with the Energy Security Board and the Chair of the ACCC, Rod Sims, present, to be able to field questions and inform Treasurers about those issues. In particular the reports that Rod has handed down in draft most recently, as well of course as the recommendation from the Energy Security Board on the National Energy Guarantee.

We also had reports from the Productivity Commission with their two reports. Firstly, on horizontal fiscal equalisation and their Five Year Productivity Review, and they were very informed and useful discussions in those areas.

We were also able to continue our discussions on housing affordability and small business regulation. I am pleased to advise that we are able to come to an agreement on both of those issues today. Firstly, in relation to housing, we were able to agree that the new funding arrangements for affordable housing, social housing and homelessness, would be able to go forward on the basis of a multilateral agreement, now to be finalised, which would be providing funding conditional on there being a housing and homelessness strategies in place in each of those states and territories, and that there would be greater transparency and improved performance data available to ensure that people were aware of the progress that was being made. That agreement will also include $375.3 million in additional funding for homelessness by converting what was a short term series of agreements on homelessness and converting that into a permanent arrangement for homelessness funding and that will be available under that agreement. So, I think that is a very important thing to have been able to have agreed on together as a group, and the progress we have been able to make. That also supports the National Housing, Finance and Investment Corporation I announced in the Budget, and the progress we're making to establish that organisation on 1 July next year, which incorporates the bond aggregator, which was an initiative of CFFR, brought forward out of the Affordable Housing Working Group to ensure that we had better finance arrangements in place for the development of affordable housing and social housing around Australia.

The other confirmation that was provided was that all states and territories have now confirmed their agreement to participate in our small business regulation reduction initiative. So, all states and territories will be submitting their plans to cut red tape for small business. They will get incentive support from the Commonwealth Government to achieve that. So, very practical measures on housing, small business, as well as dealing with the big picture issues when it comes to productivity, which is what is needed to drive wages; energy costs, which are the fundamental issue, the dominating issue, of households and businesses. So, we are making progress on each of these.

On online gaming point of consumption tax, the states and territories agreed that they would be moving to put in place a harmonised set of arrangements around a point of consumption tax. Fortunately that does not require the Commonwealth to provide any coordination or support for that initiative. That is not an area the Commonwealth was particularly seeking to be involved in, and the states and territories will be able to move to harmonise those arrangements, working with each other. The Commonwealth, of course, has the ability to apply its own point of consumption tax in that area if it wishes, but we have no plans, no consideration of doing so at this point in time. But of course that is an option that is open to the Commonwealth should it choose to do so.

Finally, we were able to ensure that we have, I think, an improved set of processes for engaging between the Commonwealth and the states and territories. I welcome Dominic Perrottet’s announcement that the states and territories will work more closely together outside the CFFR process. I think that is a useful idea. I am not shy about working closely with the states and territories. I think where the states and territories can actually identify areas of agreement and bring those to CFFR, then I think that is a useful development and I see it in those terms. Dominic Perrottet and I have known each other for many years and we have worked closely together as a Commonwealth and a state treasurer and I am pleased that Dominic is going to play a role in ensuring even closer coordination and linkages between the states and territories and the Commonwealth. I note that in his statement he particularly sets out that they will be looking at how they can perhaps even come to a common position on what can be done around the GST and horizontal fiscal equalisation. I would certainly welcome some uniformity on that view from the states and territories. I think that will be a bigger task then they may expect, but we will continue to proceed with the Productivity Commission's work in that area. The Productivity Commission has made it very clear that they will go everywhere they need to go, every state and territory, where there is the clear demand for people to want to put their views directly in hearings, and they will be very cooperative in meeting that demand in the state and territory treasurers requesting that level of support. They clearly have it, and I wouldn't expect anything different.

So, another useful meeting, a very practical meeting, and a lot of very important issues and some more real progress.

QUESTION:

You say you want to work closely with the states, essentially, they want to work less closely with you. They have formed a breakaway group and you are not invited, they say, because of the frustrations they have with the Commonwealth.

TREASURER:

I don't accept that characterisation of it at all. The states and territories have many issues that lie within their own jurisdictions. For example, the Productivity Commission report today highlighted numerous issues that are completely within the sovereign jurisdiction of the states and territories, that requires no Commonwealth involvement whatsoever. We took the leadership initiative to actually have the Five Year Productivity Review done. That has been made available to the states and territories. So, where states decide, for example, if they want to swap out stamp duties for land tax, that requires no involvement from the Commonwealth whatsoever. States and territories can move on those issues entirely on their own. They don’t need any involvement from the Commonwealth. What they do with the planning laws, what they do with zoning and land-use provisions, it is entirely up to the states and territories, and I would encourage them to work together. States and territories do not need to be babysat on their conversations. They should be having them on their own and I welcome the fact that they will be doing more of that into the future. Much more productive, I think, to be dealing with a common position which comes from states and territories rather than having to arbitrate between them, and the many differences they have between the states and territories.

So, if the states want to do that in that way, I welcome it. I think it will actually improve the process. I think it will give us an even stronger position, to come together on issues that directly involve the Commonwealth.

QUESTION:

Nonetheless though, New South Wales indicated some frustration about bureaucrats from Canberra having a say on some of the expenditure issues, a similar view is held by Victoria. Is there a concern there that there is not enough autonomy for the states and hence we are seeing this break-away group?

TREASURER:

I can assure you, state and territory treasurers all want the Commonwealth to give them more money and less accountability for it and I am not a Treasurer that is one who carelessly hands away funding without there being accountability for that funding. I am surprised that the Shadow Treasurer would be a Treasurer if he had that opportunity who would be prepared to just not get in the way of a State Premier or a Treasurer and a bucket of money? I am always going to stand in the way of those who are seeking to take money out of the pockets of federal taxpayers and spend it on whatever they want to dream up without any level of accountability. That is the appropriate tension, it’s the appropriate tension in the court which taxpayers expect. We will work constructively together, but where states and territories want more money and less accountability, I do not think that is a good deal for taxpayers and you would expect me not to agree to those sorts of provisions – and nor would I. That said, today we announced an agreement for additional funding to be put into homelessness in return for some very practical obligations, and that is that they actually have a housing strategy to deal with the challenges in the housing sectors in each of their states and territories, and have a clear plan for how they’re going to deal with homelessness in each of their states and territories. So, I think that is a good example of the outcomes we are getting. The same on small business deregulation. It is absurd for the Shadow Treasurer to suggest things aren’t working when I have just announced to you two clear areas of agreement, and a third, on online gaming, where they would prefer to do it amongst themselves and harmonise it. I am happy for them to do it because they’re state and territory levies.

[INAUDIBLE QUESTION]

TREASURER:

That’s for them to determine. That is entirely for them to determine. It is clear, you know my views about the need to fix the GST system. Now, that is not an easy task, and there’s a lot more work to be done, and the Commonwealth has not settled on any one approach here yet. But we are doing the work. We are listening. We had the Productivity Commission do their review, they have provided a draft report, and they have clearly got a lot more work to do. But the Western Australian Treasurer, I suspect, will be the odd one out in that group of eight state and territory Treasurers about the position that he’s prosecuting. But that gives him the opportunity to make that case to his colleagues. At the moment, his colleagues aren’t very supportive of the WA position. But the Commonwealth will seek to fix it. The way that you do that is you have a proper process, you do the research, you consult widely, you have a good transition plan if that’s the path you are going to go down, and that is how the Commonwealth is proceeding. Bill Shorten and Chris Bowen basically want to put in place an arrangement which doesn't fix the GST system, doesn't do anything to fix the system. It’s a bucket of money that they can’t fund. They have promised that before and they didn't deliver. So, I think Western Australians understand that they have no real solution there or no real fix, it is just a political gimmick.

QUESTION:

If I can just ask another question, the co-chair of the Referendum Council has described Malcolm Turnbull as a mission master, what do you say about that characterisation of the Prime Minister?

TREASURER:

I am not going to get into those issues, I’m just simply going to say this. We want to see practical things happen in this space, as the Prime Minister set out last week re this proposal to effectively have a third chamber. This is an idea that just doesn’t legs – and you have to be practical about these things. I can’t see the Australian people supporting having a special third chamber in our Parliament for that purpose.  So, we have got to keep this real. The Prime Minister had discussions with his own indigenous advisory group on these matters yesterday and we want to continue to work forward on a program that is achievable. I think you’ve got to be honest with people about these things and we’re just being honest. If Australians really want a third chamber, which is just for one group of Australians, well, that’s not a voice. That’s an additional voice beyond a voice provided to every other Australian. There should be one voice for all Australians and every Australian has the opportunity, as they should, to elect their representatives, and it is great to see Indigenous members in the Parliament, whether it is Ken Wyatt or Linda Burney or a host of others who are there, they make a great contribution, and it would be great to see more. But the idea that we would have some sort of third chamber, I mean, we have to keep this on the road of something that is achievable and I think that the Australian community would broadly support.

QUESTION:

All of those Treasurers in the room today, people responsible for a lot of money, and increasingly a large amount of debt. Is that something that gets talked about in these meetings, and isn’t it a concern for these things?

TREASURER:

Yes, it is. One of the good things about the housing agreement we reached today was that it was an agreement in a policy area that was reached by Treasurers and we’re talking about having to deal with a broader issue of not just social and affordable housing but how the broader housing market operates in their states and territories. Now, that obviously has to do is supply and demand of housing in the private market, as much as it does is how you pursue your policies on affordable and social housing, which is a much more targeted engagement and the Commonwealth provides Commonwealth rent assistance. We supplied support through this agreement that we were able to reach today and it is important that Treasurers are not only looking to solve these problems through these agreements, whether it is in the housing markets or elsewhere, but doing it in a responsible way, affordably. What concerned me about what the Shadow Treasurer said earlier here today is that he’ll be a soft touch for the states and territories. Each time they come demanding that he put taxes up to fund more state and territory expenditure, he will be a complete pushover. Now, you’ve got to work together – that’s true – but working together doesn't mean being a rollover, and that’s what you’ve got in Chris Bowen. He will just be rolled over. Now, people make all sorts of statements about me. Some of them are kind, some of them are unkind. I accept that. That is the nature of public life and we’re all imperfect individuals. But one thing people have never said to me is that I’m a pushover. Thanks very much.