16 November 2017
Transcript - #2017221, 2017

Interview with Ross Greenwood, 2GB

SUBJECTS: Record jobs growth; almost 300,000 jobs created since January 2017; business conditions at highest rate in 20 years; Turnbull Government’s taking action now approach on financial services

ROSS GREENWOOD:

I want to take you now to Australia's economy. Brilliant news and that is that the unemployment rate is the lowest in October that it's been for almost five years – 5.4 per cent. There are jobs being created and there are in fact plenty of jobs this year – 296,000 of them. But there's an issue here because yesterday we heard that wages are very, very low – barely keeping up with inflation. Certainly if you're working in the private sector, which most people are, they are right on the inflation rate right now. If you're in the public sector, you're getting just a little bit more of a wage rise. So how could this possibly be that more jobs are being created but wages aren't moving? Because you'd imagine if there's more demand for labour and employers are out there hiring that the wages should start to move up – but it's not happening because of course, it's good that more people have got jobs because more people are therefore paying tax but what we'd actually like to see is that they're getting wage rises to take some of the pressure off the squeeze on households. Let's go to federal Treasurer now, Scott Morrison, who's on the line. Many thanks for your time, Treasurer.

TREASURER:

Happy to be with you, Ross.

GREENWOOD:

Can you explain that conundrum to me? To families who are listening to this, to businesses who are listening?

TREASURER:

The first thing I need to explain is since beginning of this year, almost 300,000 people have got a job and that is the best first ten months we have had in 40 years. So for those who didn't have a job this time last year, well over 300,000 have got one now and that's good news for the Australian economy. But as you rightly say, the continued frustration is what we've seen on wages – now, the figures we saw the day before on wages still go to real wage growth and that was a slight improvement on what we'd seen in the previous period. But what we are, though, seeing is the labour market is tightening in some sectors, we are seeing wages move a bit stronger than the average figures that we saw the day before. But we're still, as an economy, at 5.4 per cent – you're right, that's the best unemployment rate we have seen since the start of 2013 – that's still 0.4 of a per cent above what you'd call the full employment rate which economists refer to. Once you go below unemployment of five per cent, it's what they call the non-accelerating inflation rate of unemployment which means your inflation starts to grow because your labour market is even tighter than it would seem to be at full employment. So, I don't know if that's the best retail explanation I've got… [laughs]

GREENWOOD:

No, I don't think it is the best but anyway… [laughs]

TREASURER:

The point is we've got more people getting into jobs and as that continues to happen, that will put more pressure on wages and when that occurs, obviously that will continue to support consumption in the growth of the economy. So, it's heading in the right direction, the ship is heading in the right direction, that's what the jobs growth says but the wage growth figures show there's still a distance to travel.

GREENWOOD:

So, that was my question – when does the pressure start to come off households? They've got right now higher electricity prices, higher gas prices, higher private health insurance premiums and, indeed in more recent times, higher petrol prices. So the squeezes on families, even though inflation is not necessarily rising, the things that they're paying for are rising in price but their wages are not rising.

TREASURER:

The fixed things they do and you can't avoid the water bill, you can't avoid the electricity bill and the rent bill and all of these things or the mortgage and so on and that's true, but as we know on mortgages, rates have been low now for some period of time and that is something to be welcomed and that's a good thing for households. But many of the other things that households buy – particularly retail goods, household goods – we know that we've seen a lot of falls in prices in that area and that's what's reflected in the inflation rate. So, while you have some things like power prices going up – and we have our National Energy Guarantee and our plans to ensure that we push those prices down. Some of the other parts of the economy, people are getting great deals on things which is relieving some of the pressure but the thing that has to happen that I've been saying for years now is that we need to do things that drive an improvement in people's real wages and that happens when two things happen. One is the businesses invest more in their businesses to grow and secondly that we can all work smarter so we can earn more from what we're doing and that's what our policies are designed to do.

GREENWOOD:

But you can see the squeeze on the households through looking at the retail sales numbers, you can actually see it in the number of retailers who are actually collapsing at the moment. You can actually understand that there's some sort of a disconnect – now, it may connect up in the future, but at the moment there is a disconnect between where you hope the economy might go – the Government, the Reserve Bank have both got very optimistic forecasts, some would say, about our Australian economy – and what is happening right now indeed inside many families and many smaller businesses.

TREASURER:

I think there is that perceived disconnect, Ross, but I point out that we said in the May Budget that last year's growth will come in at 1.75 and it's come in at two. So I think our forecasts are positive and forward looking but we're also meeting them and that's what's important, and you talk about retail sales and I think you're right to do that because when people look at the economy – just going about their daily lives – they sort of assess it by what's going on in the shops. And what we do know with what's happening in retail – and you talk about it often on your program – is the disruption that's going on in retail with online sales and major changes in the retail industry, and what we're seeing there is retail volumes being at one level but retail prices being in another because of discounting and the disruptions that are occurring. So, yes, the retail sector is actually doing – the on-the-street retail sector is continuing to do it quite tough and I draw your attention to the National Australia Bank survey that came out earlier in the week on business conditions. Now, they found that business conditions overall for the economy were at their best surveyed level for 20 years. The one sector where that was not true was the retail sector. All the other sectors were showing a real improvement in their conditions, including in manufacturing. So I think there is a real story going on there in retail but that isn't the story necessarily of the whole economy.

GREENWOOD:

Let's get on something else as well because last time you and I spoke on this program, I asked you whether you thought you could manage the Parliament and manage the job of Government in a minority position. You right now are in a minority position after the resignation of John Alexander. What you expect that Labor, the Greens and some of those independent members – I spoke with Bob Katter the other day who's insistent that there should be a Royal Commission into our banks – would you expect that there might be some pressure for a Royal Commission into our banks while you're in a minority position?

TREASURER:

They may seek to do things like that, Ross, but the reasons for not doing it are still the same. We are taking action now when it comes to issues with the banks – I'll go over the things again. The Banking Executive Accountability Regime – making banks accountable for the decisions and the executives personally accountable for the decisions they're making. The new complaints tribunal which will ensure that people get access to justice and have their cases heard and cases settled. The increased resources and powers we've given to ASIC, more competition in the banking sector – last time we spoke, we talked about how we're freeing up the mutuals and the coops and the customer-owned banking sector so they can be more competitive. So, we're taking the action on the banks right now. What a Royal Commission, I understand, they think will achieve is I'm not sure because at the end of the day, no one gets compensated, people might have their case referred to on chapter 23 after 18 months of some hearing where the only people who have got paid are lawyers, but their case hasn't been settled. So, it doesn't actually get an outcome for anyone or change anything. What we're doing is changing things right now and those measures are going through the Parliament and I don't think anyone can accuse me or the Prime Minister of being soft on the banks, Ross. We've seen all the evidence on the contrary about that this week – this year, I should say…

GREENWOOD:

Yes, so you wouldn't still discount the fact that the Labor Party and the Greens and people such as Bob Katter could try it on as it were?

TREASURER:

They can but this is the reality of it, only the Government, the executive government, can actually commence a Royal Commission. The Parliament cannot establish a Royal Commission – that's not how it works. Only the executive government can do that and only the executive government can make the funds, vote the funds through appropriations to create those institutions. Now, it's not the Government's policy to do that because we believe we need to take action now, not have a QC's complaints desk run and spending $150 million and more. The Royal Commission into an issue which has great validity and that is in sexual abuse amongst institutions, the bill for that is well over $400 million and going close to $500 million. I don't think people think we should spend money on other issues like a banking issue to achieve I don't know what. I think the Royal Commission into that other very important topic has followed different paths and was dealing with a very specific and identified problem, and is really providing real assistance.

GREENWOOD:

Okay, so can I take another subject? A lot of my listeners would actually be sitting here and saying, "We've got a Parliament now that seems to find this incredible bipartisan outpouring for same-sex marriage." Which is all very well and good and people have had their say no doubt but what people would kind of like to see is a bipartisan support for trying to fix the Budget to try and actually pay down some of the debts to do that.

TREASURER:

That would be great.

GREENWOOD:

But we seem politically to be stuck in that. Why can we not get that at the same time?

TREASURER:

Don't vote Labor. It's that simple.

GREENWOOD:

That might be one answer but of course what people are frustrated by is the lack of consensus – that's the issue. Are there no places where the two political parties can agree?

TREASURER:

We've passed almost 180 pieces of legislation since the last election and that includes Budget repair measures. Tens of billions – $40 billion worth of measures we have been able to pass since the last election. It hasn't been easy to do it and we've had to guilt the Labor party into some of it and other parties into other parts of it but that's the nature of the political process. I wish we had bipartisanship on fixing the Budget but the Labor party doesn't agree with us. We had $14.7 billion of measures that we tried to get through over four years which they refused to do and I had to find another way to save the AAA rating this time last year and we did that and that continues to remain a challenge. But we've kept the Budget on track to come back to balance projected in 2020-21 and we remain committed to doing that.

GREENWOOD:

You know and I know that political pressure is on and you can see it in the polls and the surveys – all that type of thing. The pressure is on the Prime Minister, the pressure is on your Government right now. At what point do you expect or would you hope to see the turnaround in opinion in regards to this Government? Do you believe it is possible?

TREASURER:

Of course I do and the time for that is ultimately at the next election and we're halfway through this term. Any suggestion that there's going to be a general election in the early part of next year or later this year is just complete bunkum. We're just getting on with the job as we spoke about last time and it's necessary to do that because the country's interests must come first and creating those jobs, getting those wages up, getting the investment flowing. We're doing well in so many different sectors of the economy and I'm excited about the new businesses that are being started in the economy and that's where many of these jobs are coming from and we've got to keep that happening. So, I'm more focused on how they're doing and I think if I do that then people will see the Government continue to improve in its standing.

GREENWOOD:

Treasurer, Scott Morrison, as always we appreciate your time.

TREASURER:

Thanks, Ross.