19 December 2017
Transcript - #2017251, 2017

Interview with Chris Smith, 2GB

SUBJECTS: MYEFO 2017

CHRIS SMITH:

On the line Scott Morrison. Treasurer, good morning.

TREASURER:

G'day Chris.

SMITH:

You've shaved debt by $23 billion somehow. I mentioned earlier though that we've got government debt sitting at $583 billion, $23 billion doesn't do too much and people should be terrified by that figure $583 billion.

TREASURER:

Well so long as there are still deficits and there are so long as there is the need to continue to build infrastructure because what we are now doing on debt is the only new debt that we're taking on is to build infrastructure, hospitals and roads and bridges and all of these sorts of things. For the first time in ten years we are no longer borrowing any new money to pay for the everyday expenditure, for pensions, for welfare, for all of that. Now that's the first time that has happened in a decade. And by getting expenditure under control, welfare dependency for working age Australians is now at the lowest level in around 25 years, and that's why we're seeing welfare expenditure, which will actually in nominal terms, fall over the next four years. It's lower in every single year over the next four years.

SMITH:

The headline news and the good news is the fact that the government is forecasting a $10.2 billion surplus by 2020-21 and that would be the first surplus since the global financial crisis. We've done it tough in a number of years, haven't we?

TREASURER:

Well we have, it has been a tough period and when you know when Kevin Rudd just let the spending rip all those years ago we're still paying for it today. You know all those cheques that went out and school halls and then all the rest of it that happened and the overpriced covered areas and you know you remember it all no need to revisit again. But we've been paying for that for a very long time and that's what really set off the debt ship in that direction and we're turning that debt ship around. I mean the growth in debt is already down more than two thirds under this government and by getting the Budget back into balance, and we've kept that on track now for the last five statements, and that projected surplus in 2021. A year ago we thought it would be a billion, a year later it's over $10 billion and so we're getting closer and it's getting stronger.

SMITH:

Of course the bottom line is if our commodities aren't keenly sought after, all these figures change, that can be rather fragile in terms of what our commodities earn for us nationally.

TREASURER:

Well that used to be true, I mean some years ago what I did was is I took out a lot of the risk that was sitting there on these commodity price forecasts in the Budget. And the commodity price forecasts I've got in this most recent statement have the prices for things like coal, metallurgical coal, iron ore below where they're actually selling at today and we've been doing that for a number of years. So the reason the Budget has improved in what I announced yesterday is actually because the things we've been doing to get welfare under control, in particular, is getting those deficits down. And in the last two years alone, I mean the deficit has almost halved now in the last few budgets and that will go down again by a similar amount of over $30 billion out to 2021, so look it's hard won progress but you've just got to stay the course, keep expenditure under control. I mean we have the lowest growth in expenditure in real terms of any government in the last fifty years.

SMITH:

You mentioned welfare, you've reigned in welfare by $8.4 billion which is the lowest welfare dependency in 25 years. We've gone for a long time not worrying about this figure and allowing people to get away with blue murder, haven't we?

TREASURER:

Well yeah, I mean the integrity things we've done around welfare, making sure debts get repaid, making sure people fill out their forms properly, making sure that we follow up with the compliance. I mean we changed eligibility rules in this announcement yesterday, we've extended the waiting periods for new migrants that come to Australia. I mean the migrants that come to Australia that built the country, I'm out here at Flemington Markets this morning, the migrants that built this country didn't come to take a contribution, they came to make one and they've made a great one. But you know our welfare system shouldn't be a honey pot for people to come to from overseas and I mean it's there for people who really need it, and there are exemptions for hardship cases in what we announced, but the welfare system is there to support people not to act as a reason to come to Australia.

SMITH:

Ok but the not so good aspects of what you announced yesterday. You'd forecast wage growth to be 2.5 per cent in May but in the MYEFO it's only 1.9 per cent, people are feeling the pinch because there's no upward movement of their wages.

TREASURER:

Well it's higher than that but the wage forecasts are exactly that and we took them back in this most recent statement after some more recent data and that meant we had to write down what our individual tax revenues would be over the next four years, so that's been written down $8 billion over the next four years and $500 million alone in this year. So that just shows that the figures I announced yesterday they come very credibly and we've been pretty honest about where we think the money's going to come from. And what's compensated for that though is what we're seeing now in the corporate sector and we're finally starting to see some profits flow there and that's only been for the last few quarters. I mean they went for three years, I mean small businesses in particular weren't making money, they were having to pay staff, keep them on by not taking a wage themselves and now they're starting to see some better days and that's good. So as the labour market gets tighter, 1,000 jobs being created a day then what we'll see is that flow ultimately into better wages.

SMITH:

Ross Gittins in Fairfax today said that a large part of your reporting is estimates and forecasts four years down the track, and he made the point that previous Labor governments run by Gillard and Swan also predicted massive surpluses which never eventuated. So there's no promise or guarantee here is there?

TREASURER:

Well these are projections based on very credible numbers. I mean as I said, we're projecting iron ore at lower than what current prices are now and so we de-risked the Budget some years ago. I think what Ross was saying was true many years ago, particularly Wayne Swan and you remember "the four surpluses I announced tonight" complete fiction and fantasy. But what we announced yesterday in terms of the $6 billion better off figure that's this year, that's not four years away, that's this year and in last Budget year we came in $4.4 billion better. So these are things that are happening now, Ross, not just four years' time, they're actual stuff that's already been brought to book and achieved and we anticipate achieving this year.

SMITH:

How the hell are you going to pay for tax cuts next year though?

TREASURER:

Well that's my summer, that's my summer work Chris. I've got a big task there but it's important that we do provide relief in the tax system for people on middle incomes. And you know the NDIS levy that we've got in there that's to pay for the NDIS scheme and Australians know that everybody benefits and everybody contributes, it's an insurance scheme and it's underfunded and that's what we announced in the Budget. But for middle income Australians we do want to ensure that they have some relief in the tax system and so I'll be working hard to ensure we achieve that but of course without putting our broader Budget position at risk.

SMITH:

One final thing, I made the point this morning that Greens Senator Nick McKim is an absolute clown, he found it appropriate to mock Christmas, Mr Morrison. Like what's he on about?

TREASURER:

Well I'm totally over this, I mean, Christians in Australia should not have to put up with that sort of mockery, particularly at this time of the year and at Easter. It's massively disrespectful and these Muppets need to grow up and show some respect. I mean I think Christians just, I mean we're you know, people are very tolerant and that's fine but you know they wouldn't do it around other religious festivals, and nor should they, and they shouldn't do it around Christian festivals and Christian ceremonies and they should show some respect for their fellow Australians. But on that note mate, a very Merry Christmas.

SMITH:

Yes exactly, Merry Christmas to you and the family and good luck for 2018.

TREASURER:

Thanks a lot Chris, great to be with you.