17 May 2015
Transcript - #2015125, 2015

Interview with Barrie Cassidy, Insiders, ABC

BARRIE CASSIDY:

Tony Abbott once said that if he had to choose between pragmatism and policy purity, he would go for pragmatism every time. Is that the kind of thinking that you came up against when you were putting this Budget together?

TREASURER:

No. We focused on continuing with our economic plan which is built on last year's Budget, is built on a number of decisions we have made since we came to government. We are continuing with that economic plan. We are focused on making sure that wherever we have new spending, we have offsetting savings. Not tax increases, but offsetting savings. And, importantly, we have a credible path back to surplus but at the same time we want to grow the economy. That's why we have a focus on small business and jobs which has been very well received in the community.

BARRIE CASSIDY:

But there are a couple of areas - you have said in the past you would consider these issues, you’d consider taxation reform, you were prepared to put superannuation concessions on the table. Are they two areas where pragmatism got the better of policy purity?

TREASURER:

No, because we actually have a taxation discussion paper out at the moment. We are going through a proper process in relation to taxation. Part of that will deal with obviously savings issues but we want to give families, we want to give superannuants some stability and certainty about their superannuation at the moment, particularly as I have said on numerous occasions now, as the Governor of the Reserve Bank pointed out, we are in a period of very low returns on investment. So, superannuants are looking for stability and predictability. That's what we are giving them in contrast to Bill Shorten who wants to introduce new taxes on them.

BARRIE CASSIDY:

But in the meantime, the concessions grow. It’s one of the biggest growing aspects of the Budget. It’s got the benefit that in fact Labor would support you if you were to do anything about concessions on superannuation. You'd be guaranteed to get it through the Senate.

TREASURER:

But we made a commitment that we weren't going to change superannuation. We are standing by that. The Labor Party gave the same commitment and they've broken it. That's their choice. We're sticking with stability, Barrie. I think it is vitally important. By the way, the extreme examples that they cite came about because of the laws that existed under previous governments. So, for those people that have a lot of money in their superannuation, they could only accrue it under old laws, not under existing laws. If you were to go back and apply a special tax to people with very large amounts of money in their superannuation, it would effectively be retrospective taxation. They complied with the law at the time and now you are saying “well, because you accrued so much, we want to go back and hit you", it is a very big step and not one that we are inclined to go down and certainly we don't want to go down the path of hitting people's superannuation during a time of relatively low returns.

BARRIE CASSIDY:

But still, one thing you learnt from the first Budget is that you have to work with the Senate that you have and instead you come up with a scheme on PPL. At this point it has got the support of just two of two of the crossbenchers. It will probably never get up.

TREASURER:

You can speculate on that, Barrie, but we consulted with the community and heard that people wanted us to focus on the first six years of a child's life and not just the first six months after birth. The PPL scheme is a safety net scheme. You'll remember it was meant to be a replacement for the baby bonus and, as a safety net scheme, it's got an appropriate place and will continue to have an appropriate place but if we’re going to put an extra $3.5 billion into childcare, which is what parents want, that's what mums want, if we are going to do that, we have to find the money somewhere. We simply can't continue to have a situation where people are getting paid parental leave from their employers, including the government, and then at the same time getting it under what was meant to be a safety net scheme.

BARRIE CASSIDY:

Sure, and if you were just talking about the purity of the problem - purity of the policy, that might not be that difficult to undertake but do you regret some of the language that you used around this that put you behind the eight ball from the beginning?

TREASURER:

Well, what language? What language was that?

BARRIE CASSIDY:

The reference to double dipping, the suggestion that people were rorting the system. You agreed with Laurie Oakes that it was fraudulent.

TREASURER:

No, I didn't actually. If anyone actually properly reads the transcript and properly reflects on that…

BARRIE CASSIDY

He says it's fraud and you said yes, it is.

TREASURER:

No I didn’t. He asked me who is it? He asked me who is it?

BARRIE CASSIDY:

And the answer is yes, it is?

TREASURER:

I said, well it is da-da-da-da-da. But anyway, I'm not going to get caught down that path Barrie. The bottom line is we want to be able to deliver mums all the support we can, particularly during their career and what we have said is we hear what people say, we wanted to go into paid parental leave…

BARRIE CASSIDY:

Do you regret some of the language? Do you regret the fact it was described as a rort?

TREASURER:

…we wanted to go into childcare. If you are going to put an extra $3.5 billion into childcare and the Labor Party says we should as well, okay, we'll do that but we have to find the money somewhere Barrie. This is where, on the one hand, we are being accused of being generous but, on the other hand, when we actually identify reasonable savings to pay for new spending, there are some people out there including Mr Shorten who want us to spend the money but not make the savings to pay for it. That's unsustainable.

BARRIE CASSIDY:

Was it unhelpful for this scheme to be described as a rort?

TREASURER:

Look, I think it is not sustainable to have a situation where people are getting paid parental leave from their employers which is the same or more than what the Government is getting and they are also going to access it through the welfare system.

BARRIE CASSIDY:

So you stick with the language? You stick with the language even though two of your own ERC ministers put their hands up and said, "Well, we were double dipping"?

TREASURER:

But Barrie, we have to pay for $3.5 billion of extra childcare support to make the system more affordable, more accessible, more flexible for mums and, if we are going to do that, we have to find the money somewhere Barrie. This is not an unreasonable ask and that is why we have a sustainable path back to surplus, because wherever we are spending new money, we are making prudent savings that at the same time help to deliver a fairer system.

BARRIE CASSIDY:

What do you say about the story this morning that you said, you told the Telegraph it was Scott Morrison's idea to get rid of double dipping?

TREASURER:

Well, there is always a bit of embellishment in reporting Barrie. I don't want to be cynical about journalists but it went through the normal process, we all accept responsibility for the decisions. There was nothing unusual about this process.

BARRIE CASSIDY:

The tax write-off for now small business purchases. Are you just a little nervous that it might be too successful?

TREASURER:

No! Bring it on. If we can encourage Australians to invest in the things that help to grow their businesses and create more jobs, I say that's terrific. That's exactly what we want. Ultimately people would get the money - small business people would get the money back over a number of years through normal depreciation. What we are doing is helping with their cash flow by bringing it forward so they can immediately deduct 100 per cent the things that are necessary for their businesses and that helps their cash flow on the 1st July. I've had a lot of small business people come up to me over the last few days saying they are going to go out and invest in the sort of equipment they've always deemed to be necessary but haven't had the cash flow to be able to afford. This is what we do, try and get jobs created.

BARRIE CASSIDY:

But what I mean by this is the take-up might be bigger than you expect and cause a blowout?

TREASURER:

Terrific!

BARRIE CASSIDY:

But won't that cause a blowout in the deficit?

TREASURER:

No, not at all because it is their own money going back to them Barrie. That's how depreciation works. It is their own money going back to them over a number of years. That is fantastic. If small business people are going out and investing in innovation and in job creation, we should all be celebrating that. That's fantastic and that's how you grow an economy.

BARRIE CASSIDY:

Alright, on the welfare measures in the Budget papers now, comparing welfare with wage earnings, we will have another look at the graphic that shows what you’re talking about here. But single mums, two kids earning $30,000 and they can top that up to $66,000 with welfare. A single worker, no kids, on $80,000 has less disposable income. Why have you gone down that path? What is the point you are trying to make here?

TREASURER:

Well Barrie, firstly, that's not my table, that belongs to a media organisation. We did put in the Budget tables clear evidence of where taxpayers' money is going. It’s not our money Barrie. This Government does not believe that taxpayers' money belongs to Joe Hockey or Tony Abbott or Mathias Cormann. It actually belongs to individuals who pay the tax. I've had people always coming up to me asking where their taxpayers' money is going. We have laid down evidence of where their money is going. I think that is a perfectly reasonable thing to do. I did it with the taxation receipt last year. If you go to the website budget.gov.au there is a sliding scale where people can see how their money would be appropriated – where their taxpayers' money would go. I think this is normal accountability because ultimately I'm taking, as the tax man, I’m taking money off people for their work and handing it to someone else, I should explain to those people where their taxes are going.

BARRIE CASSIDY:

Sure, but by highlighting that are you saying the benefits to single mums are too generous or are you saying the single person is getting a raw deal, which one is it?

TREASURER:

No, no, no, no, I’m not.

BARRIE CASSIDY:

You’re not saying either of them?

TREASURER:

No, I'm not – I’m actually just pointing out if someone is receiving $60,000 or $50,000 in government payments, then that is the equivalent contribution of one or two people working full-time and every dollar of their tax going to that other person.

BARRIE CASSIDY:

You might be building resentment, though, for no purpose when you are doing nothing about it.

TREASURER:

It shouldn't build resentment; it should explain where the money is going. Why would you resent the fact that you are helping out a single mother? I think we have an obligation to help people. I think we have a very heavy obligation. In fact, it defines our society that we provide support for those most vulnerable, most disadvantaged. But I also have a responsibility to the people who are working full-time - I think the article did get it right. It was a cleaner in my office at 10 o'clock at night in his 50s, in his 50s, who came up to me and said, "Mr Treasurer, where is my money going? I'm working until 3 o'clock in the morning, I pay a lot of tax". He earns $70,000, which is less than the average wage, a year. I want to tell him where his money is going. I think that's perfectly appropriate.

BARRIE CASSIDY:

This new medical school at Curtin University in Western Australia, why haven't you listened to the AMA on this? Why are you going ahead with a school they say is unnecessary?

TREASURER:

Well, Western Australia has the fewest number of doctors per capita of any state in Australia. There is a shortage of doctors in Western Australia. The medical school is focused on training doctors particularly for those areas where there is no medical representation and I think Brian Owler's language was extreme and certainly not fitting for someone representing a great profession. Quite frankly, I think his comments were out of order.

BARRIE CASSIDY:

Does that make it difficult for you going forward with him because you virtually – you’ve outsourced some of your policy making to the AMA?

TREASURER:

We haven't outsourced any policy making to Brian Owler.

BARRIE CASSIDY:

Well, you have said that you want the AMA's support when you are making changes.

TREASURER:

Well, I think the broader medical profession would not take the view of Brian Owler. Frankly, given that Western Australia does have the fewest number of doctors, and as you know and we all know, Western Australia is an enormous state with a lot of remote communities that don't have medical support. I think it is entirely appropriate that we go in to help train the doctors that can get out to some of those remote areas and try and alleviate some of the terrible afflictions out there.

BARRIE CASSIDY:

Just one issue unrelated to the Budget, why are you having an Inquiry into the iron ore industry apart from the fact Twiggy Forrest wants one?

TREASURER:

Well, we haven't made any final decision in that regard at all Barrie. Obviously there has been enormous volatility in iron ore prices. When we came to government, iron ore was around $120 a tonne. You can see the impact on our revenues, the massive fall in iron ore prices. There are many factors at play. There are many allegations swelling around. We haven't made any final decision in this regard. Nick Xenophon was moving a motion in the Senate. I spoke to Mr Xenophon, Senator Xenophon, I have spoken to all the players here and overseas and we will be making a final decision about whether we would proceed with something that is sensible and made up of sensible people over the next few weeks.

BARRIE CASSIDY:

The Prime Minister gave a fairly strong indication that you were just about there on that on Friday. But Graeme Samuel from the ACCC, former chairman, says that Parliament should not be intervening in the global market and that's why we have independent competition authorities. The current head of that authority, Rod Sims, says it's misguided to think BHP and Rio are engineering price wars. So there’s your verdict. You've got it already from the independent umpire.

TREASURER:

Well, Rod Sims is an independent umpire, he has had a look at that but obviously the Parliament is able to look at issues as it sees fit. I don't think you should in any way stop the Parliament from looking at a range of different issues, do you?

BARRIE CASSIDY:

But if they came out against BHP and Rio, are you ready for the consequences of that?

TREASURER:

Well, it’s not a case of coming out against BHP and Rio. They’re huge taxpayers, and they’re enormous contributors to Australia and they’re big employers and we are not anti-Australian. Remember Kevin Rudd said that they were big multinationals? Well frankly, they're great Australian companies and Australian-based companies in many ways that are making a massive contribution to the nation. This is about providing a better understanding if it is to proceed, a better understanding of how iron ore prices are determined in the global marketplace, about the competition from Brazil, about future demand out of China, but not just China, potentially India and a range of other jurisdictions and given we supply around 60 per cent of the sea-borne iron ore in the world and we produce, as I said in my Budget speech, enough iron ore to build the Sydney Harbour Bridge from Sydney to Perth and back to Sydney every year. I think we’ve got a lot at stake here and I think we should have absolute transparency.

BARRIE CASSIDY:

Just finally, you brought down two Budgets, do you guarantee there will be a third before the next election?

TREASURER:

Well, I am certainly determined to bring down future Budgets to build on our economic plan. This is part of an overall strategic plan Barrie…

BARRIE CASSIDY:

No guarantee, though, that the third will come before the next election?

TREASURER:

Oh, come on – I know what you're at. I'm not going to buy into this.

BARRIE CASSIDY:

It’s a reasonable question.

TREASURER:

I’m not going to buy into any speculation about elections or so on. I am focused on doing what is right and the stronger the Australian economy, the better the policy we roll out, look the politics will follow.

BARRIE CASSIDY:

Thanks for your time this morning.

TREASURER:

Thanks very much Barrie.