17 August 2015
Transcript - #2015167, 2015

Q&A, Australian Chamber of Commerce and Industry Business Leaders’ Summit

KATE CARNELL:

Has anyone got a question? I might ask the first one. So there won’t be many questions so you better get in early, okay. Just in the last couple of weeks the Productivity Commission has brought down their report into the Fair Work Act. We argue that possibly the Productivity Commission [inaudible] in that report. But for all of that, what they brought down in our view is pragmatic and do-able shall we say, which is I suppose a good thing from everyone’s perspective. As you would be aware, a lot of the issues in the Productivity Commission report - things like penalty rates, enterprise contracts, a whole range of things, things that make it easier for businesses to employ. And I think that’s what you want and what we want. Can we be confident that you will go the next election taking into account the recommendations of the Productivity Commission report?

TREASURER:

Well of course we’ll take them into account and it was a draft report as you’ve identified. And in some areas reform will need to be radical. In other areas, reform will need to be incremental. What matters is the outcome that you’re able to achieve. I think we need to appreciate that the disruption to our economy as a result of new technology is having a more profound influence on our community than at any other time. The people driving reform are not necessarily going to be you as business leaders, or the people up the hill in Canberra, it is actually going to be the consumer who is driving reform. And therefore, for example, when it comes to issues like retail trading hours which is a competition issue, or penalty rates on weekends, the biggest threat is not going to be - or the biggest change is not going to be legislative change, it is going to be the behaviour of the consumer who can go online at two o’clock in the morning or 11 o’clock on a Sunday and buy the good or service, increasingly the service, that they need over the internet that can be delivered the next day or two days later. And they never have to leave the lounge room. So that is going to force all of the key players to come together and recognise that you can’t stop the tide of consumer initiated reform, you have to facilitate that and at the same time, do everything you can to change your own business model to accommodate that. Now we are mindful of that, and that is influencing our response to the Harper Review, the Financial Systems Inquiry, it will influence us in relation to the Productivity Commission on Fair Work and it influences every area of government policy from the Budget, through to tax reform.

KATE CARNELL:

Thanks Treasurer. Tony [inaudible].

QUESTION:

Treasurer, having a go for small business is very important [inaudible] do you see that there’s a possibility the $2 million threshold for small business can be increased in the next term of government? Because it hasn’t been increased since the beginning of the legislation.

TREASURER:

Well, what we did in the Budget was bring in a whole lot of different definitions for small business under the $2 million threshold, particularly in relation to the aggregation of interests. Yes, the next logical step would be to increase that threshold. I’ve got to do it within the constraints of the Budget, but I am mindful that the initiatives we had in the Budget combined with the overarching narrative around the $2 million threshold has worked, and there is a compelling case to increase that threshold, but I’m very mindful of the budgetary constraints.

KATE CARNELL:

Thanks very much, one last question…

QUESTION:

Treasurer, [inaudible] not an easy issue, but something that we’re interested in constantly talking about. You mentioned confidence and certainty and when you’re a small to medium enterprise - state based - you’re dealing with at least two, if not three levels of government, different taxes and certainly around certainty of projects, you’ve got what happens at a federal level and what happens in terms of decision making at a state level. Can you give us your current thoughts on how we can start to coordinate more to create our confidence and certainty in state land?

TREASURER:

Well, I know it’s not an election but I would say vote Liberal. Sorry to be so parochial. But why do I say that? The Australian economy would be growing faster today if there was not a change of government in Victoria and East West was being built. I have absolutely no doubt about it. The Victoria Government hasn’t got a replacement project for East West. And already 600 jobs were underway with that. The bulldozers were ready to roll and the project was cancelled, which not only had a negative impact on construction jobs, not only had a negative impact on the Victorian economy, but it sent a negative message to the world about sovereign risk, particularly in Victoria. And in Queensland, it has come to a standstill as a result of an inert state government. I speak to business all the time and I can say to you emphatically, that a level of despair in Queensland leadership circles in the business community is palpable as a result of the change of government there. We know the Newman Government made mistakes, but they actually got the state moving. And it’s immensely frustrating, when in last year’s Budget I rolled out the biggest infrastructure program in Australia’s history that involved a partnership with the states, and why do you do it with the states – they’ve got the planning powers, they’ve got the delivery powers, they’ve got the capacity to do the PPPs through the asset recycling program, delivered that. Billions and billions of dollars of microeconomic reform - tens of billions of dollars of microeconomic reform came to a standstill in Victoria, and in Queensland as a result of the changes of government. And you compare that with New South Wales where there’s 165 registered cranes in the Sydney CBD, 165 registered cranes in the Sydney CBD. You look at Barangaroo and Darling Harbour and you see a state government that is on the move. Now we will partner with state governments that are on the move. We will do it and we will invest in it, and half a billion dollars to Western Australia helped to get a response out of the Western Australian Government, in some areas of reform that they were very reluctant to go to. And we are prepared to do deals. This Friday I am meeting with the Treasurers again. Every Treasurers’ meeting I say to them give me your infrastructure projects, I’ve said it I don’t know how many times to them, in particular South Australia. And the projects are just - it’s like trying to shave a horn off a camel. You’ve got to be nimble, you’ve got to be fast and you’re dealing with a really reluctant partner here. From our perspective, we’re trying to do our very best to try and…

KATE CARNELL:

States and territories aren’t that bad, Treasurer…

TREASURER:

The territories are easier. The territories are easier [inaudible]…

QUESTION:

Mr Treasurer, I read the Productivity Commission Report and I brought out a paper on it today, I’m Gary Morgan. Firstly you took over the ABS unemployment figures, you didn’t refer to our figures which showed there was a significantly higher unemployment than the ABS showed. And that’s a fact. The second issue is, you only once referred to the cash economy, you had nothing to say about the cash economy. In my opinion the only economy that is booming in this country is the cash economy. What are you going to do about it?

TREASURER:

Well if it’s a cash economy Gary, and it’s a good question, I have a great deal of respect for you Gary, as a pollster. If it’s the cash economy that is booming and in your words nothing else is, then I’m not sure how we continue to get economic growth. There must be economic growth there and of course economic growth doesn’t measure the cash economy. But I’d say to you this, I am confident in the momentum in the Australian economy. I am absolutely confident in that. And I want to emphasise to all of you, I am in constant dialogue with Finance Ministers and leaders overseas, the head of the IMF or the World Bank or others, and at the same time dealing with on a regular basis the leaders in China. Our biggest trading partner is going to continue to grow, China. It is going through a transition, but they say seven per cent, when they say seven per cent it’ll be seven per cent...

QUESTION

They put the [inaudible] in jail, that’s the difference, we don’t.

TREASURER:

Well, they do put a lot of people in jail, but I’m not really for putting entrepreneurs in jail. I must say someone in the leadership in China when I referred to the fact that Alibaba was one of the great modern success stories, listed for $200 billion on the New York Stock Exchange, the biggest IPO, and its role is to facilitate the growth of small and medium sized enterprises out of China. When I said that to one of my good friends over there he pointed out they don’t pay tax in China. So there are multiple - and I wouldn’t call it a cash business really – but I’d say to you there are multiple challenges for us, but all of them are beatable, nothing is insurmountable, and the Australian economy will get better and there will be greater prosperity, and we will get the unemployment rate down. We’re going to get the numbers down and we’re going to see more jobs created in Australia.

KATE CARNELL:

Can you just take one more question [inaudible]…

QUESTION:

Thank you Kate. Treasurer Hockey, just in reference to competition law reform and the Harper Review, very important to small business, but to the Australian economy, productivity and entrepreneurship. Is the Harper Review recommendation around the effects test - will you support the introduction of the effects test into section 46, in hopefully, soon to come Cabinet discussions in the next couple of weeks?

TREASURER:

Well, we have been discussing it, and we’ll continue to discuss it. It is not a black and white issue I must say. It’s not a black and white issue, particularly given changes in the Australian economy. I’m working it through with Bruce Billson, the Minister for Small Business. He is a fantastic advocate for small business, there’s no doubt about that. And he is the Minister primarily responsible for competition law. But ultimately as Treasurer I am involved and I’m very willingly involved. I must reflect on the fact that I first came across this issue many many years ago when I was Minister for Competition Policy, in 1998 as Financial Services Minister and Small Business Minister three years later, so I’ve been following this issue rather closely for many years. It is a hotly contested issue. But we’ll leave our discussions about it to internal processes and I’m sure you’ll be reasonably pleased with the result.

KATE CARNELL:

Thank you very much Treasurer.