Treasurer Scott Morrison joins me live in the studio for Budget analysis
Budget High Taxing, High Spending
Ross: Scott Morrison, who is live in our studio in Parliament House right now. Many thanks for your time, treasurer.
Scott Morrison: Good day, Ross. Always good to be on the program.
Ross: Can I just ask the question, given the fact that right now the government has got 23.8% of receipts coming in and it’s going to rise to 25.4%, spending right now payments 25.2%, still at 25% in 2021. Do you think your government can be characterized as a high taxing, high spending government?
Scott Morrison: No, we can’t. Taxes is a share of the economy. We’ll go to 23.7% in 2021. That is beneath the tax cap of 23.9%, which we’ve imposed on ourselves and has been imposed for some time. Our spending is only growing at less than 2% and spending, as a share of the economy, will go to 25% by the end of this period. Now, that’s the lowest level it’s been at for some time. When I became treasurer of spending, first briefing I had was, it was a 26.2%. We’ve been getting spending down as a share of the economy and we’re binging in the budget back into balance. We’ve had to reverse some 30 and a half billion dollars of savings and measures we were trying to get through the Senate. Now, we’ve got to be realistic about it. It wasn’t getting through the Senate. We got 25 billion through after the election. No one thought we’d get that much.
Ross: Tonight you’ve written that off, haven’t you?
Scott Morrison: That’s gone, we’ve ruled a line and reset on that because you have to, Ross, because the ratings agencies are looking at your books and if you’re carrying measures in your books, that they know aren’t going to pass the Senate, they just sleep through them and write them off anyway.
Maintaining AAA Ratings
Ross: I spoke to Moody’s earlier tonight and they believe, so long as you were on track and getting back into budget surplus, seven billion dollars by 2020, 2021. Do you believe that’s sufficient to keep Australia’s triple-A credit rating with all three of the agencies?
Scott Morrison: Well, it would be quite surprising if that end result wasn’t achieved. There’s one simple reason. They have said that A. you’ve got to get the budget back into balance by 2021.” That’s achieved. 7.4 billion. Two, you need to ensure that you’re not carrying measures in your budget that won’t be passed by the Senate. We’ve reset that budget 30 and a half billion have gone out and out the door. Thirdly, you’ve got to have forecasts that are credible. Now, our forecasts on growth are actually less than the IMS. Our forecasts on commodity prices are also extremely conservative.
Ross: Well, now they’re relatively flat. Even the Reserve Bank has upgraded its forecast of the economy.
Scott Morrison: They have some stronger forecasts than we put it in our budget, so I think these are responsible, modest forecasts. That was critical back at the end of December and retaining that the triple-A credit rating from all three agencies. Based on the criteria they set before the government, then I think we’ve been listening very careful and responding appropriately.
An increase in Medicare levy
Ross: Okay. An increase in the Medicare levy in 2018 and also six billion dollars coming out of the banks in a new tax there.
Scott Morrison: In 2019.
Ross: So these are two —
Scott Morrison: 2019, it’s two years before we put in the new levy to support fully funding the NDIS. It’s two years away.
Ross: Two years away, but it’s still there, it’s in the budget and so, as a result, that’s one of the accusations it would go, that you’re raising taxes on business, you’re raising taxes on individuals, to be able to fund some of the initiatives.
Scott Morrison: We’re putting a six basis point tax on the banks, which will raise 1.5 billion dollars and they’re declaring profits this year of over 30 billion dollars, so frankly, the banks can do their bit for budget repair.
Ross: They’re a soft target, aren’t they?
Scott Morrison: They are a group that are in a position to help Australia’s budget and we’re asking them to do that, rather than hit moms and dads. The only people who’ll be paying extra taxes from the 1st of July this year will be the large banks, only the big five, not regional banks. This levels the playing field up a bit for those regional and smaller banks and multinationals, who we’ll continue to crack down on and those foreign investors seeking to buy Sydney real estate.
Ross: Okay, so — but that point also then goes the next step, the increase in the Medicare levy. Just explain exactly why you have done that and what it funds?
NDIS has a funding gap
Scott Morrison: The NDIS has a funding gap, about 50 billion dollars, over the next 10 years and it starts in that year of 1920. Now, we’ve been having every attempt to try and get savings measures through the budget in the past with the Senate, so we could fill that funding gap. That’s being rejected. Now, we can’t go on any longer, having these political fights about how we fund the NDIS. Disabled Australians, their families, their carers, their friends, those who support them, they need the certainty that this is funded. Now, Australians are generous-minded people and they want to support people who are genuinely in need. Now, this is a responsibility we all share. This is a half a percent levy two years from now and we’re only striking the levy when the bills start coming in. In two years, the extra bills for the NDIS will start coming in and that’s the year the levy comes in for. It is purely and solely to support the funding of the National Disability Insurance Scheme, that supports give the disabled Australians a better quality of life.
Ross: Okay. There’s a couple bits and pieces on affordable housing. Quite clearly, the ability for first-time buyers to save or salary sacrifice through their super fund, then also our better tax incentives for investors to put their money into affordable housing, but there is a bit of a tweak of negative gearing rules on the way through, as well.
Scott Morrison: Yes. Well, you don’t get a tax cut, a tax deduction to go and visit your investment property anymore and there’s been —
Ross: Do you think it’s been a road?
Scott Morrison: Well, let’s just say it’s time to close that one down. Similarly, for depreciable items, when you buy an investment property, whatever you buy in at the curtains and in the fixtures and the fittings and the lights and the carpets and all the rest of it, you can continue that for writing that off, but if you haven’t bought those things and when you’ve acquired a property, you don’t get to continue depreciation of the previous owner. Now, that doesn’t apply to major capital items. If someone’s gone and put major capital expenditure in a place, those arrangements continue, but also we’ve got the black economy task force, where we’ve got some really good measures there on reporting and compliance in some of the sectors.
Ross: And the crackdown on welfare, as well.
Scott Morrison: And the crackdown of welfare, which is twofold. One, we’ve straightened up some of the taper rates and things like that to make sure the system is tighter, but the mutual obligation requirements. 80% of the Australians, who go to work every day to pay for our welfare bills through their income tax. Now, they’ve got to get a fair go. Now, if someone doesn’t turn up for a job interview or knocks back work or doesn’t turn up to work for the dole and their excuse is that they were drunk or drugged. Well, no, we’re not going to cop that as an excuse anymore. For repeat offenders on that score, no way. On top of that, if people aren’t living up to their requirements to turn up to these interviews and do the things that we need to do to get them into a job, well, repeat offenders, three strikes, you get put on a compliance program and that, ultimately, if you keep repeat offending means you get your payments canceled and you’re locked out of the system for four weeks.
Ross: Treasurer, I know you’ve got a busy night. Treasurer Scott Morrison in our Parliament House studio with us and we appreciate your time.
Scott Morrison: Thanks a lot, Ross. Good to be with you, as always.