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Transcript of interview with Greg Jennett: ABC24: 20 July 2016: IMF world economic outlook; making superannuation more sustainable; Labor's budget backflips; HILDA survey; training Iraqi law enforcement agencies



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The Hon. Scott Morrison MP Treasurer

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TRANSCRIPT ABC 24

WEDNESDAY 20 JULY 2016

E&OE

Subjects: IMF World Economic Outlook; Making superannuation more sustainable; Labor’s budget backflips; HILDA survey; Training Iraqi law enforcement agencies

TREASURER:

The most recent information that has come through obviously is the report overnight from the IMF and there's a slight change to their expectations around world growth. Between now and the end of the year, I think that's the appropriate time over which you make any adjustments you would to your figures. As things stand today, what I think is very clear is that we obviously need to continue to focus on the area of Budget improvement and Budget repair and that is ensuring that the savings that we have identified and put forward in the Budget both on the expenditure and the revenue side are carried through the Parliament. This is essential to ensure, in having them legislated I think to give those ratings agencies the confidences they're seeking and they've made very clear and I think they've sent very clear messages not just to the Government, but to the Parliament as a whole.

GREG JENNETT:

We might talk about some individual measures on that front. Wrapping out on the global outlook, you'll get a better indication I presume when you gather with Finance Ministers in China at the G20. We see that the IMF has slightly downgraded global growth this year and next, most of it Brexit inspired. What makes you think that Australia won't bear some of that slowing effect?

TREASURER:

What I think these figures show is the Australian economy is not in a position to rely on global growth and what the national accounts figures showed, which came out during the course of the election campaign, is much of what is occurring is being driven by household consumption in Australia. There is a positive contribution from dwelling investment. Of course our production volumes from exports going to China and other places remain a key part of our economic story. That transition that is taking place in our economy, there is nothing that has changed about that and we continue to make that transition effectively. Our growth rates are still the envy of the advanced world in terms of the advanced economies around the world and I'm sure that will be the case as I meet with my colleagues in Chengdu this weekend.

JENNETT:

Are you as broadly as confident now as you were 10 weeks ago?

TREASURER:

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There's been obviously the Brexit event over the last 10 weeks and I made commentary on that at the time, as did the Prime Minister. The advice we have on that is the impact of that is quite limited for Australia, certainly in the short-term and we're yet to see the full playout of what that will mean and the numbers that have been produced in the IMF report that was released overnight goes through a range of scenarios and I think it really is too soon to be making any judgments about which of those scenarios is to be the more likely. We've got a new Prime Minister in the United Kingdom and, of course, a new Chancellor and they'll be applying themselves to those challenges and I'm sure we'll hear more about that on the weekend.

JENNETT:

Ok. Well let's get to individual budget measures now and superannuation is one. George Christenson of the LNP has said ‘if the Government's superannuation policy does not change, I'll be crossing the floor and voting against these measures’ - what will you do to assuage him and others, especially on that half million dollar cap on after-tax contributions?

TREASURER:

This will go through the normal process, as we always said. There will be exposure drafts of legislation. That will work its way through our backbench committees and there'll be the opportunity to have those discussions and I'm sure we'll have that. It's important to understand that the changes we put forward in the Budget are an essential part of doing two things - making superannuation more sustainable, and fairer into the future and let's not forget that many of the changes we made to superannuation was to ensure those on low incomes are able to make contributions to their superannuation, that couples, those with one on a much higher income can better support their partner in building up their superannuation, that people who both work for a wage and run their own companies can also have greater access to the deductions and a parity of access to the deductions that are available for superannuation. So there is a range - this is a whole package that makes the system more sustainable and fairer. The other issue that it addresses clearly is the one of fiscal sustainability. Now the ratings agencies have made this very clear…

JENNETT:

You're saying to people, I think it's being reported that you are, if changes are to be contemplated they have to identify, or someone needs to identify matching offsetting savings - is that the approach you're taking to the implementation phase?

TREASURER:

You've heard me say this many times Greg in other portfolios, particularly while I've been on the ERC and in Social Services, but also as Treasurer. When things come off the table, other things have to go on because our obligations to reduce the deficit, to return the Budget to balance, to address the concerns raised by the agencies which can have an impact on our rating, and not just I should stress on the Commonwealth Government's rating, but that also flows through to the States and Territories who would be impacted by such a change and also the banks themselves. I don't think we can be careless in under-assessing the statements that have been made by the ratings agencies, particularly after the election. They're seeking two things - holding to this trajectory we've set out in the Budget on fiscal repair and seeing that actually work through the Parliament and seeing those measures actually being legislated and that has got my absolute focus, because that is my responsibility as Treasurer.

JENNETT:

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Have you done any figures on what it might cost if the calculation of the cap were taken from Budget night this year not from 2007, which you're obviously aware some people suggest is backdating - have you done any examination about what the actual dollar effect might be?

TREASURER:

Well it’s about half a billion dollars.

JENNETT:

And does that make it undoable in your view?

TREASURER:

Well that’s a significant cost to the Budget.

JENNETT:

In asking for that number and obtaining it, is there anything that you can do to alter the date effect from which that's calculated?

TREASURER:

The process Greg is as I outlined it. That is we presented the Budget, it went through the normal process that a Budget would go through, both through the party and then presenting it to the Parliament on Budget night, of course. Now we moved very quickly from that point into an election campaign and now we can resume that normal process that would occur following Budget to prepare legislation and for us all to have a better understanding of the specifics of what these measures do and how they are implemented. That's the process we're going through. I have no doubt we'll be able to address the very specific issues that some have raised and frankly we've already done that in a number of cases, particularly in relation to self-managed superannuation funds who had pre-existing contracts and were relying on non-concessional contributions. We made that clear before the election. So there are technical issues that can be addressed within the scope of the policy and that process is well under way. But that doesn't represent a change in policy, it represents a practical implementation of the policy.

JENNETT:

Alright, people like George Christenson might not matter much if we take at face value a lot of the commentary after the election about making this Parliament work. I'm often struck by the similarity in the magnitude of savings that you and Labor were both trying to achieve in superannuation. Have you made your appointment with Chris Bowen yet to see whether common ground might be found?

TREASURER:

I welcome what the shadow Treasurer said today, but we'll have to see the proof of that when we have legislation and when we sit down and talk about these things. Labor committed to measures they had previously opposed to the tune of around about $5 or $6 billion over the course of the campaign. They reversed their position on a lot of these measures and they included savings measures that were in our Budget in their forward estimates that they took to the election. I would expect them to honour those commitments. In fact Senator Dastyari said that the other night on the ABC - that they would be honouring what they took to the election and I take that to mean that all the things they included in their forward estimates they would certainly support as we go forward. But that really is a matter for the Labor party.

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JENNETT:

Just skipping over another one relatively quickly, a home ownership study out today suggests soon we will have less than 50% of adults who actually own a home, that's on current trends. You'll talk about planning and land release and I'll presume you're not anymore opening to negative gearing now. So given all of that, what other responses do you have, if any, to counter this trend?

TREASURER:

This is fundamentally an issue about supply and it's one that is quite specific to particular areas of the country. We already have the intervention made by APRA which has had an impact, which the Reserve Bank has acknowledged, in taking the heat out of the investor demand that we were seeing in the housing market. But those sorts of measures fall on the fair and foul ground alike and so what might be a good thing in Sydney could be a very bad thing in Perth and you've got to be very careful about how you apply those measures that are available at the Federal level in the financial system because while they might improve things in the suburbs of Melbourne, they can make things very difficult in the suburbs of Adelaide or Hobart. So that is why we are always much more focussed on how we can work with the States, how we can work on cities policy, on infrastructure policy, things of that nature which can improve the affordability of housing and accessibility of housing. It's an aspiration that Australians have and rightly have and it is getting harder and it's particularly getting harder for younger families. Those who are delaying when they might start living together. They can be married or whatever they choose to do, when they have children - it is impacting on all of those decisions. We need a diversity of the supply options that are available on the ground, as well as greater diversity in the financial system to enable them to meet their objectives and that all has to be supported by a strong economy where people can have confidence in the jobs they're in and the jobs that they're seeking.

JENNETT:

Finally, I'm sure we'll hear a lot more about that, but outside of your portfolio on national security, Australia's getting in slightly deeper with its commitment to Iraq mainly on the training front. Are there no limits on our mission and the mission changes going on there?

TREASURER:

The Defence Minister and the Foreign Minister will be engaged in various meetings over the next little while and they'll be consulting with our partners in those undertakings and we will await their reports back. But there has been no expansion in the overall envelope of our commitment. They'll be talking through, as I understand it, the flexibility of how we can better work within that partnership. No-one doubts our commitment to this task and we are seeing this task through and that I think enjoys the support of both major parties and that's necessary, I think, to make sure we meet those commitments but do it in a way which is in-keeping with the communications we've had with the Australian people about this. I think we're staying very much within the envelope of what we've committed to and what we've said we've done with the Australian people and we have to continue to practically work that out on the ground to make sure the effort we're making is best applied. I know that's what Minister Payne and Minister Bishop will be doing when they meet with their counterparts.

(ENDS)

Further information: Julian Leembruggen 0400 813 253, Kate Williams 0429 584 675