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Transcript of interview with David Lipson: Sky News Agenda: 16 December 2015: Mid-Year Economic and Fiscal Outlook

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The Hon. Scott Morrison MP Treasurer




Subjects: Mid-Year Economic and Fiscal Outlook.

DAVID LIPSON: Thanks Treasurer for your time, apologies for the delay.

TREASURER: No problem.

LIPSON: Why don’t we start with the medical concerns raised there by the AMA, suggesting that some patients may forgo services for pathology and imaging as a result of the removal of these incentives for bulk billing?

TREASURER: Well, I don’t accept that analysis for this simple reason, what was occurring with these bulk billing incentives, and let’s remember that they are paid to the companies and these are pathology and diagnostic companies, some of which have turnovers of up to about $4 billion a year, those payments, those subsidies are paid to those companies to support increases in bulk-billing, what we found was it wasn’t increasing the rate of bulk billing other than the natural rate of growth. So, we were shelling out hundreds and hundreds and hundreds of millions of dollars every year in what were effectively corporate subsidies to support bulk-billing increases that weren’t being achieved by those subsidies. So, what we do in a Budget and in a Budget update is look at the programmes, look at where the spending is being effective and where we think spending can be more effective in other places then we set those priorities and we make those changes. So, I don’t think it is helpful for this decision to be cast in the sorts of terms which have been presented by some in the debate. I mean let’s look at the evidence and the evidence is that the corporate subsidy that was being provided in the bulk-billing incentive was not leading to an increase in bulk-billing other than would have otherwise occurred. So, why should the tax payer shell out more for those corporate subsidies?

LIPSON: But surely if the costs for x-rays, blood tests and the like go up there are going to be some patients that will not take up those services. So, you may not be seeing an increase but will there be a decrease of people bulk-billing as a result of these changes?

TREASURER: Well, there is no evidence to suggest that would be the case at all, David, which is the point I just made. The natural growth in bulk-billing that was occurring without the subsidy was continuing anyway. These are quite large companies which are involved in the delivery of these services where there is a very competitive market place which keeps the downward pressure on prices and so I don’t believe it will have the outcome which is being presented, I know that every area of expenditure where there are savings issues can raise these sorts of arguments but let’s not forget where the arguments can come from. I mean there are large companies who are receiving significant corporate subsidies and that revenue stream has been changed as a result of this decision. I don’t believe it will have the impact which has been suggested and I think the money can bet better spent and better used on the many other challenges that we have including in the health area itself.


LIPSON: Do you expect a campaign from the AMA similar to what we saw against the co-payment and are you ready for that?

TREASURER: Well, I suspect when there are commercial interests that are at risk then people will raise arguments on behalf of those commercial interests. I don’t think this is about patients because at the end of the day this money doesn’t go to the patients. This money was actually being provided as a subsidy to corporations who deliver these services and the increase in bulk-billing I am advised was increasing at the natural rate of growth anyway. So, it wasn’t a very well targeted programme, it wasn’t a good spend of taxpayer’s money, it might have been a good revenue stream for companies involved in the delivery of those services but the health system was supposed to be about patients, not about health companies.

LIPSON: More broadly the Coalition has moved from talk of a budget emergency to a patient and responsible return to surplus. It seems that you have now arrived at a position that is eerily similar to that that Wayne Swan prosecuted when he was Treasurer - that is that you don’t do too much too quickly that could put the economy, and jobs in particular, at risk.

TREASURER: Well, I don’t think there is any comparison between what we are doing and what Wayne Swan did. I mean under Wayne Swan he kept jacking up spending and he didn’t exercise the restraint that this Government is exercising. We are seeing the Budget deficit come down each year, it will be lower this year than last year and it was lower the year before and it will continue to contract over the next four years and it will get to 0.7 per cent of GDP. I mean the cumulative deficits over this Budget and Forward Estimates are lower than what they have been in previous years. That shows a path back to Budget balance, I mean there is a credible path back to Budget balance, we are on that path, we are making those gains every year, we are not spending more than we are saving and that was demonstrated in this budget update itself where there was some, just over $10 billion in spending measures and over $10 billion in saving and other measures to compensate for that. We don’t spend more than what we save.

LIPSON: But aren’t you facing the same problems that Labor did that areas outside of your control, for example iron ore, are impacting on the Budget in such a way that yes you say that there is a pathway to surplus but all the evidence suggests that we can’t even predict six months in advance with any real accuracy, the budget update yesterday shows that. How can we believe what you are saying when it comes to a path back to surplus sometime well after the forward estimates?

TREASURER: Well, the new Prime Minister and I as a new Treasurer we’ve taken a very sober look at the economic forecasts and projections and some significant changes have been made from what was being done previously. And the economic parameters, the changes in the iron ore price, the change to the growth forecasts and projections, they are the things that have impacted on this most recent statement. I mean that is the reason the numbers have changed and that is because of those factors that are well beyond the control of the Government. The difference between us and Labor though is we remain absolutely committed to the job of controlling expenditure. That is what Labor didn’t do, that is why we are currently in the mess we are in now and even in areas like multinational taxation where they say they support it they actually voted against it in the last week of the Parliament. We introduced the multinational anti avoidance legislation into the Parliament and they voted against it - yet they claim to be interested in going after multinationals with taxation. Now, we are, we introduced legislation into the Parliament, they sought to frustrate its passage, we succeeded with the support of the Greens and we now have real multinational tax anti avoidance laws in this country and we are in 80 companies now imbedded to ensure those companies pay the tax which they need to pay.

LIPSON: You have made it clear that you don’t want to chase lost revenue down the rabbit hole, if you like, but will the Government be putting in place any additional savings measures in order to try to get back to surplus sooner?


TREASURER: You’ve always got to keep downward pressure on spending and we do that in every Budget, in every budget update and we will continue to do it in the next Budget as well. We need to continue to control expenditure; if you don’t control expenditure then the situation which is already a significant challenge becomes far worse. That is the difference between us and Labor. Labor are not putting up any alternative savings, more than $50 billion in measures that they need to come up with to even just draw level with where the Government is right now. They only talk about raising taxes not about new savings measures. So, we remain very committed to the issue of expenditure for this reason, because you talked about revenue, next year revenue as a percentage of GDP on the statement I released yesterday will be consistent with the long run average, but expenditure will still be higher and that demonstrates that we continue to need to do the job on spending but you need to do it in a patient and methodical way because we are seeing an emerging momentum in the economy and we don’t want to put that at risk. So we will keep the reins on expenditure but we will keep our focus on growth and jobs.

LIPSON: The savings that you have announced in the MYEFO yesterday though, some $3 billion or so of them, will have to pass the Senate. Now, as we mentioned at the…

TREASURER: Well, $10 billion actually.

LIPSON: …$10 billion is closer to the figure but the number that need to pass the Senate, we’ve seen a strong reaction today from the AMA, other groups, aged care, and indeed some Senators as well. How confident are you that these savings measures will pass the Upper House?

TREASURER: Well, of the $100 billion and more measures that we have put forward over the last two-and-a-half years almost 90 per cent of those have passed and been implemented. We will continue to go forward seeking to have as much taken through the Parliament as possible. But my message is simply this, if other parties have better saving, different savings that can replace those we have put forward well, put them on the table. One option that is not available to us as responsible Government is simply just to not do the savings. I mean that would be irresponsible. If people want to talk about how we can save money better well by all means put that on the table but if their only answer is to keep jacking up taxes then that is something that would very much threaten the growth in the economy and that is what would threaten people’s jobs. Increasing taxes at a time like this can put a real handbrake on the economy and that is why in the broader tax debate it is not about higher taxes, it is about better taxes, a growth friendly tax mix and being able to deliver particularly on income tax and company tax which are very high by global standards and are really holding people back in terms of them working, saving and investing.

LIPSON: Because I think there are some $13 billion worth of savings announced previously, before yesterday, that are still held up in the Senate. If you are having trouble with…

TREASURER: Just over $13 billion actually, David.

LIPSON: Just over $13 ok. If you have trouble with these additional savings if the Senate proves to be obstructionist, you know, is that not cause for you to take this to the people? If the Senate isn’t going to help out, do we need to go to an election any earlier than a year’s time?

TREASURER: Well, that is a matter for the Prime Minister but our position on savings is clear, it is all there, you can see it, it is in MYEFO, it in the various budgets that have been put forward, the measures that are before the Parliament. People know where we stand on savings and they know we have a strong commitment to controlling expenditure. The alternative is either just higher and higher taxes or further allowing the budget position to deteriorate more than we are currently confronted with because of the economic global circumstances we are confronted with. I mean we can’t do anything about the iron ore price and we can’t do anything about volatility in global markets and all of those things but we can do something about our level of spending. We think we have


taken the very responsible approach to the spending challenges in this statement. This is not a budget, it is just an update and so we have ensured the additional spending, so on things like taking the extra 12,000 Syrian refugees, I mean that has to be paid for, it is $900 million. The $1.1 billion in additional roads funding that was the cost of the deal on getting things through the Senate - that has to be paid for. The reversal of the bank deposits tax which Labor had introduced. That is around $1.5 billion - that has to be paid for. The $1.1 billion innovation statement which is going to unleash entrepreneurialism in this country and drive jobs - that has to be paid for. In this statement we paid for it with savings. Now, the Labor Party doesn’t want to pay for anything but they want to spend on everything and they want to raise taxes to enable them to do that to chase higher and higher levels of spending. That’s how we got into this problem in the first place.

LIPSON: Treasurer, I assume you have seen the front page of the Daily Telegraph this morning. You look like you are in pretty good shape there - what do you make of that? Have you been working out?

TREASURER: Chris Dore is already making his mark on the Telegraph. He has got a great sense of humour. I’m sure that will get quite a run down at Cronulla beach when people sort of compare the real to the fabricated and sadly it is a very poor comparison.

LIPSON: Treasurer, Scott Morrison, appreciate your time for that. Thanks very much.

TREASURER: Thanks a lot.


Further information: Julian Leembruggen 0400 813 253