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Transcript of doorstop interview: Perth: 12 April 2016: increase in business conditions and confidence; backing Australians in our transitioning economy; Bill Shorten playing politics on royal commission; ABCC; $5 note design; Budget 2016



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The Hon. Scott Morrison MP Treasurer

TRANSCRIPT

DOORSTOP INTERVIEW, PERTH TUESDAY 12 APRIL 2016

E&OE

Subjects: Increase in business conditions and confidence; backing Australians in our transitioning economy; Bill Shorten playing politics on Royal Commission; ABCC; $5 note design; Budget 2016.

TREASURER: I am very pleased to see today’s National Australia Bank monthly business survey and I will quote it to you, it says, “the NAB monthly business survey produced a strong result in March. A jump in both business conditions and confidence this month provides more assurance the Australian economy is weathering the global challenges well.” That is successfully transitioning through the end of the mining boom. “Business conditions lifted to their equal highest levels since 2008 while improvements are becoming more broad based across the economy as the recovery gains traction.” What we are seeing is the Australian economy continue to make the positive and successful transition from the investment phase of the mining boom. Here in Western Australia that challenge is no more critical than here. It is very important that we do all we can to have the right policy settings in place to ensure that we support Australians, Australian businesses who are out there every day making this economic transition a success. The one thing you don't do to throw this transition off course is to tax and spend. Labor are proposing to increase tax, the tax burden on the Australian economy, by over $100 billion on their own figures over the next 10 years. Taxing and spending puts at risk the successful transition that is occurring in our economy. Australian businesses want a Government that will continue to keep our Budget under control. That will ensure that wherever possible they seek to reduce the tax burden on Australians and not increase it. Confidence is up, expectations are up, conditions are up - the opportunity is there for Australians to continue to prosper and succeed in what is a very difficult and challenging economic environment globally and this government is backing them in to do just that.

QUESTION: Treasurer, with the debate about Labor’s negative gearing policy, why doesn’t the Government commission modelling on Labor’s specific plans rather than relying on the BIS Shrapnel report?

TREASURER: What I find surprising is that it is Labor’s proposal to increase the capital gains tax on investment in this country by 50 per cent. It is Labor’s proposal to abolish negative gearing and say to every nurse, every teacher, every policeman, every Defence Force personnel, every mum and dad investor in the country who knows that negative gearing is their opportunity to get ahead for them. Now, what we learnt today is that the Shadow Treasurer had in his possession a report that demonstrated the terrible economic impacts of the proposal they are going to proceed with. It did model the removal of negative gearing for existing properties. It absolutely did that. The evidence and the work that was done in that report showed to the Shadow Treasurer the great risk of going down that path. Now, did the Shadow Treasurer go and do any further modelling before he actually finalised his policy? No, there is no modelling to support the position which is put forward by the Shadow Treasurer. What we have is a Shadow Treasurer who is more driven by ideology when it comes to negative gearing. What he believes is he is attacking those on higher incomes, what he

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doesn’t understand is that it is mum and dad investors, people out there investing in just that one property. Investing their hard-earned savings to get themselves ahead to ensure that they can help their kids into a property at some point - that is who uses negative gearing. They are the overwhelming users of negative gearing and what the Shadow Treasurer has been caught out today doing is he had the information available to him, he dismissed it out of hand and he went ahead anyway. Now, it is up to him to make the case as to why he thinks that if you take one out of three purchasers out of the property market, how that won't cause stress on property values and undermine people's confidence in their own home values. How that won't have any impact on the sort of positive confidence that we are seeing illustrated in these NAB figures today.

This is a policy for economic damage to our economy. It is not bad enough that they are going to increase taxes by $100 billion on the Australian economy over the next 10 years, they are going to do it in a way that's going to hurt mum and dad investors and they don't care about what the results or what the analysis shows. They just brushed it aside and went ahead anyway. That's no way to support the transitioning of our economy in a positive way.

QUESTION: If the regulators are doing such a great jobs on the banks, why do we keep getting revelations of ill practice through the media?

TREASURER: In the same way that we have police forces out there doing their job every day, sadly, there are still things that police forces have to attend to in terms of criminal conduct in our society. We have a tough cop on the beat and it is important that cop gets on with the job. When it comes to the banking and the financial sector, over the course of this Government we have had a significant review of the financial system in the David Murray Inquiry. This was a financial system inquiry that was opposed by Labor when they were in government; it was an inquiry that when it brought down its report, the Opposition made no call for a royal commission at that time. When we released our response they made no call for a royal commission at that time. When it was proposed in the Senate, they voted against having a royal commission. Today, we have the Shadow Treasurer who doesn't even understand that ASIC has the powers of a royal commission; that it actually has more powers than a royal commission because it can actually go ahead and prosecute which a royal commission cannot do. ASIC can act on its own motion, it can take referrals from Ministers, it can get about all those tasks, it can compel witnesses, it can deal with all of these issues as the Attorney- General has already said today. What we are seeing from Labor is playing politics with what is a very sensitive and important issue. It's all politics. On the eve of an election, on the eve of having to come into the Parliament and explain why they want to defend criminal conduct and thuggish contact in

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building and construction industry, that's the behaviour they want to defend by opposing the re- establishment of the Australian Building and Construction Commission that has been recommended not by one but by two Royal Commissions. So, they want a royal commission somewhere else but they've demonstrated they don't listen to royal commissions. A Royal Commission, not once but twice, has said "re-instate the Australian Building and Construction Commission" to boost productivity in the construction industry, to ensure there is a cop on the beat that can deal with lawlessness in the construction industry and the Labor Party on the hook of their union mates have said “no, we won’t do it.” Now, we have got a tough cop on the beat when it comes to banking and the financial system, there are serious issues that need to be addressed there. I met with APRA earlier this week. I will certainly be catching up with ASIC later in the week which comes under the governance of the Assistant Treasurer who is in Washington this week and I will be speaking to them as I speak with regulators often. What I won’t do is see a Labor Party go and play politics with something as important as this as an election stunt. It deserves far more serious treatment than that. The sort of serious treatment that is provided by regulators who will always have our support to do the job that they need to do.

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QUESTION: Just on banks as well, Bill Shorten says we shouldn’t assume that Australian banks are immune from some of the arrogance which has infected banks in the US and Europe. That culture is an international problem, isn’t it?

TREASURER: That is why you have a strong regulatory system around our banking system which we do. We have, I would argue, one of the best regulated banking and financial systems in the world. It is one of the reasons why, with the reforms that were put in by the Howard and Costello Government to our banking and financial system regulation that ensured that our banking stood up when so many banks around the world fell over. It is because of that strong regulation it has been because of that keen focus and understanding of the Coalition that has always believed in strong regulation and efficient regulation around our banking and financial system that I think we can have the confidence that we can continue to address issues as they arise. Now, whether that is issues in banking culture or whether it is in issues of breaches of contract or other malfeasance that can occur then that is why you have ASIC that can go prosecute, that can instigate its own investigations, that can take actions where it needs to take action. And the Government will always support those regulators, those enforcement agencies, to ensure that they can do the job that they need to do.

QUESTION: The redesign of the $5 note has been released. What do you think of that and also the Reserve Bank obviously started with the $5 note, why didn’t they start with the $50 or the $100 note seeing as they are the most counterfeited notes?

TREASURER: Well, I will leave those matters to the Reserve Bank Governor and he has made those announcements and released that today and he obviously shared it with me a little while ago. It is another area of great innovation and technological leadership that Australia has shown when it comes to our currency. We were the first to move in these areas and we continue to lead the way. I think it demonstrates, again, why innovation is so important for our economy. It is not restricted to the private sector when you have got the Reserve Bank and others also showing that innovation. I think that is a very positive thing. The good news is that once again the Australian economy is demonstrating that it can make its way through the difficult transition that is ahead of us and will continue to make those gains. Australian businesses and Australians are making that happen and this government in this Budget will back them in because unlike our opponents we will not tax them in the way that the Labor Party is; $100 billion in additional tax burden over ten years is what Bill Shorten’s promise is to every tax payer in this country. That doesn’t sound like a good deal to me.

Tha nks.

(ENDS)

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