Sky News ‘Richo’ programme
E&OE
GRAHAM RICHARDSON: Thanks for your company here on Richo. With me here in the studio is Scott Morrison.
MINISTER MORRISON: G’day Graham.
RICHARDSON: Who has actually got my old job, Minister for Social Security. I don’t think you call it exactly that these days but it’s the same thing though, isn’t it?
MINISTER MORRISON: Same thing. Budget’s a little bigger as we’ve discussed before but it’s the same job.
RICHARDSON: Same job. Now I notice that you’re having a look at pensions.
MINISTER MORRISON: Yes.
RICHARDSON: Now before I get to the budget and the general state of the nation, because I think this is really interesting, now if you touch pensions it’s always tough going, it’s the hardest thing to do and yet I’m just making the point, and I’d like your comment on it, if you look at the projections for our superannuation despite the fact that we’ve now had 20 years on good super, before it was only public servants now it’s everyone, we’ve still got the same numbers projected to be on pensions in terms of percentages.
MINISTER MORRISON: That’s true.
RICHARDSON: What’s failing, what’s going wrong?
MINISTER MORRISON: It was the Commission of Audit that found that 80% of people of pension age would still be on the pension 30 years from now, what would change though is there would be more people on part pensions than on full pensions but nevertheless the same sort of theme was there. Now what that says is that we obviously need to continue to build the pool of superannuation and as we move forward that will come to full maturity. They were reforms that started under Paul Keating, carried through under the Howard Government as well and the incentives for people to be in superannuation I think are incredibly important. I think there is a compulsory element to it but if you start taking a sledge hammer to superannuation, which is what I picked up from Chris Bowen today then I think you really start to undermine the confidence in investing in superannuation. I mean if someone is going to provide for their retirement, and pay the full freight on doing that on the way through and then to slug them with taxes on top of that well that’s compel and punish, not compel and encourage.
RICHARDSON: You have now disappointed me. You have now let me down. I mean even Peter Costello for a couple of years put a surcharge on the wealthy and I would have thought that after the last budget and the political dramas that followed, it was branded as unfair and it was and it was unfair because, as I keep saying, if you’re a family in the western suburbs on $70,000 a year with three kids, you lost the same amount as me. It’s wrong. And the only way to fix that is to look at something like super. Now I just said on the air–just a minute, just let me give you an example. About three years ago, I think they’ve changed the rules and knocked it down a bit, three or four years ago my accountant says to me just put $50,000 into the account, taken it out, he had it one day, he’s washed my tax out of it, isn’t this wonderful. And I said what? You can’t do that? He said yeah that’s legal. Now that is an advantage given to me, how many people out there have got $50,000, $25,000 to wash through their tax? None. It’s wrong.
MINISTER MORRISON: You’re only focusing on one part of what Chris Bowen announced today, what he said today is, is that people who currently draw a tax free income greater than $75,000 a year on their super will be taxed. They’ll be taxed. They’re saying that $75,000, if you’re earning more than that off your own super then you’re rich, you’re rich and he wants to slug you and I think that’s the wrong approach. Where we want to focus and where the discussion on the pension has been going–
RICHARDSON: Wait a minute, let’s not jump off this. I haven’t left this yet. Let’s say I agree with you, let’s say that $75,000 is the wrong figure, why not sit down with them and work out what the right figure is, what you can wear, because it seems to me that at the top end there are rorts available that are just wrong. Why not end them? Because if we are going to be serious about getting the budget back into some health, and I’ll get to that, but if we’re serious about it, don’t we have to look at every rort under the sun? And these are rorts.
MINISTER MORRISON: No-one’s suggesting that there aren’t things that need to be addressed in the superannuation system and there’s been many calls for a retirement incomes review and things of that nature and look we’ll see where that goes down the track where everything is on the table from that perspective but what I object to and what we saw today is Bill Shorten’s had two ideas this year and both of them have been taxes. Now that’s no great surprise, but on this one, if you want to try and restrict the eligibility for welfare payments, then you don’t go and slug people simply for drawing down an income from an asset that they themselves have saved to create. Now I think that really does damage the incentive which I think is the heart of the superannuation reforms which the government you were a part of many years ago, initiated.
RICHARDSON: Yeah but even Peter Costello could see the wisdom in putting a surcharge on, why can’t you?
MINISTER MORRISON: Well I’m not sure if that wisdom continues to this day, when it comes to that particular issue.
RICHARDSON: Well no, you get into budget strife, so you look at where you can cut back, where you can raise money and that’s an obvious place isn’t it? I don’t see the problem. I don’t mind you arguing about the $75,000 figure, that’s fine, that’s sensible.
MINISTER MORRISON: That’s the lion’s share of what Chris Bowen announced today, he’s saying that he doesn’t think that you should be able to draw a tax free income on savings that you yourself have accumulated, earning them, putting them in super, doing the right thing, you hit $75,000 and you are mega rich. That is the substantive proposition.
RICHARDSON: Let’s say I agree with you, all you are going to argue about is where the line is drawn, but the line must be drawn.
MINISTER MORRISON: Well I don’t think $75,000 is the right answer and you’d have to be going a long way north before we thought that was–
RICHARDSON: So when are you going to sit down with him and work out what is the right answer?
MINISTER MORRISON: Well we are the ones introducing a budget this year, not the Opposition.
RICHARDSON: Yeah but we had a look at last years, that didn’t go too well.
MINISTER MORRISON: Let’s move to the issue of pensions, which we were talking about before, because these two things are linked in terms of retirement incomes. You know, we’ve had the issue on the CPI indexation for the pension there and that’s been out and about and I think we all know what people’s views are on that. Now some weeks ago–
RICHARDSON: You’re not going to do that are you?
MINISTER MORRISON: Some weeks ago, ACOSS put forward, I thought, a very constructive alternate proposition. See, the issue here is how you get a sustainable pension for the long term, a fair and sustainable pension–
RICHARDSON: Absolutely.
MINISTER MORRISON: Now Chris Bowen said today that 3.6% of GDP was sustainable; I disagree. It’s currently 2.9% and if we can reform the way the pension works then you can get back to 2.7%. The difference between those two numbers–
RICHARDSON: Oh it’s huge.
MINISTER MORRISON: Is $14.4 billion.
RICHARDSON: I understand, I know the numbers.
MINISTER MORRISON: If he thinks that’s sustainable he needs a calculator. But the second point I’d make is this, ACOSS are saying that if you’d look at the taper rate for the assets test then you can achieve some real savings there but not in a way that is going to impact on full pensioners and those who have low level of assets in addition to their family home. See the issue which has been raised with us is if you’re on a full pension and you’re going to change the rate at which your pension grows, well people on the full pension have very little to compensate for that. But if people have more assets that they’ve accumulated and they can draw down on, well ACOSS and others, National Seniors and COTA, I think have made some very good arguments.
RICHARDSON: But most of the assets are in the family home, aren’t they?
MINISTER MORRISON: Well, no.
RICHARDSON: For most people they are.
MINISTER MORRISON: Well, no. I disagree. For a couple on a part pension, they can still draw a part pension with the family home and $1.15 million in additional assets. Now that change happened some years ago. In the last year of the Howard Government what they changed was the taper rate from $3, which had been there since Paul Keating in 1994, and they put it out to $1.50. Now that increased the pension bill by about $1 billion a year. Nick Xenophon and others have raised–the $1.50 taper rate has not been there since Federation, it has only been there very recently, when there was a $20 billion surplus and $40 billion in the bank. So look I think that’s a reasonable discussion. It’s a conversation we’ve been having with crossbenchers and obviously with the peak bodies and the stakeholders and I think they’ve been very cooperative discussions. Now the Labor party doesn’t want to touch any of that. They just want to go and tax people who have actually saved their whole lives and as soon as they hit $75,000 out comes the big tax sledgehammer.
RICHARDSON: My answer to that is hold the phone, because I think they are going to announce some things on that, I don’t think you’re right about that and so–
MINISTER MORRISON: They’ve been dragged kicking and screaming if that’s the case, they’ve been flat footed on this all year.
RICHARDSON: You’re going to have to get dragged kicking and screaming to the fairness barrier because when you look at the last budget that was a shocker for that. Now are you going to do anything with the pension indexation rate? Now I’m assuming the answer to that is no.
MINISTER MORRISON: Well I’ve always said that I’m not taking anything off the table unless something goes on the table and I think we’ve had some pretty good discussions about what could go on the table.
RICHARDSON: So you think you can do this and work with the taper rate, that’ll sort this out?
MINISTER MORRISON: I called it a coalition of consensus around that issue some time ago and I think there is some strong support building amongst the stakeholders but also in the Parliament itself and if the Labor party wants to catch up and get on board with that then fine but their notion is that the pension is sustainable at 3.6% of GDP in the future, he has said that again today and he is just not right.
RICHARDSON: Actually I think I probably would come down that he’s not right, whether your figure is right or not I think there is always some argument. But I still think that we do have to look at that but I am fascinated to work out what is happening with this budget. Last year we were all going to be ruined said Hanrahan if we didn’t get through all of your savings measures. Now a whole host of them have been knocked back in the Senate, there is buckley’s of them getting through one would say in most cases. Now we are told there is no real crisis and we don’t have to do it again we can just have a dull budget. Dull is the word the Prime Minister has used on three occasions now, what do you think, is a dull budget what Australia wants? Is that going to get the budget back into health?
MINISTER MORRISON: What the Prime Minister said was that we are on a debt projection to 120% of GDP and last year’s budget got us to around 50% of GDP projection into the future. So that means we have still got a long way to go and that just means that…
RICHARDSON: But you are not going there.
MINISTER MORRISON: We are going there and we will continue to go there and we will go there in a modest and incremental way to get to the goal, when the goal is to get back into surplus and draw down on the debt and reduce the trajectory of Labor’s debt.
RICHARDSON: But when will this get us into service? The way they have talked, the way that…
MINISTER MORRISON: Labor doesn’t get to lecture the Liberal party on surpluses.
RICHARDSON: I am not Labor.
MINISTER MORRISON: No, I understand that.
RICHARDSON: I am asking you to tell me when do you reckon we will get back there under you? Let’s say you are in government for ten years how many of those years will it take under the dull budget you are about to bring down to get it – the Prime Minister is not a liar is he? Tell me the truth.
MINISTER MORRISON: The projection about what the fiscal outlook will be will be in the budget, ok. But what we are saying is that you are not going to get there without the incremental approach that we are looking to take and we will get to the surplus when we will get to the surplus but we are going to take steps every budget to get to a surplus. It is going to get better, not worse.
RICHARDSON: Yes, but do it, to get the changes through you need the big spending cuts. You need to take Australians with you. I know you can’t say it, I understand your position, you are a Cabinet Minister, you have got to defend the team and all the rest of it, Westminster system I have been there and I have done that but the reality is Australia rejected the last budget because they didn’t think it was fair. Now if you are going to be fair you have to do things like stopping me from washing money through my tax. You have got to look at super to some extent and I note today they talked about negative gearing, another thing only available to people with money.
MINISTER MORRISON: Well Graham that is not true. That is actually not true.
RICHARDSON: Mate, a battler out there in the suburbs on $70 grand with the three kids, how many extra houses do you reckon he owns?
MINISTER MORRISON: You’d be surprised how many people …
RICHARDSON: No, I wouldn’t.
MINISTER MORRISON: … particularly in small business who don’t earn a lot of money who have invested through negative gearing into properties to provide for their own retirement. That is a fairly common practice and I know plenty of people …
RICHARDSON: In a super scheme?
MINISTER MORRISON: … on meagre incomes. No, not even in a super scheme. They’ve just done it for their kids, they’ve done it for themselves and they’ve made big sacrifices to do it and it has also ensured that we [inaudible]
RICHARDSON: So you are saying that negative gearing is off the table?
MINISTER MORRISON: I am just responding to your point that people on modest incomes don’t negative gear. I think you are absolutely wrong about that.
RICHARDSON: Well the figures show I am not wrong. We are not going to argue about that, there is no argument but I am concerned though…
MINISTER MORRISON: There are plenty of people out there watching on a meagre income who have negative gearing…
RICHARDSON: There are some but the majority -it’s not the majority mate. Look you have got to look at overall, you can always pluck something out, you are a good plucker and you have plucked well always through your life. You are plucking but anyway.
MINISTER MORRISON: It is aspirational for people to have that opportunity to go and invest in property to try and provide for their future and people on meagre incomes do it and they make big sacrifices.
RICHARDSON: I agree but – but what we are looking at I …
MINISTER MORRISON: You are dismissing them.
RICHARDSON: I am not dismissing them either, I am saying it has got to be on the table, it has got to be examined and it has got to be changed. Not necessarily abolished but it has got to be looked at. You can’t take things like that off the table because again if you want the fairness thing to work for you, you have got to look like you are being fair. You didn’t look like it last year; you have got to make some improvements on that this year. You know that though.
MINISTER MORRISON: We have got a tax white paper that is out there at the moment which canvasses a whole range of issues. In addition to that there is the opportunity to look at further measures down the track but right now we have a budget in front of us which has to build on what we did last year. It has to consolidate around a number of measures that were up last year and were unsuccessful over the past 12 months and we need to keep the progress of going forward with the budget. We are not walking away from the fiscal task in fact we are continuing to walk in the right direction on this thing. It is like Johnnie Walker and ‘keep on walking’. That is what we are doing with the fiscal situation of the budget. We are going to keep on walking forward and you will see that in this budget, you will see it in the next one.
RICHARDSON: But you can’t do much – you can’t walk forward against the iron ore price as an example.
MINISTER MORRISON: And you don’t chase the iron ore price down the hole.
RICHARDSON: Mind you, you didn’t give Labor much of a leeway when they had terms of trade setbacks.
MINISTER MORRISON: They had the best terms of trade in our nation’s history.
RICHARDSON: After we had the GFC you gave them no leeway whatsoever but anyway there is no point in arguing about it.
MINISTER MORRISON: If we had one day of the terms of trade and the iron ore prices the previous government had I think we would…
RICHARDSON: If they could have had the ones that Peter Costello has they’d of…
MINISTER MORRISON: They had better ones than the ones Peter Costello had.
RICHARDSON: Well I am not going to get into the argument because it doesn’t matter. What I am concerned about though is you look into the future, you know it has already halved and on your own projections Joe Hockey used about two weeks ago suggests, he believes it will get down to I think his figure was 37, and everyone can argue but beneath 40 no one is in dispute that it is going to get down to those levels and that leaves massive holes. How do we fix it because once the mining boom has subsided completely which it pretty well has you have got to replace it. Now manufacturing is not replacing it, clearly. Public funding for – you government’s funding for public hospitals is falling, that is what Brian Owler has been complaining about. There doesn’t appear to be any plan to fix that. Where do our living standards come from in the future?
MINISTER MORRISON: Graham this is one of the reasons why Andrew Robb has been successful overseas and why one of the first things we did as a government was ensure that we have a strong trading future for the country and not just in the traditional areas where we have been strong but particularly in areas of the services economy. Now look at the services economy and that is the boom that is happening particularly in my home state here and in yours here in New South Wales. What we are seeing is a strong services economy which is supporting this to become now the leading economy in the country. We are seeing opportunities open up in the community and ageing services sector. The deal that Andrew Robb was able to put together for China will see Australian companies engaged in providing aged services in China. Now that is a pretty big growing market for ageing services…
RICHARDSON: I’d say so, yeah.
MINISTER MORRISON: It is enormous and they are the opportunities. The opportunities for young people leaving school today, they will need Cert 3 qualifications for about 70 to 80 per cent of the jobs that will be on offer for them and they will need to be moving into those community services and other services industries where there is a big future. It won’t always be in the ones that were traditionally there but you know what, that is not terribly different. When you were a Minister, you were going through a transformation of the economy and the country through its ingenuity was able to get to the next level. It was the…
RICHARDSON: Yes, our tariff cuts everyone said would be the end of the world.
MINISTER MORRISON: They did and the same 100 years ago. Everything was never going to be better. The truth is we are an incredibly resourceful nation, we are incredible people and the more we all get involved and the more we don’t sit back and step up then we actually make a success of this place and have done for a very long time and I am full of optimism about where we are going.
RICHARDSON: I appreciate your time tonight, I have to leave it there.
(ENDS)