ROSS GREENWOOD: Our special guest on the program this evening, the Prime Minister Scott Morrison, many thanks for your time
PRIME MINISTER: G’day Ross, good to be with you mate.
GREENWOOD: Always great to have you on the program. I want to say, for what reason have you brought forward these, these small business tax cuts?
PRIME MINISTER: Because we believe small business deserve it, I think they work very hard and we want to see them pay lower taxes. We want them to keep more of what the earn so they can invest it back in their businesses, invest it in their employees, invest it in developing new products, new markets and continuing to drive the incredible jobs growth we’ve seen, which they played such a key role in. We were unable to get the full enterprise tax plan through the Parliament and so we’re not proceeding with that and invested that back into small and family sized businesses, up to a turnover of around $50 million annually. So that’s all going to happen five years earlier. Our Government will seek to legislate that next week. That would mean in the next term of Parliament we would have those businesses paying a 25 per cent tax rate and under Labor, they would force them to pay a 27.5 per cent tax rate.
GREENWOOD: Of course the difference there is that Labor indicates that it wants to put more of the tax cuts into the hands of individuals, personal tax cuts.
PRIME MINISTER: No.
GREENWOOD: Well, that’s what they’re saying.
PRIME MINISTER: Well it’s not true.
GREENWOOD: That’s what again today you heard Bill Shorten out there saying, that their preference would be they may very well look at this proposal but they would prefer to see more of the tax cuts go towards individuals rather than going to businesses.
PRIME MINISTER: No, that’s not the case. What they want to do is cut in half the $144 billion personal income tax cuts that we’ve legislated through the Parliament, which includes abolishing a whole tier of the tax system which means that 94 per cent of Australians will pay no more than 32.5 cents in tax. Labor want to abolish that. They actually want to chop our personal, legislated tax cuts, in half. What they want to do Ross, is just spend more money. They can’t control their spending, so they’re going to put taxes up and tell households and businesses to make savings so they can pay the higher taxes.
GREENWOOD: Okay a couple of other bits and pieces, savings from the big business tax cuts were around $1.3 billion, however some of the reports today indicate that moving forward these tax cuts to smaller businesses will cost the best part of $3.2 billion over four years. Where does the difference in the money come from?
PRIME MINISTER: We’ll over the four years -
GREENWOOD: Around $ 1.9 billion.
PRIME MINISTER: Sorry, I’ll let you finish.
GREENWOOD: Yes, around $ 1.9 billion?
PRIME MINISTER: No, it’s higher than that, this is costing $3.2 over the forward estimates and around about, just over $2 billion is what we’re saving by not proceeding with the full enterprise tax plan. But over the ten years this is costing us just over $10.3 billion and as you know, the other one was costing around about $35 billion. So over the medium term it’s fully covered and in when we get to the third and fourth years of the forward estimates, then we’re back in a surplus position. These latest changes won’t come into effect until 2021 and that is when the Budget is back in balance.
GREENWOOD: Alright I was going to ask you about that because a lot of people would say, why do any of this until the Budget is back in surplus and the debts are under control? A lot of people are still concerned about the debts of the Australian Federal Government and they’re conscious of the fact that maybe there’s not as much money around and maybe we don’t really have, if you like, the reserves if there is an economic shock. We’ve seen the stock market fall very heavily today and some people are concerned that there could be a shock down the trail.
PRIME MINISTER: Well that’s why you want businesses not to be tied down with higher taxes. This next change won’t happen until the Budget is back into surplus. That is projected to happen in 2019/20 and this kicks in the following year in 2020/21. What you want - and I said this at the event I spoke at today – yes, there is this uncertainty so why, with additional pressure, would you want to be putting even more pressure on small and family businesses by forcing them to pay higher taxes to the Government? You want them to be in a position of having greater flexibility so they can keep staff on and they can keep their businesses churning.
GREENWOOD: Okay I was going to say that today, at the function you were at, was also the former treasurer Peter Costello, here’s just a little of what he had to say.
PETER COSTELLO – RECORDING: When Malcolm Turnbull launched a challenge against Tony Abbott for the leadership of the Liberal Party he said two things; he said the Coalition had lost 30 newspolls in a row and they had no economic narrative. I would agree with that. But then I kept on waiting for the economic narrative to come and I’m not sure that it did. I think this is the problem today, I’m not sure what the narrative is amongst those who are making these decisions for us.
GREENWOOD: So you were the Treasurer and you’re now the Prime Minister, is it embarrassing to hear that from a Coalition treasurer who is considered one of the finest treasurers in our history.
PRIME MINISTER: Well I tell you what did happen since that change; 600,000 people got a job. That’s a pretty strong narrative. And we legislated to reduce taxes for small businesses, we legislated to reduce taxes for personal income, right across the board. We saw record growth, jobs growth, youth employment at the highest level we’ve ever seen in our economic history. But I think the point Peter is trying to make is this – and this is what I was addressing today in my speech which he was at and he warmly received, I must say – that was that we’ve talked a lot about what we’ve achieved and I was just mentioning some of those things to you. But we’ve also got to tell people why we want to see business taxes lower for small and family businesses; because we know that people who have a go, should get a go. That’s what fairness should mean in this country. It’s about the “why” not just the “what”. That’s what I’ve been spending the majority of my time doing since becoming Prime Minister when I’ve been out talking to people; explaining to them what we believe. We believe that people should keep more of what they earn. We believe that the best form of welfare is a job. We believe that the promise Australians make, is to make a contribution, not take one. We believe that you don’t have to drag people down by taxing them more, to tax other people less.
GREENWOOD: But you’d understand politically, surely Prime Minister that if you’ve got the former treasurer coming out and saying that the Turnbull-Morrison government had no economic narrative and that’s supposed to be one of your strengths, that clearly isn’t going to help you politically?
PRIME MINISTER: Look, I don’t share Peter’s view. You know I respect Peter I think he was Australia’s greatest ever treasurer, but that doesn’t necessarily mean that he and I have to agree on everything. But what I do know is as Treasurer and working with the previous Prime Minister, we achieved the single largest growth in jobs in a year, that we’ve ever seen on economic record. I know that what we achieved on the Budget is the lowest rate of expenditure growth of any Government in the last 50 year. That 50 years, that included that time as well, by the way.
GREENWOOD: Okay one other thing I want to take you to is the fall in the stock market today, now that shows nerves and perhaps potentially volatility around the place. I do note also that the US President Donald Trump has made a very pointed conversation towards the US Federal Reserve, the equivalent of our Reserve Bank. Here’s what he said.
PRESIDENT DONALD TRUMP- RECORDING: I think the Fed is making a mistake. It’s so tight, I think the Fed has gone crazy. So you could say that, well, that’s a lot of safety actually and it is a lot of safety. It gives you a lot of margin, but I think the Fed has gone crazy.
GREENWOOD: He thinks the Fed has gone crazy by putting up interest rates. He says that’s hurting the US economy. The US economy clearly has baulked today through the stock market as a result of partly higher interest rates. Do you imagine that you as the Prime Minister would ever talk about the Reserve Bank or the Reserve Bank Governor in those terms.
PRIME MINISTER: Well no I wouldn’t and you know I wouldn’t Ross. I certainly didn’t when I was Treasurer but it’s not for me to offer commentary on other leaders and the choices that they make. I mean you did see a number of years ago, when the Fed made its first movement, we did see a pretty similar reaction in markets at that time. We did see them stabilize some time soon after that. But on top of that, I think there is a fair bit of global uncertainty at the moment, particularly around the trade issues. That’s why we’re working hard and Josh Frydenberg has just landed up there in Indonesia at the moment, in Bali, for the meetings with the IMF and the G20. What Josh will be doing is seeking to take these tensions down, not to bid them up. That’s what we’ve always done as an open, trading nation. We are for seeing greater and more open free trade because that’s what’s made Australia a prosperous country. We will continue to use our excellent relationships with all of the key countries in the G20 to achieve that for the benefit of the global economy, but importantly for the regional economy and our own prosperity.
GREENWOOD: I was going to ask you about one thing and that is Australia does sit at a very interesting crossroad. We have a free trade agreement with the United States, a free trade agreement with China and so therefore China is very important to our economic wellbeing and we are important to its wellbeing. Yet clearly the trade war that’s occurring between the US and China right now means that we find ourselves almost like the meat in the sandwich, with especially China now seemingly exerting its economic and even perhaps its political muscle. As Prime Minister how do you deal with that? How do you deal with China now seeking to become stronger internationally and also stronger from an economic point of view.
PRIME MINISTER: Well, we trade with them and we work with them and we have a Comprehensive Strategic Partnership with them and we continue to pursue Australia’s national interest in that relationship. Just as we do in our relationship with the United States –
GREENWOOD: Are we frightened of them?
PRIME MINISTER: Of course not, why would we be?
GREENWOOD: Well because China of course wants to have more economic impact here in Australia with the foreign investments it makes, with the type of -
PRIME MINISTER: Yeah but we have -
GREENWOOD: Shall I say and there’s been even a conversation with Angus McGibbon [sic] in the last little while – in regards to where national interests are trying to get into our own intelligence here in Australia. I mean these are important national issues, surely Prime Minister?
PRIME MINISTER: I know and we have national interest protections in our foreign investment rules and law, as people know from the decisions I’ve taken on a number of occasions. As long as you’re clear about that and you explain the reason, which we do, and we protect Australia’s national interest. Always have, I mean you don’t have to be a submissive party to have a productive relationship. I mean that’s not a relationship. We have a constructive partnership with China and we’ll continue to do that. We’ll be very clear about what our interests are and we’ll always stand up for them. But we don’t need to go round poking people in the eye about it, we just need to do it constructively and maturely and professionally.
So look, I think we’ve done very well out of the relationship. But trade is a two-way thing, it’s deal. Both parties are intended to benefit from trade and when you conduct yourself in trade in that way, then I think it is beneficial for both parties. Now with a lot of what’s happening in the trade environment at the moment, I mean I know there are instances where Australian companies are actually seeing opportunities where both countries are now having to turn to Australia if they’re not turning to each or China or the United States when it comes to the trade that was occurring between those two countries. But the other thing I’ve noticed with the US is this; I mean you’ve seen the US land now, agreements with Canada, you’ve seen them land deals with Mexico and everyone was saying that these were never going to happen and the US had overstated the position. But they’ve been able to do those deals and I’m confident that as time goes on, what we’re looking for here, or I suspect what the US is looking for is to land a better deal for US interests. Now there’s nothing wrong with that. There’s nothing wrong with Australia seeking to pursue our interests or for China to pursue theirs, as long as we do it in an open trading environment and we all do it in a way which ensures both parties to the transaction do well. Well, that’s what trade is. That’s how Australia has become prosperous.
GREENWOOD: Prime Minister Scott Morrison always good to have you on the program.
PRIME MINISTER: Thanks a lot Ross and congratulations to all those small and family businesses, we’re backing you.
Interview with Ross Greenwood, 2GB
ROSS GREENWOOD: Our special guest on the program this evening, the Prime Minister Scott Morrison, many thanks for your time
Prime Minister of Australia
The Hon Scott Morrison MP