3 October 2018
Transcript - #2018031, 2018

Interview with Laura Tingle, 7:30, ABC TV

Subjects: Nauru; Council on Federal Financial Relations; GST distribution; NDIS; and the Royal Commission

LAURA TINGLE:

Treasurer, welcome.

JOSH FRYDENBERG:

Nice to be with you, Laura.

LAURA TINGLE:

If I can just ask you first about our story on Nauru. Is the Australian Government aware that Nauru appears to have been frustrating federal court orders?

JOSH FRYDENBERG:

Look, I'll leave the comment on particular cases to the Minister, Peter Dutton. But as I understand it, the medical services are provided on Nauru through a contractor, whether they be GP services, specialist services, counsellors and there are opportunities for medical transfers. They're assessed on a case-by-case basis in consultation with medical practitioners on the ground.

LAURA TINGLE:

Thank you. Well, if we can turn to your meeting with the state and territory treasurers today, they've agreed to your proposal for a new carve-up of the GST to help Western Australia, but they want a legislated guarantee as well that they won't be worse off if circumstances change. That's reasonable isn't it?

JOSH FRYDENBERG:

Well, they’re all going to be better off as a result of the Morrison Government’s reforms to the GST. The integrity, Laura, of the GST was threatened, when Western Australia was receiving just 30 cents in the GST dollar.

The Northern Territory, with one-tenth of the population of Western Australia, Tasmania with one-fifth of the population, was receiving more GST revenue than Western Australia itself. So we approached the Productivity Commission. Based on its recommendations, we've put forward a plan, which will set a new floor of 75 cents in the dollar that would apply to any state.

And we're also putting an extra $9 billion to the states and territories and we've used the Productivity Commission's numbers, which have been based on advice and data from the states and territories themselves and they’ll be better off.

LAURA TINGLE:

And the states have agreed to that. The states have agreed to that change. But why not just give them a legislated guarantee that if something happens that’s untoward, they'll also be looked after?

JOSH FRYDENBERG:

The reason is we don't want to run two sets of books. You don't want to run the old system and the new system. And the new system, taking the lead from the recommendations of the Productivity Commission, will see a floor and will see the Federal Government provide a top-up to the GST pool.

The GST pool has increased by 175 per cent since it first came in and is scheduled to go and increase again by 65 per cent over the next decade. The states have a very generous partner in the Commonwealth.

LAURA TINGLE:

Well, you've mentioned that there's an extra $9 billion to be had as part of this deal for all of the states. Were your able to guarantee to the state treasurers today that that money won't come from other funding that they would receive from the Federal Government?

JOSH FRYDENBERG:

Yes, I have. I repeated that publicly as well as privately in the meeting, and so has Scott Morrison. The money will come out of the Commonwealth's consolidated revenue, and it will be reconciled in the numbers at MYEFO, which will be delivered at the end of the year.

LAURA TINGLE:

So where will the money come from?

JOSH FRYDENBERG:

Well, we're growing the economy is the first point and we have seen improvements on both the receipts side, and we've seen less payments and that played out in the recent Final Budget Outcome for 2017-18, which showed the lowest deficit in a decade.

But we’ll ensure continued fiscal discipline; our Budget rules have not changed, Ministers come to the table with offsets but we do maintain, as the Prime Minister said recently on Insiders, an element of discretion but the Budget discipline that we have shown so far will continue.

LAURA TINGLE:

So, will that discretion be that while new spending is offset, there is room for tax cuts?

JOSH FRYDENBERG:

Well, we've certainly legislated significant tax cuts, both at an income level as well as for small and medium-sized enterprises.

It's no secret that the Government is considering bringing forward that tax relief for small and medium-sized enterprises, and that Bill Shorten has committed to wind back what we've already legislated. That's where he will increase the taxes by $200 billion across the economy.

LAURA TINGLE:

So is there room for, based on the Final Budget Outcome last week, does that suggest there's room to get to an earlier or improved surplus and give tax cuts as well in the next financial year?

JOSH FRYDENBERG:

Well, Laura, we're scheduled to bring the budget back to balance in 2019-2020, with just a small surplus in that year of just over $2 billion. That’s a year earlier than we had expected. We're still on track for that. But as I said, all the numbers will be reconciled and made public at MYEFO, which is scheduled for December after the National Accounts.

LAURA TINGLE:

You mentioned earlier that there were underspends in the Budget. One of the biggest ones was $2.5 billion less spent on the National Disability Insurance Scheme than planned. Will that money stay in the pot for the NDIS? And does it suggest that the toughening up of guidelines that was done recently for the scheme may have been too tough?

JOSH FRYDENBERG:

We also saw an underspend in the year prior as well. The money will be available for the NDIS based on need.  And when you run a strong economy, you can provide the essential services, as we are doing with increased funding for hospitals, for schools and also for the NDIS.

There is a bipartisan commitment to this critical social reform. It's probably the best side of the Parliament, when we're able to come together to provide people in need with these support services, regardless of their income, and we'll continue to do so going forward.

LAURA TINGLE:

But, Treasurer, the scheme has been tightened up in the last 12 to 18 months and people have lost services. Is it time to review those figures and review the scheme, and how it's implemented in the light of the underspend?

JOSH FRYDENBERG:

Look, we believe that we have the settings appropriate but, of course, we continue to work with the experts, who we've commissioned to do that implementation of such a large, national reform.

We'll work closely with the states. I've spoken to fellow treasurers about it and we're all committed to ensuring that the NDIS works, but that it's a sustainable investment in Australia's future for the long term.

LAURA TINGLE:

We're almost out of time but I wanted to ask about the banking Royal Commission. The Government delayed the calling a Royal Commission and subsequently conceded that was the wrong decision. Are you delaying the inevitable again by saying you want to talk to the industry; consider what you’re going to do. Should you be taking a more proactive approach to both reviewing legislation governing this entire sector as well as regulation?

JOSH FRYDENBERG:

Well we have been very proactive in putting in a series of measures to deliver better consumer outcomes in the financial sector. We've established the accountability regime for executives, we have set up the Australian Financial Complaints Authority, we have increased the funding for ASIC by $70 million and put in place Daniel Crennan QC, a special prosecutor. And we'll take the action necessary to restore the public's trust and confidence in the financial system.

It's fair to say the report, the interim report, put out by Commissioner Hayne was scathing, was frank and showed that the banks have put profits before people, and were motivated by greed. At the same time, ASIC, as the regulator, preferred negotiation over litigation and needs to lift its game.

We're working on all these things while awaiting the final report, which is scheduled in February and if the Commissioner wants more time, he will get it from our Government.

LAURA TINGLE:

Treasurer, thanks for your time.

JOSH FRYDENBERG:

Good to be with you.