BARRIE CASSIDY:
Prime Minister, good morning. Welcome.
PRIME MINISTER:
Thank you.
BARRIE CASSIDY:
You still have strong faith in trickle-down economics - that if you give a company a benefit, then somehow that will mean higher wages for workers?
PRIME MINISTER:
Barrie, we've known for as long as people have looked at these issues that, if you give companies and businesses the incentive to invest, they will do so. And when they invest more, you get more investment in every part of their business, and they employ more. More investment means more jobs.
BARRIE CASSIDY:
But higher wages?
PRIME MINISTER:
Yes, of course. Because if you get more economic growth, you get competition for labour. The laws of supply and demand have not been suspended. You know, the first Labor leader to deny this economic reality is Bill Shorten. You've got to go back to Gough Whitlam's era - you remember back 40-odd years ago - more - when Labor leaders like Neville Wran and Bob Hawke and Paul Keating recognised they had to have an approach to economics that encouraged business to invest - and that was what they competed with the Liberal Party and the National Party with for years. Now, Bill Shorten has got the most anti-business, the most anti-investment, the most anti-jobs policy of any Labor leader since Whitlam.
BARRIE CASSIDY:
But why is it, then, if companies can make a 20 per cent profit - as they did in Australia in the last 12 months - and then wages go up by two per cent? Where's the trickle-down?
PRIME MINISTER:
Barrie, again, I don't accept the validity of that description. You cannot get out of the reality which Paul Keating recognised when he reduced company tax, when Bill Shorten recognised when he made the case for it - quite eloquently, in fact, when he was in government – if you encourage business to invest, they will do so, and you will then get more investment, more jobs.
BARRIE CASSIDY:
On wages, though, it's a similar story - productivity is up and wages are still stagnant…
PRIME MINISTER:
Barrie, Barrie, Barrie - you're talking theoretically.
BARRIE CASSIDY:
It's the reality. Figures bear it out.
PRIME MINISTER:
403,000 jobs. What about them? That's the highest jobs growth since records began, last year.
BARRIE CASSIDY:
But wages are not going up.
PRIME MINISTER:
Wages will move up as you get stronger - well, wages are going up, but not going up enough. But they will go up as you get competition for labour as firms compete for labour.
BARRIE CASSIDY:
You're convinced of that. But in the United States...
PRIME MINISTER:
I'm not convinced by that. Do you deny that? Do you think the laws of supply and demand have stopped?
BARRIE CASSIDY:
Well, so far, with increased profits, increased productivity, it's not being impacted on wages. In the United States, Donald Trump has some sort of agreement with the companies that they will pass on, to an extent, the company tax cuts in the form of higher wages. Is that what you should be looking at - some sort of compact? Or if not a compact, some sort of agreement?
PRIME MINISTER:
Barrie, you will see more investment, you get stronger economic growth, unemployment comes down - we've seen that - you get more people coming into the workforce, you get competition for labour, some parts of the labour market you get real scarcity of skills, firms compete for it, and they pay more. That is what happens. That is the reality. Now, you know, the law - as I said, the laws of supply and demand have not been suspended. What happens is, if you get more investment - and we're seeing that in Australia because of the economic leadership my government is providing - we're providing those incentives. Do you know...
BARRIE CASSIDY:
How soon though will we see the impact of that on higher wages?
PRIME MINISTER:
Well, you'll see that over the next year and following, as long as you get continued economic growth - you will see more demand for labour, and that will see wages move up. That happens. I mean - again, you know, it used to be common ground that, if you encouraged the private sector to invest, you would get stronger economic growth and more employment. Keating argued for that. Hawke argued for that. Wran argued for that. Now we've got Bill Shorten going back going several generations to the anti-business left-wing policies that most people thought the Labor Party had cast aside back in the '70s. He's reviving them.
BARRIE CASSIDY:
Can't you oppose a big company tax cut and not be anti-business?
PRIME MINISTER:
Well, he wants to increase company taxes. Barrie, there are more than half of the Australian workforce working for firms with revenues of $50 million a year or less. And they are overwhelmingly Australian, family-owned businesses. We have managed to reduce their company tax, and they are the firms that are investing and creating the 403,000 jobs - in large part - last year. Three-quarters full-time. Bill Shorten wants to put their tax up again. What do you think that's going to do? He does not have one policy which would encourage one firm to invest $1 or hire one employee. And that is the frightening prospect of a Labor government - the most anti-business, the most anti-jobs Labor leader that we've seen in generations.
BARRIE CASSIDY:
The personal income tax cuts, what will we find out in the budget? Will we know about the timing or the size of the cuts?
PRIME MINISTER:
You've got to wait for the budget but, what we've set out very clearly is that our next priority in terms of tax is to provide further tax relief for hardworking middle-income Australian families. We've already done that once by increasing the $80,000 threshold up to $87,000. We're looking to do more. But how much we can do, and the timing, depends on the budget, because of course we're committed to bringing it back into balance by 2020-21.
BARRIE CASSIDY:
Whenever you do it, though, won't you be giving with one hand and taking with the other? Because next year, when the Medicare levy kicks in, ordinary workers will be paying about $6 a week extra in taxes. The best you could offer, surely, in income tax cuts is somewhere between $7 and $10. So what would the net effect be, an increase of $1 or $2 a week?
PRIME MINISTER:
You talk about fairness – the Labor Party, Bill Shorten likes to talk about fairness. How fair is it to families, say, with disabled kids, to have a National Disability Insurance Scheme and not fund it? That's what Labor did. What we're doing is we've taken the tough decision - we've sought to achieve savings through the budget - and we've achieved quite a lot, but not as much as we would like, so we're going to increase - we're proposing, asking the Senate to support increasing the Medicare levy to fully fund the NDIS. That has very strong public support because Australians know it's fair and it’s fair to have a National Disability Insurance Scheme, but above all, it's fair to pay for it and not say to families - what Shorten wants to do is get the credit for the NDIS but not have to pay for it. We're being fair dinkum and being fair about it.
BARRIE CASSIDY:
What I'm saying is right, though, isn't it? Wherever the money goes, you'll be taking $6 a week from workers and then giving it back...
PRIME MINISTER:
Barrie, I'm not going to concede your figures. The bottom line is that we have already provided middle-income tax relief. We're seeking to do more. But as I said, the timing and extent will depend on the outcome of the budget.
BARRIE CASSIDY:
Negative gearing - do you think the politics has changed on that given what happened over the summer, where there was advice where labour reforms will have a relatively modest impact on the housing industry? You were suggesting that it would take a big sledgehammer to the industry.
PRIME MINISTER:
I stand by that. At the time, it certainly would have done that.
BARRIE CASSIDY:
At the time?
PRIME MINISTER:
Well, we're going back 18 months now. The market was very, very toppie, there was very strong - you'd seen rapid acceleration in housing prices. A move of that kind would have taken a very big hit to the market.
BARRIE CASSIDY:
That analysis is out of date now?
PRIME MINISTER:
No. Just let me finish. What you've seen is that we have taken much more measured and calibrated approaches to the housing market. Do you know first home-loaner loans are at their highest level as a percentage of housing loans in five years? That's because of the changes that APRA has made, the prudential changes – you know, a big reduction in interest-only loans. You've seen a decline in foreign investment and residential property, there's been a number of measures that have taken the heat out of the housing market, and you are now seeing more first home owners getting into the market. Now, that's a very good thing. That's using a scalpel - as Scott Morrison would say - rather than a meat cleaver, which is what Labor's policy would have done.
BARRIE CASSIDY:
Or a big sledgehammer, he said. A relatively modest impact, it says. And there was advice before the Reserve Bank that the impact might be 1.2 per cent in terms of a cut in house prices. That's not a sledgehammer.
PRIME MINISTER:
It would have been - Barrie, the impact of that change would have taken a very large percentage out of the housing market, and it would have had a very big negative impact...
BARRIE CASSIDY:
Would have?
PRIME MINISTER:
Let's go through a couple of things, right? If you were to take mum-and-dad investors out of the housing market, what you're going to do is put up rents. That's perfectly obvious, because people are - rents in Australia - residential rents...
BARRIE CASSIDY:
Again, the impact would be "modest", according to this advice.
PRIME MINISTER:
If you're struggling to pay the rent, any increase in rent is tough. The bottom line is that we have succeeded with some carefully calibrated policies in letting some of the steam out of the residential housing market. And again, you can theorise - I'll talk about facts. The level of first home-owner loans is the highest it's been in five years. That's real progress.
BARRIE CASSIDY:
What about Labor's promise on private health insurance now that they want to cap the rises at two per cent for two years? What do you make of that?
PRIME MINISTER:
Well, this is just Bill Shorten desperately making up policy on the run. He gave that speech a few days back, in which he floated the idea of rolling back or abolishing the private health insurance rebate. When he was pressed about it at the Press Club and asked about it -twice - he refused to say that he would stand by it, and then had to clean it up the next day. It's been a sort of rolling embarrassment for him. And this is his latest policy on the run. I understand Catherine King was ringing around the private health insurers yesterday telling them this was Bill's latest idea, so she's disowning it already.
BARRIE CASSIDY:
What's wrong with it as an idea?
PRIME MINISTER:
Well, because it - look, what you need to do is ensure that the market operates effectively and people have the opportunity to invest in private health insurance and take that decision. The latest increase of just under four per cent is the lowest in many, many years.
BARRIE CASSIDY:
See, there's the point, though. As it stands, if you do nothing, your minister has to go out there - he's got this unenviable task of trying to make a four per cent increase sound like good news.
PRIME MINISTER:
Well, it's the lowest increase in many years.
BARRIE CASSIDY:
Still a four per cent increase...
PRIME MINISTER:
Well, Barrie, these are private companies. They're in a very competitive market. And they - you know, the reality is Labor wants to destroy private health insurance. I mean, they - Shorten, as good as said he was going to reduce or abolish the private health insurance rebate in his speech, was given the opportunity to say no, he was sticking with it, and didn't take it up. So he was caught out then, and then realised what a disaster that would be, because that would make it much harder on families, because that would make private health insurance even more - or even less affordable - than it is. And so now, he's scrabbling to come up with something - some sort of latest thought-bubble idea relating to private health insurance. Labor hates it. They do not want to do anything to encourage the private health sector. And we have a great combination in Australia of a public health system supported by Medicare, which is guaranteed - we have guaranteed Medicare - and also supplemented and supported by private health.
BARRIE CASSIDY:
The other issue that came up earlier this morning - Jason Falinski. Now Labor says they have advice that he is a dual citizen. In the interests of transparency, would it be a good idea now to throw this in with the Labor MPs that you've identified?
PRIME MINISTER:
Well the Labor so-called advice is based on facts that are wrong. Jason Falinski has taken legal advice which he has presented into the citizenship register, and demonstrated he is not a citizen of any other country. Let's just be very clear about this. What Labor is trying to do is they want to pursue the children and grandchildren of Holocaust survivors - like Jason Falinski - they want to create, muddy the waters through the vagaries of Central European citizenship law - and they have, sitting in the parliament right now, Susan Lamb, the Member for Longman who, on her own legal advice states that she is a citizen of the United Kingdom. So there's not a question about her status - she is a UK citizen right now. And Bill Shorten does not have the character to get her - require her - to do what Feeney finally did and resign from parliament. And you know why Feeney resigned? He resigned at the day he had to sign the affidavit. And I suppose signing an affidavit which said "The dog ate my homework" was even more than he could do.
BARRIE CASSIDY:
Just on David Feeney and the Batman by-election - the Liberal Party hasn't yet decided whether they'll run a candidate?
PRIME MINISTER:
Well, the Victorian division will make a decision on that, but I...
BARRIE CASSIDY:
You would have 20 per cent or 30 per cent of the vote, I would imagine, in that seat. Why would you abandon your voters?
PRIME MINISTER:
Well, the party will make a decision, but I don't expect, ah - I don't expect we will be running a candidate in the Batman by-election.
BARRIE CASSIDY:
Why not?
PRIME MINISTER:
It's up to the Victorian division.
BARRIE CASSIDY:
Why wouldn't you?
PRIME MINISTER:
Well, parties have to assess priorities and the limited resources. These are all political decisions, Barrie. They've got to be taken in the context of...
BARRIE CASSIDY:
It is a political decision as Antony Green has pointed out, the Greens do best against Labor when the Liberals are not in the contest. So it does seem as if you've take an decision that's designed to help the Greens beat Labor.
PRIME MINISTER:
Well, Barrie, the decision will be taken by the Victorian division, but the reality is we are already seeing Bill Shorten moving further and further to the left, and what he is going to do is throw workers and jobs and traditional Labor supporters under the bus in his desperation to hang onto an inner city seat here in Melbourne as he seeks to move further and further to the left to compete with the Greens. And you can see that already - the moves he's making - this is going to be the most left-wing, the most anti-business, anti-jobs Labor Party, Labor Opposition, that we've seen in generations. That's where he's heading.
BARRIE CASSIDY:
We're running out of time, but The Cabinet Files that went missing - we now know that they went missing from PM&C, and apparently during your watch.
PRIME MINISTER:
I don't think that's been established.
BARRIE CASSIDY:
It would have to be right, wouldn't it? It happened sometime early last year?
PRIME MINISTER:
The documents, as my understanding, the latest date on the documents is early 2014.
BARRIE CASSIDY:
It seems as if the filing cabinet turned up in this place early last year.
PRIME MINISTER:
Well, that hasn't been established yet, as far as I'm aware. But look, let's be clear...
BARRIE CASSIDY:
In any case, do you want to see heads roll over this?
PRIME MINISTER:
Yes. The answer is - this is a disgraceful, almost unbelievable act of negligence. The idea that the public service - and this has been done, you know, in the department - this is not a political office or a minister's office - but the idea that public servants entrusted with highly confidential documents would put them in a safe, lock the safe, lose the keys, and then sell the safe without checking what was in it - it beggars belief. It seriously - if you put it in an episode of Utopia or something like that, I imagine an editor or producer would have said, "No, that stretches credulity. Take it out." It's a shocking failure. I expect and I know we'll get, the AFP are doing a rigorous investigation - we want to see that completed, and we want to see those responsible for this negligence identified and dealt with appropriately.
BARRIE CASSIDY:
And Prime Minister, before we end, I know you want to say something about Michael Gordon?
PRIME MINISTER:
Yes. Yes, our friend Michael Gordon - one of the great gentlemen of the world of journalism - gentle, wise, always calm, such a great man, such a great writer and mentor. And to die swimming - he died doing what he loved, of course, swimming - but so young. Far too soon. And it's a tragedy, and our hearts go out to Robyn and his family. He will be, he will be so sorely missed by us all.
BARRIE CASSIDY:
Well said. Thanks for coming in, Prime Minister. Appreciate it.
PRIME MINISTER:
Thank you.
[ENDS]