Interview on RN with Fran Kelly

EO&E…………………………………………………………

SIMON BIRMINGHAM:

Good morning Fran.

FRAN KELLY:

so Labor has just hit you with this plan with billions of dollars in spending cuts that the Liberals “are hiding from the Australian people until after this Saturday’s Election.” Chris Bowen and Jim Chalmers say that you haven’t explained how you’re going to pay for more than 40 Election commitments that cost more than $6 billion. Is there a funding black hole you’re keeping from voters?

SIMON BIRMINGHAM:

Absolutely not Fran. Now much of that funding they’re making these allegations relates to a couple of major infrastructure projects, funding for both of those infrastructure projects is held in a contingent liability budget. The Budget was handed down a couple of months ago now and that Budget of course detailed very clearly all of our different measures. 700 plus measures of different policy initiatives that the Morrison Government is delivering.

FRAN KELLY:

But you mention Melbourne’s East-West Road Link, a $4 billion promise. Why not, if you knew you were going to do it?

SIMON BIRMINGHAM:

We have for some number of years held funding in the contingent liability related to that and what we did yesterday was put greater emphasis around how it can be delivered. Make sure it is offered up to Victorian voters in a way that demonstrates that and we have re-conceived how it might be delivered so that there is a better chance of it happening with or without Dan Andrews’s support. We need the Victorian Government to agree for it to occur but we want to make sure there’s a model that doesn’t necessarily require them to come back in and put in huge licks of funding and the like.

We put that model on the table, it’s important about busting congestion and helping people in the eastern suburbs of Melbourne. We know that Dan Andrews walked away from the project, in breach of his election promises at a huge cost of around $1 billion to Victorian tax payers. That’s all in the past, we’re looking to the future here about how we can offer up a major piece of transforming infrastructure for people in Melbourne as we are around capital cities right around the nation.

FRAN KELLY:

Ok. So you’re saying that $4 billion was there in that contingency number in the Federal Budget and you’re going to go and do this as announced by the Prime Minister yesterday, if elected with or without the support of the State Labor Government, they wouldn’t be putting in. Since when does the Federal Government entirely fund local roads? And isn’t this a huge price tag for the sand bagging of a few seats in Melbourne’s East?

SIMON BIRMINGHAM:

Fran this is a very important piece of infrastructure for a very large number of people living in Melbourne…

FRAN KELLY:

But I ask again, when do Federal Governments entirely fund roads?

SIMON BIRMINGHAM:

And it is a very unique set of circumstances, we’ve not had the circumstances before where an agreement to build a road had been reached, contracts had been signed, then the state government walked away from that at a significant cost.

FRAN KELLY:

And then they say government got re-elected overwhelmingly.

SIMON BIRMINGHAM:

 indeed they have, but we still believe that this piece of infrastructure really will be life-changing in terms of getting them home faster, getting them to work faster, reducing the type of congestion that exists. That’s critical, and I find it quite extraordinary that the Labor Party is out there talking about Budget holes where if you look at the fiscal fantasy that was delivered up on Friday, delivered up by the Labor Party on Friday, you’ve got a circumstance there. Where in their Newstart increase, when it comes to foreign aid promises, when it comes to their refugee promises and indeed when it comes to the Melbourne rail loop, that was a $10 billion announcement by Bill Shorten yesterday, where do you find any of them?

FRAN KELLY:

Ok. But we’re going to get this now, the Federal Government is going to just solely fund roads it thinks are necessary?

SIMON BIRMINGHAM:

Fran, we’ll do and be responsive to what is important for the Australian people.

FRAN KELLY:

responsive to what though? As I say, the electors of Victoria just voted in the State Election, State Government again just a few months ago.

SIMON BIRMINGHAM:

And at that Election as at this one, there are many issues there on the table for those campaigns. This is something that we hear consistently from voters in Victoria, from people, families and others living in Victoria that they want, that are important to them and that’s why Scott Morrison and the team have listened, have heard those concerns of people throughout Melbourne’s eastern suburbs and that is of course, we would expect it to. To listen.

FRAN KELLY:

Ok. Can I go to the other new policy announced by the Prime Minister yesterday, $500 million in loan guarantees for first home buyers, what have you done to ensure that this lead up won’t just force up house prices? Have you done modelling on this?

SIMON BIRMINGHAM:

Well Fran, we of course based it on the exclusive experience of New Zealand.

FRAN KELLY:

have you done your own modelling, what it will do to our market?

SIMON BIRMINGHAM:

Well Fran we have confidence that after 10 years of this policy applying in New Zealand that it’s not going to have that sort of impact. The only party going into this Election with a policy that’s going to have an effect on house prices is the Labor Party with higher taxes in way that will drive down home values. This is about helping Australians to be able to get to that point of entering the housing market, getting to the first rung on the ladder sooner so that they can start building equity, rather than paying rent while trying to scratch together the deposit.

FRAN KELLY:

So how would it actually work Minister, because I’ve been scouring the newspapers and looked at your press release trying to work this out, is it the tax payer- the Government actually putting in 15 per cent of the deposit that the home buyers haven’t saved, or is the Government simply acting as a guarantor? Like, you know kids if they’re lucky their parents might, or they’ll have to get insurance to do that so the home owners get to borrow 95 per cent from the lender.

SIMON BIRMINGHAM:

So Fran what we do is we empower the Housing Investment Finance Corporation to enter into contractual arrangements with financial institutions, in the first instance we’ll encourage them to work with smaller banks so you create more competition in that marketplace. Those contractual arrangements will be to provide a guarantee for the gap in terms of getting up to that 20 per cent deposit.

FRAN KELLY:

So if the money is not handed over it’s a default?

SIMON BIRMINGHAM:

It’s not a hand out of the cash, it doesn’t change the assessment that banks will undertake as to whether or not somebody can pay it back, but many, many listeners would appreciate just how hard it is to save up to that 20 per cent deposit. So by doing this we’ll remove either years of extra wait that many young people go through to get to that point, or we remove the cost of mortgage insurance that is applied to them if they choose to enter the market sooner than getting that 20 per cent deposit.

FRAN KELLY:

This is a very direct intervention into the mortgage market when Labor said it would intervene to boost the wages of childcare workers the Government labelled it socialism and communism. Why is this market intervention not that?

SIMON BIRMINGHAM:

Well, Fran this is actually a very tactical and clever intervention because we’re doing it in a way that isn’t providing cash handouts, it’s not a repeated previous models such as first homeowner grants. It’s about helping those who can save and are saving but allowing to convert their savings activities into actually paying for their mortgage sooner rather than struggling along and paying rent at the same time as they’re trying to build their savings and it builds upon some of our existing measures as well. Our Government introduced measures that reduced tax for those Australians who are saving for their first home deposit, the superannuation savings accounts that we established which the Labor Party is committed to abolishing…

FRAN KELLY:

…which doesn’t have a big take up rate. Look I’m going to move on if you don’t mind because we’ve got a few issues…

SIMON BIRMINGHAM:

…let me be clear there. No, it’s $400 million over the forward estimates Labor’s abolition of the first home super saver account is $400 million dollars in extra tax that Bill Shorten’s going to collect from young Australians saving for their first home. I think that $400 million dollars just in four years matters to those young Australians.

FRAN KELLY:

Ok. The ABC’s obtained under FOI documents that shows that Scott Morrison as Treasurer expressing interest in overhauling negative gearing. That document came from a senior New South Wales treasury official ahead of then New South Wales Treasurer Gladys Berejiklian having a meeting with Scott Morrison. Isn’t it hypocritical now for the Prime Minister to be attacking Labor for its plan on negative gearing?   

SIMON BIRMINGHAM:

Well, Fran there’s no secret to the fact that when Scott Morrison first became Treasurer he asked for advice and information across the entire spectrum of different [inaudible] of course what he did with that information was the most important and that is that looking at the housing market he did not pursue changes to negative gearing. He made sure that he acted in a way that protected the housing values of Australians and wasn’t going to drive up their rents. They’re the things that Bill Shorten’s going to do. There’s only one party at this election who’s going to change taxes when it comes to housing. That’s Bill Shorten, he’s going to make first homeowners pay more tax as they’re saving to build their home deposit and he’s going to reduce the value of Australian homes and he’s going to drive up rent. That’s what the SQM Research that’s been undertaken shows. Potential loss in home values of anywhere between 5 and 12 per cent…

FRAN KELLY:

Ok well that’s not what New South Wales Treasury documents show was it? It’s quarter to eight on breakfast. Can I – we’re speaking with the Trade Minister and the campaign spokesman for the Government in this campaign Simon Birmingham. Minister, in the Newspoll the Coalition lags Labor 51 to 49 per cent two party preferred. That’s really unchanged over the past three weeks since the dial hasn’t shifted. How are you going to convince voters between now and Saturday?

SIMON BIRMINGHAM:

Fran what the polls that are out today show is that this battle is very, very close. Extraordinarily close. That the Coalition is taking the fight out to the Labor Party in a number of Labor filled seats and that this election will be fought out, seat by seat around the country and listeners need to be aware that every vote really will count when it comes to this Saturday and that the choice is a very stark choice between our Government who has brought the Budget back to a point of handing surplus Budget this year. We have managed to create record jobs and has a plan to lower taxes into the future as well as investing; critical areas like mental support and apprenticeships and support for first homebuyers versus Mr Shorten and his higher taxes.

FRAN KELLY:

Does it also show though that you’re only likely to win on Saturday off the back of Clive Palmer’s United Australia Party and One Nation preferences? Is that why you’ve done these deals?

SIMON BIRMINGHAM:

 Fran, I think you’ve been around politics long enough to know that neither side of politics wins without preference flows happening. The Labor Party however always relies far more on Greens presences to get elected. If we were running in a first passed post system you would be saying right now the Coalition’s in the box seat with a higher primary vote. We don’t have a first passed the post system. The Labor Party are the ones who rely more on preferences and the Greens preferences; they do that every election. They have their own deal with the Greens and the question really is what will the Labor Party have to do to be able to secure that Greens support if they were elected in the Parliament. What will they sell out on? What will be the higher costs that come with that? Whether it’s in national security legislation that’s not passed or whether it’s higher taxes that are implemented even higher than what Bill Shorten is promising.

FRAN KELLY:

Minister can I just ask you finally a matter of trade; last Friday trade negotiations between the U.S and China ended without a deal there and there are now 25 per cent tariffs in place making $200 billion of Australian dollars’ worth of Chinese imports. China signalled it will retaliate [inaudible]. Can you rule out a trade war now?

SIMON BIRMINGHAM:

I don’t think it’s ever unavoidable that we will continue to urge [inaudible] resolve these issues but they are matters of grave concern. They are a reminder that we live in economically uncertain times. Now, what that means as Trade Minister is that we can continue to work as a nation to maximise our access into every possible market. We’ve done that successfully as a government with trade deals struck with China, Japan, South Korea, trans-pacific partnership countries, Indonesia and I do note that on trade policy again there’s a contrast at this election. The Labor Party proposed to go back and renegotiate those unratified deals, such as the deals with Indonesia, Hong Kong and Peru as well as to renegotiate our existing deal and that’s a grave risk and a threat at a time when Australia has a record trade surplus, we routinely are reporting trade surpluses each year every month. We’ve got a far better export position as a country than we had for decades and in that sense that should not be jeopardised. That is one of risks at this Saturday’s election.

FRAN KELLY:

Minister thank you very much for joining us.

SIMON BIRMINGHAM:

Thank you very much Fran.