Sky News - AM Agenda

  • Transcript, E&OE
Subjects: US stock exchange, economy, trade, wage growth, company tax.
06 February 2018

KIERAN GILBERT: Steven Ciobo joins mehere in the Canberra studio. Mr. Ciobo, thanks so much for your time. As Isaid, the DOW/Jones below 25,000 points. It was quite some day. What's yourreaction to that? Should we be worried here?

STEVEN CIOBO: No, I mean, this istypical when you, I mean look at the US economic context. We've seen bigincreases in terms of economic growth there, unemployment's down. So you'restarting to reach what is often referred to as the latter part of the economiccycle. Now the question is, "Well, when is the federal reserve going tostart increasing interest rates?" The market price is that end. Theythink, "Well, if we're starting to reach capacity constraints in the US,that means that the Fed is more likely to increase interest rates." That startsto temper, obviously, output and potentially demand. As so a consequence, youget some of those price corrections happening. That's what's happening there.This is why our Reserve Bank Governors get paid the big bucks, because they'vegotta try to get these calls right.

KIERAN GILBERT: There'll be some flow on here, at least on the markets ifnot the RBA.

STEVEN CIOBO: Well, there's a reasonwhy things are clichéd about when America sneezes, the rest of the worldcatches a cold. Don't get me wrong, Australia's economy is doing exceptionallystrongly. We have seen 403,000 jobs created, 1,100 jobs a day being createdunder the economic policy settings that this Government's put in place. That'san incredibly fast rate of growth. Three quarters of those jobs, Kieran, havebeen full-time jobs. We are seeing really strong economic growth in Australia.We're seeing great employment creation. More importantly, we've got the policysettings right, through reducing company taxes, which will create even more incentivefor companies to continue to invest and create jobs in the future.

KIERAN GILBERT: We haven't seen the wage growth that many would like. Ifthat does kick in, is there a concern about, potentially, quite a dramaticimpact on inflation, then, as well as the impact of the borrowing costs forbanks from those global rates?

STEVEN CIOBO: Sure,I think that people get a little bit ahead of themselves. Let'sdeal with what we're facing right now. What we're facing economic areconditions in Australia that are really strong, conditions that have beenbrought about because of sound economic policies. We've been in a situationwhere we've been able to reverse Australia's debt trajectory under the previousLabor Government. People know that as Government, we've made hard decisions tomake sure we get our budget back on track for a surplus. They know we'recreating the right business conditions for businesses to invest and to createemployment. That's the reason why, as I said, 403,000 jobs, of which three quartersare full-time, that's happening because we get these settings right.

KIERAN GILBERT: So everyone,basically, should take a deep breath?

STEVEN CIOBO: I think because we'vebeen through a long period, a number of years now since the GFC, there's some peopleare spooked by some of what's happening. But I mean, really, we've seen allthis before. These are, frankly, good problems to have.

KIERAN GILBERT: Let's look at a few other issues. You're heading to the USas part of that delegation with the Prime Minister. Big business delegation, aswell. Can you give us any sense of what we can expect when you and others headto the US for that Governors' Association meeting?

STEVEN CIOBO: Well, as you know,we've been very focused on making sure Australia continues to engage with theworld. That's what lay behind our trade and investment agenda. We've put inplace a whole range of new agreements. This is part of a continuing effort tomake sure we build very strong linkages with the United States. The US is ourbiggest foreign investor into the country. They helped to drive the Australianeconomy. We want better business to business linkages, plus its 100 years ofmateship, which recognizes that Australia and the United States have foughtalongside each other for common views and values now for 100 years. OurAmbassador, Joe Hockey, has done an outstanding job at building thatrelationship, as well. So this is now another opportunity to continue todevelop that.

KIERAN GILBERT: Just returning to something you touched on a bit earlier interms of the policy settings on company tax, the Australia Institute hasreleased some numbers today showing two thirds of those surveyed as part oftheir poll on this issue, would prefer investment in public services, thingslike health and education, to help economic growth as opposed to company taxcuts. In fact, a minority of Coalition voters supported company tax cuts. Doyou need to do more to try and convince people here?

STEVEN CIOBO: Well, we do, becausethe fundamental fact is that if you get more investment across the economy, ifyou get more economic growth, then that means governments have at theirdisposal more revenue, i.e., more tax, that they can invest in services. If youtry to short circuit that and say, "Well, let's just spend more money inservices. Let's just spend more money in these areas and not worry about what'shappening in the economy," that's just a recipe for the kind of economic stuffup, frankly, that we saw under the Australian Labor Party. What happens is thatyou get a huge blowout in government debt and you get the economy slowing down.That's the worst outcome of all. That is Labor's approach. It falls upon me andothers to continue to make the case, and this isn't just an argument. These arethe fundamental laws of demand and supply, Kieran. These are-KIERAN GILBERT: Do you need to put more data out there as well, to proveyour point?

STEVEN CIOBO: I think people can lookaround the world and see what's happening. We have seen examples of wherecountries have tried to tax their way to prosperity, so to speak, which iseffectively, what the Labor Party's proposing. Labor's out there arguing forhigher taxes. Labor's out there arguing for less investment. Labor's out therearguing that the way to make sure Australia is in a stronger position in thefuture is to keep borrowing more money. We reject all of that. We say,"No, actually, let's keep the horse in front of the cart. Let's get theeconomy growing strongly. Let's make sure that more people have a job. Let'smake sure that as a consequence of that you do get an uptick in wagesgrowth." That will mean more revenue for government because we have to payfewer unemployment benefits and we get more tax from these incomes.

KIERAN GILBERT: Would it help you if companies, major companies, made thesecommitments up front? If this corporate tax rate is passed on, to 25%, then wewill pass this wage rise as a percentage onto our workers.STEVEN CIOBO: Kieran, we're alreadyseeing that. We are already seeing as a result of improving businessconditions. We're already seeing, as a result of the company tax reductionsthat this Government has put in place, that companies are employing morepeople. I mean, there is already a massive social dividend out there inAustralian population. That massive social dividend is employment beingcreated, three quarters of which is full-time, are 403,000 people. That is atremendous social dividend. If you are someone who is unemployed who now has ajob, the difference that means for you, potentially for them and their family,for them being able to service a mortgage, this is really important stuff.

KIERAN GILBERT: The Chamber of Commerce and Industry says that it would costup to $8 billion a year to lift the minimum wage to the ambit claim made byunions of 60% of the median wage as a living wage. Are those numbers realistic?Is this just a scare campaign, as Sally McManus says, that big business have triedto drive down people's wages and now when they want a fair wage they say thesky's gonna fall down?

STEVEN CIOBO: Yeah, this is a greatshame of the Labor Party and the union movement that they try to pitchemployers against employees. Kieran, without employers, you don't haveemployees. In other words, without investment by business, without investmentby risk-takers, there aren't jobs available for people to work in. We actuallyneed to encourage a culture where people understand the symbiotic relationshipbetween the two. I, frankly, grow tired. I know that many people I speak to inthe community grow tired of this class warfare rhetoric. Bill Shorten is thebiggest class warfare warrior that we've seen for years in this country, amassively left-wing agenda, and it's echoed by the union leadership from whichhe came.

KIERAN GILBERT: Minister Ciobo,we're out of time. Appreciate it.

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