19 February 2016
Transcript - #2016020, 2016

Interview with Neil Mitchell, 3AW

SUBJECTS: Backing Australians in our transitioning economy, the Turnbull Government’s national platform for economic growth and jobs, taxation, Foreign Investment Review Board, superannuation, Budget 2016.

NEIL MITCHELL:

In the studio with me, Scott Morrison, good morning.

TREASURER:

G’day Neil, how are you?

MITCHELL:

Can we shoot the bloody unicorn? Can we ban the unicorn today?

TREASURER:

I’m happy to use whatever language is going to help people. I am simply saying this, that in the past, people have tried to the blue sky, the forecast at the end of the estimates and say “well, it all turns out alright in the end in just a couple of years, you only have to do one or two things and the Budget is fixed and all of this.” I am not going to sell that message to the Australian people. What I did on Wednesday is I was pretty upfront with them, I said the challenges are really difficult, the global economy is tough. We are doing really well by comparison. We have one of the highest rates of economic growth in the developed world. Three hundred thousand jobs last calendar year – that is all good news. Confidence is up, business conditions are strong, our interest rates are at a level which enables business to go out and invest. That is all good news but we can’t kid ourselves that somehow there is a simple answer to this and we are going to do the long hard slog of getting it back in check.

MITCHELL:

That is not being straight with us. Jobs are stagnate as the figures showed yesterday.

TREASURER:

That is one month, Neil.

MITCHELL:

Well, yes. Is it stagnate or not?

TREASURER:

It’s one month and we had 300,000 last year and job growth is running at ten times what it was at the last election. That’s a good example.

MITCHELL:

So everything is terrific – do we need tax reform?

TREASURER:

We need to have lower taxes for Australians.

MITCHELL:

We need tax reform or?

TREASURER:

  We need to change some taxes to ensure that we can reduce other taxes, yes.

MITCHELL:

Alright, confidence you would say is threatened.

TREASURER:

Confidence is higher today than it has been for some time.

MITCHELL:

But so is spending.

TREASURER:

Optimism in our economy, as the Westpac Institute Index shows, is stronger than pessimism in our economy. That is a fact. That is what has been surveyed in the public surveys and that is good news. Now, I am not saying it is not difficult. I am saying it is very difficult. What I am saying is that our economy is transitioning well in these difficult conditions and that is a good thing.

MITCHELL:

Do you agree we have a critical problem with spending?

TREASURER:

Yes, I do.

MITCHELL:

Alight, so there is a problem there. What are we going to do about that?

TREASURER:

We are going to control future spending and we are going to continue to make savings wherever we can that are sensible and that are fair.

MITCHELL:

Can I play you something that the Prime Minister said and it was only a matter of hours after he was elected to replace Tony Abbott.

PRIME MINISTER:

We need to have, in this country and we will have now, the economic vision a leadership that explains the great challenges and opportunities that we face, describes the way in which we can handle those challenges, seize those opportunities and does so in a manner that the Australian people understand so that we are seeking to persuade, rather than seeking to lecture.

MITCHELL:

Do you have the economic vision or are you still working on it?

TREASURER:

Let me go through the three points the Prime Minister made because this is what we have been saying…

MITCHELL:

He said we’ve got a vision now – do you have a vision?

TREASURER:

Let me run you through it. The circumstances we face are a tough global environment and that means our economy needs to transition from the investment phase of the mining boom into the more diverse economy that we have…

MITCHELL:

Exactly as it was five months ago when you took over.

TREASURER:

I am just going through each of the points the Prime Minister said. So, that is the first thing. They are the challenges and we still have a major Budget problem which needs to be addressed.

MITCHELL:

Being spending?

TREASURER:

Yes, that’s right. How are we going to deal with that? We are going to get spending continually under control, and in the Budget that we have right now and in the update I released in December expenditure as a share of the economy is falling from 25.9 per cent to 25.3 per cent.

MITCHELL:

Which is still far too high.

TREASURER:

I agree.

MITCHELL:

What are you aiming at?

TREASURER:

Well, if you look over the last 30 years and I think this will be very difficult with the NDIS coming on stream and all of the other longer term commitments coming on to the Budget – down to 25.3 per cent, we haven’t had a surplus except for one year when expenditure has been above 25 per cent – a quarter of the economy. Now, that is something…

MITCHELL:

So, what are you aiming to get it down to? 23? 23.5?

TREASURER:

I am looking to get it down to 25.3 and 25.2 over the Budget and forward estimates but you have got to do what is achievable. We need to control future growth and expenditure. All those who run businesses out there that would be listening to this program right now, Neil, know that one of the key things any business has to do is control the growth in expenditure of their own business over time. That is the plan; lower taxes by lower spending and getting the Budget back into balance by doing the hard work of every year working to that principle. The other area is on innovation, on infrastructure – $16 billion in infrastructure investment alone is what comprises some of those new spends that came onto the books over the last two years. These are the things that transform our economy and at a state and territory level working with them to try and get rid of some of the crazy regulation and the things that are holding businesses back. Now, that is what we are doing, Neil.

MITCHELL:

So, do you have the economic vision or are you still working on it?

TREASURER:

I just outlined it.

MITCHELL:

That’s it? What is your answer on tax?

TREASURER:

Well, tax needs to be lower.

MITCHELL:

How? How are you going to do it?

TREASURER:

To make sure spending…

MITCHELL:

What is your answer on negative gearing? What is your answer on capital gains tax?

TREASURER:

They are just ideas for higher taxes, Neil. There seems to be…

MITCHELL:

So, no changes to negative gearing?

TREASURER:

If we are going to have higher taxes in one area what we are saying is you need to use the revenue from that to reduce taxes in other areas. What the Labor Party is saying is they are happy to increase taxes to chase higher spending. Tax and spend is not a race I am in. The Labor Party wins that hands down; lower spending and lower taxes is the way we put incentive back in our economy.

MITCHELL:

Your tax policy is what? Lower taxes?

TREASURER:

Yes, that is a good plan. I am sure you would agree.

MITCHELL:

Is it the plan or is it the policy?

TREASURER:

That is the policy. That is the plan, Neil.

MITCHELL:

Ok, how are you going to do it?

TREASURER:

We’re going to do it by controlling future spending and we are going to do it by making changes in other areas of the tax system and when we make those changes…

MITCHELL:

When?

TREASURER:

When we make those changes they will fund lower taxes in other areas.

MITCHELL:

When?

TREASURER:

Well, we have a Budget in May. It is in May every single year, Neil.

MITCHELL:

So, it is going to be in the Budget these changes?

TREASURER:

Yes.

MITCHELL:

There will be tax relief in the Budget other than fiddling around the edges? Other than a little bit of bracket creep?

TREASURER:

I set that out on Wednesday, Neil. I set that out on Wednesday.

MITCHELL:

Is there a major tax reform in the Budget as well?

TREASURER:

Well, I talked about the changes being modest because that is what the opportunities are but are you suggesting that we shouldn’t make changes to the tax system? That we shouldn’t give relief?

MITCHELL:

I’m looking for the big answer – what you are talking about is fiddling around the edges.

TREASURER:

What you are looking for is a silver bullet, Neil.

MITCHELL:

I’m looking for that bloody vision that was promised five months ago and still hasn’t appeared.

TREASURER:

Neil, I think, in fairness, what you are looking for is some big hit that solves all our problems in one go and the reality, the reality is that doesn’t exist. What the country needs is a government that will be sober and responsible in what are very difficult economic times to do the hard work of keeping the Budget under control over time to ensure that new spending doesn’t overwhelm the Budget that the savings continue and that we don’t go down the path of tax and spend. Now, it was only last September when we started the approach of looking at issues, whether it was superannuation or the GST or other things like that. Those issues were not under consideration before September last year. It was not like they were beavering away on them for two years before that. Those issues only came into consideration in September last year.

MITCHELL:

It is reported today that 300,000 taxpayers will be forced into the second highest bracket in the next two years.

TREASURER:

I have been making that point for five months.

MITCHELL:

Because of bracket creep. So, are you telling us that in the Budget you will fix that?

TREASURER:

This is one of my key goals.

MITCHELL:

Goal or achievable?

TREASURER:

Well, that depends on how we can raise the revenue to make sure we can pay for the reductions in those areas.

MITCHELL:

Alright.

TREASURER:

This is the point, Neil. That is the goal. The goal is to ensure that those 300,000 – that the average wage earner in this country doesn’t move into the second highest tax bracket. I have been saying that from the first day I have been in this job more or less. That has been something that drove our interest in looking at options like the GST, what we found on the GST is it just didn’t stack up. It wasn’t the time to increase that tax for that outcome because it just didn’t work.

MITCHELL:

It strikes me that ever since you did that you have been floundering – what is the answer then?

TREASURER:

That’s your assessment, Neil.

MITCHELL:

We’ll fiddle with this, we’ll fiddle with that, oh what about negative gearing, oh what about superannuation.

TREASURER:

Most people…

MITCHELL:

They are not answers – they are fiddling round at the edges.

TREASURER:

Most people when they make considered decisions, is they have to make a big threshold decisions and the big threshold decisions in tax was are you able to change the GST to provide for substantial decreases in income tax and the answer was the compensation bill swamped the package.

MITCHELL:

Fair enough.

TREASURER:

So it was a bad idea. It wasn’t a good idea. It was worth considering.

MITCHELL:

So, what is the new idea?

TREASURER:

Well, the new idea is to continue to work through the plethora of other measures which were put back on the table by the Prime Minster and I, since only last September, and to work those through and ensure that in the Budget we are able to deliver some modest tax relief to people so they do not go into these higher tax brackets.

MITCHELL:

So, there is a plethora there. Are you going to present your answers in the Budget or after the Budget?

TREASURER:

In the Budget is the back end marker and if there is an opportunity to announce things prior to the Budget then we will do that.

MITCHELL:

Are you going to announce something on superannuation prior to the Budget?

TREASURER:

Well, that is a decision to be taken.

MITCHELL:

Possible?

TREASURER:

Of course.

MITCHELL:

Rob, hello Rob.

CALLER:

Hi guys, how are you doing? Listen, Minister, raise the GST. That is the only way to do it. Other countries do it.

TREASURER:

Ray, was it?

MITCHELL:

Rob.

TREASURER:

Sorry, Rob, we did have a good look at that and the problem was is that we have got so many people on welfare in this country these days that once you have compensated all of them then there was not enough money left over to deliver genuine tax cuts and the economy would have gone backwards. It would be nice – I was hopeful that that would have a different result but it didn’t and therefore you have got to take decisions based on the facts.

MITCHELL:

What is the maximum you could save from changes to superannuation?

TREASURER:

Well, it is not $30 billion. That figure, the tax expenditure figure is not the figure and I think the gains on an annual basis are far more modest than that. Even Labor’s proposals to tax people in the retirement phase which is what they are planning to do, all of those who are out there in the retirement phase today, that is what Labor plans to do, that only raises a small amount of revenue.

MITCHELL:

So what do you think the maximum is you can save in superannuation?

TREASURER:

Well, we will announce those details when they are announced.

MITCHELL:

Ok, but it is not a heap.

TREASURER:

No, it is not the GST and nothing else is. Multinational tax, we introduced legislation on multinational tax, which the Labor Party opposed last year and we are raising additional revenue on multinational tax but none of those were ever going to raise the same amount but as I said the GST was swamped by the compensation bill and it wasn’t the right decision for the country.

MITCHELL:

So, when you say there is no silver bullet. There is no GST like big gesture you have got to fiddle round the edges?

TREASURER:

You have got to work with the options you have got and that is no different to anyone else who is out there today. Not everyone else has big silver bullet options out there in their households of their business. What they do every day, Neil, what they do every day is they make the decisions they can and they make progress every day and they get their own house in order and that is what I am doing, that is what the Prime Minister is doing and the result is confidence is up, business conditions are strong, jobs growth – last year 300,000, services exports are up…

MITCHELL:

But they are stagnate, the past two surveys have shown that jobs are stagnate.

TREASURER:

Tell that to the 300,000 people last year, Neil, who got a job. Tell that to the 300,000 people who got a job, and largely in the private sector, because of employers who are the heroes of those numbers. Now, people can talk the economy down…

MITCHELL:

Hang on…

TREASURER:

One month’s number in January. One swallow doesn’t make a summer, as you know…

MITCHELL:

Let’s be realistic the job figures show…

TREASURER:

…even if it is in summer and as you were referring to the January figures if you look at the trend and what has been happening with employment and that is backed up by what every economist, the Reserve Bank, others around the world have noted about the Australian economy. Compared to the rest of the world we are growing at twice the rate of Canada, we have got an innovation statement which is spurring on the productivity increases we need in our economy and that is what the Government is doing.

MITCHELL:

So, are the job figures down or not? Are there fewer jobs out there?

TREASURER:

In January there was a reduction. In the three months before there were increases, Neil, and last year there were 300,000 more jobs – the strongest growth rate in jobs since 2006. That is good news. I get excited about more people getting jobs.

MITCHELL:

I agree.

TREASURER:

The youth unemployment rate is lower today than it was at the last election – that is good news.

MITCHELL:

Given that the silver bullet is gone. You can’t use the GST. Given that we accept it is fiddling around the edges to try and achieve the same thing – when? When can you say that you will actually get somewhere so we get a sensible tax system, so we get some tax relief, so we do pare back spending, so we do start to run the country properly?

TREASURER:

Our tax changes will be in the Budget, Neil, and when…

MITCHELL:

Is this a five year plan or a twelve month plan or what?

TREASURER:

The Budget is in May and we will announce the changes to the tax system in the Budget well before.

MITCHELL:

I understand that but I am looking for this vision that I heard about five months ago. Is this a five year vision or a six months vision?

TREASURER:

Our vision is of an economy that is innovative, modern for the 21st century, one where people are paying less tax over time, not more tax over time, where the economy is not run by the tax and spend higher tax club who seem to think the answer to every prayer is to raise a tax. When you hear Labor saying they have announced policies all they have done is announce higher taxes fuelling higher spending.

MITCHELL:

So, when do we get there? When do we get there and you and the Prime Minister stand up and say this was our vision – we’ve done it.

TREASURER:

We’ve been saying it for five months, Neil, and we will continue to say it and people…

MITCHELL:

What is your schedule? When do you achieve it?

TREASURER:

Which goal?

MITCHELL:

All of the damn things – the tax system to start.

TREASURER:

Well, you tell me, you have asked me when the tax changes will be finalised and I said they will be in the Budget.

MITCHELL:

You have a grand vision of putting the country back on track, you are going to lift confidence, you are going to lift employment…

TREASURER:

Well, that has happened. That has all happened.

MITCHELL:

Ok, I would argue that but fair enough you can say it’s happened. Fix the tax system and cut spending. When will you get spending down to an acceptable level?

TREASURER:

The Budget shows that we will get it to 25.3 at the end of the forward estimates.

MITCHELL:

Is that acceptable?

TREASURER:

It needs to go further but it will go as far as it can, Neil. We are reducing expenditure as a share of the economy and what I said on Wednesday, the big challenge to the Government is stopping the new spending coming on and overwhelming the Budget. That is why I put a mark on it. You have got to not have these big increases in new spending and I am being honest with the Australian people about that.

MITCHELL:

So, people are going to hurt?

TREASURER:

I can sell them a fantasy as other treasurers have.

MITCHELL:

Not the unicorn.

TREASURER:

I can sell them a fantasy or whatever you want to call it, whatever you want to call it, pixie horses, whatever your preferred analogy is, but I am not going to spin the public a line that there is some simple answer to getting expenditure down. It is a long, drilling through hardboards process and that is what the country needs. It needs people with the patience and the strength and the determination to get spending down and that is what we are doing.

MITCHELL:

You have got two options here; this is a pre-election Budget. It can be a traditional pre-election Budget which is a bit soft and a bit generous or it can be the tough Budget we need – which will it be?

TREASURER:

I don’t accept, well certainly it is not the first one. It is certainly not the first one. You need a measured Budget which is right for the times, one that shows the discipline and shows the strength to get spending down over time and to ensure that you don’t jack up taxes because you can’t make decisions on spending and that is what we are seeing from our opponents. That is their race, that is their plan – higher taxes for higher spending. If we change any taxes as a result of what we are looking at right now and as I said we only started that process of looking at all those new areas in September of last year after there was the change. They were not under consideration before that and that work started then. It is under consideration now, any changes we make there we will put back into lowering taxes for Australians, like those who are going into higher tax brackets. I think they would welcome that and I think that is the right goal.

MITCHELL:

We’ll take a break and come back with more from the Treasurer and more of your calls in a moment.

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MITCHELL:

Scott Morrison is with us, the Federal Treasurer, we will take another call. Judy, go ahead.

CALLER:

Hello, I’m just furious. I am a 65 year old part-pensioner, I have been a Liberal voter for many, many years and I am just furious at what is happening. I am furious that so much of Australia is being sold off to the Chinese, that Australia is not getting the benefit of those sales. That China is going to be able to take over and not be give growth to Australia and not give growth to our economy. So, that is one big thing. There is a big sale coming up in Stanley in Tasmania and I am worried about what is happening. I am worried that our children are not going to get the benefit of…

MITCHELL:

So, your concern is the sale of assets, is it?

CALLER:

I am. I am most concerned about the sale of assets to China.

MITCHELL:

Ok.

TREASURER:

Well, thanks for that. I know people are concerned about this. At the end of the day the Treasurer has to make the decisions on whether sales are approved of not. What I have to do is make a decision about whether it is not in the national interest – that is the text under the legislation. These are the things I look at; will it support jobs, will it support increased investment, does it compromise Australia’s national security issues and can I be absolutely sure that people who come and buy these things are going to pay tax in Australia on what they earn here. I think they are all the key criteria. When I became Treasurer I made some new appointments to the Foreign Investment Review Board [FIRB]. One of those was a fellow named David Irvine. David Irvine used to head up ASIO, our domestic intelligence agency and he used to head up our foreign one as well – ASIS. Now it is important that I have a person like David Irvine on the FIRB because he has a very acute understanding of what all the potential national security risks are about any potential foreign investment in the country. I get very good advice from him and David Peever who is another individual who has a lot of experience in this area. I put him on the FIRB as well. So they are my tests. They have got to pay tax here. They have got to support the jobs in Australia and they have to be prepared to invest in Australia and it has not got to compromise our national security interests.

MITCHELL:

What is rich?

TREASURER:

In what context?

MITCHELL:

Money, income, assets. What is rich? What is a rich person?

TREASURER:

Look I don’t define that. People can make their own judgements about that. I think it is great in this country that people want to aspire to do better and provide for their kids so I don’t judge people for actually wanting to get ahead. I think that is a good thing and I want to celebrate that and I think that is what this country is about.

MITCHELL:

Ok I ask that because with superannuation all the talk I see is about targeting the high end, targeting the rich. What does that mean, how much?

TREASURER:

Others are making that commentary, I am not making that commentary so you would have to ask them.

MITCHELL:

What about you? You will be introducing some change on superannuation won’t you?

TREASURER:

Well what are tax incentives for superannuation for? They are to ensure that people don’t end up dependent on a welfare payment in their retirement.

MITCHELL:

Yeah.

TREASURER:

That is what they are for. So your tax incentives have got to target those people who  are most likely to possibly end up on a pension or a part-pension if they don’t get that tax incentive to support their superannuation savings. So that is what is conditioning my thinking on this. I am trying to make sure that tax incentives ensure for those who are really trying can have an adequacy of their retirement income and in particular that people who might otherwise end up on the pension don’t. That’s the plan, that’s my focus.

MITCHELL:

But there is the problem with adequacy, what is an adequate income in retirement?

TREASURER:

Well it’s how long is a piece of string and everyone is going to have a view on that but you have also got to cut your cloth to suit your times. That is certainly what we are doing. I demonstrated that when I was in the previous portfolio. We had some part-pension arrangements that were introduced in the back-end of the Howard/Costello Government that increased the pension cost by $1 billion a year. We reversed that in the last Budget. That was a hard decision. But there was a $20 billion surplus then, there is a $37 billion deficit now.

MITCHELL:

So do you have an idea of how much you are going to save on super?

TREASURER:

They are the numbers. We know the numbers we are working on Neil and when we make our announcements then we will set all that out.

MITCHELL:

Do you have a target?

TREASURER:

I will announce those when we are ready to announce them.

MITCHELL:

Are you looking at compulsory drawdowns?

TREASURER:

I made a comment on this yesterday. I have a lot of sympathy on this issue…

MITCHELL:

I should explain this shouldn’t I?

TREASURER:

Yeah, sure.

MITCHELL:

This is where in the retirement phase you are required to take a certain percentage out of your super.

TREASURER:

That’s right. The point about that is where there are tax incentives to help you build your super and if you are not paying tax on the earnings in the retirement phase then the idea is you are supposed to be living on it. It wasn’t a tax incentive for estate planning and an inheritance tax incentivised system. That is not what superannuation is about. If people want to raise and save money over the course of their life and pass it on to their kids then good for you, that is a great thing to be able to achieve but the tax incentives aren’t there for that. They are there so you can have a good life in your retirement…

MITCHELL:

The problem is you might be required to take out six per cent but you are earning three per cent so you are going backwards.

TREASURER:

 And when you have a problem like we have at the moment where the markets have been extremely volatile – that’s why I stress again that at a volatile time like this you need stability, you need consistent economic management that gets the Budget under control and keeps taxes low and keeps spending low. But at times like this you do get these problems. Look we will take a good look at that but there are no simple solutions to that. Tax incentives for superannuation are not there to tax incentivise estate planning.

MITCHELL:

Would it be fair to say though that it is inevitable that higher end superannuation and we have to determine what that is , is going to lose some of its attractiveness as a result of what you are doing?

TREASURER:

Well you have to put it against the test I just set out and that is who are those most at risk of going into the pension and having an adequacy problem with the size of their retirement savings pool? Your tax incentives have to focus on that and that is what we are doing.

MITCHELL:

Would you guarantee no retrospectivity?

TREASURER:

Well of course. On these sorts of issues people have different definitions on retrospectivity. It is a fairly broad question Neil.

MITCHELL:

People who have made their plan based on the laws as they exist – it would be unfair to change them.

TREASURER:

I mean people go to work every day based on paying higher income taxes. I mean I would like to reduce income taxes as well. So the point about it is yes you are right, particularly in the retirement phase where people have understood what was going to happen in the retirement phase well I think there are strong arguments around that.

MITCHELL:

Oh yeah but if I put money into superannuation six months ago on the basis of these are the rules…

TREASURER:

In the retirement phase?

MITCHELL:

No not necessarily in the retirement phase, in the accumulation phase.

TREASURER:

Well you would have to explain to me how that would be a retrospective tax if contribution arrangements were changed.

MITCHELL:

Well yes…

TREASURER:

Because they have been changed many times in the past. Peter Costello changed them, others changed them. The contributions arrangements have been changed many times and they haven’t been considered retrospective.

MITCHELL:

Marie, go ahead please.

CALLER:

Could you tell me would you get rid of negative gearing?

TREASURER:

On negative gearing, I have said this a few times, two-thirds of people who use negative gearing actually have a taxable income of $80,000 or less, 70 per cent of people only have one property and claim a net rental loss of less than $10,000 every year. So the vast bulk of Australians who use negative gearing are just trying to get ahead and trying to get their family in a better position. I say to them good on you and the government is very aware of that. The opposition is not, they actually want to hit everybody who is negative gearing in the future…

MITCHELL:

But you are planning changes of some sort.

TREASURER:

Look there are some excesses in this area as there are in other areas where people have multiple, where it is quite an operation, let’s put it that way, the way that negative gearing is used in some quarters. But the difficulty I have got with the proposal that is out there at the moment is it will really hurt those people I just talked about. Those people who are currently using negative gearing and people like them in the future who want to use negative gearing more importantly, they will have to compete with people on very high incomes for a smaller group of assets and the other thing is everyone else who owns a home now, the minute you put your key in the front door after buying a new house well it will be like driving a new car off the lot under what Labor is proposing because the pool of people who will be looking to buy your property potentially down the track will be radically changed under Labor’s proposal. We have always said these things are being considered but what I have said is we are looking to target the excesses in that scheme, not to target those, as our opponents are, who are just the ordinary, everyday Australians just trying to get ahead.

MITCHELL:

So you are targeting the excesses in superannuation and the excesses in negative gearing, targeting the rich.

TREASURER:

Well that’s how you…

MITCHELL:

That’s why I ask what the rich are.

TREASURER:

That’s not our approach Neil.

MITCHELL:

Well the top end. What’s the top end?

TREASURER:

My approach is to make sure the tax incentives we have in our tax system are designed to support the people they need to support.

MITCHELL:

But what worries me is you deciding what that level is, not you, but the government deciding what that level is.

TREASURER:

Governments are elected, governments go to the Australian people, governments present Budgets and we will face an election this year in the same way you face your listeners every day and they decide whether to turn the radio on or off. There is a natural process in this. The government will outline its plans clearly, particularly by the time of the Budget, if not before and then there will be an election later this year and people will have their say. What I am saying is our opponents want to target people and there is this politics of envy in this country. I don’t buy into that…

MITCHELL:

You just said you were going to target the top end in superannuation and negative gearing.

TREASURER:

What I said is I am going to focus the incentives we have in the tax system on the people who need them, just like when I was Social Services Minister I want welfare to focus on the people who need it, not just people who think they are entitled to it and the same is true for tax incentives.

MITCHELL:

You talk about these changes being judged by the people, would you talk them to an election or drop them in the Budget?

TREASURER:

The Budget and when it is held I think ensures that ultimately these issues go to the Australian people.

MITCHELL:

Sorry I don’t understand that.

TREASURER:

Well the Budget is in May and the election is later in the year. There are the normal processes in the Senate and the Senate hasn’t shown too much of a disposition to pass government legislation so the Budget will be there for everyone to see and the election will be held after the Budget and that gives everybody the opportunity to have their say.

MITCHELL:

So with the Senate the Budget might in fact not be implemented before the election?

TREASURER:

Well I can’t predict the Senate. If you can predict the Senate then you know more than anyone else…

MITCHELL:

Can you predict an election?

TREASURER:

That is a matter for the Prime Minister.

MITCHELL:

But that is a possibility isn’t it? I hadn’t thought about that before. Your Budget might not kick in before you have an election.

TREASURER:

Most of the measures that are introduced in a Budget the legislation that comes in after a Budget, some of it doesn’t come in until October or November, that is the normal cycle of things. The Budget doesn’t go up in one Bill as you know Neil. There are the Appropriation Bills and they will be carried in the normal way. We don’t have those 1975 issues any more. But the tax measures and other measures are presented in pieces of legislation that go forward some months after the Budget and none of the things we are talking about really would be kicking in before an election.

MITCHELL:

One last thing which is sort of related to your portfolio and certainly your previous one, I am confused by the cost we are allowing for the Syrian refugees. Do you know what it is, have you put a figure on it?

TREASURER:

Yeah it is around $700 million.

MITCHELL:

Well it has gone up. It was $400 million initially.

TREASURER:

No I was in the Cabinet decision at the time and the estimate was that was our understanding at the time.

MITCHELL:

$700 million?

TREASURER:

Yes, $600 – $700 million. It was always an expensive process. I was making that argument at the time. I notice there are some people climbing a spire in Melbourne protesting about the government’s refugee policy…

MITCHELL:

They are still there.

TREASURER:

I don’t remember them climbing a spire when there were 2,000 children in detention before the last election, maybe they have only developed climbing skills more recently. I think their timing says a lot about their motives.

MITCHELL:

Book them.

TREASURER:

By all means.

MITCHELL:

‘Book ‘em [inaudible].’

TREASURER:

That’s it.

MITCHELL:

Thank you very much.

TREASURER:

Cheers Neil, it’s always good to be with you. Thanks for the callers too.