14 March 2018
Transcript - #2018026, 2018

Interview with Ross Greenwood, 2GB

Subject: Labor’s tax proposal

ROSS GREENWOOD:

[AUDIO BEGINS] Treasurer.

TREASURER:

G'day, Ross.

GREENWOOD:

Okay, can I just first go to a Tweet from Jeff Kennett, former Victorian premier, today. He said, "First the Turnbull Government attacks superannuation last year and now the Shorten ALP proposes another attack. If they win the next election. Why do Governments keep changing the rules around super? How can people prepare for their non-working years? A pox on both their houses." Should there be a pox on your house as well as Labor's tonight?

TREASURER:

We're not making any changes to superannuation, we've made that really clear and we made some changes a couple of years ago to make the system, we believe, fairer and we said, "We're in, that's it, we're done." What the Labor Party has proposed today as you've been explaining all day, Ross, is that they're going to strip away the tax refund of people on low incomes, pensioners, self-funded retirees for the credits that they're entitled. Why should you or I – if you and I hold Commbank shares or Telstra shares, perhaps many years ago we bought those shares when they privatised them and all those sorts of things and they're sitting there – why should we get the full value of the 30 cents that the company has already paid in tax but a pensioner not? That is just completely and utterly unfair.

GREENWOOD:

Okay, so therefore Labor would say that Australia's dividend imputation system has become too generous, we are the only country in the world right now that actually gives this type of refund back. It was introduced in 2000, when Australia had plenty of money, Australia's budgetary situation is not so good these days – I would have thought that maybe the Government might have considered even pinching this policy and thinking it wasn't a bad way to actually bring in $59 billion into the Budget to balance the Budget over the next ten years.

TREASURER:

Absolutely not because it's completely unfair. When Labor voted to make this change back in 1999 when Peter Costello brought it into the Parliament, the Labor Party stood up and said they supported it because it actually gave the same fair treatment to people on low incomes and to pensioners. This idea that somehow Paul Keating always wanted it this way, the Labor Party actually agreed with the fix, the correction, the dealing with the inequity in the system that Peter Costello put into place back then and to say this today, well, if they argue it's too generous, the people they're going to rob it from are the most vulnerable people.

GREENWOOD:

I noticed today that you indicated that Labor is addicted to raising taxes. Do you believe that?

TREASURER:

Yes, I do and it's because they're addicted to spending. In our Budget, we have a tax speed limit, we say – and we live up to this – that taxes as a share of the economy cannot rise higher than 23.9 per cent. Now, at the last election, all of Labor's extra taxes would have taken them to 25.7 per cent. Now, what that means is that over that ten years, that would mean that in any one year they would have had $50 billion of higher taxes on the Australian economy.

GREENWOOD:

So, therefore, they might be addicted to taxes but you've introduced a Medicare levy hike, you've introduced the Budget repair levy, superannuation tax changes have come in as well…

TREASURER:

And all of that had to happen under the 23.9 per cent cap and it never goes higher than the 23.9 per cent.

GREENWOOD:

But you can barely say that they're addicted to tax…

TREASURER:

No, I can actually.

GREENWOOD:

While you have actually increased taxes during the course of your period as Treasurer as well.

TREASURER:

We are completely committed to a 23.9 per cent cap. It can't go higher than that. Labor's will go – at the last count, at the last election – to 25.7 per cent and that doesn't include all this. They have $220 billion worth of higher taxes now, Ross, they've got a tax on housing, they've got a tax on investment by abolishing the capital gains tax exemption – 50 per cent reduction – and that's not just on properties for residential, it's on offices, it's on shops, it's on any number of other capital investments, they've got higher taxes on family trusts and family businesses, they've got higher taxes on small businesses because they'll reverse the small and medium sized business tax cuts. It was absurd today, they ran around today saying they were going to give a tax incentive for investment in new plant and equipment, this is what it is: they will give you a – you'll be able to expense $4,000 out of a $20,000 purchase, that's what you'll be able to do. Do you know what you can do if you're a business up to $10 million under our Government? You can fully expense the full $20,000 so that was just a pea and thimble trick.

GREENWOOD:

Okay, so, the other aspect of this is you could argue that also given the state of Australia's debt and Labor's argued this today, going beyond $500 billion in net debt, in gross debt rather, you've now got a point where by if you are actually to correct that, if you are to fix the Budget, something needs to be done to raise taxes to actually pay down those debts…

TREASURER:

No, no. You've got to get your spending under control. This is how we do a Budget, we say that the economy should bear no more than 23.9 per cent in taxes as a share of GDP and we cut out costs on expenditure to make sure that we can keep that all in balance and that's how we get our Budget back to balance.

GREENWOOD:

Okay…

TREASURER:

What Labor does is they say, "You spend as much as you want and we'll lift taxes to meet all that expenditure". Because remember at the last election, they had higher taxes than us and they had a bigger deficit than us which meant they had higher taxes, higher debt and a higher deficit…

GREENWOOD:

But you were prepared to put a Budget repair levy – let's be honest about that.

TREASURER:

Which is gone.

GREENWOOD:

Which is gone but then the whole point is…

TREASURER:

That went under my last Budget.

GREENWOOD:

Okay, but the point still remains that that debt has got to be addressed at some stage. You can either grow your way out of that debt or you can actually tax to try and get rid of that debt.

TREASURER:

But taxes reduce growth. This is the thing, if you don't have a limit on how much tax you put on your economy, your economy eats itself, it's like the snake eating itself from the tail, that's what Labor's Budget looks like, that's why it's a mad way to do public finances. You've got to set what you think is something that is reasonable for the economy to bear and then you've got to keep your expenditure under control so as to not drive up taxes and slow growth in the economy.

GREENWOOD:

Would you say that the Government and Labor are poles apart on tax policy right now?

TREASURER:

Yes, I would and I can measure it for you. It's $220 billion apart.

GREENWOOD:

How did you get that?

TREASURER:

Of all the taxes I've just mentioned – over the next ten years, their tax burden and this has been costed by Treasury and was $164 billion – not including the one they made today – so you add that extra $60 billion, $220 billion in higher taxes, that's from what their changes to negative gearing, capital gains tax exemption, family trusts, reversing small business tax cuts, upping the top marginal tax rate, increasing taxes on superannuation contributions so they're going to hit you more on what you put into your super and they're going to hit you more by the measure they announced today. All of that, $220 billion over the next ten years.

GREENWOOD:

So if you are poles apart as you agree in terms of tax policy, how is this country ever going to go forward? Because given the fact that you don't have a majority in the Senate, given the fact that it's highly unlikely that any party gets a majority after the next election, how do we actually go forward as a country when we can't get changes to the tax system because the two major parties are so far apart in their tax policy?

TREASURER:

But we have made progress, Ross. Yes, of course the Labor Party's opposed us but we have got the tax cuts through for small and medium sized businesses up to $50 million. We already have listed the tax threshold from $80,000 to $87,000. We have been able to legislate the tax incentives for early stage venture partnerships and angel investing in the new start-up companies. We have got the best and strongest multinational tax avoidance laws of any country in the world and we got that through without the Labor Party's support. Our economy is rebuilding as we talked about last week when we talked about the National Accounts, we're seeing stronger growth expected over the next few years and we need to keep making the decisions that achieve that. Now, I don't believe that increasing taxes by $220 billion over the next ten years is good for the economy. Bill Shorten does so, look, if you want higher taxes, vote for Bill Shorten. If you want lower taxes, vote for Malcolm Turnbull and the Liberals.

GREENWOOD:

Okay, so how are you going in your conversations with Pauline Hanson in regards to convincing her that there should be lower company taxes?

TREASURER:

Still having them and still not walking away from them. That's the bottom line.

GREENWOOD:

Treasurer Scott Morrison, appreciate your time.

TREASURER:

Great to be with you, Ross.