22 March 2017
Transcript - #2017042, 2017

Interview with Fran Kelly, RN Breakfast

SUBJECTS: Changes to Section 18C; Turnbull Government’s Enterprise Tax Plan to drive economic growth; The Turnbull Government’s plan for more affordable childcare; Turnbull Government’s crackdown on multinational tax avoidance

FRAN KELLY:

Treasurer, before I get to the Omnibus Bill, can I just ask you about the Government’s proposed changes to Section 18C of the Racial Discrimination Act? A few weeks ago, you sounded pretty frustrated at the attention to this issue. On this programme you said 18C reform, quote, doesn’t create one job, doesn’t open one business, doesn’t make housing or energy more affordable. All of that is still true so why is the Government taking time to make this change and buy this fight?

TREASURER:

What I was saying, Fran, is that my focus as Treasurer is obviously not on those issues. My focus as Treasurer, for which I make no apology, is on people’s jobs, their living standards, how much they’re earning, bringing the Budget back to balance and all of these things which strengthen our economy. That’s what the Treasurer should be doing. Now, there are other matters being addressed by the Government and those issues, when it comes to the changes to the Act, actually strengthen the Act. What they’ve done is they’ve provided additional protections so that people cannot be harassed. That’s the point.

KELLY:

The changes the Government is proposing though, we know already the crossbench numbers aren’t there for the changes, the Nick Xenophon team, Jacqui Lambie, have already ruled it out, so it looks like they’ll never become law, ethnic groups disagree with you, they’re slamming the changes. Why start this fight if you can’t make the change?

TREASURER:

We believe that you need to strengthen the Act, to ensure that people can’t be harassed. The protections around intimidation remain, the whole point is, you can’t have cartoonists and you can’t have students who are the subject of what is basically an excess of political correctness being dragged into courts by the Human Rights Commission.

KELLY:

But you can have ethnic and religious groups feeling like their protections are going to be diminished?

TREASURER:

I don’t think they are at all, Fran.

KELLY:

That’s how people feel, right?

TREASURER:

What we’ve done, Fran, is we’ve added to the Act to ensure that people cannot be harassed or intimidated. I don’t think people because of their race, their religion or things like this should be the subject of intimidation or harassment. That sort of bullying behaviour which is standing over them, because of their background. I think that’s an outrage, I think it’s un-Australian, I think it’s a disgrace and what we’ve done is to strengthen the Act to ensure that they have those protections.

KELLY:

Plenty of people say Section 18C already does that.

TREASURER:

This does it even more significantly. Harassment is not something we should allow to happen in this country because of someone’s racial, ethnic or religious background. We’re changing the Act to give it teeth, and to give greater protections against that sort of bullying behaviour.

KELLY:

Treasurer, let’s go to your portfolio. The Omnibus Bill. Pauline Hanson says the Omnibus Bill cuts, quote, too deeply and too broadly, if it wasn’t dead before, she said it does seem as though it is now. Can you confirm you are going to dismantle the Omnibus Bill, split it in two, to find the savings for the childcare reforms?

TREASURER:

We’re a practical Government, Fran. We deal with the Senate that the Australian people elected…

KELLY:

So that’s a yes?

TREASURER:

No, Fran, it’s an answer which says we’re a practical Government that deals with the Senate that the Australian people have elected. That’s the words that I just used. That’s what I mean. We’ve always done that. Last year, we were able to get $22 billion, after the election, of Budget improvement measures implemented. Now, we were able to achieve that because we’re practical. The Australian people have elected the Senate, we’ll deal with them, we’ll give them the respect of that. There were clearly measures that we’d been putting to the Australian people at elections, and that we’ve advocated for, but it’s the Parliament that will inevitably pass or not pass measures, and every Senator, and particularly of the Labor Party need to be held to account. Particularly the Labor Party for rejecting our efforts to ensure that the nation’s welfare bill is not growing out of control and that taxes don’t have to rise to support that.

KELLY:

Listening to that seems to me that you are going to cut it, you need $1.6 billion for childcare…

TREASURER:

Fran, I don’t think you’re permitted to just go and editorialise, and rephrase what I’ve just said.

KELLY:

From reading, interpreting what you’ve said, it seems as though you are going to listen to the Senate, that’s what you said. The Senate says it won’t vote for the Omnibus Bill, it wants it split. You need $1.6 billion for childcare. Which welfare cuts are you going to persist with, essential to the Government’s agenda? Given that you need to find this $1.6 billion, you need to get something passed the Senate.

TREASURER:

Our policy is that our investment in improving childcare, and remember I devised these childcare changes when I was Social Services Minister, I’m very passionate about seeing these improvements in childcare affordability for families so they can go out, they can get jobs, they can have confidence that their children are being well cared for, which the childcare sector does incredibly well. We want to see that happen, but it’s got to be paid for, and we’ve always said it has to be paid for, and it will be paid for. The difference between us and the Labor Party is that they just want to spend money without saving money, and that’s how you get your Budget into the mess that they left it in.

KELLY:

Can we presume the $5 billion cuts to the Family Tax Benefits on the end of year supplements will be gone? They appear to be friendless in the Senate.

TREASURER:

What you can assume is that the Parliament will consider these measures and that there will be an outcome in the Senate and that outcome will enable us to pay for our childcare package should that be the will of the Senate.

KELLY:

Yesterday we spoke with Senator Derryn Hinch on this program about the cuts.

DERRYN HINCH: It is their job to find the money to do this. If you are going to go hard over what they call the ‘Google Tax’, get the billions back from people who are taking their profits offshore. There are all sorts of areas like that but this one here [inaudible] anything about cutting rights to pensioners [inaudible] going overseas and having things suspended is just rubbish.

KELLY:

Now, Derryn Hinch, we know One Nation feels the same, we know that Jacqui Lambie feels the same that the cuts should come from big business not from welfare benefits.

TREASURER:

As I said in the Parliament yesterday, it’s this Government that has introduced the toughest multinational anti-avoidance laws of any Government in our history. We’re clawing back $2 billion a year this year - $2 billion this year, Fran, as a result of the measures that we brought in to the Parliament and passed and the Labor Party voted against those. They are voting to ensure that multinationals pay less tax – our result is that they are paying more tax. The Diverted Profit Tax went through the House of Representatives yesterday. That now needs to pass the Senate. So, I just got back from the G20, where Australia is in the top of the pack when it comes to cracking down on multinational tax avoidance. Our measures are going to raise almost $4 billion over the Budget and forward estimates. So, there has been no soft-pedalling there. We are now one of the fastest peddlers on multinational tax avoidance of any country on the globe. So, we are addressing that. We are addressing savings. We have got the rate of spending growth down from over 3.5 per cent, which it was under Labor down to less than 2 per cent and we have deduced the growth in debt from over one third – over 33 per cent gross debt was growing at under the Labor Party and we have reduced that by two-thirds.

KELLY:

Treasurer, what about the $50 billion company tax cuts you had planned over a decade? That was a centrepiece. That is due into the Senate next week. Do you now concede you will have to split that Bill in two in order to get the cuts through? Will we see a bill for the first phase at 27.5 per cent tax rate for companies with turnovers up to $10 million? Because you will get that passed the crossbench it seems.

TREASURER:

The Bill will go forward to the Senate in the way it was constructed in the Budget. Now, if the Labor Party continues to oppose that Bill despite the fact that they supported company tax cuts previously, if they are going to hold to their hypocrisy and the crossbenchers don’t choose to support that, well that will be a matter for the Senate. The Government’s commitment to this hasn’t wavered. We put it in the Budget, we took it to an election – and we won – and if the Senate and the Labor Party in particular don’t want to recognise that that was the result of the last election and the mandate that we drew from that. Well, that’s a matter for them. The Government’s growth agenda not only dealt with tax issues and particularly small and medium-sized businesses but it also dealt with trade, Fran. It also dealt with innovation and science and technology. It dealt with Defence industries. We have a comprehensive plan for economic growth, infrastructure as well – a rolling $50 billion infrastructure package. All of these things are designed to grow the economy. Now, of course we would like the Senate to support the tax changes which will make businesses more competitive in this country, particularly when you have got the United States dropping the corporate tax rate to 15 per cent, the United Kingdom is already there. Even the French socialist government know it’s a good idea to reduce company taxes, they are doing it but not the left wing of the Labor Party who think people should pay higher taxes.

KELLY:

And all on the crossbenches it would seem.

TREASURER:

Well, Fran, you say the crossbenchers, but the only reason the crossbenchers are being drawn into this discussion is because the Labor Party under Bill Shorten has gone against everything that not only Bill Shorten and Chris Bowen have said but also going back to Paul Keating.

KELLY:

But even some in your own Party Room are saying it. Backbencher Russell Broadbent told the Party Room yesterday the Government is facing a backlash from voters who see it as unfair because this tax cut for big business is happening at the same time as pensions, superannuation and penalty rates are being cut.

TREASURER:

The reason we have to pursue tax reform to ensure that businesses can remain competitive, Fran, is because we need to drive investment, we need to drive growth because that is what supports jobs and that is what supports higher wages. So, you need to do that and you need to bring the Budget back into balance which we are doing. I told you a few minutes ago about how we have been able to get spending under control and how we have been able to get a massive reduction in the growth of debt. These are all difficult things to do in a difficult environment with a Parliament that we obviously respect and you have just got to work the percentages in the Parliament because the Australian people expect outcomes.

KELLY:

If you do have to split it into two tranches will you keep the tax cuts for bigger businesses as policy in the May Budget or would you rather have the $40 billion you’d save to try and shore up the Budget and the AAA credit rating?

TREASURER:

Well, what I am going to do is await the outcome of the Senate and see if the Labor Party ultimately live up to their hypocrisy on this issue and then we will deal with those matters down the track. But let me say this, Fran, the changes for small business would be the biggest changes in tax reform for small business for many years. We are changing the definition of a small business from a turnover of up to $2 million to a turnover of up to $10 million. Now, that $10 million is twice – twice – the level recommended by the Henry Review. Remember the Henry Review that the Labor Party did nothing about? Well, we are acting on small business tax reform in a way that is twice as strong as what was recommended in the Henry Review. Now, that is good news for small business and the Labor Party is saying that 2.2 million Australians who work at 100,000 businesses with a turnover between $2 and $10 million, that your wages are going to be under pressure and the profits of those businesses are going to be less because they think small business should pay more tax.

KELLY:

Treasurer, we have got to go. Thank you very much for joining us.

TREASURER:

Thanks a lot, Fran.