3 May 2016
Transcript - #2016074, 2016

Interview with David Speers, Sky News

SUBJECTS: Budget 2016 - A National Plan for Jobs and Growth

DAVID SPEERS:

Now three years ago going into the last election the Coalition was talking a lot about Labor’s debt and deficit disaster, about the need to fix the Budget. Here we are before this coming election and you have tonight announced we are not going to get back to surplus during the next term of Parliament, debt is going to keep going up, it is going to peak at around 19 per cent of GDP. Has the Coalition delivered on this core promise do you think?

TREASURER:

Well it’s a job we keep working on and we keep working on it in this Budget. What you see in this Budget is a reduction of the deficit to 0.3 per cent of GDP and $6 billion. But the projection on moving back into balance hasn’t changed from where we were in the mid-year statement. That is a positive thing which shows the calls we were making back last December I think we got right and we retain that credible path back to balance. These are difficult times and they are difficult decisions and we are making them. But importantly we are not spending more than we are saving and we are not increasing the tax burden on the Australian economy at this very critical juncture which others are proposing to do.

SPEERS:

But how credible is this path back to surplus? We have heard successive Treasurers talk about growth rebounding over the forward estimates. You are doing it as well. You are saying nominal growth will suddenly pick up in a couple of years’ time.

TREASURER:

We have revised nominal GDP growth down in this Budget and in the mid-year forecast we actually reduced it from 3.5 per cent down to 3 per cent. So in our forecasts we have been far more candid and I think this is a modest outlook for the economy but let’s look at last year - last year we grew at 3 per cent. 300,000 jobs were created last year. In these forecasts we have actually been able to be confident and say unemployment will be at 5.5 per cent, not 6 per cent. I think they are good outcomes but we need to stay the course and that’s why tonight is not just another Budget. We don’t need just another Budget. We need a national economic plan and that is what I have outlined tonight.

SPEERS:

Tax collections are going up over each of the four year forward estimates you have outlined tonight. They will go up dollar terms and go up in percentage terms, percentage of GDP to 25.1 per cent. That is an increase in the tax burden isn’t it?

TREASURER:

No, well that is an increase of tax to GDP but it is not an increase in the projection of that compared to the previous estimates. So the decisions we have taken in this Budget mean the tax revenue we have gained, whether it is the significant revenues – some $3.9 billion by cracking down on multinational tax avoidance – that is double what the opposition are looking at. We have gone far further there I think with far more sensible and targeted measures. The increasing revenues we have from that, or superannuation tax concessions being changed with their access for those on high incomes and those on the wealthy, what we are doing is investing all that back into tax cuts. So tax cuts for small and medium sized businesses and our tax plan increases GDP by one per cent. That’s $16 billion as a result of the decisions and plan in this Budget.

SPEERS:

Just on this issue about what you are going to get - $3.9 billion on cracking down on tax dodgers. The Government was very critical of Labor putting any dollar figure on what they thought they would get on cracking down on multinationals.

TREASURER:

Well we have learnt what happens when they put a figure on things – they have $20 billion black holes which means they can’t fund their education policies.

SPEERS:

But why was it a bad idea for the Labor party to put a number on how much they would put on multinationals and Joe Hockey didn’t do it either?

TREASURER:

Because we now have multinational tax anti avoidance legislation which has been passed. We now have the ATO in these companies and have a much better understanding of these arrangements. We have put in place the enforcement resources into the ATO to go after that money and we have also increased the legislative measures we intend to pursue with the diverted profits tax which will put a penalty rate of tax of 40 per cent on multinationals that seek to shift profits offshore. So these are well-structured measures, well researched measures, appropriately costed by Treasury over the last six months.

SPEERS:

On personal income you are spending around $4 billion to offer some relief on bracket creep…

TREASURER:

That is actually not what we are doing. What we are doing is expanding the middle income tax bracket. That is what we are doing.

SPEERS:

This isn’t about tackling bracket creep?

TREASURER:

Bracket creep affects more than just one income tax bracket but what this is about is ensuring the middle income tax bracket encompasses middle-income earners. So if you are on average full-time earnings you should be in the middle income tax bracket. What we have done tonight means 500,000 Australians won’t go into the second highest tax bracket, they will stay in that middle income tax bracket and it means they continue to work more, earn more and not be taxed more.

SPEERS:

But as you know only 20 per cent or less of Australians have taxable incomes more than $80,000.

TREASURER:

Well those on lower incomes are also the primary beneficiaries of welfare payments and other income support payments. That is appropriate. That is what those measures are there for. Those earning those other incomes in our first Budget we got rid of the carbon tax but kept the tax cuts that were compensation. We turned Labor’s compensation into a real tax cut for those earning under $80,000 in our first Budget. Now we have been able to afford to broaden out the middle income tax bracket. Now it doesn’t provide large amounts of money to people in that situation who it benefits but it sends a very clear message that we think a dollar in your pocket or anyone else’s pocket out there is better off there than it is in the government’s pocket.

SPEERS:

Or indeed a dollar in the pocket of business. You are spending a little more in fact on cutting the company tax rate, it has fallen…

TREASURER:

Because that drives growth David.

SPEERS:

So that’s what I wanted to ask, you are confident that this will drive more growth than putting money into people’s pockets through personal income tax cuts?

TREASURER:

Well we are doing both. We are doing both…

SPEERS:

A little more on the business front.

TREASURER:

Well on small business, small and medium sized businesses, these are the ones that are investing. Australian-owned businesses are out there who are taking advantage of all these opportunities…

SPEERS:

And these will drive growth?

TREASURER:

Well they are what has been driving jobs particularly in the last 12-18 months,

SPEERS:

So I wanted to ask you, why didn’t you when you looked the GST, model a cut in the company tax rate?

TREASURER:

We have always known that a company tax rate cut is something that can support growth, that was never the issue.

SPEERS:

But you …

TREASURER:

That’s why tonight David we have announced that over ten years we will get the company tax rate to 25 per cent. So we have followed through.

SPEERS:

It is a bit of a side issue, you decided not to do the GST because it didn’t…

TREASURER:

Well that was debated for some time and that issue was well and truly covered many months ago.

SPEERS:

On superannuation Scott Morrison you said last year we are not going to increase taxes on superannuation, we have no interest in increasing taxes on superannuation either now or into the future. What has changed?

TREASURER:

Well that was the policy of the Abbott Government and I support obviously the policies of the Government of which I form a part. Now when the Prime Ministership changed to Malcolm Turnbull he said that superannuation was back on the table. I will tell you what we didn’t do tonight. What we didn’t do is we didn’t change the tax status of retirement income accounts. So if someone has a retirement income account they pay no tax on its earnings. What we did was we said there would be a limit about how much you can put into those accounts - $1.6 million.

SPEERS:

Does that apply to those who currently have more than $1.6 million?

TREASURER:

Yes it does.

SPEERS:

So they will pay more tax?

TREASURER:

What they will do is they will transfer any funds in addition to $1.6 million, and let’s not forget we are talking about 1 per cent of superannuation fund members, ok? So this is a very elite club.

SPEERS:

Sure, when you are saying you are not taxing those who currently save this money in retirement, you are.

TREASURER:

What we are doing is saying if you have more than $1.6 million in a retirement phase account, you will transfer the higher balance to an accumulation account or you can go and invest in a company. How about that? Or you can go and invest in creating jobs in some of the start-ups and there we have put tax incentives in some of those places David.

This is retrospective.

No I don’t believe it is at all.

Well someone with more than $1.6 million will have to pay more tax.

Tax rates change. There is no doubt about that. But what we have done tonight is there will be no such thing post 1 July 2017 of a $5 million retirement phase superannuation account. They are history as of 1 July next year.

A very different approach to Tony Abbott on super and a very different approach on youth unemployment too. There was the “six-months no dole” in the first Abbott-Hockey Budget, you’re offering incentives to train them up and get them into work.

TREASURER:

Well we are doing that but we’re also keeping the measures that I was promoting when I was Social Services Minister, to have the waiting period still in place but for a more modest period of time, which was the legislation which still remains stalled in the Parliament. So what you’re getting from us is practical measures to get young people into jobs. Now I come into this job as a former Social Services Minister. I know that if you don’t get a young person into a job by the time they’re 22-25, they could spend the rest of their life on welfare. Now that is just an unforgiveable human cost. We can’t do this to young people in our country.

SPEERS:

Okay a couple of quick ones. You’re saving $1.2 billion on aged care. Where is that coming from?

TREASURER:

Well this is the continuation of the bipartisan reforms we’ve had in aged care now for some time. We appreciate that bipartisan approach to ensuring we’re continuing to get these measures right, and those will continue and the Health Minister will I’m sure have more to say about that.

SPEERS:

Last one, there’s decisions taken but not yet announced in the Budget.

TREASURER:

Yeah it’s a very modest measure leading into an election which is not unusual.

SPEERS:

But you’ve got one in 2019-20 just before we get into surplus. It’s apparently going to be a $2 billion saving to the Budget bottom line. That’s a pretty handy timing.

TREASURER:

Well the unannounced measures are very small in comparison to previous occasions…

SPEERS:

$2 billion? It sounds pretty big.

TREASURER:

Well you’ll make it sound big, that’s your job. But all of these announcements will be made before an election and people will be able to see the value of those sorts of measures.

SPEERS:

Can’t give us a hint?

TREASURER:

Well the Budget’s pretty big, David. I think we’ve given you plenty tonight. The thing we’ve done tonight is given small and medium sized businesses across the country a national plan. And that’s what they needed. This was not just another Budget, this is a national economic plan.

SPEERS:

Treasurer Scott Morrison thank you for joining us.

TREASURER:

Thank you David.