Thank you very much Chris. It's always good to be here at the Press Club and be amongst so many good friends. It's wonderful to be here with so many of my colleagues here today. I want to thank them very much for being here. The Deputy Leader of the Liberal Party, Julie Bishop, wonderful to have you here, Julie. My good friend and partner in budgets and many other things, Mathias Cormann, and Kelly O'Dwyer, the Assistant Treasurer, who is here with us today. Alex Hawke, the Assistant Minister to the Treasurer the economic team and so many other ministers who are here today and I can see Christian Porter, who is another important member of our Expenditure Review Committee and to all the colleagues who are here today. Can I also welcome of course my dear wife Jenny who is here today with us and of course my parents John and Marion and my brother, the Paramedic, it's great to have him here, if anybody is feeling a little faint, Alan is over there and I'm sure he can fix you up.
The speech I gave on the Budget last night is the speech on the Budget, so I don't propose to read that speech again. I trust you've all had the opportunity over the last little while to pour over that, and today I just want to touch on a number of those issues again and give you the opportunity to ask the questions you would like to before we go into the chamber and we get to do it all again with the Opposition.
For me, the Budget is reflected in a conversation I had a few weeks ago with Kellie Checkley and Kellie Checkley runs an organisation called Project Youth in my electorate. She has been doing it for a long time, she has been doing that job for about as long as I've been in the Parliament and Kellie was telling me about a young man that she had been working with. He had been homeless, he had trouble with the police, he hadn't completed school, and Project Youth was there to try to help him and he got a few shifts at a company out in Kurnell. They do hand sanitisers and toilet paper, hand rolls, that sort of thing, providing for hospitals and nursing homes and this sort of thing. He did five or six shifts through an arrangement that Project Youth had linked up with this local employer, and then they needed to hire a junior employee. But he needed a driver's licence and a forklift licence, and so Project Youth turned up with this great local company in my electorate, a small to medium-sized business, and they got him to get him to the training and get the licence and Kellie would often have to drive him out to work because he didn't have the means for that, and she would get there and get alongside him and support him and he now works full-time for that company. He is no longer homeless. He is in private rental accommodation and he is supporting himself.
Small business growing, backing young people, giving them the chance - everybody wins. Everybody wins.
That's who the winners are. All of us. When you see a young person get in a job and stick in a job and stay in a job, welfare can't buy that, and in this Budget, we have set out a national economic plan, a national economic plan, for jobs and growth. So more young people like that young man in my electorate, more great local people working in our communities to try to link them up, more small businesses that are out there working, saving, investing, they get backed in to keep on doing that. That's what our national plan for economic growth and jobs is all about.
The Budget I handed down last night is an economic plan. It is not just another budget. You've covered heaps of budgets and you've written your lists of all the things that are in it and out of it, winners and losers analysis and you've done all of those things. Australians wanted a plan in this Budget, they wanted an economic plan for jobs and growth. And that's what they got. That's what they got.
Australians know, as I said last night, that our future depends on how well we continue to grow and shape our economy as we transition from the unprecedented mining investment boom to a broader-based, more diverse, stronger new economy, and this plan is the foundation for that. For a more secure, stronger future, for all of us. The plan, as I set it out last night, is there, as you can see in the charts around the room. Now, our economy - the usual problems (slide show not functioning) - Julian will sort this out in any minute. Let's go to the first slide.
Our economy last year grew by almost $40 billion and added almost 300,000 jobs, but what you can see in those charts is where those jobs were coming, and those jobs showed the difference in what was occurring in our economy by picking up in new service areas and other areas of the economy, and moving across different elements of the various economic activity that exists across our economy. Household services, business services, goods-related, that's where the jobs growth was, and over the last year, we saw 300,000 jobs, but we saw 50,000 jobs in the last 18 months that have happened for young people across the economy.
We move to the next one. At 3 per cent growth last year, our economy grew faster than the world's most major advanced economies. Faster than the UK, the US, Japan and Germany as I reminded us last night in the House; Australia is doing well globally and internationally in a tough environment, and it is something all Australians should be very proud of. But we need to keep going. We need to keep making this transition a great success.
If I can go to the next one. The key numbers in the Budget that I outlined tonight show that the economy is forecast to grow at 2.5 percent in both 15-16 and 16-17 and to pick up to 3 percent in 17/18 which are the projections.
The pickup in real growth is underpinned by consumption, not mining business investment and exports such as LNG production as it comes on stream. Nominal growth is also expected to pick up as wages growth strengthens and inflation returns to the middle of the Reserve Bank's target band.
In addition, the drag from the terms of trade is expected to reverse in 2016/17. Yesterday's 25 basis point cut in the cash rate to address recent inflation outcomes is to be welcomed as it will further support our economic transition, including support in the near-term for consumer spending, housing investment and exports. So like the Australian people, we are up-beat and we are optimistic, but we are very mindful that around the country this transition is being felt more acutely in some places and by people in some occupations and some industries more than others, and we must be mindful of that at all times as we are. The deficit in underlying cash balance terms will reduce from 39.9 billion in 15-16 to 37 next year or 2.2 per cent of GDP. As a share of the economy and then as projected to fall to $6 billion or 0.3 percent of the economy by the end of the forward estimates.
Tax receipts are expected return to their long-run average by 2017/18. But spending remains at elevated levels. We are dealing with a spending problem which remains the top priority to achieve a sustainable surplus, and the chart that I've put up there is a chart that you all saw back in February, demonstrates this once again.
Our new spending commitments have been more than offset by a disciplined restraint and better targeting of spending in other areas. Any increases in tax revenue as a result of the measures that were contained in the Budget have been re-invested back into lower taxes, not towards fuelling unsustainably higher spending. We are diminishing deficits through policies that continue to control spending. That's how you get to a sustainable surplus. Payments as a share of the economy will fall from 25.8 per cent down to 25.2 per cent. At the same time there is no increase in the projected tax burden as a share of the economy compared to the projections set out in last year's Budget.
Over the medium term, we are expecting the return to balance, projecting to return to balance in 2021. Now, they are just projections. I'm not placing any more on that than what I've just said. They are just projections, and how those projections turn out in the years ahead will depend on how we continue to perform as a nation, as an economy, and how we continue to stick to the plan that we have set out upon and which I have outlined in this Budget.
In my speech to Parliament last night, I laid out the broader Government's economic plan to secure jobs and growth. The plan is multi-faceted so that it can meet the needs of our economy and our people. Policy settings should not hold back Australians, and the nation's prosperity. Unrealistic, unaffordable policy measures will not help the transition. It only puts it at risk.
The six components of the plan; an innovation and science programs for start-up businesses, a defence plan for local high-tech manufacturing and technology, export trade deals to generate new business opportunities, tax cuts and incentives for small business and hard-working Australian families, a sustainable Budget with crackdowns on tax avoidance, particularly by multinationals, and closing off loopholes, and guaranteed funding for health, education, roads based on real money - real money that can meet these real commitments.
Now each of these six components contains targeted affordable action directed to delivering lasting results. The first of those, the innovation and science programs, which includes for start-up businesses, we outlined this when we released that agenda with Christopher Pyne in one of the first initiatives of the Prime Minister.
The Government is advancing also in addition to the NISA agenda, the recommendations of the Harper competition policy review. The first major review of Australia's competition framework for more than 20 years and a key election commitment for us to go forward working with the states and territories. Competition allows inventive Australians to back themselves by building a business and bringing new products to market or finding new ways of providing better services and better value.
We believe all businesses, big and small, should compete on their merits and not be unfairly excluded by rivals. That is why we are strengthening Australia's competition law to prevent the misuse of market power or those seeking to dominate markets in an inappropriate way. This was a big change, it was a big policy decision, it's one that had been around for more than decades, and it was the Turnbull Government that took action on that issue.
The Government's NISA agenda will help create a modern, dynamic 21st Century economy that Australia needs. Reforms to employee share schemes and crowd source equity funding will make it easier for start-ups to raise capital, and our changes to company tax loss arrangements will make it easier for existing businesses to re-invent themselves.
We have a proud history of making the most of our international networks. Our challenge is now to capture the competitive gains that come with pioneering innovation and leading the way in global markets. Financial technology or FinTech is transforming our financial system and potentially our entire economy. It's going to revolutionise how consumers and businesses as the drivers of economic activity interact and that's why in the Budget we established and before the Budget we established a regulatory committee supporting us to now move forward with a regulatory sand box where FinTech start-ups and businesses can test ideas for up to six months with a limited number of retail clients subject to prescribed investment thresholds and restrictions on the typeof services eligible for testing. This will support innovation and financial services, as well as helping to retain Australian start-ups and attract talent from around the world. We're funding the CSIRO and Data 61 to develop use of block chain or distributed ledger technology in government and the private sector. We also recognise the potential for digital currency or Bitcoin to reduce fraud and inefficiency in payment systems and today, just today as the Finance Minister reminded us before we came into the House, measures passed the Parliament today to incentivise investors to direct their funds toward innovative, high growth potential start-ups. Concessional tax treatments are now available for investors who support eligible innovative start-ups, and early stage businesses, including a 20 percent non-refundable tax offset on investment capped at $200,000 per investor per year with a new ten year capital gains tax exemption for investments held for three years. So we're backing innovation.
We have a defence plan for local high-tech manufacturing and technology. Big improvements in the nation's defence capability, also support innovation and skills development in advanced technologies. Through the White Paper, we have made the decisions that others refused to make over six years. We made the decisions that they couldn't make, that they couldn't bring themselves to make or just didn't want to make under the former government. We made those decisions and that has established a pipeline for work that will secure an advanced defence manufacturing industry here in Australia, driving new high-tech jobs for decades.
The Budget also invests in public/private partnerships through our cyber security strategy. So often successful technology ventures have started by solving complex problems for governments. That is why these investments are not just about national security, but are an important part of our economic plan for jobs and for growth.
The export trade deals you are all very familiar with and I want to pay particular tribute in this place today to Andrew Robb who is the finest Trade Minister this country has ever had. An absolutely extraordinary public servant here in our Parliament and I wish Andrew all the best as he leaves the Parliament at the next election. His achievements in trade have set this country up for generations and we all owe him a great debt for his work and I have no doubt that Steven Ciobo will emulate his great success, so no pressure Ciobes, no pressure, mate. And India is his next challenge and the European Union and that's where he's heading and I know he'll do a great job.
We recently concluded the trifecta of trade agreements with China, Japan and Korea that cover a greater share of our exports than all of our previous trade agreements combined. We now have preferential access to all these north Asia powerhouse economies, including China's burgeoning services sector. And just as the Australian economy is transitioning, many of the economies of our region are also experiencing transitions of their own, most notably in China where we now see the sinking of our economies as China moves into a consumption economy from a production economy, and we move from a resources investment boom into a broader-based, more diversified economy where services are an even greater part of what we do. Not letting go of what's happening in our resources sector, production volumes continuing to increase, market shares continuing to penetrate into these markets because of the high quality product and the efficiencies in our resources sector. But in the services sector, in tourism, a million visitors from China, we've reached that mark and they're spending and they are spending and they will spend more. The international education sector and the opportunities there. The health and human services sector, of enormous opportunity, and this is being opened up to us as these markets demand our high quality services and so this is an enormous opportunity ahead for all of us.
There will be tax cuts incentives for small business and hard-working families. It's small and medium businesses who are driving jobs growth in Australia and they must continue to do so and we must give them every support to do so. They are also overwhelmingly Australian owned and more likely to reinvest their earnings in future growth as they seek to build their businesses. A tax on their business is a tax on their enterprise which ends up being a tax on the jobs that they create through their enterprise. If you are going to have a national economic plan for jobs and growth, then you've got to support the businesses that create the jobs and that create the growth, that's where it comes from. When they invest, we all win. It lifts everybody's boat.
The cut in the tax rate to 27.5 percent for small businesses and the threshold increase to $10 million will back them in to continue the job they are already doing to drive our economy forward. It means these businesses will also be able to access other incentives available to the small businesses previously under $2 million. 870,000 businesses employing 3.4 million Australians will have their tax rate reduced. Including a 2.5 percentage point cut in the tax rate for up to 60,000 businesses with a turnover between $2 million and $10 million, employing around 1.5 million Australians. Failure to extend the tax relief to all of those companies in the $2-$10 million and including the increase that we're offering to unincorporated businesses, will lock out 100,000 businesses. 100,000 businesses, incorporated and unincorporated and the 2.2 million people who work in those businesses. If the cut in the tax rate for those companies is denied them. Anyone who wants to do that doesn't get what's driving this economy. They don't get what's going to drive jobs and growth into the future. This Government does get that and that's why we've done it and that's why we'll continue to lift that threshold over time to ultimately extend it to a position where the company tax rate will be able to reach 25 percent and ensure that we sit in a competitive position right across our region and right across the world.
These measures together will reduce revenue by around $5.3 billion over the next four years. This reduction is fully offset by the increased revenue derived from revenue integrity measures in the Budget, and we are also broadening the middle income tax bracket from 1st of July to increase the upper limit for middle income taxpayers from $80 - $87,000 per year. Those earning average wages, full-time or otherwise, should stay in the middle income tax bracket. This will stop around 500,000 taxpayers from facing the 37 percent second top marginal tax rate in each and every year. As I said to you, the last time we gave it in February, we do this because we know a dollar in the hands of the person who earned it goes further and is better than the dollar being placed in the hands of Government. I joked that if it's going to be in the hands of someone who's earned it, they're more likely to turn it into $2 in the future. If you leave it with the Government, they're more likely to turn it into 50 cents and we don't want to see that. Governments make good investments, and we make good investments in this Budget, but we know the money is better in the hands of those who earn it, and that's what drives jobs and growth. And it's one of the other reasons why we are not going to go down the path of changing negative gearing rules. This would only increase the tax burdens on Australians just trying to invest and provide a future for their families. We do not consider that taxing these Australians with Labor's housing tax, by taxing them more on their investments, including increasing their capital gains tax and undermining the value of their own home and their investments is a plan for jobs and growth.
Consumer confidence is closely linked to confidence in the value of your own home. Household consumption is one of the key driving factors in our economy as we saw from the December national accounts. A housing tax would undermine confidence going forward and that's not something that supports jobs and growth. A sustainable budget with crackdowns on tax avoidance and on those loopholes and I know Chris Jordan is here today. He is our tough cop on the beat when it comes to cracking down on multinational tax avoidance and he is off to a ripping start. Armed with the multinational tax avoidance legislation that we passed through the Parliament, no thanks to the Opposition. They talk a big game on this, they talk an extraordinary game on this, but what did they do in six years when it came to multinational tax avoidance? Pretty much zip, zero and nothing. What have we done? We put legislation into the Parliament which armed our tax office to go out there and ensure that these laws would ensure that profits don't get shipped off our shore where they don't attract tax and we've backed that up in this Budget. We've backed it up with a thousand-strong taskforce led by the commissioner to go after this, and in addition to that, to add a new diverted profits tax that we've picked up from the UK. The only penalty rate you will see in this budget is the penalty rate we're putting on multinationals who seek to shift their profits offshore and not pay tax in Australia. They will pay 40%. They won't pay the corporate rate on that, they will pay 40%. It has been successful in the United Kingdom and I commend George Osborne for putting this on the international agenda of tax and we are only too happy to take it up and ensure that its part of our own tax architecture.
On superannuation, we need to ensure that our system is focused and sustainably supporting those at risk of being dependent on an age pension in their retirement. That's the purpose of superannuation. That's why it is there. And you structure your superannuation tax incentives and other arrangements to address that purpose. And in the changes we announced last night, we are making that fit for purpose. The balance cap transfer of $1.6 million will affect just 1 percent. Just 1 per cent of superannuation fund members. 30 per cent tax on concessional contributions, those earning over $250,000, again just 1 percent. Establishing a lifetime non-concessional contributions cap of $500,000 - again, just 1 per cent. And reducing the annual cap on concessional superannuation contributions to $25,000 - just 3 per cent.
What we've done in that is we've raised $6 billion from the top 4 percent of wealthy Australians who are gaining access to those tax concessions, and we've invested that back in the other 96 percent, particularly those on low incomes through the introduction of the low income superannuation tax offset, that's what we've done. We've invested $3 billion of it back into a more fair and more flexible system for those on lower incomes and dealing with the work-life challenges they face - carers, women, others who have not the traditional work pattern, couples seeking to save together by lifting the threshold to $37,000 where the primary income earner can invest in the secondary earner's superannuation.
Extending the rules out to the age of seventy five for those who keep working all the way to seventy five and want to make additional contributions, or may choose to downsize their home and invest part of those proceeds back into their superannuation retirement account which they can't do at the moment. But as a result of the measures in this Budget, they can. And these are important reforms and we've invested the other $3 billion back into the earning economy through the changes that we have made.
In health, and education and roads, we give the guarantees. Not with money that is not there, but with money that we have saved. Money we have saved, we are spending on education and schools. Money we have saved we are spending on hospitals. Money we have saved we are spending on the roads and the infrastructure and the dams and the public transport all around the country, supporting the investments of state and territory governments. Money that we have saved. Not money that we are raising taxes. We don't tax and spend as a government. What we do is we save, we spend cautiously and we reduce the deficit.
You will never chase the higher levels of spending that everybody would like with higher taxes. It is a self-defeating purpose. It will all come to a grisly, grisly end if you go down that path, but that is what our opponents are suggesting and we're not going to do that. A 26 per cent increase in funding for schools over the next four years. A 33 per cent increase for public schools over the next four years. Real money, real commitments, things that parents can believe in and back in because they know we've saved them money to provide it and it will be tied to outcomes as well.
Finally and just briefly, and this is an area of passion for me, and that is getting young people into jobs. Twelve per cent of young people aged under 15 in 2012, growing up in a family where no one has a job. I don't know if that's the experience of anyone in this room today, maybe it is, maybe it's not. But they are out there, those kids, growing up in those families, and I can tell you, from my experience, like that young fellow in my electorate, if someone doesn't get alongside them, and give them an opportunity and connect them up to a job, then they're resigning their life to a life of no choice and we can't afford that. The country can't afford that.
What we need to do is we need to try new things. There are things we have tried that haven't worked as well as we would have liked them to work. That doesn't mean they weren't noble efforts, it just meant that this is hard, it's incredibly hard, but we have got to try new things and that's what we are doing with our path program. We are taking $750 million from programs that frankly weren't doing as quell as we would have liked them to do and we're going to put it into a new program and it does three things.
First, it answers the question to the young people who said to me when I was social services minister and at other times in my career, "we need someone to help us just understand what employers want". I'm lucky, my parents taught me the values and the things I needed to know and they are here today. I'm lucky. There are many of us who are like that. But there are so many young people in this country who through no fault of their own have not had that opportunity and as a society we need to connect up with them and have people like Kellie Checkley in my electorate who will devote themselves to them and back them in to get that young people ready, to turn up to a starting line and a job and get them to that point.
After that they go into an internship that they craft together with their job service provider and together with that employer and they create the opportunity together. They get continued to be paid their welfare support, plus an additional $200 and that is real work for the dole, in a real job, with a real employer. And then after that, they go to stage 3 and they go into a wage subsidy arrangement where they continue to get what is in effect their welfare payment with a top-up coming from the employer.
And at the end of that six months, it's up to them. It's up to them about where they go from there, but I know this: business people in this country, there is nothing more that pumps them up than seeing a young person getting a job and actually succeeding in that job. It's not all about the profits, we all know that. Not all about the sales and all about the revenue. I mean, the thrill of seeing a young person come into your business and get that opportunity and succeed, you can't match I don't think, when it comes to creating those opportunities for our future. So we are going to back that in. We are going to invest in it. We're going to give it everything we've got, and I want to commend Michaelia Cash, Senator Cash for being a real engine of this and developing it up with the rest of us to put this plan into the Budget.
So to conclude, here is the plan, in case you missed it. It is a plan for jobs and growth, you may have picked up, for a stronger new economy as we transition from the resources investment boom to a new more broader and more diversified economy, and it has six key things that we want to do. An innovation and science program for start-up businesses, a defence plan for local high tech manufacturing and technology, export trade deals to generate new business opportunities, tax cuts and incentives for small business and hard-working families, a sustainable Budget with crackdowns on tax avoidance and loopholes and guaranteed funding for health, education and roads.
If we do that, and young people like that young man in my electorate will have a bright future and so will all the rest of us.
Thank you for your time and attention.
Q & A
Okay now it's time for questions from our working press. We have quite a few of them so I would ask our gallery to try and keep their questions to one each. Perhaps even the answers brief Treasurer. So we might move on and begin with The Australian.
Thank you, Chris, thank you Treasurer for your speech. David Crowe from the Australian. I have a question on superannuation, a big theme in this budget. Your $500,000 lifetime non-concessional cap is going to apply to fund balances from 2007. Your $1.6 million cap on balances will impact savings built up under the existing rule. How do you justify those two changes when you've said in the past that you absolutely guarantee no retrospectivity on superannuation?
I don't believe this is retrospectivity but others can have whatever view they may wish to argue for. The changes as I said they were, it's a $500,000 lifetime cap for non-concessional contributions, as of 7:30 last night. Now if people have contributed more than that up until this point, more than that, well we won't be asking them to take it out of their superannuation account. It will be able to remain in that account. So that is on the $500,000.
The $1.6 million is the ceiling height for passage into retirement savings accounts from the 1st of July 2017. And what that means is you get to keep all your own money, it's your money, you earned it, good for you, congratulations. If you've got more than $1.6 million in a superannuation account, you're in the top 1 percent and you've worked hard to get there, and that's fabulous, that is fabulous. We want to see more people achieving that. We're not envious, and we don't actually like to say to people who are making that effort and doing that well that somehow they're the problem in the country, I don't think they are. But that $1.6 million is the limit, if you like, like a means test on where you can access tax-free earnings in your retirement. So from 1 July next year, there will be no more $5 million retirement income accounts receiving tax free status. What I hope will happen, they can put them into accumulation account in terms of the excess, or they can go and use the new incentives that passed the Parliament today to invest in new technology, in new businesses, to free up the capital of those in their wealth phase, in their retirement. We'd love to see that. But it's their money, they earned it, they can put it wherever they like.
The Australian Financial Review.
Laura Tingle from the Financial Review, Treasurer. Everything is connected to everything and Credit Suisse today has talked about how as a result of these superannuation changes a lot more money is likely to go into negatively geared property which brings us back in a political sense to the housing affordability issue. The Government has rejected Labor's approach on negative gearing, but does the lack of any measures on housing affordability in last night's budget suggest that you don't believe that there is a budget intervention to make to deal with the housing affordability issue?
Well, not surprisingly, Laura, I don't agree with the premise of your question. But – and Anthony Albanese said today that he said the negative gearing wasn't about housing affordability. So I assume Albo agrees with that as well. But when it comes to the negative gearing changes, where people go and invest their money, if they've excess capital above $1.6 million is their business. I'm not going to tell them where they invest it. We weren't telling them how to invest it necessarily on the way through, that may have been a very good reason why they were able to accumulate it so well over the course of their working and investment life. But where they invest it is up to them. The principles around negative gearing have been around, as the Prime Minister said yesterday in the House of Representatives, for over 100 years, and they're predominantly used by police.
One in five police officers in this country engage in negative gearing, one in five. One in five. And, in addition to that, nurses and teachers and you know all those numbers. And so that's who's engaged in negative gearing providing for their future. And if they can do that to provide for a better retirement income for themselves outside of superannuation, well good for them. They're the decisions they're making and I don't intend to get into the way of that decision. We know that they're doing that to support themselves and their families over time. But the other point I'd make about housing affordability is this, APRA as you know, late last year, and the Reserve Bank Governor has made a number of observations on this, and one of the reasons why they felt they had the room to be able to reduce cash rates yesterday, is because the APRA measures had been effective in actually cooling off some of the more heated elements of some of our property markets around the country. So that was effective intervention by a federal regulator. So that was a good plan and it's a plan that took the heat off the top of the market.
Now what Labor is doing is suggesting that they take a housing tax sledgehammer to the market. Now I don't think that's a good idea, I just outlined in my statement by saying household confidence is seriously underpinned by someone's confidence in the value of their own home. I mean, of the 0.6 growth in the December national accounts, the contribution to that of household consumption was 0.4. Now if you want to see that go south, go and undermine the value of someone's home by whacking on a Labor housing tax. And so that's why we think it is a bad idea and that's why we don't intend to change it and we intend to continue to give those one in five police officers that opportunity and all the others who engage in it, the opportunity to provide for their future.
Mark Riley, network seven, Treasurer. I was rather taken by the depiction on the front of the Tele's wrap around today of you as super banners, as I'm sure you were. We know what's under the suit, don't worry.
What are you sharing, mate?
RILEY: Not mine, Treasurer. When you look inside that excellent coverage at the cameos, there was a bit of money there for people on $250,000, a couple of thousand, but for people, families earning $80,000 and below, kryptonite, the best is zero. So those people are going to be paying $5 more on prescriptions, they're going to pay a larger gap at the GP because the Medicare rebate is being frozen, they're going to wait longer for increased childcare benefits, the Family Tax Benefit changes are going ahead, the school kids bonus is being abolished. Is this the price that those families have to pay for jobs and growth?
Well you've outlined a number of measures, Mark there. One of the ones you didn't mention was that in our first budget we got rid of the carbon tax and we kept the tax relief that had been offered by the previous Government as compensation for the carbon tax.
Now the thing is when you get rid of a carbon tax and then you keep the tax relief, that turns from being compensation to a tax cut. The value of that tax cut was around about $300 for those earnings less than $80,000 a year. And so that was what we did in our first budget, and equally you're right to point out that those who earn less than $80,000, particularly those who earn less than $60,000, are quite considerable beneficiaries of income support payments. In fact you can have a household income of up to $80,000 together, and pay no net tax whatsoever – absolutely no net tax. And so they are significant beneficiaries of the system, and the generous system and the appropriate system, I mean we obviously need to keep working on that system to make sure it's affordable and they are recipients of that.
But if you want to control the welfare system and its costs over the future, we need to do the things we've talked about, but putting young people into jobs is one of the best ways to do that. There's no doubt about that in terms of what it means for the future of the economy. But for those earning under $80,000, we're not touching negative gearing and there are many of those under $80,000 - two thirds of people who engage in negative gearing have a taxable income of less than $80,000 as well, and on top of that, the low income superannuation tax offset, that is delivering even more to them, enabling them to save for their future. On top of that, the measures that involve the primary income earner to be able to invest more, in the lower income earner's superannuation I think there's another measure.
But in this budget you won't find the sweeteners that maybe some people were looking for. What you will find is a national economic plan to drive jobs and growth and I don't know if Ewen Jones is in the room, he might be or he might be doing a live stand-up somewhere else in a club in Canberra, but Ewen Jones has reminded us daily of what people are going through in Townsville. They don't need sweeteners; they need this economy to grow.
Michelle Gratton from The Conversation. Mr Morrison could I ask you about a very important non-budget decision that you've made in the last week or so, although it's related very closely to budget issues of investment and productivity and the like, and that is on the sale of the Kidman empire. I noticed that when you rejected this first time around you put a lot of emphasis on FIRB's recommendation, but in your press conference the other day you didn't mention FIRB or your statement. I just wonder whether FIRB gave any advice second time around on this matter?
Well FIRB always give advice, but it's my decision. The decision I outlined last week was a preliminary decision, and we were following a natural justice process in relation to that decision – that is the appropriate process, for me to advise where my preliminary position was, and give them the opportunity to respond, but I was very clear about it, that occasion, on the first occasion. On the first occasion, yeah clearly there were national security issues, but I also said that I had great concerns about just how large this holding was. And my view has not changed about that now, because yesterday, Dakang withdrew its application and have walked away from that. That's their call, and as a result of the decision I took last week, then Australia's largest land holding will not be sold to foreign interests. I make no apology for that, no apology for that whatsoever. I consider every single one of these cases on their merits. I have been criticised for other decisions where I have said yes, I've been criticised for other decisions where I have said no. But on this occasion, there's got to be a limit and it was just too big, and I wasn't going to say yes. Ultimately, having considered all the factors that were there, and I am surprised that Labor had a different view. But if Chris Bowen is the Treasurer on the other side of the election, well, I suppose we know what he'll do.
The Sydney Morning Herald.
Mark Kenny from Fairfax, Treasurer. Can I just take you back to the first question, a couple of questions we've had so far on this issue of the lifetime cap, or the cap on superannuation accounts of $1.6 million. There are numerous quotes of you on the record, I have one here - I have a whole list of them in fact – of you talking about this very thing, and you make the point that Australians who are saving over their lives have a right to understand that the rules in the retirement phase won't change, that they have a right to expect certainty. And you've described changing those rules in the retirement phase as retrospective by nature and certainly – and at other times you've called it technically retrospective. Why is that not the case now, given that – you know, it may be that this change takes effect from the first of July next year, but people have been saving under these rules for a long time.
The simple thing is I have not changed the tax treatment of retirement accounts. Those retirement accounts, those retirement accounts in the retirement phase remain tax free. We are not taxing the earnings out of retirement phase accounts. Full stop. What we've done is we've set a limit on what can go into those retirement accounts. That's a different position. And it's one I'm very comfortable with. I'm not uncomfortable with the fact that we put a cap on how much can go into a tax-free earnings investment made possible by the taxpayer. But I have not changed the tax treatment and nor do I propose to change the tax treatment of retirement phase superannuation accounts.
Treasurer, Kieran Gilbert from Sky News. For the first time in the nation's history we have seen the foreign aid budget cut four times in a row. It's down to, I think, it's 0.22 percent of GNI, the generosity index, they call it. It's a record low. In your maiden parliamentary speech you said, you spoke of the importance of foreign aid and you said, "The need is not diminishing, nor can our support, it's the Australian thing to do." That was in the context of the aid budget going up in 2008. David Cameron, fellow conservative politician, said he was not going to balance the books on the back of the world's poor. Are you disappointed as Treasurer on behalf of the Prime Minister as well, that you can't say that today?
In that speech I said Australia needs to be strong, it needs to be prosperous and generous. When I gave that speech, this country had a $20 billion surplus. When I gave that speech, we had $40 billion in the bank, and Labor blew it all. They blew it all, with reckless policies that set fire to the budget and they eroded our capability to do the very things that I, and I know Julie, aspire to do. But when you get a Labor Government who comes and sets fire to the budget like that, it diminishes your capacity to do the things you'd like to do. There are costs and there are consequences to reckless financial management. And that is one of the costs and consequences. It's regrettable, it grieves me, I know it grieves Julie terribly. But don't elect a Government that's going to set fire to the budget, and then you won't have to worry about that. We will continue to build our budget back up and I hope to one day be able to achieve what I said in my maiden speech, that we can once again be strong and prosperous and also generous.
More debt than us. Just quickly the British have more debt than us.
I don't think you get supplementaries KG. Standing orders would have to be changed, Mr Chairman.
Treasurer, Catherine McGrath from SBS television. I think many people would applaud the job program, the tax cuts and the cut in small business tax rates. But you were obviously in the party room yesterday when Andrew Robb talked about the importance of hope for Liberal Party members, Coalition party members, as they campaigned, that voters must have hope. What hope is there for young people concerned about the lack of intergenerational transfer of wealth, buying a home and also about 90,000 people who might be pushed off disability pensions from this budget?
Well I make no apologies for ensuring our welfare system is tight and focused. I know Christian Porter would completely agree. If you want to protect your social safety net for the future you have got to keep it tight and focused. For the first time under this Government, the number of people on the disability support pension has actually been falling. It doesn't mean we are not committed to supporting people with disabilities. I think it means we are committed to supporting people with disabilities, because we are ensuring the system is focused on those who most need it.
What we're offering the country with, with our national economic plan for jobs and growth, is the hope of that strength and that prosperity, and the inclusion of that prosperity to reach to our most vulnerable young people with the sort of program I talked about in my presentation, the hope of a job, the hope of choice, the hope of a future backed by having a Government that believes and is invested in seeing economic growth as the path to achieving that.
Treasurer, Tim Shaw from Radio 2CC. We opened up the talk-back radio lines this morning and got our listeners here in Canberra to rate your budget.
As long as they weren't rating my tie.
Well ten out of ten from a Liberal Senator from the ACT. Four out of ten by the winemaker. He says, look the WET tax delay is costing me money, but in the same breath he got an order from China. He was in the Australians in China week. We also got Dave the butcher, he says he's looking at taking on a young person and also involving renovating the business. But the most concerning call was Maurie, he is 73. He and his wife are pensioners. He likes working, he works one day a week. He said can you ask Scott Morrison if I work two days a week I get penalised on my pension. Then the young woman that employs disabled people here in Canberra. She says - where are the job support for us to employ more disabled people. So we appreciate the support the youth employment initiative you have announced but where are the measures for the older Australians, the pensioners and also those disabled that want to work and contribute to your jobs and growth?
In last year's budget, we made, in our first wave of retirement income changes, we changed the taper rate for access to the part-pension. We changed what was previously there, which said you could have a million dollars and your own home and get a pension. It was unaffordable. Totally unaffordable. Just like the changes we've made to superannuation this time, we have applied the same process. Now if you have lost a pension, then you have $780,000 in assets in addition to your own family home. And we ruled the line on that last year and we invested, as Cassandra Goldie will know, because she worked very closely with us on this, and Ian Yates I think is here somewhere, and we invested part of the savings back in improving access to going from a part-pension to a full pension for those on very, very low levels of assets, and we thought that was a balanced and fair reform. And amazingly, even the Parliament approved it. And we were able to get that through the Parliament last year in one of our significant reforms. So you've got to apply fairness to these things and we seek to do that. $780,000, or thereabouts, is the cut-off point for accessing a welfare aged pension, in addition to the assets you have in your family home and we made those changes last year.
The youth path initiative which I outlined today, I think absolutely demonstrates our commitment to getting people in jobs and there is no reason why that can't also extend to those with disabilities, necessarily. There are already a plethora of programs which do try and support young people with disabilities, and others with disabilities into jobs and I think you can take it that the Government will continue to try to improve these and make them work anywhere and everywhere we can, because it is – you know someone who has a disability, and there's someone very close to Jenny and I who have that, he works – and he's had his condition for quite a period of time. The example he was able to show to his boys, by working and showing that his disability wasn't going to stop him from being all the things he wanted to be, was inspirational and we want to see more disabled people doing that.
The Herald Sun.
Treasurer, Ellen Whinnett from the Herald Sun. Your budget contained $857 million for the Melbourne metro under the asset recycling initiative. Given that the Port hasn't been sold and we don't have a final price on that, would you commit to increasing that allocation if a higher price was achieved, to ensure that Victoria gets its full 15 percent privatisation bonus?
Well we'd have to address that if that eventuated.
That was short and sweet. News.com.au
Good you've got more time to answer my question. Malcolm Farr from news.com Treasurer.
If you're nice to the Sharks you'll get a lot of time.
FARR: Thanks for your address. Can I go to something that wasn't in the budget, and it might seem strange, given we have a 1.6 trillion dollar economy, but it's a real issue. Why haven't you abolished the five cent coin? It has lost its utility in a cashless marketplace. It's a nuisance and it costs 6 cents to make a 5 cent coin. I would have thought living within your means, you would address something like that.
Well Mal, if you can get as many people in this room again who are interested in that topic, I'll answer your question. I mean, I'll take it up with the Reserve Bank Governor, Mal. Why don't we get some questions on the Budget. Thanks.
Maybe you can make it in South Australia, it costs 10 cents.
Treasurer, Andrew Probyn, from The West Australian. I thought his question was actually quite a good one, Treasurer.
We'll get 500 more of your mates and we'll do it next time.
Can I refer to a tax and spend proposal that's been in a previous budget, that was effectively affirmed in your budget yesterday. It's the backpacker tax. Now, I understand that you told one of my colleagues on the weekend that the agriculture and tourism sector effectively wanted a subsidy. You were under enormous pressure to dump this $540 million revenue raising effort. And in fact I understand that Richard Colbeck and his colleague from Queensland, Mr Pitt, came up with a proposal, a revenue neutral proposal, that was a 19 percent tax increase on superannuation for backpackers, 60 rather than 38, a campaign with Tourism Australia, and also extending holiday visas to Greece, Israel, Hungary and Vietnam. One of your other colleagues, Liberal colleagues, said it looked like an absolute no-brainer to him. So why didn't you accept it straightaway and merely, as you suggested last night, say that you might rethink this policy before it comes to effect on July 1?
The government isn't contemplating that proposal and we are not proceeding with that proposal. And I think in part you outlined the reasons why, when it comes to our view about taxing and spending. I mean, the changes to arrangements for 417 visas I think it is or 418 visa holders meant they are treated like all other non-residents for tax purposes. That was the change made in last year's budget. We've been in consultations with the sectors about those and those consultations are continued. But it's actually quite a complicated issue, Andrew. I mean what we're basically saying is there is a part of the economy and it's not clear which part of the economy, does it extend to hospitality or does it – is it just in agriculture? Which industries? In abattoirs? It's not particularly clear. There are labour market issues that are relevant here, where the different classes of visas are necessary. There is already visa arrangements in place for what were the guest worker programs which were introduced by Kevin Rudd. There are a lot of complicated issues here and I don't think we've actually resolved it at a point yet where I think we've got good policy. I'm not going to back-policy which I don't think is good policy. So that issue remains live Andrew, but the proposal you're talking about is not one the Government's proceeding with.
Treasurer, AAP, Colin Brimston. The business world obviously is congratulating you on your tax cuts, an aim of 25 percent. But ten years seems a hell of a long time. Isn't there a risk that in that time the world will move on and we could still be one of the highest in the world?
Well there is that risk. But you've got to do what you can afford. You've got to do what you afford and that's what we're doing in this budget. And wherever we get the opportunity to move more quickly in reducing the tax burden on the Australian economy you can rest assured we will do that. Our opponents have the complete opposite idea. Their plan is to put a $100 billion tax burden on the Australian economy at this most sensitive time. Not to reduce the tax burden in other areas, but they're chasing there higher and higher unsustainable spending. Now that is what puts our transition at risk and that is why we are not taking that approach. But what you'll get in the budgets that I deliver, is spending that we can afford, measures that we can afford, and measures that we can guarantee.
Last question from the Adelaide Advertiser.
Treasurer, Tory Shepherd from the Advertiser. Thanks for the subs. There was a cracking front page on the Courier Mail with a picture of you and a headline, "Hello ladies", talking about how the budget was there to woo women. But Sydney University and ANU have done some analysis and they say actually only 29 percent of people who benefit from the tax cuts will be women, they say it's a budget for blokes. So, which is it?
Well again, I noticed the interest in the sort of winners and losers analysis, but the changes that we make particularly to superannuation, I think are very important for women. One of the – there are a number of changes there. Obviously the low income superannuation tax offset, that benefits around 2. 2 million I think, women, around about almost two thirds or thereabouts of the beneficiaries of that measure. The ability to actually lift up, lift up, secondary income earners in a family by having more contributions being able to be made into their superannuation funds, by the primary income earner, benefits women. The ability to have a rolling five-year cap on concessional contributions to superannuation is designed for women who would have been out of the workforce for a period of time, but it also supports carers, and where then they're in a position to take advantage of that, then they are giving those opportunities to do that. So our superannuation changes aren't about revenue. They do raise revenue, there is no doubt about that. But they are also about providing flexibility and to see the changes in work life patterns that people over the course of their working life, and that is particularly to acknowledge that those changes are usually most disruptive for women. But everybody benefits from a growing economy. Everybody benefits from a growing economy. I mean mothers benefit by their kids getting jobs, particularly if those kids have had difficulty getting jobs. Fathers benefit by that. Brothers benefit by that. Sisters benefit from all of that. We have got to stop looking at the economy as if it's a whole bunch of individuals, and they're all looking for their little bit out of the Government. If that's the sort of country we're going to run, we'll run it into the ground and we'll run each other into the ground. Australians are over this class warfare thing, they're over the us and them. They're over it. They know the big economic challenges that are out there facing them and their future and what they want from us is a strong economic plan that gets them to that other side. The side that they're working hard to get to. They're not interested in our petty arguments. They're interested in our plan, and what we put in this budget is our plan, and I believe they'll back our plan. Thank you.