22 June 2018
Transcript - #2018127, 2018

Interview with Hamish Macdonald, ABC RN

Subjects: Lower, fairer and simpler taxes for all working Australian; Enterprise Tax Plan; energy

HAMISH MACDONALD:

Scott Morrison is the Treasurer. Treasurer, you told me last night too much ScoMo is never enough. We'll put that to the test this morning. Welcome to Breakfast.

TREASURER:

[laughs] I suspect it's too much for some.

MACDONALD:

[laughs] Let's cast ahead to 2025. You're earning $200,000 a year. How much more will you be getting back in income tax?

TREASURER:

You'll be paying about 30 per cent of your income in tax and that compares to less than – about 11 per cent if you're on about $40,000. So the average tax rate is really what matters here…

MACDONALD:

Well, doesn't the amount matter? What's the amount that you would be getting back.

TREASURER:

Over that seven years, you'll get about a 2.6 per cent tax cut and that compares to over six per cent for someone earning around $50,000 over that same period of time because as you know, Hamish, if you earn more, you pay more tax. I mean, someone on the top rate of tax now, they pay on average the median level around $84,600 a year in tax – that's a lot of tax…

MACDONALD:

You're not telling me the amount though.

TREASURER:

No, I'm explaining the answer…

MACDONALD:

What is the amount?

TREASURER:

I'm explaining the answer, Hamish. If you're earning between $18,237 a day, the average amount of tax you pay is $1,900 so if you're paying $84,600 in tax then obviously proportioned the nominal amount is greater but I can't give an $11,000 tax cut or a $6,000 tax cut to someone who is paying $1,900 in tax.

MACDONALD:

Sure, but if you're earning $200,000 in 2025, you'll be getting an extra $7,225 back in tax. That's correct, right?

TREASURER:

And the percentage reduction – and that's seven years from now, Hamish…

MACDONALD:

Sure. That amount is correct.

TREASURER:

And every year from now until then, if you're earning less than $90,000 then you're getting that $530 every single year and that means you will actually get a bigger tax cut as a proportion of the tax you pay every year over that period and that's why it's fair, Hamish…

MACDONALD:

If you are getting…

TREASURER:

$84,600 a year, people on the top rate of tax are paying now. Over the next seven years, they will pay almost half a million dollars in tax. Half a million dollars in tax they will pay and so the figure you mentioned comes off that $450,000 in tax they will pay over that period of time because as you know, four per cent of Australians who are on the top rate of tax pay 30 per cent of the tax. Now, at the end of our plan, that will go up to 36 per cent and will be six per cent of people who will be on that top rate but 94 per cent of Australians won't face a marginal tax rate higher than 32.5 cents…

MACDONALD:

Can you see, Treasurer, how if you were on a lower income, you getting an extra $540 back but that someone on $200,000 getting over $7,000 back – that might not look all that fair if you're on that lower income?

TREASURER:

They're not even paying $7,000 worth of tax. So, they're paying…

MACDONALD:

Can you understand why it may not look fair to them?

TREASURER:

…$1,900 in tax. If you're on those lower – in those lower income bands and they're getting the same proportion of tax cut. In fact, those on lower incomes are getting a higher proportional tax cut on the tax they pay than someone on a higher income and at the end of the plan, those on the highest rate of tax will still be paying a greater share and an even greater share of the proportion of the total tax paid. Hamish, I'm not going to buy into your….

MACDONALD:

Can you see why – can you see why…

TREASURER:

Hamish, I'm not going to do it.

MACDONALD:

I appreciate that you want to get this train out of the station very quickly. It's an important question though about fairness. Can you see why…

TREASURER:

No, I think it's fair, Hamish…

MACDONALD:

If you're on a lower income…

TREASURER:

Hamish, I think it's fair. You can talk over me if you want. I'll wait for you to finish.

MACDONALD:

Well, you seem to be pretty good at it as well. Can you not see why that might not look very fair if you're on those lower incomes?

TREASURER:

I think that in the way that you've characterised it, Hamish, I don't think it's helpful to misrepresent the fact that those who are on higher incomes will not get a greater proportional tax cut than people on lower incomes. I think people on lower incomes will get a greater proportional tax cut over those seven years than those on higher incomes. I think those – as you move up through the tax scales, as you earn more, you pay more tax. I mean, today, someone on the highest tax rate pays $84,600 on median every year and those earning up to $37,000 pay $1,900. Those between $37,000 and $87,000 pay about $10,500, those who are on higher incomes will still pay an average tax rate almost three times those on lower levels of income and so the progressivity of our tax system is not under threat as a result of what was legislated because what we've done is ensure that everyone in Australia who works, they all work hard, they all pay tax and they all deserve tax relief and we shouldn't be hitting others harder in higher taxes to play some class envy game and some populist game to try and appeal to those who are on lower incomes. We think everyone works hard and we're giving all of them – wherever you are in Australia today, wherever you're going to work – you won't be paying higher taxes under the Liberal-National Government but you will be paying higher taxes under Labor because they are going to hit the economy with $70 billion in higher income taxes if they are elected at the next election.

MACDONALD:

As you say, it's about appealing to the different groups of voters. If we compare your plan with Labor's plan, if you're an entry-level nurse, you'd be getting an extra $540 back under your plan. Under Labor's plan, it would be $948, almost double that. Why would someone…

TREASURER:

What happens if that nurse buys an investment property, Hamish?

MACDONALD:

Hold on. The question is this, why would someone on that income vote for you rather than Labor?

TREASURER:

Because our plan is affordable, it's not based on putting taxes up anywhere else which leads to a weaker economy. See, what we've put in our personal tax plan is part of a broader plan for a stronger economy. Labor doesn't have a plan for a stronger economy. What they're doing is they're putting up more than $200 billion of taxes right across the economy, they're taxing some people more, even more, much harder, and they're taxing nurses like you say, if they decide to take out an investment property – they're going to tax them more, they're going to put their capital gains tax up by 50 per cent. They're going to tax retirees more, $5 billion a year in higher taxes on retirees. They're going to put up taxes on small business, put taxes on family businesses, taxes on superannuation contributions – including for women who are providing catch-up contributions to their super after a break in the workforce for having children. That's not a plan for a stronger economy. That's just a plan for higher taxes so it's an absolute con for Bill Shorten to run around and say he's going to give people lower taxes because what he's doing is putting the tax burden up. Higher taxes is not good for the economy. It costs jobs, it costs investment, it's a weaker economy which ultimately undermines the guarantee we can provide for services like Medicare.

MACDONALD:

Let's talk about the Government's other big tax policy. We're talking about corporate tax cuts. If you don't manage to get that over the line in this next sitting week of Parliament, you certain you'll take that to the next election as a policy?

TREASURER:

Everyone always makes projections about what's going to happen in the Senate, don't they, Hamish? Plenty of people were making projections about what was going to happen in the Senate on personal taxes so we'll just continue to work with the Senate, that's where our focus is and that's what we'll continue to do.

MACDONALD:

That wasn't the question though, you said you'd take it to the next election as a policy if you don't get it through.

TREASURER:

We've made it very clear that we will continue to prosecute our case on corporate taxes and that's beyond next Friday and to the next election. We will always stand for competitive taxes for Australian businesses. Now, just this week, we had an important reminder of why that is so important. Large companies, even like Telstra, they're going through another big structural change. It's 8,000 Australians whose jobs are affected by that. We can't be complacent, just because they're a large business doesn't mean they're immune from what's happening more broadly in the global economy and the changes that are happening. You need a stronger economy for people to go back into the labour market where they're affected by that. Now, that labour market, that economy is not going to be stronger if we insist on businesses paying the Government more tax. It doesn't help.

MACDONALD:

If this is so important and urgent, critical to turbocharge the economy as it's been described, why not work with the crossbenchers in the Senate – some of whom want to compromise to exclude companies with a turnover above $500 million? Obviously the banks are what they have in mind…

TREASURER:

We have been working with the crossbench for ages, Hamish.

MACDONALD:

Why not do that if this is so urgent?

TREASURER:

We are working with the crossbench, Hamish.

MACDONALD:

Sure. But there's a specific detail there which you don't seem to be addressing.

TREASURER:

Because I don't engage in public discussion about the discussions we have with the crossbench.

MACDONALD:

Is that option open though?

TREASURER:

Look, all I'm saying is we work with the crossbench, we're seeking to get our entire Enterprise Tax Plan passed through the Parliament – just like we were adamant about getting our entire Personal Income Tax Plan – because it's part of a broader plan for a stronger economy…

MACDONALD:

But would you compromise on that detail?

TREASURER:

I'm not going to – I don't go into those things in media interviews, Hamish, because we engage directly with the crossbench. I wouldn't have to and Mathias Cormann wouldn't have to engage with the crossbench if Labor believed in more competitive tax rates. They used to. They actually wrote books about it. Chris Bowen wrote a book about why company taxes should be lower to make Australian businesses more competitive. Now, like everything else, with Bill Shorten, they used to believe in, they've flipped on. Now, they've decided to go down that path and make – if they're elected – our economy weaker and people's jobs more uncertain and the services they rely less guaranteed because they don't have a plan for a stronger economy. We do. That's what our personal tax plan passing the Senate showed and we're getting our Budget implemented, it is passing the Parliament and we'll continue to prosecute these cases for more competitive tax rates because people's jobs depend on them. So, you know, we'll engage in good faith, as we always have with the crossbench, and I think we've always continued to surprise on that front and particularly through the great efforts of Mathias Cormann.

MACDONALD:

We will be watching next week. On energy policy, quickly before we go, former Prime Minister Tony Abbott and backbencher Craig Kelly have indicated they're willing to cross the floor and vote against the National Energy Guarantee – the NEG. What would you say to those considering that option?

TREASURER:

I think that's highly speculative and as Craig Kelly himself has said, these issues are still down the track but I know this, the National Energy Guarantee will see lower electricity prices for Australians. The modelling already done by the Energy Security Board shows that to be around about $400 for the average household. Now, what I do know is this, if Labor are elected, their 50 per cent reckless target, their 45 per cent reckless emissions reduction target, that will lead to higher power prices. So, it's a clear choice between Labor and Liberal and National Parties. Higher taxes under Labor, lower taxes under Liberal. High electricity prices under Labor, lower electricity prices under Liberal and National. It's a clear choice.

MACDONALD:

Scott Morrison, thank you.

TREASURER:

Thanks a lot, Hamish.