The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

10 May 2008

Doorstop Interview

Parliament House
Canberra

10 May 2008

SUBJECTS: Medicare Levy Surcharge Thresholds; Budget

TREASURER:

We're just putting the finishing touches on the Budget. I'm heading down to the Treasury and spending the day down there. So, I'm really looking forward to next Tuesday night, delivering on all of our commitments for working families. It's very important to the Government to demonstrate to the people that the platform we put forward in the election last year will be implemented in full in this Budget. So, the centrepiece of this Budget will be to deliver on our commitments to working families who are under financial pressure.

That's why I'm so pleased to make this announcement about the Medicare Levy Surcharge thresholds. Those have been left in place at the same level since 1997. This initiative will benefit potentially up to two million people. It's only fair that they should be able to make a choice, and we're giving them that ability to make that choice. We're going to deliver some justice to these people who've been hit with this surcharge for a long period of time as their incomes have increased.

There's probably no issue on which I've received more representations over such a long period of time than this issue – the unfairness of the thresholds and the reluctance of the previous government to adjust them over a decade. We're making that move in this Budget because we're delivering fairness to working families under financial pressure.

JOURNALIST:

(inaudible)

TREASURER:

I don't accept that, necessarily.

JOURNALIST:

And therefore, surely there would be an upward pressure on premiums, therefore that feeding into inflation?

TREASURER:

This is going to give working families a real choice. They've been hit with this surcharge unfairly. The levels have not been adjusted for a long period of time - $50,000 for a single, we're going to make that $100,000; $100,000 for a family to $150,000. For a decade these levels have not been adjusted and tens of thousands of working families have been caught in this net. It's only fair that these thresholds are adjusted because these people are people under financial pressure. And we have taken the right decision by these people to adjust these thresholds.

JOURNALIST:

You don't accept that anyone is going to pull out of private health as a result of your decision?

TREASURER:

These will be decisions that individuals take over time. But these thresholds have been left in place and have been punishing a lot of families, punishing too many families, and we're going to right that wrong.

JOURNALIST:

So, what's it going to cost, Mr Swan?

TREASURER:

We'll announce all of that on Budget night.

JOURNALIST:

Give us a ballpark figure.

TREASURER:

We'll announce the ballpark figure on Budget night.

JOURNALIST:

But all the people who'll benefit from this, somebody's going to have to bear the pain. Who are those people going to be?

TREASURER:

Well, the people that will gain from this will be those people who've been unfairly hit by a surcharge, and they can take a decision about what they do regarding private health insurance into the future. They've obviously been very reluctant about private health insurance, have not joined and have been paying a surcharge which has been hitting more and more people year after year after year. It's only fair that we adjust these thresholds.

JOURNALIST:

But lots of people have joined because of the high thresholds. So, won't those people come back into the public sector?

TREASURER:

If they're satisfied with their private health insurance, they'll keep their private health insurance.

JOURNALIST:

What about the extra burden on the public health system, if people drop health care insurance and…

TREASURER:

People will make a choice about that. What we are doing to bolster the public health system is very substantial and that will be outlined on Budget night as well. We have very substantial commitments in the area of health and you will see on Budget night a very substantial package which implements all of our commitments when it comes to public health. This will be a Budget which will deliver on all of our commitments in public health, and that will be delivered on Budget night.

JOURNALIST:

What have private health insurers had to say about this? You've said you've received a lot of representations. Presumably, you've been in touch with them, discussed it with them?

TREASURER:

I won't be speaking for them. They can speak for themselves. The people that I'll speak for are the up to two million people who've been hit by this unfair surcharge over a long period of time.

JOURNALIST:

Mr Swan, will parents who are also looking after their disabled children, will they be eligible for financial support out of this Budget?

TREASURER:

There will be some changes in this Budget for parents who've been looking after profoundly disabled children who, by decisions of the previous government, were denied essential support. We're going to right that wrong on Budget night. It's very important. There's a lot of people out there that are bearing very substantial burdens. The previous government's definitions of disability will be looked at and we will deliver a reform package in that area.

JOURNALIST:

Previous budgets have been chock full of goodies and financial sweeteners. Will we be seeing that in this Budget?

TREASURER:

Well, this Budget is going to be a Budget which is dedicated to tackling the inflation challenge, and that means there has to be substantial expenditure restraint and we will be cutting spending in this Budget and rearranging priorities in this Budget. So, what you'll see on Budget night is a new era of fiscal discipline and a new era of investment. There's been a substantial effort in this Budget to pair back the reckless spending of the previous government so we can combat inflation, to build a strong surplus so we can make the necessary investments for the future, and also to provide a very strong buffer against international uncertainty.

JOURNALIST:

Does the rearranging include rearranging tax breaks away from high income earners?

TREASURER:

There's no doubt that we want to see a tax system which is fair to everyone. Average people who go to work each day, pay their taxes, expect everybody else to do the same. And it's pretty fair to say that when we look at some of the tax concessions that are around they do favour many individuals over others. So, I think that what we need to do in this Budget is to pull back some of those tax concessions which are neither fair nor efficient. You'll see in this Budget a real emphasis upon fairness and efficiency in the system. And that will mean the largesse that has been handed out to a few at the expense of the many will be pulled back in this Budget.

JOURNALIST:

Mr Swan, how much money does a high income earner or a high income earning family earn?

TREASURER:

There are people in this country who are in the top five per cent of the income distribution who, in my view, may be the beneficiaries of substantial tax concessions and/or government payments who probably don't need them. So, we do need to have a discussion about who needs government assistance and who doesn't. And I think people who are on the highest of incomes don't necessarily need government assistance.

JOURNALIST:

Can we expect any more last minute leaks or announcements in the next few days?

TREASURER:

Well, you'll just have to wait and see to Budget night.

JOURNALIST:

Firstly, Mr Swan, how have you found the Budget process? Burning the candle at both ends?

TREASURER:

I've found it a challenge, but I've found it also incredibly satisfying. Spending so long going through each of the departments has given me a sense of where the priorities have gone wrong in Australia in the past and making the decisions about getting our priorities right for the future, about getting the fundamentals right is one of the most satisfying things I've ever done in my life and I'm really looking forward to Budget night. It'll be the chance for this Rudd Government to implement all of its election commitments, but most importantly, begin the important process of investing for the future.

JOURNALIST:

As always in budgets, there's the rabbit out of the hat. Can we expect a rabbit out of the hat on Tuesday night?

TREASURER:

I think the Australian people have tired of the approach of the previous government of suddenly turning up on Budget night with a whole lot of bells and whistles. What we'll turn up with is a Budget which is absolutely dedicated to getting the fundamentals right for the long term, tackling inflation, making the investments for the future, and delivering on all of those election commitments that we made during the campaign.

JOURNALIST:

So, no major surprises?

TREASURER:

What you'll see is a Budget which is dedicated to getting the fundamentals right.

JOURNALIST:

Have you consulted private health funds over these changes?

TREASURER:

These changes are ones which will be implemented through the Budget process and I'm sure we'll be having discussions with the private health funds. I'm sure the Minister for Health has talked extensively with them about all of these issues.

JOURNALIST:

You mentioned mispriorities for the previous government. Can you just point to what those were?

TREASURER:

The failure to invest in education, in infrastructure, the failure to tackle climate change, the failure to rein in reckless spending which has put upward pressure on inflation and upward pressure on interest rates. As you know, eight interest rate rises in three years and a slowing world economy will slow growth in this country and have an impact on jobs. What we have to do in this Budget is put downward pressure on inflation so we can grow sustainably into the future with lower inflation. That's the central macroeconomic objective of this Budget.

Thanks.