NEIL MITCHELL:
Treasurer good morning.
TREASURER:
Good Morning Neil.
MITCHELL:
Ok, I was told the price of going to the doctor is going up, your reaction to that – because of the Budget.
TREASURER:
Well I see no reason why people would say that Neil.
MITCHELL:
Cos you’ve frozen the fixed rebate.
TREASURER:
Well this is a continuing policy and we’ve continued that pause. That pause has been in place for some time now and that will continue.
MITCHELL:
And doctors are saying well we’ll put up the bills to cope with it.
TREASURER:
Well that’s a decision for doctors, it’s not a decision of the government.
MITCHELL:
It’s a side effect of your budget.
TREASURER:
Well no, the pause has been in place now for some time Neil and it’s been extended because in this Budget what we’re doing is we’re not spending more than we save. It’s an economic plan to support jobs and growth and to do that you don’t tax people higher to spend higher which is what our opponents want to do.
MITCHELL:
Look, we can get to the message in a moment, but do you say that doctors shouldn’t be putting up their fees?
TREASURER:
Well that’s a decision for them and I would expect them to continue to do what they have been doing because this is a continued pause.
MITCHELL:
Ah the debt’s huge, spending up, what happened to the budget emergency?
TREASURER:
Well spending as a share of the economy is actually coming down. It’s 25.8% and…
MITCHELL:
… it’s still pretty high.
TREASURER:
… it’s on its way to 25.2%. I agree Neil and we’ve had this conversation many times.
MITCHELL:
But it’s up $19 billion.
TREASURER:
Well in nominal terms there’s been no change from what we were saying back in the mid-year statement, back in December and we’re continuing to keep spending under control and we’re also meeting our commitments on health and education. We’ve got additional commitments there and they have to be paid for.
MITCHELL:
So is the budget emergency over?
TREASURER:
Um, Neil what matters is what we need to do now and what we’ve got is a national economic plan to support jobs and growth…
MITCHELL:
But is the budget emergency over Treasurer…
TREASURER:
… and not spending more than we save.
MITCHELL:
… is it finished? Is it gone?
TREASURER:
Neil, Neil ….
MITCHELL:
…we were told three years ago.
TREASURER:
…they’re tired old arguments Neil.
MITCHELL:
Well it was your party that put them. It was Tony Abbott who said “there is a budget emergency, we have to be serious here”. Has that emergency time gone?
TREASURER:
Neil what we have to continue to focus on is getting the deficit down, to get debt down in the future and that’s what we’re doing in this budget.
MITCHELL:
And why are we doing it now?
TREASURER:
I’ll leave it to all the commentators to carry on about what was happening two years ago, five years ago…
MITCHELL:
But that’s not unreasonable to carry on about. It was your Government who said “there is a budget emergency, we have to do something responsible”. Has that budget emergency now gone?
TREASURER:
I’m more interested in an economic plan Neil, I’m not interested in tired old arguments about old politics.
MITCHELL:
Tired old arguments by your own government be fair.
TREASURER:
Well Neil, we’re getting on with the plan that’s going to deliver jobs and growth and that’s what we need. This is not a document which is about politics, it’s about policy. It’s about jobs and growth, and that’s what the country needs.
MITCHELL:
Welfare’s up. Welfare over 4 years is up to $190 billion, 13% up. Is that too much?
TREASURER:
Well the welfare budget, we’ve got about 8 of 10 income tax payers who’ve got to go to work everyday to ensure we can meet those bills and the best way to get welfare down in the future is to get young people into jobs. That’s one of the key things I learnt when I was Social Services Minister.
We’ve got 12% back in 2012 of young people growing up in jobless families and if they’re not in a job by the time they’re about 25 then the risk that they’ll stay on welfare for the rest of their life is significant and that’s why we’ve taken money out of employment programs that we just didn’t think were working as well as they needed to.
MITCHELL:
How much will you put aside to spend before the election? How much have you put aside to spend before the election?
TREASURER:
It’s a very modest amount, and I know the figures you’re referring to. What we’ve done in the commitments which are not yet announced is we’d had some plans earlier last year to spend some money on some additional items back in the mid-year statement and we’ve decided they’re not affordable, and that’s what that adjustment is in the out years.
MITCHELL:
So how much had been put aside to spend before the election?
TREASURER:
Well it was a round about, the decision is not yet announced, it is currently around $500 million or thereabouts, but it’s a very modest figure compared to previous occasions going into these arrangements. But all of that will be set out in the election.
MITCHELL:
Well, I know fair enough. Well ok, we’ve talked to the budget emergency what about tax reform, when do we get that?
TREASURER:
Well, I’d say that on two areas in particular we’ve targeted very significant areas of change, in superannuation we’re going to raise $6 billion from the 4% of the top superannuation fund account holders in the country, and we’re going to invest $3 billion of that back into better superannuation.
MITCHELL:
I’d like to get to that in a moment.
TREASURER:
For lower income earners in particular we’re going to invest $3 billion of that back into lower taxes for small and medium sized enterprises.
MITCHELL:
So that’s your tax reform?
TREASURER:
And on top of that we are going after multi-nationals. We’ve got a package there, $3.9 billion we’ll raise over the budget and forward estimates. We’ve got a new diverted profits tax initiative which we’ve picked up from the United Kingdom and we’ve been working on that for many, many months now. We’ve had people over in the UK looking at how that works. And that means that if multi-nationals seek to shift their profits offshore, not only does our legislation that we passed last year, which was opposed by the Labor Party, ensure that we’ll know that they’ve done that, but they’ll get taxed on it at 40% not at the corporate tax rate. So there will be a penalty rate on multi-nationals for trying to shift profits offshore and avoid tax.
MITCHELL:
So is this the tax reform package? The superannuation and the multi nationals, is that it?
TREASURER:
No, tax reform never stops Neil.
MITCHELL:
What’s next?
TREASURER:
You’ve got to keep doing it and the tax measure that we’ve announced in this budget, the revenue that is being raised from the additional tax that we’re able to raise in this Budget has all been reinvested back in lowering the tax burden for small and medium sized businesses and extending, widening out of the middle income tax bracket. Now we think they’re the things that you need to do to support jobs and growth and the estimate from Treasury is this will boost the GDP of the country by about 1 per cent which is around $16 billion.
MITCHELL:
Let’s look at the superannuation figures. You say four per cent of the population. Maybe that is debatable but put that to one side. Is it fair to say that people in that category have woken up today with less money than they went to bed with?
TREASURER:
Well, they will certainly be paying more tax. If you are in the top 1 per cent Neil of people who have superannuation accounts., If you have got more than $1.6 million which the earnings of that is four times what someone on a single aged pension gets and that is more than twice…
MITCHELL:
$50,000?
TREASURER:
Four times.
MITCHELL:
How much are you saying you are making on $1.6 million?
TREASURER:
Well, that would be about $100,000.
MITCHELL:
$100,000?
TREASURER:
That’s the estimate.
MITCHELL:
Oh, the estimates I have seen are $50,000. How do you get $100,000 from $1.6?
TREASURER:
That’s the advice I have from Treasury.
MITCHELL:
How do you get $100,000 out of $1.6?
TREASURER:
Neil, if you can let me finish
MITCHELL:
No, I want to go and invest if I had the money.
TREASURER:
No, $1.6 million is a new cap that you can have in a retirement account which does not attract tax on its earnings and if you have got more than $1.6 million you will have to take the additional amounts and put it back into your accumulation account where it will be taxed at 15 per cent or you could go invest in small business. You can go and take advantage of the tax incentives for investing in technology.
MITCHELL:
And what if you take it out of your accumulation account? What happens then?
TREASURER:
If you take it out of your accumulation account, well, you will pay tax on it wherever you have invested it.
MITCHELL:
But what rate?
TREASURER:
At you marginal rate.
MITCHELL:
Can I take it out and buy a new car?
TREASURER:
Well, you can put it in whatever account you like…
MITCHELL:
No, well, you are talking about the 1.6 and we are putting that off to one side and I’ve got $400,000 left.
TREASURER:
It’s your money you can do what you like with it.
MITCHELL:
At what tax rate do I pay when I take it out?
TREASURER:
Your marginal rate.
MITCHELL:
Your marginal rate. So if you are paying a 48 per cent marginal rate that is what you pay?
TREASURER:
Or you can leave it in an accumulation account where you will pay 15 per cent. It’s up to you.
MITCHELL:
Yes, but the top amount you can take out is what you are earning on 1.6 which you say is $100,000.
TREASURER:
Look, the $1.6 million is the maximum balance you can have…
MITCHELL:
Yes I understand.
TREASURER:
…in a taxpayer supported investment account. Your superannuation account where you don’t pay any tax on the earnings. Now, the average peoples holdings, especially in the retirement phase is around $300,000. This is targeted very much at the high end Neil. It’s going to hit people at the high end.
MITCHELL:
Do you agree it will force people with that sort of money perhaps into the real estate market. Out of superannuation, into other investments, perhaps real estate.
TREASURER:
Well, it may lead to them investing in small businesses Neil. I don’t see what the problem with that is. I think that might be a really good idea.
MITCHELL:
Not a lot of retirees want to take risks, Treasurer. Do you agree…
TREASURER:
Neil, you are talking about people who may have $3 million.
MITCHELL:
Yeah, they may have and they may have $1.8.
TREASURER:
And good for them, they have gone out and earned it and they have built it up over their lifetime and they can invest it wherever they like…
MITCHELL:
Do you think…
TREASURER:
...it’s their money.
MITCHELL:
Do you think it could inflate the real estate market?
TREASURER:
No, I don’t.
MITCHELL:
Why not?
TREASURER:
Well, you tell me why it is? You’re the one making the proposition not me.
MITCHELL:
Because they are taking their money out of super because of the tax problem they have got there and they are saying no we won’t even bother with super. We will go buy a house and live off the income.
TREASURER:
Look, they can go and invest it wherever they like Neil. It is their money. I am not going to tell them how to spend it.
MITCHELL:
I know you have to get away. Thank you for your time.
TREASURER:
Thanks a lot, Neil. Good to be with you as always.
MITCHELL:
Treasurer, Scott Morrison.