SUBJECT: Federal Budget 2013-14
BERNIE RIPOLL:
Inside Canberra is Bernie Ripoll, the Federal Labor member for Oxley. Bernie good morning to you.
BERNIE RIPOLL:
G'day Steve.
BERNIE RIPOLL:
And Steve Ciobo is the Federal Liberal Member for Moncrieff. Steve Ciobo good morning to you.
STEVE CIOBO:
Good morning to you both.
BERNIE RIPOLL:
Bernie, did you get any sleep?
BERNIE RIPOLL:
Yes I did Steve.
BERNIE RIPOLL:
Everyone who was seen on the TV breakfast programs this morning just looked bleary eyed and cold in Canberra.
BERNIE RIPOLL:
Look it is a busy night, Budget night. There's plenty on but you know, we can all cope and do the work and still get up early this morning and turn up to a whole range of things.
BERNIE RIPOLL:
Well Bernie you're the Parliamentary Secretary to the Treasurer. Can I ask you what does Queensland need to know about this Budget? What is specifically in this Budget that has been missed for Queensland, can you tell me?
BERNIE RIPOLL:
Well I don't think that anything necessarily has been missed. What I'd say, aside from obviously some key investments in education and in health, very specifically around cancer treatment and extra funding going into there, some Medicare locals, in education obviously funding for schools which people can see every time they drive pass a school, further investments in trade training centres, but very importantly in infrastructure. This Budget is about jobs and growth, and infrastructure is a key part of that.
You need to invest, you need to spend the money there so that you can create jobs and continue to have growth. The alternative to that of course is cutting to the bone and people find themselves without work and they can't pay their mortgages and they can't pay off their house or even buy a house.
Very importantly the Brisbane Cross River Rail $715 million, the Gateway upgrade north. There's $4.1 billion for the Bruce Highway package. It's over 10 years but very significantly, it means government is getting on with the job and putting money where it counts in those areas. And closer to home for me and for a lot of people the Ipswich Motorway. The Rocklea to Darra section; $279 million, so we're going to continue the good work that we started on the Ipswich Motorway upgrade.
BERNIE RIPOLL:
Steve Ciobo, what's not in the Budget that should have been from the Liberal Party's point of view?
STEVE CIOBO:
Economic discipline Steve. What's missing from this Budget is any form of the Government having the discipline required to get Australia back on-track. I mean a number of us have said there's nothing in this Budget that promises a better tomorrow than we've got today. The reality is that this is a government that is completely addicted to spending, a government that wants to be out there making all the big promises and all the big announcements without doing any of the real hard work required.
The fundamental problem with that approach Steve is that over the long term it's completely unsustainable. And that's why I'd remind you Steve last year Wayne Swan when he started his Budget speech last year, his opening words were this Budget delivers a surplus this year, this coming year on time as promised and surpluses each year after that strengthening over time. And he also said the deficit years of the global recession are behind us, the surplus are here. That was 12 months ago. What we saw last night was the Government deliver $19.4 billion deficit this year, $18 billion deficit the year after, $17 billion deficit the year after that. All we have from Labor is deficit, higher taxes, more spending.
STEVE AUSTIN:
Steve Ciobo, then what are you guys going to do about it? Because it looks like you will win the federal election and you're going to have to tackle this, you're going to have to do something about it. What will you do?
STEVE CIOBO:
Well look, obviously we do hope to win the next election and we're very focused on being a credible alternative. Tony used the line the "adults in the room" and that is the belief that I and our other members of the Coalition have about what our approach needs to be going forward. And I think we need to be able to look Australians in the eye and say the days of big announcements and big promises are behind us - what we need to do now is live within our means. And if there's one key phrase that really summarises all of this Steve, is that Australia needs to start to live within its means and to stop spending mindlessly.
So what we're going to do is take a disciplined approach. The reality is the Coalition has a strong track record in this area Steve, I mean I know all Australians recognise that last time we came to government, after Labor left office, they left a $96 billion crater of debt and deficit and through 12 years of solid and consistent work the Liberal Party and the National Party paid all of that money back and we amassed $70 billion in savings.
What's happened now is that in five years Labor's now got $194 billion worth of deficit. So they've spent the $70 billion in savings that we had, they've racked up another $194 billion worth of debt and we're just going to have to get back to the task.BERNIE RIPOLL:
So we're worse off than before John Howard became prime minister in 1996?
STEVE CIOBO:
Of course we're much worse off and it's because of Labor's approach. Now I'm going to make a bold prediction here Steve. I'm going to say that Bernie's about to come on after me and he's going to say but hang on, they had the rivers of gold from the mining boom and things are really tough now and no one could forecast that we were about to see this massive loss of revenue, because that's been Labor's line, right. But it's a false line Steve and I'll tell you why it's a false line.
The terms of trade today are 15 per cent higher than at their very peak under the Howard Government. Fifteen per cent higher. So when Labor politicians turn around and say; but hang on they had the rivers of gold. You know what? The rivers of gold from the mining boom are bigger today than they ever were under the Coalition. The difference comes down to the approach. And the final point about the so called loss of revenue, is that Labor last year expected to run a $1.5 billion surplus this year Steve, off the back of a $39 billion increase in revenue. We said last year that that was simply never going to happen. We knew, anyone credible knew, that there was not going to be a $39 billion increase in revenue. But then Wayne Swan says; oh we never saw this coming, this is unexpected, where did this drop in revenue come from? Well, it came from the fact that their assumptions to begin with were fanciful.BERNIE RIPOLL:
Bernie Ripoll, I better let you respond, Bernie.
BERNIE RIPOLL:
Yeah. I hope so. Look, this budget does give people a choice. A choice between a responsible government that's focused on jobs and growth or an alternative government which is just going to the bone. And we've already had that experience in Queensland. We know what that means. It means people listening to your show will lose their jobs and they can't pay their mortgage and they're not going to get the investments in the schools and in the health areas.
This is about good spending. Spending in the right areas. And it's being a fiscally responsible budget. We have worked very hard. This budget alone has a further $42 billion in savings at a time when revenues are down. Revenues are down for us as Government. They're down for the Opposition as well. We'll all inherit that problem exactly the same and over the six budgets that we've had, we've made savings of $180 billion.
I'm not calling them cuts in the same sense that the Liberal Party would, because their cuts are going to be to the bone and they're actually going to hurt people. We've pulled up on the savings because there's a point at which it starts to hurt people individually. It means that they're going to lose their jobs. You simply can't cut [indistinct]…BERNIE RIPOLL:
[Interrupts] Well, they're going to be hurt either way, aren't they, Bernie?
BERNIE RIPOLL:
Pardon?
BERNIE RIPOLL:
We're going to be hurt either way, aren't we, eventually?
BERNIE RIPOLL:
Well, look, the economy is good and Steve Ciobo keeps saying that repeatedly. I agree with him. Terms of trade are up. The fact is that the Australian economy has grown by 13 per cent, five times faster than the United States or Germany or basically any other Western economy.
We actually do have low inflation, we have low interest rates, which means ordinary people are saving a lot more today in terms of their interest payments or paying off their homes quicker, building their equity. So there's a lot of good things happening.
This is a choice. We've been very deliberate. Our investments, the money we're spending in the budget, are very much focused on making sure every Australian child gets access to a really great education. Not just a good one, but a great one. We've made sure parents have more choice and there's proper testing in schools so that we know where we need to spend the money.That's why we have NAPLAN and I know there's lots of kids out there today that'll be doing it and I spoke to my daughter this morning about that and I said to her, look darling, it doesn't matter how you go on NAPLAN, it's about you. You just go in there, you be relaxed, and you do the very best you can and I'll be supportive no matter what.
And I hope that other parents can take that approach as well because we want the best for our kids. If we want the best for our kids, it's not mindless spending, it's spending for the right reasons. CancerCare spending, we've increased the budgets there. We've made sure that Medicare Locals can better coordinate and organise health spending. But on infrastructure in particular there is a stark difference. We're a government that's put our money where our mouth is in terms of infrastructure spend. You can drive on our promises because they've been delivered. But Tony Abbott's made this promise very clear and I believe he will keep his promise, and that's he no longer wants to be involved in infrastructure. He's already told the state premiers forget the money. You're not going to get it from a Liberal Tony Abbott Government. That they're going to stick to their knitting, which was his words. They're not getting involved in infrastructure. You can't cut to growth. Growth is about jobs.STEVE CIOBO:
Bernie, this is complete rubbish.
BERNIE RIPOLL:
Steve, I gave you very…
STEVE CIOBO:
Complete and utter rubbish.
BERNIE RIPOLL:
I gave you a very long and fair go.
STEVE CIOBO:
You've had a fair go, too.
BERNIE RIPOLL:
Well, thank you.
BERNIE RIPOLL:
Just finish your answer, Bernie, and then…
BERNIE RIPOLL:
Well, look, we're building the big things. It's always been left to Labor Governments to take on the difficult tasks. Superannuation in this country; Labor. NBN; labour. Jobs, education reforms; labour. What you'll hear from the Opposition, it's not the right time now. The reality is it's never the right time. But we believe that the tough decisions have to be made now.
They've not always been to our political advantage, but they've been in the national interest. And that's what I maintain.
BERNIE RIPOLL:
Well, let me play you a couple of things we've learnt this morning from an accountant. First of all on the changes to the HECS payments.
[Excerpt from interview]
IAN WOOD:
When you do actually undertake tertiary education, you can defer or pay up front for your course. So when you defer it goes into what they call HELP. So it's a loan repayment scheme. Previously it was a five per cent discount. That's going to essentially be removed entirely. So the other thing to remember though is a couple of years ago it was a ten per cent discount and before that it was 15 per cent.
So it has been a gradual reduction but they're also removing the discount for upfront payment as well. So there's actually no benefit to paying upfront anymore because you'll pay…BERNIE RIPOLL:
Say that again slowly.
IAN WOOD:
So there was a discount for upfront payment. And I remember back in the…
STEVE AUSTIN:
When you were doing your university degree.
IAN WOOD:
Yeah. Back in the dark ages when I was at uni it was a 25 per cent discount for paying up front. So there was a fairly large discount. They're actually removing all of that. So it'll essentially be the same cost whether you pay up front or defer.
[End of excerpt]
BERNIE RIPOLL:
Bernie Ripoll, why has the Federal Government chosen to do that?
BERNIE RIPOLL:
Well, what we've actually - that's accurate and that's true, so I'm not going to debate that, so I'll just say yes, that's accurate. What we've chosen to do in university is to put a lot more money in. In fact, we've increased funding massively and that means more people get access. That means more people can actually get a university qualification.
In the world we live in today, sometimes even one degree's not enough. More and more people need to self education, further educate. So we've focused very much on expanding the availability of courses and funding that. That's an expensive process, but that's what we've done because we actually believe in the mantra education is the path forward. Education is the way to higher paying jobs.
BERNIE RIPOLL:
Do you support that Steve Ciobo?
STEVE CIOBO:
Well, what Bernie just said is fundamentally incorrect. Labor has cut $2.8 billion out of tertiary education, Steve. I mean, anybody who was watching Sky News this morning would have seen the advertisement playing by the university sector about how can Labor be serious about the knowledge nation? How can they ever be serious about making sure we've got value-add jobs in the future when Labor's ripping billions of dollars out of higher education?
So look, I feel - I sometimes feel very sorry for Australians that only tune in incidentally to the fiscal debate happening across Australia, Steve. I mean, you know, Bernie says oh, Labor's increasing funding to education and, you know, we're doing great things. It's just not matched by the reality. I mean, the reality is a $2.8 billion cut to tertiary education.
BERNIE RIPOLL:
Alright.
STEVE CIOBO:
And I understand that it's confusing but, you know, I guess I'd summarise as this - and Bernie's right, it is a choice. I mean, people have a clear choice in September when they go to the polls about what they want to do. And I'd summarise it as this: they can support the Labor Party, and Labor's approach is to tax and spend. Labor has increased spending over the final year of the Howard Government by $120 billion, despite the fact that the increase in revenue over the final year of the Coalition Government is close to $90 billion.
Labor certainly is spending a lot of money, big spending announcements all the time and that's the reason why we've had 40 increased or new taxes announced since Labor was elected. So that is one pathway that Australians can choose to go down.
BERNIE RIPOLL:
Well let me ask - let me go through some further points if I can Steve Ciobo.
STEVE CIOBO:
Sure.
BERNIE RIPOLL:
Bernie Ripoll, I spoke with Ian Wood the accountant earlier on about this on the issue of personal income tax. Let me just ask you about this.
[Excerpt]
IAN WOOD:
From 1 July 2015 the tax free threshold is already increased significantly to about $18,000 and they were planning to increase that further. But because the mining tax revenues are down, you know, strong Aussie dollar, low commodity prices, they've obviously seen that there's a shortfall there so they're actually deferring those. And whether they will actually eventuate or not, well we'll leave that to the new estimates.
STEVE AUSTIN:
But for all intents and purposes, today it's gone?
IAN WOOD:
That's it, yep.
STEVE AUSTIN:
Okay.
[End of excerpt]
BERNIE RIPOLL:
Why have we done that Bernie Ripoll?
BERNIE RIPOLL:
For the exact reason that was explained. Because we need to be fiscally responsible, you can't have it both ways. You need to acknowledge though, it's not gone, we've actually increased the tax free threshold threshold from 6000 approximately to more than 18,000. That's not gone, that's there, that's real and that's happening right now, today, and will continue to happen.
What's been deferred is the increase from 18,200 to about 19,000 tax free threshold. So it's not gone, it's tripled from 6,000 - again a decision this Labor Government made because it helps support families, and while we're supporting family - family tax benefit A and B significantly increased under this Government, Schoolkid's Bonus, a significant assistance for families. These are the important measures that reduce cost of living, as does lower interest rates. And they, in fact, have been lower under Labor than they've ever been under a Liberal government.
BERNIE RIPOLL:
You've also made some moves in the area of excess contribution fees?
BERNIE RIPOLL:
So, essentially where people go over their deduction caps there's a punitive tax - probably one way to describe it, it's essentially up to 46 and a half per cent of that contribution gets taxed.
BERNIE RIPOLL:
So you're putting more aside for your super than your - than the government mandate, they hit you hard.
BERNIE RIPOLL:
They do, very hard. And for those that have gone over that cap and then also put after tax contributions and gone over it, essentially, ends up being 93 per cent tax.
BERNIE RIPOLL:
Wow.
BERNIE RIPOLL:
Yeah, so really - if you've made a mistake you get penalised quite hard for it.
BERNIE RIPOLL:
Wow.
BERNIE RIPOLL:
They're essentially making that a lot fairer so that their income than - sorry those extra deductions are taxed at your marginal rate, so it brings it back to the tax rate you would have paid as an individual, and treats it like salary.
BERNIE RIPOLL:
Okay.
BERNIE RIPOLL:
So that then reduces that back quite significantly which is good, but bottom line is try not to make that mistake in the first place.
BERNIE RIPOLL:
Bernie Ripoll, why is the Government so hardline on excess super contributions?
BERNIE RIPOLL:
Well it's not so much a case of being hardline, as your commentator just said it is good. And what it does is recognise the fact that we want people to make extra contributions, but there is a cost to the taxpayer for those that can afford to make those extra contributions. There's a cost to government, to the employer, and to the taxpayer and to the individual and that needs to be balanced.
It's not unlimited, no government's had it unlimited because there's a cost associated. So what we're doing again is being fiscally responsible, we're making sure that in that area it's still available, people can make the extra contributions, but there needs to be limits to it so that - because it has an impact on the budget as well as on the taxpayer. Everyone has to contribute in that sense.
STEVE AUSTIN:
Does the Opposition agree with this Steve Ciobo?
STEVE CIOBO:
Not at all Steve, I mean under the Coalition - Well that's right Bernie, we don't. Because the Coalition is firmly of the belief that people should provide for their retirement and we should provide incentive for people to provide for their retirement.
Under the Coalition the cap was either $50,000 or $100,000 dependant on age. As you got older we increased the cap because people generally as they get older, you know, have paid off the mortgage, are in more of a position to put more of their income into providing for their retirement. So we had a $50,000 and $100,000 cap, Labor has slashed those caps, Steve, down to $25,000.
So yes we do disagree with Labor's approach because Labor's approach does not make incentive for Australians to provide for their own retirement and that actually encourages people to rely on taxpayer support rather than providing for their own incentive. And to rub salt into the wound, Steve, the penalties that Labor imposes if you inadvertently breach those caps - and look for salary earners, you know, they're not likely to breach the cap because the super comes out of their salary.The reality is though for a lot of small business people, and there's a lot of small business people, who have variable income levels, they may inadvertently breach the cap. It's quite easy to do if you're in a business in your own small business where your income varies and you don't have the, you know, the certainty week in, week out of what your incomes going to be. So if you inadvertently breach your contribution cap as a consequence of that variation well then you get absolutely slugged by Labor's tax penalty.
And instead of just saying to people look, you've made a mistake, you can withdraw the excess contribution, Labor says no we're going to tax you. And I mean this is just part of the reason why Labor's approach is just so fundamentally flawed when it comes to providing incentive for people to, you know - to provide for their own retirement.BERNIE RIPOLL:
[Indistinct] Steve Ciobo.
BERNIE RIPOLL:
Twenty seven minutes past nine.
BERNIE RIPOLL:
Sorry what Steve Ciobo hasn't told you is how he's going to pay for that. There's a massive cost attached to that.
STEVE CIOBO:
[Talks over] Well this is the problem Bernie.
BERNIE RIPOLL:
And how they're going - it's not our spending…
STEVE CIOBO:
Yeah, no it is your spending. This is the problem. You're making it tougher.
BERNIE RIPOLL:
No we're saving, we're saving.
STEVE CIOBO:
You're making it incredibly tough for future generations of Australia because you have no discipline when it comes to spending money.
BERNIE RIPOLL:
Well, it's actually the opposite because the discipline is we've actually capped it, and we've lowered it so that there's a less cost to government, to the budget. You're making a - basically an election promise or a commitment saying that you're going to spend more and you can't…
STEVE CIOBO:
[Talks over] No I'm talking about the track record.
BERNIE RIPOLL:
You can't spend more on [indistinct]…
STEVE CIOBO:
A track record of $100,000 under the Coalition…
BERNIE RIPOLL:
[Talks over] Oh I'm not disputing it.
STEVE CIOBO:
…versus $25,000 now.
[Continues - Questions from listeners]