RAPHAEL EPSTEIN:
Bruce Billson, Federal Minister for Small Business is on the line and coincidently, he is the Federal Member for Frankston. Now Frankston has been in the news but not the Federal Parliament. Bruce is currently in Cairns participating in small business forums. Bruce Billson thanks for joining us.
MINISTER BILLSON:
You’re welcome Raf. Best wishes to you and your listeners.
RAPHAEL EPSTEIN:
Look, I am interested in the way the Coalition has responded. There has been a couple of bits of economic modelling out there and it appears to me to be the case that the bottom fifth, their income drops by 2.2 per cent, the top fifth, their income drops by a lot less. Is that a significant comparison in your mind? Is that worth keeping in mind when you think about fairness for the budget?
MINISTER BILLSON:
I think all analysis of the policy settings can be quite worthwhile and informative. I think you are talking about the NATSEM modelling…
RAPHAEL EPSTEIN:
That’s correct yes.
MINISTER BILLSON:
Which no one has actually seen, so the assumptions that sit behind it are a little hard to get closer to. In fact, I believe it includes a range of measures that may have had their life begin under the previous government…
RAPHAEL EPSTEIN:
Yeah so including things like the school kids bonus then… I understand
MINISTER BILLSON:
That’s right and don’t include the household benefits of scrapping the carbon tax and the like but it was an interesting piece of work.
The quote that you played from Joe, I found one of the more interesting things he mentioned was the OECDs household income survey that showed in Australia, the lowest 20 per cent of incomes actually had the highest dependency on Government for that income of any other country in the world. That’s more than Germany, France, Netherlands, Finland, Norway and he was making the point that if we want to have a generous and a well provisioned safety net, being able to afford it in the longer term as well as the short term, has to be a part of our thinking. We also need to realise the income support and assistance that is provided by Government, is actually financed by other citizens that are having a go and making a contribution and it’s not unreasonable to expect people that are able to provide more fully for their needs to be encouraged to do so. That’s the broad settings of the policy that’s shaped the detail that you touched on in the budget.
RAPHAEL EPSTEIN:
But I just want to engage with that concept. Would you agree, so let’s put the figures aside I suppose, would you agree that the take home pay, so the money that people have to spend for the bottom fifth, do they suffer a bigger cut than the top fifth? Would you agree with that or not?
MINISTER BILLSON:
In terms of the impact on their disposable income, we might quibble over the numbers, but all are making a contribution and where we are trying to see Government expenditure reigned in so that we can afford it for the longer term, so that the safety net, that is so crucial for the vulnerable, doesn’t become vulnerable itself for those most dependent on it…
RAPHAEL EPSTEIN:
And I understand that argument…
MINISTER BILLSON:
What we have sought to do, is make sure that we’ve got a contribution from everybody, regardless of their income, to make sure the things that you and I hope for our community Raf and our citizens, are there for the next generation as well. We need to make sure that we don’t overspend today and then load up…
RAPHAEL EPSTEIN:
And I understand that Bruce Billson, but I suppose what I am asking is, I need to know if you agree that those on lower incomes are paying a greater portion of their income because if you say yes or no to that, that is one way with grappling with the question ‘is it fair?’ Now I know, ‘is it fair’ is a very broad question.
MINISTER BILLSON:
Yeah it is and it’s also a question about income in that if one’s almost entire household income is dependent on the outlays of Government and is funded by those that are meeting their own income needs through private sources, where you are having…
RAPHAEL EPSTEIN:
So private income is fundamentally different to income that you receive from the Government?
MINISTER BILLSON:
And it’s always been recognised as such. But where those that are earning a private income in addition to meeting their needs are also providing handsomely for those not in a position to meet their needs through private income sources, I think it’s important and its honourable to make sure that support is properly targeted, it lands where its most needed and its sustainable into the future. So that vulnerable people to come or those that can be assisted to have a greater private income contribution get the help that they need. They are all honourable and I think very virtuous policy objectives that are difficult to implement and often hard to explain because people will say ‘look at what this has done for me.’
Whereas, my view is we don’t expect, particularly young people to have a life career on income support. We would actually like to support them to be able to achieve a greater degree of private income to meet their own needs where they are in a position to do so and I think that’s an important guiding principle.
RAPHAEL EPSTEIN:
Bruce Billson is with us. He is the Federal Minister for Small Business and I think you’ve got a good, and I’m totally okay with that answer on fairness and income. I suppose the other significant criticism, not criticism, discussion around the budget is a lot of the measures around Government spending, they are not around revenue. So negative gearing, the concessions wealthy people have on their superannuation, even around the pension idea so pensions are being indexed at a lower rate. I appreciate that they are going up but they are going up at a lower rate than they would have and there is no means test there, so you’re not attracting, not taking steps on the ways that the Government could take income in from the wealthier. Do you think that’s a valid criticism? It’s all on the spending of those that already receive and it’s not on taxing the wealthier.
MINISTER BILLSON:
Raf, you’re touching on a very important part of what is a key element of our Economic Action Strategy. We’re not shut off to the important question of how we raise the taxes that are needed to fund important Government works and services. That’s why there is a Tax White Paper process to ask when the tax settings and the calibrations that support them kick in? What are the exemptions? What does that look like? Do they support our longer term objectives as a nation? That’s what the Tax White Paper process is about.
We went to the election with a very clear tax plan that was to abolish the carbon tax and that should deliver around a $550 benefit on average to households and provide real assistance for small business that are trying to stay afloat and create livelihood opportunities for them and their communities.
That’s an important measure as well as abolishing the mining tax which hasn’t done anything like what the previous Government said it would, but it’s nobbled a key area of our economy that should be providing the wealth that we need to sustain our quality of life and living standards into the future. We made that commitment Raf to have the Tax White paper…
RAPHAEL EPSTEIN:
But you’re essentially saying we can hit all of the people who are on a lower income now. We may change the way we tax middle income earners and the wealthier but we are not willing to say yet what we will do.
MINISTER BILLSON:
No, I wouldn’t characterise it that way which might come as a shock to you Raf and in fact some of the individuals that have been aggrieved by the budget process, are some of those that are most likely to have the highest incomes you could imagine down the track with the changes to higher education and the like. So I wouldn’t characterise it….
RAPHAEL EPSTEIN:
But they hit everybody don’t they? The university changes hit everybody regardless of their…
MINISTER BILLSON:
But not everybody goes to university Raf and what is interesting is all tax payers contribute to that opportunity, yet those that do take up that opportunity, that is half funded by the tax payer, can expect to earn a million dollars more in their lifetime than those that don’t go to university. So again, it’s about delivering a reasonable, proportionate response to sharing the community-wide benefits of higher education participation, alongside the very substantial private and personal benefits that those who secure a degree and the like can anticipate into their future.
RAPHAEL EPSTEIN:
Bruce Billson, thank you for kicking off our discussion, I appreciate it. There are many people wishing to have their say and thank you for your time.
MINISTER BILLSON:
Thanks for your interest Raf and we can talk small business soon I hope.
RAPHAEL EPSTEIN:
I hope so. Bruce Billson, he’s the Federal Minister for Small Business.