SUBJECTS: Nation Building and Jobs Plan
RUSSELL WOOLF:
We have on the line this afternoon the Federal Assistant Treasurer, Chris Bowen. Good afternoon.
CHRIS BOWEN:
Good afternoon Russell, thanks for having me on.
WOOLF:
This has generated an enormous amount of interest…
BOWEN:
I can imagine, it is a very significant package.
WOOLF:
…and it's been broken down pretty clearly. It's always pretty difficult, people are always trying to race through and see who fits in, who doesn't fit in and there are a thousand questions, so we will go to the phones quickly.
BOWEN:
I'll do my best to answer them and if I can't answer them, I'll provide a number where people can get their specific circumstances dealt with.
WOOLF:
We'll start off with a few questions from the sms'. We can deal with this quickly.
'I'm a uni student' says Sophie, 'am I included in this cash bonus?'
BOWEN:
Look there are five different types of tax bonus, it is very important to remember. It's not just one; there are five difference types with five criteria.
There's the tax bonus for Working Australians that goes to anybody who had a tax liability last year and earned less than $100,000. That covers full-time, part-time and casual work. If they work and earn less than $100,000 they are eligible for that payment. One question I'm sure you will ask me, is 'is it couples or singles', it is single income. So even if two people are married or together and that puts them over the $100,000, they still get the bonus, if they are each, as individuals, under the $100,000. So we have also got…
WOOLF:
Can I just ask you, if one is $90,000 and the other is $120,000…
BOWEN:
Then the person on $90,000 will still be eligible for a tax bonus.
WOOLF:
So you don't add it up and divide it by the number of people in the house. And the level of income is based on taxable income?
BOWEN:
That's right on the last financial year that we have, so that's 2007-08.
There is also a Training and Learning Bonus and that goes to students who receive Austudy, Abstudy, or the Youth Allowance.
WOOLF:
Most students will get a level of this or…
BOWEN:
There will be some students who don't Russell and not everybody will get a bonus. Look 8.8 million will receive payments under the Household stimulus package, that's a lot of Australians. It's a very significant package and we have targeted to those that we think, in the circumstances, could do with it the most. There will be some who will miss out, but it's a very substantial package and it goes to a large number of people.
WOOLF:
Look I'll get you to quickly go through the other three categories of payments before we go to the phone.
BOWEN:
We have the Single Income Family Tax Bonus and that goes to people who receive the Family Tax Benefit Part B. People who get that will know that that's where one person in a family is working and they will get that $950. That covers 1.5 million families and those payments will go out in the fortnight that starts on the 11th March this year.
We've got a Farmers Hardship Bonus and I know you guys go right across Western Australia. Any farmer who receives a payment under Exceptional Circumstances Program or the Farm Support Program or the Transitional Income Support, from the 24th March, they will get the $950 payment.
We've got a Back to School Bonus that is being paid from today, and that goes to people receiving the Family Tax Benefit A, which is the vast majority of families. And that goes to families where the children are aged between four and eighteen and that is $950 per child. That will help with all the costs of getting the kids back to school. And I think I mentioned the Training and Learning Bonus. That has two parts to it. There's the $950 payment that goes to people receiving those allowances and there is a payment for those who go into training from other welfare payments as well.
WOOLF:
Okay, good, let's get to the phones. Jill joins us. How are you Jill?
CALLER JILL:
Very well thank you.
WOOLF:
Chris Bowen, he's the Assistant Treasurer and he is our guest and is listening to you.
CALLER JILL:
Hi Chris, thanks for taking my call.
BOWEN:
Pleasure.
CALLER JILL:
Chris I have a three year and seven month old who is enrolled in a state kindergarten this year and I would like to know the difference between him and his four year old class mate, payment wise.
BOWEN:
Oh well, as I say, today is the cut-off, you have to be aged four today. So there will be some people miss out on that. You always need to draw the line somewhere…
CALLER JILL:
But Chris that's half the class, half will be the 'haves' and half will be the 'have nots'. I appreciate the hand-out, don't get me wrong. I really, really do appreciate it. We are a single family – a single income family – but my son is three years and seven months and the same as every other kid in his school except for the fact that he is a little bit younger.
BOWEN:
Sure, I understand that there are some people who will just miss out. But as I say, you need to draw the line somewhere. There will be some people on the right side of the line, some people on the wrong side of the line. But if you are aged four today, you attract the bonus.
WOOLF:
I'm sorry Jill that you missed out but I'm glad that you called in to make your point this afternoon.
Matt, welcome to you.
CALLER MATT:
Yeah thanks, thanks Assistant Treasurer. My question is, this financial crisis has been caused by having too much credit. I just wonder how the government going into debt on top of lower interest rates generating private debt is going to help the economy get back on its feet.
BOWEN:
What we are seeing in Australia a very big impact from the worldwide recession, in terms of unemployment, and this is designed to keep unemployment as low as we can and growth as high as we can. Now you are quite right, in one sense, it has been caused by credit, but the wrong type of credit. Credit that was lent to people in the United States, who shouldn't have been lent to and the very lax lending standards in the United States, and frankly, poor financial regulation. Then what we saw was those loans bundled, syndicated and banks around the world being infected by them. Australian banks haven't had anywhere near the same exposure, by and large, having a very minor exposure.
Banks around the world are being exposed to it and then we were seeing some banks fail and other banks refusing to lend to each other, because they have seen other banks fail and are thinking to themselves 'if I lend to that bank today, will it be there tomorrow?' And so we have seen credit squeeze up, and the credit become more expensive in Australia, and that has had an impact.
Having said that, we are one of the few countries forecasting positive growth because of this stimulus package and the last stimulus package, to keep people spending. We have tried to keep credit available that is why we have the Special Purpose Vehicle that we announced the other week, to try and keep credit available when foreign banks go back to their home country. No disrespect to us, but we are seeing around the world, banks return to their home markets and we need to try and make sure that the Australian economy keeps ticking over.
WOOLF:
Matt a great question, thank you for posing it this afternoon to my guest, the Assistant Treasurer Chris Bowen, on Drive. And it's 5:24pm and I have a quick sms message for you. 'I haven't done my 2007-08 tax return and earned $50,000. Do I need to do my return or is a group certificate enough?'
BOWEN:
No, they need to lodge a return. And anybody who has an inquiry about that should contact the Tax Office…
WOOLF:
So if they haven't lodged last financial year's tax return then they should and they will get this benefit?
BOWEN:
That's correct. And they should contact the Tax Office if they have any inquiries on their own personal circumstances – which aren't appropriate to go into too much detail on the radio – they can ring the ATO on 13 28 61.
WOOLF:
Okay, beautiful, that's 13 28 61 if you want to talk to the ATO. Chris, another text message. Do we pay any tax on these payments?
BOWEN:
That's a good question. All the payments are tax free and they aren't included in the income test for other benefits.
WOOLF:
Now John is with us, hi John.
CALLER JOHN:
Hi guys, look I was a bit confused. I'm nearly 69; I went back to work when I was 65. I'm married to a lady who is 40 and we have four children, three at school, she gets a bit of Part A and Part B – I couldn't possibly afford to pay her. What are we actually going to pick up?
BOWEN:
Well I have to confess that you have quite a complex situation there. You will certainly be eligible for some of the payments. Anyone who earns less than $100,000 is eligible for a payment and in addition to that there's the back to school payment, which goes to people who receive Family Tax Benefit A – I think you said that you do get that – so for every child between four and eighteen you get the $950 payment. As I say, there are several payments with several overlaps. You certainly will be eligible for more than one of those payments.
WOOLF:
Well done John and thanks for ringing through this afternoon. We need to move on, Theresa is on the line, hello Theresa?
CALLER THERESA:
Good afternoon everybody. My husband and I are both self-funded retirees having not reached the aged of 65 when we can draw on a pension. My question is, because we pay tax on our earnings as self-funded retirees, are we eligible for, in anyway, for the payments that are bring given to taxpayers in this package?
BOWEN:
If you are a net taxpayer – have lodged a tax return – you pay tax, than you are eligible for a bonus.
CALLER THERESA:
Right, thank you very much.
WOOLF:
Thanks Theresa thank you very much for calling through. Now quickly, a couple of sms' If I can. 'I just think that once this money is spent, it's gone, but some help to business will keep spending going longer'.
BOWEN:
That's a good question and we have concentrated on payments to individuals, understandably, in this interview. This is a very big package that is about investing in the future. For every dollar we are spending on a payment, we are investing two in the future. I'll give you two examples and talk a little bit about business – I'll spend a bit of time on this question, because it is a good one. We have included in this package the biggest infrastructure spending program on schools in this nation's history. Every primary school will get a new library or a new hall if they want it, if they don't, they can talk to us about getting rid of demountables and rebuilding class rooms. In terms of climate change, all the evidence before us is that the biggest impact we could have on climate change and people's energy use is to insulate those older homes that don't have it. By doing that, it will be the equivalent of taking 1 million cars off the road by 2020. Things like level crossings, I mean, you know, we see the tragedies on level crossings every year. So we took the view on investing that why not fix some of those problems. We will be putting boom gates into 200 level crossings around the country. Now in relation to the question of business tax, we are also doing that. We are increasing the tax deductibility of eligible assets, for businesses, of $1,000 or more. So if a business is thinking of investing in a laptop, say a landscaping company was thinking of buying a bobcat, they will get that increased deduction to improve that bottom-line and will encourage them to invest, supporting more jobs. So the question is a fair one, but this package is a comprehensive one. We have crafted it carefully, to provide a stimulus where we need it and to invest for the future.
WOOLF:
Chris Bowen, it has been great that you could come on and spend some time answering these questions from ABC Western Australia listeners. We appreciate your time.
BOWEN:
I've enjoyed doing it. Good on you.
WOOLF:
Chris Bowen, the Assistant Treasurer, joining us here on ABC Drive.