SUBJECTS: Fringe Benefit Tax reforms, economic statement, G20 meeting
DAVID SPEERS:
Treasurer Chris Bowen, thanks for your time.
CHRIS BOWEN:
Thank you, David
SPEERS:
The Opposition Leader says this measure will damage the car industry and the leasing industry to the extent that the damage, the losses, will outweigh the revenue gains. Is he right?
BOWEN:
No he's not and it's just more of the negative spin and selective quotation of his version of the facts, David. It's a very simple issue here – this is about fairness. We took this tough decision to partially fund our decision to go to a floating carbon price, to provide cost of living relief to businesses and families.
Now, David, if you go down to the car yard on Saturday with your wife and you decide you need to buy a new car, that's a perfectly good and legitimate decision for you to take. But you don't get a tax break for it, unless it's for use for business. And all we've said, all we've said, is that if people are claiming some tax relief on the basis that it's being used partially for business use, we just need a little bit of evidence to that.
We've asked for three months of records, which will then get a tax deduction for five full years – without the records needing to be kept for those five years. Now the Leader of the Opposition and his team can continue to not tell the truth about this, but the facts speak for themselves.
The facts speak for themselves, it's a matter of fairness, and it's a matter of legitimacy and protecting our tax base in Australia – and making sure that the tax deduction is a sustainable one.
SPEERS:
[Inaudible] use this mechanism in the public service, in the non-profit sector as a way of boosting the salary package without being able to boost the actual pay packet.
BOWEN:
Well, David, people can make their own decisions based on the law in place at the time. Now this is not a retrospective change, it only applies to new contracts. We put in place a transition until April next year, so that people have some time to adjust.
Now the basic principle is very clear. If you claim the childcare rebate, you need to use childcare. If you claim a family tax benefit, you need to show us that you've got a family. If you're claiming a deduction based on the fact that a car is partially being used for business, all we need is a little bit of evidence to that effect. It is about fairness, it's about ensuring our tax base has integrity going into the future.
And, you know, the Liberal Party now has a black hole – a budget black hole – which is $2 billion bigger, because they are refusing to support this measure and say they will reverse it. Now that means, as well as their $70 billion in savings shortfall that they've already admitted to, they would now need to find another $2 billion over the next four years, if they are to be taken anywhere near seriously in terms of budget integrity.
SPEERS:
Okay, but Labor has been in office for six years, you could have done this earlier. Suddenly Kevin Rudd comes in and, chop, this decision is made with no consultation. Do you acknowledge that some of the industry are, well, now left without a job and are looking to blame Kevin Rudd for this – there was no warning this was coming.
BOWEN:
Well, David, I understand that every industry in Australia would like a tax break. Every industry would say, 'It would be great if the Government said if you buy this particular product then the Government would refund through the tax system 20 per cent of it. Every industry would like that, but industries don't get that sort of arrangement.
I understand the car industry and the associated parts of the car industry thought this was a good arrangement, but we have to make decisions based on the facts and the evidence and fairness – and that is what we have done. And Mr Abbott can mislead about the impacts of this, he can say it as it's not really is, and I will to continue to correct the record across the country every time he says so.
SPEERS:
The South Australian Labor Premier, Jay Weatherill, has written to the Prime Minister urging him to reconsider, he says it will damage Holden and the remaining car makers in Australia – what is your response to him?
BOWEN:
Well look, he is entitled to put his view. Obviously, as a State Premier and Treasurer he has a responsibility to ensure his budget integrity. He has to make tough decisions as a State Premier and Treasurer, we also have to make our decisions – we take these decisions very seriously. We will obviously work with any stakeholder who has a positive contribution to make, but this is…
SPEERS:
One of his suggestions here is that locally made hybrid and LPG cars should be exempt from FBT.
BOWEN:
We are not changing this measure because it is an important measure. Obviously, Minister Carr has been in discussion, Minister Kim Carr has been in discussion with Holden and Toyota about their continued production in Australia. He has been doing that since he became the Minister, as Greg Combet was before him, so we are continuing to talk to them about what measures may be able to assist them as part of a separate process. But this is an important measure the change to the Fringe Benefits Tax to ensure that our tax system is fair. So that if you buy a car for private purposes regardless of how you buy it or who pays for it, that it's taxed in the same way and that we have ensured that if you use your car for business purposes, then you can continue to claim a deduction, with just a little bit of evidence to support that.
SPEERS:
Just a couple of other issues, will you be releasing an economic statement as Treasurer before the election is called?
BOWEN:
Well David that's the normal process. In recent elections you will have seen treasurers and finance ministers release economic statements before elections in recent times – most elections since 1998 – and you could expect that Minister Wong and I will be doing the same to update the Budget numbers in a full and transparent way, announce the accounting for various cabinet decisions, that's what we will be doing. It will take in to account for example the announcements made in relation to asylum seekers and Papua New Guinea – that would be the normal process and you could expect Minister Wong and I to be following that process.
SPEERS:
So it will include some costing of this PNG deal?
BOWEN:
Of course yes, when we announce, when we release our economic and fiscal update and statement, we would take into account Government decisions that have been made including the arrangement with Papua New Guinea, yes.
SPEERS:
Will that be this week?
BOWEN:
Minister Wong and I will announce it when we're in a position to. We'll release it at an appropriate time, as is always the case in an election year, you will find treasurers and finance ministers doing that as a matter of course these days, and that's the approach we will take.
SPEERS:
Just to be clear this is going to happen before the Prime Minister calls the election? This isn't the pre-election - that comes from Treasury?
BOWEN:
No, no. There's normally – you will find David – if you look back at previous elections campaign's there's two statements generally, one released by the Treasurer and the Finance Minister and then there's the pre-election statement after that.
SPEERS:
Without giving too much away on what it might say on how the economy's looking, you've just return from the G20 Finance Ministers' talks in Russia, your first attendance at one of those gatherings. Has it changed your view on the direction the global economy is heading in?
BOWEN:
That's right David, I am back this morning from the G20 Finance Ministers' meeting. It's confirmed the view that I have already expressed in my first few weeks as Treasurer and that the Prime Minister has been expressing – that there are strong headwinds in the world economy which are challenging.
We have seen growth come off the boil in China and we'll continue to see that. Europe is continuing in a persistent and significant recession. And also, we're seeing emerging economies, economies like Brazil, Russia and India, as well as China, not return the sort of growth rates that might have been predicted a while ago and that is having an impact because those emerging economies were expected to be the engine room of growth and that's not translating very much in recent months.
So yes, I did discuss the current world situation in the G20 meeting and also in the bilateral meetings with the US Treasury Secretary, the Chancellor of the Exchequer, the Chinese Finance Minister, the Japanese Finance Minister and others, and the impression that I got was that it confirmed the views I had already been putting as Treasurer, that the world economy is facing some serious headwinds.
SPEERS:
So your economic statement is likely then to downgrade Australia's growth outlook?
BOWEN:
Look, I'm not releasing an economic statement today, David. I've just said to you that that's the normal process that would occur. But obviously it will take into account the various decisions the government has made and will make and it will also take into account any updates to the economic parameters that the nation is facing.
SPEERS:
Treasurer Chris Bowen, appreciate your time, thank you.
BOWEN:
Thanks David. Good on you.