Andrew Clennell:
Joining me live, the Assistant Treasurer, Daniel Mulino. Thanks for your time. Hopefully your microphone’s working, ‘cause we had to shoo away David Shoebridge because his didn’t. What have you got against this One Nation super policy?
Daniel Mulino:
So, we’ve got one of the best retirement income systems in the world, and super is an absolutely core part of that. And a key element of super is that you contribute to it at a high level and then it’s preserved, and then you benefit from it for a dignified retirement. We took decades to get to 12 per cent, and now One Nation is proposing to unwind that and take us back to where the system was decades ago.
Clennell:
Well, there’s only recently been this increase from 9 to 12 per cent, so if people are struggling to meet rent or mortgage commitments, would it really hurt that much to allow people access to this money, just for a couple of years?
Mulino:
Well, so what the modelling shows is that if you have somebody on around the average income and they, for 3 years, take their contribution down 3 per cent from 12 to 9, an individual will be $25,000 worse off at retirement and a couple $50K worse off.
What we’d rather do is support people through higher wages, through tax cuts. If you look back at the last few years, all of the attempts by this government, all of the successes of this government in boosting wages have been opposed by One Nation and opposed by the Opposition. And all of our tax cuts, 5 tax cuts for all taxpayers, have been opposed. So, that’s the best way to support people with what are cost‑of‑living challenges for many people.
Clennell:
If you had the choice of being able to pay a mortgage now or having no house and getting money when you’re 67, what do you think most people would choose?
Mulino:
Yeah. So, what we’re doing to put people in that very situation is that we’ve given them 5 tax cuts, and for somebody on the average income, they’re now paying $2,800 less, roughly, a year in taxes. That’s the best way to support them. We’re also supporting them through a whole raft of cost‑of‑living measures like cheaper medicines, like increased bulk billing rates. The last thing we should be doing is forcing somebody in that situation to raid their super. That’s going to be bad in the short‑term for them and terrible for their retirement.
Clennell:
The claim is this will push up inflation. How much would it push up inflation, in your view, a measure like this?
Mulino:
Well, I haven’t seen any modelling on that. But my fundamental opposition to this is what we should be doing to support people is by helping them earn more and keep more of what they earn rather than raiding their future. That’s the fundamental philosophical opposition here.
And I can only imagine that One Nation resorting to this – and it’s not all that different to what the Opposition’s been peddling – is there’s a fundamental philosophical opposition to super in all 3 of the parties on the right of Australian politics. They’re undermining super for short‑term political sugar hits.
Clennell:
You think this is a political winner for you, don’t you, you and Jim Chalmers? You think people are in favour of the super system the way it is, and the polls seem to bear that out.
Mulino:
Well, I think people are rightly proud of the fact that Australia has one of the best retirement income systems in the world. Lots of other countries look to Australia. When I talk to regulators in other countries, they say they’re looking to Australia. I think in a world where there’s lots of economic uncertainty, people saving for themselves is a real positive. People have now got to the point where people entering the workforce in Australia are going to save at 12 per cent super guarantee for their whole careers. That’s a huge positive, and the last thing we need is to undermine it.
Clennell:
How come you guys keep whacking new taxes on it?
Mulino:
No, no, we’ve strengthened the super system, so the Payday Super, the Low Income Super Tax Offset, that’s helped 1.3 million low income workers, so –
Clennell:
Sure, but I mean, you know, you’ve got your section 294s, or whatever you have, you’ve got the $3 million thing, you’ve started – you know, you guys obviously – your government obviously doesn’t believe that super garners enough tax revenue, philosophically, do you?
Mulino:
Well, so those measures affect a really small proportion of the system that are doing well enough that they’re going to be very secure in retirement. But what we’ve done in conjunction with that is through the LISTO, the Low Income Super Tax Offset, we’ve benefited 1.3 million people on low incomes. We’ve also got Payday Super, which is going to deal with that problem of $6 billion not going into people’s accounts. And at the Press Club a couple of weeks ago I announced some really significant reforms where we’re going to protect people more in the super system. We want there to be choice, but we’re going to ban a whole bunch of lead generation, and we’re also going to make sure the platforms live up to their promises.
Clennell:
Is there a world where you could imagine the government cutting tobacco excise?
Mulino:
I think what was really clear in Question Time today is that we really need to focus on the enforcement side of things. I was really interested in the evidence from the Illicit Tobacco and E‑cigarette Commissioner, who said that even if we significantly cut the excise and potentially cut it to zero, it’s still going to be possible for organised crime to make a profit.
So, we need to focus on that. And as Minister Butler pointed out, we’ve engaged in not just additional funding, but really positive engagement with a number of jurisdictions, Queensland and South Australia in particular, pointing to how you can actually make progress on this front.
Clennell:
It seems pretty out of control to me. I mean, do you rule out any sort of cut to tobacco excise?
Mulino:
Well, look, I’m not here to rule in or out anything, but I reiterate what the Treasurer said, which is that our focus is on law enforcement, and again, we had a number of ministers, I think, really thoroughly go through this issue today. Minister Burke pointed to the fact that the price that organised crime can make from illegal tobacco is way below the price of legal tobacco without the excise.
So we need to really focus on a whole‑of‑government and multi‑jurisdictional enforcement effort. That’s what we’re doing. We’ve put over $360 million into this, and we need to keep doubling down and make sure that all jurisdictions use best practice here.
Clennell:
Even the Budget papers say that across the 5 years, receipts from tobacco excise were down $8 billion. So the excise rate and the price isn’t really working at the moment in terms of revenue collection, is it? Because it’s just too expensive, so people are being driven underground to the illegal ciggies.
Mulino:
Well, I think the experts are really saying that in order to deal with this issue we need to look at enforcement, as I’ve said. And I go back to that evidence from the illegal tobacco commissioner, who said that, not just if you look at the price at which organised crime can make illegal tobacco in Australia, but also if you look at other jurisdictions overseas, the evidence there is that reducing excise alone is not going to have the kinds of effects that many people claim.
The other thing I would say is that –
Clennell:
You’d [inaudible] though, wouldn’t you? I mean, as an Assistant Treasurer, it’s not ideal that the price is so high that people are just, you know, buying things and not paying the tax?
Mulino:
Well, if the enforcement action is more effective, I think we’ll see some of those losses will prove –
Clennell:
Well, how much do you have to put into this enforcement action?
Mulino:
Well –
Clennell:
You’ve got $300 million, maybe you need to put a B in, the way things are going. I mean, you know, look, you go down any street in Sydney or Melbourne and look at all the illegal tobacco shops, or the tobacconists just sprouting up, selling illegal smokes. You’ve probably got one down the road from you. You don’t see cops going in there or any sort of enforcement happening. Where’s your evidence that enforcement’s working?
Mulino:
So we’ve invested that significant amount of money, and as I said, there’s 2 jurisdictions where they’ve made significant gains, and Minister Burke has pointed to, not just today but in other public forums, the fact that we’ve intercepted billions of cigarettes through enforcement actions at the border, we’ve also disturbed a number of illegal distribution retail centres. So there’s a lot of success in different jurisdictions. But I think so it’s fair to say that it’s uneven, and we need to make sure that those jurisdictions that aren’t doing a great job lift their practice to the best practice jurisdictions.
Clennell:
Are you finally prepared to admit house prices are dropping partly as a result of the government’s tax changes? I know I asked you 15 times last time. Are you finally going to admit it?
Mulino:
Look, Andrew, I think in that interview I agreed that our modelling had pointed to the fact that if you looked at our overarching changes on negative gearing and CGT, the modelling showed that those policies would lead to more people moving into ownership, but also to a moderation in house prices. So, that’s what the modelling says. But it says that it does it over 2 years, and it says that it will be a fairly mild moderation.
And the point that I was trying to avoid giving a simplistic answer to was some commentators at the moment trying to draw a straight line between what happened in the Budget and week‑to‑week changes in auction‑clearance rates. But our modelling shows that there will be a slight moderation, but that we still expect over the medium term for there to be increases in house prices.
Clennell:
What’s that modelling based on?
Mulino:
Well, this is Treasury modelling of the housing market, and Treasury modelling of the macroeconomy has a good track record. It stacks up –
Clennell:
Have you seen the modelling?
Mulino:
I’ve discussed the modelling with Treasury, I haven’t seen –
Clennell:
You haven’t seen the modelling?
Mulino:
What do you mean by ‘seeing the modelling’?
Clennell:
Well, could you just say to Treasury, ‘Look, you know, this is pretty important, house prices in Australia’ – have you said to the Treasury officials, as Assistant Treasurer, ‘Look, can you show me this modelling and how you work this out?’ You know, particularly –
Mulino:
I’ve discussed the modelling in detail with Treasury.
Clennell:
Okay. So how did they model it? What did they feed into the machine to come out with the modelling that they got?
Mulino:
Well, I don’t know quite what kind of answer you expect here for me to run through equations. But I think this modelling of the housing market deals with the core elements of what’s a very complicated market. And as I said, Treasury modelling of the macroeconomy and Treasury modelling of the housing market has a strong track record. And I think if you look at what’s happening in our housing market, which is that with housing finance approvals, for example, they’re growing more strongly among owner‑occupied than among investors. So it’s the kinds of changes in the housing market that we would expect if over the medium term we’re going to see more people owning and less people renting.
Clennell:
Because you’ve got private‑sector economists saying they’ll drop 20 per cent or so, haven’t you? So it does seem a bit incongruous with what Treasury told you in that Budget. I just wonder whether it would be worth releasing the methodology, releasing the modelling, or letting us know how they came up with the figure that they came up with in terms of what was really a slight moderation, is what they were talking about. What was the figure again?
Mulino:
No, there’s some commentators at the minute who are extrapolating and making all sorts of guesses or forecasts about what might happen. But what we’ve seen in the housing market –
Clennell:
What was it again? Was it 2 per cent –
Mulino:
Over a 2‑year period.
Clennell:
2 per cent less than it would ordinarily?
Mulino:
What it would have been. And what we’ve seen since the Budget nationally is that house prices have come off about 3 per cent, but there’s a whole bunch of factors that go into that. We’ve seen –
Clennell:
Which over a year would be about 12 per cent. But anyway.
Mulino:
No, but see, that’s the thing. I mean I think anybody who just extrapolates a particular movement over long periods of time, that’s not the way to think about complex markets.
Clennell:
All right. We’ll have you on at the end of the year and we’ll see where house prices are then. We’ll have that discussion. Daniel Mulino, thanks for your time.