Patricia Karvelas:
For more on the news of the day in and outside parliament, I want to bring in the Assistant Treasurer, Daniel Mulino. Welcome to the program.
Daniel Mulino:
Afternoon, PK.
Karvelas:
Okay. So on this very issue, this bill, you’ve put together everything, the Coalition doesn’t oppose the WATO, that $250 tax cut, but you’ve put it all together to wedge them. They’re right, aren’t they? It’s not the same as last year at all?
Mulino:
Well, so I don’t agree with the characterisation, but look, can we just go back to recent history? They’ve already voted against 3 tax cuts for Australians, they’ve voted against the re‑worked Stage 3 tax cuts, which were a much fairer tax package, they’ve voted against tax cuts for all Australians in this budget and the next budget; they went to the last election opposing them and saying they would remove the legislation supporting them.
Now when it comes to the package that we’re introducing on Thursday, it includes important tax reforms to make housing more accessible for all Australians, and particularly for young people, with changes to negative gearing and capital gains tax.
But it also includes a Working Australians Tax Offset and an instant deduction. So, they will be put to the test on Thursday as to whether they support the WATO and the instant deduction as part of a broader tax package.
Importantly, what we’re doing also with these tax reforms is to better align our tax system to give these tax cuts by better aligning taxes right across our tax system.
Karvelas:
Okay. The government was repeatedly asked questions today in Question Time, you were there, about the carve‑outs of the capital gains tax. And the questions were pretty specific, and I think fair, whether hairdressers or builders, gyms, pharmacies, vets, other categories would be carved out. Now, of course, there are the 4, you know, categories already in the legislation for exemptions. Would businesses like that be carved out?
Mulino:
Well, so just to reinforce the point you just made, PK, there are 4 exemptions and reductions already, which are already there. There’s the retirement, there’s the 15‑year asset or 2 active assets. So, they remain, and 9 out of 10 small businesses use them to varying degrees.
What we flagged on Budget night, what the Treasurer flagged on Budget night and the day after is that when it comes to venture capital, when it comes to businesses with very low, zero or small cost bases, that we would engage in consultation. We’re doing that right now.
Karvelas:
Just for them. So if you’re a hairdresser or a dentist, you wouldn’t – you’re not in the mix for a carve‑out?
Mulino:
No, no, and we’ve flagged that when it comes to small business, where similar issues might arise, we’ll have consultation, and that’s happening right now. So those issues have been raised with me; they’ve been raised with the Treasurer. We’re having consultation, we’re engaging in consultation on that right now.
And that’s very normal with tax policy that there be consultation, because it’s always complicated when you’re engaging with the big issues.
Karvelas:
So just to be crystal‑clear, your negotiations are also about businesses that are perhaps hairdressers or landscapers?
Mulino:
Well, we’re having discussions and consultation, so I don’t want to get ahead of where they might land, but just to flag that we are engaging with discussions.
Karvelas:
Okay. But that is much wider than just venture capital or start‑ups, isn’t it? So, it is significant if you’re widening it out.
Mulino:
Well, no, I think last time I was on your program actually –
Karvelas:
You –
Mulino:
– I flagged that we were talking with venture capital, but also that we were in a conversation with small business. So I think that was something that I –
Karvelas:
I suppose what I’m trying to get –
Mulino:
– discussed last time I was on your program.
Karvelas:
Yeah, you were quite upfront with me. So, but it’s kind of – now the Opposition’s kind of trying to nail down detail, which is what Oppositions, you know, do. Will we get any clarity on who gets carved out this week? Like how fast will this process be, where we’ll get some clarity so people aren’t so confused?
Mulino:
Well, I just want to be very clear also that it’s important that we bring legislation forward quickly so that we can start to move on these important reforms. But it’s also very normal with significant tax reform that it’s not all included in one bill.
If we go back to John Howard’s GST reforms, there were 7 reforms of that bill, or 7 additional pieces of legislation in the first year. If we go to the 1999 reforms that John Howard brought in, which included changes to CGT, I think it was a total of something like 30 bills that were affected over the course of a period of time.
So, look, it’s not uncommon, in fact it’s normal that tax reform would include reforms in a number of bills. We’re going to bring forward 4 elements on Thursday which will include the WATO, the instant deduction, negative gearing and CGT, but there will be elements that we will continue to engage on, and that’s very normal for tax reform.
Karvelas:
Okay. And then the detail, which of course is the thing that people are probably more exercised about, because, you know, they’ll work out whether they’ll be affected directly. When do you want to pass that by? What’s your timeframe?
Mulino:
Well, so there will be a lot of detail in the legislation that’s introduced on Thursday. But what we’re flagging is that that won’t be the only element of the legislation. So, there are additional pieces that we’re consulting on, and you know, to the extent that that leads to further changes, that will be dealt with in subsequent legislation.
I think it’s entirely normal that there be an initial bill and that subsequent issues be dealt with by subsequent bills.
Karvelas:
Okay. And then the subsequent bills are to be passed by the end of the year?
Mulino:
Well, so there’s no particular timing flagged, but look, the consultation is happening right now on a range of issues. I’ve been engaged in some of that, the Department, and of course the Treasurer is leading that.
So that’s meaningful, in‑depth discussions that are going on, and again, it’s quite normal for there to be an initial piece of legislation and for additional issues to be dealt with later.
Karvelas:
And then of course there’s the Senate process. Do you accept that the Senate should be given some time to properly pour over the details?
Mulino:
Look, there will be a proper set‑up process. Again, I don’t want to foreshadow there my role what that would look like exactly.
Karvelas:
Yeah.
Mulino:
But there will be discussions and appropriate consultation in that realm.
Karvelas:
Do you agree it needs to be nailed down as a matter of urgency because of the uncertainty? I mean people making investment decisions, making all sorts of decisions about what they do, what to know, what this will look like; isn’t that fair enough?
Mulino:
Well, so we’ve flagged proposed start times for these changes in the Budget papers.
Karvelas:
No, but people don’t know if they’ll be in or out if you’re doing carve‑outs, that’s what I’m referring to.
Mulino:
Right. And so, you know, there’s a bit of lead time for those different changes, but that’s why it’s important that there be a first piece of legislation that’s timely, that’s been brought forward relatively quickly, and that’s good that that’s been brought forward in the sitting week immediately following the Budget week.
But again, it’s entirely normal that there would be other pieces of legislation that will involve pieces of – that will reflect pieces of consultation that have been undertaken after that.
Karvelas:
The other part of your reforms in the Budget were cuts to the NDIS, and they’re quite significant. The Opposition NDIS spokeswoman, Melissa McIntosh, says there is no guarantees that the Coalition will support your legislation. She’s essentially left the door open to delaying the bill, even if it maybe puts at risk your growth targets. I’d like your reflections on that. If there is any delay, what sort of impact does that have on your projections?
Mulino:
Well, can I just reiterate that the NDIS is an incredibly important reform. I was an adviser back in the time when that was brought in. Look, I see it as a reform which is critically important for providing an additional part of our social safety net and protections, that it provides people with a disability, more autonomy, and more consistency in the benefits they receive.
The reforms that we put forward in the Budget provide for a more targeted and better system, it provides for a more sustainable system, which I think will provide better protections for people with life‑long serious disability.
Now this is also though a set of reforms that is important for its fiscal sustainability. And I think it’s a real test for the Opposition. If they play politics with this, I think that’s both irresponsible in terms of the budget, but also in terms of the people who are benefitting from the NDIS. This is something which the Opposition should engage with seriously and not play politics with.
Karvelas:
ISIS brides, this next cohort looks like they’re going to be landing while we’re on air in the next hour or so. The Opposition says you just haven’t done enough to stop these people coming back. We’ve got these, you know, 2 semi‑large cohorts that have come back now, you know, when the second lot come back today.
Governments use a lot of strong rhetoric, but they’re still coming, they’re still landing in Australia.
Mulino:
Well, look, as the Prime Minister made very clear today, he doesn’t support anybody who provides any kind of support to ISIS. And that is something which I would hope would have support right across the political spectrum.
What we have said is that we are not providing any assistance to any of the people in this situation, but that if they have rights to return, what we will ensure is that the full force of the law is applied upon their return.
It’s an example of an issue where I believe the Opposition is playing dangerous politics and trying to use an issue where we are basically applying the same protocols, the same processes, the same laws that they applied when in government, and in fact they allowed an ISIS fighter to return.
We are applying all the same protections they did. They are making all sorts of claims and insinuations as part of a broader strategy of trying to fight off One Nation on their right wing, and it’s really concerning and troubling that they’re doing that.
What we’re doing is applying the law and operational procedures in exactly the same way that they did in government and relying upon the advice of our expert security agencies.
Karvelas:
Thank you so much for coming in.
Mulino:
Thank you.
Karvelas:
And that’s Assistant Treasurer, Daniel Mulino, on the latest default energy offer and the government’s efforts to push its tax reforms through the parliament.