Sally Sara:
You’re listening to Breakfast. Well, in a few minutes, One Nation MP Barnaby Joyce will be my guest. You’ll also be hearing from Innes Willocks from the Australian Industry Group as well. But first, a parliamentary inquiry into the federal government’s proposed changes to negative gearing and capital gains tax discount will begin today. It will be the first of only 2 days of hearings. Four peak business groups have united to call on the government to dump its changes to capital gains tax, which they say will discourage investment at a time when Australia needs it most. Daniel Mulino is the Assistant Treasurer and also Minister for Financial Services. Daniel Mulino, welcome back to Breakfast.
Daniel Mulino:
Oh, morning. Thanks for having me on.
Sara:
Before we get to the inquiry, what does the federal government make of this breaking news with Pakistan saying a deal has been reached between the US and Iran.
Mulino:
Well, clearly we’ve been wanting a deal to happen over the last few months and we’ve been wanting to see a peaceful resolution and the reopening of the Straits of Hormuz. So, I don’t have any of the details at hand yet, but it sounds positive.
Sara:
Returning to your portfolio, the Council of Small Business Organisations, the Chamber of Commerce and Industry, the Australian Industry Group and the Business Council say Australia can’t afford policies that make the country less attractive to investment, less attractive investment destination. What concessions will you make?
Mulino:
Well, can I just say I don’t accept that proposition in that what we’re doing through our changes is returning to the taxation of real gains rather than an arbitrary reduction of nominal gains. And there’s a broad agreement, I think, amongst policy experts and economists, both in government and the private sector, that the current system is distorting decisions. The reforms that John Howard brought in skewed decisions away from certain asset classes into standalone property and had the opposite effect that it was supposed to.
So, I believe that this will actually be more neutral across asset classes and make for a better tax system. When it comes to concessions, we are discussing a wide range of issues with stakeholders. So, today’s public hearings and tomorrow’s public hearings are a part of that. But we’ve already been engaging with venture capital and that was flagged by the Treasurer on Budget night and a wide range of other stakeholders, as is appropriate.
Sara:
So, what’s your message to this coalition of business groups? That you’re open to further concessions on the issues that they’re identifying or that that’s not going to be a discussion?
Mulino:
No, no, I think I would say that we are open to discussions and clearly they’ve now got the opportunity to put their views to this Senate inquiry. And this is very normal for a major piece of reform, whether it be in tax or otherwise, and will engage in good faith with whatever it is they put forward. But I would also say that when it comes to some of the broader propositions that stakeholders are making about aspiration or investment, look the current system isn’t working well so we need to reform it. And I think you can point to a number of comments from tax experts like Bob Breunig and Ken Henry, but also some of the chief economists at our biggest banks who are saying that this tax system is going to lead to a much less distorted set of decision making between asset classes when it comes to investment. It’ll be a significant improvement on the changes that John Howard brought in, which simply led to a fuelling of house prices.
Sara:
Are you open to making substantial changes with these, particularly with what business is pushing for, or is this more likely to lead to minor adjustments only?
Mulino:
Well, what I would say is the Treasurer flagged on Budget night that there are some special circumstances. He flagged venture capital as one, businesses with a very low cost base. That was something which he indicated both on the night and the day after at the National Press Club. And there has been a considerable amount of consultation with that sector. There are other issues that are being flagged by business groups and others which we’re engaging with. So, this is all very normal for tax reform, that there be an overarching framework piece of legislation, and that there be subsequent pieces of legislation that deal with a range of additional issues. This is very normal and it’s appropriate for governments to engage in details because there are always details when it comes to tax.
Sara:
After breaking election promises on tax in the Budget, does the government need to take some responsibility for One Nation’s increasing support as voters look for alternatives?
Mulino:
So, I think One Nation’s rise in the polls has been something that has been occurring over quite some months now. It was occurring well before the Budget. And I think it for me reflects a frustration on the part of many people at the way the system is working for them and the fact that they’re feeling pressures on a number of fronts. Pressures from cost of living, pressures from an increasingly uncertain global economy and political situation. So, I think for me, the long term way to deal with that for the government – and this is what we’re focusing on – is to deal with some of those real world cost‑of‑living pressures by giving people assistance, whether it be through tax reform, fixing our housing system or things like cheaper medicines and better access to bulk billing.
What I’d say about One Nation is that they are very good at identifying grievances. They’re not very good at solutions. And in fact, Pauline Hanson’s voting record over recent years has often been to the detriment of people seeking pay rises, to the detriment of workers’ rights. As that comes to light more, I think people will judge that in due course.
Sara:
Daniel Mulino, thank you for coming in this morning.
Mulino:
Thanks very much, Sally.
Sara:
Daniel Mulino is the Assistant Treasurer and Minister for Financial Services.