PETER VAN ONSELEN:
I'm joined now out of Parliament House by the Assistant Treasurer, David Bradbury. Mr Bradbury, thanks for your company.
DAVID BRADBURY:
Good evening Peter, good to be with you.
VAN ONSELEN:
You must be heartened by Newspoll, obviously you want to see a little bit more movement because if it sits where it is you're probably a goner in your seat, but its heading in the right direction.
BRADBURY:
Look, I think that's the case and certainly I think it reflects the fact that there is strong support out there in the community for our plans to spread the benefits of the mining boom. Of course, we are already seeing some of the assistance payments that we're starting to send in the direction of families and pensioners, making their way into people's bank accounts and I think over coming weeks we'll see the Schoolkids Bonus start to flow through. Of course when we get to the first of July, people will see the benefits of tax reform, tripling of the tax free threshold, and for some seven million Australian workers, a tax cut. So I think people do appreciate the nature of the patchwork economy and I think there's also a strong recognition that the Budget has been a very strong strategy in trying to address that and spread the benefits of the boom.
VAN ONSELEN:
See, there comes that word again, the "patchwork economy", you say that people appreciate the nature of it. I'm not sure that they do and I know that your own backbench don't appreciate the use of the language. A number of them have told me that they wish the Treasurer, and now I'll add you to the list, would stop calling it a patchwork economy because it sounds like it saps confidence from the management of the economy because it has a negative undertone to it. How do you respond to that?
BRADBURY:
I don't have that particular undertone when I hear the word "patchwork economy" and I think what it does demonstrate to people is that, on the one hand you could say it is a two-speed economy, but that's probably not necessarily correct because the economy's operating at many more speeds than that. But I think the point that it makes, that people…
VAN ONSELEN:
Sorry Minister, but I think you're right by calling it a patchwork economy. I guess I'm talking about, John Howard was very good at always sounding upbeat about where things were, even through thick and thin, and ultimately that's why when it got to the pointy end of the electoral cycle people had confidence in him. But when you look at the government at the moment, one of the problems is that despite international accolades in the management of the economy, particularly towards Wayne Swan, domestically there's doubts in people's minds and some members of the backbench that I'm talking about here have concerns about the use of the language, accurate as it might be intellectually, they worry that is not very good for the salesmanship of the government's economic record.
BRADBURY:
I think the government's been very strong in advocating the strength of the economy but we also recognise that not everyone in the economy is benefiting from that strength. Now, to recognise that is not to downplay the strength of the economy but it's just to recognise simply that there's more work to be done from the government, in terms of ensuring that we spread those benefits. Can I make this point on the broader question of confidence, that if people are suggesting that the use of the term 'patchwork' is somehow sapping confidence, let's have a bit of plain speaking here and recognise that what is sapping confidence has been the relentless negativity of Tony Abbott and the Liberal Party in talking down the economy at every turn. We have a very strong economy. If you look at the growth in the economy, it is amongst the strongest of the advanced economies; we have low unemployment; we have contained inflation. At the same time, net debt is very low but we have this record pipeline of investment. We saw figures recently that show that the amount of investment coming into Australia is somewhere in the order of a half a trillion dollars, and that's just in the resources sector alone. So I think that there are plenty of people on our side of politics talking up the economy, but recognising that not everyone is doing it as well as perhaps those global figures do indicate, but we think it's important that there be a bit of a reality check and unfortunately the Liberal Party is determined at every turn to talk down the economy.
VAN ONSELEN:
Can you help us, a lot of people can't understand how, when the Global Financial Crisis in 2008 hit, the Government's response was to blow the budget, I don't say that pejoratively, but to do so in order to cash splash, to try to keep money flowing through the economy, because they thought that was important at that time. Here we are in a situation where a lot of discussion centres around the idea that we might be running into another Global Financial Crisis with what's happening in Europe, yet the Government's response is very much to argue that you've got to hold the fiscal line on the budget surplus, because that's what the times call for. What is the difference between the decision then and the decision now, in terms of economic reasoning?
BRADBURY:
I think the global economic landscape is very different today to the circumstances that existed immediately preceding the GFC. To begin with, America is starting to recover, its economy is starting to improve. There are certainly concerns around Europe, I think everybody recognises that, but in terms of where we're placed at the moment, I think it would be a grave miscalculation to suggest that where we're at at the moment is comparable with where we were at immediately leading up to the GFC. You know there were difficulties…
VAN ONSELEN:
Not as bad, you mean, not as bad, the situation?
BRADBURY:
No, not as bad, in terms of the liquidity crisis that was existing, funds and transfers of funds between banks were freezing up. There are a whole range of considerations there that were effectively the constituent parts of what we now come to call the Global Financial Crisis. Now, there are challenges, but they are not in that same magnitude. Now, we monitor the developments that are occurring in other parts of the world, particularly in Europe, but there is still a lot of activity occurring throughout the global economy, growth within our region continues to be reasonably robust and that is one of the key driving considerations when you look at the demand for our resources, the goods and services that are being produced here in Australia. So I think that we should recognise those risks, in Europe in particular, but we should also be very conscious of the fact that there are plenty of signs of optimism elsewhere within the global economy. And as far as Australia's concerned, we are very much located precisely where you would want to be to take advantage of those opportunities.
VAN ONSELEN:
We've had a tweet that's come in that is critical of you talking about the tax-free threshold again, asking me to ask you about the low-income earners' rebate and how that will be treated. This goes to this point, doesn't it, that it's little bit tricky to claim that the tax-free threshold has been tripled and just ended there, because there were already a number of rebates in place that effectively meant that it was sitting there already.
BRADBURY:
Look, couple of points to make. First one is, by tripling the tax-free threshold, you actually add a layer of simplicity to the tax system that wasn't previously there. Just think about what you said there, the existence of the low income tax offset, which we had increased and that's certainly a key part of our efforts to try and take away some of those disincentives that stop low-income earners from earning more money or engaging in more employment. That particular measure, in order to get the benefit of it, you had to factor that in to your taxation arrangements, file a return and claim that particular offset. Now what we're doing is we are lifting the threshold. I make the point that everybody gets the benefit of the increase in the threshold, whereas previously with the low-income tax offset, only those that fell within the band that that applied got the benefit of that. But additionally, we will now have somewhere in the order of a million Australian taxpayers that won't have to put a tax return in, a million Australians not having to put a tax return in. So that is genuine tax reform. The low-income tax offset, it was a positive initiative, but I reckon this one blows that out of the water.
VAN ONSELEN:
But there is a big difference though, isn't there, between spruiking it because it because it made things more simpler and avoids people having to put in a tax return versus the impression, I guess, that tripling the tax-free threshold gives to some people, which is that they are going to suddenly have a lot more money in their pocket. That's a far better, albeit inaccurate, sales pitch, compared to this notion that it just simplifies the tax system.
BRADBURY:
But I restate the point that many more Australians will get the benefit of this measure than the low-income tax offset, that's the first point to make. And that's because increasing the tax-free threshold flows through to taxpayers on higher rates as well. The other point to make is that even down at that lower rate, there is a larger number of people that fall within the scope of the tripling of the tax-free threshold than the low-income tax offset. So, look, people might want to quibble about in overall terms what the impact might be, but I can tell you what, there are now going to be a million people that don't even have to put a tax return in, if you're one of those million people, I reckon you'd think this was a pretty positive development.
VAN ONSELEN:
I won't disagree with that, putting in tax returns is an absolute pain in the arse. But listen, we are out of time. David Bradbury, we've just talked tax policy for a couple of minutes, with any luck we haven't lost all our viewers for that. But I thought I would just throw in this tweet before I let you go. Take this as you will, it's positive but in a guarded sense. Somebody said "Bradbury is definitely one of the government's best performers", if they put the pen down that would have been good, but then they said "but, that's not saying much". So I'll leave you with. David Bradbury, much appreciated, thanks for joining us on Showdown. Appreciate your company.
BRADBURY:
Thanks very much, Peter.