Jim Chalmers:
Good morning, everyone. It’s a really important day today. Today, we introduce the third major tranche of the tax reform legislation to give effect to the very ambitious tax package that we announced in the Budget.
Our tax reforms are all about cutting taxes for workers, making the housing market fairer for first‑home buyers, and better aligning the tax treatment of income from working and income from assets. Today, this trusts legislation it’s a really important step when it comes to tax reform.
There are legitimate reasons for people to have trusts, but they do mean that a small proportion of Australians can manage their tax affairs in ways that aren’t available to the vast majority of Australian workers. That’s why, for the past 50 years or so, there have been report after report after report recommending that trusts be reformed in the sorts of ways that we are proposing with the legislation that I introduce to the House today.
In the last 20 years or so the use of trusts has doubled, but it’s still only something available to a very small proportion of Australians. I think more than 95 per cent of Australians don’t receive trust income, and around 10 per cent, or less than 10 per cent of small businesses will be impacted in any given year by the changes in the legislation today. It is also the case that most trust income is received by the wealthiest 10 per cent of households. So, trusts can be a legitimate way for people to manage their affairs but they are a way that’s only available a small proportion of Australians, not available to a large number of workers.
The arrangements that we start legislating today will mean a fairer tax system, and will also fund tax cuts for workers. There are a range of very sensible exemptions. The changes don’t come into place until the middle of 2028 and we’ve provided a number of options for people to pick up and run with, should they want rollover relief to restructure – should they want to elect to lock in distributions and avoid the minimum tax – there are a whole range of sensible provisions that we have made to make sure that this reform is the best version it can be, and to take into consideration a whole bunch of feedback and consultation that we’ve been doing since the Budget as well. So, a really important day.
Tomorrow, I’ll be heading to the G20 Economic Ministers Meeting in Thailand. This is an important opportunity to engage with the world’s biggest economies and some of the most important decision makers. The focus will be on fuel security, global oil prices and developments in global bond yields, which are impacting borrowing costs right around the world. We have a sliver of the public debt that other countries have, but we won’t be immune from some of these developments. We know from the World Economic Outlook that the global volatility, made much worse by the war in the Middle East, is pushing up inflation and weighing on growth around the world and here in Australia. You can see that in the World Economic Outlook. You can see that in developments in our own economy and we will continue to engage at this really important time.
We’ll continue to manage the budget responsibly. Part of that is engaging in this tax reform legislation that I will be introducing later this morning. We know that it’s contested, we know that it’s contentious. Tax reform always is, but it’s really important.
Journalist:
Last night, the Prime Minister made it clear that because of lobbying from ACCI directly, last Thursday night he made the decision to change the ATO surcharge and extend that. Were you rolled by the PM?
Chalmers:
No, not at all. It is true that there were discussions with ACCI on Thursday. We were involved in some of those discussions at office level. They were engaging with my team –
Journalist:
Were you overlooked by ACCI?
Chalmers:
If you let me set it out for you, then I’m happy to take a subsequent question from you if you like. On Thursday, there were discussions with the business community. On Friday, Daniel Mulino and I did take a proposal to ministers to step in to provide a much longer transition period so the ATO had more time to consult with small business and to get this right. There was also work happening on Wednesday of last week. The Prime Minister and I were in discussions on Wednesday of last week. He had a view, and I agree with it, that we needed to step in to provide this longer transition period to allow the ATO the time –
Journalist:
But it was his view? He decided and then you took it?
Chalmers:
We had the same view. We had the same view and I’m trying to be very clear with you about that because I know there’s reporting contrary to that. Before those discussions with the business community – those exchanges that the Prime Minister was right to reference in his speech last night – there was work happening already on the Wednesday of last week. There was engagement with the business community on Thursday and we were part of that engagement. I took a proposal with Daniel Mulino to ministers on Friday. I spoke with the ATO commissioner very early on Friday morning to run him through the proposal that I was taking to ministers.
The interpretation that I’ve seen in the course of the morning is not quite right. The Prime Minister and I were working together on Wednesday of last week, we were engaging with the business community on Thursday of last week to make sure that the ATO had the time to get this right, and that’s why we stepped in in the manner that we did. The Prime Minister and I obviously agreed that that was the best way forward, and that’s why I proposed it to the colleagues on Friday.
Journalist:
Could the government have handled the surcharge ban rollout better? Do you have any regrets about, for example, hailing it as a cost‑of‑living measure before small businesses have to increase their prices and the ATO consequence?
Chalmers:
I made it really clear, on the day that the ban came into place at a press conference in my electorate in Logan City, that this is all about making sure that the price that you see on the menu is the price you pay when you tap your card or your phone. It’s all about saving businesses, especially small businesses, more than $900 million a year in interchange fees. We’ve already seen some welcome developments from the banks lowering interchange fees in response to the announcement from the Reserve Bank and the implementation of the ban on 1 October.
When it comes to the ATO decision not to accept credit cards, I think it’s self‑evident in the fact that we stepped in to ensure a longer transition period. I think it’s self‑evident and it’s clear that more consultation should have happened in advance of the 1st of October. We’ve been clear about that already. That’s the reason we’re providing the resources to the ATO to take more time to do more consultation and to get it right.
Journalist:
Just on your speech last night, you’ve given a warning not to mock voters that are looking to One Nation. Tell us about that warning and why did you decide to issue that?
Chalmers:
We don’t take the outcome of the next election for granted. We never have and we never will. The speech that I gave last night is about not underestimating our opponents. It’s about not dismissing the very real concerns and pressures that people are feeling right now in our community. Our strategy is not to dismiss or disregard or denigrate anyone who is looking for alternative political options because they’re under pressure.
Our response, first of all, is to recognise the real pressures that people are under. Secondly, to respond in real and tangible ways with tax cuts and more bulk billing, more parental leave, and higher wages. Thirdly, to reform the economy in the interests of working people, and that’s what today’s trust legislation is all about. It’s what the tax reform package and the housing market reforms in the Budget are all about as well. We know people are under pressure. We know that that pressure is evident in our politics as well as in our economics. I have never underestimated that and we’ll never underestimate. We’ll never take for granted the outcome of the next election. We know that people are under pressure and we don’t just acknowledge that, we’re acting on it.
Journalist:
Treasurer, a couple of weeks ago, the Prime Minister at the top of the week flagged that further cost‑of‑living relief could be on the way for Australians in MYEFO. That Sunday, on Insiders, you downplayed that, I’d say. Is there any further clarity for Australians as to whether they can expect further cost‑of‑living relief in MYEFO time?
Chalmers:
First of all, we’re rolling out cost‑of‑living relief in the form of tax cuts and more bulk billing. I made it clear in the interview I did with David Speers that, consistent with our practice throughout all of our budgets and budget updates, we do what we can for people, constrained by the very real pressures that are on the budget at the same time.
So, from budget update to budget update, we weigh all of that up. We have provided cost‑of‑living relief in a range of ways over the course of the last 4 and a half years. We need to be very cognisant of the pressures that the budget is under right now and the pressures that people are under right now, and to strike the right balance. That’s what we intend to do, not just in the next budget update, but in all of the budget updates.
Journalist:
Indigenous residents in remote communities are saying that they’ve been trapped in their places because of the high fuel prices. Would you consider additional measures to help make their fuel less expensive?
Chalmers:
Obviously, we’re aware of the extra pressure being piled on the people because of high global oil prices. That manifests itself in cities and suburbs and in remote communities as well, where the price of fuel can often be higher because of transport costs and for other reasons. We have stepped in in the past to provide petrol price relief. We know that there are a whole range of ways that we can provide cost‑of‑living relief, and for the time being we’ve chosen other ways – tax cuts, bulk billing, other kinds of cost‑of‑living relief. But we’re very cognisant of the pressures that people are under, and as we put the mid‑year budget update together, obviously, all of those pressures will be front of mind.
Journalist:
You spoke last night about the next 12 months not necessarily getting much better in terms of Australia’s economy. Are you saying your power was to do anything to try and make it better in the next 12 months, or is this what we’re resigned to now?
Chalmers:
I was actually making the opposite point. When you look at the Reserve Bank forecasts and you look at the Treasury forecasts, there is good reason for some cautious confidence. Both of those institutions have inflation coming back into the target range by the end of next year. Both of those institutions are expecting real wages growth.
Journalist:
Do you think people will feel better this time next year?
Chalmers:
The point that I was making in the speech, which you’re asking me about, is that there are good reasons for some cautious confidence about the outlook this time next year. Obviously, there’s more than the usual amount of uncertainty around forecasting. Predicting the economy is difficult in calm times, and these aren’t calm times.
With all of those caveats, the point that I was making is that both the Reserve Bank and the Treasury are expecting inflation in the band this time next year. They’re expecting real wages to be growing again. A lot of economists by then – not that I would make this prediction – are expecting interest rates to be easing by this time next year, when you look at the Bloomberg survey of market economists. That’s the point that I was making in the speech, to acknowledge that these are especially difficult times for people.
The war in the Middle East is making that worse. It’s been a disaster from a cost‑of‑living point of view for Australians and from an economic point of view, the end of the war can’t come soon enough. It’s piling the pressure onto people and you can see that. The point that I was making in the speech is we are hostage to developments in the Middle East, but there are good reasons for some cautious confidence when you look at those Reserve Bank and Treasury forecasts about this time next year.
Journalist:
As the ATO works through this issue with the cards – the RBA, the card providers – whatever the resolution is, are you hopeful that that resolution will involve businesses being able to use a credit card beyond June 30?
Chalmers:
I don’t want to pre‑empt the consultation that we’ve asked the ATO to do and provided the resources for them to do. We stepped in on Friday to make sure that the ATO will continue to accept credit cards until the end of June next year. That provides the ATO plenty of time to do genuine consultation across a whole range of these areas. I don’t want to pre‑empt that consultation. I’ve had a discussion with the ATO about some elements that they might look at as they go about doing that.
But from a government point of view, we stepped in for good reason. We wanted to ensure that they had the time and space to do this consultation properly with the business community. They’ve undertaken to do that, and that’s a good thing. Thanks very much, everyone.