KARL STEFANOVIC:
Treasurer, good morning to you.
JIM CHALMERS:
Good morning, Karl.
STEFANOVIC:
Before the last election you vowed to bring integrity back to politics. How much integrity is there in a broken election promise?
CHALMERS:
One of the reasons, Karl, that we made this change to come into effect after the next election is because we wanted to take it to the people and that's what we're doing. We said before the election we wouldn't make major changes to superannuation. This is a modest change. It leaves all the fundamentals of superannuation in place but it makes the superannuation tax concessions a bit more sustainable, it makes the Budget a bit more responsible. And that's our responsibility to the Australian people. We inherited a trillion dollars of debt and deficits as far as the eye can see and some of the pressures on the Budget are intensifying rather than easing, and so this is about responsible economic management. It's about making a modest but meaningful change to super where 99.5 per cent of people are unaffected. And even for the half a per cent of people with millions of dollars in their superannuation account they can still access tax concessions. They're just a little bit less generous.
STEFANOVIC:
My point is you said it wasn't going to happen and now you're saying it is going to happen. That's a broken promise.
CHALMERS:
I said there wouldn't be major changes to superannuation and this isn't a major change, it's a modest change.
STEFANOVIC:
The PM said there wasn’t going to be changes.
CHALMERS:
It wasn't something that we are contemplating before the election. In fact, it wasn't something we were contemplating for the October Budget either. But some of the pressures on the Budget, including the borrowing costs on that trillion dollars of debt because interest rates are rising, some of those pressures are intensifying. And our responsibility to people is to try and make the right decisions for the right reasons. Sometimes taking the right path is not the path of least resistance. And we take our responsibility seriously enough that we understand that when you make an announcement like we did yesterday, sometimes it does come with a political cost. But our overwhelming responsibility to the Australian people is to try and do the right thing. This is the right thing for superannuation and for the Budget.
STEFANOVIC:
The political cost is now the trust issue that you're alluding to. Are you going to apologise to the Australian people for breaking an election promise?
CHALMERS:
I genuinely don't think that's necessary, Karl. I think the Australian people expect me as Treasurer and the government more broadly to try and make these difficult decisions and try and get them right. And on the merits of the decision, I don't think anyone, I don't think any objective observer could say that this wasn't the right policy outcome. It does make superannuation a bit more affordable and the Budget a bit more responsible. And we need to do that because we've got all this debt in the system that every Australian pays the interest on and we want to try and get on top of things. And part of getting on top of things is recognising we can continue to give these tax concessions, but we can make them a little bit less generous for people who might have tens of millions of dollars in their super account.
STEFANOVIC:
With respect, you knew the debt levels. If it was such a good idea, if, as you said, there would be no major changes, why didn't you have the courage to take it to the last election?
CHALMERS:
Because we weren't considering it then, Karl. It wasn't on the agenda then and it wasn't on the agenda even into last year in the October Budget that I handed down. But as I keep saying, some of these pressures on the Budget are getting harder rather than easier. The Budget is getting a little bit better in the near term because we're getting good prices for our commodities and unemployment has got a three in front of it and we're getting the beginnings of wages growth. All of that's good for the Budget this year and next year, but after that, whether it's health care or aged care or disabilities or defence spending, but especially the interest costs on that trillion dollars of debt that we inherited from our predecessors, all of these pressures are intensifying on the Budget and we can't ignore them. No responsible government can ignore those pressures. That's why the decision that we took and announced yesterday is all about responsible economic management.
STEFANOVIC:
You're quite willing to break an election promise if something's not on the agenda, is that what you're saying?
CHALMERS:
I'm saying we’ve always got to try and take the right decision for the right reasons, even when it's difficult.
STEFANOVIC:
Okay, so no one feels sorry for the super‑rich, I get that. But is the real issue ‑ it won't generate the revenue you hope, and in the meantime you put the fear of God into everyone with a super account?
CHALMERS:
I don't think that should be the reaction. 99 and a half per cent of people are unaffected. And some people want to argue that the $2 billion a year that we'll raise from this, roughly when it's up and running properly, is too much, and some people will want to say that it's too little. It is a modest change, but it's a meaningful change, and that couple of billion dollars a year matters at a time when we're trying to get on top of some of these budget pressures.
STEFANOVIC:
Okay, what is next thing? Because I don't think you're going to stop here. Trust accounts, capital gains, negative gearing?
CHALMERS:
We put out yesterday an assessment from the Treasury of the cost of all of the various tax breaks, but I think we demonstrated in the announcement that we made immediately after all of those numbers were released that our priority and our focus and our intention is in the superannuation system. We believe in super. We created the thing. It's world class, but it's imperfect. And one of its imperfections is that we can't afford to give incredibly generous tax breaks to people who might have $100 million in super, and so we've made this tweak to the system so that we can make it a little bit more affordable, a bit more responsible. That's our priority when it comes to tax.
STEFANOVIC:
It's not an election, a broken election promise. It's a tweak. Any more tweaks coming to trust accounts, capital gains or negative gearing?
CHALMERS:
We haven't been working up any options on that.
STEFANOVIC:
That could be part of the agenda.
CHALMERS:
Well, it's not something we've been considering.
STEFANOVIC:
Here's the problem. You said that before about super, and now you're saying that about that, and therefore it erodes your credibility in the electorate.
CHALMERS:
Yes, but I'm being up‑front with your viewers, Karl, and saying that's not on.
STEFANOVIC:
The agenda yet, like superannuation.
CHALMERS:
When we look right across the tax concessions in the Budget, we think the most important place to act is superannuation. We will always try and take the right decision on behalf of your viewers, Karl. In the economy, none of these decisions are easy. We shouldn't pretend otherwise. But what we announced yesterday, I think, demonstrates first of all by putting it on the other side of the election, but also making sure that it's a modest change even though it's meaningful. All of these reasons, I think, demonstrate our priorities when it comes to tax reform.
STEFANOVIC:
Just to clarify, just before we go and let you do another hundred interviews, you're not going to touch trust accounts, capital gains or negative gearing?
CHALMERS:
It's not something we've been considering.
STEFANOVIC:
Yet.
CHALMERS:
Well, it's not something we've been considering. I think by announcing what we will do, that gives people the best understanding of where our priority is. Our priority is this modest but meaningful change in super.
STEFANOVIC:
Good to talk to you, Treasurer. Thanks very much. Appreciate it.
CHALMERS:
Thanks, Karl.