LAURA TINGLE:
Treasurer, thanks for joining us tonight. We won't officially know until tomorrow what the government's proposed tax package looks like, but we can say now that the pledge to keep the stage three tax cuts is now out the window. That's obviously a huge political call. Why should voters trust the government's promises in the future?
JIM CHALMERS:
Well, we have changed our view and we've changed our view because we’ve found a better way to provide more cost‑of‑living relief to more people in a way that doesn't add to inflation. The proposal that the Prime Minister will put forward tomorrow means more help for more people. It means a tax cut for every tax paying worker and it will be better for middle Australia, better for cost‑of‑living pressures, better for women and workforce participation, better for nurses and teachers and truckies. And as the Treasury analysis that I will release tomorrow will show, it will be better for the economy as well.
TINGLE:
But you have given a lot of ammunition to the Opposition just on the question of the lie, though, haven't you? The Deputy Opposition Leader says the election was won on a lie.
CHALMERS:
I think whether it's the Deputy Opposition Leader or Peter Dutton or Angus Taylor, they always want to play the kind of nasty, negative politics that they are familiar with. This is not about politics. This is about helping people with cost‑of‑living pressures in a more effective way. It's about providing bigger tax cuts for more people to help them deal with the cost of living. As I understand it, the Deputy Opposition Leader said today that if they are elected, they will unwind these changes. That means the Liberals and Nationals are going to the election with a policy to increase taxes on middle Australia in order to fund even bigger tax cuts for people on the highest incomes.
TINGLE:
Well, what finally brought you to a change of mind on this? I mean, the economy's changed, the outlook for inflation's changed, the cost‑of‑living pressures have obviously risen. But what was it that really, finally changed your mind?
CHALMERS:
I think people do recognise that it's been almost five years now since these tax cuts were legislated by Scott Morrison and in that time we've had a pandemic and a recession, a couple of major conflicts, but really what's motivating us here is we understand, we have listened, we know that people are under sustained and persistent cost‑of‑living pressure. This is about middle Australia, it's about helping people deal with these cost‑of‑living pressures. We understand that people are under the pump but we don't just acknowledge that – tomorrow when the Prime Minister stands up and announces this important change, we will be doing something about it.
TINGLE:
Have the changes in economic circumstances like inflation actually changed the way stage three tax cuts would have affected voters or how they would experience them?
CHALMERS:
I think certainly different kinds of cost‑of‑living pressures impact differently in the community including, for example, the impact of higher mortgage repayments and the Treasury analysis that I will release tomorrow alongside the Prime Minister's announcement will make it clear that we've taken that into consideration. One of the reasons why this is squarely about cost‑of‑living pressures for everyone but especially about middle Australia is we recognise that people are under pressure and that's why the tax cuts that the Prime Minister will announce tomorrow and why the Treasury analysis which backs it up shows that this is better for the economy because it takes into consideration the cost‑of‑living pressures. It takes into consideration the circumstances of middle Australia. It's better for women and for the workforce and it's better for the economy as well. And so I understand, Laura, that people will want to know why we've changed our view and the simplest answer to that question is we found a better way – a better way for middle Australia, a better way for cost‑of‑living and a better way for the economy.
TINGLE:
Well, when the tax cuts were first raised in 2019, the two big issues were their massive cost and the question of equity on stage three. Obviously, the Budget's in a better position are you still concerned, though, about those costs? Or is it the fact that the Budget is in a better position so that's not so big a concern for you?
CHALMERS:
We want to provide as much relief as we responsibly can in an affordable and methodical way and that's what this package is really about. And one of the reasons why the proposal we'll put forward tomorrow is revenue neutral compared to the old stage three tax cuts is because we know from Treasury and from consultations with the Reserve Bank that being revenue neutral is a key reason why we don't expect and they don't expect additional inflationary pressures in the economy as a consequence of the changes that we are making. We have delivered the first surplus in 15 years, there is a second surplus in prospect but we're not there yet, we've got the Budget in much better nick but the pressures are still there and so we didn't want to spend more than the envelope from the old stage three for good reasons including inflation. We didn't want to spend less because we want to provide the maximum relief we can in a far more effective way which recognises the pressures right up and down the income scale.
TINGLE:
What about the equity issue, then? Your comments in 2019 certainly suggested you found them inequitable then. Economists are pointing out that there's been a big increase in the number of taxpayers in that top tax bracket. They're entitled to feel a bit unhappy, aren't they?
CHALMERS:
I don't think so. I think when they see the package tomorrow, people will appreciate that there is a tax cut for all tax paying workers and that is deliberate. We're not in the business of setting people against each other when it comes to these tax changes. We want a tax cut for every tax paying worker. There is an emphasis on middle Australia and the reason for that, simply, is because we were able to find a way to make a meaningful difference to all taxpayers, rather than a disproportionate benefit for a few taxpayers. The many will benefit from this rather than the few, that is a motivating factor here but we found a way to do it in a way where everyone who pays tax and works gets a tax cut under what we're proposing.
TINGLE:
Well, some of the people who won't benefit are the ones who don't pay tax, whether they're pensioners, people on really low incomes and retirees. They're also being squeezed. Will there be any cost‑of‑living help for them announced by the Prime Minister tomorrow?
CHALMERS:
Tomorrow's focus will be on changes to the structure of the tax cuts. But people on low and fixed incomes have been a particular focus of the cost‑of‑living relief that we're rolling out right now. Cheaper medicines, more bulk billing doctors, energy bill relief – in so many of these ways we have recognised the pressure on people on low and fixed incomes. That has been a big part of billions of dollars which are rolling out from the first two Budgets. Tomorrow's emphasis is on working people and especially middle Australia.
TINGLE:
We'll be speaking with the Woolworths CEO Brad Banducci a little later in the program. You're talking to the competition watchdog about a possible inquiry into price gouging. What else do you need to see before you commission an investigation?
CHALMERS:
I've had some terrific conversations with the Chair of the ACCC about the powers that she needs in order to ensure that our supermarkets are as competitive as possible and we get a fair go for families and farmers and I hope to say more about that before long.
TINGLE:
And finally, what do you say to those who say that this is the end of tax reform? I mean, where does the debate go about where tax reform goes next and how we rebalance the system so we're not so reliant on personal income tax?
CHALMERS:
Well, I obviously disagree with that perspective because this is tax reform which is superior to the tax reform that it replaces. It ticks all of the boxes when it comes to the economy for all of the reasons that I've run through already. By providing a bigger tax cut to more workers to help with the cost‑of‑living, we can encourage more people to work, we can take the pressure off people who are under the pump, and we can tick all of the boxes that the Treasury advice that I release tomorrow will indicate. It's the right kind of tax reform, it's not an absence of tax reform. It's a superior tax reform to what it replaces.
TINGLE:
Treasurer, thanks so much for your time tonight.
CHALMERS:
Thanks very much, Laura.