Sally Sara:
Treasurer, welcome back to Breakfast.
Jim Chalmers:
Thanks Sally. It’s nice to see you in person.
Sara:
These budget measures will help every income taxpayer. Why do that rather than target those in most need?
Chalmers:
Well, it’s how the tax system works, that if you want to cut the bottom rate of tax, as we’re doing on 2 more occasions next year and the year after, then the benefits flow up and down the income scale but the benefits are felt disproportionately for younger people, people entering the workforce, people on lower and middle incomes and that’s deliberate. What we’re doing with these tax cuts is we’re topping up the tax cuts which are already flowing. The combined benefit of all 3 tax cuts is an average of about $50 a week and that’s about helping people with the cost of living in the most responsible way we can.
Sara:
Almost everyone is struggling with the cost of living but really none more so than people relying on social security. Budgets are very much about choices. Why did you choose tax cuts but to leave the rate of JobSeeker below the poverty line?
Chalmers:
Well, first of all, there’s a key difference between social security and the tax system. One is indexed and one isn’t and so the single rate of JobSeeker, I think, from memory, is $138 higher than when we came to office. And part of that, but not all of that, is that we gave a permanent increase to JobSeeker in one of our budgets. We found room to do that. From budget to budget, you use a different combination of ways to help with the cost of living. In this Budget, tax cuts for every taxpayer, strengthening Medicare because more bulk billing means less pressure on families, cheaper medicines, cutting student debt, and the energy rebates as well. This is the best combination of affordable, responsible cost‑of‑living relief that we’re rolling out.
Sara:
What about tax indexation? What about ending this charade of giving back the proceeds of bracket creep once and for all and fix it?
Chalmers:
Well, I don’t see it that way. I wouldn’t describe it the way that you have. I think giving back bracket creep is a really important thing that we’re doing now on 3 occasions and we’ve only been in office for 3 years. It’s an important way that we help people with the cost of living. There’s an economic dividend too when it comes to encouraging more people into work. Most of the OECD countries don’t index their tax scales or their tax brackets, we don’t here in Australia. We’ve got to make it add up and that means providing this cost‑of‑living relief when we can in the most responsible way we can.
Sara:
You did announce a ban on non‑compete clauses for most workers. What do you think this will mean for productivity and wages?
Chalmers:
We know from the Productivity Commission and from independent experts like e61 that when you ban these non‑compete clauses for millions of Australians, it will boost competition, make our economy more productive, there’ll be more economic growth and probably, most importantly, it will boost wages. We’re talking here about an estimated 4 per cent increase in wages for the millions of Australians who are unnecessarily caught up in these non‑compete clauses and that’s why we’re abolishing them.
Sara:
What’s the risk that this move undermines small businesses?
Chalmers:
I don’t see it that way at all. This is really about making sure that people can find higher paying job opportunities and this is not unrelated to the tax cuts because a big theme of the Budget is what we’re trying to do to rebuild wages and incomes to make sure that people can earn more and keep more of what they earn. Banning non‑competes is part of that and the tax cuts are an important part of it too.
Sara:
Luke Achterstraat is the CEO of COSBOA, the Council of Small Business Organisations Australia. He has expressed concern also that the instant asset write‑off is absent from the Budget. Let’s take a listen.
[Excerpt]
Luke Achterstraat:
Now the government’s trying to make reassurances that they’ll have more to say about the instant asset write‑off in coming weeks but we’ve said that we need certainty about this program because small businesses making investment decisions need to know that that program is good to go and accounted for. So, we were quite shocked and quite disappointed that the Budget did not cater for that last night and once again small business has been left a bit out in the cold, sort of questioning where that program is.
[End of excerpt]
Sara:
That’s Luke Achterstraat from COSBOA. He was saying when we spoke to him earlier, Treasurer, that small business is shocked and disappointed by the government, not feeling much love from the government. One of the worst budgets for small business. How do you respond to that?
Chalmers:
Well, of course that’s not the case and if Luke is looking for certainty, then he should call the Liberal Party and tell them to stop holding up the earlier round of instant asset write‑off for small businesses. We are enthusiastic supporters of small business. Whether it’s the instant asset write‑off we’ve been trying to legislate, whether it’s the energy bill relief, whether it’s the competition policy reform to try and level the playing field, changes to the relevant acts to make it easier for small business, we are big, enthusiastic supporters of the sector and if Luke and others want to see that instant asset write‑off passed, then they need to get onto the Coalition who has been holding it up unnecessarily, as I understand it, in the Senate.
Sara:
Can you guarantee that it will be there ahead of the federal election?
Chalmers:
Well, the existing instant asset write off, the $20,000 write off that we’re trying to legislate is a matter for the parliament. And as Luke, I think, said in the grab that you played from him, we have indicated we’ll have more to say about small business in the course of the coming weeks and months.
Sara:
You’re listening to Radio National Breakfast and I’m speaking to the Treasurer, Jim Chalmers. Treasurer, you’ve named a number of global volatilities in your speech. If you were to name one that keeps you up at night, what would it be?
Chalmers:
These escalating trade tensions are obviously keeping us awake at night because trade tensions are bad for growth and they’re bad for inflation. They are a big part but not the only part of the global economic uncertainty which does cast a dark shadow not just over our Budget and our economy but the budgets and economies of the world.
And so what the Budget tries to do is to say there are 2 kinds of pressures, cost of living and global uncertainty and to try and deal with those both at once. The best insurance against that uncertainty is to make our economy more resilient with investments in Future Made in Australia and making our economy more competitive and productive and dynamic, but also rebuilding wages and incomes and living standards. And those are really the 2 objectives of the Budget because they recognise that the global economy is a pretty dangerous place right now. There are a lot of risks in the global economy. Our own economy is turning a corner in encouraging ways but there is enough risk in the global economy to trouble us and the Budget is designed to respond to that.
Sara:
How do you rate Australia’s chances of avoiding a recession in the months ahead if there is a global downturn in the next year or so?
Chalmers:
Well, we expect the Australian economy to continue to grow and for growth in our economy to pick up. This is one of the reasons why we do think our economy is turning a corner because we’ve got growth rebounding solidly, we’ve got inflation down, unemployment’s low, real wages are growing, we’ve got the debt down, interest rates have started to be cut and all of that augurs well for our own economy.
Our economy is performing in exceptional ways compared to other economies around the world and that’s because we’ve made that progress on inflation together without sacrificing heaps of jobs like other countries have had to do and that makes us stronger and more resilient in the face of all of these global economic shocks.
Sara:
Next financial year, the gross debt is more than a trillion dollars. That’s about a third of GDP. How’s that going to be paid down?
Chalmers:
First of all, the gross debt this year is $177 billion lower than when we came to office because of our efforts and that’s saving Australians tens of billions of dollars in debt interest. And so, yes, there is debt in our Budget, very very low by international standards but the hard work of budget repair continues. We’ve found almost $100 billion of savings already, we’ve got the debt down, delivered those 2 surpluses, we’ve shrunk this year’s deficit and that’s all having an ongoing structural effect, positive structural effect on the budget as well but we know that there’s almost always more work to do.
Sara:
There are more than 20 major spending measures in the Budget, just 3 big savings items. Do there need to be more savings there to cater for the spending promises you’ve made?
Chalmers:
There are billions of dollars of savings in this Budget and that makes it unusual on the eve of an election. On the eve of the last election, there were no savings in the last Coalition budget. We’ve found billions of dollars here and that’s been part of almost $100 billion in savings since we came to office and so that is a demonstration of our responsible economic management. I think it’s too lightly dismissed and diminished the effort that we’ve made on budget repair. We’ve actually helped engineer the biggest nominal improvement in the budget position in a single parliamentary term ever and that’s made room for us to strengthen Medicare and help with the cost of living and invest in building Australia’s future.
Sara:
Treasurer, we’ll need to leave it there. Thank you for coming in.
Chalmers:
Thanks so much, Sally.
Sara:
That’s the federal Treasurer there, Jim Chalmers.