Sally Sara:
Jim Chalmers is the federal Treasurer and joins me now. Treasurer, welcome back to Breakfast.
Jim Chalmers:
Morning, Sally. How are you?
Sara:
Very well, thank you. Treasurer, did you and the government get it wrong in the Budget on these counts?
Chalmers:
No, the next steps that we announced yesterday were all about providing more certainty for investors, more support for small business and also more incentives for innovation, and we flagged on Budget night that we would do consultation on start‑ups and in other areas to make sure that we got the final implementation details right. And so those announcements yesterday about those next steps, about those implementation details are the product of the consultation that we flagged some weeks ago.
Sara:
The Budget papers flagged, as you say, that you’d need to consult further on start‑ups. It’s taken you just a month to do that, and your solution is effectively the same as the way you’re treating new homes, giving them a choice between the new rules and the old rules. Why couldn’t you have figured that out in time for the Budget?
Chalmers:
Well, because sitting underneath that, Sally, are a whole bunch of details in the consultation paper that we released yesterday. And it’s not unusual at all, in fact it’s standard practice when governments are engaged in significant tax reform for there to be consultation on implementation details, for there to be multiple pieces of legislation, and that’s what we’re seeing here. The reason why the Tech Council put out such a supportive statement yesterday after we released this consultation paper is because that consultation is real and it’s meaningful. It’s not possible to do all of that before the announcements on Budget night, but it’s also not unusual for that consultation to take place after.
Sara:
Now that you’ve changed your position, does the government acknowledge that it didn’t fully grasp how damaging these changes would be for small‑business owners who plan to sell up?
Chalmers:
Well, we’ve said for some weeks, particularly when it comes to the threshold for small business carve‑outs and concessions, that we’re prepared to discuss that with the small business organisations. We’ve been doing that, I’ve done a bit of that myself, but also the Treasury and other ministers, Anne Aly and other ministers, to make sure that we get that right.
Because of that threshold that we announced yesterday, it means that every single one of the 2.7 million active small businesses in this country will have access to CGT carve‑outs and concessions, and as you rightly point out, 98 per cent of all active businesses.
That’s part of getting the consultation right, listening in a meaningful and in a genuine way to make sure that as we get these implementation details bedded down that we do that in a way that maintains the original intent of our policy changes, which are all about making it easier for people to buy a first home, cutting income taxes for workers a fourth and a fifth time and better aligning the tax treatment of labour and asset income.
Those are our objectives. We’ve maintained those objectives even as we continue to bed down some of these implementation details, including the small business threshold.
Sara:
You’re listening to Radio National Breakfast. My guest is the federal Treasurer, Jim Chalmers. You’ve excluded discretionary testamentary trusts from the minimum 30 per cent tax. If it’s not a death tax, as the critics said, why did you exclude those trusts?
Chalmers:
First of all, there is no inheritance taxed or taxes on inherited assets in the Budget at all, we made that very clear. There has been, I think, a very dishonest scare campaign about that. But we want to put the issue well beyond doubt, so that’s why we announced the details that we announced yesterday.
Sara:
So there was doubt before, you think, in the minds of some people?
Chalmers:
I think that doubt had been deliberately sown. That element of it – a very tiny sliver of the trusts in this country – were not the main game when it came to those proposals that are in the Budget. And so to put it beyond any doubt whatsoever, to shut down that very dishonest scare campaign, we’ve made a very modest change in that regard.
Sara:
Are you confident that this legislation on CGT and negative gearing, that it will get through in the upcoming sitting fortnight? Are the Greens on board?
Chalmers:
I’ve learned not to take any outcomes in the Senate for granted, Sally, I think that’s wise given nobody has the numbers in the Senate on their own, that’s just the reality of it, so we’ll continue to discuss with the crossbench in the Senate the best way to pass this legislation.
Obviously, there have been some discussions, those discussions aren’t concluded yet, but we call on the Senate to make it easier for people to buy their first home, cut taxes for workers and make the tax system fairer and stronger at the same time. Those are our objectives. This is an opportunity for the Senate to get behind those objectives and recognise that the broken status quo in the housing market and in the tax system isn’t working, especially for young people.
Sara:
Has there been political damage, not only to the current government but to the major parties from this broken promise on capital gains tax and negative gearing?
Chalmers:
I think to be upfront with you, Sally, I think we have lost some political paint but it’s worth it because we’re doing the right thing here and if we’re given the choice between taking the easier path politically or doing the more difficult thing but the right thing in the interests of, particularly first‑home buyers, young people, workers in the tax system, then it will be worth it.
Obviously, there’s a big partisan political campaign against these changes, we understand that, we anticipated that, we expected that. But it’s worth it because our job isn’t just to take the easy political options, often it’s to take the difficult policy decisions which we know are right for this country and its people.
Sara:
So if this was the right political decision, why not announce that before the last election? That’s what’s catching politically, isn’t it?
Chalmers:
Well, our position at the election reflected our view at the time that our efforts on supply, which is still the main game in housing, and our efforts with the 5 per cent deposits would be sufficient. But it became increasingly clear to us that we needed to do more to try and make it easier for first‑home buyers who’ve been locked out of this difficult housing market for too long. And so we came to a different position, we’ve been upfront about that, we’ve been explaining why a different position is necessary.
Yes, we’ve lost some political paint on the way through, I’ve acknowledged that on multiple occasions now, but the more important thing than the politics of this is to get the policy right, to get the substance right. Because at the end of the day what matters most is the tax system and the housing market are broken, we are acting to fix it. Our political opponents are arguing to leave everything exactly as it is, but doing that would consign generation after generation to being locked out of this housing market, which is one of the perennial problems, not just in our economy but in our society more broadly.
Sara:
Treasurer, the ABS net migration figures came out yesterday, the latest numbers, it was 301,000 last year. Given polls showing that many Australians are uncomfortable with the level of migration, would you like that number to fall even further? Or do you have a view on an appropriate level of migration for Australia?
Chalmers:
I would like to see it fall further, and the Treasury forecasts have it falling further, but we need to recognise net overseas migration came down again in those figures yesterday. It was already down around 45 per cent from its peak, it was absolutely surging when we came to office, and we’ve been able to get it down considerably. We want it to come down a bit further, and we expect that it will.
Sara:
Did you watch Pauline Hanson’s Press Club address this week, and what did you make of it?
Chalmers:
I didn’t see it, I saw some of the reporting of it, I was busy when she was on her feet at the National Press Club. But I think what we saw, once again, is One Nation desperate to prey on the legitimate concerns that people have, but they don’t want to do anything to actually address them. And we know that because every time they’re asked to vote for tax cuts for workers or decent pay and conditions or our cost‑of‑living help, they vote directly against the interests of people who struggle and people who work in our country. That’s the big fraud at the core of One Nation’s appeal. They want to capitalise on people’s legitimate concerns, they don’t want to do anything about them.
The absurd irony of their position is they want to change the government in order to leave everything the same – leave the housing market the same, leave the tax system the same. And I think what that exposes is a One Nation party which will always do what Gina Rinehart tells them to do but never do what the workers and battlers of this country need them to do.
Sara:
Jim Chalmers, we’ll need to leave it there. Thank you for your time this morning.
Chalmers:
Appreciate it, Sally, all the best.