SARAH FERGUSON:
Treasurer, welcome to 7.30.
JIM CHALMERS:
Thanks very much, Sarah.
FERGUSON:
Now, last year at the G20, you personally spoke to your Chinese counterpart about Yang Hengjun’s case, saying you wanted him returned to his family. What was your personal response to the decision and the judgement handed down?
CHALMERS:
Well like Penny Wong, I thought it was an appalling judgement and I thought it was disappointing and distressing, especially for his loved ones. We want to see the basic standards of justice apply here and that's why the Secretary of Minister Wong's department has conveyed, or is conveying our concerns to the Chinese Ambassador.
FERGUSON:
Let's go to the politics here in Parliament. You've been criticising the Opposition for playing politics with your proposed tax cut changes. But wasn't your decision the decision of the government, driven by the government's need to bring back disaffected voters?
CHALMERS:
It was driven by the cost‑of‑living pressures that people are under. It became increasingly clear over the course of summer that we needed to do even more to help people with these cost‑of‑living pressures. We needed to do something bigger and broader without putting additional pressure on inflation and so the tax system became the best way to do that. The reason that we're making the point about politics is because our opponents can't see beyond the political argy‑bargy and the punditry that comes out of this bill when it should be about tangible benefits.
FERGUSON:
Yes, but you're not divorced from political calculations yourself. You've had a difficult year with the failure of the Voice and, of course, people's distressing cost‑of‑living crisis. Do you think that this tax cut will bring back some momentum for the government?
CHALMERS:
Well, we haven't considered it in those terms. We consider it in relation to ‑
FERGUSON:
Is that really plausible? I mean, you're still a politician. I accept that you're doing serious things and that you are considering the cost of living. I'm not suggesting that's insincere, but you can't sit here and tell me you haven't considered the political ramifications?
CHALMERS:
But I can tell you that the politics are secondary. What really matters here is getting a tangible benefit, which is a bigger tax cut for more people to deal with these cost‑of‑living pressures and we knew it would be contentious, we knew it would be contested, but we did it anyway because we genuinely want to put people before politics. We want to provide more help. Every taxpayer will get a tax cut from the 1st of July, but there'll be bigger tax cuts for more people because people are under pressure, and we recognise that.
FERGUSON:
But to what extent are you aware of how disaffected the voters were becoming towards the end of last year?
CHALMERS:
I think every government goes through rough patches and good patches. I think that's just the truth of political life.
FERGUSON:
But that was a sticky rough patch.
CHALMERS:
Well, some issues are more challenging than others for governments, and that's not peculiar to this government. This happens to governments through time – you and I have been observing them for a long period now. What matters most is that you take the right decisions for the right reasons at the right time. That's what we've done here. The politics will take care of themselves.
FERGUSON:
Do you accept, though, that you'd be very unlikely to break an ironclad, oft‑repeated promise not to do something if you didn't think it would improve the government's standing?
CHALMERS:
Well, I thought it would improve people's prospects out there in real communities.
FERGUSON:
And yours?
CHALMERS:
I think the most important thing, the more important thing, much more important than any of the political considerations or the polls that came out overnight or the punditry and the front pages of the media, is our responsibility to do what we can to help people when they're doing it tough. It became really clear to us, increasingly clear over the course of summer, that this was the best way to do it. And what we did then, having changed our position, was we were upfront about why we had changed our position. I think one of the reasons why we're getting so much encouragement out there in the public and why people have accepted our reasoning, more or less, for why we made this change, is because people expect us to do the right thing by them, even if it's politically contentious.
FERGUSON:
Let's just go to a couple of questions about the timing. Treasury officials said today that they started looking at better ways – they started looking at better ways to do the stage three tax cuts. Did you direct them to do that or were they independently concerned about the inequity features of those tax cuts?
CHALMERS:
Well, I think the Treasury made it very clear today – and I didn't see all of the testimony – but my understanding is that the Treasury made it clear that the Treasury had proposed around that time that we look at the tax system. What is already on the public record is that the Prime Minister and myself were seeking more ways to provide more cost‑of‑living relief to more people. And it became clear, I think, over the course of summer as I said earlier, that the tax system was the best way to do it because it needed to not add extra pressure to inflation. It needed to be bigger and broader than all the cost of living [indistinct] ‑
FERGUSON:
You're saying that drive came from the Treasury? Not from you?
CHALMERS:
As I understand it, the officials made that clear.
FERGUSON:
Here you are in front of me. Was it you or was it them?
CHALMERS:
I made it clear to the Treasury that I wanted more options to provide more cost‑of‑living relief to more people. The Prime Minister made that clear privately and publicly as well.
FERGUSON:
And did they come up with other ideas to attack cost‑of‑living relief, or did they only come to you with stage three tax cuts?
CHALMERS:
Well, we're still considering other ways to provide cost‑of‑living relief in the lead‑up to the May budget.
FERGUSON:
And are they part of what Treasury proposed to you, or did they come up with other ideas in addition?
CHALMERS:
They are in the process of working through ideas for the May budget. What makes this different is two things. First of all, this is easily the best of the available options because it's bigger and broader and doesn't push up inflation. It's relief and reform, more relief for middle Australia and better reform for our economy. But also we needed to legislate the change if we were going to make it. And so we didn't want to wait, frankly, until after the Dunkley by‑election, we didn't want to wait until the May budget, we didn't want to leave it too late in the legislative calendar. And so having come up with this better option, better for people, better for the economy, our responsibility was to explain why we came to a different position and put it into the Parliament as soon as we can, which I'll be doing tomorrow.
FERGUSON:
Let's talk about the numbers, because, in fact, I think Treasury couldn't answer this question clearly today. What percentage of income taxpayers are not going to get what they expected from the original stage three tax cuts?
CHALMERS:
That's not a number that we've provided. It's not a number that's been part of the –
FERGUSON:
Why aren't we entitled to know how many people are to be disappointed along with those people who are going to lose more money?
CHALMERS:
Well, there's two reasons – two reasons for that. First of all, the Treasury advice, and not just the Treasury advice, but the Grattan Institute analysis, which was released overnight – both of those had made it clear that we found a better way to return bracket creep because bracket creep does the most damage in low and middle incomes and we've found a superior way to return bracket creep. That's the first point. The second point is really important but is often missed, and that is that it is highly unusual, if not unprecedented, for a tax system to go 10 years without being changed again. It's an option available to governments of either political persuasion at any point over that –
FERGUSON:
Sure, in the future.
CHALMERS:
– to provide additional tax relief if they can afford to.
FERGUSON:
Well, I mean, the question will be, is whether the country can afford it because if they legislate their tax cuts on top of yours, I don't know how the budget is going to pay for that. Do you?
CHALMERS:
No. And that would be an extra $39 billion over the forward estimates. And we've made the point that one of the important features of our tax changes is that they are revenue neutral. They don't put extra pressure on the budget, they don't blow out debt and they don't add pressure to inflation.
FERGUSON:
Let's just come back to that question we were at before, which is you don't provide the number. I'm not sure why not. How many people are we talking about who are not going to get – who will lose out from this change? Let's put it like that.
CHALMERS:
Well, that's not a number that we're providing or a number that I have to hand. And the reason for that –
FERGUSON:
You must have some idea what that number is?
CHALMERS:
We've released a whole bunch of numbers in the Treasury advice, way more than what –
FERGUSON:
This is important because this is about people who are, who lose something, who are expecting something, who may have budgeted for something. It's as important as the people who will benefit to know what that number is.
CHALMERS:
Well, first of all, everybody, every taxpayer gets a tax cut and people on higher income still get a substantial tax cut and we are the first government to lift the top tax threshold since Labor was last in office, so that's important too. When it comes to the benefits of this, we've released a whole bunch of numbers, more than governments usually do, we've released the Treasury advice as well and it makes it clear that the overwhelming majority of people are better off from the 1st of July and over the 10‑year period and that's because we found a better way to return bracket creep.
FERGUSON:
But are you saying you don't have that number or you don't want to give the audience that number? Because for sure, with the political calculation at stake, you must know what that number is?
CHALMERS:
No, I'm saying we provided the numbers that we have – they're in the Treasury advice. We've made those public. We want to have a big national debate about this. We think it's important –
FERGUSON:
Then shouldn't we know who are the winners and the losers without being drawing – rule in, rule out about it? It's a reasonable set of numbers.
CHALMERS:
Every taxpayer is a winner because they get a tax cut from the 1st of July. People pay much less tax over the 10‑year period than they would otherwise and we found a much better way to return bracket creep. The Treasury advice makes that clear.
FERGUSON:
The Coalition party room is meeting tomorrow to decide their response. Have you wedged them into a position now where they won't be able to reject your tax cuts without voter backlash?
CHALMERS:
Well, I think two things are already clear. No matter what the Shadow Cabinet decides or the Liberal and National party rooms decide, two things are already clear. They've already shown how diabolically out of touch they are with middle Australia and with the cost‑of‑living pressures that people are confronting. And the second thing is, no matter what they decide, we already know, courtesy of Sussan Ley, who was asked, will you unwind these tax changes if you can – and she said – “absolutely” they would.
FERGUSON:
I'm feeling like I've given you a bit of a free kick there, and I'll tell you why. It's because I've actually heard you respond to those questions already. So, let me move on. If the Coalition does decide to oppose your legislation, are you prepared to negotiate with the crossbenchers who are going to want to see a better deal for people suffering the most from cost‑of‑living pressures?
CHALMERS:
We want to see our tax changes implemented and legislated as we've announced them. And that's because they are more relief, they are better reform. It is the best available option. So, we want to see those tax changes legislated. I would be disappointed, but not surprised if the Coalition came to the wrong decision on this and if the Greens tried to knock over these tax changes that we're proposing. Voting against our tax changes would be voting for Scott Morrison's stage three tax cuts from five years ago.
FERGUSON:
I look forward to finding out what that number is. But in the meantime, thank you very much indeed for joining us. We'll see what happens tomorrow. Thank you, Treasurer.
CHALMERS:
Thanks very much, Sarah.