JIM CHALMERS:
The government will be appointing Greg Combet as Chair of the Future Fund Board of Guardians for a five‑year term. As you know, Greg Combet has extensive experience in investment and superannuation as well as government and the climate and energy transformation in particular. Greg Combet is a person of extraordinary breadth and depth and character and experience, and he is the perfect appointment to take the Future Fund into the future.
We are very pleased, Katy Gallagher and I, to make this appointment today after it went through the Cabinet last week and what we've been able to do here is ensure that we can renew and refresh a really important economic institution with an appointment of this calibre.
Greg will bring deep, diverse experience and fresh leadership to the Future Fund. He's been the Chair of IFM investors. He served as a trustee of AustralianSuper. He's been the Minister for Climate Change and Energy, as you know, and he also served on the Executive Board of the National Covid‑19 Coordination Commission appointed by the previous government.
Greg is currently the Chair of the Net Zero Economy Agency, and we will work with the agency and obviously with Minister Bowen to recruit a new Chair. We expect Greg will begin as the Chair of the Future Fund around the middle of the year, he has more work to do at the Net Zero Economy Agency first before he joins the Future Fund Board around the middle of the year.
In the interim, the government has appointed Mary Reemst as acting Chair of the Future Fund, and Mary will start in this position on the 4th of February 2024. The government has also appointed Nicola Wakefield Evans and Rosemary Vilgan as part time members of the Board for five‑year terms. These two new member appointments will increase the representation of women on the Future Fund and continue the government's really strong track record of appointing women to senior roles in Australia's most important economic and financial institutions.
Rosemary has a strong background in investment and a broad range of experience in executive and non‑executive roles. Rosemary will begin on the Board in February. Nicola has extensive experience in capital markets, corporate finance, the energy sector and corporate law, and she will begin on the Board in March.
So, these are some really important appointments. The Finance Minister and I have put a lot of thought, a lot of time, a lot of consultation into these appointments to get the optimal blend of skills and experience and to also ensure that we've got the best kind of fresh leadership that can help modernise the Future Fund for the future.
The Future Fund is a really important institution. It has been a successful institution, and Katy and I are excited to work with Greg and the Fund on how we can maximise its role into the future in the way that maintains its independence and its commercial focus.
I also want to thank Peter Costello for his role in establishing the Future Fund, but also his leadership and his contribution to the Board over the past 14 years. I wanted to thank John Fraser, who left the Board late last year, and John Poynton, who's about to leave the Board, for the contribution that they have also made to the success of the Future Fund.
We're excited to be making these appointments today; Greg Combet, Rosemary Vilgan, Nicola Wakefield Evans. They will make terrific contributions to the Board and they will help us renew and refresh what is a really, really important institution in our economy.
It's a big week for the economy this week, not just these new appointments to the Future Fund, but also the quarterly and monthly CPI for December will come out in the middle of the week. Obviously, we'll see what those numbers say but it is all already clear that inflation has come off substantially since its peaks in 2022 but we need inflation to moderate further and faster. We have made welcome and encouraging progress in the fight against inflation, but it's not mission accomplished because people are still under pressure and that's why we are delivering a bigger tax cut for more people without adding to these inflationary pressures in the economy. When it comes to these tax cuts that the Prime Minister announced towards the end of last week, what matters here isn't the political argy‑bargy, what matters are the tangible benefits for middle Australia. Everyone gets a tax cut, but there is a bigger tax cut for more people to help with the cost of living and that's what matters here.
I also wanted to make this point about bracket creep. There is more than one way to return bracket creep. Our plan is relief and reform – it's cost‑of‑living relief and it's also important tax reform to improve and strengthen the tax system into the future. By dropping two rates and by lifting two thresholds, we are giving everyone a tax cut. We're delivering $359 billion worth of tax relief and we are returning bracket creep where we can do the most good which is middle Australia.
Obviously, our political opponents will stumble around looking for excuses to oppose bigger tax cuts for more people to help with the cost of living. Our job is to get to the right outcome and that's what we've done here – bigger tax cuts for more people. Everybody still gets a tax cut, but more help with the cost of living without adding to pressure on inflation.
JOURNALIST:
Thanks Treasurer. On the Future Fund appointment, you've talked about renewal. Is the new Chair the bulk of these changes or have you got more changes to come? Have you directed the new Chair on anything in particular?
CHALMERS:
No, not yet. We will have discussions, obviously, with the Chair of the Future Fund and with the CEO and others about the future of the Future Fund – really important institution doing an important job in the economy and in the Budget. We think the most appropriate first step when it comes to renewing and refreshing an institution like this is to get the right people in place. Having these three appointments around the same time was a really welcome opportunity to provide that fresh thinking and that fresh leadership, and that's what we're announcing today.
JOURNALIST:
Thanks Treasurer. Both yourself and Mr Combet have spoken about harnessing superannuation to help the energy transition, other sort of nation building sort of goals. Would you foresee it's possible that you might change the Future Fund’s investment mandate to reflect that or would you think that you probably stick with the current sort of mandate?
CHALMERS:
First of all, I want to make it clear again and I think I did in the introduction, we cherish the Future Fund's independence, and we cherish its commercial focus, and we don't want to mess with that. What we want to do here is to make sure that the Future Fund is an important economic and financial institution into the future. The first step in ensuring that is making sure that we get this fresh thinking and this fresh leadership. Greg and Nicola and Rosemary are ideally placed, I think, to work with the government to consider the future role of the Future Fund, but to do that in a way that recognises its existing strengths.
JOURNALIST:
Treasurer, there's a note from CBA economists this morning that calculates the tax to income ratio at 18 per cent. In their assessment, it's still very high. Is there more room for relief, further additional tax relief before the next election?
CHALMERS:
Well, we want to bed down the tax relief that we’ve just announced in the last few days, and I think a really important number when it comes to that is the average tax rate goes from 25 and a half per cent this year to 23.9 per cent next year with our new tax cuts. We are getting the overall tax burden down. We're doing it in a way where everyone gets a tax cut, but there's a bigger emphasis on middle Australia. We are returning bracket creep. We're providing cost‑of‑living help, we're not adding upward pressure on inflation, we're doing it in a way that's good for middle Australia, good for young people, good for women, and good for the economy. So the proposals that we announced last week will ideally be legislated before the next election and will be flowing before the next election.
JOURNALIST:
You used language that your position hasn't changed on the stage three tax cuts and then changed. You've used similar language on negative gearing and franking credits. Is there potential for you to revisit the policies that were more in line with the ones you had in 2019?
CHALMERS:
We're not contemplating or considering resurrecting the policies that we took to the 2019 election. Our focus when it comes to tax and housing has been on incentivising build to rent properties with the tax breaks that I budgeted for in the May Budget. So we haven't changed our view on what you're asking about here, we have changed our view on income tax cuts, because we found a better way to give a bigger tax cut to more people to help with the cost of living. Now, I know that our opponents will want to focus on what we aren't proposing, because they want to distract from the position they've taken on the tax changes that we are proposing. And that's because their position on stage three is indefensible and untenable.
JOURNALIST:
Treasurer, the surveys suggest there'll be some decent inflation numbers out later this week. But in the months ahead, are you expecting to see maybe more stubborn inflation due to the conflict in the Red Sea and the damage to the supply chain?
CHALMERS:
A couple of things about that, Ben. We have been encouraged by the fairly substantial moderation in inflation since those peaks we saw in 2022 but we know that there's still some distance to travel. We don't pre‑empt the numbers that we get later in the week. In particular, the monthly figure can bounce around a bit. We've seen inflation tick up in other parts of the world in recent data and so we're not getting ahead of ourselves. The overall direction of travel is clear and welcome and encouraging. It's not mission accomplished, because people are still under pressure. What we expect to see over the course of the year is inflation to moderate further, and in the estimation of the Treasury and the Reserve Bank and other credible forecasters we expect to see real wages growth this year, we expect to see inflation moderate further and the tax cuts will be flowing in the second half of the year, if and when, they pass the Parliament. So there have been some welcome developments, but we're not getting carried away about it.
JOURNALIST:
Treasurer, the justification for these changes on tax cuts is that you found a better way, you could find a better way on a lot of policy. Are you prepared to break public promises if there are better ways or was this one and done?
CHALMERS:
We're not contemplating other areas and the reason that we've been so upfront about the rationale for this change in position is because it became so clear to us over the course of the summer that there was a much more effective way of delivering more relief to more people to help with the cost of living. We know that that's politically contentious, and we're not pretending otherwise, nor are we pretending that we didn't say the things that we have said in recent years. I pay tribute to the Prime Minister for the way that we collectively as a government have taken responsibility for this change and explain to your viewers and the Australian people why this change was necessary and beneficial. As the Prime Minister has said, in various ways, our responsibility is to do the right thing for people, no matter the political consequences, that's what people expect of us, we did find a better way to provide more cost‑of‑living relief to more people in a way that didn't add to inflation. Having found that better way to do it, it was our responsibility, not just to announce our change in position, but to explain the reasons for it and that's what we're doing.
JOURNALIST:
So on those changes that you announced you spoke about the better way, and the change in circumstances, where does that leave what you didn't enact or your what you're not going to enact in stage three? So the changes you didn't make? Are they still on the table? They might be where you move next, or are they just scrapped?
CHALMERS:
We don't consider them as a piece of unfinished business, the precise tax design that Scott Morrison legislated five years ago. What we've shown is that our income tax policies need to keep up with the economic conditions and the Budget realities and so we're not leaving Scott Morrison's tax cuts in a drawer somewhere and hoping to put them in place at some future point. We have come up with a far superior way of returning bracket creep and delivering cost‑of‑living relief to more people. That is our tax plan that we hope to legislate. The Liberals and Nationals should stop fumbling around for pathetic excuses to oppose bigger tax cuts for middle Australia. If they really cared about middle Australia, they'd support bigger tax cuts for middle Australia to help the cost of living.
JOURNALIST:
The better way as you describe it, it doesn't look like it went down too well at Melbourne Park. I don't know if you stayed up and watched Jannik Sinner, I am a bit tired today due to that…
CHALMERS:
I'm not shocked that you stayed to the end.
JOURNALIST:
I'm a sporting tragic, but there was a decent boo for the PM. I'm not expecting they're all just Medvedev fans. There's probably something to do with the tax. Are you worried about that reaction?
CHALMERS:
I didn't see it, I was traveling here. I got the late flight from Brissy to here so that I could spend time with you this morning, Kieran. I congratulate Jannik Sinner and Aryna Sabalenka for their well‑deserved victories. I think it's a well‑worn Australian tradition at sporting events for that to happen and I don't think we should read too much into it.
JOURNALIST:
Treasurer, there's a strong argument that those doing it toughest at the moment are those that don't actually pay income tax, people who are job seeking, for instance. Is the government considering a further raise to the rate beyond indexation in the Budget?
CHALMERS:
Well, a couple of things about that. People on low and fixed incomes have been the primary focus of a lot of the cost‑of‑living relief that is rolling out right now and I'm really proud in the May Budget of the various steps that we took to support people on income support, for example, a permanent increase to JobSeeker and other working age payments, the way that we targeted the energy bill relief, cheaper medicines, Commonwealth Rent Assistance. A really big focus of cost‑of‑living relief in the first two Budgets has been people on the lowest incomes and on fixed incomes and of course, as we move between now and the May Budget, there will be a range of ideas about what other cost‑of‑living relief we may be able to provide. I listen respectfully to those ideas. They would need to be responsible; they'd need to be affordable; they'd need to be suited to the economic conditions. But I'm proud of what we've done to here to support people on low and fixed incomes.
JOURNALIST:
Treasurer, there seems to be a rise in neo‑Nazi protests in Victoria and New South Wales recently, if any of the people involved in those protests are found to be members of state or federal, government employees, is it right for them to keep their job?
CHALMERS:
I think there's no place for these kinds of grubs in a civilised society and obviously, that applies to government agencies as well. We don't want to see hatred, or violence, or antisemitism on our streets or in our country, and certainly not in our agencies. I think a lot of Australians would have been shocked by those scenes that we saw in Sydney in recent days. We commend the New South Wales Police, I commend the New South Wales Premier and also as a federal government, we've taken a number of steps to stamp out this kind of hate being expressed on our streets. But there's no place for these kinds of people or for their beliefs.
JOURNALIST:
Treasurer the reasons you've given for the broken promise on tax, a more equitable and fairer distribution, and so forth, are not new. They've been made for a couple years now by the Greens, by ACOSS and by yourself in Shadow Cabinet when you were in Opposition, and you tried to get in before the Budget, your first Budget in October, you had Treasury look at options. You've been one of the most vocal critics of these tax cuts internally. Could I put it to you that the only thing that's changed between then and now is the polls and the abandonment of Labor by middle Australia because they didn't feel you're sufficiently focused on the cost of living?
CHALMERS:
No, obviously, that's not right, Phil, respectfully. There's a couple of elements to your question. First of all, our primary motivation here is giving more people help with the cost of living and it became increasingly clear over the course of the summer that there was a responsible and affordable way to give everyone a tax cut, but a bigger tax cut for middle Australia to help with the cost of living in a way that's good for the economy and doesn't push up inflation.
As for the history that you mention, I think the history is relatively well established. When these were first proposed to the Parliament, we tried to alter them. We didn’t want to vote against the whole package in the final vote, and so – because we didn’t want people on low and middle incomes to miss out when we came to office, we ran a ruler over the whole Budget and we educated people about the choices in the context of a trillion dollars of Liberal debt. What we were talking about then we weren’t considering, then, the sorts of changes that we announced last week.
I think we had a responsibility having come up with this far superior way to deliver the same amount of tax relief, we had a responsibility to do that, and the Prime Minister did a terrific job of explaining that to all of you at the National Press Club last week. Our primary motivation here is cost of living, helping people deal with the cost‑of‑living pressures they’re under. Those cost‑of‑living pressures have been sustained, they have been persistent. We’ve spent a big chunk of our time in office providing cost‑of‑living relief in various ways but it became clear to us over summer that we needed to do more, that it needed to be broad and that there needed to be a focus on middle Australia and that’s why you have before you the changes we’re proposing.
JOURNALIST:
Treasurer, how do you think the – or how do you expect the Fair Work Commission to factor in your tax cuts to its minimum wage decision later this year? And what do you make of business groups suggesting that that pay rise should be lower than it would have been otherwise?
CHALMERS:
Our tax cuts should be on top of a decent increase in the minimum wage, not instead of one. This is not an either/or here – we want to get wages growing in our economy at the same time as we provide additional cost‑of‑living relief via the tax system. So this isn’t an either/or, we want to see a decent increase in the minimum wage as well as not instead of these tax cuts that we are proposing.
One of the reasons why we’ve got wages growing again after a decade of deliberate wage stagnation and wage suppression is because there have been a couple of decent pay rises granted by the Commission. We will make our submission in the usual way, but our tax cuts are never intended as a substitute for the decent wages that workers in our country need and deserve.
JOURNALIST:
Treasurer, in negotiating these tax changes through Parliament, will the government consider any adjustments to various levels, brackets and so on in the package, or would it consider other measures like increases in JobSeeker or, you know, parental assistance or things like that?
CHALMERS:
Look, we want to pass the tax changes that we announced. That’s our intention. That’s our objective. There are obviously always a whole range of ideas about what else we might do to help with the cost of living but what we’ve been able to do here is good for the Budget and good for the economy and it strikes all of the right balances.
This tax package that we announced last week is not some sort of compromise position. This is the best available set of changes for people doing it tough. Everyone gets a tax cut. The overwhelming majority get a bigger tax cut to help with the cost of living. It’s a package which is coherent, it provides relief and reform. It returns bracket creep, it’s good for women and young people and truckies and teachers and nurses and police officers, and we urge the Parliament to support it.
And I say to the Liberals and Nationals, stop fumbling and bumbling around for excuses to oppose bigger tax cuts for middle Australia. The only definitive statement that we’ve had from the Liberals and Nationals is that they will absolutely unwind these changes. The position that they have most definitively put is that Australians on middle incomes should pay higher taxes to fund an even bigger tax cut for the people on higher incomes. And so I say to the Parliament – not just the crossbenchers but the Liberals and Nationals as well – if you accept that middle Australia is under pressure – and it is – then you have to back our tax cuts for middle Australia. You can’t be for middle Australia and against the tax proposals that we put forward last week.
JOURNALIST:
Thanks, Treasurer. On childcare the ACCC has released its report and recommendation into regulation in the market is for naming and shaming rogue operators. Is that something you’d support and further market intervention?
CHALMERS:
Look, we’ll consider the recommendations and views put forward. We’ll do that primarily through the relevant ministers – Anne Aly and Jason Clare – and when we’ve got more to say about that, we will.
JOURNALIST:
Treasurer, a couple of minutes ago just in response to a question about negative gearing and franking credits you said, “We haven’t changed our view.” This time last week the federal government was saying the same thing about stage three tax cuts. So why should people believe you this time?
CHALMERS:
Because when we came to a different view on the stage three income tax cuts we were upfront about why, and I would encourage yourself and I would encourage our political opponents to focus on the tax change that we are proposing, not on the tax change that we’re not.
JOURNALIST:
So we can take your word on negative gearing?
CHALMERS:
Well, we’ve made it really clear that that’s not something we have considered or are considering and, again – I think the Australian people expect us to do the right thing by them. If that means coming to a different view on stage three income tax cuts, then once we changed that position at the Cabinet last Tuesday – we come out and explain why. This is not about the political argy‑bargy; this is about tangible benefits for more people. This is about helping people with the cost of living, and we can’t forget that. We know that this is politically contentious, of course it is. We know that we need to front up to you all and explain our change of position and we know we need to own that and take responsibility for that, and we are. We are.
JOURNALIST:
Does that mean on negative gearing [inaudible] – that it’s equitable and not helping the housing market and affecting first home buyers getting in?
CHALMERS:
Well, our efforts in the housing market when it comes to tax are tax breaks for build to rent, as I said in response to Jess’s question and what I would have said if I was allowed to finish my answer to Chloe’s question.
JOURNALIST:
But just what you said about stage three, Treasurer, you said there are other ways to help people on low incomes than tax cuts, and now you’ve made a case to change the tax cuts. Surely the housing crisis is just as bad if not worse than the cost‑of‑living crisis. Why don’t you look at CGT for investors and negative gearing again, surely you could make an argument for that in this current environment?
CHALMERS:
Well, we found other ways to support the housing market, and I’m pleased to –
JOURNALIST:
[Indistinct] –
CHALMERS:
I’m pleased you asked me about housing. We have a number of measures about boosting supply, tax breaks for build to rent, increasing Commonwealth Rent Assistance. This has been a big focus of the government over the course of the first year and a half or so. The answer I was providing to Chloe’s question is that we haven’t changed our view on that. We’ve found other ways to support the housing market. We have changed our view on stage three tax cuts, and that’s why I’m here explaining to you why.
JOURNALIST:
So on housing, you feel as though the overall tax arrangements are working well, such as negative gearing and CGT? They’re working well and helping people get in?
CHALMERS:
I think when it comes to the housing market we need to do better, and that’s why we’ve got a whole range of policies out there – billions of dollars in new investment, tax changes, direct investment, working with the states, increasing Commonwealth Rent Assistance – because we understand the pressure that people are under in the housing market, and that’s why we’re acting so decisively.
Thanks very much.