Jo Briskey:
I’m absolutely thrilled to be here at Modscape, and a big thank you to Jan and the whole team here at Modscape for hosting myself and the Treasurer to be able to come and witness the incredible work this company does around modular housing, and the opportunity it provides not just for locals here in my community of Maribyrnong, but also right across Australia.
Jan Gyrn:
Thank you and welcome to Modscape and Modbotics. We are absolutely delighted to have the federal Treasurer and our local member here today, and for you to see the operation of our industrial manufacturing line in action.
Jim Chalmers:
A big thank you to Jan and the team at Modscape for having us here in Essendon, near the airport, and my wonderful colleague Jo Briskey, the Member for Maribyrnong. It’s a real pleasure to be here today to talk about our Budget.
Our Budget is a budget for housing, a budget for workers, a budget for small business, and a budget for Australian industry. We’re coming at this housing challenge in our country from every responsible angle, more funding for more supplies, more funding for youth homelessness, supporting modern methods of construction, and building these wonderful homes like we’re seeing here at Modscape. We’re also making the tax system fairer for a generation of people who are at risk of being locked out of housing.
If you think about the Budget that we handed down last Tuesday, the essential elements were a tax cut for every taxpaying worker. They were were billions of dollars in new investment in housing and trying to come at this housing challenge from every responsible angle. Also, a lot of support for small business, $3.5 billion in tax breaks for business, especially small business, whether it be the treatment of losses, whether it be the investment incentives for venture capital and start‑ups, whether it be research and development incentives as well.
A budget for housing, a budget for workers, a budget for small business, and a budget which invests in the future of our country. We’re seeing the future of our country, a future made in Australia, right around us here at Modscape with Jan and the colleagues. When it comes to housing in particular, we’re providing almost $200 million to invest in modern methods of construction like this prefab housing that we’re seeing here today. We’re working with the states and territories to try and get more of this into the system to help with this big housing supply challenge that we have in our economy. There’s an extra $2 billion to build more homes by building more small‑scale infrastructure to get more projects online, more money for youth homelessness, and also making the tax system fairer.
Our tax changes in the Budget are all about making it easier for Australians to own their first home. They’re all about cutting taxes for every single working Australian taxpayer, and they’re also about better aligning the tax treatment between people who work and people who earn their income in other legitimate ways, including from assets. Those are the objectives of the Budget.
We’ve heard from the Shadow Treasurer in the last little while at the National Press Club, and what we saw there was this: last Thursday was the least responsible, most divisive Budget reply speech from an opposition leader in memory, and today was the least coherent, least credible Shadow Treasurer hit‑out after a budget that anyone can remember.
Tim Wilson’s misinformation and his lies didn’t last 30 minutes of scrutiny at the National Press Club. The reason why they didn’t mention their only policy is because they know this: first of all, their policy is for bigger deficits, more debt and more inflation, and secondly, because the last time this government cut income taxes, the Liberals and Nationals voted against it. They said they would repeal those income tax cuts and put taxes up from the first of July.
It is a Budget reply with no credibility and no coherence, unable to defend the most basic policy announcements in the Budget reply. Their Budget reply is in tatters because it lacks coherence and lacks credibility. The one example that Tim Wilson began his speech with, he was asked ‘could this person pay less tax under these new arrangements,’ and his answer was, essentially, ‘maybe.’
Tim Wilson was unable to explain his policy for bigger deficits, more debt, and more inflation. He was unable to justify the last time the parliament cut income taxes, and that’s because they voted against it and said that they would increase income taxes. This is a government which is cutting income taxes 5 times in 3 different ways. Theirs is an opposition which voted against that at the last opportunity that they had.
Happy to take a couple of questions.
Journalist:
Do you think the top tax rate is too high? There has been criticism from Labor figures, including Chris Minns himself, who effectively said that Monday, Tuesday, and half of Wednesday you’re working for yourself, the rest of the week you’re working for the government. Is it too high?
Chalmers:
First of all, that’s not how marginal tax rates work. Second of all, this is a government which is cutting taxes for every Australian worker – 13.3 million Australian workers will get another tax cut from this government in the Budget. We are cutting taxes 5 times in 3 different ways, and that’s because we recognise how important it is that we use the tax system to provide this tax relief to workers.
One of the problems with our tax system right now is it’s out of whack. It doesn’t reward work sufficiently, which is why we’re cutting taxes 5 times in 3 different ways. The treatment of people who earn their income from assets has become out of whack as well so we’re taking some difficult decisions to fix that. But overwhelmingly this is a government which cuts income taxes. The way that you’ve just described it is not how marginal tax rates work in our tax system –
Journalist:
Do you think the New South Wales premier is wrong in describing it that way?
Chalmers:
I’m saying this is a government which agrees that at every responsible opportunity, we have and we will cut income taxes, and the last time that we cut income taxes in the parliament, the Liberals and Nationals voted against that and said that they would repeal it.
Journalist:
Treasurer, will you consider any changes at all to the CGT proposal as it stands?
Chalmers:
We’ve made it clear that we’re consulting with the start‑up sector. We made it clear – privately before the Budget, in the Budget papers, and publicly after the Budget – that there are some issues particular to the start‑up sector which have been the focus of our consultation. We’re consulting with the sector in good faith to see if there’s a way through that we can both live with. In that instance, that is something that we have flagged previously.
Journalist:
[Inaudible].
Chalmers:
We’re not going to pre‑empt the consultation that’s underway now. That consultation is happening in good faith –
Journalist:
Is that a genuine conversation? Will you listen to them?
Chalmers:
Of course it is. I’ve been doing some of that consulting myself and the Treasury has got a formal process underway. It’s a real process and we’re listening to the sector. We understand and recognise that there are some issues particular to the sector, and we’re taking their feedback very seriously.
Journalist:
Allegra Spender and others have made the point today that isn’t just start‑ups that will soon face high tax bills, but all kinds of businesses that have high growth and low cost bases, like tourism. Do you acknowledge that the CGT increases taxes on a wider range of business owners, other than just tech start‑ups?
Chalmers:
It’s still the case that investments with larger returns will still get larger returns after the changes come in, that’s the first point. The second point is some investments will do better under the new arrangements. If you look at a 20 year period between when this policy mistake was made by Howard and Costello, on average over a 20 year period, investment in established housing was over‑compensated and investment in other kinds – in some instances shares, in some instances medium density housing – was under‑compensated. Some forms of investment will do better and that’s because it depends on the type of investment, the type of return, how long you hold on to those investments for, and what your marginal rate of tax is.
Journalist:
Will you consult with small businesses?
Chalmers:
We’re always consulting with small business and this is a budget which puts the interests of small business front and centre with our tax cuts. $3.5 billion in a tight budget for tax cuts for business, especially small business. There’s the loss carry back arrangement, there’s making the instant asset write‑off for small business permanent, there’s a different treatment for venture capital to incentivise more of it, there’s reforms through research and development. All of this is about backing small business in the Budget, and that’s because we consult with them frequently –
Journalist:
What about specifically on the CGT changes?
Chalmers:
When it comes to these specific changes it’s very important to remember, contrary to a lot of the misinformation that you might see, there are 4 existing concessions and carve outs for small business and we’re not changing them. The 4 existing concessions and carve outs for small business in the CGT system will remain, and people like our political opponents who want to make up things about our changes don’t acknowledge that, but they should. The 4 existing carve outs and concessions stay as they are.
Journalist:
Following on Chris Minns, he criticised the top marginal tax rate as too onerous while declaring the government needs to take urgent action on bracket creep through the income tax threshold. Do you agree that the top marginal tax rate comes in at a salary that is too low, and why didn’t you include comprehensive tax reform in the Budget to truly tackle intergenerational equity?
Chalmers:
First of all, we have increased the top threshold in the tax system, we did that a couple of budgets ago. Secondly, we do understand how important it is that bracket creep be returned, and that’s why we’ve done it 5 times in 3 different ways. This is a government that cuts income taxes. We’ve done that enthusiastically and we’ve done that repeatedly. We’ve increased the threshold, we’ve cut the rates, we’ve provided tax relief via a standard deduction, and now we’re providing tax relief via a Working Australian Tax Offset. Five different times in 3 different ways. This is a government which cuts income taxes. The last time we went into the parliament to cut income taxes, the Liberals and Nationals voted against it.
Journalist:
There have been calls from key Labor heavyweights, including Paul Keating, as well as Bill Kelty. Do you think that their calls are right to push to have the government reduce that top tax rate?
Chalmers:
We understand that there are a lot of views about the tax system. I engage with Paul pretty frequently about all of these questions, and I’m obviously aware of Bill’s views as well.
My answer to that question is a bit like the answers to the other questions. We’ve lifted the top threshold in earlier budgets, we’ve cut taxes 5 times in 3 different ways, and that’s because this is a government that cuts income tax. If you compare our approach to our political opponents, the last time this was in the parliament, they voted against tax cuts. That’s why Tim Wilson today at the National Press Club barely mentioned their only policy, because people know that when they had the opportunity to put their hand up for more tax cuts, they voted against it. If the Liberals and Nationals had their way, taxes would be going up on the first of July, not going down on the first of July under this government.
Obviously, there will always be calls for more tax reform. We understand that. We listen respectfully to all of those suggestions, but this is a government which is cutting taxes repeatedly and enthusiastically.
Journalist:
Just one from your home state. Brisbane’s Lord Mayor wants more federal funding for the Brisbane Metro service to be expanded before the 2032 Games. Time’s running out to get that extra funding if they’re going to complete it on time. Will you commit to further funding? And if so, when?
Chalmers:
Well, it wouldn’t be the first time that a Lord Mayor or a state government has wanted more money from the Commonwealth. That’s a story as old as Federation. After every budget, every municipal, state leader and territory leader says that they would have liked to see more funding in the Budget.
Queensland is actually the biggest winner in infrastructure funding in our Budget. Queensland receives more than any other state or territory and that’s because of the Olympics. We’re investing billions of dollars in the Olympics. We’re partnering with the state government and with local governments to make those Olympics amazing –
Journalist:
Will there be any for the metro though?
Chalmers:
We’re already investing billions of dollars and in Victoria as well, particularly in Melbourne, an extra $4 billion for suburban rail. This is a government, particularly a Prime Minister, absolutely obsessed with infrastructure investment, that’s his passion. Big new investments in Melbourne, big new investments in Brisbane, recognising the role that the Commonwealth can play in making these wonderful cities even better.
Can I just finished by saying to Jan and his colleagues, we really appreciate the investment here in Melbourne, and we appreciate the investment in Yatala as well in South East Queensland. This is exactly what we want to see, this kind of investment, and so we appreciate that. We appreciate you having us here.
Thanks very much.