STUART BOCKING:
Treasurer, good morning.
TREASURER:
Good morning.
STUART BOCKING:
Thank you for your time. Mate, did you back into Leigh Sales’ car last night in the car park? What happened? Fair dinkum!
TREASURER:
Oh yes, she was pretty fired up…
STUART BOCKING:
I was there thinking [inaudible]… you dinged her car, what had happened?
TREASURER:
Yeah, look, I’ve got a lot of respect for Leigh Sales, and she’s a formidable interviewer. It was, you know, happens from time-to-time.
STUART BOCKING:
Now look, you say last night’s Budget is the right Budget for the right time. Was last year’s the wrong Budget at the wrong time?
TREASURER:
No, we had to do what we did last year, and that is to try and reign in some of the massive growth in government spending that Labor locked in against falling taxation receipts. And there are hard decisions that are being implemented, you know, significant cuts in foreign aid, the fact that we couldn’t pay bonus payments to the states for a range of different things. We just can’t afford them, we couldn’t afford them last year. We couldn’t afford them when Labor promised them, we can’t afford them tomorrow. But, what we’ve got to do is, many economists have noticed today, is we’re reigning in spending, and importantly we’re getting the deficit down and getting back to the point where we live within our means without hurting the economy.
STUART BOCKING:
But we’re not getting the debt down though, are we? I mean the net debt, you look at it this year, $250 billion by 2018-19, that’ll have risen to $325 billion.
TREASURER:
Too high, you’re absolutely right.
STUART BOCKING:
I mean it’s increasing, by $70 billion over the next four or five years, and you were saying the days of spending and borrowing are over, the nation’s living beyond its means. But under you still, over the next four or five years, net government debt will rise by $70 billion.
TREASURER:
Well, that’s because we’re running these deficits, we’re not paying our way daily. When we came to government, we had to borrow $133 million a day just to pay the bills. We’ve got that down to $96 million a day.
STUART BOCKING:
But that’s a function of interest rates, more than any reduction in debt though isn’t it?
TREASURER:
No, no, no, not at all, we’ve actually reduced government expenditure, you know, compared to what it would have been Stuart, we’ve come down, and we’ve been able to deliver some tax cuts. We’re collecting less tax, over $5 billion less tax, than what would have been collected if Labor were in government today. But look, looking forward, we are focused on getting to the point where we live within our means, but we’re also very focused on creating jobs and giving people stability and certainty, and that’s what the Budget’s focused on.
STUART BOCKING:
You were sounding very relaxed, you presented very well last night, you seemed comfortable with all of those figures you were presenting. How do you explain though that shift in rhetoric from what was a Budget emergency, some of the doom and gloom we heard in opposition, to you now seemingly being quite comfortable with the fact that you may never preside over a surplus and that the net government debt figure just keeps on rising?
TREASURER:
Well, we’re getting things under control.
STUART BOCKING:
Did you over [inaudible] it in opposition?
TREASURER:
Oh no no, no, absolutely not. Because if Labor were still in government, you know, I don’t want to harp back to those days, but you’ve invited me to do so…
STUART BOCKING:
Well, don’t scare us.
TREASURER:
Well, we were facing at least $667 billion of debt. Now, we’re on a trajectory that’s $110 billion less than that, we’re getting the day-to-day expenditure down from what we inherited. Of course there’s still more work to do, there’s more work to do, but ultimately the best way to do it is to make prudent decisions, and this year, all new spending has been offset by savings in other areas, so we spend some money, we make some savings in other areas. Not tax increases, just savings in other areas, and importantly we’re being more careful with the money we have. So the net result out of that is that the Government’s starting on a yearly basis to live within its means, we’ve got to extend that to a ten year basis, and there’s still more work to do.
STUART BOCKING:
Tell me if there’s a bounce in the polls post-Budget, are we headed for an early election?
TREASURER:
Oh no, look, Stuart can I say to you, this is part of our economic plan. I mean, when we came into government, we had to make some hard decisions. We said, you know, organisations like Qantas and SPC Ardmona and some of the motor vehicle companies, we can’t keep writing out cheques. And that was hard for them.
STUART BOCKING:
And you were vindicated in the case of Qantas, I mean you’d be asking for the money back today based on where their share price is.
TREASURER:
Well, it’s a great story and it’s a great tribute to the management team in Qantas and the workers of Qantas.
STUART BOCKING:
It’s also vindication of the decision that you took at the time, but the point is, you know, you’ve got to have been rattled by the reaction to that Budget last year, and it’s got to have been foremost in both yours and Tony Abbott’s mind when it came time to frame this one.
TREASURER:
Well, we knew that we tried to bite off too much in our first Budget, and why, because there was a real challenge for the Budget. We inherited a mess, and you have to move quickly to try and stop the haemorrhaging, I mean that’s what you’ve got to do. As any paramedic would tell you, you know the first thing to do is to stop the bleeding. And we’ve come a long way, we’ve still got more work to do, but along the way we are trying to fire up the big employers, the big innovators of the future, and that’s small business.
STUART BOCKING:
Based on those net government debt figures though, by the time we get to 2016-17, that bleeding will be such I’ll have passed out.
TREASURER:
No, no, I think…
STUART BOCKING:
You don’t think so?
TREASURER:
No, otherwise we would have lost our AAA last night and we haven’t, they all reaffirmed last night; well not all, enough of them…
STUART BOCKING:
I noticed that today. Look, there’s almost universal support for some sort of changes around tax concessions on superannuation. It’s viewed by many as low hanging fruit, why have you ruled it out last night? You said there will be no changes to tax on superannuation, under this Government.
TREASURER:
Well, we want to give people with superannuation stability and certainty. A number of people have very low returns on their superannuation at the moment Stuart, and you know, you look at interest rates at record lows if they’ve got money in the bank, they’re not getting the sort of return on their deposits that they might have expected.
STUART BOCKING:
We’re often not talking about the tax concessions for those people, it tends to be tax concessions for higher income earners, where there is fairly broad consensus that something could be done. You’ve basically ruled that out as a revenue stream for the life of this government.
TREASURER:
Well, because it’s actually, at the end of the day, it wouldn’t touch the sides. Labor wants to put a tax on anyone earning $75,000 or more. That’s what they want to do. We’re saying, look, superannuants have got low returns at the moment, it’s unfair to tax them on what they’re getting, given that would be like a double whammy [inaudible].
STUART BOCKING:
[inaudible] Labor’s talking about the $75,000 in the pension phase, I’m talking about some of the tax concessions available in the accumulation phase.
TREASURER:
Well, in the accumulation phase what’s happened is some people, and it’s only a handful of people, have actually accrued a lot of money under the laws that were put in place by Paul Keating, and then successive governments. Now they built up huge funds, and you couldn’t build up today. You and I, and your listeners wouldn’t be able to build up that amount of money in superannuation today, right, because of the limits on the contributions. So, it’s also the case that there’s a 30 per cent tax on contributions, which is [inaudible] over certain levels. So you’re actually, there have been changes in the superannuation system. One of things is that at various points along the way everything’s been grandfathered, so it means if you grandfather everyone - if we were to change the system now, it would be retrospective, and fundamentally, even when some people have taken great advantage of it, it is unfair to go back and change the laws that applied yesterday.
STUART BOCKING:
That’s right. When you talk about that 30 per cent level on those contributions, what income level does that kick in at?
TREASURER:
I think from memory it was around $300,000 but don’t hold me to that at the moment, I’ve had so many figures at that point, I’ll come back to you….
STUART BOCKING:
I don’t want to turn him into a Chris Bowen, tax free threshold moment, but alright…
TREASURER:
No it was introduced by the previous Government.
STUART BOCKING:
It was, that’s right, under Wayne Swan. Look these new depreciation write offs for small business, terrific, why not apply the same principles for childcare? You know, we’ve got this convoluted money go round with subsidies and family payments, why not simply say to working families, claim the cost of childcare up to a capped level, as a deduction, a cost of earning your income on your tax return? It’s much simpler, isn’t it?
TREASURER:
Well we had a Productivity Commission Review into the childcare system, which has been complicated, and what we’ve come up with, and Scott Morrison’s done an excellent job in explaining this, is a system that is simpler, and it’s fairer, and it’s more flexible. And, coming down to a single payment and importantly, also having the trial of nanny’s so you can help people that have shift work, and so on, and basically provide some out-of-hours childcare, they’re the sorts of initiatives that are going to help. The Productivity Commission identified that 165,000 parents wanted to work more or participate in work but couldn’t because of the inflexible childcare system. So, what we’ve done is said okay, we’re going to you know, put a bit more money in, we’re going to have to make savings in other parts of the Budget, but we’re going to put a bit more money into childcare to make it flexible.
STUART BOCKING:
And I think there’s some merit in that as a trial, but as part of this money churn we’ve got a scenario where a double income family with three children can claim as much as $64,000 in taxpayer subsidies. Now they’re net recipients of government transfers, they’re paying no net tax. Is that really where we should be? It seems to me a much better option that you know, you simply treat childcare like any other cost of earning your income.
TREASURER:
Well the thing is that there’s a tipping point for a number of people if you spend more on childcare than the benefit you get of going to work, then there is you know, you’d say to yourself well why should I do it? Because you know you can still in some cases claim Family Tax Benefit to stay at home. Now the other thing is we want people to work, because when they work they pay tax, and they also in many cases have no choice but to work, I mean…
STUART BOCKING:
But in some of the cases, there are double income families, and yet they can claim they are working, and yet they can claim in some cases with three kids, as much as $64,000 in taxpayers - that well and truly outstrips what they’re actually paying in tax.
TREASURER:
Well you know what, if you’ve got three kids under school age, I tell you it’s hard work.
STUART BOCKING:
I’ve got two. Well I’ve got one who’s just at school, and the other one who’s not quite there.
TREASURER:
That also includes some after school care too, so it depends on the circumstances Stuart, but you know if we can increase our female workforce participation levels to the same level as that of Canada, we’d basically grow the Australian economy by a city the size of Newcastle every year. So, if we can do anything to help parents to participate, we want to give them a choice, but if there’s anything we can do to help them participate then that’s a good thing.
STUART BOCKING:
These thirty multinationals you’ll target as part of this crackdown, is News Corporation one of those?
TREASURER:
Oh, no, I wouldn’t for a second…
STUART BOCKING:
Want to upset them?
TREASURER:
…name I wouldn’t want to name any particular company…
STUART BOCKING:
I mean we obviously know Microsoft, Google must be some of them.
TREASURER:
Look, frankly, they don’t tell me. They have, under the law, the Tax Office, cannot inform me of the thirty companies, but they’ve identified them, I’ve got a reasonable idea of who they are and so do you, and if you look at the map I displayed the other day, you can see where a number of them are located, on the West Coast of the United States, but not all of them I’m told. And what they’re doing is they’ve got a sizeable presence in Australia but they’re moving money through Singapore, to Ireland, and transferring money from Ireland to the Netherlands, and back to Ireland, and then off to the Bahamas. And you know, then, it’s just, they’re not paying their fair share of tax. And we’re going to get them.
STUART BOCKING:
I know you’re getting the wrap up, we’ve got our news coming up. We see these measures, the re-indexation of the fuel excise, deregulation of university fees, scale back of the Family Tax Benefit Part B, the Budget assumes all of those measures pass the Senate – how?
TREASURER:
Well they have to otherwise we end up spending more…
STUART BOCKING:
You told the Senate the GP Co-Payment had to pass, it’s now been done, how do we get this stuff through?
TREASURER:
Well, Stuart, you’re asking the wrong guy in that sense, because Bill Shorten is complaining about government spending, and he wants to spend more. So it’s, you know, it is now time for Mr Shorten to explain to the Australian people how he’s going to pay for everything, because I tell you what, the Labor Party’s complaining about debt, but they want more debt, they’re complaining about spending, they want more spending. And now, they’re even opposing their own savings in the Senate, so common sense must prevail, otherwise you know, inevitably it’s going to be more difficult for Australia, but we’re going to do our very best, and we’re on track.
STUART BOCKING:
Alright, well look I appreciate your time this morning. When do you get an hour off?
TREASURER:
Well if money never sleeps then the Treasurer never sleeps either.
STUART BOCKING:
Pleased to hear it. Look, appreciate your time this morning.
STUART BOCKING:
Thanks Stuart.