MOORE:
Well, yes, indeed, tax cuts, they are on their way, or they will be shortly, likely to be passed through the Senate in Canberra today and they are aimed at, in part, stimulating a pretty moribund economy. The question is will the Government follow up with other spending to kick start growth or, indeed, is the focus now entirely on a surplus? If you get $1,080 in your pocket, how long will it stay there? What do you plan to do with it? Michael Sukkar is the Assistant Treasurer and also Minister for Housing. He's the Member for Deakin. Michael Sukkar, good morning.
SUKKAR:
Good morning, Ali, good to be with you.
MOORE:
Well, it's not through yet but it will be mid by night tonight. Is that a fair guess?
SUKKAR:
Well, look, I'm very hopeful, the Government is hopeful and optimistic, you know, but as with all these things, Ali, we don't count our chickens until they've hatched.
MOORE:
But you're pretty safe to do that, aren't you? You've got the commitment of Jacqui Lambie, she is the fourth of the six cross benchers that you need.
SUKKAR:
You're correct, Ali. It seems as though we have the support necessary to ensure that it passes through the Senate but I suppose as an abundance of caution I don't start celebrating these things until the vote has occurred.
MOORE:
So you did a deal with Lambie. Did that actually involve something? She was very open yesterday about putting a price on what she wanted for her support. Did she get what she wanted?
SUKKAR:
Well, Ali, I don't agree that there's been any deals done. I think the tax package that we took to the election, that we spoke about every day at the election, which was endorsed by the Australian people six weeks ago, I think stands on its own two feet and, of course, we always are willing to speak to the cross benchers, indeed any member of Parliament, on particular issues they want to discuss. But in this case, we are, you know, we've always taken the view that this tax package, it's important not just in the short term but the medium and longer term, stands on its own two feet and that's the basis upon which I expect that senators will support it later today.
MOORE:
Indeed, as you say, you do talk to the cross bench and Senator Lambie was very clear about her demand for more support for social housing in Tasmania. Will we find in coming months that there will be more support for social housing in Tasmania?
SUKKAR:
Well, again, I mean Senator Lambie has spoken to the media this morning and she herself emphasised that there's, you know, no formal deals.
MOORE:
But it's a fairly simple question. Have you said that yes, we'll look at that and we are likely to put more funds into that or have you just said no, not doing it?
SUKKAR:
Well, no, Ali, I'm the Minister for Housing and I visited Tasmania just a few weeks ago and attend a housing and homelessness forum down there. We've been in constant discussions with our Tasmanian colleagues, also the State Government and, look, there are a range of things that the Government has been working on, indeed a range of things the Government has already announced for housing in Tasmania and we've got an open mind. Whenever there's an issue that we can assist with that is within our abilities to do so, particularly in the housing space, I'm always with the disposition that at first instance we will do everything that we can to assist and those sorts of discussions will be ongoing and delivery is continuing.
MOORE:
Have you made any commitments?
SUKKAR:
No, I'm not part of the negotiations.
MOORE:
No, but as you said, you are Minister for Housing which puts you front and centre of the sorts of things that Jacqui Lambie was looking for.
SUKKAR:
Well, there's a whole lot of things we've done prior to the election that we're rolling out now. We had a $30 million commitment under the Hobart city deal for community and social housing. This predates the election, it predates any of these discussions.
MOORE:
So there's no commitment specifically around Jacqui Lambie's support for your tax package? You're doing plenty of other things, which I accept, but nothing specific around her support for tax?
SUKKAR:
Well, I'm not involved in the discussions with amongst senators, that's being led by Senator Mathias Cormann. As far as I'm concerned, as the Housing Minister, there's a range of things we're doing already that are addressing these issues and we'll continue to work on them.
MOORE:
You're listening to Michael Sukkar who is the Assistant Treasurer and we're talking about the tax cut package. He's not counting his chickens before they hatch but the Government does now have the support of the necessary number of cross benchers. I wonder whether you will spend the extra money. 1300 222 774 is the number. Michael Sukkar, how quickly will that first $1,080 flow?
SUKKAR:
Well, Ali, the ATO's made very clear that once people lodge their income tax returns they will be swiftly processed. I think if we look at last year's data, most people received their refunds within three to five days of their return being processed, which means things move relatively swiftly. So that will depend on when you lodge your tax return, for example. But if the legislation's passed, if it receives royal assent, that is being signed by the Governor-General to formally make it law this week, the ATO will be in a position to get all of their IT systems ready to roll over the weekend which will mean the tax returns that are lodged next week will be processed in the ordinary way and refunds will flow in the ordinary way as well.
MOORE:
Including this extra bit of tax relief?
SUKKAR:
Correct, yes.
MOORE:
How confident are you that you will be able to afford the final tranche? It is a long way away, that was always the Opposition's point, it's not until after the next election, but it's some $95 billion worth of tax cuts and the economy is not exactly in a stellar position right now. You're pretty confident things are going to turnaround in time?
SUKKAR:
Ali, this plan all hangs together, as I said, we have argued for the importance of short term income tax relief, $1,080, $2,160 for couples to flow immediately. Medium term relief to ensure that we don't allow bracket creep to get out of control and finally structural relief to make sure that 94% of Australians don't pay more than 30 cents in the dollar. This is a well calibrated plan, it all hangs together. It was very well thought through. We took it to an election. The Labor Party, up until six weeks ago was arguing against much of that plan. Now they have changed their mind, to some degree, since the election but the difference is our plan was taken to an election endorsed by the Australian people.
MOORE:
But that wasn't what I asked you, Minister. I asked you how confident you are that when it comes time for that final tranche, that the economy will be strong enough to bear it?
SUKKAR:
Thank you and I was getting to that point. In the end, what I would say is that we have been very focused on a very disciplined fiscal strategy. I think that has been demonstrated most recently by the fact that on the most recent budget updates for this year, or for last financial year, for example, that the Government has come well ahead of where we thought we would on the budget. We have projected a budget surplus for the next financial year. So we take very seriously the idea that we need to bring the budget back to balance and then surplus and then repaying debt and you can therefore be assured, Ali, that every decision we take around tax cuts is designed to ensure that continued fiscal strategy.
MOORE:
At the same time there is a lot of pressure, at the moment, that as opposed to being totally focused on a surplus, what we actually need is more spending, the Reserve Bank has been very encouraging for the Government to do more to stimulate the economy. Infrastructure spending is the big one on the agenda. Are you worried about the state of the economy? You can't find anyone at the moment who will tell you it's going gangbusters?
SUKKAR:
Well, Ali, I suppose the things that we discussed prior to the election and what we spoke to the Australian people about every day, are now gathering currency amongst the commentariat. These are the exact things we were saying and why we didn't believe that Labor's $387 billion of taxes, extra lead in the saddlebag would have helped an industry such as ours, which is why we think these tax cuts are important. You're right to point out infrastructure. We do believe that the Federal Government has a role to do a lot of the heavy lifting with infrastructure which is why we have the single biggest infrastructure funding plan of a Federal Government in history.
MOORE:
But it's a very long term plan and the economy needs help now. Can you bring any of that forward?
SUKKAR:
Well, we are spending huge amounts on infrastructure in every financial year over the forward estimates. These projects are yes, they do have long lead times but there are a range of projects, many hundreds, in fact, around the country that are coming online immediately and the money is being spent. The projects are progressing and so, again, I would say that discussions of the, I suppose, journalists and economists is perhaps catching up with what we've been saying since the budget.
MOORE:
The other big question following the back to back rate cuts is about deeming rates. Now obviously this has been an issue for some time. The deeming rate hasn't changed since 2013, this, of course, is the rate that you assume that pensioners are earning off their investments and they get less in the pension the more that they earn. You're deeming that singles are earning 3.25% for assets up to $51,000, official interest rates are 1%. If you can tell me where I could get 3.25, I'd be very happy.
SUKKAR:
Well, Ali, as you know, deeming rates are set at a point in time.
MOORE:
But that's a long way away, a point in time six years ago.
SUKKAR:
Sure, Ali, but I'm just making this self evident point. These are set at a point in time and obviously in low interest rate environments it is an issue and we're very mindful of the impact, particularly on older Australians on fixed incomes and in this context we are considering the best way to respond. The Minister for Families and Social Services Anne Ruston is bringing a recommendation to the expenditure review committee in relation to this precise matter and we will address it in an orderly fashion.
MOORE:
Why does it take so long, though? That deeming rate has been out of whack with official interest rates for a long time?
SUKKAR:
Well, Ali, again, this is not a relatively new issue. I think it's heightened in the context of a low interest rate environment but, again, for many, many years, indeed, decades, we do have deeming rates that are set at a point in time and, of course, we have fluctuating interest rates.
MOORE:
But there's nothing to stop you changing that deeming rate on a regular basis. I don't mean monthly but you could certainly do it every year or every two years, couldn't you?
SUKKAR:
What I've said is that the minister responsible is considering and is very mindful of the impact that this has on particularly older Australians. She will be bringing forward a recommendation to the Expenditure Review Committee and the Government will, as with all these things, deal with it in an orderly fashion but we are very, very mindful of the impact.
MOORE:
And do you know what that recommendation is? One assumes it's for a cut. Will it be for a cut for the full 1.25%?
SUKKAR:
It's not in my portfolio. All I know is that the minister is very mindful of the issue and, again, will be considering the best way to respond but is very mindful of the impact on older Australians, particularly.
MOORE:
There will be a lot of older Australians particularly who will be waiting eagerly for the outcome of that. Michael Sukkar, thank you very much for talking to us this morning.
SUKKAR:
Thanks so much.