Tom Connell:
As you heard at the top of the hour, the Federal Government will announce major tax concessions for businesses in next week's budget. Businesses with an aggravated annual turnover between $10 million and $50 million will, for the first time, have access to up to ten small business tax concessions. The Fringe Benefits Tax (FBT) will also be immediately scrapped for eligible companies to support employer-provided retraining and re-skilling of workers. To discuss this, I'm joined live from Canberra by Assistant Treasurer, Michael Sukkar. Thanks very much for your time. So, let's talks about this tax and red tape relief then. A big part is the Fringe Benefits Tax relief. How exactly will this get the economy going again?
Minister Sukkar:
Well, Tom, in essence, we’ll see up to 20,000 businesses, between that $10 to $50 million turnover range, who will now have access to the ten additional concessions – some of which are abolishing FBT, some are allowing prepaid expenses to be immediately deducted and, of course as you mentioned, abolishing FBT entirely for employers who invest in the retraining or re-skilling of their employees. In essence, these suite of ten concessions will provide those businesses with more money because they'll be paying less FBT, simpler interactions with the tax office which, of course, removes a layer of red tape for them, which at this very important time will mean they'll, of course, be able to have more money to invest in their business and employ Australians or invest in their own workforce, and, of course, more time to focus on their business because they will have less interactions with the tax office.
Tom Connell:
So, in terms of the total package here, quite a few different measures. What's the total value of those and how many businesses are they spread across?
Minister Sukkar:
So, the total cost to revenue for the ten concessions is $105 million, the total cost for the abolishing of FBT in relation to retraining and re-skilling employees is $7 million, and there's, of course, less red tape, which is a regulatory impost. So, the total package is $112 million over the 20,000 businesses which employ some 1.7 million. This is an indication of the approach of this year's budget, which will be to assist businesses to focus on their business, to invest more into their employees, to invest more into their business, to employ more Australians and, in that respect, these are measures that I know are going to be welcomed by all of those businesses who will now have access to the concessions.
Tom Connell:
I'm sure every bit helps, but I mean we're talking, back of an envelope, $5,000 a business. It's not a game changer, just a small part. Is that how it's fair to describe it?
Minister Sukkar:
Well, Tom, you'll see on Tuesday night the full suite of measures that the Government puts in place. I think this is a very strong indication though of the attitude that the Prime Minister and the Treasurer and the Government have brought to this year's budget which is making it easier for small and medium Australian businesses – who, quite frankly, do the heavy lifting of employing Australian – are given every possible leg up. I can assure you every single business, regardless of the value, will be welcoming not having to pay Fringe Benefits Tax, being able to invest in the retraining or re-skilling of their employees. I mean, in relation to that, there's going to be no more important thing that employers can do now than help their workforce flexibly deal with the pandemic and having an arcane Fringe Benefits Tax penalty, in essence, we thought was certainly not going to encourage people to, and businesses to, invest in their people. So, these are important measures but they, most importantly, Tom, give Australians a sense of just how serious we are about encouraging Australian businesses to employ and invest in their workforce.
Tom Connell:
A report today, the Government looking at loss carry-back as well for business so this could mean that tax already paid pre-Covid could actually be claimed back. Can you confirm this is on the table?
Minister Sukkar:
Well, of course, Tom, your viewers and yourself and everyone will have to wait for Tuesday night. Again, we as a Government, are going to be very focused on making sure we make it as easy as possible for Australian businesses to have the liquidity, the capital, that they need to invest in their businesses, to grow their businesses, to drive economic growth, to employ fellow Australians. I can't and I won't get involved in speculation, but people will see a very comprehensive package on Tuesday night that seeks to address all of those things.
Tom Connell:
It'll be a bit of a journey though. Labor brought one in and the Abbott Government scrapped it.
Minister Sukkar:
Tom, I'm not going to speculate on the budget. Today, we've announced one element but…interrupted.
Tom Connell:
I understand that but you understand if it's brought in, that it's a bit of a journey, isn't it? Was there a reason why it wasn't a good idea when the Abbott Government scrapped it?
Minister Sukkar:
Tom again, I'm not going to speculate on what is going to be announced potentially or not announced on Tuesday night. People need, and Australians will need to wait for Tuesday night. But what we have seen in the lead-up to the budget – whether it's our proposals to get credit flowing in the economy again through the removal of responsible lending red tape, whether it's simplified insolvency rules, whether it's these announcements today – we are absolutely focused on getting the economy moving, getting businesses able to invest in their workforce to employ fellow Australians and I suppose anything that falls within that broad remit, it's fair enough to be speculating about for Tuesday night. But of course, Tom, I can't confirm it one way or another, everyone will have to wait for Tuesday night.
Tom Connell:
Well, one has to try one's best. We’ll talk, I'm sure, after the event…interrupted.
Minister Sukkar:
Tom, of course you've got to, you've got to do that. I don’t blame you.
Tom Connell:
Yes, well, very good. Let me ask in a broad sense. So, we're going to see some huge deficits and overall debt. We know why. Will the Government try to set some sort of debt-to-GDP cap? If not a hard cap, an idea in mind? Something that essentially is sustainable over the long term that has to be paid back one day?
Minister Sukkar:
Well, Tom, what the Treasurer has announced in his most recent speech to the Press Club was really a two-step approach. As far as you say, expansionary budgets at the moment are absolutely necessary, as far as fuelling growth in the economy and most importantly ensuring that we get as many Australians back into work or increasing their hours if they want to do so. Then, of course, once we reach certain milestones and there’s a range of benchmarks that will be assessed at the time including the unemployment rate, we move into, in a sense, fiscal restraint. Now, they're the broad parameters around which the Treasurer has outlined. In the end, I think you'll see on Tuesday night a very credible pathway that fits within that two-step strategy. Australians will see a very disciplined long-term, medium-term, and of course, short-term plan to achieve all of those objectives. We of course, over the last seven years have shown an ability to get the budget back into broad balance as it was last year. But if you look at the strategy outlined by the Treasurer in his Press Club speech; you will see in the budget papers on Tuesday night, a credible strategy that implements that two-step plan.
Tom Connell:
But I guess the point as well, is having this conversation in some way, I get why you're not going to say right now “here's the percentage, we can't go above that”. But in the future, if we're talking about the Coalition having taken the country into, I don't know, $800 billion in debt and Labor says it will go $900 billion, they’re such big figures that it's going to be hard for you to run a campaign saying that it's too much debt. Do you need a conversation and to ultimately establish, what is sustainable in terms of debt-to-GDP?
Minister Sukkar:
Well, Tom, the budget is not about a campaign, the budget’s about Australians and about their jobs and their livelihoods and the businesses …interrupted.
Tom Connell:
But I’m talking about beyond the budget?
Minister Sukkar:
…businesses that people have spent many decades putting together. I mean, if you look at, even on relatively pessimistic projections, Australia's debt-to-GDP ratio is going to be quite modest in relation to comparable economies, whether that's the US, the UK, comparable as far as first world economies. So, I think if you look at where the trajectory is for Australia on a debt-to-GDP ratio, we compare very favourably. It doesn't mean though, that we can't and shouldn't be very disciplined and we will be. But again, as the Treasurer outlined in his Press Club speech, our first objective now is to ensure that we get the economy moving, that we get people in to work, that we create opportunities. That's what it will be about, and people will see, and you will see, Tom, a credible, long-term plan to ensure that the disciplined financial management, of which we are known for, will continue.
Tom Connell:
We’ll certainly see the budget on Tuesday. We'll talk after then. Michael Sukkar, thanks for your time.
Minister Sukkar:
Thanks so much, Tom.