JONES:
…to open the speech with a recitation of where you have come from.
TREASURER:
I think that is right. If you do not remind people where we were, people tend to forget what could happen if things were not managed properly. Remember when we used to owe $96 billion of debt. Our Budgets used to be in deficit. We had two million less Australians in work, youth employment was 46 per cent. This is just 10 years ago. This is during my political lifetime and we have come from all that, we have got rid of that debt, we do not have interest bills any more. Two million more Australians are in work, young people are getting the opportunity of apprenticeships and we want to give them more opportunities for apprenticeships, and Australia has emerged as one of the stronger managed economies, if not the strongest managed economy in the western world.
JONES:
Is there an economy in the western world which will be handing down its 10th consecutive Budget in surplus?
TREASURER:
Not America, not Britain, not Canada, not Japan, not France, not Germany – you have to go a long way to find one, not any of the major economies of the western world…
JONES:
And then there will be people today looking at the tax tables and they will be saying “oh well, it is only $14, $17”, but this is the fifth straight year of income tax reductions. We tend to forget that as well.
TREASURER:
That is right. If you are on $40,000 - the combined tax cuts over the last three Budgets have reduced your tax by 45 per cent - 45 per cent for people on $40,000.
JONES:
Yes I was making the point a while ago, that seven years ago on $30,000 you were paying $6,222 in tax, now you are paying $2,850.
TREASURER:
Absolutely. And of course the average wage in Australia is about $47,000, so for average Australians, when you accumulate all of these tax cuts it has been a very, very significant tax cut. Now, we have done them in bite sizes, we do them as we are able to afford them and I think it has been good for families. I make no apology for that. If you can balance your Budget, if you can invest for the future, Alan, then you ought to be returning things to taxpayers. And this is the fifth Budget in a row where our Government has cut income tax and you have to remember at the end of the day that Government is there to collect tax, to run things like hospitals and schools and build roads. But if you can run your hospitals and schools and build your roads and do that with proper investment, which we did in last night’s Budget, then you ought to try and relieve the tax burden on working Australians.
JONES:
An interesting initiative on the superannuation co-contribution. You introduced this last year. Am I right in saying that for those who actually put the $1,000 aside last year you are doubling your contribution?
TREASURER:
That is right. If you, out of your own money and are a low to middle income earner, put $1,000 in your superannuation we would have matched it with $1,500. What we have said last night is in fact for 2005-06 contributions we will match it with $3,000. Three dollars for one. You put in $100 we will put in $300. If you put in $500 we will put in $1,500. If you put in $1,000 we will put in $3,000. That will build superannuation savings for low to middle income earners and give them a bit more to retire on because that will accumulate in a fund, you will get investments from it and it builds retirement savings for people after they retire. And, of course, you have got to bear in mind that the reform I introduced last year to cut superannuation taxes means that for people when they retire after 60, they can actually get that superannuation back tax free.
JONES:
As a pension or as a lump sum.
TREASURER:
As a pension or as a lump sum – which ever way they decide to take it.
JONES:
No tax.
TREASURER:
Let’s take this example, of course you would have other contributions – but suppose you put in $1,000 and the Government puts in $3,000, and that $4,000 accumulates and it grows – it might grow over five years, it might grow over 10 years – you turn 60 and you get it back tax free.
JONES:
Yes, it is a big initiative. Just on tax and then we will get on some other things in a minute – your tax return can now be filled out online?
TREASURER:
Yes. I think this will help a lot of people. What we will do now is, if you are a taxpayer that has either filed electronically or your agent has filed electronically, and most agents do file electronically, nine million Australian’s now file electronically, you will be able to go online. The Commissioner will have filled out the tax return for you which will have your wages on it, dividends, any payments you have got from the Government, your health insurance premium. You just look at it online…
JONES:
Because he is aware of all that.
TREASURER:
Yes, that is right, they can match it.
JONES:
Absolutely.
TREASURER:
Yes, absolutely. And if you say ‘yes, that is right’. Click. Your tax return is filed.
JONES:
That is it.
TREASURER:
For nine million Australians. Now, if you say ‘oh well look, I have got a few other things that I want to claim’, you have got a complicated thing, you can actually add it online and click. But for 10 million Australians who pay tax, nine million of them will be able to file online.
JONES:
Okay. I thought the central component of this, I don’t know what your view was, was in education…
TREASURER:
Yes.
JONES:
…which is very important. We will just have a look at a couple of things on universities and schools – you have got this Higher Education Endowment Fund to be managed by the guardians of the Future Fund, so you are going to stick $5 billion in it straight away…
TREASURER:
Yes.
JONES:
Right. And then the earnings from that will be used by universities to try and what? Enrol…
TREASURER:
No. No. (inaudible) to build institutes, to build buildings, to modernise the infrastructure. There has been a bit of a run down, I think in the buildings and infrastructure of universities.
JONES:
And individuals can contribute to this fund as well.
TREASURER:
Individuals who might want to endow a university, suppose their kids have gone there or maybe they went there, and they want to endow it – they can pay money in and say ‘this is an endowment for Sydney University or this is an endowment for such and such university’, will you please manage it? We will manage it. Their contribution will be tax free and they will be able to designate that the earnings will be used for a particular project. At the moment people do endow universities of course, but they have to set up their own trusts, sometimes they give it to the university which has to set up its own trust. Now that we have got a Government endowment fund we can say ‘look, we can do all that for you’, this will reduce the costs of investment and managing. You will still be able to direct your endowment to your particular university. In fact, we will say to the universities themselves – you can actually put your own endowments in this fund and we will manage it. And Alan, we are putting $5 billion into that at the end of this financial year. But in future years we are going to grow it…
JONES:
That is the point. Replenish it.
TREASURER:
…grow the capital so that the earnings will be bigger.
JONES:
On schools too, an issue which I think is really important – schools with demonstrable sustained improvement in literacy and numeracy, be evaluated of course, but they will get a grant of up to $50,000 and teachers who successfully complete a 10 day summer school training course for embetterment programmes, will get a $5,000 bonus.
TREASURER:
Yes. We want to encourage good teachers. There are so many good teachers that just go unrecognised at the moment. We have had examples of schools in under-privileged areas that have really made a big effort and lifted the literacy standards and the numeracy standards – and the teachers get no reward. They get no recognition. And so we have got a programme now where if you are one of those schools and you do lift the standards and make a difference in the kids lives then you will be eligible for a $50,000 grant to the school. And what a great way of rewarding good principals, good teachers.
JONES:
Just a quick one on pensions, if I might just say. Someone gets cancer, could be you, could be me, you are on $2,000 a week, you cannot work, you have got to go home, you’ve got a mortgage, you’ve got a wife, all you can manage is a disability pension, $525 a fortnight…
TREASURER:
Yes.
JONES:
…have we gone far enough in helping these people manage in unforeseen circumstances?
TREASURER:
Well, of course, you know that last night again I announced that a bonus for carers – and that is for people who look after those with a disability. In relation to disability themselves, I would make two points – one is, of course, for some people on disability who get in that situation we have schemes which allows access to superannuation to help them of course. The other is, we are negotiating at the moment a new Commonwealth-State Disability Agreement, and I think you make a good point there Alan, and these things we will take into account very much in the negotiation…
JONES:
We are short of time, you are busy. On water I am always disappointed, I suppose – it’s the only, I thought, hole in the wall. You did talk about irrigation, over-allocation, water tanks and so on, but you now have got a Future Fund, you have now got this Higher Education Endowment Fund, why not an infrastructure fund whereby you can put money from superannuation into it. You can ask the private sector to go into it, and we can build some dams, we can build some pipelines, we can recycle and have major plants so that we can do something to secure Australia’s water supplies for the years. You said last night in one interview - long after you are out of Parliament and I am out of broadcasting…we are yet to have grasped that net.
TREASURER:
Well I agree with you about building dams - absolutely agree with you about building dams. I could not agree with you more.
JONES:
You are going to say it is a State job?
TREASURER:
Yes, of course.
JONES:
Give them some dough to do it.
TREASURER:
Well yes…Alan. Ever heard of GST?
JONES:
It only goes so far.
TREASURER:
Oh, Alan we are up around $40 billion.
JONES:
Yes, but don’t we have to say that water is a national initiative here. It is so important that we have got to guarantee secure metropolitan, regional and agricultural water supplies?
TREASURER:
You are quite right. I mean, the Commonwealth does not control metropolitan water supplies. We don’t control Sydney water supplies, you know that.
JONES:
Yes.
TREASURER:
But there are crucial water ways that run between States, and the biggest of course is the Murray-Darling Basin.
JONES:
I am talking about harvesting it. It is going to rain one day, and we do not have one extra cup built to harvest the water. Not one extra cup for the last 40 years to harvest the stuff. Now we are awash with superannuation money. Australians would want you as the Treasurer to take the initiative and say ‘come on, pitch in to rebuild our country’.
TREASURER:
Well here is what we are going to do in relation to the Murray-Darling Basin – we have made the biggest initiative ever in Australian history. We are going to try and get Commonwealth control of it. And we are going to try and fix it. You see Alan – you cannot fix these things if you do not run them. You know.
JONES:
And the Constitution doesn’t allow you to run a lot of these things.
TREASURER:
I know. You can run your radio station very well, if I may say so, but you cannot fix the problems of other radio stations because you do not run them. We cannot fix problems with Sydney Water – we do not run it. What we are going to do is we are going to try and take over the Murray-Darling Basin, it crosses four States, it’s proper that the Commonwealth run it, and we are going to do all of those things provided we can get the last State which is the hanger to come and agree with us.
JONES:
…over the line. Some of these things I think we will need to talk about further, we are beaten for time now, both of us, but thank you for your time and congratulations and well done.
TREASURER:
It is a great pleasure to be with you.