DAVID SPEERS:
In last year's Budget you said any additional revenue would be "banked as an improvement to the Budget bottom line". Now, you've got additional revenue here, more than $30 billion and yet you're only banking less than half of that, $15 billion.
TREASURER:
We also have a rule that we won't allow taxes to rise as a share of the economy beyond 23.9 per cent and so what we're doing is letting people keep their own money. What we've done in 2017-18, 2018-19 and 2019-20, all of that additional revenue that has come in, in those three years, is going directly to the bottom line. In further years, when we're back in surplus of over $10 billion, those are the years in which that additional revenue, we're allowing to go back to Australians who earn that money because it's theirs.
SPEERS:
Income tax payers would also like to be paying a whole lot less interest than they currently are. I mean, the $14.5 billion interest bill next year that could be lower.
TREASURER:
Well, that falls by $2.2 billion…
SPEERS:
That's still going to be $12 billion, $12 billion, $12 billion…
TREASURER:
And it will fall by $2.2 billion in the last year of the forward estimates…
SPEERS:
So it's too much?
TREASURER:
No, I don't think Australians like to pay higher taxes, David, for Governments. I think they prefer to keep taxes under control and for Governments to live within their means and for Governments to achieve their path back to balance on that way. I think the recipe of higher taxes, higher spending always ends in tears. We've seen that with previous Labor Governments, we shouldn't go back there, we've got a plan, we've stuck to it, it's delivering those results.
SPEERS:
So you don't think this debt level's too high?
TREASURER:
The debt's coming down as of 2017-18. 2017-18, the net debt falls from where it is now and it will fall 3.8 per cent of GDP over ten years, it will fall by the $230 billion over that ten years. It will fall by $30 billion over the Budget and forward estimates. Why? Because we're getting the Budget back into balance and building that with a stronger economy.
SPEERS:
Let me turn to spending. There really aren't many spending cuts in this Budget.
TREASURER:
Well, the Budget washes its face on that with what's saved and that is new expenditure is covered off by savings, with a slight positive balance of $400 million.
SPEERS:
Your mentor Peter Costello is worried about this, there's only a net save of $404 million over four years, you know, now that's next to nothing.
TREASURER:
Our Budget rules say that you reduce expenditure as a share of the economy, which this Budget does it falls to 24.7 per cent over the Budget and forward estimates…
SPEERS:
Next year it's going to be 25.4 per cent, then it starts to fall. So it's gone up since you've been Treasurer.
TREASURER:
It'll go up then it'll come down. And it falls to 24.7 per cent and real spending growth under this Government over this Budget and forward estimates is 1.6 per cent.
SPEERS:
How is it coming down? Can you explain how it is coming down?
TREASURER:
Well, we've got a couple of measures which are hitting the Budget in the next couple of years. There's some funding around some additional expenditure on hospitals, and settling some old agreements. There's some additional Defence expenditures which we've got in a short a period of time and that is going down in further years. But our welfare savings are achieving integrity savings on welfare. Getting people off welfare and into work is like in rugby league a 12 point turnaround. You score and stop them from scoring, 12 points.
SPEERS:
The tax cuts, now when fully implemented, high income earners will get around $7,225 a year. Someone on average earnings will get $540 bucks. Is that fair?
TREASURER:
When you look at what the percentage is, in terms of what people pay in actual tax. Now, people on the highest marginal tax rate pay over $80,000 a year in tax. On the next rate down, they pay around $30,000 a year in tax. The next one down, $10,000. And on the lowest tax bracket, they pay about $1,900 a year in tax. So there are people on the top tax bracket, around 400,000 people, and they pay for 17 per cent of the tax.
SPEERS:
Do they need a $7,000 tax cut?
TREASURER:
No, what I'm saying is we need to have taxes as a whole lower, this is seven years from now, David, and we're saying those on lower and middle income, they come first, $530 every year, year on year on year on year. And you'll see in the Budget, that what they get as a percentage of tax cut, on what the tax they pay is over 6 per cent when you look at it over that period of time. For those on higher incomes, it's less than 3 per cent.
SPEERS:
Well, the first stage, you want this introduced on July 1 so you need to get cracking.
TREASURER:
Yes.
SPEERS:
Will you introduce the legislation tomorrow?
TREASURER:
Yes.
SPEERS:
So you will be looking for the House to support this?
TREASURER:
Of course, and the whole plan, the whole package. It's a package. A whole package, over that seven years, because we're providing a very clear direction and that's what is needed to actually keep taxes below the speed limit.
SPEERS:
So you won't break it up? So you wouldn't break this into stages?
TREASURER:
Absolutely not.
SPEERS:
Definitely not?
TREASURER:
Absolutely not.
SPEERS:
Because you said that about your company tax package and you ended up breaking that up…
TREASURER:
I'm introducing the whole plan, it's a test for them: do they want taxes to be lower or do they want them to be higher? I know they want taxes to be lower.
SPEERS:
But they already said they'll back the first stage, surely you should take that…
TREASURER:
No, this is a whole plan. This is a whole plan for all Australians. We want all Australians to have a reward for their effort.
SPEERS:
To be clear on that though would you be willing to hold them ransom for lower income earners just so the wealthy can get a tax cut?
TREASURER:
Well, that's a question you should put Bill Shorten.
SPEERS:
No, it's to you because…
TREASURER:
Well no, I'm putting the whole plan. Now, Bill Shorten should back the whole plan.
SPEERS:
And if they don't back the whole plan, the lower income earners get nothing?
TREASURER:
No, if Bill Shorten doesn't back the plan, then Bill Shorten has told Australians that he thinks taxes should be higher.
SPEERS:
So you would not be willing to break it up and at least get that first stage through?
TREASURER:
The whole plan is going into Parliament. And we want to see it backed for all Australians.
SPEERS:
So the whole plan or nothing?
TREASURER:
We want to see whole plan backed. Why would we not? The whole plan's in the Budget. I didn't sort of put the whole plan in the Budget then go, "Maybe this bit but not that bit." I said, "We're doing the whole plan because that's what keeps taxes low as share of the economy."
SPEERS:
Ok, but would you be willing…
TREASURER:
You're saying, "Let taxes creep in the future." That is not what we believe…
SPEERS:
I know the argument…
TREASURER:
We believe in lower taxes, not higher taxes, that's Bill Shorten's…
SPEERS:
Would you be willing at least to get what you can?
TREASURER:
The whole plan is going to the Parliament…
SPEERS:
I know it is, but would you be willing to at least get the first stage…
TREASURER:
David, you can ask me 25 times, and you're going to bore your viewers silly…
SPEERS:
Alright…
TREASURER:
The answer is it's the whole plan…
SPEERS:
We'll see what happens in the Parliament. Now, the company tax cuts, I didn't actually hear you mention company tax in your speech tonight, is that a bit sensitive?
TREASURER:
No, it was straight out of the blocks when I was talking about our Enterprise Tax Plan. That's the name of the plan.
SPEERS:
Alright, and what's the remaining cost of that?
TREASURER:
It's $35 billion.
SPEERS:
So $35 billion over the ten years?
TREASURER:
That's on the measure just before the Parliament. That's $35 billion, and let's not forget over that period of time, the bank levy, by the time the tax rate for all businesses gets to 25 per cent, the bank levy would have raised $16 billion. When you put it over the ten years it's closer to $20 billion. So of that $35 billion that's currently there before the Parliament, around $20 billion of that, comes back at least in the bank levy itself.
SPEERS:
The estimate was the company tax cuts would boost national incomes by 0.81 per cent, what are personal income tax cuts going to do for the economy?
TREASURER:
Well, that is caught up in the current forecast we have for the economy…
SPEERS:
Why isn't there a specific number?
TREASURER:
Because this is about tax relief for personal income tax…
SPEERS:
But is there an economic benefit?
TREASURER:
There are improvements to the consumption numbers that you see in the Budget. But then that is balanced out by movements…
SPEERS:
So there are no growth figures?
TREASURER:
Well, we believe there is but that is part of componentry of the forecasting…
SPEERS:
Well, what is…
TREASURER:
…And currently sitting before the – well, you've got economic growth goes from 2.75 up to 3 per cent. It's included in that…
SPEERS:
And that, and that…
TREASURER:
It's included in that…
SPEERS:
And that is driven by the personal incomes tax cuts?
TREASURER:
Well, it's partly driven by that, amongst many other things.
SPEERS:
Of course, Labor doesn't want the rest of those company tax cuts…
TREASURER:
Well, Labor believes in higher taxes.
SPEERS:
Well, they could put that into an even bigger personal income tax cuts…
TREASURER:
Well, no they can't because they've already spent it. At the last election they said they were reversing the entire Enterprise Tax Plan. They spent all of that money and the money on negative gearing, and the money on capital gains tax, and the money on the higher tax rate on the top marginal rate, they spent it all, and they still ended up with a deficit $16.5 billion higher than we have. See this is the problem, if Labor allows taxes to just run wild, their spending always runs higher. That's why you've got to control taxes. If you can't control taxes, you can't control spending.
SPEERS:
Now, aged care and older Australians. There are few elements in tonight's Budget for them, 14,000 new in-home care packages on top of the 6,000 from in December. There is a long waiting list already, 105,000 on the waiting list already. So will this make a big difference?
TREASURER:
I think it will make an important difference. It's an excellent start, and the more we can do the better, David, but it's over an 80 per cent increase for the high-level care packages because we've really targeted the high-level care. You've got quite a lot [inaudible]…
SPEERS:
But there's still a waiting list of 57,000 [inaudible]…
TREASURER:
I think there's around 40,000 people in that figure you're talking about, who are already in the in-home care system, so they're waiting for different higher level care packages within the system…
SPEERS:
But there's a way in which the higher care of about 57,000…
TREASURER:
Yes, I know and we've just announced 20,000 additional places.
SPEERS:
Alright, are you still though wanting to make people until they're 70 before accessing the age pension?
TREASURER:
Well, the next change to the pension age, that's been about 35 years' time by the way, or 30 years' time, my understanding of what that figure is…
SPEERS:
The lift to 70?
TREASURER:
The lift to 70. I would stand to be corrected on that. But the next change to the pension age is the one that Labor legislated. So next time the pension age goes up, you can thank the Labor Party…
SPEERS:
And you supported it.
TREASURER:
We were there, we supported it…
SPEERS:
You want to go further, you want to go further…
TREASURER:
Well, what we've put in this Budget though is giving people the means and the systems and support to be able to live a longer life, and to work more effectively according to the choices they make…
SPEERS:
Except you're also going to still take away the energy supplement for pensioners.
TREASURER:
Well, these are manners that are still being negotiated in the Senate.
SPEERS:
Is that something you're indicating you'd be willing to negotiate on?
TREASURER:
I'm saying that these are the matters that are still before the Senate.
SPEERS:
Alright, but it is still Government policy?
TREASURER:
It's still a measure in the Senate, and it's still being discussed in the Senate.
SPEERS:
And it's still a Government desire to remove that energy supplement?
TREASURER:
Well, it's for the Senate, David, so we'll keep working with those Senators in the Senate along with a number of other bills.
SPEERS:
Final one, there is an election due roughly 12 months from now…
TREASURER:
True.
SPEERS:
If not sooner. Elections usually do involve a lot of spending promises. Where is that potentially going to come from?
TREASURER:
Well, what we're doing David is acting responsibly. That's how we've got to where we are now. That's how you get to having the lowest rate of real growth in expenditure of any Government in 50 years. That's how you get to the turning point on debt and from now the debt, and from now the debt as a share of the economy and nominally falls, as I said, by more than $230 billion over the next ten years. You get there by responsible financial and economic management.
SPEERS:
So you wouldn't change those surplus forecasts during the election campaign to pay for any promises?
TREASURER:
Our estimates are there for all to see, and our record is there for all to see. We are the responsible economic and financial managers when it comes to political parties in this country and Australians know that. And we'll keep providing that leadership when it comes to doing that, because that's what supports a strong economy, because the Budget is about a strong economy, because with a strong economy you cannot guarantee essential services Australians rely on.
SPEERS:
There is about $3.3 billion in the contingency reserve for 2019-20, is that the sort of money you'd use for an election campaign?
TREASURER:
Well, that also includes the conservative bias and so, which is a technical feature of the Budget and these are normal parts of the Budget, so, no, I don't think there's much to enquire into there.
SPEERS:
Alright, Treasurer Scott Morrison I do appreciate your time this Budget night, thank you very much and good luck in the next 48 hours or so…
TREASURER:
I'm sure we'll speak soon.
SPEERS:
Indeed. Thank you very much for that.