JULES SCHILLER:
Treasurer, welcome.
TREASURER:
G’day, Jules.
SCHILLER:
I believe you’ve got your name in the record books. Is this the broadest income tax reform package ever passed by a Parliament?
TREASURER:
I’ve heard references to that but frankly the winners today are the people you just talked about. That’s the only sort of record that counts, they’ll be keeping more of what they earn which is what this is about and over the next seven years we’ve got a plan to ensure that bracket creep doesn’t eat into their wages and what they need for themselves and their families and so this is why we’re pleased.
SCHILLER:
The Parliamentary Budget Office says that it will cost you $360 million next year, go up to $24 billion by 2028 so I guess, are you going to have to cut some services, Treasurer, to pay for it?
TREASURER:
No and we don’t have to increase taxes either. This was all set out in the Budget back in May and the Budget goes back into balance in 2019-20 and it rises to about one per cent of GDP over the medium term so this is an affordable, responsible plan. It starts with low to middle income earners then it works its way through the system and that’s why we set it out over that longer term to ensure that it’s achieved in that way. Low to middle income earners first but everyone who works hard, pays tax – doesn’t matter what they earn – they all work hard, they all pay tax and this provides relief across the board.
SCHILLER:
Well, stage one is fairly popular – I’ll grant you that – but when you get up to stage three, Treasurer, you’ve got 90 per cent of all taxpayers between $40,000 and $200,000 on a flat tax rate of 32.5 per cent which has been said – I’m no economist myself – but it really benefits higher income earners. That’s not as popular. I mean, do you think that’s fair for all Australian taxpayers?
TREASURER:
I think that analysis is rubbish. What that means is when you look at the plans over the period of time the average tax rate that is paid by people on higher incomes is still well over 30 per cent and those on lower incomes is down below 15 per cent. So the more you earn, the more average tax you pay and still at the end of our plan, the top income earners who are on the highest tax bracket, they’ll pay 36 per cent of all the tax collected. Now, currently, that’s only 30 per cent so it retains its progressivity but it also ensures that there is tax relief right across the board and we want people to earn more and we want them to keep more of what they earn. That’s what our plan delivers.
SCHILLER:
People are worried, we’re getting lots of SMSs as you would expect, Treasurer Scott Morrison, people are saying, “I’d rather keep paying taxes and get better infrastructure.” I mean, people are worried that we will get cuts to services and infrastructure…
TREASURER:
Well, they won’t.
SCHILLER:
So you can guarantee that?
TREASURER:
Yes, we’re not cutting any of those things. In fact, we’re increasing expenditure on all of those things. We’re spending $30 billion more on hospitals over the next five years in our new hospitals agreement. We’re spending over $20 billion more on education, we’re spending $75 billion on infrastructure over the next ten years so we’re delivering on the services. The reason we can do this is that we’ve got a plan for a stronger economy that’s delivering. We’ve got more than 400,000 jobs created last year – that was an all-time record. Economic growth is running at over three per cent, which is higher than all the biggest G7 economies in the world. We’ve got unemployment down to 5.4 per cent, the AAA credit rating has been maintained through some of the most difficult times that Australia has faced financially after the mining boom where $80 billion was ripped out of the economy. So we’re managing the finances, the economy’s growing and that enables you to deliver the essential services that Australia’s rely on. Promising to spend money doesn’t do it, a stronger economy does it.
SCHILLER:
Stage three comes in in two electoral cycles, you did mention the world, we don’t know what the world economy will be doing over the next seven years, Scott Morrison. So, do you think it’s naïve to think that we can lock in these tax cuts with so many variables that could happen?
TREASURER:
Well, why wouldn’t you ask the question about spending? If you can afford to spend over the next ten years, why can’t you afford to provide tax relief over the next ten years? It’s the same issues affecting both and Australians should have the certainty of tax relief. The Labor party tried to deny them that today, thankfully they were defeated. We have a $140 billion tax relief plan. They tried to turn it into a $70 billion tax relief plan. Now they’re saying at the next election, if you vote Labor, you get to pay $70 billion more in extra personal income tax over ten years. So, I don’t see how that’s terribly flash.
SCHILLER:
I mean, Labor have said that they’re going to – from what I understand – repeal stages two and three, is that right?
TREASURER:
Yes, they are. They’re going to go to the next election and say, “vote Labor and pay more tax.”
SCHILLER:
Okay, so it’s pretty clear. Labor are going to support stage one, they’re going to repeal stages two or three. What do you think of their plan?
TREASURER:
I think it’s a stupid plan. I think it’s completely anti-aspiration. I think it says to Australians, who are just trying to get ahead and do their thing, that Labor thinks that your money is theirs. They are just for higher taxes and if you allow taxes to grow too high in the economy, basically you slow the economy down and a weaker economy can’t provide the schools and hospitals and infrastructure that you were just talking about. Too much tax is too much tax.
SCHILLER:
And Mathias Cormann must be a pretty good negotiator, it was pretty touch and go there, Treasurer, to get this through.
TREASURER:
We’ve just been doing our job and Mathias has been doing his and I’ve been doing mine, Malcolm’s been doing his. That’s what Governments should do, they should get things done.
SCHILLER:
A final – any promises to Pauline Hanson that might crop up later in the year?
TREASURER:
People are paying less tax and she’s been a part of achieving that and that’s a good thing.
SCHILLER:
Scott Morrison, Federal Treasurer, it’s a very big day for you so I appreciate you giving us some time.
TREASURER:
Thanks, Jules, good to be with you.