TOM ELLIOTT:
The Federal Treasurer, Scott Morrison. Good afternoon.
TREASURER:
Hey, Tom.
ELLIOTT:
Now, in a nutshell for dummies, what has been passed today? What tax cuts can we now look forward to?
TREASURER:
What we’ve got is a three step plan, the first one is if you’re earning up to around $90,000 a year, a $530 extra tax refund that you’ll get back from beginning of next year, that tax year. Then...
ELLIOTT:
Do we get that every year though...
TREASURER:
Yes.
ELLIOTT:
... or is it a one-off?
TREASURER:
No, you’ll get that and when you get into the second stage, you’ll continue to get that. From the second stage, we move some of those tax thresholds so we move $37,000 up to $41,000 and then we move $90,000 up to $120,000, we’re going to move that one that’s currently at $87,000 now up to $90,000 – that happens on 1 July coming and then in the second stage, that goes up to $120,000. And in the final stage, we abolish the 37 cent tax rate all together.
ELLIOTT:
Oh, it’s the 37 cent tax bracket, is it? So wherever that cuts in, you’ll keep paying 32 cents in a dollar...
TREASURER:
Thirty two and a half – that’s right.
ELLIOTT:
Thirty two and a half.
TREASURER:
That means for most people over their entire working life, they will never face bracket creep with the full implementation of this plan – 94 per cent of Australians will not face a marginal tax rate higher than 32.5 cents.
ELLIOTT:
Just on bracket creep though, our finance expert, Scott Hayward, pointed out to me earlier today that wage growth is very slow at the moment. Is bracket creep now an issue?
TREASURER:
Yes, of course. It impacts every year and it has been factoring into the Government’s revenues and so it’s important that you do that over a longer period. That’s why it’s a longer term plan. How many times – either on your program or programs you’ve listened to, Tom – have you heard people when they ring in say, “the Government’s got to think long-term about these things.” That’s what this is and so over that period of time we’ve made sure that as people’s wages move up, even if it’s just by inflation, and over seven years with a stronger economy, then we expect to see wages to move as well, people taking extra hours and extra shifts over time, they shouldn’t have to pay a higher tax rate just because they’ve made an extra effort.
ELLIOTT:
Okay, so straight away, if you’re earning up to $90,000, you get an extra $530 a year...
TREASURER:
In your tax refund, yes.
ELLIOTT:
Ten bucks a week.
TREASURER:
You get it all in one go and that’s four tyres on a car. If there’s two people in your household earning that, that’s over $1,000 for the family and that’s nothing to sneeze at. That’s half a year’s electricity bill for most households.
ELLIOTT:
Why did you pick four tyres on a car?
TREASURER:
Sorry?
ELLIOTT:
Why did you pick four tyres on a car?
TREASURER:
Because that’s what it’s worth.
ELLIOTT:
I know.
TREASURER:
And then you’d have a bit of change on that too.
ELLIOTT:
Alright. Now, Pauline Hanson has been in the press this afternoon saying that she’s the one responsible for getting this through the Senate. Is Pauline Hanson your new best friend?
TREASURER:
All of the crossbenchers that voted for this, we appreciate it and that’s what was necessary to pass the whole bill. So there was the full eight we needed to achieve that and that’s what we were able to achieve.
ELLIOTT:
Were you surprised though that Pauline Hanson crossed over?
TREASURER:
I was pleased.
ELLIOTT:
Pleased? Have you thanked her?
TREASURER:
I haven’t seen Pauline to be honest but I thanked her, and all the other crossbenchers that voted for it, in the House of Representatives this afternoon.
ELLIOTT:
Alright, now, when – so for those of us who might look forward to the 37 cents in the dollar tax bracket being abolished, when will that come in?
TREASURER:
That’s seven years from now. It’s a seven year plan.
ELLIOTT:
Seven years?
TREASURER:
And if we can do it earlier, we will.
ELLIOTT:
What would cause you to do it earlier? What would you need to see?
TREASURER:
An even stronger economy.
ELLIOTT:
Right. So, if the economy is growing ahead of expectations, you can bring forward the abolition of the 37 per cent tax bracket?
TREASURER:
We will always seek to have people on lower taxes and wherever we get that opportunity, we’ll act and I think what we’ve done with this plan - it’s not the first time I’ve made changes to personal income tax. In my first Budget, I moved the $80,000 threshold up to $87,000, now it’s going up to $90,000 on 1 July. We’ve provided tax breaks, tax cuts for first home buyers – that was in last year’s Budget so they can save 30 per cent faster by putting their savings into their superannuation account which means it attracts a 15 per cent tax rate, not a 30 per cent tax rate.
ELLIOTT:
Okay, if you’re serious though about getting rid of bracket creep – so where people’s wages just go up over time with inflation or wage growth and they get pushed into higher tax brackets – why not index the brackets in the same way that petrol tax is indexed each year, why not index it with wage growth or with inflation?
TREASURER:
That’s one way you can do it, this is the other way you can do it and we chose to do it this way.
ELLIOTT:
The Labor party has said that the second two parts of your tax plan, they’ll abolish it if they get into Government. Is there any way of preventing them? Is there any way of enshrining this in law so it can’t be abolished?
TREASURER:
It is in law. The only way to prevent that is don’t vote Labor. Labor wants to put $70 billion in higher personal income taxes on Australians if they’re elected and that’s on top of the $200 billion in other higher taxes on everything from small business, the retirees tax – that you and I talked about, abolishing negative gearing, capital gains tax, family business extra taxes, higher taxes on superannuation contributions – including mums who are coming back from having kids and we’ve provided tax relief for them to put more into their super to catch up. They’ll get rid of that too. Too much tax is never enough for Labor.
ELLIOTT:
Will this be a vote-winner for you?
TREASURER:
It’s a win for Australians who work. How they vote is up to them but the choice could not be clearer as I sort of showed today – I don’t know if you saw The Karate Kid – both your and mine vintage I think, mate – but you know, “tax on, tax off”. “Tax on” for the Labor Party, “tax off” for the Liberal Party. That’s the choice.
ELLIOTT:
So you’re channelling Mr Miyagi.
TREASURER:
Mr Miyagi, there you go, giving zen-like tax advice.
ELLIOTT:
Now, what about the company tax cuts? You had them in the Budget a couple of months ago, where are they going?
TREASURER:
Well, the company tax cuts were in the Budget two years ago and we’ve been seeking to have those passed now for two years. We took them to an election which we won and the Labor Party refused to pass and recognise that vote in the election but we’ll continue to pursue those and we’ll be pursuing those again next week.
ELLIOTT:
Are you worried about unemployment? I note that yesterday Toys ‘R’ Us went into administration and of course, Telstra’s big news that they’re going to cut at least 8,000 jobs in middle management – many of them right here in Melbourne. Do those sorts of job cuts worry you?
TREASURER:
Of course they do but unemployment has come down to 5.4 per cent and all of that news is distressing but it would be even more distressing if you found yourself in that situation and you had to go into an economy where unemployment was rising and there weren’t many jobs. 415,000 jobs were in the economy last year. That’s the highest we’ve ever seen in Australia and you look in areas like telecommunications, there were specifically net 3,600 extra jobs in that sector last year, that was up 1.6 per cent and you look across in wholesale trade that was up 11,400, 63,000 extra jobs in manufacturing, 162,600 in the services sector. So it is an economy where there are more jobs than there were a year ago and a year before that. We said jobs and growth, we would deliver and we have been delivering that.
ELLIOTT:
Very quickly, across the ditch in New Zealand, the ‘first baby’ has been born...
TREASURER:
Well, not the first one ever I suspect.
ELLIOTT:
No, but given that her husband is called the ‘first bloke’, therefore, the child...
TREASURER:
Oh, the first – oh, I get it. Sorry. Yes, yes.
ELLIOTT:
The child is called the ‘first baby’. Does the Australian Government – like would you present the happy couple with a gift?
TREASURER:
I suppose Malcolm may do that. I’m sure he’s offered his congratulations. I certainly do as well. It’s the happiest time in your life. I’ve got two little girls so I know what that’s like and to all the parents that are there and the grandparents – that’s just joy. It’s just as simple as that. It’s just pure joy and I wish them well and God bless them.
ELLIOTT:
Thank you, Mr Morrison. Scott Morrison there, the Federal Treasurer.