JULIA BANKS (MEMBER FOR CHISHOLM):
It is absolutely fantastic to be here today in the heart of Chisholm with these two amazing gentleman, Stuart and Sam, cofounders of Planet Innovation. Planet Innovation in the heart of Chisholm is exactly and precisely what the Turnbull Government’s Budget is all about. They are on the forefront of advanced manufacturing and medtech, they are global leaders and they export to thousands of countries all around the world, and to be here in the heart of Chisholm with such a fantastic business with the Treasurer is an absolute honour. So, over to the Treasurer.
TREASURER:
Thanks very much, Julie, and come around, guys. I want to start by thanking Julia for inviting me here today and to meet Stuart and Sam. This is an incredibly energising story, and as we've moved around the facility here today and to see the number of people, 100 more people being taken on over the last year or so. This is a business that is smart, it's innovative, it's passionate, it is breaking new ground, from day dot it was breaking into global markets. It continues to invest in itself and it continues to invest in its people. Their employee share ownership schemes that they drive here, giving people the incentive to come here and work and be innovative and create new value for people, and they are dealing with technology here that changes people's lives. I mean, I've had some experience of this, and to know that - to see the technology today to what I saw 20 years ago is very, very different and I think it is a great blessing to those people who are now dealing with the medical issues, and challenges, whether it’s fertility and things like that, and getting that rapid information, that those products that are meeting the market is tremendously exciting and that it’s all happening here in Chisholm, Box Hill, linking up with the collaboration with the university sector, but most importantly the clinicians. That's what drives R&D. This is a company that is on the verge of breaking the $50 million turnover mark, and we want to ensure that they keep paying the lower rate of tax which they will now be getting under our legislated changes, which reduces their company tax rate for businesses up to $50 million. But we still are in a discussion with the Parliament about ensuring that we can continue to implement our enterprise tax plan, so businesses like this one can continue to be benefitting from the lower tax rate. I mean, it is a nonsense to think that Australian businesses, 10 years from now, will be able to compete with a corporate tax rate of 30 per cent and for innovators, like these two guys, and all of those who are working in this company, to face top rates of marginal tax of 49.5 – you know you’re basically saying, "Slog your guts out. Build a company like this and at the end of the day your great reward is you've got to work one day for the Government and work one day for themselves." That's what Bill Shorten said last night. Now, that is an innovation-killer, that is an entrepreneur-killer and it’s a business-killer, which means it is a jobs-killer. One of the other things I learnt about this business here today, is that even, you know we’ve got people working right across the spectrum of this business and even those who would be earning not the top-end salaries, they've seen wages growth two to three times what the national average has been because this business is doing well. So it’s not a theory, it’s the reality of this business, and that's why it's so important. So this is why we are here, to demonstrate that when companies start and companies do well, companies supported by innovative taxation policies, but most importantly by the know-how, passion and energy of those who drive them, who make big sacrifices early on and are looking to see their businesses grow and do well in the future. Now last night we saw that Bill Shorten was going to put his hand in the till of every single business in this country. First of all, he is going to increase the taxes, if he is elected, on small and medium-sized businesses up to $50 million, which would include this business. This business at its current level of operations. And then he wants to deny and put in place a tax regime which would make us the most uncompetitive tax country in the world for businesses to do business and business to invest. That is all just ideological rhetoric and nonsense, and Australia can't afford it. Australia must have a competitive tax system to support businesses like this, to grow, to find new markets, to provide wage increases for their staff which is happening right here. This is the business which says when the business is doing well, the employees are doing well, and as you move around and you see the retention of staff in this business, you can see that there in action. So happy to take some questions on, let's stay focused on why we are here today and happy to take more broader political questions, or questions more importantly I would prefer on policy.
QUESTION:
You mentioned how successful this particular business is and how much they are profiting at the moment. So some might argue that why do we need a tax cut now, when businesses like this are already doing well?
TREASURER:
Just imagine how much better they are going to do, one, if you continue to provide incentives for businesses like this, but the question assumes that the tax situation around the world stays the same, and it’s not. Businesses around the world, like in the United States, will be facing taxes half what we're currently imposing on businesses above $50 million now – half the tax rate. President-elect Macron in France is taking the tax rate down to 25 per cent. In Singapore, in places in our own region, the tax rates are already lower. The United Kingdom is going down to 17 per cent. You know, so you snooze, you lose when it comes to tax, and Bill Shorten wants to give companies a slumber pill when it comes to the tax arrangements in this country, and that's not what this country can afford. So it's important for us to keep on the path to support the growth in businesses that supports jobs. No one gets a job in a business that is not open. No one gets a pay rise in a business that is not growing.
QUESTION:
Just on broader political matters, Treasurer, it doesn't look like the Medicare levy will be very popular in the crossbench of the Senate. What's your Plan B?
TREASURER:
Let me say a couple of things. No, I don't hold that view. What we outlined in the Budget, two years from now, was a clear plan to ensure that the NDIS, the National Disability Insurance Scheme, is fully funded once and for all. Put to rest, put aside all the political arguments. It was a practical plan, it was a plan which said, “Let's meet in the middle to make sure the National Disability Insurance Scheme is fully funded for when the bills come in, which is in two years from now.” Now what we've heard from the Labor Party this morning is they don't want to put up the Medicare levy to support the NDIS. That was admitted by Andrew Leigh this morning. He was asked specifically about that. They don't think there is a funding gap with the National Disability Insurance Scheme. That just means that they've got no idea. There is a $55.7 billion funding gap for the National Disability Insurance Scheme. And what they are proposing, he said this morning, was just to raise more taxes. That's all it was. He is actually using this as an excuse to raise more taxes. It's not a plan to support the NDIS. It is just a plan for Bill Shorten to put his hand in your pocket. We wouldn't put up the Medicare levy for any other reason than to ensure that the National Disability Insurance Scheme is fully funded. That is the sole and only reason we are proposing that. But Bill Shorten’s not doing that. He has chosen to play politics, very disappointingly on this. It is personally, and more generally, very disappointing that we appeal to him to actually get in the middle here and work together. It is not our first preference to do it this way. We tried to do it with savings. He said no. Now he says no when we come to a position which is very much in the centre ground. So we stand by what I put in the Budget on Tuesday night. It is fair, it is the right thing to do. It is Australians sticking by their mates, supporting an important disability scheme. Bill Shorten has used it as just an opportunity to play politics and jack up taxes for nothing to do with the NDIS.
QUESTION:
What do you make of Labor's decision to only back the levy increase for people on above $87,000?
TREASURER:
Well, apparently a rich person today in Bill Shorten's lexicon is someone earning $87,000 and one dollar. I mean if he wants to make that case to the Australian people, well, I think I’ll call him out on it and they will tell him he is dreaming and that he is completely out of touch, particularly in cities like Melbourne here and in Sydney, he is seriously out of touch. I mean what we saw last night was just a political rant, and Australians are just fed-up with that. They are not interested in Bill Shorten's political rants, shaking his fist at the clouds and carrying on like he’s at some sort of union conference. They are just interested in politicians that are going to focus on the needs Australians have, like making sure businesses like this grow, so people have jobs, and the Australian economy can be competitive, and so that was really the terribly disappointing thing about last night's presentation. It was just all politics, just more political carrying-on and people are over it.
QUESTION:
Just back on your previous answer, casting the Opposition aside, what is your message to Senate crossbenchers who may not be fully on board with the Medicare levy and are you willing to make any concessions?
TREASURER:
My message is the same that I delivered on Tuesday night and that is the Government has come to the middle ground and we've said we want to make sure that Australians who live with a disability, their families, their carers, their friends, their mates, can be given absolute assurance that the NDIS is fully funded. We are there, standing in the middle ground, waiting for them to come and support us for this important national project.
QUESTION:
Just clarifying something to do with the Medicare levy…
TREASURER:
Yes.
QUESTION:
The increased rate of $400 million in 2018-19, how does it increase when the measure begins on July 1 2019?
TREASURER:
Because the costing of the measure includes it’s impact on the personal income tax revenue, not just the Medicare levy, and what that means is we've learnt that when you make changes to the Medicare levy or the tax system, then there is what's called a behavioural response and people will change their behaviour around the start of an introduction date, so some we know will try to bring some of their income forward into the previous year which means the income tax receipts will go up as a result of that change. So what that shows is we've thought through how this plays out. What Bill Shorten needs to explain to people is what will be the cost to the Australian economy of a 49.5 per cent top marginal tax rate, of a tax cliff at $87,000 just above average full-time ordinary earnings. I mean, you are going to be sitting there on $87,000 and you can going to create and confront this massive tax cliff. You think you are going to work that little bit harder? Take that extra shift? No, that's called an effective marginal tax rate problem where you are creating disincentives for people to earn more, and it just shows they don't think this stuff through, because they are only thinking through an ideological political and looking through that sort of a lens and that's no way to run a country and I think Australians are just rejecting that.
QUESTION:
Treasurer, what do you make of the violent protests outside the Crown before your post-Budget speech today?
TREASURER:
Well, I didn't see it. I came through, as you’d expect, another entrance. First of all, I want to thank the Victorian police. I am the son of a police officer. I know they, police officers all around the country, including our own Federal officers have been given increased support in this Budget, do a great job and I thank them for their professionalism. It is a free right to protest in this country. Free speech is something that’s important. They are entitled to make their view. I just ask they do it in a respectful way and a way that doesn't put others at risk. But I’m sure people will continue to make their points going forward. But what I’ll continue to stand on the ground on is supporting hard working every day Australians who are out there every day making the choices that helps them and their families. And I am with them. That is who I am standing with.
QUESTION:
Real estate prices in Melbourne's east are probably the highest they have ever been, particularly in Box Hill where about today. How are your Budget measures going to improve housing affordability in the area and …
TREASURER:
Well, in Melbourne generally, I mean there are three important measures for Melbourne in particular and for accessing more affordable accommodation for people, not just here in Melbourne but in the surrounding regions as well. For a start, we’re duplicating the Geelong-Waurn Ponds line which provides access to one of the close by regional areas where obviously housing is more affordable than it would be here in the Melbourne CBD. For some people, that will be their choice because that’s what they can afford and this will improve their link to the Melbourne CBD. Secondly, we’re doing the job of increasing housing supply in this city. And I am happy to commend the Government on the work they’ve been trying to do to increase supply here in Victoria. I think they should be absolutely commended for that. We are doing two things in this Budget which will help increase supply. One is we are incentivising the State Government to continue down the path of releasing more land and reforming their planning and zoning systems through a new housing agreement with them which rewards them for doing those sorts of things. Secondly, we’re releasing the defence land at Maribyrnong which will create 6,000 new homes in Melbourne. So that alleviates the supply issues here. Now, on the issue of demand, what we’re saying to Australians is you can invest, each and every one of you, $15,000 out of your pre-tax income for two years or if it takes you longer to get the $30,000 cap. Fair enough, and we will accelerate your savings by 30 per cent. You will pay less tax on the salary sacrifice savings you have going in. You will pay less tax on the higher earnings you’re going to get out of your superannuation fund than you will in an ordinary bank deposit account and you will pay less tax when it comes out. So you will be 30 per cent closer from the efforts of your own savings right now by signing up to the first home super savers scheme.
QUESTION:
Just one more, Treasurer, the banks have accused the Government of putting unfair time lines on them. How do you expect them to respond to draft legislation in 24 hours?
TREASURER:
I expect them to start paying the tax on July 1. It’s a very reasonable and fair measure. It sits very comfortably within their ability I think to pay this measure. I mean we’re talking about a three to four per cent impact on profits of over $30 billion, over $30 billion, and we are asking the banks to pay $1.5 billion to support all the things I have been talking about today. I think that’s very reasonable. It is consistent with what is done in many parts of the world, where their other competitor banks are operating. It doesn't hit the smaller and regional banks, it doesn’t hit the Bendigo Bank and the ME Bank and banks like this. It is focused on the larger banks. And it’s a six basis point annualised levy on those restricted liabilities that they are assessed on. Now they have already enjoyed, the big banks, about a 20 basis point advantage because of the implicit guarantee that exists for those banks as part of our banking and financial system. Now, Coles and Woolies don't get that. The mining companies don't get that, other big companies don’t get that, these blokes certainly don't get that and so six points versus a 20-point advantage, I think people will see that as pretty fair. We will work closely with the banks over the next month or so. The technical issues, I have no doubt, will be resolved. Where there’s new tax legislation, there are always technical issues, just to confirm that is all that is taking place at the moment. Look, if the banks want to go on about this in the public space, well, that’s their right. But it is coming in, it’s coming on 1 July, $1.5 billion will be paid, it’s a reasonable levy, it is totally implementable and we’re just going to get on with it. Ok. Thanks, guys.