BYNER:
Today is the last day of this financial year and there are some changes coming up, some of which might actually be quite good as you cower, I suspect in many cases, under the pressure of inflation and cost of living. Let's talk to the Federal Treasurer, Wayne Swan. Wayne thanks for your time.
TREASURER:
Good morning, Leon. Good to be with you again.
BYNER:
Now, tomorrow is the beginning of the new financial year, what advice would you wish to give people and advantages must they avail, in order to take full advantage of the changes that you made both in the Budget and some of the tax cuts that are coming up?
TREASURER:
Well first of all, the tax cuts are coming up for 1st July and that'll certainly be welcome relief, given what's happening with the price of petrol, but we've also got the additional childcare assistance that's coming in, the Child Care Tax Rebate which increases from 30 per cent to 50 per cent, and the maximum rate of payment has also increased substantially as well. So, that's important for people to keep an eye on that and to make that claim because they can now claim it quarterly, and I think they can claim that from October this year on a quarterly basis. So, that's pretty good for those people that have been really hit with increased childcare expenses.
And of course on top of that, the Education Tax Refund which is coming through which will deliver substantial additional support for families with kids in terms of educational expenses for both primary school and secondary school children. And of course for that, they will certainly be needing to keep their receipts. So, it's going to be $375 maximum paid out for a primary student and $750 for a secondary student. So, keep your receipts for those textbooks and computers and so on that you're buying.
BYNER:
Okay, just to put a general figure on it, the average worker getting the average salary, a lot of people don't know how to get, well below or above, what's going to be the average benefit they're going to get. Have we quantified it?
TREASURER:
Well, there certainly is. The average tax cut for someone on a relatively modest wage would be around $20, sometimes a bit more for those depending on where they are on the income tax scale. But over and above that there'll be substantial benefits. So, if you take a family on a combined income of say anywhere between $60,000 and $80,000, they can be $40 to $50 a week better off after they've received the Education Tax Refund, but most particularly those additional out-of-pocket childcare expenses. So, it varies by families.
But also, we've got the seniors who've had their $500 bonus come through, mostly, I think, in the last week. We've also got in the next or so another quarterly payment for the Utilities Allowance which will increase to a total of $500. So, we can't forget about those people on low and fixed incomes and we know many of those, particularly on a single pension, are doing it pretty tough.
BYNER:
Wayne, there are significant cost pressures across the community at the moment that are going to put a lot of pressure on inflation, and it's believed that the next lot of figures for inflation are not going to be all that flash. What are you going to do?
TREASURER:
Well, we've got to do everything we can to put downward pressure on inflation because if inflation remains high that puts pressure on interest rates. As you know, inflation has built up during the last few years and when we came to office it had just hit a 16-year high and that was really before we'd seen the full impact of this latest global oil shock which has seen petrol increase by about 30 cents a litre since the beginning of the year. So, that's pretty substantial inflationary pressure in the system. And what that means is from the national level, we have to be very disciplined in what we do, which is why the recent Budget we reined in spending. We reined it in so we could actually make a bit of room for this additional assistance for people, particularly for those on middle and lower incomes. For the first time in a long time, the tax cuts are tilted towards those lower and towards the middle, because over the previous 12 years they've been tilted to those who are towards the top and the upper levels.
BYNER:
What's going to happen with fuel, because I know Martin Ferguson was in Jeddah recently trying to convince countries like China to charge their local populations more which went down a bit like when the Americans were here three years ago telling us we needed to pay more for pharmaceuticals?
TREASURER:
Well, I don't know, but Martin must have had an impact because that's precisely what the Chinese did – the actually moved on some of their subsidies only a week or so ago, and that will impact in that country. Look, there's a variety of things at work here – certainly there is a supply issue internationally.
BYNER:
Yes.
TREASURER:
But also there's been a lack of investment. I also think, from my meetings internationally when I went to the G8, that there's a bit of speculative activity in it as well. But all of these things can only be solved internationally, because the price of oil is a global price, it's not determining what's going on in this country – but that makes it all the more imperative that we are disciplined in our budgetary management locally because we are suffering these shocks that are coming through globally, not just from oil, but from the international financial market turbulence as well.
BYNER:
Wayne, I know you're busy, but one other point to make, and that is that we only import about 16 per cent of the fuel that we use, the rest is actually garnered here, and it seems strange that in that scenario we are actually paying a parity price which assumes we're importing when in fact we're not.
TREASURER:
Well, I think it's a bit different to that. Yes, we do produce a lot of oil, but some of it we export because it's a different quality and we do import I think a slightly higher proportion than you may have indicated. But I think you are pointing to a very important point and that is energy security, the supply and discovery of oil in this country has not been great in recent times. And Martin Ferguson has made a comprehensive statement which will impact upon exploration and all these issues of energy supply. We've also got the issue of gas, which has become red hot in Western Australia through that accident up in the North West Shelf. So, a lot of issues there in terms of the future supply of energy, whether it's oil or gas, which we have to deal with.
BYNER:
Wayne, thanks for your time.
TREASURER:
Good to be with you.