Topics: Budget 2017, income tax, bank levy, former senators Day and Culleton
E&OE …
KIEREN GILBERT:
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The Shadow Treasurer Chris Bowen will be giving an address today at the Press Club. We’ve got some detail of it. Essentially the deficit levy stays in place for high income earners until there is a surplus. Does that make sense in a political argument when you put the deficit levy there in the first place because we’ve got a deficit, that remains, why isn’t Labor right in that regard to keep it?
SENATOR SCOTT RYAN:
If any voters believe that the deficit levy will come off when Labor delivers a surplus then they’re not looking at Labor’s record because there will never be a surplus under Labor. Their record shows it.
The deficit levy was introduced in 2014. It wasn’t a policy that was overly popular inside the Coalition and it is going to expire. For reasons that people as Labor as Paul Keating have outlined, we shouldn’t be forcing up high marginal tax rates. This faux fairness campaign of Labor – we need to put in context just how fair our tax system already is – when the top one per cent of income earners pay more than the bottom 50 per cent of income earners in income tax. The top quarter of income earners pay two-thirds of all income tax. The top five per cent of income earners pay nearly a third of all income tax.
We have a highly progressive tax system and what Labor’s trying to do is mislead people into saying ‘tax the rich, tax the people you don’t know’ and somehow the Budget will magically come into surplus. Well the record shows, it doesn’t.
GILBERT:
You say we shouldn’t be lifting marginal rates or looking to do that, but isn’t the half a per cent Medicare levy doing that? That’s across the board and that’s basically an increase in the marginal tax rate.
SENATOR RYAN:
The half a per cent Medicare levy applies to basically all people who pay income tax. It’s a social insurance levy, which is another name for a tax, but it’s part of the social insurance levy we have and that will ensure, with the half a per cent Labor already put there with Coalition support, which Bill Shorten said was fair, that will ensure the National Disability Insurance Scheme is funded.
The Coalition comes to government, Labor’s made all these promises, printed up all these bumper stickers, but nothing’s been paid for, nothing’s been implemented. The National Disability Insurance Scheme is something the Coalition supported, but we’re going to support it honestly by implementing and paying for it. Labor didn’t do that.
GILBERT:
They’re maintaining this fairness argument though, in a political sense, do you worry that that’s a vulnerability? You’re going to be lifting the tax rate for everyone, they’re saying ‘no, only for the top two tax brackets upwards of $87,000 a year’?
SENATOR RYAN:
Let’s put this in context. The top tax bracket – $180,000 and above – seven per cent of all income earners or just under, they’ll pay 27 per cent of the increase in the Medicare levy so it is highly progressive. What Labor is doing is to try and create this idea that somehow there is an easy path back to surplus that involves taxing the rich or hitting up people you don’t know. The truth is, Labor said that for years in office and they never even got close. Deficits continued to grow, the date of coming back to balance was pushed further and further out. Then, when we came to office and tried to legislate the necessary spending changes and spending reductions, or even reductions in the rate of growth to spending to bring the budget back to balance, they voted against it, including some promises they made themselves in the 2013 election. We’re being responsible and saying ‘this wasn’t our first port of call, but we haven’t been able to balance the budget through spending reductions or reductions in the rate of growth of spending. We believe the NDIS is important, there’s a $50 billion funding hole over 10 years, we’re not going to expose those people to risk, we think this is a fair way of going about it that ensures those who earn more, pay more’.
GILBERT:
Peter Costello says, basically, governments haven’t been living within their means since 2007. Do you agree with him on that?
SENATOR RYAN:
Well I remember sitting, just after I started in the Senate in 2008 and 2009, listening to the debates about fiscal stimulus and the idea that this would just be $42 billion that would just be laid out in the second stimulus package from the Labor Party and that surpluses would flow back. Some of us warned they wouldn’t because increased spending was being baked into the budget and forecasts were simply too optimistic. The best way to ensure you have no debt is not run it up in the first place. Peter Costello did that. He ensured we had a surplus. Labor blew it. We’ve been spending the last four years – through a combination of spending reductions, reductions in the rate of growth, changes to programs – to ensure the budget can come back into balance. But it’s not been easy when you’ve had a Labor Party who honestly is intent on maintaining the budget in deficit.
GILBERT:
The Treasurer has told The Daily Telegraph that he is going to put forward a standing inquiry basically into the banks through the consumer and competition watchdog till June 30 next year. This might be an effort to try and rein in the banks, but nothing’s worked before has it, in terms of stopping them passing on the costs, which is exactly what they’re going to do?
SENATOR RYAN:
Well the ACCC has long been given extra resources Kieren to address specific issues.
GILBERT:
It hasn’t worked.
SENATOR RYAN:
When the GST was brought in, the ACCC was given extra resources to ensure that claims made about prices or price changes reflected the change in the tax base. Governments of both persuasions have ensured that the competition and consumer protection authorities have the resources to ensure when people make claims about price changes, they are based on facts. And to ensure that consumers are fairly and fully informed. This is entirely consistent with the practice nearly two decades ago with GST implementation.
GILBERT:
Are you optimistic though that it’s going to work?
SENATOR RYAN:
I don’t know if anyone who knew me would call me an optimist. I am optimistic in this case because remember, this does give people the opportunity to change their mortgage, to change their bank account. Quite frankly, the whinging of some of the bank heads is going to highlight that to consumers that they can go elsewhere.
GILBERT:
I want to just touch on a story that’s in your area of responsibility specifically. The Department of Finance is apparently pursuing Rod Culleton to pay costs incurred when he was a senator. A couple of questions: are they going to go after Bob Day in the same regard? And secondly, apparently you, as Special Minister of State, have the power to waive those costs, would you consider that?
SENATOR RYAN:
I need to be very careful in what I say here because I may have a future decision making role and I cannot prejudge.
What I can say, and I’ll have more to say on this before the Senate Estimates committee next week, is that letters from the Department of the Senate and the Department of Finance – they are the two responsible authorities for different parts of allowances – have gone to Mr Day and Mr Culleton.
There is a process that will play out there, they have been offered certain options. As I understand it, because those letters have not come from me, the debts have not yet been raised, but there is a process to go through that any citizen can apply for a waiver of a debt to the Commonwealth and at the moment, I am the responsible minister for that process right across government, but I’ll have more to say on this before the Senate Estimates committee next week.
GILBERT:
Minister appreciate your time, we will talk to you soon.
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