Topics: 2016 Budget, Labor’s $20 billion black hole.  

E&OE…

KIERAN GILBERT

Joining me now is the Minister for Vocational Education and Skills Senator Scott Ryan and the Shadow Parliamentary Secretary for Foreign Affairs Matt Thistlethwaite, gentlemen good morning to you. A big day for the Parliament, for the nation, a lot of pressure on Scott Morrison today, do you think he is relaxed heading into the Budget? It is the Government’s manifesto for the election campaign as well.

SCOTT RYAN

I think we saw from Scott earlier when he did an interview as he was coming into Parliament, that this is not just a Budget, it is not just a list of measures, it is about another step in the Government’s plan for jobs and growth. Over the course of the last few months we have had our innovation strategy launched, we have had our plans to increase competition in our economy through supporting small business and changing competition laws , our defence industry plan is also a plan for high-tech jobs, and the Budget today builds on all of that and will take the country forward by some of the measures we have already heard about…

(Interrupted)

GILBERT

But it is pretty modest in terms of tax cuts and that sort of thing isn’t it?

RYAN

No, no, it is actually about incremental but important reform that underpins those who provide growth in the economy, those who provide employment and also ensuring that unlike the Labor Party, as we saw last night, we are committed to bringing the Budget back into balance and not leaving future generations with a debt burden.

GILBERT

We will get to the number I think you are alluding to in terms of the tobacco excise in a moment, because the Government has confirmed as you heard with Mathias Cormann before the break that they are going to adopt Labor’s  tax excise on the increase in the tobacco tax.  I want to ask you first of all on income tax, because it is hard to see how Labor would not support, or at least not block the $80,000 increase in the threshold for workers, it is not a lot of money.

MATT THISTLETHWAITE

It hasn’t been confirmed yet, and we will have to wait and see if it is in the Budget. We will wait and see and make a call on that. What we will see tonight is you’ll see an increase in the deficit, you’ll see record levels of debt, cuts to education, cuts to health, maintained by this Government. And really tonight is Malcolm Turnbull owning Tony Abbott’s cuts to health and education. You are going to see workers’ and families’ incomes fall, you are going to see paid parental leave slashed, it is a Budget that makes it more difficult for people throughout Australia and it won’t promote growth and jobs.

GILBERT

Just getting back to that question though, if they do, as expected, increase the threshold of which the second highest rate of tax kicks in, I just don’t see how Labor could not support the passage of that particularly if it is going to kick in July 1. How can you stand in the way of people earning eighty grand or eighty-five grand whatever it ends up being, getting some tax relief? I can’t see how Labor doesn’t support that.

THISTLETHWAITE

In the past Labor has brought in policies that has provided tax relief for low income workers. When we were in government we increased the tax free threshold. We introduced a low-income superannuation contribution and it appears that the Government is looking at similar policies that the Labor Party introduced. We will give them serious consideration and we will make a call once we have seen the detail of them in tonight’s Budget.

GILBERT

Alright, let’s look at the vulnerability for the Government then. If you do move that threshold are you then vulnerable from an attack from Labor saying what about those under $80,000 a year.

RYAN

When the new tax system was brought in, there was a commitment to have the great bulk of income tax payers, particularly those on average weekly earnings, not paying more than 30 cents in the dollar in income tax. Now, I am not going to comment on any speculation that has been in the papers, I am not privy to those decisions, but it seems that Labor wants to see average income earners pay more tax. That is every signal we are getting, but that is consistent with what they have said over the last six and twelve months. Despite the fact that their taxes don’t add up, they are still desperately committed to increasing the tax burden on Australians. What we have seen in the paper and speculation would merely ensure that average income earners don’t pay more than 30 cents in the dollar tax.

THISTLETHWAITE

They are not average income earners, average income earners are $60,000 that is confirmed…

(Interrupted)

RYAN

No, no there are different measures…

(Interrupted)

THISTLETHWAITE

…In Australia and you are seeking…

(Interrupted)

RYAN

There is a difference between average income and average earnings.

THISTLETHWAITE

The focus of this Budget tonight will be to provide tax relief for large multinational corporations and high income earners while average workers and average families suffer…

(Interrupted)

GILBERT

So someone on $80,000 a year is a high income earner?

THISTLETHWAITE

No, Scott used the term ‘average income earners’ but the average income for Australians is $60,000.

GILBERT

Well let’s look at that number though, if you look at those on $60,000 particularly families, the bulk around that number – $60,000 to $70,000 – would be paying little if any tax once you factor in transport payments and that sort of thing.

THISTLETHWAITE

These are the people that have faced reductions in their incomes because of other changes in the Budget. So, family payments have been cut, paid parental leave is going to be cut again and maintained in the Budget tonight. So, they are making it more difficult for people on low to middle incomes through this Budget…

(Interrupted)

GILBERT

When you say that it is going to help multinationals, my understanding is that the Government is going to be cutting tax for medium and small businesses up to a threshold of $10 million turn-over a year. That is not the big end of town is it? That is still SMEs, small and medium sized companies.

THISTLETHWAITE

Labor’s policies, and they have been out there for a long time and they do tackle this notion of multinational profit shifting, and big companies shifting profits overseas…

(Interrupted)

GILBERT

Do you support tax cuts for those small and medium sized companies? Because that is the middle ground that the Government is going to be targeting tonight.

THISTLETHWAITE

We support fair taxes for all Australians…

(Interrupted)

RYAN

This is just another empty slogan from Matt. Labor made all of these promises and left all of these measures unlegislated when they left office. They didn’t do anything on multinational tax…

THISTLETHWAITE

Yes we did.

RYAN

… they had all of these announced but unlegislated measures on superannuation. He is now saying he won’t answer the question on should average weekly income earners move into higher tax brackets, he is not saying that we just believe in a fairer tax system. This is the problem with Labor, all sentiment but when you look at the numbers it doesn’t add up. We saw that with a story that has blown a $20 billion hole in their costings with the tobacco excise.

GILBERT

In defence of Labor at the moment at least, they haven’t seen the numbers, you have to make the final judgement after you have delivered the certainty.

RYAN

The parliamentary Budget office admitted it in estimates earlier this year, in Senate estimates when quizzed. That Labor’s costings had not been updated. This is the point, Labor puts out these policies, they claim they are funded and their history in Government as we saw under the Rudd-Gillard-Rudd eras is that none of these things are funded. There is always a black hole.

THISTLETHWAITE

You’re adopting our policies.

GILBERT

Is this a bad look for Labor with Treasury modelling…

RYAN

This was Malcolm Turnbull’s policy in 2009.

GILBERT

…Treasury modelling showing that there is going to be a $20 billion shortfall in what you are forecast to generate from the increase in the tobacco excise?

THISTLETHWAITE

We stand by the figures, because they have been costed by the independent Parliamentary Budget Office.

GILBERT

But are they old?

RYAN

But not by the people who run the Treasury.

THISTLETHWAITE

The process for the Opposition in having their costings assessed is through the independent Parliamentary Budget Office. That is the process that the Parliament has set up. Labor has complied by this process and we stand by these figures. But don’t fall for this Kieran, this is a ruse really. What the Government is doing here is stealing Labor’s policy. They are stealing our policy on tobacco excise, and they will probably steal our policy on…

GILBERT

It’s a big number, it’s a big discrepancy – $20 billion.

THISTLETHWAITE

And this is a ruse. This is a fact that they’re trying to divert attention from the fact that they’re stealing Labor’s policies.

RYAN

Or is it a rounding error like Chris Bowen said?

THISTLETHWAITE

It was, it was…

(Interrupted)

RYAN

Malcolm Turnbull announced an increase in the tobacco excise.

GILBERT

Matt, to finish please.

THISTLETHWAITE

It was Tony Abbott that described this as a workers’ tax. You had Sussan Ley and all the other criticising Labor when we introduced this policy, despite the fact that we’d done a lot of work, a lot of lead up work, consulting, and having this policy properly put together. Now they’re going to adopt it tonight – what hypocrites. It shows you that the true leadership on tax reform is being adopted by Labor.

RYAN

Malcolm Turnbull announced an increase in tobacco excise in his 2009 Budget reply, to a Rudd budget. He actually announced this, I mean this was something he spoke about at the time as an alternative funding mechanism. So you know, we can get into the ownership all you want, the difference with us and you, is that we make ours add up. You claim you put numbers through a process, but you don’t care about the outcome.  The outcome’s a $20 billion dollar black hole.

GILBERT

Isn’t it fair for the shadow treasurer then to look at the budget numbers and to recalibrate … and heading into the election?

RYAN

But $20 billion… it’s not a rounding error, Kieran. It’s a massive black hole that is consistent with everything else Labor have done on Gonski and the NDIS…

(Interrupted)

GILBERT

But the Parliamentary Budget Office undertook that modelling for them.

RYAN

Yeah, and the Parliamentary – and they didn’t update it, and as I recall the Parliamentary Budget Office did not say this was an estimate of higher reliability, so Labor’s been trying to use it as a smokescreen to cover all their unfunded spending. But this is consistent with everything they did in government. Constant black holes, NDIS, Gonski – all these sentiments, but unfunded and none of the hard work done. That’s what the budget tonight…

(Interrupted)

GILBERT

Then let’s hear from Matt Thistlethwaite.

THISTLETHWAITE

What are you saying, that NDIS is not properly funded?

RYAN

You did not fund it. No, you left a massive black hole.

THISTLETHWAITE

Well that’s not true at all. The NDIS is properly funded. It was properly funded in Labor’s last budget. This has been confirmed in Senate estimates by the officials who are actually rolling out the program across Australia.

(Interrupted)

RYAN

That is absolutely untrue.

THISTLETHWAITE

The NDIS is properly funded and you’re trying to use that as an excuse – you and other conservatives are trying to use that as an excuse to cut back on the fact that you don’t want to deliver a national disability insurance scheme.

RYAN

We’re actually delivering it. Christian Porter’s actually delivering is having to find the funding that Labor did not put aside, you had a little short-term funding package for it, but nothing that funded the long-term growth of NDIS.

GILBERT

Now in terms of this focus on small and medium size businesses, why is that so important in terms of the broader economy? Why – wouldn’t it be better to be going for the larger companies, because wouldn’t that provide a better growth dividend?

RYAN

Now one of my prior portfolios was small business, in Opposition, Kieran. The group that’s the most highly responsive to actually increasing employment is actually small business and small and medium businesses. This is the real engine room of the Australian economy. It’s why there were the measures put in place in the budget last year which was so successful. One of the tragedies of the Rudd era was that when Kevin Rudd came to office, more than half the people in Australia were employed in small business but by the time he left, it was well under half. We’ve been rebuilding that because this is a group that is highly responsive to incentives and highly responsive to a strong economy and they can generate the jobs and growth for the future.

GILBERT

According to the small business council as well, this next cohort of business – the medium enterprises of up to ten million dollars turnover a year – that they are the ones that really can drive the growth and have the capacity to use the instant tax asses write-off which, as I understand it, it’s not going to be just the tax reduction to 27.5 percent, but also this instant tax write-off for assets up to $20,000 per asset. This is going to be quite a boost for the economy.

THISTLETHWAITE

Well firstly you need to factor in that a lot of small businesses aren’t incorporated and they won’t get the benefit of company tax reduction. Secondly, it’s something that Labor was acutely aware of when we were in government . That’s why we introduced these policies of the instant asset write-off, of lost carry-backs. These are Labor policies that we put in place when we were in government. Tony Abbott criticised them in his first budget, then adopted them in his second. So it is good to see that the government’s finally woken up and that you do need to support small businesses in practical ways that Labor did when we were in office.

GILBERT

Isn’t it true that even the unincorporated businesses will still benefit from this in terms of the asset write-off?

RYAN

The way it was instituted previously was to have a separate measure to include unincorporated businesses and we will see tonight the further detail of that.  Small businesses are never going to run around saying the Rudd-Gillard-Rudd era was a great era of support from the Commonwealth for small business. We saw massive restrictions put on the way they managed their workplace, and on top of that we saw the simple number of people they employed decline because their confidence was destroyed by the Gillard government. And so small business responds very well, and medium businesses, to these incentives and they generate the jobs that Australians need.

GILBERT

Alright. Gentlemen, we are out of time, have a good Budget Day 2016. It is going to be a big few weeks ahead, we will talk to you throughout the election campaign. Scott Ryan and Matt Thistlethwaite.

THISTLETHWAITE

Thanks.

RYAN

Thanks Kieran.

(ENDS)