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Budget 2016: Transcript of doorstop interview: Sydney: 5 May 2016: 2016 Budget - a national plan for jobs and growth; ten year enterprise tax plan; Budget -in-reply



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The Hon. Scott Morrison MP Treasurer

TRANSCRIPT

DOORSTOP INTERVIEW, SYDNEY THURSDAY 5 MAY 2016

E&OE

Subjects: 2016 Budget - A National Plan for Jobs and Growth; Ten year enterprise tax plan; Budget-in-reply

TREASURER: It was good to have the opportunity to this morning to further outline, and go into a bit more detail about our national economic plan, for jobs and growth, and a stronger new economy. Ensuring that we crack down on multinational tax avoidance is a critical part

of that plan. Extending tax relief and tax support to small and medium sized businesses across the country is incredibly important to that plan and how that works out and how we ensure that we better target the concessions, generous tax concessions, for our superannuation system, to make it more sustainable for the future, but to ensure that the revenues that we can raise from better targeting is pumped back in to a more flexible superannuation system. But also supporting those tax cuts we’ve got for middle income earners. They’re the only tax cuts that are in this Budget. They are for middle income earners. There’s no tax cuts for multinationals, in fact there are penalty rates taxes for multinationals in this Budget. The only changes to the tax system in this Budget, as far as it applies to personal income tax, is to broaden the middle income tax bracket. There are absolutely no other changes when it comes to what we’ve done on tax.

Now, yes we would obviously like to do more in that area but we will always do what we can afford and the budget papers explains this very carefully as to how that is costed and how that is done over both the short and medium term. The second thing I would say is this, and the Finance Minister I’m sure will have more to say about this later today, Bill Shorten tonight needs to outline very clearly just how much more he is going to spend, because the more he spends, the more he will tax you. Every moment you see Bill Shorten’s lips moving tonight he will be spending more which means he will be taxing you more. He needs to be crystal clear with the Australian people about just how much more he is going to spend and that includes not proceeding with the savings that this Government has been able to put in place, the savings that he has been blocking. For example savings like the changes to the supplement payments, that are currently there in the welfare system that this Government wanted to see removed so we could pay for the Jobs for Families package, the child care package that we put in last year’s budget. The only reason we have had to delay that is because Labor wasn’t prepared to support the savings that would pay for those changes. We wanted to see those measures come in as originally intended, but Labor just won’t make the savings in the budget to enable us to be able to go forward with other spending

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measures. As a Government, we don’t spend more than we save and where we do raise additional revenue by cracking down on multinational tax avoidance or by ensuring that generous superannuation tax concessions for the top four percent of wealth holders in the

superannuation system, where we can do that, we invest that higher revenue back into lower taxes on the Australian economy in other areas. So Bill Shorten needs to tell the Australian people just how much his spend-a-thon is going to go on because every second his lips move he spends more money which means more tax on you.

QUESTION: Bill Shorten’s going to use his budget reply speech to say that the Coalition has put big business before battlers, is the Coalition out of touch?

TREASURER: That is a ridiculous proposition from the leader of the opposition. As I have just said the only income tax cut in this budget is for middle income earners, to ensure that the middle income tax bracket remains for middle income earners, particularly those at the end of full time ordinary earnings who would go in to the second highest tax bracket and pay 37 cents on the marginal dollar that they earn. Now I note that Labor are actually going to support that measure. So that’s the only income tax measure in the budget. I’m pleased that the Labor party will support that one. They’ve got to decide how they’re going to pay for it though because we’ve paid for our tax cuts for hard working families and small businesses by cracking down on multinationals. $3.9 billion is the revenue we’ve been able to identify from our smarter, targeted more effective measures. Labor has come up with less than half that on the previous estimates they were providing and their not making the savings either. So he’s got to explain to people how he’s going to keep pace with their out of control spending. We already know on the old budget and forward estimates that they had commitments up to $60 billion and only around $7 billion in new taxes to pay for it. Now we know the tobacco excise is way out on that figure and only one billion dollars’ worth of savings. Now it just doesn’t add up and our Budget is a fully costed and affordable plan. What we spend on education we can afford because we’ve put the savings there to pay for it.

QUESTION: Do you think there’s a danger that with both sides obviously highlighting the multinational tax issue that this might actually discourage investment in Australia?

TREASURER: No I don’t, because this is part of a broader international change that is happening. Yes Australia is leading in that together with countries like the UK and the diverted profits tax measure that’s in this Budget which is, basically a penalty rate for multinationals who try to shift their profits offshore, the only penalty rate that is in our Budget is a penalty rate of tax on multinationals. So no I don’t think it will have that effect because there is a global movement at the moment that is cracking down on these things right around the world. I think multinationals know that the game is up on this and it’s been countries like Australia in particular and I acknowledged inside the former Treasurer Joe Hockey for his really good work on that and I commend him for that and we’ve followed that through. When we chaired the G20 we really put that issue on the agenda and we we’re strongly supported by George Osborne and the UK and others and the OECD and we continue to lead that movement but more importantly here, it means that we’re able to crack down and ensure that we can pay for tax cuts for hard working families and small and medium sized businesses.

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QUESTION: Treasurer, this ten year glide path up to a 25 percent corporate tax rate, will that make any difference or have any serious impact if the rest of the world keeps falling over the same period with Singapore already at 17 percent?

TREASURER: Well what it does is it puts us back in a far more competitive position. It puts us in the middle of the pack, over that period on OECD averages currently and it is an affordable measure which is contained in the medium term projections which are contained in the Budget. If you look at the underlying cash balance projections in the Budget you will see that that goes out to 2026-27 and that obviously incorporates the ten year enterprise

tax plan. The Treasury have estimated that the economic impact of putting our enterprise plan in place for taxes, which includes all of the tax measures in the Budget including those I’ve spoken about inside today, that will lift the economy in real dollar terms today by around $16 billion. Now that is a significant improvement. A lot of that improvement comes through increasing real wages. So our tax plan boosts real wages, our tax plan supports small and medium sized businesses to employ more Australians and hopefully throughout Youth PaTH package a lot more young Australians get a job so they don’t live a life on welfare.

QUESTION: With the $1.6 million super cap and with the longer life expectancy you’ve got higher risk [inaudible] wouldn’t that increase your reliance on the age pension?

TREASURER: No our modelling doesn’t suggest there is any material impact on the reliance on the aged pension and importantly the other more flexible changes we’ve introduced including the ability to contribute into your superannuation up to the age of 75 is a recognition of the ageing of the population and a relaxing of some of the arrangements to allow a primary income earner to contribute more to a secondary income earner, so a partner can contributing to a spouse’s superannuation account when that spouse is on a much lower income, we’ve lifted that threshold up to 37 thousand. So, I think these are important changes that we’ve made that ensure that people can save for their retirement. Superannuation tax concessions shouldn’t be a free for all, they should be there and targeted to those who most need them and by doing that in this Budget we have generated some $6 billion in additional revenue which again, we invest back and hand back to the Australian people through lower taxes for hard working families and lower taxes for hard working small and medium sized businesses. Labor will just take the tax money and chase their higher and higher levels of unsustainable spending. You do not get to a sustainable surplus by taxing and spending because under Labor their taxes never catch up with their spending which means higher deficits and higher debt and a bigger burden for the long term on our children and grandchildren.

QUESTION: Treasurer, will you be releasing the full costing of your ten year corporate tax plan?

TREASURER: It’s in, as I just said, the Budget. If you look at the medium term projections, on the underlying cash balance it goes out to 2026/27, and our full tax plan is incorporated in those projections as provided for by Treasury. So it’s fully accounted for, it’s there. The figures for budgets are always over the budget and forward estimates and the funds that

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we’ve been able to raise there have been pushed back into pay for those tax cuts over the budget and forward estimates. The challenge for Bill Shorten tonight, as he is wagging his lips and raising his expenditure and increasing your taxes, is to show how that is a plan for jobs and growth. Higher taxes and higher spending does not equal jobs and growth.

Our clear national economic plan that I announced on Tuesday night is a plan for jobs and growth for a strong new economy as we transition from the resources investment boom to a more diversified economy where all Australians can prosper.

Thank you very much.

(ENDS)

Further information: Julian Leembruggen 0400 813 253 or Kate Williams 0429 584 675