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Transcript of interview with Patricia Karvelas: ABC National Wrap: 6 May 2018: 2018 Budget; income tax cuts; Turnbull's $80 billion big business tax handout; Budget surplus; Labor's plan for a fairer tax system; Liberals quiet on so-called "Budget emergency"; Banking Royal Commission and compensation; women on boards; Newstart



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JIM CHALMERS MP SHADOW MINISTER FOR FINANCE MEMBER FOR RANKIN

E&OE TRANSCRIPT TELEVISION INTERVIEW ABC NATIONAL WRAP SUNDAY, 6 MAY 2018

SUBJECT/S: 2018 Budget; income tax cuts; Turnbull’s $80 billion big business tax handout; Budget surplus; Labor’s plan for a fairer tax system; Liberals quiet on so-called “Budget emergency”; Banking Royal Commission and compensation; women on boards; Newstart

PATRICIA KARVELAS: Well on Thursday night, Bill Shorten will deliver Labor's Budget reply speech. Jim Chalmers joins me now on National Wrap. Welcome to National Wrap.

JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Thanks, Patricia.

KARVELAS: Treasurer Scott Morrison has warned Australians not to expect a mammoth tax cut in next week's Budget. He says low- and middle-income earners will be the first priority. Isn't that a responsible strategy given these people haven't seen wage rises?

CHALMERS: There will be a mammoth tax cut in the Budget on Tuesday night. That mammoth tax cut will be for multinational corporations and the four big banks. And for as long as he intends to give something like $80 billion in tax handouts to the top end of town, including $17 billion for the big four banks, then this will be a Budget for big business and not for battlers.

KARVELAS: Yeah, but my question was about those tax cuts for people at the bottom end. Don't they deserve the cuts?

CHALMERS: We've always said that we would look far more favourably on tax relief for low- and middle-income earners than we would on yet another Turnbull Government tax cut for the wealthiest people in our society. So we'll have a look at what's proposed on Tuesday night, but we've been saying for some time that if the Government has some

tax relief for people who work and struggle in this country, then obviously we would look favourably on that. The point that we would also make is that because we've done the work and made the announcements about dealing with some of the tax concessions at the top end of the tax system, we think we're in a far stronger position, a more responsible position, to deliver that kind of tax relief in a more sustainable way.

KARVELAS: Will the Government return to surplus a year earlier than forecast, and would you welcome that?

CHALMERS: We definitely expect the Government to announce on Tuesday night that the surplus year will be brought forward. They've got extraordinary global conditions that they're benefiting from in the Budget. They've got billions and billions of dollars rolling through the door. They've really run out of excuses for the mess they've made of the Budget. So our firm expectation, and most of the informed commentary, expects the Government to announce on Tuesday night that the surplus year would be brought forward. The deficit in that 19-20 year is currently about $2.5 billion. They've got billions and billions rolling through the door. They've run out of excuses not to improve the Budget in a substantial way.

KARVELAS: Will you say here whether Labor will offer a lower tax-to-GDP ratio than the Government?

CHALMERS: We haven't seen the updated numbers that we'll see on Tuesday night, but I wouldn't be prepared to give that commitment two nights before the Budget. We've made a series of announcements on tax, which are about dealing with the extraordinary growth in spending on tax concessions, which overwhelmingly benefit the most wealthy people in our society. What we've said all along, is Australia as a country, and certainly us as a Labor Party, we have higher priorities than continuing those tax breaks for the top end of town. Our priorities are health and education, middle Australia, pensioners, dealing with the rising costs of living - those are our priorities. The Government can go on and on about tax all they like. The defining tax change in Tuesday night's Budget will be that $80 billion for multinationals and the big banks.

KARVELAS: OK, but you were going to be painted as the higher taxing side of politics and aspiring Government. Would you personally like Labor to aspire to a low tax-to-GDP ratio?

CHALMERS: No I want us to aspire to a fairer tax system. And that means dealing with some of the tax concessions; that means fixing the holes in the revenue base in this country so we can properly invest in health and education, and the other things we value.

KARVELAS: So it's not a fiscal rule you think Labor should aspire to?

CHALMERS: We'll announce our fiscal rules after the Budget, but before the election. It's entirely responsible for us, and understandable I think, to have a look at what the

Government proposes on Tuesday night and to respond in due course. And we will have our own set of fiscal rules. Our emphasis there will be on funding our priorities in a responsible way and trying to start fixing the mess the Government has made of the Budget. Now remember this, Patricia: when net debt in this country was $175 billion, the Government said that it was a "Budget emergency", and a "debt and deficit disaster". Net debt is currently exactly twice that level, and we don't hear peep anymore about the Budget emergency. These are the sorts of circumstances, record and growing debt, that we will inherit if we win the next election. And we take our responsibility of dealing with that very seriously, and part of that means tax reform.

KARVELAS: Should there be a bank victims' compensation package in the Budget? I just spoke to Kelly O'Dwyer. She says the Government wants to wait for the Royal Commission to report and it would look at a proposal if it came forward. But should it be in this Budget?

CHALMERS: I'm not sure why the Government is resisting compensating the victims of these rorts and rip-offs. Compensation should be a central consideration of the Royal Commission, not some kind of afterthought. I think when you listen to what Kelly O'Dwyer just said, you listen to Malcolm Turnbull's comments on this since Bill Shorten wrote to him to propose a proper compensation scheme, and I think a lot of Australians will wonder why only Labor wants to compensate the victims, and yet Malcolm Turnbull wants to compensate the perpetrators of these rorts and rip-offs by giving them a $17 billion tax handout in the Budget.

KARVELAS: So who should fund this compensation package? Should it be taxpayers?

CHALMERS: Of course the wrongdoers should be funding a compensation package.

KARVELAS: But how would you do that? Levy them, or how would you do it?

CHALMERS: What we've proposed by Bill Shorten writing to Malcolm Turnbull in good faith and saying let's sit down and work out what compensation should look like, is let's make it a central feature of the Royal Commission and not some kind of afterthought, and let's get the right structures in place so that we're compensating the victims, not compensating the perpetrators as Malcolm Turnbull is proposing to do in the Budget with his tax cut to the big four banks.

KARVELAS: Kelly O'Dwyer's made some very strong comments about women on boards. Now, of course, some people have been criticising women being promoted too quickly, women who don't have merit is the kind of language people are using, to meet quotas, in the wake of this banking Royal Commission. She says that's unfair criticism and that quotas are important, especially for these boards. What do you make of this ongoing discussion we're having about women and merit and this Royal Commission.

CHALMERS: I'm with Kelly O'Dwyer on this, Patricia. I think it's absolutely absurd, almost to the point of not warranting a response; some of the kind of 1950s commentary

that has been around about women on boards. I mean, this is the year 2018. It's Australia, we're a progressive, forward-looking country, and we need to have more women on boards. I think it would be absurd in the extreme to try to pretend that the under-performance of some of our financial institutions and some of the rorts and rip-offs that we've seen there are somehow attributable to having women in leadership positions. We want more women in leadership positions, not less. On that point, I'm with Kelly O'Dwyer.

KARVELAS: Could you live on Newstart, $40 a day?

CHALMERS: No, I'd find it very difficult, Patricia, I think. We've said for some time now that we think it's too low. We don't want to discourage people from looking for work and there is a legitimate argument that it's so low now that it acts as a discouragement for people to find work.

KARVELAS: So why are you just reviewing it, then? You know that it's too low. You just said you can't live on it, you say that it's a disincentive to work. So, like you've made other commitments, why just not make a commitment to increase it rather than review it? Don't you think people are kind of sick of reviews?

CHALMERS: I can understand that people are frustrated that Newstart is where it's at. But we want to do a proper review that takes into account all kinds of factors. We want to make sure that we come up with something that's responsible and affordable and we can pay for it. We want to consult the best minds on this and we think the best time to do that would be in the first term of a Labor Government. For some people, that will be too slow, others don't want there to be a change to Newstart at all. We think we're striking the right balance here.

KARVELAS: Jim Chalmers, thank you so much for your time tonight.

CHALMERS: Thank you, Patricia.

ENDS

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