MICHAEL ROWLAND:
The task now is to sell the budget. I am pleased to say, I am joined by the chief salesman. The Prime Minister of Australia, Malcolm Turnbull, good morning and welcome to Breakfast.
PRIME MINISTER:
Good morning, good to be with you.
MICHAEL ROWLAND:
Let's start with the banks. They are absolutely ropable about this new tax. Do you fear this is the mining tax 2.0?
PRIME MINISTER:
The banks are the most profitable banks in the word, $32 billion in profits. They benefit from the implicit support of the government, that is a major benefit that they have. It’s only fair that they pay this levy to help bring the budget back into balance. Levies like this are common right around the world. This is a very conventional approach and it is one that will secure that additional money, $6 billion over the next four years. That will assist us in bringing the budget back into balance and ensuring that our children and grandchildren are not burdened with a mountain of debt.
We will, on the projections in the budget, as you know we will have $7.4 billion of surplus by 20/21. That’s a big improvement on what was forecast in last year's budget.
MICHAEL ROWLAND:
Lots of veiled threats, in fact of not-so-veiled threats of this being passed on to customers through higher mortgage rates. How can you stop the banks doing that?
PRIME MINISTER:
Well, the ACCC will be keeping a very close eye on that, and of course we’re enhancing competition in the banking sector. The levy only affects the big banks so there are other banks and financial institutions that are competing with them. Of course, fintech, you know, financial technology, is enabling more competition. So competition is a big factor.
You have to remember that the banks are hugely profitable. They do not need to pass this on. They will still be very profitable. They will still be the most profitable banks in the world.
MICHAEL ROWLAND:
Some commentary around this morning that this is payback by the government for the banker’s association appointing former Labor Premier Anna Bligh as the chief executive?
PRIME MINISTER:
Well that is commentary. The fact is that we need to bring the budget back into balance. That is a fundamental responsibility. This budget is fair, Michael, it is fair at every level. We are bringing it back into balance so we don't burden our children and grandchildren with a mountain of debt. That’s fair. We are fully funding the National Disability Insurance Scheme. That is fair. Now, Labor couldn't do that. We haven't been able to secure the savings through the Senate to fund it through savings, so we are increasing the Medicare Levy from 2019, to ensure the Disability Insurance Scheme is fully funded.
We are guaranteeing Medicare, restoring indexation, creating a Medicare guarantee fund and we are ensuring that schools funding conforms with David Gonski's recommendations. Labor never did that.
Schools funding will be national, consistent, needs-based, transparent and fair.
So this is a very fair budget, it’s a responsible budget and it is of course, driving a massive investment in infrastructure. $75 billion in road and rail alone.
MICHAEL ROWLAND:
The Treasurer spoke at length last night about how families have been doing it tough, having to make sacrifices, many Australians have not had a wage rise for many years. How then is this half a per cent increase in tax, the Medicare levy, going to go down? It might be for a very good reason, the National Disability Insurance Scheme but …
PRIME MINISTER:
Could there be a better reason? Could there be a better reason than ensuring that people with disabilities get the support…
MICHAEL ROWLAND:
I get that, but it will hurt a lot of families’ bottom line.
PRIME MINISTER:
It will be an additional tax, there’s no doubt about that, on families by 2019, but the reality is, that we have to fund the Disability Insurance Scheme. All of us are beneficiaries or potential beneficiaries of it. All of us know people who need support with disabilities, kids with disabilities, families struggling with that. This is a great national enterprise and we need to fund it responsibly and give that assurance to Australians that their Government is standing behind them, guaranteeing those essential services.
MICHAEL ROWLAND:
Welfare recipients, the Greens up in arms about this move to drug test, to randomly drug test welfare recipients. Why is the government doing that?
PRIME MINISTER:
I am so disappointed people are critical of that. Really, what is more important in the welfare area than getting people back into a job? I mean the best form of welfare is a job.
Now, if people are on welfare and they have got an addiction problem, then that needs to be identified and helped. It needs to be helped. They need to get off the addiction so they can get back into the workforce. This is helping people.
I am really disappointed by the criticism of that. I would have thought more people would be saying “Why haven’t you been doing more of it years ago”.
MICHAEL ROWLAND:
It does set a bad precedent doesn’t it? Starting with welfare recipients, where does random drug testing end?
PRIME MINISTER:
There’s plenty of random drug testing. If you’re involved operating heavy machinery and so forth, you’ll find a lot businesses, companies have to do that. This is a very big issue. There is a big correlation between substance abuse and unemployment. Because of course, if people are on drugs or if you’ve got a serious alcohol and drugs problem, of course they’re not able to work, therefore they become welfare dependent. So what we want to do is get people off welfare, into employment. This is one of the many ways that we seek to do that.
MICHAEL ROWLAND:
Now you got rid of $13.5 billion of savings from the – truly from the Coalition’s perspective – “horror Budget” of 2014. Is this budget, does it represent the repudiation, final repudiation of Tony Abbott's prime ministership?
PRIME MINISTER:
Look, this has got nothing to do with personalities. Well, it’s got everything to do with 24 million personalities; 24 million Australians, assuring their future, assuring their essential services and assuring them that the budget is coming back into balance, that they won't be burdened with the debt for future generations. This is critically responsible, investing in the infrastructure that again, will ensure that future generations have the jobs and the opportunity and the business and investment, that they need.
MICHAEL ROWLAND:
Finally, the surplus, $7 billion in 2021.
PRIME MINISTER:
$7. 4.
MICHAEL ROWLAND:
Who’s counting?
(Laughter)
Well, you are, certainly.
PRIME MINISTER:
I am, clearly.
MICHAEL ROWLAND:
It’s just a projection, it’s not a promise. Governments have made various promises about surpluses that never materialised, why should Australians believe you?
PRIME MINISTER:
They should accept it as a very responsible and reasonable projection. The assumptions, the economic assumptions are conservative, whether it’s on commodities or GDP growth, they’re actually more conservative than the Reserve Bank or the IMF. So look, we do live in an uncertain world Michael, but this is a very responsible, very reasonable forecast. The ratings agencies have confirmed that. Moodys came out last night and reaffirmed the AAA rating.
So in an uncertain world, this is a very responsible budget and the forecasts and projections are very reasonable and conservative.
MICHAEL ROWLAND:
Prime Minister thank you very much for joining News Breakfast.
PRIME MINISTER:
Great to be with you.
[ENDS]