KIERAN GILBERT:
Joining me on First Edition now, the Prime Minister Malcolm Turnbull. Mr Turnbull thanks very much for your time.
Is the message to Bill Shorten “it’s all or nothing” when it comes to the income tax plan?
PRIME MINISTER:
This is an income tax plan and we’re asking the Opposition to support it all, the parliament to support it all. This is a seven year plan. It’s part of our national economic plan that is delivering record jobs growth and it’s that stronger jobs growth and stronger economic growth that’s enabling us to do all the things we’re achieving in this Budget. Enabling Australian families to keep more of the money they’ve earned. This is not a tax giveaway, this is their money, Australians’ money, families’ money, they should be able to keep more of in these times. And of course, guaranteeing essential services and bringing the Budget back into balance a year sooner.
KIERAN GILBERT:
There’s been a big focus on that initial bonus for low and middle income earners, but in the second phase which kicks in in 22/23, that 19 per cent threshold goes from $37,000 a year, to $41,000.
PRIME MINISTER:
Yep.
KIERAN GILBERT:
Which basically makes that bonus a permanent fixture.
PRIME MINISTER:
It does, that’s the whole idea. This is calibrated, designed, to ensure that Australians on lower and middle incomes get the benefit first. They get the tax relief first. Then as the plan develops over the seven year period, you see we get to a point after seven years, where you have from $41,000 right up to $200,000 a marginal tax rate of 32.5 cents in the dollar. So what that means is that 94 per cent of Australians will not have to pay more than 32.5 cents on an extra dollar they earn. And yet, the people on the higher income tax, 45 per cent, they’ll actually pay a larger per cent of total income tax payments than they do now. So it’s very equitable.
KIERAN GILBERT:
When it comes to those changes though in the third phase, is that really the time bomb for Shorten though? Because you know he doesn’t support an increase, you know, reductions in tax for those on the higher incomes. In fact, he wants to keep that Deficit Levy in place. So that makes it almost impossible for Labor to back the plan?
PRIME MINISTER:
Well, Labor has got to really reflect on this. If seven years from now, what you’re talking about, if you left the top threshold at $180,000, you’re talking about school principals, you’re talking about police superintendents, you’re talking about a lot of people moving into the tax bracket where you’re paying nearly half of every additional dollar you earn in tax. Now these are not the millionaires and billionaires that Bill Shorten is always complaining about. So this is a fair, well-thought-out tax reform plan. At the end of it, you have a very much improved tax system. Because everyone for years Kieran, has said quite rightly that the problem with having all of these tax brackets, is that people have a disincentive to earn more.
KIERAN GILBERT:
You say everyone, but it's not everyone is it? Because the unions they have warned and they're concerned, that this is the end of the progressive tax system? Having such a big space and an employment cohort who are on the same rate?
PRIME MINISTER:
Well they've got short memories. I can remember for years, you remember Craig Emerson used to come here and talk about the problems of effective marginal tax rates and how all of those tax brackets discourage people from doing overtime, from working longer, from getting a better job. This is going to provide real incentives for more employment, for more jobs, better jobs. That's what we're delivering; a stronger economy.
So this is what we're able to do with that record jobs growth, the lowest number of people of working age as a percentage on welfare in 25 years. All of this, this is what you get from a stronger economy. Keeping more of the money you earn. Guaranteeing essential services and turning the corner on debt.
KIERAN GILBERT:
It’s easier to sell than company tax cuts as well. A lot more in terms of revenue isn't it?
PRIME MINISTER:
Well it is, of course because most of the tax revenue we have is from individuals. So when you reduce personal income tax, yes, it does have a budgetary cost. But it is one that we can we can afford and bring the Budget back into balance a year earlier. We are turning the corner on debt. How important is that Kieran? That we're not going to be throwing a bigger and bigger mountain of debt onto the shoulders of our children and grandchildren?
KIERAN GILBERT:
So Mr Costello can be reassured that it is?
PRIME MINISTER:
He should be, he should be reassured, yeah.
KIERAN GILBERT:
Can it be believed though? We've had 25 billion dollars in additional revenue since MYEFO in December, so it’s a huge amount.
PRIME MINISTER:
Yes but you know, this is not off the back of record commodity prices or anything like that. This is the result of hard work, good policies. We have made our own luck. And as you would have seen from all of the economic commentators, they're all saying the forecasts and the assumptions are conservative. I mean, in some respects they're more conservative than the Reserve Bank. Certainly more conservative than many market economists, so this is a very realistic budget.
Remember we've had over the last three years, six budget updates between Budgets and MYEFOs and in each of them, our position has improved.
So we've been conservative in our forecasts and in our assumptions. We've continued to work on doing everything we can to deliver a stronger economy. That's why we're getting the benefits.
KIERAN GILBERT:
I know you've been saying you want to go full term, most likely May next year, but on the basis of this you could go to a spring election? Particularly if you've got a fight on income tax. I mean that's –
PRIME MINISTER:
You should be planning your election coverage for next year.
KIERAN GILBERT:
Not October?
PRIME MINISTER:
No.
KIERAN GILBERT:
Okay. In terms of, you say you're focusing on lower and middle income earners. What about the most vulnerable though? Those on Newstart, a million people.
PRIME MINISTER:
Yeah.
KIERAN GILBERT:
You haven't increased it, you know, you've got the Business Council of Australia, ACOSS, it's quite a coalition supporting it?
PRIME MINISTER:
Well, it’s a safety net to support people while they're looking for work. The best form of welfare is a job. Last year the economy created 415,000 new jobs, the largest number in our country’s history. And we have the lowest percentage of Australians of working age, on welfare. So that's our economic plan -
KIERAN GILBERT:
Its easier to look for a job if you’ve got a full pantry and you're not worried about eating, because you've seen the reports of people on 40 dollars a day, struggling to put food on the table.
PRIME MINISTER:
Well the vast majority of people on Newstart are also in receipt of other benefits as well Kieran, so it's a more complex picture than that. But the important thing is that people are looking for work and when they're looking for work, they can get work. Of course, that's what we're seeing with this record jobs growth.
KIERAN GILBERT:
So you didn't increase it because you don't want to provide a disincentive?
PRIME MINISTER:
No it, it increases with inflation every year.
KIERAN GILBERT:
But there's been an argument to increase it substantially.
PRIME MINISTER:
Well people have made that contention. We believe the setting is right. It is a safety net. It is not intended, it's not like a disability pension or an age pension which is entitled to be a substitute for employed income. This is a safety net to enable people to get additional support from government to enable them to look for work.
KIERAN GILBERT:
I've had a few people from this sector contact me concerned about – people, parents and others, children with disabilities, with anxiety over the future of that scheme.
PRIME MINISTER:
The NDIS.
KIERAN GILBERT:
The NDIS yes. It didn't get much of a mention last night. Are you aware that there is, there was anxiety in that community?
PRIME MINISTER:
Of course, we totally understand that but with a stronger economy and the stronger revenues, with the economic management that we've delivered, we can guarantee the funding for the NDIS without having to increase the Medicare Levy as we proposed.
KIERAN GILBERT:
So they’ve got no reason to worry at all on that front?
PRIME MINISTER:
Well, the reason to worry would be having a Labor government of course, after the next election, which would see jobs decline, it would see investment decline and it would see economic growth go backwards. All of that, that puts every essential service at risk.
I mean the reality is, that you need a strong economy.
You need strong economic management, strong economic leadership.
You need an economic plan, we have that plan and it is working. It's delivering greater opportunities for all Australians. It means Australians can keep more of what they have earned, more of their money. And it means government has stronger revenues to deliver the NDIS, record funding in schools, in hospitals in defence, in infrastructure. All of that comes from a stronger economy.
KIERAN GILBERT:
It would be remiss of me if I didn't ask you about the big international story today. Donald Trump has withdrawn the US from the Iran deal. Theresa May says she wants to push ahead with the other signatories to it, the other parties involved. What's your reaction to it? Do you regret it like Emmanuel Macron says France does.
PRIME MINISTER:
Yeah we do, we do regret the US pulling out of the Iran deal. We believe it was the best option to maintain the ability to verify Iran's compliance with its commitments on nuclear development.
We'd urge all parties to show restraint. The Europeans, I believe, will continue with the deal and we hope that Iran does too. So it's important to maintain restraint.
KIERAN GILBERT:
It comes at a precarious time internationally as well, ahead of the Korea talks. Because what does the dictator in Pyongyang think if the Americans do a deal, renege on it?
PRIME MINISTER:
Well look, there has been real progress in Korea since this week, but we welcome it cautiously. There have been plenty of false dawns there in the past. But you have to recognise there has been real progress. I think the strong stand that Donald Trump has taken, the strong support that he's received –
KIERAN GILBERT:
[Inaudible] see the two separately?
PRIME MINISTER:
What you've seen is economic sanctions on North Korea from the global community. America under President Trump has taken a very strong stand. China has enforced those sanctions. That has put the pressure on North Korea to seek to find some compromise or agreement or at least appear to do so.
We're not getting our hopes up unduly, but you have to welcome very cautiously, the developments so far.
KIERAN GILBERT:
Prime Minister as always appreciate your time, thanks.
PRIME MINISTER:
Great to be with you.