SABRA LANE:
Prime Minister Malcolm Turnbull good morning and welcome to the program.
PRIME MINISTER:
Thank you very much, Sabra.
SABRA LANE:
There will be five by-elections for MPs who quit yesterday including the seat that was vacated last week by Tim Hammond, who quit due to family reasons. How many of those seats are winnable for the Coalition?
PRIME MINISTER:
Well, Sabra, by-elections are always tough for the government, for an incumbent government of whatever political stripe. But we will see.
Obviously, this is going to be a very big test for Bill Shorten. He asserted that his party's vetting processes were “rolled gold”, even after the High Court made it very clear in the Canavan decision last year, that the position of the Labor MPs in the House of Representatives was, you know, untenable. They made it very clear.
He insisted that they were okay. They did not resign. He took no responsibility for their position of clear ineligibility and then the High Court simply reconfirmed in the Gallagher case yesterday what they’d said in the Canavan case in October.
SABRA LANE:
Is it as embarrassing as saying the High Court “will so hold”, like you did with Barnaby Joyce and that proved to be wrong?
PRIME MINISTER:
The difference is the High Court had made its decision in the Canavan case. If you go back last year to the cases involving Barnaby Joyce and Matt Canavan, the Court really did have several routes they could take, in terms of the approach to Section 44. Once they'd taken that decision in Canavan's case, it was very clear that a very black letter law approach was being taken. It was very clear those members were no longer eligible to sit in the House.
Bill Shorten did not have the character or the commitment to the Constitution to ensure that they resigned. Now he’s has been found out.
SABRA LANE:
Mayo is a former Liberal jewel, Longman is one of the marginal seats in the country, Braddon is a marginal seat as well. Will these contests be the best locally-recognised candidate, or will this be a referendum on which party's tax plan is better?
PRIME MINISTER:
Well every by-election is a local contest and in some respects a national contest, Sabra, but time will tell.
You've said that those members have resigned, by the way, they haven't resigned.
They have stood up in the Parliament - and this tells you a lot about the Labor Party - they've stood up in the Parliament, they have said they’re ineligible, they have acknowledged they are ineligible and they still have not resigned.
So, they are still presumably drawing salaries and using MP’s entitlements.
SABRA LANE:
Do you want the Liberal Party to field candidates in each one of those seats?
PRIME MINISTER:
Well, that's a matter for the state divisions to consider.
SABRA LANE:
Would you like that?
PRIME MINISTER:
Well Sabra, we are a party that is formed for the purpose of fighting elections and winning and holding Government, so.
SABRA LANE:
A long term view before we move on to the Budget. There is a problem, or is there a problem that needs fixing with dual citizenship? Would you like that to go to a referendum? Or is this a case of wannabe MPs have to be diligent, do their homework and get rid of any citizenship entitlement?
PRIME MINISTER:
You've just very eloquently summed up the High Court's decision actually. That’s exactly what they’ve said; that you’ve got to get your act together before you nominate.
Now in the case, most of these cases have been UK citizens and it is very straightforward to renounce your UK citizenship.
So, there are no, you know it is not complex. It’s not-
SABRA LANE:
You don't have a view?
PRIME MINISTER:
You know, the position that we put to the High Court last year - which the High Court didn't accept obviously - is one that we felt would have been a preferable interpretation of the section.
But changing the Constitution is very hard and very hard to get support for that. So I think the best advice, given that the election will be next year, is for everyone to get their act together and make sure they are not a citizen of anywhere else, before they nominate.
SABRA LANE:
Alright, on to the Budget. The tax cut package that was introduced into Parliament yesterday - it’s worth $140 billion over a decade - why should Parliament vote for it without knowing the details of exactly how much it’s going to cost each year for those ten years?
PRIME MINISTER:
Sabra, it is a total, it is a total package. The cost of it or the impact of it over the forward estimates - which is what is set out in the Budget - is all laid out. But you’ve got to remember-
SABRA LANE:
That's four years, not seven years.
PRIME MINISTER:
But Sabra, this is Australians’ money. You see this is the big difference between our approach and Bill Shorten's approach. Bill Shorten regards a reduction in tax as a “giveaway” by the government.
He thinks that the money that Australians earn belongs to the government and that it’s the government that allows them to keep whatever is not grabbed in tax.
He wants to go after pensioners’ savings. He wants to go after, to increase tax on small businesses. He wants to go after trusts. He wants to go after one target after another. $200 billion of additional taxes.
Now, what we're saying is that hardworking Australian families - particularly middle income Australian families deserve to keep more of the money they earn. It’s their money.
That's why they are getting, they're getting support in the first stage. They're getting the first support, in the first stage and then as the tax reform rolls out, we're going to get to the point - what a huge reform – where 94 per cent of Australians between $41,000 and $200,000 will know that if they go out and earn an extra dollar, they won't pay more than 32.5 cents in the dollar.
That is a huge reform.
SABRA LANE:
But there are concerns - and the crossbench shares these concerns - that the full extent of your package, that the wealthier Australians will get a far bigger cut than those on lower incomes. For example, the scrapping of the 37 per cent tax bracket, those earning $100,000 a year, which is a good chunk of Australia, will get an increase in disposable income of about one per cent and those on $200,000 will get a boost of 5.4 per cent. The wealthier will get a bigger cut and that’s two elections away, six years away and people are saying: “not fair”.
PRIME MINISTER:
Well Sabra we have a very progressive tax system and people on higher incomes pay more tax than people on lower incomes, in fact a lot more tax. I mean, let me give you an example. So after our reforms are fully in place in 24/25, someone earning $200,000 will pay 12 and a half times more income tax than someone on $41,000. Someone earning $200,000 will have an average tax rate of more than 30 per cent, average over all of their income. While someone on $41,000 will have an average tax rate of around 11.6 per cent.
So the tax system remains, our personal income tax total collections are overwhelmingly paid by the few, not the many and that will remain the same.
So, if you regard the high income earners as the people in the top tax bracket, which is 45 cents in the dollar plus the two cents for the Medicare Levy, so 47 cents, that's a very high top marginal rate by world standards. It currently comes in at $180,000. What we’re saying is that in seven years time, that should be increased to 200, to take into account of course inflation. Otherwise, you're going to have school principals, you’re going to have police superintendents, many people you would not regard as being multi-millionaires or billionaires coming into the top marginal rate.
SABRA LANE:
Right now though, Labor is indicating that it will vote for the first part of your package but not the rest of it. Why not hive it off and let Parliament pass what’s possible?
PRIME MINISTER:
Because it is a complete tax plan Sabra. I mean it is the government’s complete - this is a big tax reform -
SABRA LANE:
That's what you said with the corporate tax plan and you ended up hiving that off it as well.
PRIME MINISTER:
Sabra you’ve sat in this studio for years -
SABRA LANE:
I have.
PRIME MINISTER:
You have, you have and you’ve heard governments say –
SABRA LANE:
I have heard governments say: “This is an entire tax package,” and they’ve cut it off and passed what they can.
PRIME MINISTER:
And you’ve had one economist after another, Labor, Liberal politicians say: “The problem with our tax system is effective marginal tax rates, it disincentivises people working longer, you know we’ve got to have a flatter tax system”.
This delivers it. This is the big reform to personal income tax. The rich will continue to pay, or the higher income earners will continue to pay the bulk of the tax. The tax system will remain progressive, right? But you will have in that middle, for the vast bulk of Australians, 94 per cent of Australians, they will know that if they decide to go for a promotion, if they decide to do some overtime, if they decide to boost their business and generate some more income, they will not get slugged by going into a higher tax bracket. They will just continue to pay 32.5 cents in the dollar. It’s a huge reform. It’s a reform that speaks to aspiration.
SABRA LANE:
Perceptions are everything.
PRIME MINISTER:
And it speaks to the values that the Liberal Party and the National Party represent. Because we want Australians to get ahead and you know what? They are listening to that and they are taking it up. That’s why we’re getting record jobs growth.
SABRA LANE:
Perceptions are everything in politics. This will be painted as the Coalition wanting to fight an election on giving more money to wealthier Australians. Do you believe-
PRIME MINISTER:
Well, painted by whom? Painted by whom?
SABRA LANE:
Well, the analysis that’s coming through from KPMG and NATSEM on who gets the benefit of this tax.
PRIME MINISTER:
But you’ve got to recognise the point I just made. Someone earning –
SABRA LANE:
And the point I just made too –
PRIME MINISTER:
No, but hang on. Someone earning $200,000 after the scheme is all put in place, pays 12 and a half times more income tax than someone on $41,000. Now, is that progressive income tax? It is, you know it is. That means somebody who is earning, you know, roughly five times as much money, is paying 12 and a half times more tax. That's what progressive income tax is.
And so, the more money you earn, the more you pay and the tax system will continue to be borne by the few, in terms of the bulk of collections, rather than the many. That will remain that way, but the bulk of Australians, they will have every incentive to get ahead.
We want Australians to get ahead.
SABRA LANE:
Just quickly-
PRIME MINISTER:
We want them to be able to work harder, work longer, get another job, do some overtime, start a business, realise their dreams and not be held back by being pushed into higher and higher tax brackets.
SABRA LANE:
We’re out of time. Your response to the Malaysian election?
PRIME MINISTER:
Well we’ll wait to see the results. It’s obviously the decision of the Malaysian people and we’ve always worked well with the government of Malaysia and we look forward to the results of the election.
SABRA LANE:
Prime Minister, thanks for your time this morning.
PRIME MINISTER:
Thank you.