SABRA LANE:
Welcome back to AM.
PRIME MINISTER:
Good morning Sabra.
SABRA LANE:
How tempted are you to take up Chris Bowen's offer and drive down to Yarralumla and call a general election on tax?
PRIME MINISTER:
Well, Chris Bowen’s completely failed to deliver any sort of alternative to the great achievement we've been able to deliver for Australian families.
The Australian families, middle-income families are getting more money back, they’re keeping more of the money they've earned. We said we would ensure that they could keep more of the money they earned. We've delivered on that with this tax reform. It is a comprehensive tax reform. It rewards aspiration, it encourages aspiration.
It will result in middle-income taxpayers getting $530 back next year, but over the period of the whole reform, of course, you get to the point where from $41,000 up to $200,000, the marginal tax rate for every extra dollar is 32.5 cents. That's a massive reform. You're getting rid of the 37 cent tax bracket.
This is what people have been talking about for years, having a tax system that is flatter, that’s simpler, that’s fairer and lower taxes. This is all targeted at middle-income Australians. Those on high incomes actually pay more of the total tax take under our reforms, than they do today. The Labor Party, which used to be the party that said it was delivering and working for aspirational Australians, now says aspiration is a mystery.
Chris Bowen must wonder why he is in politics at all.
SABRA LANE:
But both sides of politics are now saying that their tax plan is the right one for Australia. Both of you can't be right?
PRIME MINISTER:
Well, of course. Labor is absolutely not right. Labor is absolutely wrong.
Labor has abandoned the people the Labor Party was founded to support and protect.
SABRA LANE:
It’s promising a -
PRIME MINISTER:
They have abandoned aspirational Australians.
SABRA LANE:
There were points that you made in your first answer -
PRIME MINISTER:
Labor is saying that somebody that earns $100,000 a year or $90,000 a year is rich, is a multimillionaire and needs to be soaked. You look at the people -
SABRA LANE:
Sorry, Prime Minister-
PRIME MINISTER:
We’re talking about high school principals, primary school principals, senior police officers. They are all going to be paying thousands of dollars more tax in 2024/25 under Labor's plan.
SABRA LANE:
It’s promising a rollback.
PRIME MINISTER:
They've abandoned middle income Australia.
SABRA LANE:
It’s promising a rollback for high income earners to deliver deeper cuts for low income workers, and through the rollbacks it could now spend that money on hospitals and education and that just might be an alternative that voters prefer.
PRIME MINISTER:
Sabra, we are spending record amounts on hospitals, we’re spending record amounts on health.
SABRA LANE:
And they could promise more?
PRIME MINISTER:
Labor is lying about it. They’re out there in Longman saying we are cutting funding from the Caboolture Hospital.
Funding for the hospital system from the Commonwealth in that part of Brisbane, has increased 53 per cent since Labor was in government.
Our new five-year hospital deal for the states will deliver an extra $7.5 billion to Queensland hospitals, $30 billion across the country.
When Labor was in government, they had to defer listing life-saving drugs on the PBS because their budget was out of control. We list them as they are recommended and we're able to do that because we've got the Budget under control. I mean-
SABRA LANE:
The five by-elections next month, will these elections be a test of this policy? Will they be a referendum on your tax policy?
PRIME MINISTER:
Of course. These competing tax policies will certainly be key issues in those by-elections, naturally.
And the reality is, a vote for Bill Shorten is a vote for higher taxes, higher personal income taxes, weaker economic growth and fewer jobs.
That's what Bill Shorten, that is his vision of Australia; one based on grievance. Ours is based on aspiration and ambition, incentive and enterprise.
SABRA LANE:
But for low-income earners, $10 is a week is the relief that they’ll get. High income earners it will be something $130 a week. Can you understand how those people on low incomes will think that's just not fair.
PRIME MINISTER:
Well Sabra, people on high incomes pay most of the tax. Let me give you this example.
SABRA LANE:
But those figures –
PRIME MINISTER:
No but Sabra -
SABRA LANE:
But I just put that question to you.
PRIME MINISTER:
And I'm putting an answer to you, which you may not want to hear, but it’s the truth. Right now people in the top tax bracket, over $180,000, 45-cent tax bracket, are paying 30 per cent of the total income tax take. It's about four per cent of taxpayers and they’re paying 30 per cent of the total income tax take.
Under our reforms in 2024/25, that top tax bracket threshold moves up to 200 and you know what? People in that bracket will be paying 36 per cent of the total income tax take. So those people on higher incomes will be paying more of the total income tax receipts to the Commonwealth than they are today.
So under our plan, the tax system continues to be fair and progressive and those on higher incomes pay the most tax.
SABRA LANE:
But getting to the point of that question, can you understand how people on low incomes will view that? They will think; "I'm only getting 10 bucks. They're getting $130."
PRIME MINISTER:
You’ve got to look at how much tax people pay.
SABRA LANE:
Can you understand how they feel aggrieved?
PRIME MINISTER:
Sabra, of course I can. But you've got to look at the total amount of tax you pay. You see, under our plan from $41,000 to $200,000, the marginal tax rate will be 32.5 cents in the dollar for every dollar you earn, but the person on $200,000 is making five times as much as the person on 40, they're paying 13 times as much tax. The person on $41,000, is paying about 11 per cent of their income in tax, overall. The person on $200,000 will be paying around 30 per cent overall. Now so what you are seeing is much more tax being paid by people on higher incomes.
SABRA LANE:
You say this will help Australians with their dreams. What if by 2024 the world economy has changed, it goes south because of perhaps trade wars or something like that. Are you prepared to re-assess that plan if you're still in government or cut government services if that's what happens?
PRIME MINISTER:
Government services are better funded now than they ever have been.
SABRA LANE:
To the point of the question, if the economy has turned south by then, is this “L.A.W” law tax cuts. Are you prepared to do a Paul Keating and re-assess it?
PRIME MINISTER:
Sabra, this tax reform is a long-term, conservative, well-thought-out tax reform which is fair. It makes for a simpler tax system. It results in lower taxes and Bill Shorten, he wants to go to an election and say -
SABRA LANE:
And to the point of the question, to the point of the question, if the economy changes in that time, because that's a long way away and we know, we’ve seen -
PRIME MINISTER:
Well Sabra, I hope we're able to bring - I hope we're able - I would love to think that we would be able to bring some of these tax cuts forward, if the economy and the Budget enables it.
But I can say this to you; what we are committed to is long-term, comprehensive tax reform. Shorten tried to respond with offering more money in the short term.
SABRA LANE:
Sure, and let’s talk about -
PRIME MINISTER:
He has no plan. Well no, we’ve got to talk about him because -
SABRA LANE:
But I've just put to you a question about your own circumstances.
PRIME MINISTER:
He is the biggest threat to health funding in Australia, Bill Shorten. Because he has no plan for a stronger economy. Despite what many may think and assert in the media, everything we do in Government, every dollar we spend on essential services, health, law enforcement, security, defence, roads, education, depends on a strong economy. We've got stronger government revenues. You know why? We've got records jobs growth. More Australians are getting jobs now than we've seen ever in our history, the largest jobs growth in 2017 in any year in our history and we have the lowest percentage of working age Australians on welfare in 25 years.
That's great news. It’s great news for them. It is great news for everybody that’s able to get a job, and what it means is that Government’s got more revenues to provide the essential services.
And if you don't have them, you have to do what Labor did back when they were in government and start postponing listing life-saving drugs.
SABRA LANE:
The rest of your corporate tax cuts, will that be put to Parliament for a vote next week?
PRIME MINISTER:
It will be before the Senate next week.
SABRA LANE:
Will it be put to a vote?
PRIME MINISTER:
It will be put to a vote, sure.
SABRA LANE:
And if it doesn't get up, will you put it to one side and take it to the next election?
PRIME MINISTER:
Sabra we are committed to the full implementation of our corporate tax plan. We are working with the Senate-
SABRA LANE:
You’ll hang onto it.
PRIME MINISTER:
With the crossbenchers, we are committed to it and again, do you know why? Because we've got to have a competitive tax system.
We currently have our corporate tax rate, for the larger companies, at 30 per cent, which is the second highest in the OECD. Now, do you want Australian businesses to be competitive? I do, because that delivers more jobs. It delivers higher wages, more investment, higher productivity and a stronger economy and therefore higher government revenues to put into hospitals and schools and roads and so forth.
SABRA LANE:
Prime Minister, a conservative pocket within the Government seems determined to wreck the prospects of any deal on the National Energy Guarantee. How seriously do you take Tony Abbott's threat to cross the floor?
PRIME MINISTER:
Look, the National Energy Guarantee as you just heard from Fiona Simson a little while ago, has enormous support. I think Fiona described it as the only game in town, but the National Farmers Federation supports it, the manufacturers support it.
SABRA LANE:
Is it a serious threat, though?
PRIME MINISTER:
The National Energy Guarantee has the strong support, overwhelming support of the Party Room, but most importantly, it has the overwhelming support of the community, and what it delivers - it will deliver is lower prices.
Now, our policies - my government's policies are already delivering lower gas prices, lower wholesale generation prices and, as we're seeing now, lower retail prices, and there is more to come.
So we have got a plan for lower energy prices and we're delivering on that, just as we said we had a plan for lower taxes, we're delivering on that, just as we said we had a plan for jobs and growth, we've got record jobs growth and 3.1 per cent GDP growth.
So we're delivering on our economic plan. That's what we promised in 2016 and that's what we're delivering.
SABRA LANE:
Prime Minister, thank you for joining the program this morning.
PRIME MINISTER:
Thanks so much, Sabra.
[ENDS]