KOCH:
Welcome Prime Minister, thanks for joining us after the Budget.
PRIME MINISTER:
Good to be with you David.
KOCH:
A lot of issues that we've had from our viewers that I'll put to you a sec. But first of all I suppose the good news for the Budget is the blueprint for the economy over the next 12 months. This is an economy that's going sensationally well isn't it compared with the rest of the world?
PRIME MINISTER:
It is. It is a stellar performer as an economy. There isn't a developed country in the world that has the growth outlook, the low debt, the solid financial foundations that Australia has and if we continue to manage it well and we don't do silly things and we continue to run a budget surplus then there's no reason why it can't go on because we have undertaken a lot of reforms and we've got to keep pushing for further reforms. But the first responsibility of the Government is to provide security - national security and economic security - and then let people get on with lives and that essentially is what this government from the very beginning has tried to do.
KOCH:
Peter Costello during his now infamous slideshow he's doing during the budget press conference...
PRIME MINISTER:
They're very good.
KOCH:
No, no they are terrific but a comment that stuck with me as a comparison say for our economy to the United States if that if we're in the same economic shape as the United States our budget would be in deficit to the tune of $30 billion. That is a huge gap isn't it?
PRIME MINISTER:
It's enormous and you look at the, sorry for the jargon, the debt to GDP ratio, as a debt ours is sort of four per cent, five per cent, the average of the OECD is 45, in America it's 47 and in Japan it's 80 or 90. Now that is the measure of the good housekeeping that we've undertaken and of course it's doing that that enables us to return some of the surplus to the Australian people because they own it, I mean I always regard tax cuts as returning to people money that is theirs in the first place, I mean it's not ours and you have stewardship of their money and they give it to you to spend on things that are important for the country, but if you've got any left over and you've got the country in a sound financial position, as soon as you've got a bit left over you've got to give it back and if you have more left over next year you give it back too.
KOCH:
Okay, so is this the start because we've been running a big campaign here on Sunrise, driven by our viewers, that we need to keep changing our tax thresholds. You did that last night, terrific, thanks very much. But why not ingrain that every year? Why not index tax thresholds to get rid of bracket creep altogether?
PRIME MINISTER:
I guess the answer David is that you never know what position you're going to be in a year ahead. But people can take it from me that whenever we have something over after we've covered necessary spending, we've delivered a surplus, if we've got something over we give it back in tax cuts.
KOCH:
But certainly bracket creep is an insidious tax isn't it? It's like a tax increase every year...
PRIME MINISTER:
We have done a number of things to reduce bracket creep but the new tax system plonked millions of tax payers in the range of $20,000 to $50,000 and it meant, and this is very important for example for part time workers and lower income workers, if you were anywhere in that range, if you were say earning $25,000 a year and you got $5,000 a year increase, now we're talking about a lot of part time workers, then you didn't go into a higher bracket, in fact you'd get an increase up to $49,999 without going into a higher bracket. Now as a result of last night that $50,000 has gone up to $52,000. We would like to keep doing things like that when we have the capacity to do so, I guess my reluctance about entrenching the indexation is that it robs of you flexibility and governments in a rapidly changing world always need flexibility.
KOCH:
Okay, well you'll at least look at it for us?
PRIME MINISTER:
Our position is whenever we have the capacity to do so we want to return money to taxpayers.
KOCH:
Okay, superannuation, big disappointment, no changes to that last night, we get taxed three times on our superannuation, the forecast for the next financial year is that tax revenue from contributions and earnings on our retirement nest egg is going to go up 13 per cent, $5 billion. That's a lot of dough, it's a shamozzle at the moment.
PRIME MINISTER:
Well not quite, people would always like - as their first preference - no tax on anything, we understand that, but governments have got to get their revenue from somewhere. There are three points at which it occurs but when you put it into the fund the tax is for everybody is at a lower rate than you would normally pay, I mean it is at a concession rate. There is a earnings tax and then depending on how you take your superannuation you pay tax, I think you take it by way of a pension or an annuity you obviously pay tax and then there are lump sum arrangements when in turn continue to be concessional. So sure, we could alter the tax structure on superannuation but we'd have to find the money from somewhere else to make up and I'm sure the superannuation industry will tell us where we get the billions of dollars to plug the hole to pay for the tax changes that I know they want to make.
KOCH:
But that's my money, that's my retirement nest egg that you told me I've got to prepare for in retirement because Peter Costello's slideshows last year said gee older Australians will be a burden on the economy in the future. So you encourage us to put money into super, don't argue...
PRIME MINISTER:
... by having a concessional tax rate.
KOCH:
But then we get taxed three times along the way and we're the only country in the world that does it. Why are we the only country?
PRIME MINISTER:
There are other things about this country, we're the only country in the world that provides certain benefits too. A Government has to, you can't look at a thing like that in isolation. I mean what the superannuation industry is really doing is saying well look we want you to restructure the system so...
KOCH:
Not the industry, we're saying, Sunrise viewers are saying.
PRIME MINISTER:
I understand that but I have to say to them that I've got to get the money from somewhere, I really do, and if we reduce superannuation tax by billions of dollars then we have to increase tax somewhere else by billions of dollars or withdraw essential services to the tune of billions of dollars. Or we start going into deficit and I think Australians now don't like that and we're not going to do it.
KOCH:
You are making a lot of money, you're getting a lot of tax revenue coming in.
PRIME MINISTER:
Yes, but we also have a lot of things to spend it on and, well we do and we do have to spend more on Defence and security, we are going to put more money into health. I mean of course if you look at the bald figures they're big, but the expenditure figures are big and if you're going to balance the books you've got to get it from somewhere.
KOCH:
Steve Armstrong emailed in, why won't you look at income splitting? You were big on income splitting a few years ago.
PRIME MINISTER:
Can I say to Steve that in relation people earning up to about $60,000 a year, if they've got at least one child under the age of five years we've effectively brought in income splitting with the way we've structured the family tax benefits.
KOCH:
Yeah, that's a point. That's a good point. And the other thing that we're getting a lot of emails on is this issue of the GST being calculated on state taxes but a lot of the states are doing, particularly when you get your insurance policies...
PRIME MINISTER:
You mean the state taxes being added on to the GST?
KOCH:
Yeah, yeah.
PRIME MINISTER:
I think that's a fair point.
KOCH:
Can you do anything about that?
PRIME MINISTER:
Well ring Mr Carr or...
KOCH:
Well it's every state.
PRIME MINISTER:
Or Mr Bracks, or Mr Beattie. I mean one of the things out of the Budget last night is that the GST is delivering in spades to the states. Some of the states are already ahead of what we predicted three years ago they would and it is their responsibility, we don't impose stamp duty on insurance policies, we don't impose stamp duty on houses and things, they're state taxes, I'm not saying they shouldn't do it, that's a matter for them. But if people are complaining about a tax upon a tax, which they are, then it's the state tax upon the federal tax that they're complaining about.
KOCH:
So you can't...
PRIME MINISTER:
Well absent taking the GST off, we can't. I mean what should not happen is that when you pay GST on something you should then pay a state tax on the GST component of the item, that's what your viewer is complaining about.
KOCH:
Okay, and just finally, if you can have a word on our behalf to Larry Anthony, we had him up on the wall to come back to us by April 30 on some child concessions and he sort of missed the deadline, can you have a word in his ear and see if he'll come back on.
PRIME MINISTER:
Well I'll certainly, I don't know the background on it, Larry may have a good, I'm sure he's got a very good reason but I will certainly pass on your continuing interest.
KOCH:
Okay, terrific. We'll still keep an interest in indexing thresholds and superannuation but thanks very much for joining us this morning. Appreciate it.
PRIME MINISTER:
Thank you.
[ends]