FRAN KELLY:
US President Donald Trump's announcement that America will pull out of the Iran nuclear deal, is the world a more dangerous place this morning?
PRIME MINISTER:
Well, certainly we regret the decision of the US, although of course President Trump had promised that, foreshadowed that, for a long time.
We encourage all parties to continue to comply with the deal and we certainly will do everything we can to support that.
FRAN KELLY:
Given the potential consequences for peace in the region and also for the global economy, higher oil prices are a risk. Is this likely to have some impact on Australia?
PRIME MINISTER:
Well Fran, time will tell but I think at this stage, I'm reasonably optimistic that there will be, that all sides will show restraint.
FRAN KELLY:
So you think that there will be some kind of deal that survives, even without the US?
PRIME MINISTER:
I think yes, I have some optimism about that. I wouldn't foreshadow a complete unravelling of the deal. There is a commitment, certainly from the other parties to the deal, the European parties to the deal, for it to be maintained.
FRAN KELLY:
And Iran?
PRIME MINISTER:
Well Iran, yes. Iran has shown, they have certainly indicated, that they will show restraint so far. But again time will tell. You have to be very cautious in your forecasts here. But I wouldn't be rushing off to dire scenarios as quickly as you were suggesting earlier.
FRAN KELLY:
Alright, Prime Minister let’s get to your Budget.
Labor has already branded your tax plan a ‘hoax’ because the big money comes in seven years time and who knows what the economy will be doing in seven years time. I mean you are asking voters to take a leap of faith and faith in politicians is not high at the moment. Why should they trust you?
PRIME MINISTER:
Well, we're asking Parliament to legislate this tax relief right now.
I mean what this is all about is ensuring that Australians and Australian families can keep more of the money they have earned. It's a big indicator of the attitude, the disrespect the Labor Party shows for hardworking Australian families, that they regard tax relief as a “giveaway”.
You see, they think they own the money, that government owns the money, is entitled to all the money that Australians earn.
We know that tax should be no higher than it needs to be in order to deliver and guarantee our essential services - which we are doing and with record funding. But we want to ensure that Australians, particularly those on middle incomes – you know, a nurse and a teacher right, a couple, a nurse and a teacher - they will be, next year, over a thousand dollars better off as a result of these reforms.
This is ensuring that a time when wage growth has been slow - you know with jobs, we're getting a lot more jobs, jobs growth is good - wage growth has been slow. This is giving more money, enabling people to hang on to, keep, more of the money they earn. It's their money.
FRAN KELLY:
Labor says it'll give you a big tick for that today. It’ll pass your first stage of your tax plan, which will give that $550 boost per year to middle income Australians, it’ll say yes today. It just won’t say yes to the tax cuts which it says are “on the never-never”.
PRIME MINISTER:
But, it's a long term plan. Government's plan for the long term all the time, whether it's infrastructure, whether it's schools policy. You know, we have a schools funding policy that goes out for 10 years. We've got infrastructure projects that are being built, will take years to build, naturally. We have to have a plan, an economic plan, we do have an economic plan.
We took it to the last election and Fran, you cannot deny that it's working.
Record jobs growth last year. All of the cynicism, you can bottle all of the cynicism in the Press Gallery but it cannot take away the record jobs growth in Australia. Last year, 415,000 jobs, the highest jobs growth in our history, and we have the lowest percentage of Australians of working age on welfare in 25 years.
FRAN KELLY:
I don’t think it’s fair to bash the Press Gallery as the cynics here, I mean no one’s doubting the jobs numbers.
PRIME MINISTER:
Well, that’s good -
FRAN KELLY:
They’re proven, the bureau says that, it’s wages growth that people are missing, that’s where the cynicism is coming from isn’t it? It’s not just in the Press Gallery, it’s people aren’t getting it in their pay packets.
PRIME MINISTER:
But they will be getting more money back after tax as a result of the reforms we're introducing. That’s why it's important to back hardworking Australian families, so they can keep more of the money they have earned.
FRAN KELLY:
How much will the third part, this is where the big money comes in, the third element of your tax plan cost? Because it's not in the Budget papers that I could find.
PRIME MINISTER:
Well, it will cost, as you know, it will cost about $14 billion over the forwards but -
FRAN KELLY:
Yeah that’s four years, but then beyond that?
PRIME MINISTER:
Well those numbers are in the medium term, we calculate it on a medium-term basis -
FRAN KELLY:
But they’re not in the Budget as far as I can see. Chris Bowen was hot to trot on this, saying: “Why would the Senate vote on a plan that's not even costed?” We can’t see the costings?
PRIME MINISTER:
Well Fran, it all builds to a stronger economy -
FRAM KELLY:
I’m just saying, how much will it cost?
PRIME MINISTER:
Well Fran, let me just answer the question this way. What you’ve got is a tax system at the moment that we all know provides disincentives for people to work longer, to work harder, to move to a better job. Because the complaint has always been, you know “I get a raise and I go into a higher tax bracket and I'm giving more away to the Taxation Office”.
What this is going to achieve is that from $41,000 right up to $200,000 dollars, no one will pay more than thirty-two and a half cents in the dollar for an additional dollar earned.
Now that’s 94 per cent of Australians. To the point about equity that you were raising earlier -
FRAN KELLY:
I haven't got there yet, I am going to get there, but I have got there yet.
PRIME MINISTER:
People that are in the top tax bracket earning over $200,000 in seven years time, paying 45 cents plus the Medicare Levy in tax, they will actually pay a higher share of total tax receipts. A couple of per cent more than they do now. So, it's fair and it's providing real relief for Australians on middle and lower incomes.
FRAN KELLY:
I’m going to come back to the fairness thing in a minute. But just on this issue of the Senate, because you're asking the Parliament to lock in by law, this seven year plan. You can't tell me what the third part costs, I understand the global figures is $140bn dollars for the entire seven year plan. You want to lock in $140 billion worth of tax cuts when we don't know what the global circumstances might be in economic terms in seven years time and you can't actually lay out what the plan costs. Why should the Senate do that?
PRIME MINISTER:
Well Fran the important thing is to have that long term plan, you've already said it's $140 billion cost over a decade.
FRAN KELLY:
That’s the entire thing.
PRIME MINISTER:
Yeah sure and it is a package. It is a package plan. It is one tax reform plan.
FRAN KELLY:
Okay so just on that, because Labor and the Greens have already said - I'm sure you heard them last night - they won't vote for the entire plan. They won't vote for a tax plan that goes out to 2024.
PRIME MINISTER:
That’s because they’re not long-term thinkers.
FRAN KELLY:
But Labor have said they will vote for the first tax cuts today, will you split them up?
PRIME MINISTER:
No, no we will not. It is one tax reform plan.
FRAN KELLY:
So it’s all or nothing?
PRIME MINISTER:
That’s right. This tells you all about the Labor Party. They do not plan for the long term.
You know something? They’ve got a track record of failing in one forecast after another.
What we're committed to, is conservative forecasts which we have done. You've had one economic commentator after another saying the forecasts in the Budget are reasonable, they're conservative. In some respects they're more conservative than the Reserve Bank.
We've had six budgets and budget updates over the last three years. In every one we've demonstrated that the forecasts from the update before were conservative. So we're confident in these forecasts. But what we're really confident in, is the fact that economic growth is the driver for all of the essential services, all of the tax relief, that Australians need.
FRAN KELLY:
I’ll finish with this bit after this question, but it is the seven year stretch we're talking about here. The ratings agencies aren't convinced the good times will continue for the economy. Immediately after the Budget was handed down last night, SNP Global Ratings announced it was maintaining its negative outlook for Australia. It says while the Budgetary position has improved -
PRIME MINISTER:
Our AAA rating -
FRAN KELLY:
Yeah that's true, but it says nevertheless -
PRIME MINISTER:
Minor detail is it, the AAA rating?
FRAN KELLY:
No, no it’s not.
PRIME MINISTER:
It’s a big deal, isn’t it?
FRAN KELLY:
I’m not misquoting.
PRIME MINISTER:
Wouldn’t you say it’s a big deal to have a AAA rating from the three agencies?
FRAN KELLY:
It is a tick for the Government’s budget management that we have a AAA rating and you’ve maintained it.
PRIME MINISTER:
A big tick, Fran, come on give us credit. How many countries in the world have got that? Do you know?
FRAN KELLY:
Let me just finish the quote from SNP Global Ratings. Nevertheless -
PRIME MINISTER:
Only ten and we’re one of them.
FRAN KELLY:
Prime Minister, “Nevertheless risks to fiscal outlook remain including external economic uncertainties. As such, risk for the Government’s plan for an earlier return to budget surpluses are significant.” So again, it's talking about risk to banking on the outlook for the global economy and you're banking on that seven years out?
PRIME MINISTER:
There is a big risk to our economy and it's the risk of a Labor Government.
The biggest threat to our economy, the biggest threat to the earnings and jobs of Australians, is a Labor Government.
Bill Shorten does not have one policy that would encourage one business to invest one dollar, or hire one employee. He doesn't even claim to have them.
He wants to put taxes up on Australian businesses. That will disincentivise people to invest and employ.
He’s got an anti-business agenda, the like of which we have not seen from the Labor Party in generations.
He is opposed to our free trade deals. This is a guy who said I was “deluded” in trying to conclude the Trans-Pacific Partnership. Yet we all know that coming off the commodities boom, what has enabled us to recover, has been opening up more export markets. Labor’s opposed to them.
They want to jack up taxes on individuals.
They want to rob cash dividends, franking credits, from retirees. They want to go around robbing retired Australians.
And they want to put up tax on individuals.
There is nobody that Labor doesn’t want to tax more and if you think that jacking up taxes is going to do anything other than slow economic growth and put Australians out of work, then you're definitely in economic fantasy land.
FRAN KELLY:
But if all you can get is the first tranche of these tax cuts for people that would come in in July, you’ll say no to that? It’s all or nothing?
PRIME MINISTER:
Fran, it is a consistent well-planned package and you know-
FRAN KELLY:
But you’ll say no to that?
PRIME MINISTER:
Yes, Fran. You have had one economist after another - I remember Craig Emerson used to come in here and talk to you about this, from the Labor Party - about the importance of having fewer disincentives for people to work harder and earn more and get a better job and so forth. Imagine that; 94 per cent of Australians will not have to pay more than 32.5 cents in the dollar for any additional dollar they earn.
That is a massive tax reform and that is why our personal income tax plan is being so widely welcomed. Yes, it does happen, it does operate over seven years, but you know what? Governments are meant to plan for the longer term. Whether it is on the economy, whether it is on income tax, whether it’s on company tax, whether it's on infrastructure.
FRAN KELLY:
Okay it's a quarter to eight on Breakfast, our guest is the Prime Minister Malcolm Turnbull. He is out selling the benefits of his 2018 Budget.
Getting back to some of the elements within the budget, let's look at something that's not there and that's Newstart, a boost to the Newstart allowance. Because we've had economists, we’ve had the Business Council of Australia, the welfare lobby, not just this year for some years now, saying that would be, not just a fair measure, it would be a productivity measure.
Why isn’t there - with all this money sloshing around - why haven't you boosted Newstart?
PRIME MINISTER:
Well, look it's a safety net to help people while they're looking for a job.
FRAN KELLY:
It’s not enough is it?
PRIME MINISTER:
Well it's not a substitute for employment.
FRAN KELLY:
Of course not. It’s $39 a day.
PRIME MINISTER:
It is, it is designed to be a safety net. It almost invariably goes with the receipt of other benefits, rent support and so forth, for people on Newstart.
But Fran, the best form of welfare is a job and we have the lowest percentage of working age Australians on welfare now than we've had in 25 years -
FRAN KELLY:
Yes, but there seem to be a lot of people on unemployment benefits. Even your own forecasts don’t have us reaching full employment for several years. So in the meantime, people are existing on Newstart, why didn’t you give them more?
PRIME MINISTER:
Because it is a safety net, that is increased with inflation. The object is to encourage people to get back into work. What we have is a stronger economy, which is offering those opportunities and it's good to see that last year, a record number of Australians took that up.
FRAN KELLY:
The other major outlay in the Budget is, the package for older Australians $1.6bn. The Treasurer says the Government wants to help people live longer, live healthier, with better lifestyle options.
PRIME MINISTER:
And more choices, yeah.
FRAN KELLY:
Now we're going to be speaking to the aged care sector a little later in the program, looking at the various elements of this. But the Government is still planning to lock people out of the pension until they reach 70. So, you need them working longer because they won't be able to get the pension until 70, is that how this fits together?
PRIME MINISTSER:
Well we’re living longer and we're living healthier and we're working longer. This is a, this just reflects that, reflects that reality. We're doing everything we can to give Australians the option, older Australians the option to do work, even if it's just part time work, stay connected to the workforce. You know as well as I do, I mean I got a message from Ian Hickie just a moment ago about how pleased he was about the mental health programs in the Budget.
FRAN KELLY:
For older Australians?
PRIME MINISTSER:
Yeah well for older Australians yes, indeed, but right across the board. But if you had Ian here, one of our leading psychiatrists, he would tell you that the mental health of Australia, the mental health of nations, will be certainly boosted by more people, older people staying connected to the workforce. Giving them the options, you know, the choices. This is about respect, choice, support.
And what's the alternative? Bill Shorten grabbing cash out of their savings? Taking away those franked dividend refunds?
He's robbing self funded retirees, we're providing them with respect, support and choice.
FRAN KELLY:
Prime Minister you have a busy schedule, so can I just ask you briefly and finally; it’s been described by one and all as a pre-election Budget. If the public response is positive will you be tempted to make a dash to the polls this year?
PRIME MINISTER:
You should plan - as I’ve said for the Budget - at the due date, which will be in the first half of next year.
FRAN KELLY:
Prime Minister thank you very much for joining us.
PRIME MINISTER:
Thanks so much.