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Transcript 40336

Interview with Fran Kelly on RN Breakfast

Photo of Turnbull, Malcolm

Turnbull, Malcolm

Period of Service: 15/09/2015 to 24/08/2018

More information about Turnbull, Malcolm on The National Archive website.

Release Date: 04/05/2016

Release Type: Transcript

Transcript ID: 40336

FRAN KELLY:

Prime Minister, thank you very much for joining us. Oh let me turn your microphone on, do that again.

PRIME MINISTER:

It’s good to be with you.

FRAN KELLY:

The Government has made a virtue out of the fact that this is not your typical budget. There was no money last night for most household budgets by in large, how is this going to win you the election on the 2nd of July?

PRIME MINISTER:

We are focused on the long term, this is a national economic plan for jobs and growth, this is not a short term political budget, this is a long term economic plan and everything in it, everything in it, the enterprise tax incentives that you mentioned earlier, business tax cuts, the investment, the innovation packages, making superannuation sustainable, all of that is focused on the goal of ensuring that we have stronger economic growth and more and better jobs in the future. This is our economic plan.

FRAN KELLY:

So we will come to those elements you just talked about. As you say, this is a plan for the future. There is some short-term planning in this Budget, though. The Government is still very much trying to get out from under the 2014 Budget which was tagged as "unfair". So you put fairness as one of the tests of this Budget. If fairness is the test, why is it fair to deny the lowest paid, those earning under the average wage, which is 75% of workers, why is it fair to deny them a tax cut?

PRIME MINISTER:

Well let me just make this point Fran. Everybody benefits from stronger economic growth and more jobs yet 26,000 jobs created in the month of March, 300,000 jobs created last year, 3% real growth in GDP. We are successfully transitioning from an economy that was pumped up by a mining construction boom to one that is more diverse. All of our measures, the ones in the Budget and the ones we announced beforehand, the Defence investment plan, our innovation agenda, all of that is designed to ensure continued strong economic growth and everybody benefits from that. Stronger growth means more jobs, better jobs, Australians can get ahead.

FRAN KELLY:

You are asking everybody to accept that this Budget is for the greater good, even though and according to the Parliamentary Library, only nine electorates have average incomes greater than $80,000. The $80,000 tax bracket is the one that is going to benefit. Your seat of Wentworth tops the list, 106,000 averages. On the top ten seats for income, nine of them are Liberal seats. On the face of it you do appear to be playing to your base here?

PRIME MINISTER:

Fran what we are doing is focusing on ensuring that Australians, middle income Australians, those that are on average full-time earnings, which, as you know, is nudging $80,000, don't move into the second top tax bracket, and so that is a modest personal tax cut. There is no...

FRAN KELLY:

It is a modest aim?

PRIME MINISTER:

It is a modest aim to ensure that middle Australia does not move in to the second-top tax bracket so they are not moving in to that 37% tax bracket and that change will achieve that. But the most important issue here is that we are ensuring that all of the measures in the Budget are consistent with our plan for jobs and growth. What we are doing with encouraging enterprise, entrepreneurship, small business. Small businesses are the ones that move most quickly, they are able to hire people quickly, invest quickly, that is where you are seeing real jobs growth at the moment and we are providing them with real encouragement to continue doing that.

FRAN KELLY:

I’m going to come to small businesses but I want to nail down this tax cut thing because it is going to affect a lot of people who aren't going to benefit from the company tax cuts. You are unlikely to be able to legislate this tax cut before Parliament is dissolved, before the election. So how will they be introduced by the 1st of July?

PRIME MINISTER:

That is really up to the Labor Party whether it's legislated, but certainly it will be covered administratively after the election, we expect the Parliament to come back and ensure that all of the legislation supporting the Budget measures is passed.

FRAN KELLY:

So they will get them from the 1st of July?

PRIME MINISTER:

That is exactly the goal.

FRAN KELLY:

We’ve spoken to the Shadow Treasurer Chris Bowen earlier. He was saying that Labor will keep in place the 2% temporary deficit levy on the highest income earners because he said it’s not fair that the highest earners are the ones that get the tax cut. I know it was always meant to be temporary but the deficit is not looking temporary. So why have you decided to give this tax cut to the highest paid?

PRIME MINISTER:

The deficit levy was passed as a 3-year temporary levy.

FRAN KELLY:

Sure.

PRIME MINISTER:

Labor attacked it, Chris Bowen described it as an exercise in deceit. He denounced it and he said it was wrong to undertake it, and then reluctantly, apparently, they supported it, but they supported it on the basis that it would expire after three years. Now you have got to remember Fran, that people on high incomes, very high incomes are seeing a very significant reduction in the tax advantages they get out of superannuation. The changes to superannuation which raise around $6 billion over the forward estimates in additional revenue, those changes affect only a few per cent at the very top end of the income scale and of superannuants. Those people are the ones that are the higher income earners and they will be paying a lot more tax on their super balances as a result of this. That’s appropriate. That’s one of the reasons.

FRAN KELLY:

So you take from one hand but they are getting a fair, 2% cut to the tax they are paying?

PRIME MINISTER:

The deficit levy was imposed for three years. What Labor is saying is that they presumably, they’re saying they want to increase income tax into the future. So Labor wants to go to the election saying they want to increase income tax.

FRAN KELLY:

Ok. Now just for a quick straw poll on your Budget, I will come to these other measures, the superannuation and the company tax cuts but our colleagues at 'AM' have been out and about in the election of Petrie in Queensland seeking reaction to this pre-election budget, here is some of the responses.

VOX1:

I think it’s a bit of a propaganda, safe budget, to get him votes.

JOURNALIST:

Can I ask you if the budget that was handed down will affect your vote this election?

VOX2:

Well I must admit I did think this morning when I heard the news and last night that it would, but then again I can’t see myself voting for Labor, so I don’t know.

JOURNALIST:

Was there anything in particular you are disappointed in about the budget?

VOX2:

I don’t think he did enough to get the country back on track.

JOURNALIST:

What would you have wanted to see?

VOX2:

Negative gearing for a start- I think there should have been a change in that. How can you give tax cuts to rich people and not to the lower income people?

VOX3:

Well it’s a cowardly budget; they’re not really tackling the main issues.

FRAN KELLY:

Now a rough guide of course, three voters in Petrie, a cowardly budget, giving tax cuts to the rich and a propaganda budget. That’s voters in the electorate of Petrie in Queensland. Are you worried about this going into an election and these elements that voters are focused on?

PRIME MINISTER:

Fran I'm focused as I'm sure Australians are focused, on the long-term prospects for our nation. I am focused on creating the good jobs, the better jobs, the high paying jobs of the future, ensuring that we continue to have strong economic growth, that it's sustained and gets stronger. And that's why we've set out an economic plan. Every single measure that we have announced in the Budget and the ones we have announced beforehand, an innovation agenda, a defence industry plan, the tax incentives for business, the way in which we're recalibrating the superannuation system to make it sustainable. Ensuring that we have the money to fund substantial investments, substantial commitments to health and education and infrastructure, and that we can pay for them and bring the Budget back into balance, that is a plan to secure our prosperity in the years ahead.

FRAN KELLY:

It sounds like you have got some convincing to do if those voters from Petrie are any guide, but then you are going to have an 8 week election campaign to do that. The company tax cut, that's the centrepiece of this Budget. You are looking to small and medium-size businesses to drive the jobs and growth you are talking about, the tax rate will be cut to 27.5% for 870,000 companies with turnovers of up to $10 million. How many jobs will that create?

PRIME MINISTER:

They employ 3.4 million Australians now, 870,000 businesses. You can imagine, you don't need many of them to hire one more employee and you get substantial improvements in employment. The fact is at the moment, where we are seeing the strongest job growth is from the small and medium end of business.

FRAN KELLY:

Is it? Because the ABS figures, this is according to the 'The Guardian', shows between 2008 and 2013, 52 per cent employment growth was in businesses with more than 200 employees and 18 per cent of it was in businesses employing fewer than 20.

PRIME MINISTER:

Can I just say it depends what you mean by your definition of small and medium business but we focused on turnover here. Obviously a business with $10 million turnover, it could be a restaurant with dozens of employees. The reality is that you see strong growth at that end but remember, this 27.5 per cent tax rate for business, for companies, steps up. So the threshold goes and in the first year it's $10 million then 25  then 10 and 100 and so forth, after 10 years all companies are paying 25 per cent tax and that, of course, provides an incentive right across the board.

PRIME MINISTER:

They employ 3.4 million Australians now, 870,000 businesses. You can imagine, you don't need many to hire one more employee and you get substantial improvements in employment. The fact is at the moment, where we are seeing the strongest job growth is from the small and medium end of business.

FRAN KELLY:

Is it? Because the ABS figures, this is according to 'the Guardian', shows between 2008 and 2013, 52% of employment growth was in businesses with 200 employees and 18% was in businesses employing fewer than 20.

PRIME MINISTER:

Well can I just say that it depends what you mean by your definition of small and medium business, but we focused on turnover here. Obviously a business with $10 million turnover, it could be a restaurant with dozens of employees, the reality is that you see strong growth at that end but remember this 27.5% tax rate for business, for companies steps up. So the threshold goes and in the first year it's 10 million and 25 and then 50 and then 100 and so forth until after ten years all companies are paying 25% tax and that, of course, provides an incentive right across the board.

FRAN KELLY:

Now there you have a ten-year plan -

PRIME MINISTER:

The smaller companies, the smaller companies in terms of turnover, are getting the incentive first. They will react, because they are smaller, to the incentives sooner. That is why they are getting that priority.

FRAN KELLY:

Under this 10-year enterprise plan as it’s called, the big businesses will get their corporate tax cut eventually, it's 10 years hence. You can’t legislate for that, it's aspirational only? And according to Labor its un-costed?

PRIME MINISTER:

Well neither of those points is correct. It is a commitment, it is a plan…

FRAN KELLY:

But it can't be legislated for 10 years?

PRIME MINISTER:

Absolutely, of course it can be. The legislation will enable us to deliver those cuts into the future. I mean obviously a future Parliament could change that if -

FRAN KELLY:

Yeah as you said, Labor's Gonski funding was ‘fantastic’ because it was 10 years hence.

PRIME MINISTER:

Well all of this has been carefully costed I can assure you of that and that is all set out in the Budget. That's the Treasury's job, you don't have to rely on politicians to do that. The Treasury has done that. But let me say this to you Fran - ensuring that our company tax rate is competitive, ensuring it is competitive with other economies, particularly those in our region, is absolutely critical to attract the investment into businesses in Australia. Because from that comes the jobs and the opportunities that we need to secure. We have to make sure at every level, we are competitive, we are more innovative, we are more competitive, We’ve got the infrastructure we need, we have got the company tax regime that we need. Remember this - Labor is setting itself up for a war on business. They are setting themselves up for some kind of class war. They are arguing that people who earn $80,000 a year are rich. Labor doesn't want them to benefit from a tax cut that would - Labor presumably would like them to go into the second-top tax bracket.

Now that's the type of war of envy, the politics of envy, which absolutely stands in the way of aspiration and enterprise and growth. Look at what they are doing. Look at what Labor is doing on capital gains tax. Think about this; capital gains tax is a tax on investment, clearly. Do we need more investment in 2016? Do we need more investment? Of course we do. Labor is increasing that tax on investment by 50 per cent. That can only give you one thing - less investment. If you have less investment, you have less jobs.

FRAN KELLY:

Yes but there’s also with any investment enticement or concession, there is always room for cleaning it up. I mean the Treasurer himself talked about the excesses in negative gearing, you have decided to leave them there - they are excesses by the Treasurer's own mouth?

PRIME MINISTER:

No. Let me say this to you, just in terms of negative gearing. Think about this, Labor talks about fairness. A plumber who earns $80,000 a year in personal income, under Labor would not be able to negative gear an investment property that he or she has bought. A person who has $80,000 a year in investment income - interest, dividends, rents -they will be able to negatively gear. So under Labor, working people who live by the sweat of their brow will not be able to negatively gear an investment property or shares or a shop but wealthy people with investment income will. That is Labor's view of fairness. They have done so little thought on the way they have put together their policies, they are actually proposing changes that would not only stunt growth, stunt growth in jobs, would actually make the system much less fair and equitable than it is today.

FRAN KELLY:

Prime Minister there’s -  let's not get distracted to negative gearing again here because there is plenty of economists that don't agree with you and I want to keep to Budget measures if we can because there is plenty of people who want to hear from you. It's 11 minutes to 8 and Prime Minister Malcolm Turnbull is our guest. A number of changes to superannuation, $6 billion in cuts at the top end, $2.9 billion net savings over four years. Tony Abbott said this would be a ‘senior’s tax’. Why did you decide to impose a senior's tax?

PRIME MINISTER:

What we are imposing, what we are doing, is ensuring that the superannuation system is fit for purpose. Superannuation is designed…

FRAN KELLY:

Curbing the excesses?

PRIME MINISTER:

… is designed to give, ensure, that middle Australia is able to save for their retirement, so that they don't have to rely on the age pension. That's the object of superannuation, and what we're doing is ensuring that the very generous concessions that were being quite legally and legitimately - I make no criticism - but they were being taken advantage of, people on high incomes, very wealthy people, as in effect a wealth creation exercise, have been brought back so that superannuation is fit for purpose and it does its job. At the same time, as we've done that - you said that’s taken $6 billion or brought $6 billion of additional revenue to the Government over the forward estimates - what we have also done is made superannuation more flexible for people on lower incomes. In particular, this particularly applies to women, who often have, almost invariably have lower superannuation balances than men. Because they have interrupted employment, particularly because they have taken time out with family.

What we are doing is changing the laws so that they can catch up, if they have the means to do so and they go back to work, they can put more than the maximum cap into superannuation, so it gives greater flexibility for them and then also for older Australians. At the moment, you can't make contributions, concessional contributions to your super after 65. Well a lot of Australians work well past 65 and we want them to. It's good. It's very good. That's the best thing for them to do, stay active and involved and engaged in the workforce. So they can make contributions right up to the age of 75.

FRAN KELLY:

Ok…

PRIME MINISTER:

Also people who are contractors, working for themselves, they will have the ability to contribute to super in the way that people that are employed do too.

FRAN KELLY:

The Government has done a 180 degree turn really on its attitudes to youth unemployment. Instead of the stick that Tony Abbott included in his first budget, you have got a carrot. Its called the Youth Jobs Path, Intensive skills training leading to 120,000 placements in an internship, and jobseekers will be paid $200 a fortnight on top of a dole if they’re a part of an internship. There is a heavy training component in this. In fact it's reliant on that, who is going to do that training? Because the vocational education sector in this country at the moment is an absolute mess. Who is going to be doing the training?

PRIME MINISTER:

Well the organisations who contract for Jobactive now will be able to do that. But there are many organisations that provide training of that kind, Fran. That's obviously - they are the agents or the organisations the Government will be engaging with. But you know I'm glad that you are pleased with this because this is really because this is really an example - you saw the way Scott Morrison described it last night. What Scott said was we have got a big youth unemployment challenge. We know that. The measures, he acknowledged, the measures we have had to date have not been as successful as we would like.

FRAN KELLY:

The measures you both supported in the first, the 2014 budget were incredibly arduous and penalising?

PRIME MINISTER:

And Scott Morrison acknowledged that they had not been sufficiently successful and we are trying something new that is going to ensure that young people who are unemployed get the skills, get the skills that they need, to be an effective employee and then get the internship with an employer. There is an incentive for them, an incentive for the employer, and that gives them the experience of engagement with the workforce. You know as well as I do, that the way to make someone become employable is first to be employed. There is a chicken and egg problem there and we are dealing with that by providing these real incentives for so many young people to get a start in a good job.

FRAN KELLY:

Okay let's go to the numbers and forecasts and the projections in this budget. How solid are they? Because last week's shock deflation news presumably hasn't been factored into these budget numbers. The RBA cut interest rates yesterday because presumably it’s worried that falling consumer prices may be sustained for a while, which will be bad for corporate profits, bad for employment, bad for growth. Will the budget’s quite rosy outlook for the economy have to be modified now in the preselection fiscal outlook numbers which must come out?

PRIME MINISTER:

Well the PEFO will come out very soon of course.

FRAN KELLY:

Do you expect there will have to be modification?

PRIME MINISTER:

Well the pre-election financial outlook as you know is written, is independent of Government by the Secretary of the -

FRAN KELLY:

I'm sure you have an eye to it?

PRIME MINISTER:

Fran these forecasts are the forecasts of the Treasury and they are very reliable as the Treasury forecasts are. But of course they are forecasts.

FRAN KELLY:

Prime Minister, when are we going to the polls?

PRIME MINISTER:

There will be an election, you can expect there to be an election on the 2nd of July as I think everyone in Australia knows.

FRAN KELLY:

When will you call the election?

PRIME MINISTER:

Between now and the 11th of May.

FRAN KELLY:

Okay so in a few days’ time, we will be going, you will be calling the election. Since you took the job from Tony Abbott, your support in the electorate have taken a real dive -  68 per cent six or seven months ago, 51 per cent last month. Voters had such high hopes. Why do you think you dashed your hopes?

PRIME MINISTER:

Well I think that’s something for you and Michelle to talk about in a minute.

FRAN KELLY:

Doesn't it keep you awake at night?

PRIME MINISTER:

No it doesn’t, I’m focused - I sleep well and I'm focused on ensuring we have strong economic growth, great jobs in the future and we will have the opportunity, re-elected, to deliver on our national economic plan. We can't take a risk of changing course. The economy is making an effective transition from the mining construction boom, as the Reserve Bank Governor said only yesterday. But we need strong economic leadership and we need to complete our economic plan for jobs and growth.

FRAN KELLY:

Obviously one reason why you have taken a lot of hit, is because people are disappointed. You haven't done what they thought you would do for them on clean energy, on climate change, on asylum on same-sex marriage. There is a number of things they had expectations; they don't feel you have met them. Do you welcome the chance to try and win an election in your own right? Do you feel that will allow us to see the real Malcolm?

PRIME MINISTER:

Fran, let me say this to you; the election is going to be a choice between a Government and a leader that has a clear economic plan for Australia's future - every element of our plan will drive stronger growth, more and better jobs. Our opponents on the other hand, as you can see, have measures, have policies which are absolutely calculated to hold up economic growth, to stand in the way of entrepreneurship and stand in the way of our successful transition. Now we don't want that to happen. That's why we will be going to the election with a positive national economic plan and I'm confident the Australian people will endorse that and give us the opportunity to execute that plan, to deliver that plan in the next term of Government.

FRAN KELLY:

PM just finally, in the middle of this campaign, it's likely that the issue of asylum seekers will land again because the Supreme Court in PNG ruled offshore detention is illegal, it can't go on. Talks are occurring. The asylum seekers won't settle on PNG, the Government won't bring them to Australia. Meanwhile two people have set themselves alight in Papua New Guinea - in Nauru and one person has died. Did you ever think you would be in a position where you would be defending keeping people in a position where the desperation is so intense they are killing themselves?

PRIME MINISTER:

Fran, the misery that many of those people are in, the mental anguish that many of them are in is something that we sympathise with, we grieve for them. But we have to recognise this; that if we want to stop people drowning at sea, 1,200 people drowned at sea under the Labor Party's administration or maladministration, 50,000 unauthorised arrivals.

FRAN KELLY:

Yes but this is not just a plan to keep people in hell, is it?

PRIME MINISTER:

Fran, if we want to keep our borders secure, if we want to stop the people smuggling, then those people who seek to come to Australia with people smugglers by boat, cannot settle in Australia.

FRAN KELLY:

So what will we do with them?

PRIME MINISTER:

The people that are on Nauru and on Manus will have the opportunity of settling.  They are free, the ones in Nauru are free to move around in Nauru as you know. They are not in detention at all. The people that have been given refugee status in PNG, that have been assessed as refugees, can settle in PNG. There are third country options and we continue to work to encourage them, those that have not been given refugee status, to return to their country of origin.

As you know, many of them have been led to believe that whether it is because there is a change of Government to the Labor Party, that there will be a relaxation, the Australian Government will then admit them to Australia so there is a -

FRAN KELLY:

Well Labor says there is not going to be any kind of alleviation.

PRIME MINISTER:

Well Labor's track record in Government is not one that would encourage anyone to believe they can be safely relied on to keep our borders secure.

FRAN KELLY:

Prime Minister thank you very much for joining us on News Breakfast.

Ends

Transcript 40336