A strong Budget for a secure future; congestion-busting infrastructure; Labor’s higher taxes;
Prime Minister
FRAN KELLY: Prime Minister thank you very much for joining us.
PRIME MINISTER: Good morning Fran.
KELLY: It's taken twelve long years to get the Budget back into surplus. That's due next year. Now that you say you've done it, you want to hand out another $158 billion in tax cuts. How is that strong and prudent budget management, given the signs of an economic slowdown ahead?
PRIME MINISTER: I don't want to hand out anything. I just want people to keep more of what they earn Fran, that's what tax relief is. This is people's own money. This isn't spending, this is money that they've earned. We believe that the path to keeping our economy strong, which has been so responsible for the budget surplus that was delivered last night, the way you keep doing that is, you keep giving Australians the incentive to keep going out there and doing what they do every day, making our economy stronger by working hard, running their businesses and doing what they do best. You've got to give them the opportunity to keep doing that. I mean, otherwise why would they work harder under a Labor Government that just wants to increase their taxes? Under our Government they’ll have the incentive to keep doing exactly what they're doing. That's what makes our economy strong.
KELLY: But is $158 billion of promised tax cuts on top of $144 billion already legislated, this Budget tells us there are danger signs ahead for the economy. The global outlook is slow, the growth forecasts have been cut, employment growth has been downgraded, consumption growth is slowing too. How can such a lacklustre economy pay for or start paying for more than $300 billion dollars of tax relief?
PRIME MINISTER: Well again Fran you’re seeing it as expenditure. We don't see it as that, we see it as an investment in Australians to keep our economy growing. You don't make -
KELLY: Yeah but you’re also saying you're going to stay in surplus.
PRIME MINISTER: And we are going to stay in surplus over that entire period. We will pay the debt down to zero, just like John Howard and Peter Costello did, which is what the Budget set out last night. But you don't make your economy stronger and more resilient to face the very challenges you're talking about, by increasing taxes. I mean, $200 billion -
KELLY: No, but you don't get to surpluses and maintain them with slowing growth and slowing global outlook and tax handouts, do you?
PRIME MINISTER: That’s already taken to account in the Budget. That's why the Treasurer was able to say last night that we achieved these surpluses while maintaining the discipline of keeping our taxes below the speed limit of 23.9 per cent.
See, the way we've been able to get the Budget back into surplus, is by having the right responsibility, of balance, by keeping taxes under control, keeping spending under control. That's why we've seen people go from receiving welfare payments, to receiving wages, going from welfare into work in record numbers. That's how the Budget balances and stays in a surplus. You keep your economy strong by backing the Australians who make it strong.
KELLY: Okay well speaking wages, Bill Shorten has declared the election will be a referendum on wages. Wages are forecast in your Budget to grow 2.75 per cent next year, 3.25 in 2020/21, but the same Budget papers show employment growth slowing next financial year and beyond and unemployment stuck at 5 per cent. If there's no tightening of the labour market going on and growth forecasts are downgraded what is going to push up wages?
PRIME MINISTER: Well our forecasts are always conservative. As you know unemployment is now at 4.9 per cent, which is better than -
KELLY: Well, they’re not always conservative, we haven't hit the wages forecasts for the last five budgets.
PRIME MINISTER: And what we have achieved are $10 billion and better improvements on the Budget bottom line in the last two Budgets we delivered, Fran. So we've been overachieving on what we've put in the Budgets for years now. That's why we've been able to come back and get the Budget in surplus. But you know what, the important -
KELLY: Yeah, but where is the wages growth going to come from?
PRIME MINISTER: I'll tell you. The wages growth is going to come from businesses continuing to expand, more people accessing more markets investing in their businesses, because of the low tax environment we're creating for them.
KELLY: But you’ve got unemployment growth slowing in this Budget.
PRIME MINISTER: Employment growth continues because we've got unemployment down to the lowest level in the last decade, Fran. So we're going to get more people in jobs, 80,000 more apprentices we're going to train. This is what the Budget is driving; continued growth in our economy. That's where you get wage increases from. You won't get wage increases from a reckless emissions target of 45 per cent, which is going to force those same businesses that people want wage rises from, to spend $36 billion paying for carbon credits from companies from countries overseas.
KELLY: Let's come back to your Budget, let's come back to your tax package. The most immediate measure - a lot of moving parts in this tax package - the most immediate measure is the proposed doubling of the low and middle income tax offset, which is worth up $1,080 for every single Australian and double that for dual income families.
PRIME MINISTER: Yes.
KELLY: Four and a half million taxpayers would receive that tax cut from the 1st of July. But you're essentially matching, a little bit more, the promise Labor has have on the table for a year. That makes it a net neutral at the ballot box in May, doesn’t it?
PRIME MINISTER: No. This is the big lie of what Labor's been saying about their tax plan. Labor's tax plan is about taxing some people more, to pretend they're providing relief to others. We're providing tax relief right across the board, Fran.
KELLY: In the short term, in the first four years, you’re providing tax relief for the same group Labor is.
PRIME MINISTER: No, no there’s tax relief going right across the board. Now, that tax relief is designed to encourage Australians to go out there and keep doing what they're doing. You know, you’ve got people at the moment, they're on their way to the trams and they're on their way to the trains and the ferries and I want to give them the incentive every single day - regardless of where they sit in the labour force, regardless of what job they have or what their income is - I want them to keep going out there and doing the right thing for their families, which they want to do.
KELLY: Yeah and in a real comparison over the forward estimates, over the next three to four years, middle income and low income Australians would get the same immediate tax hit from you as they would from Labor.
PRIME MINISTER: No, because we're not going to put on 45 per cent reckless emissions target, which is going to put a further tax on the economy.
KELLY: Well that’s not about your tax cuts.
PRIME MINISTER: We're not going to put a $5 billion retiree tax on Australians. We're not going to increase taxes for half the population, this is what Labor plans to do, Fran.
KELLY: Okay, okay.
PRIME MINISTER: They have $200 billion dollars and more, plus the reckless emissions target, which will put up the costs of absolutely everything and cost wages by independent analysis of $9,000. That’s what Labor's plan is. Our plan is lower taxes and people keeping more of what they earn. But importantly, investing back in the services. I mean, hospital funding Fran, has increased by 63 per cent under our Government just till now. Medicare is up 27 per cent and schools funding is up -
KELLY: I want to talk about your Budget.
PRIME MINISTER: That is my Budget.
KELLY: I want to talk about your tax plan.
PRIME MINISTER: I’m talking about schools, hospitals and Medicare, Fran, and it’s all gone up.
KELLY: Yeah, but most of the money in your Budget is going on this tax plan. You'd be happy to hear last night, I think, that Labor would support this initial part of your tax plan, the $1080 for individuals. They've said so already. There's only two sitting days left before the election, why not legislate that tax relief today to give taxpayers certainty ahead of the 1st of July if it's so urgent to people and their cost of living, why not take the trouble to get it through both Houses today?
PRIME MINISTER: Because Fran I'm going to put this Budget to the Australian people. Labor played this game last year and they tried to split our tax plan in the Parliament and played games to try and put up taxes for other people, while pretending to help others.
I’m going to let the Australian people decide on this. This will go to an election and it means that the Tax Office... if the Labor Party, if people think they can trust the Labor Party to reduce their taxes, well, their form goes completely against that.
People know they can trust us to deliver tax reform, because that's exactly what we have been doing now for five and a half years. The Tax Office - if the Labor Party says that they support the lower end tax cuts, well the Tax Office is able to go and administer the Tax Act on that basis. So the legislative issue is a moot one, what really matters, Fran, is would you trust Labor to actually cut your taxes? When their real plan is to increase taxes by $200 billion on the Australian economy.
That's why Treasurer said so many times last night; “We're increasing funding for hospitals, schools, Medicare and we're doing it without increasing taxes.”
KELLY: He did said a lot of times, eight times in fact in that speech. Prime Minister you’re essentially though, to put it bluntly, weaponising this $1,080 dollar tax cut to help you win the election, aren’t you? Haven’t low and middle income earners become hostage to the election campaign?
PRIME MINISTER: No, I don't believe so at all Fran, I think I just outlined it perfectly well. If the Labor Party supports the tax cuts, well, they have to do is say so and the Tax Office can administer it on that basis.
But I don't think Australians will trust them to do that, Fran and I don't trust them to do that because their form is to put up tax. You see, we have a tax discipline in our Budget which says that we have a speed limit on how much you can tax the economy. The Labor Party is going to abolish that and that's going to mean tens of billions of dollars of higher taxes weighing down our economy, slowing growth which slows wages. It puts people out of work.
Now, I want the next decade to be a strong one. You said at the start of the interview, it's taken us 12 years to get back to where John Howard left us and Peter Costello. Last time people changed the government and voted Labor, they've been paying for it for a decade.
You vote Labor once you'll pay for it for a decade. That's what last night's Budget demonstrated.
KELLY: Prime Minister I know your time is tight this morning and you must go, so one final question. Last time people voted for the Coalition too they voted for a different prime minister. They've ended up with you. You want people to judge you on your economic record. Your mantra is; “Who do you trust?” But why would the Government's economic record, a Budget back in black, why would that be at the forefront of their minds when they enter the ballot box? Why won't they be thinking of all the division and the disunity at the heart of the Coalition Government which has thrown up three prime ministers in four years?
PRIME MINISTER: Because that is our economic record, Fran. It's our economic record and the strength of the economy that matters to Australians going about their business today. The choice about who the leader will be, will be between Bill Shorten and I, for the country at the next election.
KELLY: Well, that's what they thought last time and then didn't turn out that way at the end of the term.
PRIME MINISTER: And the Liberal Party has changed their rules to ensure that successful at this election, then if you vote Liberal at this election, you get me as Prime Minister. If you vote Labor at this election, then you get Bill Shorten as prime minister. That's the choice that is before the Australian people. Our Party changed its’ rules, the Labor Party changed its rules many years ago. What that means is, at this election, if you vote Liberal, then I will be your Prime Minister for the next three years. What that means is the record investments in hospitals and schools. I've got to say, of all the measures in the Budget that we announced last night, Fran - and I'm sure you'd agree - it’s the $461 million we're putting to combat youth suicide and youth mental health challenges. I don't know of a family in this country that in some way, through a friend or God forbid directly in their own family's experience, that haven’t been touched by youth suicide.
That's what a surplus does. That's what a strong economy does. That's the thing I'm most proud of in this Budget; that we are going to take on the challenge and combat youth suicide in this country. Because it's taking far too many of our young lives.
KELLY: Prime Minister thank you very much for joining us.
PRIME MINISTER: Thanks a lot Fran.