ABC NEWS TONIGHT
TUESDAY, 8 MAY 2018
SUBJECT/S: 2018 Budget
EMMA ALBERICI: Jim Chalmers, welcome.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Hi, Emma.
ALBERICI: If Labor is in Government in 2024, will you follow through on the government's plan to wipe out that 37.5 per cent tax bracket?
CHALMERS: We'll carefully consider the tax changes that are being proposed tonight, but we're not yet convinced about some of those changes which are more than two elections away. It's important for people to understand that we're talking about a tax cut seven years down the track where Malcolm Turnbull is saying "look, if you re-elect me two more times, I'll give you this tax relief down the track." So we're not convinced about that. We are prepared to support immediately the changes which come into effect on 1 July this year, which favour low and middle-income earners in this country. We've said for some time we'd take a positive view to genuine tax relief there. We're prepared to do that now. We are not prepared yet to come to a decision on those tax cuts further down the line.
ALBERICI: So how will you deal with bracket creep then?
CHALMERS: An important first step is to deal with low and middle-income earners. That is what we are prepared to support. We are looking for other ways that we can help working people in this country. They have been dealing with higher energy prices, higher private health insurance premiums, all of these sort of things. The cost of living has gone through the roof under this Government. So we are looking at other ways we can help working people as well.
ALBERICI: At the moment, three per cent of taxpayers are paying that highest rate of personal income tax. By the time this seven-year plan rolls out, the intention would be to double that and you will have six per cent of taxpayers paying that highest rate. Why does Labor think that six per cent of Australians should pay more tax? Because you are suggesting a lift in that highest bracket from 47 to 49 per cent?
CHALMERS: We are proposing to keep in place the Budget Repair Levy. The Budget Repair Levy does apply to the highest income earners in this country.
ALBERICI: So I'm correct it would go from 47 to 49?
CHALMERS: It would, yes, for over $180,000, which is the current threshold.
ALBERICI: That means six per cent of Australians would fall into that bracket?
CHALMERS: What we've said is people in that tax bracket would continue to pay the Budget Repair Levy, because we've got a Budget which is still in a mess.
ALBERICI: But it would be double the number that are paying in that bracket today?
CHALMERS: Well, we would get all of those numbers updated as part of this debate that we are having about tax. But yes, obviously, whoever is in that top tax bracket, we are saying the Budget Repair Levy should continue to apply to them. Because, we have got in this Budget today something like $40 billion in additional taxes being collected at the same time as we've still got net debt which has doubled from what the Government inherited; we've still got gross debt over half-a-trillion dollars. The first time it happened in this country was under the current Government. It stays over half-a-trillion dollars every year for the next 10 years and it's higher in ten years than it is today. We've still got very acute Budget challenges, so we would leave the Budget Repair Levy in place until those Budget challenges are dealt with.
ALBERICI: Even though an extraordinarily increased number of people will be earning $180,000 in seven years' time?
CHALMERS: We've said for some time now that people in the top tax bracket would be subject to the Budget Repair Levy.
ALBERICI: So Labor is building a war chest that could amount to more than $100 billion when all's said and done from not going through with the corporate tax cuts to the dividend imputation measures, CGT, trusts and negative gearing. What do you intend to do with all that money?
CHALMERS: Well, a range of things. Firstly, provide genuine and responsible and sustainable relief for low and middle-income earners. That is because we have taken those difficult decisions, we have got room to do that in a more responsible way than what the Government is proposing tonight. We have also said some of it'll go to repairing the mess that the Government's made of the Budget.
ALBERICI: What do you mean by a "more responsible way" than the Government?
CHALMERS: We have today in this Budget, we have a Government which is promising tax cuts on the back of a temporary spike in revenue; on the back of measures, something like $2 billion worth of measures which haven't past the Parliament, the so-called zombie measures; and some very optimistic forecasts around wages. So what we're saying is only Labor, because we have taken those decisions to close down some of those loopholes that you are referring to, can deliver tax relief in a sustainable way because we will put the Budget on a more stable footing into the medium-term and the long-term. So our approach is more responsible than what the Government is proposing.
ALBERICI: Chris Bowen on the weekend told my colleague Barrie Cassidy that you want to run higher surpluses than the Government. How much higher than the Government and what would you do with that money?
CHALMERS: Chris was making a number of points on the weekend with Barrie. First of all, he was saying the Government is failing their own test they've set for themselves, which is to have these big surpluses; they keep breaking their own fiscal rules. That was the first point Chris made. The other point that he made is these decisions that we have been taking to close down loopholes, to end this situation where we've got the biggest, fastest-growing concessions going to those who need them least. When we end those concessions, or reform those concessions, we have the capacity to do a better job of Budget repair than the Government has done. That means, into the future, there is a strong possibility that we would have stronger surpluses. But the commitment that we are making today having seen the numbers in the Budget is that we will get back to balance the same year that the government does, which is 2019-20 and we will take a more responsible approach after that as well.
ALBERICI: And what will you do with those surpluses?
CHALMERS: There is a range of things that we'll do with what we are proposing in tax - repair the bottom line, deliver sustainable relief to working people, particularly people in middle Australia.
ALBERICI: You said you would run higher surpluses, so what happens to that money?
CHALMERS: Surpluses go towards paying down debt. We have a situation here, as I've already said, where net debt has doubled under this Government, gross debt has crashed through half-a-trillion dollars for the first time in the history of this country. So we've got a big task ahead of us. We've got to fund health and education. We've got to give cost of living relief to middle Australia and we have got to start paying down this record debt that accumulated under Mathias Cormann, Scott Morrison and Malcolm Turnbull.
ALBERICI: When the Gillard Government introduced the Recession Development Tax incentive, it was expected to cost $1.8 billion a year; it is currently costing $3 billion a year. Is it being rorted?
CHALMERS: We will carefully consider what the Government is proposing to change when it comes to the R&D tax offset. It's a very complex area of tax policy. And you're right that it is a very expensive part of tax policy as well. But we are not ready to come to a conclusion on what's being proposed in the Budget today having seen it for the first time. There's been a review some time ago, which the Government has sat on for a couple of years now.
ALBERICI: Yeah, it was released in 2016.
CHALMERS: Correct. We have only just seen the response to that today. So, we'll take the time. We will consult with industry. We will talk with colleagues and come to a view on that in due course.
ALBERICI: The Business Council of Australia in its Budget submission says there will be unintended consequences and add complexity to the system of research and development tax incentives, could they be right?
CHALMERS: Their opinion is one of the views that we will consider, as we work through what is being proposed today in the R&D tax offset.
ALBERICI: Sorry, in that space as well, in the innovation fund space is also higher education, preparing the workforce for 2030 and the kind of jobs that will exist then. What's Labor proposing on that score and would you continue this $2.2 billion worth of higher education cuts that are coming through as a result of the mid-year statement?
CHALMERS: We will have a proper considered policy on higher education. But we have said since the mid-year update that we have a very dim view of that $2.2 billion cut to universities. There is also a new cut in the Budget today that not that many people have picked up on, which is a new $270 million cut to TAFE and I think people who work in this space or people who interact with the TAFE system understand that it's been hollowed out under this Government. So right across the board of lifelong learning - schools a $17 billion cut, universities $2.2 billion cut, TAFE another $270 million pulled out - if you are serious about growth and jobs in this economy, you can't keep hollowing out our investments in human capital, because investing in human capital is how we get productivity, and that's how we get growth.
ALBERICI: Jim Chalmers, thank you.
CHALMERS: Thank you Emma.