Interview with Neil Mitchell, 3AW
NEIL MITCHELL:
On the line is the Federal Treasurer Dr Jim Chalmers. Good morning.
JIM CHALMERS:
Good morning, Neil, thanks for having me back on your show.
MITCHELL:
Thank you very much for finding the time. Do you accept that your changes to superannuation are a broken promise?
CHALMERS:
First of all we're not proposing any changes, we haven't decided any changes. All that's happened this week, and the reason I've come on the show to talk about it, is because I've tried to focus people on the fact that some of these concessions in the superannuation system aren't cheap, and we've got to work out what superannuation's actually for and how we can make it sustainable and affordable into the future. But we're not proposing, we haven't made any announcements or made any decisions.
MITCHELL:
No, no, I understand that. But when a government talks conversation it means you're thinking about it. Are there likely to be changes to the superannuation system in the Budget?
CHALMERS:
It's not determined yet, but the reason I raise it and I raise it deliberately, I'm not pretending otherwise. I raise it deliberately because I am concerned about the cost of these things. Before long the cost of these tax concessions will be more than the cost of the aged pension itself and we want to make sure it's sustainable. We believe in super, we want it to be something that gives people a decent retirement, and in order to make it sustainable you've got to make sure it's affordable too.
MITCHELL:
I just want to pursue, I want to play something you said on ABC Insiders, March last year.
[Excerpt]
CHALMERS:
Oh look, we said about superannuation that we would maintain the system. Our efforts have been directed towards saving the superannuation guarantee from the Government that was trying to prevent it going to 12 per cent, that's been our highest priority. We've been defending the system from Coalition attacks. Australians shouldn't expect major changes to superannuation.
[End of excerpt]
MITCHELL:
Does that mean there'll be no major changes to superannuation in this term of Parliament?
CHALMERS:
Yeah we're not contemplating major changes but we are thinking about and concerned about the sustainability of some of the concessions. And the point that I made in that quote, Neil, is that we believe in the system, we want to maintain the system, we want to make it sustainable. At the time the big threat was in the superannuation guarantee going to 12 per cent and we're pleased now that it is.
MITCHELL:
Yeah, but you are planning or discussing or considering changes. Are you saying they're not major changes? Are you saying they won't be major changes?
CHALMERS:
At the risk of saying exactly what I said a moment ago, Neil, we haven't made any decisions. We haven't made any proposals -
MITCHELL:
Well, all right, do you accept if you do make changes it's a broken promise?
CHALMERS:
We're not proposing and not contemplating major changes to the system. What we're trying to do is secure the system. We're trying to get the guarantee to 12 per cent. We're trying to nail down an objective which is our highest priority in the Parliament right now when it comes to super. But I think a government of either political persuasion, Neil, needs to be conscious of and cognisant of the fact that some of these concessions cost a lot of money. We've got to make sure we get value for money. This is exactly what happened in 2016 when the former Liberal Government made changes in this space.
MITCHELL:
When you talk about concessions and changing concessions do you accept that's new taxes? That's a new form of taxation. If you're cutting concessions and people are paying more that's a new form of taxation.
CHALMERS:
Well if that's the case, Neil, then that was the case in ‘16.
MITCHELL:
I don't care about ‘16, I'm talking about the last election. We went into an election saying no major changes. Now it seems -
CHALMERS:
And we're not contemplating major changes.
MITCHELL:
Yeah, but are you considering taxing at a different rate on the income and the superannuation deposits over a certain level?
CHALMERS:
We haven't come to a concluded view.
MITCHELL:
No, but are you considering it? Because that's a bloody major change, isn't it?
CHALMERS:
I don't think so. I don't think people considered it to be a major change last time there were tweaks of that nature.
MITCHELL:
Tweaks, but you're talking about taxing at a different level the income on superannuation, and that's not a major change?
CHALMERS:
I wouldn't have thought so, Neil. Depends how you do it. As I've said a few times now, you know, we haven't got a concluded view on possible changes here. But I think it's important, and the reason I've come on your show, the reason I'm grateful for the opportunity, is I think the country's Treasurer should be able to say, you know, we've got to fund better aged care and better Medicare. We've got to fund some cost of living relief. We've got to fund our national security. There's a lot of pressures on the budget, we've got a heap of debt in the budget. I should be able to say, here are one of the areas where there's a lot of pressure on the budget, these tax concessions, and to say it's of concern to us. I think that's an important thing to be able to do. And I do understand that there'll be views about that. That's the reason to raise it, so that people can provide a view and that's what we're doing.
MITCHELL:
So why wasn't it raised before the election?
CHALMERS:
Well we have said at different times over a long period now that we've got to make superannuation sustainable. Let me just give you an example. I mean most people have got about 150 grand, the average is 150 grand in super. Less than one per cent of people have got more than three million bucks. The average for them is about 5.8 million bucks. And I think the country should have a conversation about whether concessional tax treatment on balances that big is the best use of the taxpayer money. I think that's a good thing for people to tease out and grapple.
MITCHELL:
Is it targeting the rich?
CHALMERS:
I wouldn't see it that way. It's targeting – you know, those sorts of conversations and considerations are targeting a superannuation system which gives people a decent retirement and is affordable at a time when there are a lot of other pressures on the budget.
MITCHELL:
Are you looking at lowering the 1.9 million limit, which has just gone up to 1.9 million? Will you look at that as well?
CHALMERS:
It's not something that we've been considering, no. There are other proposals put to us. You know, there's a mob that you'd be aware of called the Grattan Institute who say that you should change the maximum amount you can have in super. I think the superannuation industry itself has been calling for that for some time. Those are the sorts of things that are put to us.
MITCHELL:
Do you accept the point, and okay, I'm in that age bracket, but do you accept the point that people actually plan their lives and plan their retirements under certain rules and certain circumstances? You change that, it's a form of retrospectivity. If you change that, their plans are gone, and this has created the level of hurtful uncertainty within the industry and with individuals.
CHALMERS:
Well, first of all, it depends on the change. I mean not every change is retrospective. I think that's just a fact.
MITCHELL:
Well will you guarantee it won't be retrospective?
CHALMERS:
Well I'm not considering retrospective changes to superannuation.
MITCHELL:
But if you change the tax rates that by definition is retrospective, because it’s - unless you don't change it on money that's already there.
CHALMERS:
Yeah, not necessarily.
MITCHELL:
All right.
CHALMERS:
I mean there's all different parts of the superannuation system, different phases. You know, there's four different parts of the tax system and they've all got different tax treatments. And so just factually that's not necessarily true. But to find some common ground with you, Neil.
MITCHELL:
Yes.
CHALMERS:
I do understand that people do and should guard their superannuation tightly. I do know that when you talk about some of these difficult issues, about the long term sustainability of the system, I do understand that people want to hear where we're coming from and that's why I've come on your show to talk about it.
MITCHELL:
I appreciate that. So what is on the table to change? These changes which aren't major, what is on the table?
CHALMERS:
Well we're listening respectfully to some of the things that are put to us by the superannuation industry and by, you know, people like the Grattan Institute and otherwise. I think most objective observers of the system itself would conclude that, you know, the cost of maintaining some of these concessions is going to grow a lot and we need to make sure we're getting value for money for that. That's really all we're talking about.
MITCHELL:
We've been told for years, "Put your money into super. Look after yourself in your retirement". Is that still your philosophy or do you want more people on the pension?
CHALMERS:
For sure. No, no, I mean we created superannuation, we believe in it. We want to nail down its objective and its purpose and we want to make sure it's sustainable because we are the big believers in superannuation.
MITCHELL:
I’m sorry, will you encourage or require super funds into sort of what I would describe as social investments, like green energy and low‑cost housing?
CHALMERS:
I'm pleased you asked me about this because I do think there's an opportunity, we've got these trillions of dollars in capital and if there are ways that members can get good returns and investors can get good returns, which is our highest priority. Nobody's talking about undermining that. At the same time as they invest in some of these areas where we have big opportunities, big economic opportunities, the energy transition, data and digital housing and the like, then that would be a good thing for the country. But from time to time you hear people say, Neil –
MITCHELL:
But that's turning the Government into a financial advisor. Surely the industry has to make its own decisions on where it invests.
CHALMERS:
Yes, it will, of course.
MITCHELL:
As does business.
CHALMERS:
Of course, Neil, and nobody's talking about messing with that. What we are talking about is working out ways where the Government can partner with other investors to solve some of our big economic challenges. Nobody's talking about compromising returns. Nobody's talking about returns being any less than they would be otherwise. What we're trying to work out is Australia's got some big chances in some of these areas, some big challenges too, and if people can make a buck out of it, and investors can make a good return out of it at the same time as we satisfy some of our other objectives that would be a good thing.
MITCHELL:
So that means there'd be no compulsion in that area, there'd simply be encouragement, would there?
CHALMERS:
Of course, yeah. Of course. I mean super funds and investors make their own decisions. Our role is to show some national leadership on our economic priorities. If there's a way that we can partner with some of these investors we can and we should.
MITCHELL:
Will the super fund, will the Future Fund remain independent?
CHALMERS:
Yes.
MITCHELL:
Okay. Just something else quickly, I know you've got to go, your colleague Stephen Jones seems confident inflation has peaked, interest rates won't go much higher. Others are saying 4.3 per cent. Do you think we're through the pain yet?
CHALMERS:
I think most people's expectation is that we have seen inflation peak at the end of last year. That's what the Treasury thinks and what the Reserve Bank thinks. It's hard to predict perfectly but I think that's almost everybody's expectation. And when the Reserve Bank sits down to work out interest rates independently they factor all of that in. But inflation will be higher than we'd like for longer than we'd like. We recognise that. That's why the Budget in October and the Budget that I hand down in May will be all about trying to get on top of this inflation challenge.
MITCHELL:
If people are in trouble with their mortgages is that their fault, the bank's fault or the Reserve Bank's fault, who's to blame?
CHALMERS:
Well depends on their own circumstances, Neil. I'm not in the business of apportioning blame when it comings to these sorts of things. The bank takes its decisions independently. I've got my own job to do and that's what I'm focused on.
MITCHELL:
Has Governor Lowe been unfairly attacked?
CHALMERS:
I think we need to recognise he's got a hard job and he's got to get on top of this inflation without crunching the economy. I don't take shots at him. I think it's entirely reasonable that people point out, you know, what our expectations are for inflation and the impact of these rate rises on people trying to make ends meet. I think that's entirely reasonable and acceptable. I don't take shots at Phil Lowe, I've got my own job to do.
MITCHELL:
Does he have your support?
CHALMERS:
He does.
MITCHELL:
Just finally before you go, and talking about costs, is negative gearing on the table?
CHALMERS:
No.
MITCHELL:
Will you review negative gearing on Airbnb's?
CHALMERS:
I haven't started thinking about that Neil, if I'm honest. I see reports about that from time to time but it's not something I've been considering or thinking about.
MITCHELL:
You can see the point; negative gearing makes a point in helping the rental market but Airbnb is only sort of a short term rental market. Is it really worth the Government investment in negative gearing?
CHALMERS:
Well I haven't got my head around it to be honest with you, Neil. I mean I've read from time to time people pitch that up as a solution but it's not something that we've been, you know, as we start putting together this Budget for May it's not something that we've got on the table.
MITCHELL:
Final question. Dollars need to be found, that's part of why you say you're looking at superannuation. What else is on the table to find money?
CHALMERS:
Oh, well, what we do every budget, this is only the second one, and what we did in the first one and what we'll do again is we'll try and work out if we can make some savings in areas where we're not getting bang for buck. These a job I do with my colleague Katy Gallagher. And it's a lot of pouring over spreadsheets, working out where we can trim spending from one area to spend it more productively on aged care or Medicare or cost of living relief or some of these other important areas.
MITCHELL:
Any of that affect the public?
CHALMERS:
We haven't finished that task yet but, you know, inevitably it's not easy to trim spending in parts of the budget. It's not an easy task to engage in but it's an important task because you've got that trillion dollars in debt, we've got deficits as far as the eye can see and so we need to be responsible economic managers, and that's what we've determined to be. Sometimes when we talk about that, whether it's in the context of super or savings or some of these other areas, inevitably, you know, that involves some element of political risk, but the most important thing is we get the economic decisions right on behalf of the Australian people.
MITCHELL:
I'll break my promise, one more question. I was talking to Professor John Blaxland earlier about the ASIO speech last night. It was quite extraordinary.
CHALMERS:
Oh yeah, yeah.
MITCHELL:
I haven't seen one like that before or heard one like that before. And he said the importance to the Australian people is that this sort of level of spying and espionage ultimately goes to the economic viability of the country.
CHALMERS:
Yes.
MITCHELL:
You agree and does it concern you?
CHALMERS:
I really do, and it does concern me greatly. I mean foreign interference is a huge risk to our economy and to our national interests more broadly, and I think it's absolutely crucial that Mike Burgess and ASIO provide these updates so that people can understand the kinds of pressures that the system is under. ASIO works around the clock to try and address these challenges to our national security, as does the Government, and they've got our full support as they go about that really important work.
MITCHELL:
But how does it affect the economic viability of the country, which is your responsibility?
CHALMERS:
Well a big part of foreign interference is economic coercion and, you know, we are under challenge, as Mike Burgess said, from a number of places who don't want our country to succeed. That includes economically as well as on the security front. So, you know, without going into the details we do spends a lot of time in the cabinet under Anthony's leadership grappling with some of these big threats to our national and economic security. No doubt the Prime Minister when he's at the Press Club later today will be asked about some of this as well. Now this is something which is right up there when it comings to the challenges to our country, and that's why we resource these agencies to do their work. They do it well. That's why we support them as a government in doing it.
MITCHELL:
Tell me, why don't we name the countries? I know it's not Mike Burgess' job but why wouldn't you or the Prime Minister name which countries, I mean in one case they were trying to kidnap an Australian citizen and kill them.
CHALMERS:
Yeah, well I'm not going to sort of second guess that. I mean that's a long standing convention as I understand it and we try not to kind of get in the way of the way that ASIO and other agencies go about their task. I'm sure there's a good reason for it. Our job is really to make sure we resource these agencies, we support them as they go about this really important work. They do do it well. We're very fortunate to have them and it's a big challenge. It warrants their attention and our attention, and it's got it.
MITCHELL:
Thank you so much for your time, I appreciate it. Thank you.
CHALMERS:
Appreciate it, Neil, all the best.
