E&OE TRANSCRIPT
TELEVISION INTERVIEW
SKY NEWS BUSINESS TICKY
TUESDAY, 2 APRIL 2019
SUBJECT/S: 2019-20 Budget; Labor’s plan to level the playing field in housing market; climate change; living wage
TICKY FULLERTON: Let's go now to the Opposition and find out what Labor thinks of this year's Budget. Joining me now is Shadow Finance Minister, Dr Jim Chalmers. Jim, great to have you here.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Thanks Ticky.
FULLERTON: If we heard it once, we heard it I don't know how many times in the Treasurer's speech today - a surplus and a Budget and the Government is doing it all without raising taxes. They obviously feel this is going to have some traction.
CHALMERS: He did mention that a few times, I noticed that too. The important thing to understand about the surplus as you understand, and probably most of the people watching the show do, is that a surplus hasn't been delivered tonight. It's been forecast tonight for next year. So we won't actually know if the Budget's in surplus for the next financial year until September 2020. So nothing's been delivered tonight, and the fact remains that if the Government was to change hands in May - I'm not saying that it necessarily will - but if it changed hands in May, the new Government would inherit a Budget in deficit.
FULLERTON: Are you surprised that they didn't? They could have delivered a surplus this year. Are you surprised that they didn't and do you think it was perhaps some of the rattling around on NDIS that caused them to change their mind?
CHALMERS: It may have been. The NDIS is a big part of the story. We've had these massive underspends in the Budget and I noticed that you just asked Mathias about that a moment ago. They're very sensitive about it, because a lot of the improvement in this Budget has been on the back of making people with a disability wait longer for the services that they were promised. And so, if you think about even the forecast surplus for next year, a big chunk of that is an NDIS underspend. A big chunk of the improvement in the Budget this year has been an NDIS underspend, it's a big part of the story. They're very sensitive about it. They want to pretend that it's all about good economic management, but it's hard to say that spending less on people with a disability is good management.
FULLERTON: Equally, it's also about the right spending. You surely would know that something like the NDIS has a capacity to get bigger than Ben Hur if you're not careful with it. Equally, Labor's got a record of some of its programs going off and getting slightly out of control. So, once again, how can the voter be sure that you are the right economic managers?
CHALMERS: Two things about that: firstly, we had been told by the Government for a long time now that there were pressures on NDIS spending and they needed to raise taxes to pay for it, and it was going to blow out. And now we learn that they've been lying all along. There's been massive underspends; multi-billion dollar underspends on people with a disability. That's the first point. When it comes to our approach, I do think that the bar is higher for the Labor Party. We do have to convince people that we will be responsible economic managers. Chris Bowen and I have worked on little else for the last almost three years, and what we will do is we will take to the election a more responsible approach to the economy than our opponents. We do that because we do understand that people want to see that we have the capacity to manage the economy and manage the Budget in the interests of ordinary people in middle Australia.
FULLERTON: Jim, one of the things obviously is this property market. It's not looking fabulous at the moment. Interestingly, the Budget also had some numbers which seemed to suggest that a 10 per cent fall in housing could impact the GDP by half a percent. Into this market, you are presenting these changes to negative gearing.
CHALMERS: We said that we would start our changes on the 1st of January next year. We've said that we will grandfather those changes so that people who are negatively geared now can continue to be so, and people can continue to negatively gear newly constructed properties, even after the 1st of January.
FULLERTON: It's not going to hit the property market even more?
CHALMERS: The point I'm making is it's a very staged introduction. Even the Government's own Treasury advisors have said that it would have a negligible impact on the housing market. And besides that, our policy is not designed for the ups and downs of the housing market. It's to make sure that wherever the housing market is, a first home buyer is not competing against somebody who's having their 7th or 8th home subsidised by the taxpayer. The people of Australia can't afford to keep doing that, but it's also unfair. So we want to level the playing field.
FULLERTON: Are you going to support the Government? If the Government remains, would you support it in terms of it's tax packages? The income tax package, both the offsets and then the big change and reform?
CHALMERS: There's quite a substantial hypothetical there, Ticky, as you'd appreciate! And I was a little bit surprised that the Government wasn't going to attempt to legislate their tax change.
FULLERTON: Run it all through tomorrow?
CHALMERS: There had been an indication that might have been the case. Now we hear that they won't attempt to do that, and so in lots of ways it just becomes a contest of two competing approaches to tax. We are attracted to supporting the changes that they are proposing to the Low and Middle Income Tax Offset - the LMITO - we are intending to support that. But there's a big gap in there where they've left people under $40,000 hanging a bit. So we're going to see what we can do with that group; about two million low income Australians who have been left high and dry again by a Government which makes a habit of leaving low-income earners high and dry. So our priority is to see what we can do to fix that part of it. In the broader tax debate, you already know from last Budget and from many times since then - people you've had on your show - we don't want to see implemented this kind of flat-tax fantasy at the very top of the tax system. We don't want to see doctors paying the same rate as nurses, so we've indicated our problems with that part of it.
FULLERTON: Coming back to you on tax, and I see Angus Taylor is now talking about your lunchbox tax, hitting businesses like Bega and Nestle as part of the 250 businesses in your new energy plan, the cap and trade, the safeguard mechanism.
CHALMERS: Poor old Angus makes Melissa Price look good. I don't think he's got a lot of credibility anymore. I think the Australian people are sick and tired of the kind of breathless hyperbole about carbon. We've got a very responsible policy out there.
FULLERTON: There have been responsible policies before, one would argue, like an NEG. And time after time after time, Government that one would have thought would have got back in actually lose because of the energy and climate policy.
CHALMERS: We're very, very happy and very comfortable to have climate change be a key feature of this election campaign. Very comfortable. We're proposing to extend Malcolm Turnbull's safeguard mechanism. We're proposing to have more investment in renewable energy, and the Australian people need and deserve the kind of approach that we've sketched out. If the Liberal Party and the National Party want to have a barney with us over climate change in the election we are very happy with that.
FULLERTON: The costs which don't seem to have been really set out for voters at this stage, how you're going to fund it.
CHALMERS: It's not a question of how we will fund it. We have, as I said before...
FULLERTON: Well who pays?
CHALMERS: ... as I said before, we'll be very responsible about that. But I think one of the consequences of having this 10-year argument about climate change, which has been unedifying at times, lots of false starts, lots of false dawns; one of the consequences of that is the Australian people have been educated as we go along of the costs of doing nothing. And the costs of doing nothing outweigh the costs of acting. I think in some ways Angus Taylor and Melissa Price and Scott Morrison, they're kind of fighting yesterday's battle. The Australian people are ready for action, and we will give it to them.
FULLERTON: Will you keep a deficit levy of sorts, even if there's no deficit?
CHALMERS: It's a Budget Repair Levy. We've made it very clear that we would hang on to the Budget Repair Levy until we have strong sustainable surpluses, and we would have more to say...
FULLERTON: So over one per cent of GDP?
CHALMERS: We'll have more to say on that. That's been our rule of thumb to now. We'll have more to say about it. It's about repairing the Budget and making it sustainable again.
FULLERTON: And what about business? The Government say you are high-taxing, and you've got an anti-business agenda. What do you make of their ideas for small business, which I think were very welcomed by small business.
CHALMERS: There's a few things in that. We will support the changes on small business. We're actually the original authors of the instant asset write-off.
FULLERTON: Well as I said it worked for Donald Trump, didn't it?
CHALMERS: (Laughs) Well, we don't have half an hour there Ticky.
FULLERTON: (Laughs)
CHALMERS: We're the original authors of it. We are inclined to support small business. That's that part of it. On the whole anti-business thing, I spend most of my week in the boardrooms of Australia talking to business leaders about training, about infrastructure, about how we get the economy going again. And we haven't mentioned this yet in this interview, but this Budget downgrades economic growth, downgrades wages growth, downgrades consumption and consumption's 60 per cent of the economy. I've heard people say that this will be the basis of their re-election campaign. They will be going to the people on the basis of growth downgraded, wages downgraded, consumption downgraded...
FULLERTON: We being economically responsible, they would say.
CHALMERS: Their whole approach over the last six years, and people will judge them on the last six years, not the next six weeks in my view, their whole approach has proven to have failed. We've got slowing growth. All the people-facing parts of the economy are busted - consumption, household debt.
FULLERTON: There are real other issues playing into that like global growth.
CHALMERS: The global conditions for the last six years are overwhelmingly positive. Yes, we might be approaching some difficulties, but overwhelmingly for six years they've been very positive, and still we've got net debt which has doubled on their watch. And they want to talk about paying down debt. They said that at the start six years ago and it has more than doubled on their watch.
FULLERTON: Can I finish by asking you about the living and Labor's interest in having a living wage?
CHALMERS: Of course.
FULLERTON: What would that do to the Budget?
CHALMERS: There's lots of swings and roundabouts on wages. Obviously tax is part of the story if people are paid higher wages than the Government collects more tax. That's one of the consequences, there's a whole heap of them. But our main interest in seeing a sustainable and responsible increase to the minimum wage is because the main problem that we have in this economy is that people don't have the money that they need to spend and provide for their families. The reason the economy is slowing is because consumption is weak, household saving is bad, household debt is bad - all of these things together combined.
FULLERTON: There are concerns in the business community, particularly small business community, that obviously they will have to try and find that somewhere.
CHALMERS: Yeah, and as I said before, I spent a lot of time with the business community, and I hear those concerns. Something that I was really happy about is when we announced our policy on the minimum wage and the living wage a lot of the peak groups came out and said we welcome the consultation, we look forward to consulting more about it.
FULLERTON: Jim Chalmers, great to get your views, thank you very much for the response.
CHALMERS: Thank you, Ticky.
ENDS
