E&OE TRANSCRIPT
TELEVISION INTERVIEW
SKY NEWS SPEERS
MONDAY, 21 MAY 2018

SUBJECT/S: Income tax cuts; Labor’s fairer tax plan

DAVID SPEERS: Jim Chalmers, thanks very much for your time. So debate on the Budget tax plan coming into the House tomorrow. Has Labor yet cleared up what it will do in terms of trying to split this up? Will Labor seek amendments? What will you actually do?

JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Of course we'll try to split the bills, David. We've said really since Budget night that we're prepared to support the tax relief that comes in for low- and middle-income earners from the 1st of July. So we've been calling on the Government now for some time to split the bills up. If they do that, we'll vote for the immediate tax cuts that are on the table, which favour working people. That can be a reality, really, by the end of the week if the Government's prepared to split those bills.

SPEERS: While it's clear that you will support the first stage and you'll oppose the third stage for high income earners, what about that one in the middle? Stage two from 2022? What's Labor's position on that?

CHALMERS: It's true that we're not wild about the latter stages, but even that bit has to get through our usual party processes the same as the second stage. We've made our view abundantly clear on the first part of it for low- and middle-income earners; we've said we're not wild about the third stage, which is two elections away and which Grattan, the ANU and NATSEM have all said fundamentally gives the biggest benefit to the highest income earners.  But we've got more discussions to have on that intermediate stage.

SPEERS: We'll come back to that, but Deloitte Access Economics saying today even the Government's plan for the third stage does see the highest income earners paying a greater burden of the overall tax take.

CHALMERS: Even with that Deloitte Access Economics research, and you know we've got a mountain of respect for Chris Richardson and his team, but even that research does not negate the fact that the Government's tax package in its entirety - three waves of it - overwhelmingly favours the wealthiest people in this country. That's the point that's been made by the ANU and NATSEM and the Grattan Institute.

SPEERS: But they're paying more tax according to Chris Richardson.

CHALMERS: They do very well out of the Government's tax proposal, and what Deloitte also said was that our policy, which is true, prioritises people on low and middle incomes, and that's really the contest.

SPEERS: Coming back to stage two though, I appreciate you've got to go through some party processes, but given this is being debated from tomorrow in the House, you've got to take a position. What's your view on the stage two tax cuts?

CHALMERS: Our position for tomorrow is split the bills and we'll vote for the first bit.

SPEERS: And you'd vote against the rest?

CHALMERS: That's to be determined. But stages two and three only come into being years down the track. Stage three is in seven years' time; stage two is only moderately before that. So we've got heaps of time to come up with a position on those things. The Government shouldn't be rushing to a vote this week on tax cuts which come into being two elections down the track. We've made our position very clear: split the bills, we'll vote for the first part and we can have a conversation about the rest.

SPEERS: This is where the two plans differ though, yours and the Government's, because some of those on middle to higher incomes - in fact, I think it's average ordinary full-time earnings, $84,000 to $85,000 at the moment - how would they fare under your plan? We know under the Government's plan stage two is when they do see some permanent tax relief, because the thresholds change - that 32.5 per cent threshold is pushed up to $120,000, so they're not hit by bracket creep for quite a good period of time. But what about under your plan?

CHALMERS: So a couple of things about that. First of all, our bigger, fairer tax cuts for $10 million Australian workers comes in the year after the Governments, and they are permanent. And for someone on $80,000 for example, they get, I think, $928 a year tax cut from us and $530 odd from them.

SPEERS: If they're on 90 grand to 95 grand, and by then that will be average full-time earnings no doubt, what do they get under your plan?

CHALMERS: It starts to taper away after about $90,000, but the question you asked me is $95,000. The total benefit they get is $796, of which $341 is additional in our plan.

SPEERS: But if you're not shifting that threshold, the main thing of stage two under the Government's plan is lifting that 32.5 per cent threshold from 90 grand to 120 grand.

CHALMERS: Correct.

SPEERS: You're not willing to do that?

CHALMERS: We're still discussing the second stage of the Government's...

SPEERS: So you might be open to that?

CHALMERS: We might be. We're going to have a conversation about it internally. We've said we're not wild about stage three; we said we're keen on 1 July; we're still having a conversation about stage two.

SPEERS: This is interesting because a lot of Australians in that - as I say, but 2022 this will be average full-time earnings. You're yet to decide what sort of tax relief they might get?

CHALMERS: No, we've got a plan for people on $95,000, which I just referred to, which is our alternative tax plan; additional to the Government's. The so-called second phase of their tax plan, they haven't been able to tell us how much it costs yet, and that's a big part of it. The Government's asking us to vote on something they have not yet revealed the costings for as of just before Question Time on the Monday before it goes to Parliament on the Tuesday.

SPEERS: Yep, fair enough.

CHALMERS: I don't know about you, but I don't generally buy something until I know what the cost of it is.

SPEERS: It's a fair point, it's a fair point. But I am interested that you may still be willing to vote for it once you see the cost, once you have a good look at it, and that will go beyond what you've announced in terms of your tax plans.

CHALMERS: We've said all along that we'll consider the second stage of it. Part of that is understanding how much the thing costs, which is not unreasonable.

SPEERS: And then that would affect your own Budget bottomline forecasts as well, wouldn't it? If you did vote for it?

CHALMERS: All of our decisions in tax impact on our alternative bottom line. We've done the work to make sure that we can afford genuine tax relief for working people because we're closing down some of those loopholes at the top of the tax system.

SPEERS: And if you did back it, you might have to spend a little less somewhere else, presumably? Because you're not going to keep us in deficit for longer, I assume?

CHALMERS: No, we've said we'll get back to Budget balance the same year as the Government and have bigger surpluses after that. We take our responsibilities as the alternative Government very seriously, and that means making difficult decisions and trade-offs.

SPEERS: Jim Chalmers, thank you.

CHALMERS: Thank you.

ENDS