ABC News Breakfast 4/7/19

July 03, 2019

SUBJECTS: Labor’s plan for tax cuts for all workers in this term of Parliament; Floundering economy under the Liberals; interest rate cut; Budget surplus

MICHAEL ROWLAND: To talk us through Labor's response now is the Shadow Treasurer, Jim Chalmers. He joins us from Canberra. Jim Chalmers, good morning.
ROWLAND: So, the Government, it appears, has got the numbers. Will Labor still try to amend the package to separate Stages One and Two from Three?
CHALMERS: We will be moving our amendments today, Michael, in the Senate. And those amendments will be all about boosting the economy, which is floundering under the Liberals. It will be all about giving every Australian worker a tax cut this term, not on the never never. And we'll also be trying to prevent the Senate from saddling the Budget with a $95 billion tax cut, which doesn't come in for another five years, and where the Government hasn't said what services and what programs that they will cut to pay for that tax cut.
ROWLAND: Okay, if those amendments fail, will Labor then support the entirety of the tax package?
CHALMERS: We'll still put all of our effort into our amendments. If it is the case that the Senate rejects those amendments, if the Senate supports the Government's package, then we've been saying for some time now that we'll consider our options at that point. We'll have the appropriate discussions and we'll have more to say about it later on today.
ROWLAND: Okay. And how quickly could you see these tax changes taking effect on the economy in terms of Stage One and Stage Two that you support?
CHALMERS: Remember, first of all, Michael, that the Government has already broken their promise to have Stage One in place by Monday of this week. They've already broken that promise. Those tax cuts are already late. What we've said all along is our priority is to get more tax cuts into the hands of more workers sooner, to help boost this floundering economy. If Stage One is passed this week, then those tax cuts will flow from next week. Our priority is to ensure that we can get those tax cuts into the economy. The economy desperately needs a boost. The Reserve Bank has cut interest rates to a record low of one per cent, which is a third of what interest rates were during the Global Financial Crisis. So, we've got a big challenge here. The Reserve Bank said that they can't do all of the heavy lifting on their own. We're prepared to play our part. We have been all along, to get Stage One flowing in the economy. As for Stage Two, we're proposing to actually bring those tax cuts forward into the current year so that every Australian worker gets a tax cut. The Government remarkably voted against that in the House the other night, and they've indicated they'll vote against it in the Senate today. Which is a pretty amazing thing to vote against their own tax cuts being implemented earlier. As it stands right now, if the Government's package is successful in the Senate, workers won't see those tax cuts until 2022, which is after the next election.
ROWLAND: Okay, but just trying to get Labor's position. So, you'll move your amendments. As the numbers stand, they'll fail. Will the Labor Party then support the entirety of the package, as Labor did in the House of Reps?
CHALMERS: If our amendments fail in the Senate, if that becomes clearer during the course of the morning, then obviously we'll have discussions at our end, and we'll have more to say about it after we consider all of our options. We have been saying that all week, that, first of all, we will attempt to get our amendments supported in the Senate. Those amendments are about the things that I've been talking about, including trying to take Stage Three out of the tax package, because it does saddle the Budget with a massive cost and it doesn't come in for another five years. The Government struggles to predict how the economy is going to be travelling five minutes from now. The idea that they know what the Budget will look like and the economy will look like in five years is absurd. So, we'll still attempt to pull that out of the tax package. We think that that could be considered at a later stage, without jeopardising or deferring the tax relief that workers need right now.
ROWLAND: Okay. As you say, the Reserve Bank has been none too subtle in urging the Government to do more on the Budget...
CHALMERS: That's right.
ROWLAND: ...including fast-tracking infrastructure spending, possibly at the expense of the surplus. So, do you agree with your colleague, Ed Husic, who essentially agrees with what the RBA is saying. He says the surplus is nothing more, in his words, than a "vanity exercise"?
CHALMERS: First of all, I think you're right, Michael, to say that the Reserve Bank has been really crying out for help. They've said they can't do all of this on their own. We're running out of space when it comes to interest rates and monetary policy. They need the Government to do something. Unfortunately, the Government looks at all this weak economic data, and they're too busy patting themselves on the back for their election win to actually realise that the economy has deteriorated even since the election. And so we need them to do something different. That's the point the Reserve Bank has made. That's the point I've been making and Labor has been making. When it comes to the surplus, we think it's possible for the Government to bring forward part of Stage Two of their tax cuts and to bring forward some of their infrastructure spending, which is currently out there on the never never, sometimes five and six and seven years away. We think it's possible to bring that forward as well without jeopardising the surpluses that the Government has forecast for this year and beyond. What we are proposing is a responsible change to the tax package and to their infrastructure package, which wouldn't see more spending than the available surplus. So, we think it's possible to do both. The Government has no excuse, really, not to deliver the surplus that they promised this year. They've got high iron ore prices and company profits are up. So they should be able to do both of those things. They should be able to satisfy what the Reserve Bank's calling for and what Labor is calling for, without ditching the surplus.
ROWLAND: If it came to it, and as you say we are going into potentially tricky economic times, should the surplus be sacrificed in the interests of growing the Australian economy?
CHALMERS: At this stage, Michael, I don't think it will come to that. I think that the economy is weak and it needs stimulus, and that's why we're taking this responsible course we are on tax and why we are proposing to help the Government out on infrastructure as well. The economy does need stimulus right now. But the sums that we are talking about, and the proposals that we've put on the table, cost less than the forecast surplus. So, as I see it, it's possible to do both of those things to maintain the surplus and to stimulate the economy. The Government's got no excuse not to deliver the surplus that they've promised. And they can also do some of these other responsible things that we're calling for at the same time.
ROWLAND: Okay, it's going to be an interesting day in Canberra. Jim Chalmers, thank you very much for joining us this morning.
CHALMERS: Thank you, Michael.