E&OE TRANSCRIPT
RADIO INTERVIEW
ABC RN DRIVE
THURSDAY, 11 MAY 2017
SUBJECT/S: Budget reply; Turnbull Government’s $65 billion company tax cut; banks levy
PATRICIA KARVELAS: Jim Chalmers joins me now. How are you going?
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Great to be here, Patricia. Thanks for having me.
KARVELAS: So Bill Shorten is expected to say in his speech tonight that Gen Y are Malcolm Turnbull's public enemy number one. Where's your evidence of that?
CHALMERS: Well really substantial cuts to education is our main point that Bill is making there. Cuts to training, cuts to university - all of those sorts of things. And that's before we even get to the cuts to schools funding.
KARVELAS: OK, but the housing plan - I know that one of the arguments is going to be that there wasn't a housing plan, but there was.
CHALMERS: It's a sham, Patricia.
KARVELAS: Where's the sham? Young people will be able to save up to $30,000 each - $60,000 for a couple. There are other measures in there too.
CHALMERS: There are other measures in there, but there is no proper housing affordability policy if it doesn't contain measures to deal with those tax breaks for wealthy investors, which are preventing young people from getting a toe hold in the market because when they go to auctions, they're competing with people who are subsidised by the taxpayer who might already have seven or eight homes.
KARVELAS: The Government has extended their company tax plan by a year, or rather given us the figures that it's up to $65 billion.
CHALMERS: Very reluctantly given us the figures, yes.
KARVELAS: Do you see it as having $16 billion extra to spend tonight?
CHALMERS: I don't see it that way no, Patricia. But it is very interesting to know that the company tax cut, that giveaway for big multinational corporations in this country and it will now cost the Australian taxpayer $65 billion-plus. That wasn't in the Budget on Tuesday night. It wasn't in the Treasurer's speech on Tuesday night.
KARVELAS: It's never in the Budget. It's a four-year cycle.
CHALMERS: That's not true that it's a four-year cycle by the way. There's also 10-year costings for some policies in the Budget. The point that I'm making is if they are so proud of this company tax cut - at the same time by the way as they're jacking up taxes on people who work - if they're so proud of it they would have mentioned it. We had to drag it out of the Prime Minister and the Treasurer today. They had four different stabs at the number before they came up with that $65 billion number.
KARVELAS: So will Bill Shorten announce tonight that he will repeal the company tax cuts for small businesses up to a turnover of $50 million?
CHALMERS: Well we don't have long to wait now to hear Bill Shorten's speech...
KARVELAS: My listeners need to know!
CHALMERS: Well already there are two announcements that I'm happy to tell your listeners about. The first one is that we'll be calling for the deficit levy to continue for two reasons. The deficit levy is that levy on income earners above $180,000. It was put in place in the Liberals' first Budget in 2014 when the deficit for the coming year was $2.8 billion. It's now $29.4 billion. We think with a blowout in the deficit of that proportion, we should keep the deficit levy. The other important reason...
KARVELAS: For how long is the question though.
CHALMERS: For as long as there is a deficit for a start.
KARVELAS: So as soon as the deficit comes off, what 2020/21 according to the figures, it's off?
CHALMERS: That was our most recently announced intention, yeah; to have a deficit levy while there's a deficit. The deficit levy has blown out. But probably the most important reason to keep it on is because Malcolm Turnbull is asking Australians - low and middle-income earners - to pay extra tax. At the same time, by taking off this deficit levy, for example a millionaire will pay $16,400 a year less tax. This is a Prime Minister who thinks that is fair, describes a Budget as fair when at the core of it there is that sort of unfairness.
KARVELAS: Do you think it's fair to repeal a business tax cut for companies that are turning over up to $50 million a year? Would that be fair for Labor to take away a tax cut that's now been legislated?
CHALMERS: We'll have more to say about the company tax cut on another occasion. The deficit levy is our priority. And the other one that Bill Shorten will announce tonight, which your listeners wouldn't have heard yet, is that we intend to cap the deductions that people can claim from their tax for managing their tax affairs - we intend to cap that at $3,000. Only about one per cent of the population spends more than $3,000 managing their tax affairs, that's how we get this absurd situation where some people can make a million dollars but pay no tax at all, because they have the capacity...
KARVELAS: How much will that save if you do that?
CHALMERS: It'll save just under $300 million over four years - a much bigger figure over 10.
KARVELAS: Who does it hit?
CHALMERS: It hits the one per cent of people who spend more than $3,000 managing their tax affairs.
KARVELAS: Typically, who are they?
CHALMERS: Generally wealthy people who have that ability to spend a lot on managing their affairs; high income earners who can hire a high-priced lawyer or accountant to help them avoid their tax. We're not saying that that is any way illegal. We're just saying that the taxpayer shouldn't be subsidising helping people avoid paying more tax.
KARVELAS: The other big issue that everyone wants to know the answer on of course is the increase in the Medicare levy, which the Government announced on Tuesday night. Will you support that?
CHALMERS: Bill Shorten will talk about that tonight in his Budget reply. That's a very big tax hike on people right up and down the income scale. The point that we've been making is that we shouldn't have the deficit levy come off high-income earners at the same time as Malcolm Turnbull's asking low- and middle-income earners to pay more. We think that is desperately unfair, but Bill Shorten will have more to say about the Medicare levy later tonight.
KARVELAS: So far we've heard concerns from Labor of course that it does hit lower-income earners as well. It is a progressive tax system though and, as Malcolm Turnbull says: well, that's the way you get the most amount of money by applying it to everyone. Labor needs that money just as much as the Government. You could be in Government in a year or two.
CHALMERS: It's dramatically less progressive as a tax system if you don't keep that deficit levy on the highest income earners and more broadly in the tax system, we're having this big shift because of that $65 billion tax cut for multinationals, as well as the deficit levy coming off. And what the Government's trying to do - there's all this rhetoric around fairness - but the reality of the Budget is there's a big shift in wealth in the wrong direction.
KARVELAS: Just finally, the head of the Australian Bankers' Association, Anna Bligh - obviously a former Labor Premier in your own state of Queensland - met with your colleague Chris Bowen today. Did she win him over? Will you reconsider your support for the bank levy?
CHALMERS: We don't intend to oppose the bank levy. You'd have to ask Chris and Anna about their meeting. It's entirely appropriate that they have a conversation about this, but we don't intend to oppose it. The onus is on the Government to convince the Australian people that it won't be passed on.
KARVELAS: I'm troubled by this, because if you are supporting it, you too are responsible for backing it. You don't just support something and go "oh, Government's problem". If you think it's good enough to support, then you too would be saying the same things that the Government's been saying to the banks, wouldn't you?
CHALMERS: I understand your point Patricia, but I don't agree with it because it's the Government's policy and they said that they didn't expect it to be passed on. I'm very sceptical about that. And then the Government said "well, we've got the ACCC looking at it" but then they only fund the ACCC to do this task for an extra year. So I think the onus is on the Government to explain it. It's showing all the signs of a typical Turnbull Government debacle, the implementation of this policy. But given how much debt and deficit has blown out in this country, we don't think that we can oppose it.
KARVELAS: Do you think it's fair that it's permanent.
CHALMERS: Sure. That's the design of the policy and we won't be opposing that, including that aspect of it. If you look at the debt and deficit profile, we've got record gross debt. We've never had higher debt in this country than we do right now. That means we have to take decisions like this one and that's one of the reasons - arguably the key reason why we won't be opposing the bank levy.
KARVELAS: Final question - At 7:30 when this announcement has been made, will there be anything that looks tough; funding cuts, cuts in the Budget. Because one of the criticisms of the Government from people who think they should have been more hardline on cuts was that they didn't make enough cuts, because they're obviously trying to repair their image after 2014. Will you be prepared to make some of those decisions?
CHALMERS: The short answer is yes. I can't go into them now and it's only an hour to wait, but yes. And we take that responsibility very seriously; not just to propose changes on the revenue side of the Budget, but also on the spending side of the Budget. And we think that some of the spending that the Government did on Tuesday night is not what you would do given we have record debt in this country. So we'll have more to say about that.
KARVELAS: Jim Chalmers, thanks for coming in.
CHALMERS: Thanks, Patricia.
