Peter Costello

Media Transcripts

Budget - Interview with Alan Jones, 2GB

TRANSCRIPT

of

THE HON PETER COSTELLO MP
Treasurer

Interview with Alan Jones
2GB

Wednesday, 12 May 2004
7.14 am

SUBJECTS: Budget

JONES:

Treasurer, good morning.

TREASURER:

Good morning Alan.

JONES:

Thank you for your time, can we just go back a little bit, when you became, because we take those barometers which I suppose have enabled you to do what you did last night, of unemployment, inflation, interest rates and debt, this now is your ninth Budget, where were they when you came to cast and draft your first Budget?

TREASURER:

Well, unemployment was much higher than it is today, unemployment was about 8.2 per cent and it has fallen to 5.6 per cent, we have got 1.3 million new jobs in Australia since then, inflation was more than double what it was today, it was around about 5 per cent back then, and the Commonwealth debt which we inherited from Labor was $96 billion and I was able to announce last night we have paid back $70 billion of that, so we have taken it down from $96 billion to $26 billion.

JONES:

And yet, I suppose the criticism today will be in the light of the changing of the tax scales, that there is nothing in the Budget for someone under $52,000 by way of tax relief.

TREASURER:

No, well I will come to that in a moment, but I just want to say this Alan, when we introduced our new tax plan we cut income taxes, this is back in 2000 when the GST was coming in, and we cut them particularly at that low end, we cut the 20 per cent rate to 17 and the 34 per cent rate to 30 per cent, but the Senate would never allow us to pass the income tax cuts for middle income earners, Labor blocked it in the Senate. And I have always regarded it as unfinished business, that when that deal was broken in the Senate by Labor, the middle income earners missed out and as a consequence of that, in Australia today, you can go onto the top rate of tax at $62,500, now $62,500, you are not rich…

JONES:

No, not at all.

TREASURER:

…you have got people like policemen and firemen, building workers who are paid a lot more than that, people who want to do overtime, so in this Budget I have said if we can get Labor to pass this in the Senate…

JONES:

Just interrupting you there, they seem to be saying that they will, don’t they?

TREASURER:

…well, I hope they do.

JONES:

Right, so you will still pay only 30 cents in the dollar up to $58,000 from July 1 this year…

TREASURER:

Yes.

JONES:

…and it will be $63,000 from July 1 next year?

TREASURER:

That’s right, and the top rate after it has fully come in on 1 July of next year, you won’t go onto the top rate until you earn $80,000 and I think for those people between $60,000 and $80,000 as I said, there is a lot of policemen, there would be firemen, people doing overtime, you are not rich and you shouldn’t be on the top tax rate and…

JONES:

Right, well that…

TREASURER:

…I call on the Senate to pass that.

JONES:

…well that is fantastic stuff, but can I ask you this question, there are 5 million workers on the 30 cent rate and another 2 million on the 17 cent rate, what do you say to them today?

TREASURER:

Well a lot of those are the self-funded retirees, and…

JONES:

Who are doing it tough because you have kept interest rates down, which is to your credit, if people have got debt, but if you are relying on interest rates to make a quid, they are suffering, aren’t they?

TREASURER:

…well, this is why in our Budget a couple of years ago we introduced a new thing for Senior Australians, the Senior Australians Tax Offset, and for the self-funded retiree, if you qualify for that you don’t pay tax until you are on $20,500, you get the effect of a tax-free threshold and we did that two years ago and that has introduced for self-funded retirees benefits which were not previously available. You see, what we are doing here, having done that for the senior Australians, having cut rates back in 2000 for the lower income Australians, what we are doing now is we are returning to the unfinished business and we are making the picture complete, it shouldn’t have been this way…

JONES:

So 80 per cent of taxpayers will only now pay no more than 30 cents in the dollar.

TREASURER:

…absolutely, and I don’t think they should pay more than that…

JONES:

Can I just ask you this question though, the tax-free threshold where you pay nothing is $6000, but our welfare system recognises that a single person living alone needs more than twice that amount to keep body and soul together, did you ever at any point consider raising that tax-free threshold to what in fact the welfare system recognises as the base rate at which, on which you need to, a base rate of money you need to live?

TREASURER:

No, because people who are down in those levels do get benefits out of the welfare system. If you raise that tax threshold you might cut tax but $1 a week maybe or $2 a week, but people down on those levels of income, if they are pensioners, they get pensions…

JONES:

So that is the other half of this isn’t it?

TREASURER:

…the other half of this is, the really low income earners get benefits out of the pension system, that is the other part of this and they have already been put in place, and I keep on coming back to this point, that this is unfinished business, this should have been done before, it was defeated in the Senate and we have now returned to try and complete the picture.

JONES:

OK, well completing the picture, you have relaxed the incomes tests on the core family allowance scheme which is a Family Tax Benefit Part A…

TREASURER:

Yes.

JONES:

…so, the minimum payment will now be available to families with two children earning $87,000 and a bit which is well up from the $68,000, isn’t it?

TREASURER:

That’s right, and we have increased the amount by $600 per child.

JONES:

And they will get that $600 lump sum before June 30?

TREASURER:

First payment before June 30 and then next year’s payment as soon as they lodge their tax return, so that for each child that is an increase of $600, so the minimum amount that families were getting per child was $1095 and it is going up to $1695 so that is a pretty fair increase for families…

JONES:

Yes, absolutely, so that is the family side, the incentive I suppose in all of this is to say to the bloke out there, well listen you get a promotion, you earn a few more quid, but you don’t shift out of that tax bracket.

TREASURER:

Out of the 30 cent tax bracket, that is the point here. You see, people that are getting a promotion or doing overtime, they were starting to pay more than 40 cents in the dollar on their tax and they were saying, I don’t want to get a promotion or it is not worth doing overtime. If you can keep the great bulk of Australians on that 30 cent or less tax bracket, then you are going to get a lot more incentive in the system, and that is what we want. Look, Alan at the end of the day and I keep on saying this, you can’t do anything if you don’t have a strong economy…

JONES:

Yes, you made the point last night, that is not accidental is it?

TREASURER:

It is not accidental, it is not a fluke, it just doesn’t happen, it has to be managed and you have to make good choices in really hard situations, but one of the ways that we can make the Australian economy stronger is by promoting incentive and we have got a lot of (inaudible)...

JONES:

On that, the incentive in retirement, now you have offered a further incentive, the co-contribution scheme, you have allowed that for people, now you have extended it up to $58,000, right, and the co-contribution will now be $1.50 for every dollar we stick in.

TREASURER:

That’s right, if you want to put $100 into your superannuation fund, the Government will put $150 in for you, so you put in $100 and the total amount that goes in will be $250, $100 from you and $150 from the Government. It is your money, it is your funds and it will be for your retirement, and it is a way, you have probably seen these ads on television with the piggy bank, a bloke puts a dollar in and an unseen hand puts another dollar in, well, now he is going to put a dollar in and it will be $1.50…

JONES:

And you are trying to cut, and I say trying because it looks as though there are some people there who are going to oppose this, Senator Brown in one amongst them, the 14.5 per cent tax on high income earners, the superannuation surcharge down to 7 per cent in 2006-2007.

TREASURER:

…halve it, we want to halve it and again we have had a go at this before and the Labor Party has blocked it so I haven’t heard what they have said in relation to that, but we have got this $1.50 for a dollar for the low income earner and for those higher up the scale, what we are trying to do is to cut the additional tax they pay when they put money into superannuation, so that is a balanced package, it gives incentives to the lower income earner and the middle to upper income earner to save for their retirement which is something that we have got to do as the population ages.

JONES:

I see that, the Budget Papers suggest that there will be about 800,000 workers who will now drop back to the 30 cent rate by July 1.

TREASURER:

Yes, these are people that are in those middle income ranges and if we don’t get these tax changes through, they will be pushed into higher brackets. Now Alan, we are introducing this legislation tomorrow and it has to go through by early June because the Tax Commissioner has then got to publish the instalments and employers have got to know how much tax to take out of the pay packets before 1 July, so there is no excuse for mucking around here, there is no excuse for mucking around in the Senate by Senator Brown or any of his people trying to delay these tax cuts or the Labor Party trying to engage in delaying tactics, we really have to get this through if people are going to get their benefits on 1 July and we have to get this through if families are going to get their payment of $600 by 1 July.

JONES:

Can I just ask you one, we had a lot of calls this morning for the non-custodial parents, becaue they say now as the incentive exists to earn more and stay in the same tax bracket there is no incentive for them because when they earn more the child support agency then bumps up the amount that they have to pay as a non-custodial parent. Is there any contemplation of trying to reform that where these people really feel as though they are down and out?

TREASURER:

Well I know Larry Anthony, the Minister responsible, has been looking at this formula, it works off a formula as you know, you have got to give X per cent to the child support agency for the support of your children, and as your income goes up the formula works on your rising income and sends more money across. I know that Larry Anthony is…

JONES:

But you understand the point.

TREASURER:

…I understand the point absolutely, look it is a difficult one, this, because people should be responsible for their children, we all know that, there are a lot of arguments about whether the formula is right or whether the formula is wrong, but I know that Larry Anthony, the Minister responsible is looking very carefully at these formulas.

JONES:

Every one will be asking you I suppose today whether this is your last Budget, you have done nine, will you be doing ten, if you win the election is it a tenth Budget in the offing?

TREASURER:

Well, let’s win the election, that is what I keep on saying and if people say how is next year’s Budget going and I say look, if we don’t win the election, you could have Simon Crean doing next year’s Budget and think about that.

JONES:

A lot of work putting this together, how many months have you been working on this?

TREASURER:

Since before Christmas, and it takes about 6 months to put it together. Alan, you know it is a big thing, these Budgets are $200 billion, and they involve maintenance on your fighter aircraft…

JONES:

Yes.

TREASURER:

…docking your Collins Class submarines…

JONES:

And giving a little bit to the circus industry which we approve of. We have got to go to the news.

TREASURER:

OK, thanks Alan.

JONES:

Thank you for talking to us.

12 May 2004

View more media transcripts …

Latest News

Paris Diary

Peter Costello Paris Diary

Read more …

To the Brink 1997-2001 Black Holes to Surplus Budgets

Peter Costello To the Brink 1997-2001 Black Holes to Surplus Budgets

Read more …

The Hole Truth

Peter Costello in the Daily Telegraph

Read more …

Videos

Video Screenshot

Watch videos …