CHRIS BOWEN, SHADOW TREASURER:Thanks for coming everybody.
This economic update confirms what we already knew about economic management under the Turnbull Government, about the twisted priorities of the Turnbull Government.
Now firstly, let's be very clear, debt is going up on this Government's watch. It appears the Treasurer wants a gold star and a pat on the back for having debt which is $23 billion lower than previously predicted. Debt continues to rise under this Government and Jim Chalmers will have a lot more to say about that in his opening remarks. Of course,debt and deficit would be lower if this Government embarked on the sorts of serious policy reforms that Labor has a ready indicated we will adopt: reforming negative gearing, capital gains tax discount, trusts and managing tax affairs. This Government refuses to act and instead we see the twisted priorities for this government, continuing withtheir corporate tax cuts, and their personal tax rise.
Right from page one of these mid-year economic update, it is clear that this Government remains committed to increasing the tax paid by working Australians.
Malcolm Turnbull says Merry Christmas and here is a taxrise for Australians.
Remember all of the bluff and bluster about personal income tax cuts from the Prime Minister just a few weeks ago? The Treasurer could not even bring himself to talk about the personal income tax cut earlier today. There is no mention of personal income tax cuts in this mid-year update. Instead we get a personal tax rise on every Australian earningmore than $21,000.
We are more than happy to have the tax debate with this Government because this Government's priorities are all wrong. This Government wants to increase incomes taxes to ordinary Australians by $44 billion over the next decade and hit more than 7 million workers earning between $21,000 and $87,000.
For someone earning $50,000 a year theyll pay $200 in increased tax as a result of this Governments policies. For someone on $70,000, they will pay $350 a year in tax because of this Government twisted priorities.
Of course, we continue to see this Governments attacks on higher education, mortgaging the future and attacking one of the sources of Australia's long-termeconomic prosperity and economic growth, our higher education sector, in a way which will impact particularly on those from lower social economic backgrounds who dare to dream of going to university. The Labor Party in office opened the door to thousands of Australians to attend university, Malcolm Turnbull appears intenton slamming that door shut.
There is little surprising in this document, it continues the twisted priorities of this Government who want to provide tax relief for people on very high incomes and corporations and increase taxes on people earning as little as $21,000. We've seen anadjustment to the economic growth figures largely driven by as the Treasurer himself admitted - poor consumption figures. This is absolutely the worst time to increase personal income tax for those earning between $21,000 and $87,000 and yet it is what this Treasurer and this Government are committed to doing.
I will ask Jim to add to these remarks and then wewill take your questions.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE:Thanks very much Chris.
What this Budget update shows is that the Turnbull Government has learnt absolutely nothing from the hundreds of thousands of Australians who have deserted them since the last election and the five or six thousand people in Bennelong who deserted them on Saturday. As Chris said, this is a pretty shabby Christmas present for middle Australia.
This Budget update does three things: it smashes middle Australia with higher taxes, it showers billions of dollars on the top end of town, and inflicts more public debt than any government has ever inflicted on Australians in our entire history.
The global economyis in the best nick it has been in for probably the last ten years, so the Government has absolutely no excuses for this record and growing debt on their watch. The reason that the Budget is still such a mess is because Malcolm Turnbull and Scott Morrison continue to shower the biggest tax concessions on thepeople in our community, the millionaires and multinationals, who need and deserve the tax breaks the least - at the same time as jacking up taxes on people who work in middle Australia.
That is the reason why the Budget is a mess. There is no excuse in the global conditions and there is no excuse anywhere else. The reason the Budget is a mess is because Malcolm Turnbull wantsto give big tax breaks to the top end of town.
The debt profile in this update is marginally better not because of Malcolm Turnbull and Scott Morrison but despite them. The decisions taken in this MYEFO, in this Budget update, actually diminish the budget bottom line by something like $1.9 billion. Those aspects of this Budget update which the Government is responsible for actually diminish the budget bottom line by $1.9 billion. The reason we have these marginal and welcome improvements is because of a difference in payments of something like $11.2 billion.
That is not something that the Government wants you to focus on. But those are the facts that are contained in this Budget update. Those are not the only facts that the Government hopes that you do not notice. Let me give you a few more:
What they are claiming credit for now and what they are expecting a standing ovation for today is that instead of adding $326 billion on their watch until 2021, they will be adding $303 billion in gross debt.
That means an extra $303 billion in gross debt on this Government's watch. It means that they are racking debt up at $3.26 billion dollars a month rather than $3.5 billion a month. That is what they want these big pats on the back for today.
We also know from today's figures that this Coalition, this conservative Government, under Turnbull and Morrison, is actually racking up gross debt faster in good global economic times than Labor did during the last Government when Labor, as you all know, had a Global Financial Crisis to deal with. So the Budget won't substantially improve while the Government continues to favour the top end of town with these multi-billion dollar tax breaks.
This is a Government which is so out of touch that they see stagnant wages, low household consumption, record household debt, record and growing public debt and they think the main problems in our economy are that the big banks pay too much tax and that Australian workers pay too little tax.
So Australians will not applaud a Budget update which has at its very core a triple whammy of higher taxes for workers, lower taxes for multinationals and the big banks, and the highest debt that any government has ever inflicted on the Australian people.
BOWEN:Thanks very much Jim. Over to you.
JOURNALIST:The Senate blocked their initial $2.8 billion cuts to higher education. Now they're going to freeze grants instead as a way to get around that. What do you make of that strategy?
BOWEN:Well I am glad that the Parliament blocked the Government's proposed cuts to higher education. Of course we were an integral part of blocking that with other parties. Absolutely and we are proud of that, we are proud of the fact that we have defended Australia's university sector against these unwarranted attacks. It says everything about this Government that, when denied by the Parliament their ability to hack into universities, that they go around and find another way around it. Of course, they can do that but it just goes to the warped priorities of this Government that they actually do not believe in proper investment in our universities and in particular they do not believe in opening the door of opportunity that university provides the people from low social economic backgrounds.
Jim and I were both very fortunate to be the first in our families to attend universities and it is very important to the Labor Party that that opportunity continues to exist for people. This Government simply does not get it.
JOURNALIST:Do you think there are greater efficiencies that can be found in that sector?
BOWEN:Well we are always happy to work with any sector, whether it be universities, hospitals, health, anywhere, to work on sensible efficiencies but a savage cut imposed by Scott Morrison and Simon Birmingham and Mathias Cormann, and I think the universities have made clear when they see about the impacts of these cuts, we have seen it in the public commentary already, so this isn't about efficiency, this is just about cuts.
JOURNALIST:The Government says it will find a way to pass drug testing for welfare recipients and it's done that with these uni cuts, given the freeze doesnt need legislation. Will it succeed with drug testing as well?
BOWEN:Well I think they will struggle to find a way to subvert the will of the Parliament on drug testing but Jim might want to say more, he's directly affected as a local Member.
CHALMERS:My community is one of the communities that has been selected for the drug testing trial and what the Government has discovered is that there is not a single expert - health expert, law and order expert, right across the board - who supports the proposal for these drug tests. They have the capacity to dramatically increase crime and have all kinds of consequences which the Government has not thought through.It is disappointing to see it in the Budget update, that they intend to proceed and not just that one, theres also still of course the cuts to the energy supplement, there is still of course the jacking up the pension age to the highest in the developed world. There are all kind of nastiesin this mid-year Budget update.
If it was such good news for middle Australians, I dont think the Government would be releasing it a week before Christmas. It is a very shabby Christmas present because they cling to all of these Budget nasties at the same time as they cling to a $65 billion company tax cut for big businesses. If they wanted to genuinely improve the Budget in afair way, they would deal with the tax concessions at the top end, some of the things that Chris mentioned before in negative gearing, capital gains and trusts, but they would also ditch that big business tax cut which is doing more damage to the Budget than any of these measures they are keeping on the books.
JOURNALIST:So overall Chris Bowen, do you acknowledge the Government has made progress on Budget repair?
BOWEN:Well I think Jim very clearly outlined the deterioration of the debt situationon this Government's watch. The fact of the matter is that their own decisions, clear in this document, their own decisions are worsening the Budget bottom line. Now we are seeing a synchronised world recovery, the world economy is in quite a way which is unprecedented for several years, coming together in a way which is positive and thats obviously having some flow through effects for Australia. But the factof the matter is that debt is going up under this Governments watch and they refused to make the sorts of tough decisions which Labor has lead on from Opposition. This Government goes down the route of the scare campaign instead of leadership. What we need is a Government determined to bring the Budget back to balance based on good sensible but toughdecisions, the sorts of ones we lead the debate on but Mr Morrison is simply incapable of delivering.
JOURNALIST:What about increasing waiting times for newly arrived migrants from two years to three years?
BOWEN:Look, theres a whole range of measures in MYEFO, not just that one, which we will take some time to work through. However we obviously are deeply concerned about any impacts on those who can leastafford it. Again, Jim and I are honoured to represent a highly multicultural electorates. We see it firsthand every day, the positive impact of newly arrived migrants in our communities. Now of course we will, through our normal processes, work through that and a whole range of other measures which are in the Mid-Year Economic Outlook but its fair to say we would express some concern about that one from the beginning.
JOURNALIST:So should, what are you saying about it?
BOWEN:What Ive just said, that we will take some time...
JOURNALIST:Should they be made to wait longer?
BOWEN:We will take some time to work through but obviously at the outset, it raises questions which we will be asking through those normal processes about the impact of this measure. And this is not the firsttime the Government has attempted to go down this road, and of course we have a good track record here. We will take the time to look at the measures, to ask the right questions, to assess this impact, on this and other proposals in the Mid-Year Economic Outlook. The media have had the advantage of having a lock up for several hours. Weve had the document since it was publically released. It would be irresponsible of us to jump to decisions to oppose any particular measure without talking to our colleagues and going through our normal processes. But where we see the Government targeting newly arrived migrants, we will express concern but then look through the detail. Theres very little more I can add other than expressing that view.
JOURNALIST:Do you think its unfair?
BOWEN:Well Ive expressed our concerns.
JOURNALIST:Why do you remain confident that Australia can retain its current corporate tax rate while other countries are cutting theirs?
BOWEN:Well the fact of the matter is, that this is the single biggest hit that either side is proposing to the Budget. Talking about trying to get the Budget back to balance, nobody, not Labor, not Liberals not even the Greens are suggesting a measure which worsens the Budget by more than the Governments big business tax cut. And its a $65 billion hit over the decade. The fact of the matter is, you can believe in budget repair or you can believe in a corporate tax cut, you can't believe in both. We believe in Budget repair. We believe in making those tough decisions and we dont believe this can be justified at this time. Now of course, you always look to the competitiveness of our tax system. Decisions are made to invest in Australia based on a whole range of circumstances in which tax is one, but so are a whole lot of other factors which companies take into account, including our dividend imputation model which is by enlarge unique around the world. So if youre going to compare our corporate tax rate, by all means, but compare also the fact that we do not have state corporate taxes like other countries have, some other countries have, we have dividend imputation. Lets make that comparison on a fair basis. Now, Mr Morrison and Mr Turnbull can argue for reducing corporate tax and increasing tax on workers. We choose to argue the opposite.
JOURNALIST:But isnt there the risk of Australias competitiveness?
BOWEN:Well, you know, the fact of the matter is that we had avery significant investment boom with the current corporate tax rate. Different economic circumstances, I grant you. The fact of the matter is that we believe in repairing the Budget. We do not believe in increasing the tax on people earning over $21,000 a year. That is the choice that Mr Turnbull and Mr Morrison make at the same time as reducing big business tax rates. We make a different set of choices.We have different priorities. That is a choice that will be before the Australian people before the next election.
JOURNALIST:Enrolments in universities arent really booming and theres high dropout rates. Isnt it prudent to rein in spending in that sector?
BOWEN:Well I don't think there is any evidence that dropout rates are increasing to such a degree that these sorts of cuts arejustified or warranted. This is just 2014 all over again. This Government does not believe in proper investment in universities. We do. It is a binary choice. Binary choice.
I think we are done?
Thank you very much.
PRESS CONFERENCE SYDNEY
18 December 2017