Interview with Leigh Sales, 7.30 Report

Leigh Sales: The new Parliament returns next week and the Coalition's key election promise, its tax cut package, is in the balance. Labor's offering a compromise of passing the first two stages if a decision on the third is deferred. The third part kicks in in five years' time and would introduce a 30 per cent tax bracket for all earnings between $45,000 and $200,000. But the Coalition is playing hardball, earlier I spoke to the Acting Treasurer Senator Simon Birmingham. Acting Treasurer, thank you for coming in.

Simon Birmingham: Good to be with you Leigh.

Leigh Sales: Wouldn't it be simply common sense to stick with your intent to introduce a 30 percent tax bracket in five years' time but hold off legislating it to preserve flexibility and economic management?

Simon Birmingham: I think the Australian people expect us to do as we promised at the election, expect us to do as we announced at the budget prior to the election and that is to legislate tax relief for ten million Australians, to get on with the plan that changes the way our income tax system works by creating greater incentive to work an extra shift, to get a pay rise and to know that you won't be pushed up into a higher tax bracket, to have that middle income tax rate as low as we possibly can. Thirty cents in the dollar which is our intention and to make sure that we deliver on that and our intention is simply to deliver on that promise to the Australian people and to lower their tax burden.

Leigh Sales: But you raise what the Australian public expects, the Australian public also expects its politicians to try to work together and compromise so we get things done instead of having road blocks. Labor says it will help you get Stages 1 and 2 of your tax plan through Parliament right now if you defer stage three. Why is that not a reasonable compromise?

Simon Birmingham: Well Leigh because it is only five weeks since we had an election and tax was at the heart of that election. We had Scott Morrison, outlining a very detailed plan to reduce the income tax burden on Australians and keep taxes as low as possible and you had the Labor Party arguing for higher taxes in a range of ways. Now that message was clearly heard through the electorate and they've made a decision.

Leigh Sales: What about the point I raised in the first question about trying to preserve flexibility in economic management because five years can be a long time?

Simon Birmingham: Well it can but wealso need to show the ability to actually plan and deliver for the long term. When we build infrastructure in Australia as we are doing at record levels with more than $100 billion worth of infrastructure investment, that's about long term investment and that's what we are doing. When we deliver social policies like the NDIS, ensuring it's fully funded and getting record numbers of Australians onto the NDIS, that's a long term proposition. In fixing our income tax system to make sure the incentives to work are right, that should also be a long term proposition, governments should be able to make decisions that aren't just one or two years into the future but actually look to the long term and to get them implemented, especially when they took those policies to an election as we did.

Leigh Sales: Speaking of the future, the pressure on government spending is going to be all upwards because we have ageing population and so therefore the money you have to spend on services like health, aged care services, the pension, is going to be more. Given that you will forego revenue by delivering tax cuts, where will you get the money to pay for that increased demand for services?

Simon Birmingham: Well those medium-term projections were all outlined not only in the budget but in the pre-election fiscal outlook that was released independently by Treasury and the Finance Department during the election campaign. They show that revenue continues to come in to be able to fund record and growing spending on our hospitals, on our schools, on aged care services, particularly more in-home care places, that deliver our promises to increase investment in mental health support. All of those policies that we took to the election to keep that spending up with rates of growth but at responsible levels. We've seen more than 60 percent growth in funding for public hospitals, for public schools to date and that continues into the future. And it's fully funded out of the tax model that we took to the election with these tax cuts for hardworking Australians at their core.

Leigh Sales: Can I get back to a first principles question; does the Morrison government think at the moment that the economy needs stimulus?

Simon Birmingham: I think certainly the economy faces some global headwinds and pressures at present. As Trade Minister I can say that the rate of growth around global trade is down on what we had expected previously. That has in turn has seen the OECD and the IMF revise down some of the global economic growth forecasts and those are pressures that we were well aware of at the time of shaping the budget so we have been prudent in terms of our decision making. That without these reforms, Australia would have amongst the highest income tax rates in the English speaking world and that would clearly be to the detriment of our country.

Leigh Sales: On the points about competition and investment, one of the key aspects of that is the industrial environment, the Coalition is saying it will look at industrial relations laws but wants the business community to quote the Prime Minister today, build the evidence for change and help bring the community along with you, isn't that a form of outsourcing the leadership for the IR policy?

Simon Birmingham: Well no Leigh, because what we are doing firstly is bringing to the parliament, legislation about the integrity of workplace organisations and to try to clean up the CMFEU. Anthony Albanese won't support the tax relief for hard working Australians and he has also has failed to be able to deal effectively not only just with John Setka but with the constant law breaking of the CFMEU.

Leigh Sales: But you are asking business to set direction there not saying as government we'll set the direction?

Simon Birmingham: On that issue, we've set the direction and brought legislation to the parliament. Also where the Prime Minister was saying today in his speech and that is part of the productivity agenda he wants to ensure we have minimal red tape where we can, that business can get on and grow and invest with confidence that they will be able to do so without governments getting in the way unless it's necessary for public policy purposes. And in the industrial relations space, he set out the framework that we have to make sure that any changes give people confidence, ensure benefits to workers and employees, but also if it can be streamlined, then business needs to make the case for where that occurs. It's not just a case of business to say we want to see industrial relations change without defining it, they need to define it, they need to define it against the parameters the PM set around protecting workers interest as well.

Leigh Sales: Minister thank you for your time.

Simon Birmingham: Thank you Leigh.