Senator the Hon Mathias Cormann
Minister for Finance
Date: Saturday, 17 May 2014
MONIQUE WRIGHT: From July, if Budget changes make it through the Senate, the average Australian will have to make do with less money.
ANDREW O'KEEFE: Now the Government has promised that in the end this will all be good for the nation. But what is a political promise worth these days? Joining us to discuss is Minister for Finance Mathias Cormann in Perth, Cassandra Goldie from the Australian Council of Social Services, ACOSS, in Sydney and Money Mentor Nicole Pedersen-McKinnon in Maroochydore Welcome all and thank you for joining us
Senator Cormann if we could start with you. Now we know that this is being called a Budget of the heaving lifting in which everyone must share the burden. It does seem though that the changes to health, education and welfare programs will effect seniors, unemployed people, low income groups, the young and even indigenous people, more than they will affect other strata of society. Can we honestly say that the burden is being equally borne?
MATHIAS CORMANN: Well in the Budget we have asked every Australian to contribute and we have sought to spread that effort as fairly and equitably as possible. But inevitably, when we make adjustments to government spending to a degree that will impact on those that receive government payments. The only way you can make government spending sustainable into the future is by adjusting the spending growth trajectory. The spending growth trajectory that we inherited from our predecessors was unsustainable and would have forced us to increase taxes massively, which would have weakened the economy and which would have cost jobs across Australia. That would have been bad for everyone ultimately.
MONIQUE WRIGHT: Cassandra, you've been calling this Budget something else, a very divisive Budget, however can you see any merit in ending what Joe Hockey calls the 'age of entitlement'? Can you see any merit in that?
CASSANDRA GOLDIE: Well, I agreed with the Treasurer at the time when he said that he was in Europe at the time and he was looking at the countries there and he said if we don't get our act together, we've got a problem too. And we agree with him. But what we have seen in this Budget is a very divisive approach which focuses solely, mostly, on the spending front and has picked on particular groups to treat very harshly we believe whilst other groups probably have quite a different approach. So really harsh measures that are around young people. What we have got this combination of the family payments and the tax fuel excise and then the co-payments. Single mums, you know those households that are on the low incomes, every dollar really counts. But I have got to say it is very light touch at the other end of the scale in terms of, like when you talk about the Budget sustainability it is both the money coming in, and the money going out. And we have got very light touch on the tax front, the deficit levy is pretty modest, $180,000 and above. Bear in mind that average Australia, 50 per cent of us and earning $55,000 or less. You know if you go in Canberra, there is two worlds here. There is out there in Australia and then the world view about what really big money is...interrupted
ANDREW O'KEEFE: Senator Cormann, just on that I mean we are discussing expenditure and revenue here. As far as expenditure cuts and revenue go, it would seem for example that a two per cent temporary debt levy on those earning above those very high figures will affect them much much much much less than the other cuts that you have suggested to welfare programs in particular will affect lower income earners and even those in the mid-strata. And at the same time, you know, big business seems to get out fairly unscathed, mining is even being giving $100,000 million plus boost. It does seem to the average person that there is an inequity going on here.
MATHIAS CORMANN: Well somebody who earns more than $180,000 a year is already paying about $60,000 a year in tax. And what we have asked higher income earners to do, recognising that they are already making quite significant contributions to our Budgets through income taxes, is to help with an additional special effort to get us back into a stronger position as we set out to repair the Budget. The point here is, what we have very much sought to do is to replace the old age of entitlement with a new age of opportunity. What we are trying to do is build a stronger, more prosperous, more resilient economy where everyone has the opportunity to get ahead. So our decisions in the Budget are very much targeted around ensuring that economic growth can and will strengthen into the future so that everyone, right across Australia, has the opportunity to get ahead.
MONIQUE WRIGHT: Nicole do you accept what the Finance Minister is saying there? How do you think that this is going to affect the everyday Australian in the next couple of years first?
NICOLE PEDERSEN-MCKINNON: Look, sorry Minister, but you I mean you have a trifecta of new taxes from a government that repeatedly said no taxes and what is really akin to welfare warfare and particularly as Cassandra was saying on those lower income thresholds, the pain is going to be acute. On Labor's figures, families on $65,000 per year, single income families, are going to lose $1,700 this next years, rising to $6,000 in three years time. You are going to see a raft of measure actually disappear from July 1. Some tax offsets, some allowances, some bonuses, some supplements, they are all just going to go. I don't think anyone has really wrapped their head around fully just how severe and widespread this is because there is just so much that is being attacked in this Budget. And you've got thresholds that are frozen, the rates themselves, the payments that are not going to go up so people are going to find that they can buy less and less over time. This is a very, very harsh Budget on the people that can afford it the least.
ANDREW O'KEEFE: So in the long term, you do see this as having a significant impact on peoples' you know on budgets and quality of life?
NICOLE PEDERSEN-MCKINNON: Yeah, look, I do. Because there is not only the shorter term issues about being able to access welfare, I mean Joe Hockey has spoken a lot about this only being the supplementary income of people. So it is kind of okay to target this, because it just tops them up. But it tops them up to get them over the line. So that is really key. I mean it means that someone can afford uniforms for their kids, to put food on the table. And then you do have the longer term issues as well. Which is if the education funding, you know, the fact that universities are going to be deregulated, the fact that they are going to being paying back HECS or what is now HELP from about $51,000 per year. It is going to be very difficult to actually lift yourself out of that and educate yourself to a level where you can self-fund and the age of entitlement, you know, you can afford not to be entitled.
MONIQUE WRIGHT: Just very quickly before we go, Cassandra what are you suggesting as strategies we can get to get more people off welfare, to get them into education despite these changes. What do you think would work?
CASSANDRA GOLDIE: Well, one of the things we loved in this Budget was the agreement to put some decent money on the table to encourage employers to take on older workers that have been out of the labour market for some time. Fantastic. Both businesses and us on the night said that's going to work. But why are we restricting that to older workers? Some thousand dollars upfront to help a young person get into a workplace, remember that feeling the first time you got your first job, that relief to get in. That would be an investment and we believe that is the kind of approach that would help. Not Work for the Dole. We think it is only going to stigmatise young people. It is probably going make them feel even worse about themselves. And I want us to come together as a country, to say don't give up young people, we know it is hard to get that first job, people are applying over and over again, everyone says you need more experience. I think it is savage to cut young people off at the knees at the point when they are trying really, really hard...interrupted
ANDREW O'KEEFE: I'm not sure where you get the time to look for a job if you are working for the dole 25 hours per week.
MONIQUE WRIGHT: And the other thing is, the jobs that we might have started out on, right on the basement floor in the mail room or whatever, those jobs don't exist anymore.
CASSANDRA GOLDIE: Well everyone talks structural adjustment don't they? What does that mean? It means when you look in the newspaper, your first jobs are not there in the same way. So we have got to think differently, we need great investments into start up business. Young people are thinking about how they can start up their own business, what don't we get behind them about that? And really work on the strength of people rather than cracking down on them.
ANDREW O'KEEFE: Now Senator we do have the Treasurer on tomorrow, so no doubt he will be able to talk further about the Government's vision for this Budget and the age of opportunity. Thank you so much for joining us this morning. It has been incredibly busy week for you. Enjoy your day off tomorrow. Nicole thank you so much as well and Cassandra, lovely to have you in, beautiful.