Transcripts → 2022

TRANSCRIPT

ABC Radio - 774 Drive

Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia

Transcription:
PROOF COPY E & OE

Date: Wednesday, 30 March 2022

Topic(s):
Budget 2022

Raf Epstein: One of the key architects of the budget he's the Finance Minister and Liberal Senator for South Australia. Good afternoon.

Simon Birmingham: Hello, Raf. It's good to be with you again.

Raf Epstein: Thanks for joining us. What's it like to be a Liberal government that taxes more than Labor ever did under Rudd and Gillard?

Simon Birmingham: Well, I don't accept [inaudible] the sense that we're a government that has brought down income taxation for many Australians. And indeed, if you're an Australian who earns, say, $90,000 a year, you're currently paying around $3,000 less in income tax than you would have if the income tax rates were still what they were under the Labor Party. If you're a small business paying company tax, you're currently paying a company tax rate for small businesses that is at a 50 year low thanks to company tax cuts that we have delivered.

Raf Epstein: You're taxing more out of the economy, though.

Simon Birmingham: Well, we're seeing a stronger economy that is increasing revenue flows into government. We've got record numbers of Australians in work. And so that does mean that even though we've brought down income taxes, we're yielding more in income tax revenue because we've got more people paying income tax. So more people are paying less per person than they would have under previous tax rates. But they're contributing more and that's great news because it means that, of course, they're getting to keep more of their income. But our budget deficit is closing. And certainly what we did in yesterday's budget was we took more than $100 billion of the improvements in the budget bottom line that we could see, and we put it against reducing future deficit.

Raf Epstein: And maybe we can we can get to debt and deficit. But if I can return to the first question. Budget paper number one, page 112, your government's going to tax $0.24 in every dollar in the economy roughly over the over the year set out in the budget. Labor was under $0.22 in the dollar for all but one year under Kevin Rudd and Julia Gillard. So as a proportion of the economy, what is it like to be a Liberal government taxing more than Labor ever did when they were last in power?

Simon Birmingham: Well, Raf it is about the fact that the taxes people paying are less under us than they were under the Labor Party. So as I went through before income tax, we've delivered two stages of income tax cuts and we've legislated for a third stage that we can guarantee if we're re-elected, will come into force in the next Parliament and see around 90% of Australians pay no more than $0.30 in the dollar as their top marginal tax rate. We've used lower tax opportunities to be part of the COVID recovery, encouraging businesses across Australia to be able to invest more in plant machinery, equipment and to make their operations more productive and competitive. And what we've achieved with that is of course using the tax system and tax incentives to get business to bring forward those activities that help the economy today and also make those businesses more productive and competitive into the future and support jobs now and for years to come.

Raf Epstein: People who earn less than $126,000, they're getting a bonus in their tax refund. Let's say they file in July. Great. Good for them. They'll get more money than they were expecting. But everybody who earns under $126,000, they're all actually going to be paying more tax in July, aren't they? The temporary measure is removed. Then everyone earning less than $126,000 is going to be paying more tax as interest rates go up and the cost of living goes up. Is that a good thing?

Simon Birmingham: Well, no, they won't be in July seeing a change to their take home pay. They will be seeing when they lodge their tax return that they get more back and that helps them. And that's a function of two decisions. One of them was the decision last year as part of our COVID recovery strategy to extend the low and middle income tax offset for an extra year, even though it was part of those income tax cuts I've talked about before. And due to phase out when stage two tax cuts came in, we decided to extend it as part of the COVID recovery measures. We in this budget decided to use that as the most effective and efficient way to deliver some extra cost of living support given-

Raf Epstein: -in July. But doesn't your tax rate go up in July? Doesn't your tax rate go up in July? If the if the lamington, the lower and middle income tax offset, if that is no longer there in the next financial year, doesn't that mean my tax rate goes up in July?

Simon Birmingham: It doesn't mean that you take home pay is going to going to change in July. No.

Raf Epstein: Simon Birmingham is the sorry-

Simon Birmingham: -arrangement and that's why people get the benefit of what they paid of decision from last year's budget when they put their tax return in over the coming few months.

Raf Epstein: Can I just fling a few questions at you that have come from the text message? I guess it comes around what you. It called the temporary and targeted payments. Ian wanted to know on the tax, does the government think cost of living pressures will only last six months? Because of course that tax refund, the petrol stuff, that's all going to be gone by October. So. Ian wants to know if you think cost of living pressure only last six months.

Simon Birmingham: We know cost of living pressures are real in a number of different ways. But this measure is to respond to a particular shock that our economy has felt and that Australian households are feeling, and that's in the form of petrol prices. And that shock has been caused dramatically in terms of the spikes that we've seen since Russia invaded Ukraine. And whilst the human toll and the terrible tragedy there is enormous, it's also inflicted this economic toll around the world. And now those oil price spikes aren't forecast to last forever. But we're taking this temporary targeted action in response to these temporary pressures we're seeing. It's analogies, if you like, to what we did during COVID-19, where we saw unexpected shocks that happened and we put in place temporary and targeted measures, some of them payments, some of them big programs like JobKeeper to get through the period of that shock. That's what we're seeking to do here with helping families with petrol prices and all Australians who are motorists to be able to not face the full extent of that shock at present and to see that $0.22 a litre reduction in the price they pay at the bowser.

Raf Epstein: It's always a struggle for the rise in my wages to keep up with the rise in inflation. Your government doesn't really, your budget, I'm sorry, doesn't have a fantastic forecast there. So if my real wages aren't really going up much, but interest rates are clearly going to go up and inflation is here to stay, I'm going to have less money aren't I?

Simon Birmingham: Raf, that's where the good news in terms of wages growth is there in this budget that having got unemployment down to 4% and with a forecast to push it down even lower to 3.75%, the lowest unemployment rate Australia has seen in close to 50 years. There's also then the pick-up in wages growth that's is-

Raf Epstein: Again, it's not going to really forecast- your budget, doesn't forecast my wages to pick up that much more than inflation.

Simon Birmingham: It forecast a three and a quarter per cent growth in wages next financial year and that then grows out to three and a half per cent. What we're expecting to see is that inflationary factors ease off from the spikes that we've seen in disruptions during the course of this year and that we provide for real wages growth going further forward. But also those things we were talking about before in terms of the income tax cuts we've delivered to date, which are putting around one and a half billion dollars extra a month into the pockets of Australian households right now. That's extra disposable income that we've made available to Australians by making those tax rates lower. And as I indicated, we've got further income tax cuts that come in the life of this budget estimates period in the life of the next Parliament, that will see those income tax rates come down even further for Australians.

Raf Epstein: Why are you cutting the funding that goes to those agencies that tackle climate change?

Simon Birmingham: Well, we're not. We're not. And this budget shows very clearly that in terms of achieving net zero emissions.

Raf Epstein: So not about emissions, just Clean Energy Finance Corporation, the Australian Renewable Energy Agency, Clean Energy Regulator, people listening might not know what they do, but they basically tackle climate change. The money they get is dropping from 2 billion a year to 1.3 billion a year. Why is that money dropping to those agencies?

Simon Birmingham: That's not an accurate interpretation in terms of the money that's available-

Raf Epstein: That's what it says on page 198, isn't it?

Simon Birmingham: -what matters in terms of achieving net zero. So the Clean Energy Finance Corporation continues to have the $10 billion that it invests across the Australian economy to achieve clean energy and lower emissions outcomes. Arena continues to invest through a number of different funding streams we've set up for it-

Raf Epstein: If they have to do more. Don't they need more money from the budget?

Simon Birmingham: And we're providing more in a range of ways to achieve low emissions. It's not any more a case of just lowering emissions, though, in the electricity sector. We're seeing huge transformation underway. There is, I know you appreciate and are well aware of, with the highest uptake of rooftop solar, the closure of different coal fired power plants forecast around the country. Now, change in the electricity sector is well advanced and has huge momentum behind it-

Raf Epstein: So when do you think the government is actually doing cut emissions because they haven't really budged since 2013?

Simon Birmingham: Look, they've come down by 20%-

Raf Epstein: Since 2005. Since 2013, the stuff we pump into the atmosphere has barely shifted by about 2%. That's on your website as well. When do you think that's going to actually start to really move?

Simon Birmingham: As we see these continued changes in terms of the closure and change of the energy mix from those coal fired power stations into the renewables. As we conclude our massive investment in Snowy 2.0, that will provide for additional capacity in the electricity market, that that will be concluded over the next couple of years. And it's the biggest energy storage project, renewable clean energy storage project of its type in the Southern Hemisphere. But the point I was also making. This budget includes extra money for hydrogen, for example. Sure.

Raf Epstein: And they're all significant parts of the of tackling the problem, Minister. But if you go to the Department of Industry website, it's 540 metric tonnes pumped out of the economy in 2013 and 525 metric tonnes pumped out of our economy at the end of last year. That's a barely a 2% shift the whole time you've been there. When are you going to start getting some real reductions?

Simon Birmingham: Ref, we are achieving reductions. I mean Australia's reductions are actually ahead of many of those, of some of those around the world who perhaps get lauded from time to time for their rhetoric but haven't achieved the real reductions in emissions from their actions. But our investment in terms of hydrogen, as I was partway through explaining before, is about making sure that not just in the energy sector where we're seeing that transformation, but in liquid fuels that are used in industrial emissions or used in other forms of energy, that we get transformation there. We get transformation in transport emissions. It's why CFC, we were referencing before our together with Arena investing in additional electric vehicle infrastructure around the country to help with the transformation of that transport grid across the country. In this budget there's also more money for microgrids dealing with rural and regional communities who operate off grid, often use diesel powered generation to provide for themselves. And we're investing in creating microgrids that give them cheaper and renewable energy that's clean energy to address their emissions and their cost profile.

Raf Epstein: I appreciate your time on a busy day. How many interviews have you done today?

Simon Birmingham: I've kind of lost count now, Raf. It's somewhere getting close to 20, I think.

Raf Epstein: No worries. Thanks for your time.

Simon Birmingham: Thank you. Cheers.

[ENDS]