CANBERRA, ACT, May 20 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: the Budget, tax changes, Australians activists detained
Rafael Epstein:
Jim Chalmers, thank you for coming in.
Jim Chalmers:
Nice to see you, Raf. Thanks for having me back.
Epstein:
I do want to give you time to talk about detail, but I want to ask about politics first. Have you lost control of the debate on the Budget?
Chalmers:
Of course not. Obviously from some quarters there will be people who prefer the current arrangements. They'll say and do anything, write anything to protect the arrangements which are currently in place. We anticipated that and we expected this to be contentious. We expected there to be a misinformation campaign, we're seeing that. We expected the politics of it to be difficult. But the conclusion that we reached is that it's more important to get the policy right and to wear some difficult politics than to take an easier political road and leave what we consider to be a broken system in place.
Epstein:
You're not talking about housing this week, right? I saw your colleague Mark Butler being asked about what happens to stamp duty with a trust. You are talking about what happens when a young person invests in the stock market. You are talking about what happens when someone sells their small business, the capital gains. That's - that is not in control of the debate, is it, if you're getting asked all those things?
Chalmers:
Well, we're answering the questions that we're asked. We don't write the questions. But we are talking about housing. I've been talking about housing every day, so has the PM, as we fanned out around the country. Yesterday I was in Sydney talking about housing. Later today I'll be in Essendon, I think, talking about housing and so that is what this policy is fundamentally about.
The policy changes that we've made - which are ambitious, they are contentious, we understand and accept that - but they're really about 3 pretty simple objectives. The first one is to make it easier for people to buy their first home. The second one is to cut income taxes for the fifth time so that people who work for a living get a bit more help with the cost of living. And then thirdly to try and better align the tax treatment of people who earn their income from working versus people who earn their income in other legitimate ways. And those 3 objectives are all about recognising we want people to do well in this country. We want more people to do well in this country, but the intersection of the housing market and the tax system right now is locking too many people out of the aspiration of owning their own home and so that's why we've taken a series of difficult decisions.
Now, obviously, as I said before, Raf, and you would have observed this too, of course there's going to be misinformation. Of course there's going to be -
Epstein:
Can I ask you about misinformation? Some people who sell a small business will pay more tax, right? Some people who sell a small business will end up paying more tax. That's not misinformation, is it?
Chalmers:
I'll tell you the misinformation there in the campaign that's being run here. There are 4 existing concessions and carve outs for small business in the CGT system. Every single one of those 4 concessions and carve outs will remain in place. Now, people don't share that information, but that is the case. All of the existing 4 concessions and carve outs for small business will still be there and to the extent that they apply to farms similarly and that's because we recognise the crucial role small business plays. In fact, there's $3.5 billion dollars' worth of tax cuts in the Budget particularly for small business, the way they treat losses and the way they make investments and so -
Epstein:
Maybe this is an opportunity to go through the exemptions. But, it's true, isn't it, some small businesses when they sell will pay more in capital gains tax as a result of the Budget? That's true.
Chalmers:
Not small businesses defined in the usual way by the 4 exemptions. There are 4 concessions and exemptions. Some small businesses will pay none. A lot of small businesses will pay none. Let me make sure I get the right number here. Something like 9 in 10 small businesses are eligible for the concessions, which means that they can pay reduced or zero CGT when they sell their business. So that's an important fact.
Epstein:
But does that mean 9 in 10 have no change, or does it mean that 9 in 10 -
Chalmers:
It means no change to their arrangements. No change to the current concessions and carve outs for small business. But it means that 9 in 10 can pay reduced or zero CGT. Now, the thing that we've changed here - and I've seen this campaign about the 47cents, you would have seen that, too, Raf - what that completely ignores is that there's still a discount in the CGT system, it's just calculated differently. It's calculated more effectively to recognise inflation rather than a made‑up number.
Epstein:
The discount is not as big. The discount is smaller.
Chalmers:
It can be. No, but it can be. For example, you hear this said about shares as well, we analysed a 10‑ and 20‑year period since this big change was made by Howard and Costello, and some people will do better under the new arrangements than under the old arrangements. But the main effect of the change is to take out of the system this big distortion which has turbocharged house prices in this country and made it too difficult for people to buy their first one.
Epstein:
1300 222 774 is the phone number. Jim Chalmers is the federal Treasurer. We've actually got an NDIS question. You'll need to pop on the headphones, if you can, Treasurer. You've got some there right next to you.
Chalmers:
Yes.
Epstein:
Amanda is in Forest Hill. You're hearing me okay through the headphones?
Chalmers:
Yes.
Epstein:
Amanda, go for it.
Chalmers:
Hi, Amanda.
Speaker:
Good morning, Raf. Good morning, DrChalmers. I would like to know how you can justify the cuts to the NDIS given that you already cut the NDIS a lot since you came into power in 2022. We are now facing even greater cuts. You're talking about people getting tax cuts and people making it easier for people to get into housing. The cuts you're going to inflict on people like me -
Epstein:
Can you turn that into a question, Amanda? Like, what's your question for him.
Speaker:
Well, the question is: why are they cutting the NDIS? I don't understand how you can punish people with disability so much.
Epstein:
Okay. Treasurer?
Chalmers:
Well, we believe in the NDIS, Amanda, and we've got to save it from itself. The growth in costs in the NDIS I think put it at risk. A future government would be tempted to cut it entirely or to cut it too harshly and so when we see the way that the costs are increasing and we want to continue to deliver a level of service and care that people need and deserve in our community, then we've got to make sure that it's sustainable.
Now, growth in the NDIS will still be there. Growth will still go up in each year. But it will grow a bit more slowly, and that's because we recognise that in order to provide this level of care, this standard of care, then we need to be able to pay for it.
Epstein:
Are people being punished? Some people won't get what they might have got. That's punishment, isn't it?
Chalmers:
Of course not. Of course we don't see it that way. What we're trying to do is to make sure that we can afford that decent level of care for people who need it. Part of that is about getting the shonks out of the system, for example. Part of it is making sure that we can continue to pay for this into the future so that a government of a different political persuasion at some future point isn't tempted to abolish it entirely.
Epstein:
Nicholas is in Northcote. What's your question, Nicholas?
Speaker:
It's a question in regards to what Jim Chalmers has said about small business paying less tax with the concessions. It's actually flawed because as a public practitioner you see small business from day to day. The impact of these Budget changes are significant upon small business - not just on sale but also on the way they operate.
Epstein:
Give me an example, Nicholas. Just try and turn that into a question for me. Just try and turn that into a question for him, if you can.
Speaker:
Okay, well, the small business CGT concessions, Jim, the fourth arm where you're saying is tax free, is actually a bit flawed because if they do decide to pay tax on it, in the past they'd pay tax 250 at their marginal tax rates moving from zero to $47,00, whereas in your case they're going to be paying a flat 30percent tax on that. So in a very simplistic arrangement 30percent on $250,000 is $75,000 in tax.
Epstein:
Okay, so you're saying more tax there in that fourth arm.
Speaker:
If that was a husband and wife team - yep. If that was a husband and wife team, they'd only be paying $45,000 in tax.
Epstein:
Nicholas, I just want to try and get an answer from the Treasurer. Is he right?
Chalmers:
Well, I think Nicholas is referring to only one of the 4 concessions and carve outs. There are others available in the system and we're not changing those. And the 30percent minimum that Nicholas refers to is a change being made elsewhere to recognise that a lot of people with high lifetime incomes then sell their asset when their current marginal rate is low, and we don't want to encourage people to take advantage of the system that way. But Nicholas is referring to one of the concessions and carve outs. There are 4 in total, and we're not changing them from the current arrangements to how they will apply into the future.
And when it comes to the 47cent rate that you see on social media, there is still a discount on the CGT that people pay.
Epstein:
An inflation‑linked one.
Chalmers:
An inflation‑linked one which more appropriately takes the distortions out of the system. The old distortion used to over compensate fixed housing and under compensate a number of other different kinds of investment. By taking the distortion out of the market, people will make their investments and manage their assets for economic outcomes and not necessarily just for tax outcomes.
Epstein:
So let me ask this question - Jim Chalmers is with you on 774; I know he has to go soon so I've only got time for a few more questions - but you've said there'll be different arrangements for start‑ups. That's a very particular example. You haven't nailed that down yet. Small businesses paying under new arrangements because of the CGT, will there be any exemptions? You said there's some currently existing exemptions that won't change. Are you going to have to create some new ones? Are you going to need to give more people exemptions to get it through the Senate?
Chalmers:
The focus of that consultation, as you rightly say in your question, is in the start‑up sector. It's got a different kind of cost base calculation. And so we acknowledged that even before Budget night and we acknowledged it in the Budget papers that there is a particular element of this that requires -
Epstein:
Are you going to have to give ground on the other stuff?
Chalmers:
Well, it remains to be seen. I'm not anticipating that.
Epstein:
Are you okay if you do?
Chalmers:
I'm not anticipating that. One of the reasons in the small business part of this is because we're not changing those carve outs and concessions that we're talking about. So there are already carve outs and concessions for small businesses - 4 different ones - and they'll all stay in place. Not anticipating further changes in -
Epstein:
Does not anticipating - I just want to try and nail down your language. When you say you don't anticipate, the Australian and the Financial Review are not going to stop, right? This is going to go on and on and on.
Chalmers:
Yeah, I understand that.
Epstein:
There are people who support the sorts of things they are reporting. Are you prepared to give any ground or absolutely no?
Chalmers:
We've said that we're prepared to consult on the start‑up part of it and we've said that we consider the 4 existing concessions and carve outs for small business to be appropriate and that's why we're keeping them. Now, some of those outlets, they don't mention that those concessions and carve outs are there and that they will remain, but that's the case. And there's already some concessional treatment for small business. We will hold on to that. We'll do some more consultation on the start‑up sector.
Epstein:
Paul is in Clifton Hill. What do you want to ask about, Paul?
Speaker:
Clifton Springs, actually, Raf.
Epstein:
Sorry, Clifton Springs. Forgive me.
Speaker:
Yeah. Thank you for taking my call. Good morning, Treasurer.
Chalmers:
Good morning.
Speaker:
I wonder if you've considered alternative and perhaps less crude ways of trying to control inflation, such as giving the GST a tweak? My concern is that interest rates just affect a small group of people who've probably got very little discretionary income.
Epstein:
Treasurer, would you consider it?
Chalmers:
Not the GST change. We've been pretty clear about that. But I acknowledge that when interest rates go up or, indeed, when they go down, they impact people disproportionately depending on whether they've got a mortgage and whether they've got a big mortgage. So for millions of Australians when rates go up, it does make life harder for people. Those decisions are taken independently by the Reserve Bank, as everybody knows. My job is to focus on the things that I have under my control - a very responsible budget that saves more than it spends -
Epstein:
I have to ask this: the other suggestion that comes up all the time: a compulsory super contribution, increase it for a time. That takes the heat out of the economy. People ring with that suggestion all the time. Could that work?
Chalmers:
I get that suggestion, too, and I get Paul's suggestion as well from time to time. It's not something that we've been looking at. We think the best way to play a helpful role in the fight against inflation is run a responsible budget - and we are - to make sure that we provide cost‑of‑living help in the most responsible way that we can - and we are doing that, too - and the independent Reserve Bank will make its own decisions about inflation and interest rates in particular.
Epstein:
Two final questions: are you really in your heart of hearts not blown away by the criticism you've received this week?
Chalmers:
No, I'm genuinely not, because I expected it. Our opponents' main job in life, main reason for being in life, is to talk down the economy, to talk up division in our society and to protect the currentl arrangements which lock too many people out of housing. I anticipated that. Similarly, some of their allies in the media, they will talk the economy down, they will talk the Liberal party up, and they'll protect the currently arrangements. And so none of this is especially surprising to us -
Epstein:
So you're saying there the Fin and the Aus are aligned with the Liberal party?
Chalmers:
Well, I'm saying that they make the case for them. And I don't think anyone thinks it's an especially objective view that they've taken about these changes and that's because I understand that there are some people who would prefer that we left all of this untouched. But leaving all of this untouched will consign another generation of Australians to being locked out of the housing market. It will leave completely undisturbed a set of arrangements in the housing market and in the tax system which isn't working for aspiration and opportunity and ambition in this country. Our political opponents and our critics, they like to talk about this ladder, there's not much point in having a ladder if the first few rungs are missing on that ladder.
Acknowledging it is politically difficult, acknowledging that making big economic reforms will always attract its fair share of critics - but we are prepared to take a harder political road to get to the right policy outcome and we're doing it because if you look around the world, Raf - and I know that you do this - you look around the world, there are whole generations of people and whole cohorts of people who feel with some justification that they're being disconnected and disregarded and we don't want to go down that path in this country. And for us the defining challenge in that regard is in the housing market so we've taken some difficult decisions to address it. We knew that it would attract our fair share of critics. We knew that there'd be misinformation. We knew that our political opponents would lie about it, and we're seeing all of that. None of that is surprising. And it doesn't change the fact that what we're doing is the right thing and we're doing it for the right reasons.
Epstein:
I don't have time for any more calls. I will get to more of them, whatever you made of what the Treasurer's got to say. Thanks for answering those questions. Something separate but important: 11 Aussies, we don't know where they are. The government might agree or not agree with that flotilla to get aid to Gaza. Is it wrong of Israel to not tell at least their parents and their friends where those Australians are?
Chalmers:
Well, I think it would be really traumatic for their parents and friends. So first of all, I want to acknowledge that, and the caller that you've had, I think yesterday on your show -
Epstein:
Today.
Chalmers:
Today. I want to acknowledge that, very traumatic as a parent. We're engaging with the authorities. We want to see these people released. DFAT was engaged trying to discourage people from taking this path, trying to encourage people if they want to be helpful here to use established ways of being helpful. But we want to see people released, and we can understand how traumatic it is, and so we'll do what we can.
Epstein:
Is it wrong if Israel doesn't give out info on where people are, if they've got them in custody?
Chalmers:
It would be better if the loved ones of these people were up to speed and up to date on what's happening, I mean, clearly. And I don't know this for sure, but I suspect that DFAT is trying to get more information for parents and loved ones. Even if we think there are other, better ways to provide assistance here, it's important that people get the information that they need, and it's important that people are released as soon as possible.
Epstein:
Thank you for your time.
Chalmers:
Thanks, Raf.
Epstein:
That's the Treasurer, Jim Chalmers. He and the Prime Minister and the other ministers are out doing the big sell, the Budget roadshow, this week. It is a big budget. Tell me what you make of what he had to say.
Disclaimer: Curated by HT Syndication.
