In an interview recorded on Wednesday, Prime Minister Malcolm Turnbull talks to Ross about the budget, the polls, and the bank levy
Ross Greenwood: Prime Minister, thank you so much for your time. Just an important question right now after the budget. You’ve now got to sell this to the Australian people, but it’s quite a different budget, isn’t it? It’s not the same budget that we’ve seen from the previous coalition governments in this period of time.
Prime Minister: Well, it’s the budget for our times. It’s a budget that is fair, it’s responsible, it provides real incentives for business to invest and employ, provides $75 billion for infrastructure. It guarantees Medicare. It delivers school funding that is fair, consistent, needs-based, transparent, delivering on David Gonski’s recommendations.
Is There Something in this for me?
Ross: Okay. A person going out there to work today, when they sit there and look at this budget, do they say, “Is there something in this for me?” or is it that long term, it’s “Trusts us, we’re the government, we will look after you. Better times are ahead.”
Prime Minister: Well, it is delivering for Australian businesses and Australian workers right now. You’ve got to remember, we already have the tax cut for businesses with turnovers of under $10 million in place. The tax cut for businesses up to $25 million comes into effect from July 1. Next year, it’ll be included up to 50. Australian businesses are getting that incentive from law business tax rates and of course, a big part of everybody’s income, in a real sense, is the security of having Medicare, the National Disability Insurance Scheme, knowing that schools will be properly funded, those essential government services are part of our income, are part of what we rely on, and we are securing them, delivering.
National Disability Insurance Scheme has not been fully funded, we all know that. We did our best to get savings through the Senate to cover it. We’ve been unable to do that, so we are increasing the Medicare levy, as you know, by half of percent in 2019, that will fully fund the National Disability Insurance Scheme. The assurance, the security that that gives to Australians, to parents with a disabled child. They know that the money will be there, the funds are there to support them, to help them as they support their children.
Ross: You talked about the measures that couldn’t get through the budget previously. That’s where this is different because it’s effectively saying, “Look, the hard cuts clearly can’t pass the Senate, so, as a government, we’ll try a different way, we’re going to try –”
Prime Minister: We’ll try a fantasy budget, Ross. You’ve got to live in the real world, okay? You’ve government’s proposed changes, they put them in the budget and they do their best to get them through and we have done our best to get them through, but there comes a point where you’ve got to accept. We couldn’t get them through the last Parliament, the old Senate. We’ve got a new Senate, we couldn’t get them through this Senate, so clearly the time has come to face reality, make the hard decisions and ensure that we bring the budget back into balance. You saw last night, we’ve got a tick from the ratings agency, from Moody’s. I saw Chris Richardson saying earlier it was a good budget because it’s bringing a credible, responsible path back into balance.
Ross: Does it rely really on trying to grow the pie, grow the economy and grow wages as well?
Prime Minister: Well, it relies on all of those things, naturally, but it is the assumptions that we’ve made — as an economist, you’d understand this better than me, I guess, but the assumptions are pretty conservative. They’re more conservative than the Reserve Bank or the IMF. Obviously, we live in an uncertain world. We don’t know what INO prices are going to be two, three years from now, coal prices, but the assumptions we’ve made are very conservative ones. Assumptions about economic growth, global growth are conservative as well. All of that gives us a high measure of confidence in the forecasts and projections in the budget.
Ross: Prime Minister, tell me about your hopes for getting this budget through our Parliament. As you put it out, it’s been tough getting previous cuts through. How do you think you go this time?
Prime Minister: Well, I’m confident we will get the measures in the budget through the Parliament. We’ve already seen support in some cases from the opposition and other cases from the cross benches for the measures in the budget. We are quietly confident of securing support in the Senate for the budget, all of the measures in the budget.
Ross: Is it true, a person sitting at home, going to work, most of their taxes right now do go — they fund the government, half of their tax, half of the money that you raise comes from people going to work every day, that’s something you’ve at least got to be conscious, responsible.
Prime Minister: That is why we do everything we can to ensure that taxpayers dollars are spent wisely and effectively, that’s why we’re constantly, I’m constantly seeking to ensure we get the best value for the taxpayers back.
Ross: Okay. Tell me about home buyers because clearly, homeland affordability up the eastern seaboard has become what you’ve described as a crisis. Just explain, do you think really that what the government has done in this budget is going to help to avert that crisis?
Prime Minister: Yes. It will, it will alleviate it, there is no silver bullet. There’s no single silver bullet and you know that as well as I do, better than I do probably. The first thing you’ve got to do is build more houses. Build more dwellings, particularly in Sydney and Melbourne.
Ross: That’s music to Harry Triguboff’s ears.
Prime Minister: Well, it is, and that needs action on zoning and planning by state and local governments. Obviously that they’re the consent authorities, but what we do is, by working with them, tying in our money for infrastructure to city deals. This has been a big innovation in my government. We’re actually getting some leverage and some say, so as we develop the Western Sydney city deal and associated with the Western Sydney Airport, which we’re going to build, part of that is going to be the state government providing the zoning to allow additional housing supply, which is clearly going to be needed. Also, we’re providing physically additional supply by freeing up, for example, a large area of defense land that surplus to requirements now in Melbourne, 10 kilometers from the CBD. All of that is very important.
We’re also providing incentives for affordable housing, for investment in an affordable housing, for people on lower incomes, for people who need housing because they’re homeless or been subject of domestic violence. There is a very big affordable housing element in there. Then, of course, for the young homebuyers, would-be-homebuyers, we’re making it easier for them to save for a deposit, not by rating their super. Super is sacrosanct, that’s secured, but they’ll be able to save additional money and get super-like tax benefits, in fact, in some respects, better than that. They’ll be able to get those benefits and more readily save for a deposit. It’s a big package.
Ross: Would you expect young people to use those incentives to save for their deposit? Is that what you’d really expect, is it big enough for them?
Prime Minister: Well, yes, it is. It will enable them to save $30,000 each, so that’s a couple at $60,000, that’s a help. Again, the overall, the most important answer is increasing supply. For example, again, another measure, there has been an issue with overseas buyers buying residential property, typically apartments and leaving them vacant. Now that’s not terribly economically rational, but nonetheless, that’s been happening, that’s become quite a phenomenon in some parts of Melbourne and Sydney, as well. What we’re doing is providing, we’re saying that there will be in effect a tax on foreign-owned residential property that is not either occupied or available for rent for at least six months, and so we’ll rent it or available foreign for at least six months. That is providing an incentive to increase supply so that you get more apartments available for rent.
Ross: Is that the same as what you’ve done with older Australians, who have had the incentive to hang onto their properties and not to downsize because of pensions and superannuation, is that why you’ve tried that deal?
Prime Minister: Yes, correct. That’s right, what we’ve done is, you’ve said, if you’re over 65 and you decide to sell your house, you can take $300,000 of the proceeds and put that into your super, over and above your other entitlements. Again, that’s providing an incentive for downsizing. The housing package is — there’s a lot of measures in it. It’s been very well thought-out. It’s been very well received by the housing industry because they can see the thoroughness with which Scott has approached this, the comprehensive nature of it, dealing with first-time — from first-time buyers and their in savers in their 20s to people in their mid 60s, who are thinking of downsizing, right across the board increasing supply, providing help to first home buyers, encouraging people when they choose to downsize to do so, and, of course, all of that creates more supply.
Ross: You can’t be ignorant, Prime Minister, that you have been behind in the polls. Many people pointed to this budget and said this was a way in which you could reset it effectively. It is your first real budget that you can claim full ownership and authorship of with the treasurer. Do you think this is enough to grab the public’s attention? Can you sell up to the public to grab their attention, to really say, “This is the way forward for Australia”?
Prime Minister: Well, my focus is on delivering a good budget and Scott and I and Matthias and the whole team, we’ve delivered a budget that is fair, guaranteeing, delivering those essential services, education, National Disability Insurance Scheme, Medicare, national security, delivering all of that and, at the same time, providing incentives for employment and investment. Delivering $75 billion of infrastructure in road and rail across Australia, nation building infrastructure, inland rail, Snowy Hydro, Western Sydney Airport, these are all vital investments. We’re doing all of that and at the same time, we’re bringing the budget back into balance because we have to do that because otherwise, you’re just loading a mountain of debt onto the shoulders of your children and grandchildren.
Ross: You speak to a lot of people around the place, do you think they’ll buy this budget?
Prime Minister: Well, I believe Australians will see that it is fair, it’s responsible, it’s creating opportunity and it’s providing security.
Ross: Prime Minister, thank you so much for your time.
Prime Minister: Thank you.