Television interview - Sky News Afternoon Agenda with Tom Connell

TOM CONNELL, HOST: Welcome back. Who better to get a take on the Budget? I’m sure it won’t run across party lines. Joining me now is Assistant Minister to the Prime Minister, Patrick Gorman, and former Liberal MP Jason Falinski.  Pat, we’ve heard about levelling up the playing field, and I thought, great, humble PAYG income taxpayers must be getting a good deal. Then I had a look at the Budget papers. Income tax as a percent of GDP is at a record high, 12.8 per cent.  So those paying income tax, they’re not getting a better deal, are they?

PATRICK GORMAN, ASSISTANT MINISTER TO THE PRIME MINISTER: I think if you went to the other parts of the Budget papers, Tom, you would see there was, of course, the Working Australians Tax Offset. That's $250 each and every year, permanently. There is the $1,000 instant tax deduction, and there's a tax cut coming on 1 July this year, and a tax cut coming on 1 July next year, and the big difference between our tax cut - 

CONNELL: But they are all factored into that -

GORMAN: I was just referring to the measures that are in the Budget. And the big difference between the tax cuts that we're talking about and what we're seeing from the Opposition is that all of our stuff is actually in the Budget and costed. You can see it there, it's real. 

CONNELL: Okay, but all those measures are fine. The number that doesn't lie is, the Budget papers say over the next few years 12.8 per cent. So, the tax take on income tax, 12.8 per cent of GDP. In other words, we're never going to pay more income tax than by that stage. So, you can say here's an amount you're giving, and it sounds impressive, but bracket creep is galloping ahead of that, isn't it? That Budget paper doesn't lie.

GORMAN: What we've known for a long time, and this is not news to you or to Jason, is that Australia does have a large reliance on income tax from people working, giving their effort to earn a wage. That has been an element of the Australian economy for many years. You can - whether you like that or not, that's up to you. But obviously, this Government has a very strong record when it comes to cutting tax cumulatively. All of the measures we've put in place saves your average worker about $2,800 a year, that's significant for working people.

CONNELL: But clearly behind bracket creep. Add them all up, that's fine. It's clearly behind, if the percentage GDP keeps going up. Jason, for the Coalition, is the call on ending bracket creep to be believed, I guess? Do we need to hear about all the savings to make sure it's affordable?

JASON FALINSKI, FORMER LIBERAL MP: Sure, Tom. I mean, what we've already seen in this Budget is that there's a huge amount of fraud and waste going on, and this Government hasn't touched on it. In fact, as Chris Joy pointed out, all the savings they're making are simply going directly into paying for their largesse in the public service, you know. Patrick and I had an argument not that long ago about flat income tax, and it looks like the Labor Party is going to deliver on that within this decade. Because we'll all be paying the highest - the top marginal tax rate. So, I just, you know, thank you for agreeing to my idea, and implementing it, Patrick.

CONNELL: Do you - what about the top marginal tax rate? Because the Coalition previously looked at it. Even just the relatively modest increase to $200,000 because it was $180,000 in I think 2007. If it had gone along with inflation, it would be $280,000. Now it's $190,000, but the Coalition's plan didn't look at that. It is sort of scared off the politics of that, do you think, Jason?

FALINSKI: No, I don't think it's scared off at all, Tom. I mean, the fact of the matter is that we have the highest income taxes in the world. They are punitively high, especially when you include the Superannuation Guarantee Levy as well. It's probably some of the highest taxes, income taxes in the world, cutting in at the lowest income rates. And the fact is that, you know, it is killing off any sense of people who want to have a go, want to take a risk, who want to innovate. And the result of that is that, you know, we have a country where people are just taking the safe course, because it's the only rewarding one, and the result of that is that our living standards have been declining over the last four years.

CONNELL: Labor pledged to keep that stage three, Pat. What do you make of the top marginal tax rate? It is very, very low when it kicks in, especially compared to not just around the world, but to the last time it was increased in Australia. At some point, if you want to help out PAYG workers, and what Jim Chalmers spoke about, aspirational Australians, do you have to revisit that at some point?

GORMAN: We have always explained that the focus of our tax cuts have been on those on lower-middle incomes. That is not to mean that there haven't been tax cuts that have flowed all the way through the system, as has happened with those reworked stage three arrangements, but also the additional tax cuts that we've got in this Budget.  But I think people understand that - given the financial pressures that Australia faces when it comes to the significant headwinds we've had, and of course, the need to make sure that we're making responsible Budget decision - that we'll always look at income tax cuts. We look at that in every Budget we've handed down, always trying to find ways to help people who are working hard to earn the money that they take home. And if we can help people earn a bit more and keep a bit more, that's a good thing, and we'll keep doing that.

CONNELL: No thought of those, you know, trying to get a second round at the wine bars, Pat? Maybe on a higher tax bracket, just wondering when it'll ever shift?

GORMAN: I'm not exactly sure what your question there is, Tom. But that wouldn't be the first time and probably won't be the last.

FALINSKI: Tom. If I can say. We are now in a situation - 

CONNELL: You get what I mean? Yeah, go Jason - 

FALINSKI: - where we have the highest income taxes in the world. There are a couple of countries that are higher than us, mostly in Africa, cutting in at the lowest income rates. We have the highest taxes on corporations in the world, certainly on the OECD. We now have the highest rates of taxation on capital. We are an incredibly highly taxed country. Debt under this Government has gone up by $110 billion. The deficit is another $36 billion this year, not accounting for off-balance-sheet spending, like Snowy Hydro 2.0. The fraud, the waste, and the abuse, inherent in so many of the programs that are being run by Government at the moment is problematic, and we are killing people who are the people who generate the wealth, generate the jobs, who are willing to take a risk, and the result of that is, is that all of us will be poorer very, very soon. And we've seen that already. We've been in a per capita recession. Basically – 
 
CONNELL: Okay, okay – 

FALINSKI: Well, if you'd answered the question I wouldn't have got a chance – 

GORMAN: Why is it always such catastrophe from the friends of the Liberal Party, Jason? You've said that we're killing people. You said that you know very soon, it is going to fall apart – 

FALINSKI: When did I say you were killing people? 

GORMAN: Rewind it. I mean, can we just have a sensible economic discussion – 

CONNELL: It might have been figurative – 

GORMAN: - rather than the three conservative parties, always running to the extremes – 

CONNELL: Let me guide our way to – Patrick, let me ask you this. So, housing – 

FALINSKI: Well, I mean, I'm just bringing – I'm sorry that I’m bringing facts to this discussion [inaudible], and that must be hurting people, but if you're killing people, Pat, you know this probably is a good time to confess, but I didn't know about any of that.

CONNELL: I believe it was a figurative reference, as it was from you, Jason. I'm going to move on there, anyway. Okay, so the Budget papers had immigration – we're overshooting immigration by 55,000 and Labor is behind on its housing targets, Pat. That's pretty simple, isn't it? You're making the housing crisis worse.

GORMAN: Firstly, the figure that I also saw is that since we came to office, some 660,000 new homes have been built. There's more to do, but I'll tell you what won't help is the plan that Angus Taylor released on his Budget reply – 

CONNELL: It’s a big figure. It doesn't mean anything with the amount of people that have arrived since then. 

FALINSKI: [Inaudible] This government created an $80 million fund that hasn't – that's built something like 24 homes, Pat. 

GORMAN: Yeah, okay, so it does mean something. 660,000 homes mean something to the people who are able to have a safe place to call home. It does matter. 

FALINSKI: Not when we need more, and it’s less. 

CONNELL: I’m saying the number by itself, doesn’t mean anything. 

GORMAN: And if we go to the idea, when it comes to what was put forward on Budget reply night by Angus Taylor, which was to close the Housing Australia Future Fund. Now I went and checked, what would that mean in my election of Perth alone? That would mean 341 homes that have been built by that fund or invested in by that fund –

FALINSKI: But they haven’t been built. They’ve been purchased. 

GORMAN: - I assume they get – I don't know what happens to them. Do they sell them off? Do they kick out the tenants? What happens to those people? 

FALINSKI: Well, that's what you – well, that's what the fund took previously built houses and bought them. It hasn't built a single – well, that's unfair. It's built very few new houses, Pat. That's why building stats under your Government have gone down.

GORMAN: Okay. Well, I don't know if the Liberal Party solution of doing even less helps. I don't see how that's going to help anyone. Closing that Housing Australia Future Fund – closing that down – 341 people in my electorate kicked out on the street. Thanks to Angus Taylor. I don’t see how that helps. 

FALINSKI: Where is that coming from? It has done nothing. Oh, come on. Now who's guilty of hyperbole?

GORMAN: It's the Liberal Party policy, Jason, you might not agree with it and that’s open to you.

FALINSKI: Sorry, point to where our policy is to kick people out on the street, Pat. Which page number – where? It doesn’t exist and you know it. 

GORMAN: Well, no, you know there is not a single costing for this policy, but if I was – if you've got the secret costings, please share them. What I do know, when it comes to the Housing Australia Future Fund, 341 people in my electorate rely upon that. All out on the streets, thanks to Angus Taylor.  

CONNELL: I’m going to jump in. Pat, Jason. Sometimes I wonder how long you two would go for if I just said nothing. Maybe I'll try that next week. I'll start with a question.

FALINSKI: Oh, we'd start asking you questions. How would that go, Tom?

GORMAN: How would that go, Tom?

CONNELL: Well, yeah, I’d just have to wrap because we're out of time. I might – I'm going to try that one week, but I've sort of ruined the surprise now, haven't I? Patrick, Jason, talk next week. 

ENDS