WEBVTT - Labor’s budget promises fairness – does it deliver?

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<v Speaker 1>Australia's long standing housing shortage is making homes unaffordable. This

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<v Speaker 1>challenge hits young workers and families hard, and we're addressing

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<v Speaker 1>it from every responsible angle.

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<v Speaker 2>It was a budget framed around fairness for workers and

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<v Speaker 2>for young people locked out of the housing market. The

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<v Speaker 2>Treasurer Jim Chalmer's fifth budget restricts negative gearing, though not

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<v Speaker 2>for anyone who was already doing it, while also promising

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<v Speaker 2>to increase housing supply and delivering a two hundred and

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<v Speaker 2>fifty dollars tax cut for workers.

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<v Speaker 1>Speaker, this is the most important and ambitious budget in decades.

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<v Speaker 1>Important because the world is throwing a lot of us

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<v Speaker 1>and this budget is about helping Australia deal with those challenges.

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<v Speaker 2>Charmers wants this budget to be seen as ambitious, but

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<v Speaker 2>is it. I'm Ruby Jones and you're listening to seven

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<v Speaker 2>Am Today Press Gallery journalist Karen Middleton on what the

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<v Speaker 2>Treasurer is promising and whether it delivers. It's Wednesday, May thirteenth,

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<v Speaker 2>so Karen, hello and welcome back to the show.

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<v Speaker 3>Thanks Ruby.

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<v Speaker 2>It's eight point thirty at night on Budget Night, which

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<v Speaker 2>is late, so let's get into it. I thought we

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<v Speaker 2>could begin with the part of the budget that everyone

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<v Speaker 2>has been talking about in the days and weeks leading

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<v Speaker 2>up to tonight. Housing we know that now that negative

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<v Speaker 2>gearing will be restricted to new homes as of tonight,

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<v Speaker 2>and capital gains tax concessions are also going to be

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<v Speaker 2>wound back. So tell me how all of this works.

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<v Speaker 4>That's right, So as of budget night tonight, anyone buying

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<v Speaker 4>a property will only be able to negatively gear it

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<v Speaker 4>if it's a newly built property, not an established one.

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<v Speaker 3>Anyone who's already got an established property will be able

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<v Speaker 3>to continue to negatively gear it.

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<v Speaker 4>In terms of capital gains tax, the fifty percent capital

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<v Speaker 4>gains tax discount that exists now is going to be

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<v Speaker 4>replaced by a return to what was the old system,

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<v Speaker 4>an inflation based cost assessment system. They'll also have a

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<v Speaker 4>minimum thirty percent tax applied now.

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<v Speaker 3>People buying new properties.

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<v Speaker 4>Will be able to choose which version of the system

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<v Speaker 4>they access to minimize their tax again to try and

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<v Speaker 4>boost the sale of new properties, but those with established

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<v Speaker 4>properties are going to lose that fifty percent discount now.

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<v Speaker 1>This will help rebalance the system, which is more generous

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<v Speaker 1>to assets than it is to labor, and help rebalance

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<v Speaker 1>a system where house prices have decoupled from incomes. Since

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<v Speaker 1>nineteen ninety nine, house prices have risen over four hundred percent,

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<v Speaker 1>more than twice as fast as average incomes. Our tax

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<v Speaker 1>changes will help about seventy five thousand Australians achieve the

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<v Speaker 1>dream of home ownership.

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<v Speaker 2>Okay, So these changes to negative gearing, as you say,

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<v Speaker 2>they come into effect now. So if you're buying a

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<v Speaker 2>house as of tonight, no negative gearing unless it's a

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<v Speaker 2>brand new property. That means, though, is that anyone who

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<v Speaker 2>has already been negative gearing for the past few decades

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<v Speaker 2>or years, they can just continue to do that for

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<v Speaker 2>however long their loan goes for. So the intergenerational inequity

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<v Speaker 2>that exists right now that the government says that it

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<v Speaker 2>is trying to address, how much does that really change?

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<v Speaker 3>Well, that's the.

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<v Speaker 4>Question the government's going to have to answer, and I

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<v Speaker 4>reckon I'll get that question quite a lot in the

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<v Speaker 4>next few days, because there'll be people who argue that

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<v Speaker 4>it's still inequitable.

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<v Speaker 3>If the people already in the market who've had.

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<v Speaker 4>The advantage and been able to access the housing market

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<v Speaker 4>my investment properties can continue to negatively gear them whereas

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<v Speaker 4>the people who had aspired to do that one day

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<v Speaker 4>will only be able to do that on new properties.

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<v Speaker 4>Now they will still be able to do that on

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<v Speaker 4>new properties, but there will be this debate I think

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<v Speaker 4>about whether it goes far enough to addressing the intergenerational

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<v Speaker 4>inequity issue. The government argues that there was no perfect

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<v Speaker 4>way to do this and that they had to have

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<v Speaker 4>a transition arrangement because they couldn't sort of holdless bolus

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<v Speaker 4>change the tax system for everyone already in the market.

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<v Speaker 4>But it's going to raise those kinds of questions and

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<v Speaker 4>maybe criticisms, Okay, And.

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<v Speaker 2>This is of course something that Anthony Albanizi said that

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<v Speaker 2>he wouldn't do. He went to the last election saying

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<v Speaker 2>that there would be no changes to negative gearing because

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<v Speaker 2>we've got a chance to rule it out now, and

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<v Speaker 2>I think it's important you rule it out if you

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<v Speaker 2>don't plan on.

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<v Speaker 3>Doing it, well, I have no plans to do it.

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<v Speaker 2>It's not our policy. His treasurer has now explicitly done

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<v Speaker 2>the opposite, and a lot is being made of that

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<v Speaker 2>broken promise. So why is the Albanesi government doing this now?

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<v Speaker 4>Well, it's fascinating Ruby because you're right. They said it

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<v Speaker 4>the election emphatically. In fact, the Prime Minister was quite

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<v Speaker 4>forceful with journalists who were asking him about this that

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<v Speaker 4>they were not going to make these changes. And they've

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<v Speaker 4>changed and they say that things have changed since the election.

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<v Speaker 4>And I think circumstances have changed, but there's going to

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<v Speaker 4>be a question about whether people accept the reasoning and

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<v Speaker 4>the argument in favor of breaking the promise. You've got

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<v Speaker 4>these kind of competing constituencies. You've got the people who

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<v Speaker 4>say we want the government to do something. It's got

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<v Speaker 4>a huge majority, it needs to do something to fix

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<v Speaker 4>a broken tax system. And those are people who don't

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<v Speaker 4>want to wait till the next election to have the

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<v Speaker 4>government come up with an idea and then get it indoors.

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<v Speaker 3>They say that's too slow.

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<v Speaker 4>Those people are putting pressure on the government now to

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<v Speaker 4>do something. And then you've got the people who quite

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<v Speaker 4>rightly say this is a broken promise. It's an egregious

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<v Speaker 4>broken promise. They said they wouldn't do it. I believe them,

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<v Speaker 4>and this is a breach of trust. And the government

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<v Speaker 4>is choosing to act on the first lot of people's

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<v Speaker 4>demands and thinks that it can manage the second lot

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<v Speaker 4>and it's interesting because I think because of the size

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<v Speaker 4>of their majority, that the number of seats they want

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<v Speaker 4>at the election, A lot of people are telling, you know,

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<v Speaker 4>focus groups, social researchers, polsters that they sort of were

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<v Speaker 4>surprised by the size of the majority already the government

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<v Speaker 4>got and that it now has the opportunity to do

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<v Speaker 4>something like a once in a generation thing because of

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<v Speaker 4>that majority, and it should act fast. So in some ways,

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<v Speaker 4>the old rules or the standard rules of don't break

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<v Speaker 4>a promise get flexibly interpreted even by voters. I think

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<v Speaker 4>when they decide that there's something that warrants doing something

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<v Speaker 4>about it right now, and that is what the government

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<v Speaker 4>is looking to and pointing to in its decision to

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<v Speaker 4>break the promise and make these changes.

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<v Speaker 1>I think people will be most focused on the positive

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<v Speaker 1>change that we're making in the tax system and in

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<v Speaker 1>the housing market. It has obviously involved a level of

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<v Speaker 1>political risk because we come to a different view. And

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<v Speaker 1>I've said in recent days and I really mean it,

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<v Speaker 1>one of the reasons I'm here taking these characteristically difficult

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<v Speaker 1>questions from you, Sarah, is because I do understand when

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<v Speaker 1>you come to a different view, you have to front

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<v Speaker 1>up and explain why and that's why I'm doing so.

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<v Speaker 2>Is the risk here, then, Karen, that no one is

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<v Speaker 2>happy with this policy, that property investors and the housing

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<v Speaker 2>lobby don't want the bubble to but for young people

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<v Speaker 2>who are trying to get into the market, that this

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<v Speaker 2>policy doesn't actually make a meaningful difference to them. So

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<v Speaker 2>all this political capital is being spent on something that

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<v Speaker 2>actually doesn't deliver.

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<v Speaker 3>That is the risk.

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<v Speaker 4>You know, what's the old saying that you can't please

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<v Speaker 4>all the people all the time, but you try to

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<v Speaker 4>please some of the people some of the time, and

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<v Speaker 4>the risk is that you upset all of the people

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<v Speaker 4>all at once. And that's what the government will be

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<v Speaker 4>hoping that it isn't doing. I guess it depends on

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<v Speaker 4>how effective its explanation is and how people receive that,

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<v Speaker 4>whether they decide that this is an important move to

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<v Speaker 4>fix the system, whether they accept that there has to

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<v Speaker 4>be a transition which entrenches some of that unfairness for

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<v Speaker 4>a while, or whether they think it doesn't go far

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<v Speaker 4>enough and we're going to punish the government accordingly.

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<v Speaker 2>Still to come tax cuts for working Australians parent A

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<v Speaker 2>central concern of this budget has been how the government

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<v Speaker 2>can weigh cost of living relief measures against the inflation risk.

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<v Speaker 2>So given that, can we talk a little about what

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<v Speaker 2>is in the budget that might help reduce costs for people.

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<v Speaker 4>Yeah, So there's been some speculation in the last week

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<v Speaker 4>or so that there might be some kind of extra

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<v Speaker 4>tax measure, and we have in fact seen that in

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<v Speaker 4>the budget tonight. It's called a Working Australian's tax offset

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<v Speaker 4>of two hundred and fifty dollars.

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<v Speaker 1>This offset is targeted to workers and it represents the

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<v Speaker 1>most meaningful permanent increase to the effective tax free threshold

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<v Speaker 1>since labor increased it more than a decade ago.

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<v Speaker 4>It doesn't come in until the second half of twenty

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<v Speaker 4>twenty seven and it won't be claimable until the end.

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<v Speaker 3>Of that tax year.

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<v Speaker 4>So really we're talking about an extra measure that people

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<v Speaker 4>would get in their pockets after probably the next election,

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<v Speaker 4>so it's a while away. But the other measure that

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<v Speaker 4>the government's introduced is this one thousand dollars to instant

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<v Speaker 4>tax deduction, and that's aimed at people who are claiming

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<v Speaker 4>lots of work related expenses in their tax return. It's

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<v Speaker 4>allowing them to claim up to one thousand dollars without

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<v Speaker 4>having to provide receipts. And now, yes, that's going to

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<v Speaker 4>be pretty welcome to a lot of people for whom

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<v Speaker 4>doing the tax is a huge headache. If you want

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<v Speaker 4>to claim more than one thousand dollars, you are going

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<v Speaker 4>to have to provide receipts. But up to one thousand

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<v Speaker 4>dollars you're be able to claim that instantly. It'll be

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<v Speaker 4>a faster way to do your tax. So that's going

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<v Speaker 4>to appeal to a lot of people. I think Treasury

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<v Speaker 4>is saying that something like six million people, working people

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<v Speaker 4>are going to benefit from that proposal that makes tax

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<v Speaker 4>time a little bit easier. One of the key things

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<v Speaker 4>the government is emphasizing is that all the money that

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<v Speaker 4>it's saving from the tax measures that it's making is

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<v Speaker 4>going towards funding other tax measures, like the tax cuts

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<v Speaker 4>that it announced a couple of years ago. So it's

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<v Speaker 4>talking about a broadly revenue neutral budget and it's trumpeting

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<v Speaker 4>the fact that it's re employing that money to the

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<v Speaker 4>benefit of the electric.

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<v Speaker 2>And this budget also cuts the permanent migration intake, which

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<v Speaker 2>is interesting. So is that an economic decision or a

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<v Speaker 2>political one?

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<v Speaker 4>Well, that's a very interesting question. On face value, it

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<v Speaker 4>looks to me like a political decision. The government's setting

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<v Speaker 4>the twenty twenty six twenty seven permanent Migration program planning

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<v Speaker 4>level at one hundred and eighty five thousand places, and

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<v Speaker 4>most of those over seventy percent are going to go

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<v Speaker 4>to skilled migrants. They're also going to prioritize applications from

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<v Speaker 4>people who are already on shore and those that are

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<v Speaker 4>offered to offshore applicants that are going to be targeting

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<v Speaker 4>high skilled migrants with high levels of education. But there

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<v Speaker 4>is also an admission in the budget papers that the

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<v Speaker 4>government's forecast net overseas migration levels have blown out. So

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<v Speaker 4>they had forecast in the midyear budget update that the

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<v Speaker 4>twenty twenty five twenty six level of net overseas migration

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<v Speaker 4>would be two hundred and sixty thousand. In fact, they're

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<v Speaker 4>now saying it's going to be two hundred and ninety

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<v Speaker 4>five thousand, So that's a blowout of thirty five thousand.

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<v Speaker 4>They say that's because not as many people are leaving

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<v Speaker 4>the country as there had been before. But on the

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<v Speaker 4>whole there's a new emphasis or an even greater emphasis,

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<v Speaker 4>on skilled migrants, on highly educated migrants, and on people

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<v Speaker 4>already here in Australia, so they're kind of pulling the

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<v Speaker 4>drawbridge up a little bit on new migrants, and you've

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<v Speaker 4>got to assume that that's at least in part response

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<v Speaker 4>to the sort of political climate we're seeing that delivered

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<v Speaker 4>paul En Hansen and her One Nation Party a seat

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<v Speaker 4>in the electron of Parah on the weekend, and that

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<v Speaker 4>is becoming a big issue around Australia, with the connection

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<v Speaker 4>between the number of migrants since the COVID lockdowns and

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<v Speaker 4>border closures and the economic pressures people are facing. Whether

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<v Speaker 4>or not those connections are fair, that's certainly something that

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<v Speaker 4>people are feeling. And the government is making a point

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<v Speaker 4>of emphasizing a tightening of the migration system in this

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<v Speaker 4>budget and it seems to be looking to those sort

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<v Speaker 4>of sentiments.

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<v Speaker 2>And the big message of this budget every budget has one,

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<v Speaker 2>is around fairness. Yet the biggest cut has been from

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<v Speaker 2>disability support thirty six billion from the NDAs, and when

0:12:10.280 --> 0:12:13.880
<v Speaker 2>it comes to intergenerational inequality, there are these real questions

0:12:13.920 --> 0:12:16.600
<v Speaker 2>I think about whether or not this budget will address

0:12:16.640 --> 0:12:20.000
<v Speaker 2>that in any meaningful way. So what is your assessment

0:12:20.040 --> 0:12:24.120
<v Speaker 2>of that messaging and whether the budget actually backs it up.

0:12:25.160 --> 0:12:27.880
<v Speaker 4>I think it's I mean, I think it's certainly moving

0:12:27.920 --> 0:12:30.600
<v Speaker 4>in that direction, and as we've been saying, there'll be

0:12:30.800 --> 0:12:33.839
<v Speaker 4>debate about whether it goes far enough. Certainly there is

0:12:33.920 --> 0:12:35.800
<v Speaker 4>some in new community that will point to what is

0:12:35.840 --> 0:12:39.960
<v Speaker 4>still being spent on things like the Orcus submarine deal

0:12:40.760 --> 0:12:43.760
<v Speaker 4>and things that weren't done, like the decision not to

0:12:43.800 --> 0:12:48.000
<v Speaker 4>tax the gas industry in a more onerous manner, and

0:12:48.120 --> 0:12:50.480
<v Speaker 4>say well, you know, why are you sort of doing

0:12:50.480 --> 0:12:52.160
<v Speaker 4>these things and not doing those things? And there are

0:12:52.200 --> 0:12:54.679
<v Speaker 4>places you could be saving money. But I think they

0:12:54.720 --> 0:12:58.600
<v Speaker 4>have made some pretty hard decisions here that will probably

0:12:58.840 --> 0:13:03.560
<v Speaker 4>ultimately be beneficial for the economy and fairer for the economy.

0:13:03.040 --> 0:13:04.840
<v Speaker 3>But they're going to be hard to manage them in

0:13:04.920 --> 0:13:05.760
<v Speaker 3>the short term.

0:13:06.040 --> 0:13:09.600
<v Speaker 4>It's interesting going back to the point we discussed about

0:13:10.200 --> 0:13:14.120
<v Speaker 4>the feedback they're getting from Australians about the desperation and

0:13:14.160 --> 0:13:17.280
<v Speaker 4>the desire for them to do something to change the system.

0:13:17.640 --> 0:13:19.360
<v Speaker 4>You know, I've got a piece in the Monthly this

0:13:19.440 --> 0:13:22.480
<v Speaker 4>month looking at the levels of anxiety in the community

0:13:22.520 --> 0:13:24.880
<v Speaker 4>and the sorts of sentiment that is delivering support to

0:13:24.880 --> 0:13:27.480
<v Speaker 4>Paul Enhancement's One Nation and talked.

0:13:27.240 --> 0:13:30.040
<v Speaker 3>To some polsters and social researchers about that.

0:13:30.080 --> 0:13:32.160
<v Speaker 4>And one of the messages that came through there from people,

0:13:32.200 --> 0:13:35.120
<v Speaker 4>which I thought was really fascinating, was the sentiment that

0:13:35.880 --> 0:13:38.600
<v Speaker 4>if you've got two houses, the tax system helps you

0:13:38.679 --> 0:13:41.960
<v Speaker 4>more than if you've got two jobs. And that is

0:13:42.000 --> 0:13:44.480
<v Speaker 4>the sentiment really that we've heard from Jim Chalmers in

0:13:44.520 --> 0:13:46.760
<v Speaker 4>the delivery of his budget, the press conference that he

0:13:46.840 --> 0:13:49.840
<v Speaker 4>gave explaining the budget in the lock up to journalists,

0:13:49.920 --> 0:13:51.720
<v Speaker 4>he was talking very much about that.

0:13:51.960 --> 0:13:54.960
<v Speaker 1>This is about better aligning the taxes paid on these

0:13:55.040 --> 0:13:59.280
<v Speaker 1>types of income with the taxes paid on wages. These

0:13:59.400 --> 0:14:01.880
<v Speaker 1>changes will all the playing field for workers and first

0:14:01.920 --> 0:14:05.920
<v Speaker 1>home buyers and support investment in productive assets including new

0:14:05.960 --> 0:14:09.160
<v Speaker 1>housing supply, and they will find our new round of

0:14:09.200 --> 0:14:12.439
<v Speaker 1>tax relief for more than thirty million Australian workers.

0:14:13.320 --> 0:14:16.440
<v Speaker 4>He was saying, we want the tax system to be

0:14:16.559 --> 0:14:20.040
<v Speaker 4>fairer to people who earn their income through working and

0:14:20.200 --> 0:14:23.280
<v Speaker 4>not as generous to people who earn their income from

0:14:23.400 --> 0:14:27.360
<v Speaker 4>passive investments and assets, because he says it's out of whack,

0:14:27.520 --> 0:14:30.280
<v Speaker 4>it's out of balance and it needs to be rebalanced,

0:14:30.280 --> 0:14:32.400
<v Speaker 4>and that's very much the emphasis. So in that sense,

0:14:32.480 --> 0:14:36.120
<v Speaker 4>it's a very labor budget. It is really trying to

0:14:36.160 --> 0:14:39.000
<v Speaker 4>shift that back to be fair to working people.

0:14:39.320 --> 0:14:41.000
<v Speaker 3>But it's not going to be without some pain in

0:14:41.040 --> 0:14:41.640
<v Speaker 3>the short.

0:14:41.480 --> 0:14:44.920
<v Speaker 4>Term, and certainly there are some groups that are going

0:14:44.960 --> 0:14:47.480
<v Speaker 4>to find it very difficult. I mean, there are some

0:14:48.360 --> 0:14:51.240
<v Speaker 4>changes to the tax for business as well to try

0:14:51.280 --> 0:14:54.560
<v Speaker 4>and protect business from the worst of the economic crisis,

0:14:55.000 --> 0:14:57.720
<v Speaker 4>and there are some pretty dire forecasts in here.

0:14:57.880 --> 0:15:01.240
<v Speaker 1>In this budget, Treasury also presents some more severe scenario

0:15:01.360 --> 0:15:03.520
<v Speaker 1>where the your price peaks at two hundred dollars a

0:15:03.520 --> 0:15:07.800
<v Speaker 1>barrel and takes three years to fall back down. We'd

0:15:07.840 --> 0:15:10.920
<v Speaker 1>still avoid a recession, but unemployment would spike to pre

0:15:11.040 --> 0:15:14.800
<v Speaker 1>pandemic levels and inflation would peak above seven percent.

0:15:15.240 --> 0:15:17.400
<v Speaker 4>And so you know, there's a lot of sort of

0:15:17.760 --> 0:15:21.360
<v Speaker 4>uncertainty about all of this, and the government.

0:15:21.040 --> 0:15:24.040
<v Speaker 3>Has taken a big risk, a big political risk in.

0:15:24.040 --> 0:15:26.800
<v Speaker 4>Making these changes in this tough budget at this time,

0:15:27.400 --> 0:15:30.160
<v Speaker 4>but they've decided they've got the political capital they need

0:15:30.200 --> 0:15:33.160
<v Speaker 4>to spend it and that Australians are calling out for

0:15:33.640 --> 0:15:37.040
<v Speaker 4>something to change.

0:15:37.800 --> 0:15:39.760
<v Speaker 2>Well, Karen, thank you so much for your time.

0:15:40.520 --> 0:15:41.160
<v Speaker 3>Thanks Ruby.

0:15:52.640 --> 0:15:55.080
<v Speaker 2>Also in the news, the government has been accused of

0:15:55.120 --> 0:15:58.080
<v Speaker 2>trying to bury its response to the Peter Murphy Report

0:15:58.120 --> 0:16:02.040
<v Speaker 2>on gambling reform by release it on Budget Eve. Leading

0:16:02.080 --> 0:16:06.120
<v Speaker 2>advocate Tim Costello says it's very disappointing, particularly since the

0:16:06.160 --> 0:16:09.840
<v Speaker 2>government is only tackling four of the thirty one recommendations.

0:16:10.440 --> 0:16:13.680
<v Speaker 2>The official government response, released more than a thousand days

0:16:13.720 --> 0:16:17.560
<v Speaker 2>after the report, ignores calls for an online gambling regulator

0:16:17.600 --> 0:16:22.680
<v Speaker 2>and comprehensive ban of online gambling advertising, and a Canberra

0:16:22.760 --> 0:16:25.640
<v Speaker 2>teenager has been charged with planning a terrorist attack in

0:16:25.720 --> 0:16:29.000
<v Speaker 2>the Act. The seventeen year old is accused of planning

0:16:29.000 --> 0:16:33.880
<v Speaker 2>an attack motivated by views aligned with nationalist and racist extremism.

0:16:34.680 --> 0:16:38.240
<v Speaker 2>Counter Terrorism police say it's alarming to see young Australians

0:16:38.280 --> 0:16:43.320
<v Speaker 2>exposed to violent extremist material and propaganda. I'm Ruby Jones

0:16:43.360 --> 0:16:46.000
<v Speaker 2>and we'll be back with a special Budget Bonus episode

0:16:46.040 --> 0:16:49.320
<v Speaker 2>this afternoon, where we'll break down exactly what the government's

0:16:49.440 --> 0:16:52.320
<v Speaker 2>changes mean for house prices and people trying to get

0:16:52.320 --> 0:17:03.360
<v Speaker 2>into the property market. Thanks for listening, you m