Low Income Tax Offset; Carbon price; Budget 2011; Skilled migration; Employment; Asylum seekers

Warren Snowdon MP, Minister for Indigenous Health, Member for Lingiari

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TREASURER: Good to see you all out here on a freezing Canberra morning. It’s good to be here also with Jenny Macklin. I just wanted to say a few things about the Budget and then of course I’m happy to answer questions and Jenny will of course say a few words as well.

You’ve heard me talk about really the twin challenges of the Budget. Firstly the short-term softness and then of course the long-term strength. Of course we’ve got short term economic softness which is a product of the natural disasters, and of course it’s also a product of a patchwork economy. So not everybody out there is in the fast lane. Many people face cost of living pressures and of course many small businesses also do it tough. That’s why I’m pleased to announce today that we’re providing some additional assistance to people on modest incomes bringing forward the payment of the Low Income Tax Offset. This is a modest amount of money but every dollar counts, particularly when you’re facing cost of living pressures. So it’s good that we’ve been able to put this in the Budget to assist those people that are doing it tough.

And you would have seen yesterday also that I confirmed that we were extending the $5,000 instant asset write-off for small business, extending that to the first $5,000 for the cost of a motor vehicle, say, a ute. That’s an important piece of additional assistance for small business that are also doing it tough. So we’re very mindful in this Budget of recognising that in a patch work economy not everybody is in the fast lane, but what we also know is that the economy is at a position and in transition to very strong growth in the medium term. And that’s why we must bring this Budget back to surplus in 2012-13. We simply can’t have the Government compounding or adding to the price pressures and capacity pressures which will flow from this very strong investment pipeline. There are great opportunities for Australia in the years ahead and I’m very optimistic about our future. That means getting the settings in this Budget right is absolutely important, as well as for future Budgets. That’s why we’re focused on coming back to surplus in 2012-13 and making sure that there is room for our current priorities by making savings elsewhere in the Budget. Jenny.

MACKLIN: Thanks very much Treasurer. This is a very important initiative particularly for low income families. We know how important it is for families who are on low incomes to be able to get that extra bit of support when their bills come in and this change to the Low Income Tax Offset will mean that extra help is there for them.

This change that the Treasurer is announcing today is in addition to the money that we will provide to families who’ve got teenagers. I think all of us know that children as they grow up in fact cost more, not less, and so the Government is very pleased to be funding in this Budget the increase to Family Tax Benefit Part A which will see an increase of over $4,000 for some families with teenagers aged 16 to 19. The critical issue for that initiative is that the young people must be attending school or be in vocational education. And that really is the theme for this Budget – additional support for families, but we want to do everything possible to encourage and support young people, other Australians to get education and training and to be in work.

TREASURER: Over to you.

JOURNALIST: If every dollar counts why not pay 100 per cent of the offset upfront so people have so people have $10 or $15 dollars more a week?

TREASURER: Well, there’s a very good reason for that, it is that the Low Income Tax Offset has been doubled under this Government from $750 to $1500. People’s incomes move around so it’s important to have a little bit of a buffer because if your income changes during the year you don’t want to end up getting a bill either. So there is a reason why you don’t pay it all at once.

But we’re really proud of what we’ve done with the Low Income Tax Offset. We’ve doubled it during the period we’ve been in Government. This has been a very substantial tax cut for low income earning Australians – $1500 it’s worth now. It means an effective tax free threshold of $16,000. So we had a good think about this, we had a look at it, and we thought, well if we can move from 50 per cent through the year to 70 per cent through the year then we should do it and that’s what we’ve done because it does recognise that at the moment people are doing it tough. Every bit helps, every dollar counts, particularly when there are cost of living pressure around. So that’s why we’ve decided to move to 70 per cent.

JOURNALIST: Treasurer, Joe Hockey has been saying this Budget is essentially meaningless without details of the carbon tax in it. What do you say to that?

TREASURER: Well, first of all you cannot include a proposal in a Budget which hasn’t been developed or fully costed. We are currently consulting about the design of an Emissions Trading Scheme. If we were to include details in the Budget that hadn’t been fully costed or designed we would be receiving criticism from Mr Hockey about that.

The fact is, that we will include and publish to everybody and make available to everybody the full details the minute we take a Government decision. The minute we do that all of that material will be published and then it will be incorporated in the next economic update that comes forward, and in this case it would be the mid-term review towards the end of the year. But we will provide immediately Budget quality material and costings when we have taken those decisions

But I want to make a couple of other points about the complete hypocrisy of Mr Hockey.

Firstly this, that when John Howard announced his commitment to an Emissions Trading Scheme, he did not then include any figures in his next Budget update, indeed he didn’t include any figures in the proposals he took the election for an Emissions Trading Scheme in 2007. Secondly, when John Howard announced the GST in 1997 he never included any figures in a Budget until 1999.

So I think this just demonstrates the rank hypocrisy and political opportunism and the emptiness of the critique of Joe Hockey.

JOURNALIST: We’ve heard over the last week the goodies in tomorrow night’s Budget. Where are the nasties and how nasty are they?

TREASURER: Well, we’ve made it very clear that in coming back to surplus in 2012-13 and then building surpluses thereafter, there is a need to put in place substantial savings, and you’ll see on Budget night substantial savings. In our time in Government and in the previous three Budgets we have made substantial savings, savings worth $83.6 billion over three years have been made. And as you’ve heard this morning, particularly from Jenny, talking about the initiatives that we’ve got in terms of Family Tax Benefit Part A – we will make savings to make room for new initiatives.

I just want to remind everyone of this very important fact because I think it’s very relevant to our discussion this week. We went through the last election campaign and we made savings for every single new spending initiative that we put forward. We did not spend one additional cent during that election campaign.

Contrast that with Mr Hockey and the Liberal Party. The Department of Treasury and Finance blew a hole in their costings to the extent of $11 billion and we had Mr Hockey out last week claiming he could bring the Budget back to surplus in 2011-12. Mr Hockey must have slept through the Global Financial Crisis, the global recession and our recent natural disasters to be making absurd claims like that. He has no credibility, neither does Mr Robb or Mr Abbott when it comes to putting forward fiscal policy.

Everybody will remember the farce we went through last year in the Budget when we had the three stooges’ routine from the Liberal Party about their alternative Budget. The weight is on them this coming week: are they going to put forward their savings and their alternative plan or not? We’re waiting to see it.

JOURNALIST: Treasurer, why bring in 16,000 migrant workers when we’ve still got Australians who are unemployed?

TREASURER: Well, I’ve been looking at those stories this morning and as I understand the stories this morning, what they’re really talking about is the allocation of workers to regional areas. We will outline our plans for the migration program on Budget night.

But I want to make this point, and I want to make it really strongly, because it goes to the core of this Budget. Our priority is to train Australians first. Our priority is to make sure that all Australians participate in the benefits of this mining boom that we are beginning to see. And we want to see the employment growth in this country in the years ahead, which will be something like 500,000 jobs in the next couple of years with an unemployment rate going down to 4.5 per cent; we want to see the benefits of that spread to every corner of our country and to every postcode.

So what you’ll see in this Budget is an emphasis upon Australians participating in the labour force and getting access to employment opportunities. Now of course, from time to time, and in places in the country, and in particular industries, there will be shortages that can’t necessarily be filled by Australians. But our first priority, our number one priority, our enduring commitment, is to train Australians.

JOURNALIST: You’ve said that we’re going to fall short by about 500,000 jobs –

TREASURER: No, no, I didn’t say that. I said we’re going to create –

JOURNALIST: In the future you said we’re going to need an extra 500,000?

TREASURER: No, no, I haven’t said that. What I’ve said is we are creating, the country will create over the next two and a bit years, 500,000 additional jobs on top of the 750,000 jobs that have been created in our first term in Government. There is nothing this Government is prouder of than the employment creation record of our economy in recent years. It goes to the very core of what Australians want from their economy and what our economy needs from Australians, which is employment security.

JOURNALIST: But Treasurer, during the years of the mining boom, particularly in the middle of the decade, skilled migration, or all migration rose to about 300,000. The ABS has projected it’s fallen to about 180,000. Now you’re saying, it’s flagged today about 16,000 extra skilled migrants. Is it actually enough to, I guess, keep the economy working?

TREASURER: You will see all of the figures for the program in the Budget on Tuesday night. But I’ll just make a couple of points. Net overseas migration to Australia has dropped dramatically, dramatically, over the last couple of years and our emphasis in devising the program has been to put all of the emphasis upon the skilled component, but there has been a dramatic drop in net overseas migration to this country. When we publish our figures tomorrow night you’ll see our estimates. But our first priority is to train Australians, that is terribly important to make sure that all of the opportunities and jobs that flow from the mining boom go to every corner of our country.

JOURNALIST: Treasurer, did you need to fill an extra 500,000 jobs, which is what I was saying? You’re creating 500,000 more jobs. You need the workforce for that. Are you looking, and can you confirm, whether the Budget tomorrow night will include measures to increase skilled migration to fill those places?

TREASURER: Well, as I said, you will have to wait until tomorrow night to see the forecast for the migration program but the story that I’ve seen today talks about the allocation of additional migrants from within the program to regional areas. That’s what it talks about. So let’s just be accurate about that. Secondly, the most important thing to note is that net overseas migration to this country has come down dramatically, dramatically, and the figure that was mentioned by the gentleman before I think is broadly correct. We will put forward in the Budget, as we normally do in every Budget, our estimates for the future on Tuesday night and those figures will be there for everybody to see.

JOURNALIST: How sharp will the increase in the costs of border protection measures be this Budget?

TREASURER: Well there are swings and roundabouts when it comes to border protection measures. As you are aware, we want a regional solution and the agreement with Malaysia is an agreement which will send a really tough message up that pipeline to the people smugglers and those in the pipeline, that if they come to Australia they will end up being sent back to the end of a very long queue in Malaysia. So there are swings and roundabouts in that. Putting that in place will cost some money and the Minister outlined that when he, and the Prime Minister outlined that, when they announced the arrangements the other day, but of course as that falls into place that will have an impact on the numbers that come through. So there are swings and roundabouts in terms of costings but all of those costings will be there for people to see on Tuesday night.

JOURNALIST: It looks a bit like a Pacific Solution. How is it different?

TREASURER: I don’t think it looks anything like that at all. I think you’ve just heard this morning, on the radio, a representative from the United Nations High Commission for Refugees outline their involvement in the Malaysian proposal. It is a regional solution within the framework, sorted out through Bali, through that Bali framework. That allows for agreements between countries and it also means that we are having direct involvement from the United Nations in this process and nothing could contrast more than that with the previous approach of the previous government.

JOURNALIST: (Inaudible)?

TREASURER: I’m very confident that a regional solution is what this country needs for the future, it eluded the previous Government and this Government has worked at it painstakingly because it’s very important. There are asylum seekers all over the world and this is a problem which faces many countries, not just in our region but around the world. A regional solution is the way to go. Thanks very much.