Malcolm Turnbull interview with Alan Jones 2GB
- Written by Alan Jones
The PMs on the line Prime Minister good morning.
PRIME MINISTER:
Good morning Alan great to be with you.
ALAN JONES:
Thank you so much for your time. Can we just go firstly to the polls as I have warned my listeners we would because the poll this week suggested a swing of over 4% to the Opposition which would give them Government. You’ve got until July 2 to turn it around, how do you do it.
PRIME MINISTER:
Well Alan it’s a very clear choice at the election. We are presenting a national economic plan, every element of which will promote economic growth and jobs. We are optimists, we are confident. We know Australia can succeed better than it ever has before, but we need a clear economic plan. Now on the other hand you’ve got Labor which is offering higher taxes, bigger debt and deficits. There is nothing, not one element, in what they have proposed that will add jobs or drive economic growth. In fact it will do the opposite. They are actually increasing taxes on investment. You increase taxes on investment, what do you get? Less investment. Less investment, less jobs. What we are doing is the opposite, we’re promoting growth and promoting jobs. That’s the future.
ALAN JONES:
But in your budget that you brought down, nonetheless there is $85 billion of more debt over the forward estimates. How do you address this question of expenditure? We’ve now got nine deficits in a row. How do you turn that around? Can you give a commitment that you’ll wind back expenditure?
PRIME MINISTER:
Yes Alan, we absolutely are. As you can see in our Budget we’ve got a deficit this year, 15/16 of course and it continues to next year it’ll be $37 billion and then getting down to six billion dollars in 2019/20. Then coming into balance and going forward into a surplus, a modest surplus. It is a slog, there is no doubt about that. But the key, the absolute key to this, is growing the economy. You’ve got to grow the economy faster than expenditure. That’s what John Key did in New Zealand, that’s why you need a pro-business, pro-enterprise, pro-growth, pro-jobs Government.
ALAN JONES:
Right you mention John Key though, John Key has no upper house. Now there is $20 billion in savings being blocked in the Senate.
PRIME MINISTER:
That’s absolutely right and we will have a new Senate, after the election because this is a double dissolution and every senate seat is up for election. So we are hoping that the Senate, the Australian people will elect, senators as many Liberal and Nation senators as possible and ensure that we are able to get a constructive response from the Senate. You know the Labor Party, some of the savings of ours that the Labor Party has blocked, are ones that they proposed in government. So they have been, the Labor Party’s approach has been utterly irresponsible in opposition. They were bad enough in government and they’re even worse in opposition.
ALAN JONES:
Can I just take this issue of negative gearing because much has been made of this. Just forget for a moment, because I’ll come to that in a moment about whether housing prices will go up or down as a result of the negative gearing proposals by the Labor Party. Is there a hidden agenda, is there something about the negative gearing proposal that we aren’t aware of and that hasn’t been debated – I’ve heard you make comments about which assets will able to be negatively geared.
PRIME MINISTER:
Alan, this is – thank you – this is an enormous hidden agenda, it is a massive restriction on economic freedom. What Labor is proposing is that the negative gearing, which I’ll just explain in a second, will be banned on every single type of asset, other than a new dwelling. So it’s banned on existing residential property, all commercial property. It’s banned on shares, it’s banned on business assets. Now the truth of the matter –
ALAN JONES:
That’s as it applies to individuals.
PRIME MINISTER:
As it applies to individuals.
ALAN JONES:
Not to BHP for example.
PRIME MINISTER:
Oh no. It doesn’t apply to rich people either you see – this is the Labor Party, the party of looking after the workers, so they claim – so a person with an investment income, for dividends and shares and rents and interest on their deposits, they will be able to negative gear against their investment income. But someone whose only income is their personal exertion income, their wage or their salary or what they’re earning from the sweat of their brow, they can’t negative gear.
This would be a massive brake on investment. It denies - the vast majority of people who negative gear today are on $80,000 or less - so it denies people on middle incomes, nurses, teachers, doctors, policemen, people who are serving in the armed forces, all of these areas have very large percentages of negative gearers. They won’t be able to do it because their only income they claim the net loss against, is their personal exertion income. It’s a massive restriction on economic freedom.
ALAN JONES:
Let’s go to the other side of the coin now and that is the inability of so many young people to find their way into the housing market. Now I’ve heard you say that the release of available land is the biggest impediment to young people. Now there are people listening to this broadcast now, businesses, developers – the much-maligned developer, but without the developer we’d have nothing – who are shovel ready, now. They could actually start building tomorrow, 5,000, 10,000, 20,000 housing units and bureaucracy is in the way. These are state governments blocking all of this. Will you exert your authority with state governments to get this bureaucracy out of the road?
PRIME MINISTER:
Alan that’s is one of the key objectives of our new cities policy. You’re absolutely right and every study on this in Australia and internationally has found the reason housing is unaffordable or less affordable in any given city, is because of a restraint on supply. It’s supply and demand. If there is more demand than supply of new housing, then the price goes up. Now what constrains supply, what restricts supply, is governments, local governments and state governments. What we have said in our cities policy is that we are no longer going to be just a passive ATM that just hands out money to the states willy nilly. What we will be doing in the future is entering into a city deal. The deal will be, it might be for example in western Sydney, it might be here in Melbourne …
ALAN JONES:
I can take you where these places are. They are just waiting and bureaucracy is in the road and they’re waiting, 5,000 at one particular suburb in western Sydney, further south another 10,000. They’re ready to go. They have been ready to go for three years.
PRIME MINISTER:
Well let me give you an example of the type of things that I’ve already done as Prime Minister. We’re putting money into the Appin Road out in Campbelltown. That is going to, the upgrade of that road is going to unlock 35,000 new home sites.
ALAN JONES:
That’s right, that West Appin land there has been blocked for years and years and years. The developer is ready to put the shovels in the ground.
PRIME MINISTER:
That’s right. I’ll give you another example in Adelaide, where we funded an extension not very, it’s less than a kilometre, of a rail line that links up to the Flinders University and a hospital and will leverage $800 million of development. That’s smart investment. See I approach these things as a businessman, that’s been my life. I believe that we’ve got to look at our investment in cities in a way that maximises the benefits for the people that live in them. That includes having affordable housing and increasing housing supply in circumstances where you do so that improves amenity, doesn’t affect congestion, because you make sure you’ve got the infrastructure there before the housing.
ALAN JONES:
Can I just -
PRIME MINISTER:
Go on please.
ALAN JONES:
Can I just come back to this economy thing because Paul Keating told the electorate 30 years ago that we’d be heading into a ‘banana republic’. People said - Bob Hawke, good Prime Minister then - said, “you’ve just cost us the election”. It was Keating-Hawke vs Howard. Keating said ‘no, I’m going to go out and explain and be honest with the people that we can’t go on the way that we are and I’m going to cut expenditure and explain why. He cut $5.5 billion worth of expenditure in two years which I suppose today is about $30 billion worth of expenditure. Are you prepared to embrace the commitment to go out and explain to the Australian people that we can’t go on the way we are.
PRIME MINISTER:
Alan I’m doing that every day. The reality is we have to live within our means. My economic plan, my Government’s national economic plan, a key part of that is living within our means, which means that when we talk about funding for health, education, for roads, for rail, just as we’ve been discussing, all of those commitments are fully funded. You know there are no black holes in our budget. Everything is paid for and we can do these things, we can live within our means, but we have to control expenditure. We have to remember – and this is the thing Labor forgets – we have to remember that if you keep on jacking up taxes the way Labor does, if you are not prepared to reduce the tax on business - which is what we’re proposing to do, as you know that’s part of our commitment - if you’re not prepared to give business some tax relief, then you won’t promote the investment and the employment that only the private sector will deliver.
ALAN JONES:
Nonetheless I mean the public sector debt is crowding out the private sector and you had that statement on Friday, that pre-election financial statement, assumptions about the economy returning to full employment. It said rather ominously and I quote: “without considerable effort to reduce spending growth it will not be possible to run underlying cash surpluses say in the order of 1 percent of GDP.” Now that being the case, it’s a sort of thing saying ‘look out, we’re going to tax you even more.’
PRIME MINISTER:
Yeah well you know we are cutting spending. I mean spending as a share of the economy is falling over the next four years. We are – the key to this Alan is growing the economy. You see this is the big distinction between – there are many distinctions between my Government and Bill Shorten’s Opposition – but one of the biggest ones is that everything we propose, whether it’s innovation, investment in advanced manufacturing through the defence plan, you know whether it’s our PaTH program to bring young people back into employment, whether it is our business tax cuts, every single element. There is no question, it will promote economic growth and jobs. People will say ‘how much growth, how many jobs?’ Sure, well they can talk about that. There is nothing which Labor proposes that will grow the economy. In fact everything they propose will slow it.
ALAN JONES:
Well just take the flipside of what you just said then. Because you’re talking about aspirations, aspirational Australians. You want to support aspirational Australians. You want people to roll up their sleeves, get out there and provide for yourselves. The aged pension is going up to about $50 billion a year, we can’t afford it. Yet you’ve stuck a cap in that Budget, on pension assets at $1.6 million. That’s really toxic. Everyone out there, the correspondence I’m getting is frightening and it’s from your constituency. Would you consider listening to the electorate and raising the cap of $1.6 million as a first step towards accommodating these people?
PRIME MINISTER:
Well Alan no. We believe our changes to superannuation are fair and well targeted. But let me just explain the point about the $1.6. This is important. It’s not limiting what people can have in their superannuation. All it does, what we’re saying is, that in future when you go into the retirement phase of superannuation, the amount you can take in – and of course it can grow over time, it’s not sort of capped thereafter - is $1.6 million. What that means is that the earnings on that $1.6 million and whatever it grows into, are tax free. However let’s say you had $2 million in your, beforehand, so you take $1.6 million into your retirement phase –
ALAN JONES:
That’s right. And the other pays 15 cents. Yep.
PRIME MINISTER:
You pay tax on that, on the $400,000 you keep that in super and you pay 15 percent tax, which is still a very low tax rate. I mean that’s lower than the lowest rate of personal income tax.
ALAN JONES:
Yes.
PRIME MINISTER:
So superannuation remains a very good deal.
ALAN JONES:
I know, but see you’re trying to sell superannuation to your own constituency and now we find that from July 2017 which is next year, they can only if they’re under 50 stick in $25,000 per year. Now I have made the point about the 40-year-old for example who is on pretty good money. He’s earning $100,000 but he is getting no more than his mandatory compulsory superannuation commitment. He’ll only finish up, if he leaves at that with $550,000 in retirement. That will get him a retirement income of less than the pension of about $22,000.
Now he’s saying, well when I get to 40 and the kids are out of school they’re educated and I have actually got the mortgage well covered and I have paid off my HECS debt, I want to stick a bit, as much as I can get, why is Malcolm Turnbull limiting me to $25,000, because I want to get that $550,000 up to million which means I’ll then have a reasonable retirement? So it is not so much whether you’re paying tax on it or not, it’s the capacity to build it up to an asset which will give him a comfortable retirement.
PRIME MINISTER:
Well Alan he can put in an extra $500,000 of non-concessional contributions and of course he has got a limit of $25,000 a year. So if for example he’s on $100,000 and he’s had, about $9000 has gone in, over five years the difference between that and the maximum is of course five times $16,000. So he is able under our proposal - and this one of the things we have done to make super fairer and more flexible - he can catch up and put in $80,000 on a concessional basis i.e. taxed at 15 per cent. So it is, the way look –
ALAN JONES:
See what your critics are saying is they don’t understand why you don’t say “well look I don’t care how much you have in the retirement fund, I don’t care whether it is $10 million but up to $1.6 is all you’ll manage and after which you’ll have to pay interest on the income from that”. What’s wrong with that? That’s quite simple. Why put a cap of $1.6?
PRIME MINISTER:
Well this is basically the most administratively straightforward way to do it. It was also, it enables you to have a separate account - so you go into retirement, you put $1.6 million in to your - we are talking about you know less than 1 per cent of the population, so the vast majority of people don’t have any like this –
ALAN JONES:
No. But I am talking about the 40-year-old who wants to build up his bank, doesn’t he? You know, you’re limiting him too. Why do we limit how much he can put in?
PRIME MINISTER:
Alan the reason is and you know you said it yourself last year, very eloquently as always –
ALAN JONES:
Thank you.
PRIME MINISTER:
You made the point on the 9th of February last year you said “the notion that someone like me –
ALAN JONES:
You’ve done some homework on me.
PRIME MINISTER:
“- getting concessions, I pay 48 cents in the dollar tax, but if I put my super in I pay 15, I get a 33 cents in the dollar concession. Super concessions are costing the Government $49 billion a year.”
Now the reality is we have to live within our means. The super concessions are very generous they remain very generous. What we have done is dial them back a bit, frankly for people on very high incomes and with very large super balances. People like you and me for example. So we are paying a bit more tax –
ALAN JONES:
I’m not in your league PM, I’m not in your league.
PRIME MINISTER:
Pardon?
ALAN JONES:
I’m not in your league.
[Laughter]
PRIME MINISTER:
Well who knows. Who knows.
ALAN JONES:
[Laughter]
PRIME MINISTER:
But the bottom line is that I think yes there are people that are unhappy about it. But you know, let’s take someone who takes $4 million - this is a wealthy person - takes $4 million into retirement. They are paying no tax on the earnings from $1.6 and on the balance they are paying 15 per cent tax. That is less tax than the minimum rate of income tax.
ALAN JONES:
Sure. Well I’m not suggesting you leave it at $4 million. All I’m saying is at the moment the Government bond is at a record low of about 2.2 per cent. The future looking to lower its inflation plus the future fund of 5 per cent. So I’m just saying at the current rates, something beyond $1.6 would give them most probably an amount of money which would prevent them from going on to the aged pension. That’s what you’re seeking to do surely?
PRIME MINISTER:
Well yes but Alan, the answer is yes, but the whole purpose of super is to enable you know, say middle income Australians, to save money so that then they have a good lifestyle.
ALAN JONES:
Alright. On the save money can I just take you to this draw down rates, draw down rules because we are running out of time, although we’ll have a chance to cover some of these things next week. But draw down rules. I mean can you give some commitment about these draw down rules? If you’re under 65 you have got to take 4 per cent of your superannuation funds each year. 65-74.5 per cent. Why do we need those at all? I mean they are not earning that amount of money so they have to borrow their capital. How sensible is it to have rules which force people who want to be independent to eat into their capacity to be independent?
PRIME MINISTER:
Ok well it’s important to remember that the idea of super is not to be a sort a wealth creation exercise to build up a large capital amount. The idea is that you get big tax incentives to put money into super. It’s got even bigger tax exemptions of course, in the retirement phase. The idea is people then live off that and they consume both the income and a portion of the capital.
ALAN JONES:
Nothing wrong with leaving something for your kids is there?
PRIME MINISTER:
No of course there’s not. But the point is that the idea of super is to give people financial independence.
ALAN JONES:
So you’ll leave the draw down rates where they are? They seem steep to me.
PRIME MINISTER:
Well as you know, for under 65 they are four per cent, 65-74 five per cent, 75-79 –
ALAN JONES:
That’s it yep. Six.
PRIME MINISTER:
If you get up to over 90 –
ALAN JONES:
11 per cent.
PRIME MINISTER:
These were reviewed recently and they are going to, they get reviewed every five years by the Government actuary. They will be reviewed in five years’ time.
ALAN JONES:
Just before go then, because I want to cover this with you. Are you aware of this program the Safe Schools Programme originating in Victoria and coming into New South Wales schools where children in year’s 9, that’s 15-year-old girls get to play characters of Megan and Grace and Kelly. They have to role play these characters. “Megan lives in the city, she works at a local café. She’s had 15 sexual partners and describes herself as bisexual. She rarely practises safe sex. She is often drunk”.
Is this, I mean you’re a grandfather you have kids going into schools. Do you want a 15-year-old daughter being, embracing this stuff as education?
PRIME MINISTER:
Well Alan I’m not familiar with this particular programme, all I can say is that as you know with the Safe Schools Programme that the Labor Party introduced when they were in Government, what we have done is made some changes. This was on the basis of independent professional advice, Education Minister Simon Birmingham did this. What the changes are essentially, is to require parental involvement and consent. I can –
ALAN JONES:
Would you like your 15 year old daughter to have to role-model “Kelly” who says “I think I’m a lesbian, oh I’m not sure because I’ve also been attracted to boys. I guess it gives me more choice.” I mean someone, this seems to be endorsed by both the Labor and the Coalition. Shouldn’t that stuff be wiped out of the curriculum?
PRIME MINISTER:
Well Alan I think you need to have, there is no substitute for very active and involved and engaged parents in this area. These areas are very, very sensitive.
ALAN JONES:
They want parents out of it.
PRIME MINISTER:
Well speaking for the Coalition, we believe parents should be right in it.
ALAN JONES:
Ok.
PRIME MINISTER:
That was the changes that were made.
ALAN JONES:
We’ll leave it there, we can resume on that, let’s talk about that and other things next week.
Good to talk to you thank you for your time.
PRIME MINISTER:
Thank you Alan.
ALAN JONES:
There he is the Prime Minister and you can call us to talk to you about all of that.
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