ANTHONY ALBANESE, PRIME MINISTER: Good morning. On Budget Night we foreshadowed planned consultation on our tax changes with small businesses and startups. And today we're announcing the next steps in the implementation details. This Budget, of course, delivers more tax cuts for every working Australian a fair crack at buying your own home for first home buyers. An economy that works for Australians, for small business and for future generations. Following the consultation that we flagged on Budget night, we are announcing details to allow more small businesses access to the capital gains tax concessions. Today, we're announcing that we'll increase the turnover threshold for existing small business 50 per cent active asset CGT concession from $2 million to $10 million. This is one of the four concessions that we have said would continue. It is the most widely used of those four CGT concessions used by small businesses. And obviously we'll increase the new threshold by five times, bringing into line with the threshold for small business that's there in a number of other features of the system. 2.7 million existing active small businesses will be eligible for this concession. We're also proposing to introduce a new Innovative Business Tax Concession for startups.
And we'll release the the consultation paper on the startup sector later this morning and that will allow for further detailed consultation on the basis of that. This comes on top of our extra tax cuts and making permanent our $20,000 Instant Asset Write-Off for small businesses. The permanent Instant Asset Write-Off and these important capital gains tax benefits being announced today are providing substantial support to Australian small businesses. Also today, we're confirming the Government will exempt income from all types of discretionary testamentary trusts from the minimum tax, provided they are established for genuine testamentary purposes. We back Australian small businesses and the important role that they play in Australia. They're the blood running through the veins of our local communities and they're vital for our economy. We also back innovators and startups and we want them to thrive here and we're certain that they can. There's no place that's better to engage in economic activity than Australia. I'll hand over to the Treasurer who'll go through the details of the announcements today and then we'll take questions.
JIM CHALMERS, TREASURER: Thanks very much, PM. We said on Budget night and before that that we would consult on these ambitious tax reforms, we have, and we will continue to that. And today we're announcing the next steps which come from all of that consultation that has been taking place. Our tax reforms are all about making it easier for people to own their first home, cutting taxes for workers and better aligning the tax treatment of asset and labour income. And the legislation before the Senate is all about giving effect to those objectives. The next steps that we announce today are all about providing more clarity and confidence to investors, more support for small businesses and more incentives for innovation. That's what these next steps are all about today. As a consequence of these arrangements, this now means that every one of the 2.7 million active small businesses in this country will have access to generous CGT concessions and 98 per cent of all active businesses will be eligible for these concessions. As the PM rightly pointed out, there are four existing concessions for businesses in the CGT system. We're leaving all four in place, but we are making one of them substantially broader and significantly more generous at the same time.
Now, this is one of four next steps that we are announcing today because of all of the consultation that we have been doing. The first one is that one to increase the turnover threshold for the active asset CGT reduction from $2 million to $10 million. This is a much bigger increase than we would have seen had that threshold been indexed. The second one is, as the PM said, we're releasing a consultation paper on the design of a new innovative business CGT concession. This would provide a 50 per cent CGT discount to early-stage investors, including founders and employee share scheme participants of innovative start up businesses. We're also confirming that income from all types of testamentary trust will be exempt from the minimum tax, with implementation details, including the details around integrity, to be included in further consultation. And the fourth set of next steps which I'll come to at the end, is about the Government's legislative strategy. Which of this would be ready for amending the legislation currently in the Senate and which necessitates more consultation. So, for the small business concessions, as I said, maintaining all four of them, making one of them more generous, we will seek to amend the legislation currently before the Senate to give effect to that change. We consider that consultation to be complete on that aspect of these next steps.
On the consultation paper for start ups, we will put out later this morning a paper which sets out our preferred position when it comes to the next stage of consultation for start ups, making it clear, as we said in the Budget papers themselves and before that, privately, subsequently, publicly, that we do consider there to be a special case for businesses with low or no start up costs and that necessitates this different treatment in the tax system. We will put out a fair bit of detail on our position and we will be seeking feedback on that in the coming weeks. The next piece of next steps is obviously, as I said, when it comes to exempting all types of testamentary trusts from the minimum tax, we will release a consultation paper on the trust legislation. That's obviously not part of this first tranche before the Senate. Now, it's not unusual for there to be a number of pieces of legislation to give effect to major tax reforms and that's what people should expect on this occasion as well. Now, the fourth category of things goes to how we will proceed now with the legislation before the Senate and subsequent pieces of legislation as well. So, some of this will be ready to make targeted amendments to the legislation currently before the Parliament. In some instances what we are trying to do is to take some areas where there are legitimately in the usual ways, so Ministerial discretion and to put that into the primary legislation where that is feasible. And so the amendments that we seek to move in the next sitting fortnight, subject to negotiations with crossbench in the Senate, it’s to legislate an amendment to give effect to the threshold change for small business. To ensure that deductible gift and donations reduce capital gains that are subject to the minimum tax, to maintain those incentives in relation to charitable giving. To provide the list of income support payments that qualify for an exemption from the minimum tax on capital gains, making clear, for example the family tax benefit paid parental leave and the like is in in terms of the exemption. We'll also look to embed the calculation for the Working Australians Tax Offset in the legislation. And wherever we can, we will remove Ministerial powers that we no longer need to give effect to the Government's policy intent. Now, once again, it's not unusual for legislative instruments which are disallowable by the Parliament to be used, but where we can, we will put some of that into into the primary legislation. We're also looking to do that with the two pieces of definitional work for housing, particularly when it comes to the definition of new builds. We've made clear in the papers in the Budget what we consider to be a new build and not. But there'll be more consultation on that that won't be ready for the next sitting fortnight. But if we can, we'll put that in the primary legislation too. And similarly, when it comes to the types of housing investment which is exempt from the limits on negative gearing, including what you've seen in the Budget papers around affordable housing. So, we'll do that in the primary legislation subject to a bit more consultation.
So, the last thing I'd say is that we're really grateful to the individuals and organisations that have made time for us, made their views clear to us as we've gone through this consultation that we flagged in the Budget papers. As I said, our reform agenda is all about making it easier to buy a first home and to cut taxes for workers and better align the tax treatment of asset and labour income. It's not unusual for big, ambitious tax reform like this to involve a lot of consultation to involve primary legislation for the core elements. Subsequent pieces of legislation as well. We've seen that in the past with governments of both political persuasions and that's what is taking place as well. We understand that there's never a unanimous view about economic reform, and particularly about tax reform. It's always contested, it's always contentious, but it will be worth it. We are delivering real change here and it means that the details that we have outlined today will provide a bit more clarity and confidence to investors, more support for small businesses, and also increase those incentives for innovation. And with that, we’re happy to take some questions.
JOURNALIST: How confident are you of getting these changes through the Senate? Have you had any discussions with the Greens? And also, have you costed them?
PRIME MINISTER: Yes, we have had consultation across the Senate. I always speak with people, as do the relevant ministers. We know that the Senate will hand down, I think tomorrow, its hearing, its findings on this. We’ll continue to engage, but what we know is that this is in the interest of the Australian people. This is genuine reform, and genuine reform is often difficult, but it’s the right thing to do, done for the right reasons. In order to give Australian workers a tax cut, in order to make sure that more Australians can get into their first home, and in order to make sure that we treat income earned from work, which is how most people overwhelmingly get their income to get by, more equally with income from assets.
JOURNALIST: What revenue impact are these changes expected to have, and will you release that costing and modelling about what this will do to investment levels?
TREASURER: Well, the final figures will be produced in the mid-year Budget update in the usual way, Paul. But the indicative costing that we have is around $475 million over the forward estimates. To put that into its context, the negative gearing, capital gains and trust changes are expected to raise about $8.1 billion over the course of the forward estimates. And so, these next steps that we are announcing today represent around one-seventeenth of the total that we expect to raise from these changes. And of course, once again, an opportunity to remind everyone that all of the money which is raised from these changes is being returned to workers as tax cuts, and to businesses as part of that almost now $4 billion package to support innovation, small business and investment.
JOURNALIST: Prime Minister, the discretionary testamentary trusts are only held by 10,000 people. You’ve previously said the changes are fair. Why are you deciding to wind them back?
PRIME MINISTER: You’re from The Aus? Sorry about that. I spoke at The Aus-Sky News forum a short while ago and said that our clear position has been that we didn’t want to see people lose anything from this process. We’re making it very clear and explicit, consistent with what I said at The Aus forum, which is why I asked just a couple of weeks ago.
JOURNALIST: Prime Minister, just wondering, were you at all surprised by the reaction, the political reaction and the public reaction, to these changes when they were announced on Budget night? Hence some of these changes which weren’t flagged at that time, which weren’t expected, in regards to the discretionary testamentary trusts, in regards to the broader carving out of small business. Politically, were you surprised by the reaction that came particularly from younger Australians, younger business owners in particular?
PRIME MINISTER: Not at all. I’ll tell you what the feedback I’ve had from young Australians is. Young Australians who’ve been able to get into their first home, both them and their parents and their grandparents, saying that for the first time, having gone along, tried to get a fair crack at the housing market, that they’re finally getting a fair go. That this Saturday, when first home buyers go along to an auction, if it’s an existing home, they won’t be competing as much with investors. Of course, some may still well be investing in existing homes, but they won’t be able to use negative gearing going forward. They see that as a very positive thing. But tax reform –
JOURNALIST: So, you’re saying that house prices could come down? Is that a good thing for all Australians?
PRIME MINISTER: I’m not saying that. I’m saying what comes out of my mouth is what I’m saying, and I continue to say that. Treasury has done modelling which shows that there’ll still continue to be an increase, but it will be smaller than it would’ve been otherwise. But what I’m saying is that we’re giving young people a fair crack that they’ve been excluded from for a long period of time. I have seen editorial after editorial speaking about the tax system and how it was too reliant upon pay-as-you-go workers’ taxes. And what we’re doing is making sure that the tax system is fairer, that it treats income from assets more equally with income from work, which is overwhelmingly how working Australians earn their income and get by.
JOURNALIST: Prime Minister, on that, have you made it easier for the fire the liar slogan to stick, given you have broken clear election promises despite vowing to be a Prime Minister who keeps his word?
PRIME MINISTER: No.
JOURNALIST: Prime Minister, is all reform good reform? And will you acknowledge that even after these changes, some people who will be worse off aren’t liars, aren’t running scare campaigns, but are just saying that they’re not better off? And if I may, for the Treasurer, why change so many discretionary powers? You put in a lot of ministerial discretionary powers and now you’re taking them out. Why do that?
PRIME MINISTER: This is good reform. This is reform that is necessary. This is reform that your newspaper has called for reform of the tax system for a long period of time. It’s something that we’re engaged in. It’s not easy. The easy thing to do is to sit back, pretend that everything’s all okay. What we are doing here is delivering real change, and it’s real change in the interest of the nation. Jim?
TREASURER: Thanks, Matt. When it comes to the discretion in the tax laws, that has existed under other treasurers of other political persuasions. For some reason, I don’t remember reading a lot about Liberal treasurers having exactly the same sorts of instruments available to them that are available to me. We’ve made it really clear that that’s standard practice in tax legislation and it should be covered equally. In terms of the changes, or the details that we are providing today, when it comes to legislating where we can some of those instruments, that is to provide more clarity and more certainty to people who are interacting with the system. In some instances, those kinds of definition-setting powers, which are disallowable by the Parliament in the usual way, they are appropriate, but where we can convert some of that into primary legislation, we are seeking to do that. And that’s because we understand that people need to know how this is headed, what some of those definitions look like. From my point of view, whether it’s in the primary legislation or disallowable by the Parliament, in both instances it’s subject to the scrutiny of the Parliament, which is appropriate, but where we can provide that extra certainty and clarity, we’ll seek to do so.
JOURNALIST: Given the scale of these carve-outs, how much of these changes are designed to quell the backlash from small businesses and from even some in your own ranks who said there needed to be changes to how these taxes apply to small business?
PRIME MINISTER: Well, our ranks are very supportive of this reform. That’s the first point that is critical. I lead a Government of 124 members who are committed to actually making a difference for the country, who weren’t prepared to sit back and say, “We know the housing system’s broken.” And I haven’t seen any articles, even in those publications that tend to not be as supportive of reform as others. I haven’t seen any article by any serious commentator saying the housing system is working for Australians, that it is easier today to get into a home than it was when I first bought a home a long time ago now, 35 years ago. So, we are making changes that are important, and what we’re doing is giving the implementation details as we flagged on Budget night.
JOURNALIST: Can I ask about the Press Club speech yesterday?
PRIME MINISTER: Yeah, I’ll come back to that.
JOURNALIST: On that, what actions do you think need to be taken in response to that GetUp! stunt yesterday at the Press Club address?
PRIME MINISTER: So, I think in general sometimes actions can be counterproductive, and I think that was as well.
JOURNALIST: I’m sorry, my earlier question – do you accept that Australians do feel misled by you, given your changes on these reforms compared to what you said before the election, and that’s contributed to the rise of One Nation?
PRIME MINISTER: If you look at polling, the free advertising on the front page of various newspapers assists as well, the rise of some of the issues which are there. We will continue to advocate for what we regard as the national interest. That’s what we will do. There’s a range of commentary that people are entitled to do. I’m not someone who goes to a media conference and says, “I won’t answer questions from some groups.” I answer to all, and I’ll continue to do so.
JOURNALIST: Is it the media’s fault One Nation is polling so well?
PRIME MINISTER: I haven’t said that, so don’t try to misinterpret. I haven’t said that at all. What I’ve said, around the world there is a rise of right-wing populism. Some of that has been promoted here in Australia. And we will deal though with what’s before us, and we’ll deal in the national interest. What I’m concerned about isn’t what happens on a 24-hour media cycle, let alone on the cycle we’re in, which is often minute by minute or hour by hour. What I’m concerned about is what do we need to do as a Government to set Australia up for the future, and that is what this is about. Bigger income tax cuts for working people, along with following the tax cuts that we have scheduled for July 1, increased wages for working people, dealing with practical measures to deal with living standards. Yesterday we had a pretty significant announcement about a 15 per cent increase in the wages of early educators in our child care centres. That’s important. That is something that was left for too long, and the child care system was in crisis when we came to Government. That’s something that we are fixing, like we fixed the aged care crisis that was summarised by the word Neglect, like we’re fixing the skills crisis through Free TAFE. These are all practical measures that we are taking on a day-by-day, week-by-week basis. We’ll continue to do that. The commentators, it’s their job to commentate. Our job is to govern in the national interest.
JOURNALIST: This protest at the Press Club speech yesterday, do you think that it raises safety concerns, considering GetUp! was able to get into the Press Club and put that down there? And you said it was counterproductive – do you condemn the actions of GetUp!?
PRIME MINISTER: I’m not aware of all the details, that’s a matter for the AFP. But I think quite clearly these actions can be counterproductive, and one of the things that I’ve said consistently, consistently, is that we need to turn the temperature down. I think that people should be allowed to go to the National Press Club and address the Press Club with whatever views people have in a respectful manner, and that should be treated respectfully. I’ve said that very consistently, and I do it across the board, that we need to turn the temperature down, whoever is engaged in that sort of behaviour.
JOURNALIST: Prime Minister, just on that, do you think her speech will affect social cohesion?
PRIME MINISTER: I have a view, which is consistent, that I think that One Nation do not present alternatives. I didn’t hear anything about cost-of-living from – I didn’t see all the speech, but I looked at some of the reporting. And I haven’t seen any policy announcements regarding cost-of-living measures. What I know is that in the Senate they’ve opposed the increases that we've put forward for the minimum wage. They’ve said it should be easier to sack people. They’ve said as well that they’ve opposed Free TAFE, they’ve opposed the public housing and housing investments that we’ve made. They’ve opposed anything that will make a difference to people’s living standards is opposed by One Nation – and that’s the policy debate that I’m more than happy to engage in, and I think that that is the hard work that is needed from people who want to be parties of government, not simply seeking to divide Australians against each other. I seek to unite Australians.
JOURNALIST: Just on superannuation changes, it’s less than two weeks before changes making super tax concessions less generous for big balances, but on defined benefit schemes, judges, pollies, tax advisors are still completely in the dark about how that’s going to work. So, Jim, can you tell us how that works?
TREASURER: Well, first of all, we made it clear that the treatment would be commensurate when it comes to defined benefits. Second point is that the liability doesn’t kick in until the second half of next year. The third thing is, as I understand it, the Treasury will be providing some of those details. It might even be today, but my understanding is certainly this week. And so, commensurate treatment of defined benefit, not due until the second half of next year, and more details to come very soon.
JOURNALIST: Can I just get your reaction to the MOU signed between the US and Iran, and does this, I guess, finally kill off any hope of any extension to the fuel excise relief?
PRIME MINISTER: I’ve said that we’ll examine those issues with regard to fuel excise, and we’ll do that over coming days. But we welcome the MOU. This is a really important breakthrough. I’ve seen, a summary has been read out of what is in the MOU, and it is positive to providing, firstly, an immediate de-escalation. That we are seeing an opening of the Strait of Hormuz – that might take some time, though. That is important to recognise. The briefing that I’ve had is that there is some uncertainty as for how long that will take going forward. So, the consequences of the shutdown, the closure of the Strait of Hormuz, will be with us for some time. Yesterday, I met the global head of Shell, for example, who was out in Australia – Sir Andrew Mackenzie – and we had a discussion about what, from their perspective – and they are major players in Qatar and in the Gulf – they’re concerned, as is the world, about the consequences and how long it takes for the proper reopening, and the consequences for prices that will occur. But this is a good breakthrough. Importantly, as part of the agreement as well is the nuclear weapons provision that is there. We’ve said all along we don’t want Iran to get access to nuclear weapons, so that’s important. But it also, I think, provides a framework, and clearly there’s more work needs to be done after the official signing will take place tomorrow, which is, I think, Saturday morning, probably early our time here. So, we’ll continue to play a constructive role.
JOURNALIST: Your thoughts, Prime Minister, on whether you have any reassuring messages for the SBS journalist who was told very bluntly yesterday that she should be without a job? And also, how can you just get rid of the public broadcaster?
PRIME MINISTER: That’s not a question for me. The public broadcasters play an important role in our democracy. ABC and SBS play important roles.
JOURNALIST: Coming back to the carve-outs – sorry –
PRIME MINISTER: Hang on. We’re just talking about the right of the full suite of the media to ask questions, so I’ll respect that. SBS play a really important role. I tell you what, the World Cup’s on at the moment, and it had many millions of Australians watching it on Sunday. I’ll be getting up and watching Australia in the United States at 5am on Saturday morning, as will many other Australians. I went on the program with Santo and co just a couple of nights ago. They play a really important role, and I think that the idea that you just exclude media and abolish SBS – is what they’re talking about – and the ABC, I think I would hope that all media organisations come out and oppose that, because they should, because they’re vital roles in our democracy. Thanks very much.