LAURA TINGLE, NATIONAL PRESS CLUB PRESIDENT: Prime Minister, thank you for your address. Every other Prime Minister who has broken a major promise has gone on to lose their job. Paul Keating and his L-A-W tax cuts, Tony Abbott, cutting health and the ABC, Julia Gillard, on the carbon tax and Kevin Rudd on the CPRS. Why will Anthony Albanese be different?
ANTHONY ALBANESE, PRIME MINISTER: We are being very upfront with the Australian people that when economic circumstances have changed, it is a responsible thing to do to change our policy. And we are changing our policy for the right reasons. Because we cannot have it that as Prime Minister of the country, as I travel around during the summer and I do much sometimes to the concern of some who have to look after me, go to shopping centres, walk through communities, I don't have just controlled environments, I go out there and I talk with people. And when low and middle income earners are saying that there under financial pressure. We have a responsibility to do something about it. Not just to wring our hands and to say, 'Well, that's difficult, but I cannot do anything about it'. As Prime Minister, I have a responsibility to act. And that is what we are doing here. We are acting in a way in which we will provide assistance to people without adding to inflation because that will be counter-productive. So, the options before us, I accept, this is not an easy decision to make. The easy option is to kick the can down the road. This is the right decision. Done for all the right reasons. And as Prime Minister, I will always do what I believe is in the national interest.
JOURNALIST: Prime Minister, can I take you up on this point about not adding to inflation? You quoted the Treasury advice on that which seemed to be fairly unequivocal, but how is this so given that the people who will benefit more from the changed tax cuts will be the low and middle income earners who are likely to spend more of the money than the higher income earners that would have been the beneficiaries under the original stage three who are likely to save more than the middle?
PRIME MINISTER: Well, the Treasury documents set that out in great detail. And what they say is that yes, middle income earners need this money, that's the point. So, they likely put in the bank, they are likely to buy things that they need. Food, pay rent, provide those essentials. Whether they are low or middle income earners, they are likely to do that. But is balanced out, as Treasury indicates, this is where this is good economic policy for the nation and particular good for business. And I note that Innes Willox is here and other business people. They’re struggling to get workers. What this will do is encourage workforce participation and help to deal with labour supply. So, that is where Treasury analysis says that is why it is not inflationary. It's also very clear that what we did was make sure that we are keeping the same amount, effectively, there’s a very small increase of $1.3 billion over the forward estimates, there’s a little bit less in the first year. But we were really conscious, as we have been with all of our measures. We understand that the fight against inflation is central to everything that we do. And that is why when we came to, what are the options that we have to help low and middle income earners. This was not just the best way by an option, it wasn’t in a marginal call, this is overwhelmingly the best way that we can do that, that's the advice that we received and I think it is absolutely right. And that is what has given us the confidence that what we are doing here is the right thing.
JOURNALIST: Prime Minister, in December you released the mid-year Budget update and it shows the Budget was going gangbusters in terms of revenue largely as a result of bracket creep. The Treasury advice you released about an hour before the speech says as a consequence of the redesign, you’re going to rake in an extra $28 billion in revenue over the next 10 years which I assume is a large portion due to bracket, you’ve reintroduced the 37 per cent bracket, etc. The Treasury advice also says that the inflation should be back within the band within a year so we should hopefully be for the cost of living crisis. My question is, in a years’ time or not long after, will you again look at tax brackets once the cost of living crisis is over and do something about bracket creep?
PRIME MINISTER: We are focused on the here and now. And I make the point, Phil, that this increase in the top marginal tax rate is the first since 2008. I note some of the commentary, I was looking for that in some of the headlines, but that is just a fact. The previous mob sat there for a decade, didn't do anything about it –
JOURNALIST: They raised it to 200,000.
PRIME MINISTER: No, they did something and said, 'In five years’ time, down the track, we’ll do something'. They could have had the option, we are saying here that this will be legislated on July 1. And as the quote that I said in my speech today, in 2019, it's the trial of hope over experience. In 2019, to say exactly what you thought you knew the economy would look like in 2024, 2025. Now, no-one predicted that I know of, predicted the pandemic, no-one knew. You will recall those famous mugs, 'Back in black'. Well, we had the largest deficit ever, the second-largest deficit ever all produced by the former Coalition Government, they could have done something, they didn't do something. We are doing these measures. We want to legislate so they come in on July 1.
JOURNALIST: Today, your Treasurer said it was over Christmas that it became apparent stage three can be delivered in a better way. In early January, you tasked Treasury with looking into this. So, why then when last week when asked on radio if you are committed to delivering the stage three tax cuts as promised, you said, 'We are committed to that'. Do you accept that this was a lie and why should Australians trust that you won't lie to them again?
PRIME MINISTER: What Australians can do is to trust me to make the right call, not the easy call. And that is what I have done. We changed our position on Tuesday in the Cabinet. I'm here at the National Press Club on Thursday with everyone here, being accountable for that decision. We made the decision on Tuesday, it went through the proper process of the ERC which received the Treasury advice. And I've said that over summer, one of the things that I do, and I note in the Daily Telegraph, there is a good vox pop today about a working family who are really struggling and they say they welcome this decision. I say this, that the readers of the Daily Telegraph and Herald Sun and the Courier Mail and the Advertiser overwhelmingly will be beneficiaries from what I'm announcing today. And you cannot say, we as politicians, we cannot say, 'We are aware of the cost of living, we are just sorry but not in a position to do anything about it'. I'm the Prime Minister. I am in a position to do something about it. We are doing something about it. And it's the right thing to do.
JOURNALIST: I’m sorry, but the question wasn't, 'Is this good or bad policy', it’s that, do you believe that you lied?
PRIME MINISTER: Well, what I did was absolutely say, I have announced when we have changed our position. We changed our position on Tuesday. I lead a Government, I'm only the Prime Minister. I don't have multiple portfolios. I don't have a Cabinet committee of one. What I do is we have really proper processes, you know why? Because you get better outcomes. And what you do is you consult your colleagues, we have a proper ERC process, we have proper submissions that are round, not PowerPoint presentations from pollsters. We are proper presentations and submissions, gone through with Treasury and Finance. We did that. We did that. We had ERC and we had a Cabinet and then we had full Ministry and then I had full Caucus. During the right thing making sure that everyone had a chance to have that important, you know why? Because you have better decisions when you involve more people. And we involved the full capacity of my magnificent team in the Cabinet but we also involve the capacity of the Public Service that we with respect. And received their advice, went through it and as I've said also, we involved someone else as well, or another group of people. Ordinary Aussies in supermarkets. Over December and January, I visited every state and territory in the country. I spoke with people as I do in shopping centres, around streets, in shops, in restaurants here in Canberra. I engage with people. And the consistent message that has been building up of a long period of time is that, 'We might get that there is energy price relief and child care and we get that there are some things that you've done but we need more. We need more'. And this is overwhelmingly the right option.
JOURNALIST: In your explanation about breaking a promise, you pointed to a whole bunch of factors. The pandemic, recession, war in Ukraine. Clearly, there are some factors that have changed in recent times, there have been 12 interest rate hikes under your Government, there's a war in the Middle East. But things like the pandemic, recession, the war in Ukraine, they were known when you went to the election in May 2022. So, when you named those factors as reasons for this change, aren't you just looking for excuses here? Why didn't you level with voters at the election in May 2022?
PRIME MINISTER: The pandemic has had a significant aftershock on global supply chains as they came back. On the supply of goods and services, on labour market because of what happened with migration. Speak to any business in Australia about getting better, but restaurants, I know of small business owners who shut because they couldn't get a workforce. The impact of the pandemic didn’t end. Of course, people are still getting COVID, we are still dealing with the consequences, but the aftershock has been much greater than what was anticipated. The other thing that was not envisaged in 2022, as you know, was that if you can point me to an article saying the Russian war on Ukraine and the invasion would be ongoing over such a long period of time, that impact on energy prices that then flows through, to the logistics industry, two supermarket shelves, was very significant indeed. No-one in 2022 at the election, I don't think was pointing towards those factors at all. So, there has been when we came to office, inflation, of course, the fight against inflation is always an issue. But at the time, of course, inflation peaked, the highest level was 2.1 per cent in March of 2022. And the first of the interest rate increases were in the election campaign as you would recall. You would recall also the previous RBA Governor making a statement about where interest rates would go. No-one during that campaign was saying that there would be the number of interest rate increases that would occur. And interest rate increases have an impact on middle Australia, they are the people working to get ahead who have a mortgage. Some people are doing okay in Australia, politicians are doing okay. People I worry about are people in middle Australia struggling to pay the school fees, to pay the mortgage, to pay for the things that they need. And the economic circumstances have changed, we’ve responded to it, we have responded in so many ways. Just as, David, if you had of said in 2022, that we would bring a policy in conjunction with the New South Wales Coalition Government and the Queensland Labor Government to have price caps on coal and gas, I would have said, 'Really? You think we are going to do that? That would be a very bold policy to have'. We did that. It was the right thing to do and a response to the changed economic circumstances which are there. And good government is about being responsive, is about doing what is necessary, not what is easy. And I want to be known as a Prime Minister who had the ticker to say what was needed and to set about doing it, even as I recognise that this would be controversial.
JOURNALIST: Even at a cost to your personal integrity then?
PRIME MINISTER: No, I tell you what my integrity is. Not looking at lower middle income earners and saying, 'Sorry, I'm just Prime Minister, I am not in a position to help you', when I know I am in a position to help you and this is what this plan does.
JOURNALIST: A somewhat related question about the economic circumstances that Treasury outlined and you have outlined that have underlined this decision to change the stage things tax cuts, things like inflation as you've said today has been an issue from the day you became Prime Minister, so have things like the flow on consequences from the pandemic through the economy, Russia’s war has been going on for some time now. You said that you asked Treasury for advice this summer. Given families and many households have been feeling pain from those economic circumstances for more than a year, why have changing stage three tax cuts been off the table until this summer?
PRIME MINISTER: Well what we did was a range of measures, we introduced in a very clear way. Before last summer, in December, remember the National Cabinet meeting where we adopted it, I had COVID at the time, we did what was a radical proposal, not one we envisaged, we would be doing it at the election campaign of the two-part policy of the cap on gas and coal while also providing our energy price relief plan. Again, we received proper advice on that. Now, the easy option, and some might argue the political option and one that our opponents were characterised by, would have been just to send people cheques. What we didn't do was that. What we did was do that in a way that both the RBA and the Australian Bureau of Statistics in their latest iteration, as well as Treasury and Finance have said, put a downward pressure on inflation. So we did that. We did other measures that we had planned for some time, such cheaper child care, began on the first of July and there will be some figures out next week, showing that that has been an effective policy, with a double-digit decrease in cost. We did cheaper medicines, they began on January 1 of this year. And then our 60-day dispensing made a difference as well. In addition to that, we promised 180,000 fee free TAFE places and we delivered over 300,000 places last year. So, dealing with two issues there. You are dealing with supply chain shortages, but also reducing cost for people. So, we had gone through a suite of measures, one by one. Constantly, what can we do to make a difference. What became clear though, is that you needed, we needed to do more. And over summer that became clear to me. I sought advice. I said publicly that I was seeking that advice, of course. We did not hide the fact that we were seeking advice about what to do. But it is our decision, our decision. And we take responsibility for it. But it's the right thing to do to consider how you can make a difference. And it is very clear to us when you have order of $107 billion over the forward estimates that are already factored in to the RBA’s consideration, factored into the Treasury and Finance analysis, that the right thing to do is what we are doing today. Keeping the amount of the tax cuts that were envisaged but doing it in a way that helps lower and middle income earners, but also helps our economy. This is good economic policy. And good economic policy matters. That's why we are doing it.
JOURNALIST: Some Labor MPs are concerned about rebuilding trust now with the public following your decision. You promised to do politics differently, to bring integrity, honesty back to politics. Isn't it important therefore you level with the Australian people today and admit that you breached an election commitment? Is that something you can do?
PRIME MINISTER: I'm not sure if you were here for the speech, Joe.
JOURNALIST: Don't think you have said it was a broken promise yet, Mr Albanese.
PRIME MINISTER: I am very clear about the fact we have changed our position. We have changed our position for the right reasons. And I stand by and accept responsibility for it. It was unanimously adopted by the ERC, unanimously adopted by the Cabinet, unanimously adopted by the Ministry and unanimously adopted by our Caucus. We have been through proper processes. That's what I do. That is the sort of Government I lead. A Government that is considered. A Government that is orderly. A Government that is focused on the needs of the Australian people. And what we have done here is put people before politics. We expect there to be some controversy around that. But I have a responsibility to put people first. Not to put the politics of this first. And people can do their own analysis and that's fine.
JOURNALIST: Are you saying there has been no breach?
PRIME MINISTER: What I know is this is the right thing to do by the people of Australia, both individuals, people on middle Australia, who need that assistance. And you, in doing that, we are also in good position in that this is also good national economic policy to make a difference. And some of the tables that we have released from Treasury today indicate of that, why it is good for labour participation, it is good for business, why it is good for the economy. We had a question before about people on low and middle incomes spending more, by comparison with people earning higher incomes. You know where they spend it? They spend it at the local supermarket, at the local shop, at the local things they need for their kids, buying school uniforms, doing all the things that they need.
JOURNALIST: Prime Minister, Benjamin Netanyahu has stated in recent days he is against the Palestinian state. As a world leader do you call that out or is it time for the Government to look at the reality of the situation and look at whether it is now time to drop the two-state solution policy. Is there an alternative and is it possible in your view that Palestinian people could live in Israel with equal rights as thousands of Arabs do?
PRIME MINISTER: I support a two-state solution. One of them is called Israel and one is called Palestine. And that is in the interest of Israelis and Palestinians to live in peace and security. Both. What we have seen after the terrorist act on October 7 by Hamas is a tragic loss of life of Israelis. But we have also seen a tragic loss of life of Palestinians. I value every life equally. Every innocent life. Israel must be allowed to exist within secure borders stop but the Palestinians need justice as well. And I support the effort of President Biden. I have had discussions obviously with the President Biden, I refer you to the joint statement that I made with Prime Minister Trudeau and the new Prime Minister of New Zealand as well, three of the Five Eyes countries. We have taken, again, not an easy decision on this. We have been consistent. And it is consistent as well, it might be said the resolution of the House of Representatives that I moved that was supported by both the major parties.
JOURNALIST: On the standard you have applied today and you say is accepted by your Cabinet on this change, that when circumstances change, then the right thing to do and you said the responsible thing to do is to change policy. Prime Minister, circumstances change daily. Can you name any of your election promises you are not now prepared to break?
PRIME MINISTER: If you have a look, Mark, at what my Government has done, we went to an election, promising cheaper child care and we’ve legislated for that. Went to it promising a Housing Australia Fund, legislated for. We went to the election saying we would have a 43 per cent target for 2030 for emissions reduction and net zero that we would legislate, and we do it. That we would do that through the Safeguard Mechanism and we have legislated it. That we would have a National Reconstruction Fund and we’ve legislated it. Right across the board, whether it be economic policy, the various social policy mechanisms that we have put forward, or environmental policy, we have been very much focused on making sure that we focused on making a difference as we said we would. What has happened with this policy, this is a change in position. I am not trying to argue that it is not a change of position. We have kept as much consistency as possible by keeping the same amount there, but done it in a way that recognises the reality which is there. So that those people listening to Channel 7 News, just to give you a free ad, on TV tonight and every other night, who are sitting at home, thinking that, you know, they are doing difficult, whether they be low income earners or middle income earners, or indeed even high income earners who will get a $4,500 tax cut, know that this policy that we are announcing, but very much focused on middle Australia, where overwhelmingly, there is higher benefit with double the benefit for people in and around the average income bracket - that they have got a Government prepared to provide assistance when it is needed. And it is needed right now.
JOURNALIST: You told Australians time and time again that there would be no changes to the stage three tax cuts despite privately doing the exact opposite. So, I ask you today to rule out ringing in the retirees tax are any changes to negative gearing?
PRIME MINISTER: I'm not sure what you're referring to with the first one.
JOURNALIST: You said the stage three tax cuts will go ahead as planned.
PRIME MINISTER: You said retirees or something.
JOURNALIST: Yes. Can you guarantee there will be no changes to further tax concessions, whether that be negative gearing?
PRIME MINISTER: What we have done here, and the only consideration that we have had here is cost of living pressures. None of the things you refer to will go anywhere near any of that. So, the only consideration that we have had, and it's been a focus of my Government, is how do we deal with cost of living pressures? That is what we have been focused on. The tax cuts that we've announced today will go to providing support for cost of living measures. So, it's been the number one focus of my Government has been cost of living, whether it be child care, medicines, energy, TAFE and education, whether it be all of those measures. And we found ourselves in a position where this was overwhelmingly the case as it was put. Were circumstances different then, it certainly was not, we didn't well in advance say, well, we are going to change things. Because what we were doing, though, in recent times, just over summer, very recent times, I said we changed the position on Tuesday, because the cost of living pressures has lasted for much longer than people thought and the range of measures that we put in place had not as effective enough.
JOURNALIST: Thank you, Prime Minister, we’ve had about promise in the past, I might try one for the future if we can. This package will have to go through the Parliament. The Opposition are outside unseen, which means you need the Greens. They say they want more. Can you then guarantee that this is the package that will get to and through the Parliament and there won't be other changes of heart?
PRIME MINISTER: This is the package that will put to the Parliament and we are confident it will be carried by the Parliament. Because people have the option now of two plans. One plan that the Coalition say before they even looked at our plan, they are saying no. But they also say that they will legislate to reverse it if they are elected. We think that this is the right thing to do. It is a considered proposal. And I'm sure that they will be some who will say it does too much or doesn't do enough. We think this is the right thing to do. And as I said, we have changed our view on income tax and we are explaining our reasons why. And this is the best proposal. It's backed by the Treasury analysis that we have put out. It won't be inflationary, it will make a difference for Australians, overwhelmingly, everyone will get a tax cut. 84 per cent of Australians will get more than under the Morrison plan. And we are particularly focused on the beneficiaries will be those in those middle income brackets who need that assistance. So, we will argue our case. That is what I'm doing here today. And I'm confident that we will be able to get a carried in the House of Representatives and the Senate.
JOURNALIST: Some public reaction we've got so far this morning from middle income earners is that they're happy they want more money but at the same time, it has planted a seed of doubt as to whether they can trust you on anything you say going forward. So, do you acknowledge that middle income earners may forgive a broken promise but may not forget?
PRIME MINISTER: Australians, including middle income earners can trust me to do the right thing for all the right reasons. That's what we are focused on. I have said before, and I repeat, this isn’t the easy decision, it's the right decision. And we stand by it.
JOURNALIST: Thank you very much for your speech, Prime Minister. You’ve said today that the changes to the stage three tax cuts won't worsen the inflation and that appears to be backed up by the advice you provided from the Treasury and from the RBA. But we are still not seeing that inflation come back within the target range until 2025. Was there any alternatives to the version of the stage three tax because you offered today that could have seen bigger cuts to bring inflation under control sooner?
PRIME MINISTER: Well, we were determined to have the same level of tax cuts we thought was the right policy. And the reason why we thought that was because of the problem that we are trying to solve. The problem was pressure on cost of living for low and middle income earners in particular, for middle Australia. The solution is what we came up with. So, we were very clear and we insured that the analysis was done as well by Treasury that we've released for you. We made sure the Treasurer as well as a Treasury Secretary consulted the Head of the Reserve Bank ahead of us making that decision because we understand that inflation does not have the same impact on people, on Australians. Inflation has a greater impact the less you earn. That's the truth. And that is why this response has been fashioned the way that it has. To make a difference to those low and middle income Australians.
JOURNALIST: This policy gives more for every taxpayer but not every Australian. Will there be anything for working Australians below the tax-free threshold and income support recipients in the relief that you flagged today?
PRIME MINISTER: Well, I do know that the last Labor Government tripled the tax-free threshold, something that we were very proud of. We, very much, are focused on providing support for the right thing to do was to reduce that rate from 19 cents to 16 cents because that was a change as well, that flows through to everyone including those earning $45,000. That's a factor that reduces everyone's tax they are paying. So, we thought that was very positive. And I note that in other measures that we have been doing on cost of living, many of those have been targeted at people outside the tax system. Our increased rental assistance, our support for single mums, our increases in payments to welfare recipients have all made a difference. But what we did with this package is unashamedly come at it of how do we assist people in that middle income bracket? How do we assist those people, because you don’t assist those social security systems. And we've done a range of things to the social security system in our first two budgets. This was about how do we help working families? That's what it was about. Working families particularly middle income working families and that is what this does, by doubling the benefit for them which will make a difference. In addition to that, of course, lower income workers including part-time workers will benefit from the change to the drop from 19 to 16 cents. And that's something that will drive as well, will be a big factor for people, mums and dads, deciding how they will go back into the workforce for two or three days, it will be a real encouragement for them. And that is why the impact on labour supply is seen to be so positive and that's why the impact of these changes as well. We also released today the gender impact statement this very much, the previous package was very much skewed in terms of benefit towards men, overwhelmingly benefit. So, as a result of this, 90 per cent of women will receive a greater benefit. But I make this point, and I will conclude with this, Laura, if I get away with it. Every Australian will receive a tax cut as a result of what we will do. That is why I go back to the speech. No one left behind, no one held back. This is about not forgetting people who really need that assistance and we are providing a lot, cheaper medicines has cost for example, $250 million to the budget as a result of what we have done on cheaper medicines is the benefit for Australians overwhelmingly on low incomes. That’s why we focused with this on not holding people back. This is a pro-aspiration package by providing all the benefits, focused on middle Australia but also by making sure that we’ve increasing our top rate as well. So that we didn't try to look after just one section, we've tried to look after the whole nation, but particularly with that focus on middle Australia.