Matthew Abraham: On a Wednesday we gather three powerful South Australian MPs together to discuss national affairs, a lot to discuss today; your money. Simon Birmingham Education Minister and Liberal Senator joins us, good morning Simon Birmingham.
Simon Birmingham: Good morning guys, great to be with you.
Matthew Abraham: Kate Ellis is the Shadow Minister for Education and Labor MP for Adelaide, good morning Kate Ellis.
Kate Ellis: Good morning.
Matthew Abraham: And independent Senator for South Australia Nick Xenophon good morning.
Nick Xenophon: Good morning.
Matthew Abraham: Nick Xenophon it takes a lot to make you happy, can you accept that enough has been done for South Australia.
Nick Xenophon: Well no. It does take a lot to make me happy because the auto sector in South Australia, in the country, is closing down at the end of next year. That will involve tens of thousands of jobs at risk, and I think that this budget was a safe one for the Government, I think they want us- it’s a treading water budget. But in terms of manufacturing jobs if you look at the budget paper, the one sector of the economy that’s going backwards rapidly is manufacturing jobs, and my concern is that there isn’t a plan to deal with the massive loss of jobs we’re facing at the end of next year.
Matthew Abraham: But there are tax concessions for small business, the small business threshold goes up to $10 million, the Government has promised a lot of naval shipbuilding work to be in South Australia over decades. You can’t even be just a little grateful?
Nick Xenophon: No, no, no, I am very grateful that we’ve got the subs contract, but that won’t start in earnest in terms of the jobs that it will create, and the significant jobs it will create for a number of years. Right now you’re facing many thousands of South Australians who work for GMH, who work for the suppliers, who are affected by the multiplier effect of those industries who by the end of next year are looking at a pretty grim future. And that’s all I’m saying, is that we also need to look at that as well.
Matthew Abraham: Kate Ellis Shadow Minister for Education, Labor MP for Adelaide. Can you find something positive in this budget for South Australia?
Kate Ellis: Well I mean I think it’s incredibly disappointing that we have 75 per cent of all Australian workers waking up today to learn that they haven’t got a cent out of the budget, but they’ll pay the price for the huge cuts to education, huge cuts to health, cuts to pensions. So no I think this is a fail.
Matthew Abraham: You say cuts; spending is actually going to up isn’t it? It won’t reach Gonski levels, but there has been more money put back into education.
Kate Ellis: Well there will be $29 billion less in our schools as a result- as a direct result of the actions of this Government.
Matthew Abraham: You mean compared to what it would be if Gonski was fully funded?
Kate Ellis: I mean compared to what it would be if the legislation that is currently in place continues, and if the agreements which have been signed, which the Government said they were on a unity ticket about, were allowed to continue and weren’t torn up.
Matthew Abraham: Yeah but for people who might struggle with that, what exactly that means, what you’re saying is that under Gillard she promised us Gonski funding which would go out into the out years, we’re now approaching those out years, you’re saying it’s not going to reach that funding level, even though in real terms money has gone up. It’s just not as much as it otherwise would have been.
Kate Ellis: Well absolutely.
Matthew Abraham: Okay.
Kate Ellis: What I’m saying is that when we went through an independent review to determine what Australian schools needed to be international competitive this government have now said they’re throwing away the outcomes of that review, and they’re making Australian schools pay a $29 billion price for their wrong priorities.
David Bevan: You both wanted to take superannuation money away from people. You wanted to take away negative gearing and capital gains tax benefits. You both had identical tobacco tax policies. There’s… you’re almost getting down to splitting hairs are you not in terms of the difference between Tweedledee and Tweedledum.
Kate Ellis: Well I think that there’s no doubt that we have done the hard work in identifying where money can come from in the budget, and I think there’s an argument Scott Morrison should have to share some of his salary with Chris Bowen. What they’ve done is jumped on board, adopted a range of Labor policies, but unfortunately they haven’t adopted the areas where we would direct that spending to benefit Australian families and Australian workers; that being health and education, which are really going to pay a very big price as a result of this Government’s priorities.
David Bevan: Simon Birmingham, Liberal Senator for South Australia, Education Minister, is this a copycat budget?
Simon Birmingham: No, far from it in fact. What this budget demonstrates is that the Turnbull Government has a very clear plan for jobs and growth, a plan that will encourage investment in our economy by making especially investment in small and medium sized business more attractive – that’s critical to the South Australian economy in particular – that the Labor Party will go to this election promising higher spending but also promising much much higher taxes than the Liberal Party. And so we do have some strong contrasts that will run into this campaign, and importantly they’re contrasts about whether or not we support the Australian economy to transition out of the mining boom, out of some of the largesse we’ve seen of the past, into what is a challenging period of time. We’re getting good jobs growth at present but…
Matthew Abraham: [Talks over] When you say largesse in the past, what are you talking about? Are you talking about the superannuation breaks that you’ve taken away from people in this budget?
Simon Birmingham: Well we are working…
Matthew Abraham: [Interrupts] Which were put in place by Peter Costello, a Liberal Treasurer.
Simon Birmingham: Indeed. Look, we are addressing a range of issues in this budget, to achieve sustainability. Importantly, every new spending commitment we’ve made, including additional spending for schools, is offset by savings elsewhere in the budget so that we are not growing the overall level of government spending, in fact over time we’re bringing it down. And that’s important because that enables us to ensure that the overall level of taxation does not grow over time. Labor will spend more and tax more and their policies are quite transparent about that. We think Australians pay enough tax already. We think if you want to encourage small and medium sized businesses to actually create more jobs in the future we need to do something to help make them more internationally competitive. And that’s what our changes to company tax do, while also providing modest income tax relief also.
Matthew Abraham: Simon Birmingham, you’re the Education Minister. Should we just get over Gonski? You are putting more money into education, but get over it, it’s not going to be Gonski.
Simon Birmingham: So we are putting more money into education. Education, funding for schools will grow from around $16 billion this year in 2016, to $20.1 billion by 2020.
Matthew Abraham: [Interrupts] But it’s not as much as the Gonski proposal.
Simon Birmingham: No it’s not as much as the Labor Party is promising…
Matthew Abraham: [Interrupts] And that you promised to match I think?
Simon Birmingham: We promised to match at the budget when we came to Government, and we have matched, and in fact exceeded the budget spending when we came to Government because we had to tip money back into the states that Labor had left out, like Queensland and WA. But beyond what was in the budget in 2013 we’ve now put spending on to a more sustainable pathway. And we think that that gives real funding growth into schools. We’ve got a real reform plan that focuses on how that can most effectively be used in our schools, because it’s not just about how much money is spent, it’s about whether our kids are actually learning to read effectively, whether we are getting enough people to undertake…
Matthew Abraham: [Interrupts] So we should all just get over Gonski?
Simon Birmingham: Well we should adhere to, and we will adhere to, good principles around needs-based funding, so schools in low socio-economic areas, students with disabilities overall will need more funding than others [indistinct] in the future.
Matthew Abraham: [Talks over] Yeah, yeah. Money for everyone.
Simon Birmingham: No, well, it’s not. This is a very important point. It’s not a case of money for everyone. It’s money carefully targeted as to who it goes to, carefully targeted as to the reforms and how it’s spent, and it’s money that is affordable into the future, unlike the type of big spending of Labor, which crippled jobs and growth.
Matthew Abraham: Nick Xenophon, Independent Senator for South Australia, were you really expecting, on the back of the subs announcement, and the largesse – as some would see it – handed out in the weeks running up to this budget, that for instance there would be more specific funding for Arrium and Whyalla? Do you agree that that really almost needs to be a separate negotiating point?
Nick Xenophon: It would have sent a strong signal if money was set aside for our steel industry, but it’s also issues of anti-dump, a procurement policy, because the Commonwealth does spend $59 billion a year on goods and services. And there should be a buy local first, a buy Australia first policy in my view. I’m seeing the administrator of Arrium Mark Mentha in Canberra tomorrow morning because obviously it has major challenges. If we don’t have a steel industry in this country you can basically say goodbye to a strong manufacturing sector in this country, but look, we do face challenges in terms of jobs in this state and my concern is that the budget hasn’t set aside either a plan or the funds to deal with the crisis we’re going to have in the auto sector.
David Bevan: Okay, Now, I’ll just come back to Simon Birmingham. A text has just come in from the Premier, Jay Weatherill. If we pay enough tax already, as you say Simon Birmingham, why does the PM encourage the states to raise their taxes to cover health and education cuts?
Simon Birmingham: [Laughs] The PM…
David Bevan: Why does he?
Simon Birmingham: The PM doesn’t encourage the states to raise their taxes but he does say to them if they want to spend more then they should take some responsibility for raising revenue themselves. That’s their decisions as state and territory governments. As a Commonwealth we don’t want to grow and will not grow the level of taxation. Only the Labor Party is proposing to grow the level of taxation in Australia.
Matthew Abraham: Can we ask each of you, Simon Birmingham, Kate Ellis and Nick Xenophon; how are you planning – we don’t want to go into too personal details here, but how are you planning to fund your own retirement? Are you going to rely on your super or have you got something else up you sleeve? Simon Birmingham?
Simon Birmingham: Well look, I have compulsory superannuation contributions like everybody else. All three of us are on a superannuation system that is identical to other Commonwealth public servants so…
Matthew Abraham: Yeah, but is that it? Are you just relying on your super or have you got something else that will supplement that?
Simon Birmingham: My wife and I seek to save where we can but really, it’s a case of super savings. We of course are all receiving very good salaries as Members of Parliament – that builds our superannuation. I don’t think that our situation is one to worry about. Most of us pay more taxes…
Matthew Abraham: [Talks over] No no no no, we’re not worrying about you. I don’t think our listeners are worrying about you three.
Simon Birmingham: [Talks over] I would hope not.
Matthew Abraham: But they’d like to know since you’re in the Parliament which decides how they get to save for their retirement, they’d be interested in what your plans are? So your savings and your super…
Simon Birmingham: So it’s important to note, I think the three of us will all pay more tax on our superannuation as a result of changes in this budget. However lower income Australians will be much better off.
Matthew Abraham: Kate Ellis, are you just relying on your super or have you got a stack of investments that you think… because some people would think we’ll you’re a mug if you’re just relying on superannuation. Now you need something else.
Kate Ellis: Look to be really honest with you, I intend to work for many many more years and I hope that I will have a very long time to think about my retirement income. Some of that is in the hands of the good voters of the people of Adelaide, but my focus is absolutely on the working years at the moment. And the decades…
Matthew Abraham: [Talks over] No, but your strategy is super I assume? Is it?
Kate Ellis: Well…
Matthew Abraham: [Interrupts] because governments, including your party. Political parties; they get to decide increasingly how people can use their super and how much they can sock away and how much the Government is now going to start taxing.
Kate Ellis: Well absolutely.
Matthew Abraham: Yeah.
Kate Ellis: And we are incredibly supportive of a strong superannuation system. We’ve been pushing for concessions for low income earners, which this Government wanted to scrap… but I’m being really honest with you saying that my concern at the moment is not about my own retirement, my concern is about the pensioners who were hit again in the budget last night. The policies that are being putting in place which are affecting people retiring right now.
David Bevan: Okay right. So you’re pushing 40 and you haven’t got a retirement plan apart from your super?
Kate Ellis: I think that is fair to say. And I intend to keep working for decades in order to be able to have a fair retirement plan in place. But I am not looking at putting my feet up anytime soon.
David Bevan: Okay Nick Xenophon, Independent Member for South Australia?
Nick Xenophon: I’m not planning on retiring, I’m planning to work til I die, whether it’s involved in politics or not. If it’s not to be [indistinct] or who knows, talk back radio? So um…
David Bevan: That’s a bit grim isn’t it? Honestly? Really?
Nick Xenophon: What? Yeah, what talk back radio? It is a bit grim isn’t it?
David Bevan: No, I mean… you’re not really seriously going to work til you die, are you?
Nick Xenophon: Well it depends [indistinct] but…
David Bevan: No, I mean. Do you really want to work til you die?
Nick Xenophon: What are you guys? Are you my mother this morning? What are you doing?
Matthew Abraham: Nick Xenophon, it is a serious question because many of our listeners right now would be thinking how am I going to plan for my retirement?
Nick Xenophon: And that’s what I want to address.
Matthew Abraham: So how are you doing it? What are you doing? What’s your example?
Nick Xenophon: My example, well I’m not planning on retiring, but my example is that I have superannuation from state and federal parliament, I also because of my parents’ Greek heritage and my father was a builder I have investment properties that are not negatively geared, but I’m planning to work for a very long time. And what I’m worried about, similar to Kate, is there are many people out there, particularly women in the workforce who have very little by way of super retirement savings, and that is a big challenge we need to tackle.
Matthew Abraham: Why haven’t you negatively geared?
Nick Xenophon: They were negatively geared, but now positively geared.
Matthew Abraham: Oh no, yeah yeah, you paid- they paid- they’re actually- okay, fine.
Nick Xenophon: Yeah, yeah.
Matthew Abraham: Well that’s not [laughs].
David Bevan: Okay.
Matthew Abraham: And you’ve got the roller in the shed.
Nick Xenophon: That’s right, that’s right.
David Bevan: You can always …
Nick Xenophon: And the Yaris, and the Yaris.
Matthew Abraham: Kate Ellis, coming back to you as Labor MP for Adelaide, why would Bill Shorten and the Labor Party have a problem at all in giving small business tax breaks?
Kate Ellis: We don’t have a problem in giving small business tax breaks.
Matthew Abraham: Well just listening to Bill Shorten on AM he does. He opposes the extent of the tax breaks given to small business in this Budget.
Kate Ellis: No, that’s incorrect. What we’ve said is we support the concessions for small business. What we don’t support is changing the definition of small business so it increases from a turnover of $2 million up to a billion dollars, which is in the Government’s announced plan last night. We support the measures for small business, but we will not be supporting rewriting the definition – which is actually just a way that this Government can give tax breaks to big business under another guise.
Matthew Abraham: Simon Birmingham, I thought the limit was now 10 million, not a billion. Is that correct that it’s a billion? The turnover?
Simon Birmingham: So the initial proposal is that in the 2016-17 year turnovers of less than $10 million will enjoy a reduction in their rate, and that’s a tax decrease for around 870,000 small businesses, small and medium size businesses if you want to use those words, who employ about 3.4 million Australians. So that’s the first step. We’ve outlined a longer term proposal to ultimately reduce the company tax rate across a range of other sized businesses – and that’s really important to make Australia a more attractive country …
Matthew Abraham: [Interrupts] Up to a billion-dollar turnover?
Simon Birmingham: … in which to invest. Well ultimately we want to get all Australian businesses onto a company tax rate closer to 25 per cent. But in the first instance we’ve outlined affordable steps to achieve that. And South Australia is an economy based on small and medium sized businesses.
Matthew Abraham: And just as with the Gonski thing, you can’t really worry about anything that’s 10 years off, it’s all pie in the sky anyway.
Simon Birmingham: Well South Australian, you know, South Australian economy is based on small and medium sized businesses, and this is great news for the SA economy to actually have this tax cut for small businesses flowing through. It will really help trades, and builders, and all of those types of businesses to invest and employ more South Australians in the future.
Matthew Abraham: Liberal Senator Simon Birmingham, Education Minister. Kate Ellis, Shadow Minister for Education, Labor MP for Adelaide. And Nick Xenophon, who’s going to work until he drops dead, Independent Senator for South Australia. Thank you.