Wed Oct 7

Prime Minister Interview with Sabra Lane

Written by Sabra Lane

SABRA LANE: Prime Minister, good morning and welcome to AM.

PRIME MINISTER: Good morning, Sabra.

LANE: This Budget is hoping to create 950,000 jobs over four years. How many of them will be created in the next 12 months?

PRIME MINISTER: What we will see happen, I think, is hundreds of thousands jobs continue to come back into the labour market, into the economy, just like we've seen over the last three months. 760,000 jobs have been, come back into the market. We've seen jobs that reduced to zero hours come back and be real hours in jobs now, 760,000 of them. And on measured employment, 60 per cent of those jobs that have come back have been for women. And so we're going to continue to see that happen because the plan is about creating jobs now. Hiring people, bringing forward investment, bringing forward those tax cuts. Bringing forward the things that will get people in jobs.

LANE: But is $100 to $200 a week for an employer enough for them to take a risk and hire someone?

PRIME MINISTER: Absolutely. And that- this is, this is what the transformation is in this Budget. We're moving from not just keeping people in jobs, but getting people into jobs. And this is going to provide that additional incentive. But when you take it together with all the other things that are in this Budget, the incentives for investment, the ability to use your current losses to access further capital, to be able to invest in your business and keep staff in in their jobs and to actually put more staff on your payroll. All of that works together to ensure more people will be in jobs.

LANE: The Government is placing its faith and hope in businesses to lead the recession recovery. What happens if they don't, because they're just not confident about the future?

PRIME MINISTER: Well, 8 in 10 jobs are in the private sector, Sabra. So the private sector always drives the economy. Always. That is what we always rely on. That's what people, majority, rely on for their incomes and their livelihoods. Whether they're employed themselves or running their own businesses, self-employed or elsewhere throughout the economy. So it's always essential that the private sector has the incentive to invest, to have that confidence and to go forward. And I think as people wake up this morning, as they are around their kitchen table, as they're thinking about their own futures, they'll be more confident today. They'll be more confident in the future they can plan for because they know the Government has done what is necessary in this crisis to stump up and ensure that there's the incentive to get on with it.

LANE: If the tax cuts go through and low income earners compare this year's income statement with last years, the boost won't be as generous as the Budget glossy papers show because the Government's chosen to compare the expected cut with wages from three years ago. Why has the government chosen to do that?

PRIME MINISTER: Well, we've got the low income tax offset which kicks in, and that's about $255 extra. You're also increasing the threshold from $37,000 to $45,000 for those paying 19 cents in the dollar. And then for those paying 32 and a half cents in the dollar, you’re increasing that from $90,000 to $120,000. So this is a major bring forward of those tax scales and those tax incentives. See a huge part of our recovery plan, Sabra, is to bring forward things that are part of our longer term plan. They need to be brought forward to now. Whether that's the income tax cuts, which are overwhelmingly going to favour those on low to middle incomes, or it's the, what we're doing with the incentives for investment, or those that we're focussing on with the hiring credit to get people into work. All of this is being brought forward to bring forward those decisions so we can get the economy moving right now.

LANE: Prime Minister, but for someone on, say $60,000 a year they'll get something like $21 a week. Is that right?

PRIME MINISTER: No, they'll do better than that. But my point is, they'll be better off, Sabra. They'll be better off.

LANE: How will they do better than that?

PRIME MINISTER: They will, they will be better off both on the increase in the threshold from $37,000 to $45,000 and there is also the impact of the low income tax offset.

LANE: This is a cross your fingers Budget, hope that there is a vaccine, hope that businesses hire, hope that consumers spend their tax cuts. Recently many of them have been saving it. If an effective vaccine isn't found and consumers and businesses aren't confident, how ineffective will this strategy be?

PRIME MINISTER: Well, I disagree with your assessment, Sabra. I think that is a fairly cynical view. What I think this Budget is about, and I think what Australians will see this Budget as, is a Budget that is a plan for economic recovery. It's a plan to create jobs. The measures that are in this Budget, whether it's the hiring credit, whether it's the bring-forward of tax cuts, the incentives for people to go and invest more and hire more people. None of this is contingent on whether there's a vaccine or not. None of it is contingent on the assumptions that are within the Budget. It's contingent on the government's commitment and passing these measures through the parliament to ensure that much needed support for our economy is there right now. But not just now, but well into the future. The JobTrainer reforms go out over the decade. The work that is being done on energy technology is about powering our economy for the next 30 years. The manufacturing plan, which is there for the next 10 years. The work that we’ve done on insolvency and credit reforms is going to fuel the arteries of this economy for many years to come. So it's about today. It's about tomorrow. But it's also about the future.

LANE: But I'm sorry, Prime Minister, the Budget papers also talk about this being contingent on there being an effective vaccine by the end of next year? If that doesn’t happen?

PRIME MINISTER: No that's an assumption, Sabra, you misunderstand the Budget papers. Having an income tax cut is not dependent on whether there's a vaccine or not. It's not. That is just the assumption that is made as to what is the, our best understanding of the economic conditions at this time, which is no different to any other Budget. The Budget also assumes an iron ore price of $55 dollars. It's been more than twice that that recently. So there are swings and roundabouts when it comes to the assumptions, and the assumptions are in every single Budget. But they don't determine what the measures are. And I think it would be wrong to suggest that a job hiring credit or an income tax cut was somehow contingent on whether there's a vaccine or not. That's just simply not true.

LANE: Net debt will hit nearly a trillion dollars by 2024, the government won't attempt to repair that until unemployment reaches below 6 per cent, maybe in 2023-24. Do you want to put an estimate on when that entire debt might be repaid?

PRIME MINISTER: No, I don't think that's possible at this time. And right now, that's not the priority. The priority right now is jobs. And that's what Australians understand. And we are in a COVID-19 recession, the likes of which we have not seen since the Great Depression, the world economy is going to contract by 4.5 per cent this year. During the GFC, it contracted by 0.1 per cent. We're dealing with an economic crisis at a global scale 45 times worse than what the GFC was. And so that requires this sort of response. There's no alternative to that. You've got to step up and do this. But you've got to do it in a way that's proportionate, that's targeted and that's temporary. 90 per cent of what we’re spending, Sabra, will be spent this year and next year. It doesn't go on for years beyond like what happened the last time we faced a crisis under Labor. This is done over the next two years to ensure the economy gets the boost it needs to get people back into jobs and get the economy off and running again.

LANE: Will you be clear with voters before the next election on how you'll find the billions extra to start budget repair?

PRIME MINISTER: Well, we've made very clear in this Budget about what we're doing on budget repair. We've made it very clear in our fiscal strategy, which has been updated in this Budget, to say the priority is to get people back in jobs. And I'll tell you why, because as both a Treasurer and the Prime Minister and a member of the Expenditure Review Committee before that, that over 6 years got the Budget back into balance. The primary way we did that, Sabra, was getting people into jobs. 1.5 million people into jobs before this COVID-19 recession hit. And when you get people not on welfare and in work, paying taxes, when you get businesses being profitable, that's how you balance a Budget.

LANE: Prime Minister, thanks for talking to AM this morning.

PRIME MINISTER: Thanks a lot, Sabra.