Topics: OECD tax report, Labor’s inflation crisis, Gendered violence

E&OE

MATT DORAN:

The Shadow Treasurer Angus Taylor joined us to discuss this from Goulburn earlier. Angus Taylor, welcome back to Afternoon Briefing. This OECD report highlights a number of issues that are leading to Australians seeing more of their take home pay eaten up by tax. One of the factors is the end of the LMITO, or the Lamington as it's colloquially known - the low and middle income tax offset - that was always a temporary measure. Do you think that this highlights the need for that to be a more baked in feature of our tax system?

ANGUS TAYLOR:

Well, I think what this data tells us is that Australia has had the biggest increase in personal income taxes of any advanced country in the world, of any country inside the OECD. And this Labor Government has been happy to go with that. It bolsters their budget by raiding household budgets. And no matter what the cause at the end of the day, it's happened in their time in government. And it's a big part of the reason why Australians are feeling enormous pain in their household budgets, we know their household budgets have been smashed by higher prices. We know that household budgets are being smashed by higher interest rates. But we also know that household budgets are being smashed by higher personal income tax. And a big part of that is bracket creep, which is biting deep into household budgets. It's like a thief in the night taking from household budgets and giving to the government. And that's a big part of the reason why Australians are feeling such pain right now.

MATT DORAN:

So do you think, as has been highlighted by the OECD, if a factor like the LMITO, and I'll get on to bracket creep in just a moment, but a factor like LMITO has led to this situation, that that should be considered in future discussions?

ANGUS TAYLOR:

Well, no matter what the cause people are paying more tax. Now, a government can do a lot to deal with that. They can find ways to hand back bracket creep, and they haven't done and the reason is that they want to increase their spending. And they have been increasing their spending - $209 billion of additional spending across the forwards, four years under this government. That's additional to when we left government, that's $20,000 per Australian household, which is an enormous amount of money in extra spending. And that's the real cause of Labor being happy to have higher taxes. And it's the real reason why they need to raid household budgets to support their own budget.

MATT DORAN:

Jim Chalmers says that the revised stage three income tax cuts, which come into force from the middle of this calendar year, will go some way to helping that tax burden for Australians. He does have a point though, doesn't he, that there is going to be further tax relief for more Australians than would have been there under the Coalition's original plan?

ANGUS TAYLOR:

Well, it won't touch the sides, it won't touch the sides, there's no additional tax relief, they've just recycled it. And at the end of the day, the 7.5% reduction in Australians' standard of living is not being restored by this government. You've got to go to the underlying source of the problem. The underlying source of the problem here is that we've got rampant inflation in this country. We've got Labor's homegrown inflation crisis, which is driving up personal income taxes being paid, which has been driving up interest rates and we're now seeing leading economists saying interest rates are going to be higher, not lower, they're certainly going to be higher for longer than was anticipated. We've got the most persistent inflation in the world. And the combination of interest rates, inflation, and higher taxes is absolutely smashing household budgets. That's why people feel as though they can't make ends meet anymore. They've had to take on extra jobs, they're digging deep into into their savings, they're giving up on any discretionary expenditure. And we need a budget, the test for Labor now is to bring down a budget that's going to take pressure off inflation and interest rates. We all benefit when they achieve that. That's not what we've seen so far. That's what we need in this budget.

MATT DORAN:

I know that you're describing the inflation situation as a homegrown issue there. Some of the data that came out of the ABS earlier this week on key drivers of inflation, looked at things like petrol prices. Now that is something that is out of the control of the Australian Government, but it's a significant impost on household budgets. So how can the government be held accountable for rises in those sorts of costs?

ANGUS TAYLOR:

Well, I'll make two points about that. The first is that Michelle Bullock, the RBA governor, has said that this is homegrown inflation. The second point is we saw that in the data. The non-tradable inflation, the domestic inflation in the economy right now is over 5%. 5%. And tradable inflation is down below 1%. So it's very clear from the data we saw out earlier this week, this is homegrown. It is absolutely clear. Labor will look for any excuse to pat itself on the back, Labor will look for any reason to blame someone else and not take responsibility.

MATT DORAN:

Talking about the issue of bracket creep, we know that the Coalition is promising its own tax plan to try to deal with this issue. And indeed, under the original stage three income tax cuts, there would have been the complete elimination of a tax bracket, that 37% tax bracket, for people earning between $120 and $180,000. If this is such a big issue, and you want to see this addressed, does that suggest that in this new plan that you're going to put forward ahead of the election that that will return? That will be a feature of what you're planning?

ANGUS TAYLOR:

Well Matt, there's no doubt that bracket creep is a thief in the night, there's no doubt that Australian households are feeling poorer under this Labor government, partly because of the impact of bracket creep. And there's no doubt we'd like to see less of it. The first and most important thing you can do to address bracket creep, is get inflation down. This is why I say all roads lead initially to just beating inflation, fighting inflation first, which this government is not doing, and beating it. And that will take a lot of the sting, most of the sting out of bracket creep. So that's the starting point. We'll announce our tax policies in the lead up to the next election, I'm not going to disappoint you that I'm not going to announce those policies here today. But as I say, the real test for this budget, the first and most important test is, is it going to be a budget that fights and beats inflation. We've had two budgets already from this government where they've said they were going to fight inflation. It hasn't happened.

MATT DORAN:

I want to get your thoughts on one other issue before we let you go. It's an awkward handbrake turn, but it's one that we need to do anyway, considering how important an issue it is, and the scourge of domestic violence has, again, been forced into the national spotlight this week. We consistently hear that this needs to be framed as a men's issue, that men need to be taking responsibility for their behaviour towards women. Why do you think that message is not getting through to certain parts of the community?

ANGUS TAYLOR:

Well Matt, can I say up front, I mean, the data we saw this week, obviously terrible and sitting behind that data are terrible stories of people seeing violence that they shouldn't see. And we've got to do absolutely everything we can to beat it. And it's the practical measures that can be taken that we're most interested in. We'd like this to be above politics, to be bipartisan, we'll certainly seek to make it bipartisan in any measures that come forward on it. I note that the New South Wales government is looking at measures around bail, and I think that's a good thing. But as I say, we'll work with the government on any measures that are sensible, that can actually achieve an improvement in the situation because it isn't acceptable.

MATT DORAN:

So why don't you think the message is getting through though to the community, that these behaviours need to be need to be stamped out? Aside from what policies could be put in place, what is the driver there?

ANGUS TAYLOR:

Well it's a good question. It's a good question. I mean, you know, there's no doubt that households are under more pressure in recent times, and is that contributing to it? I don't know, I don't have the answer to those questions. What I do know is the outcome is something that we shouldn't be content with at all. I mean, we need to be, and it's practical measures that are going to make a difference that we're really interested in. And as I say, we'll take a bipartisan approach to that insofar as we ever possibly can, and if there was ever a good - a bad issue, terrible outcome, but an issue where we should be seeking to be bipartisan, it's this and we'll certainly seek to do that.

MATT DORAN:

Angus Taylor, thanks for your time.

ANGUS TAYLOR:

Thanks, Matt.

ENDS.