Interview with Emma Rebellato, News Breakfast, ABC

Subjects: the fuel excise cut and introduction of new tax legislation Emma Rebellato: Time now for federal politics and we’re joined by the Federal Assistant Treasurer, Daniel Mulino. Thanks very much for joining us. Daniel Mulino: Thanks for having me on, Emma.

I want to get to the legislation that’s being introduced today in a moment, but first I want to start with the fuel excise cut. Now, we know inflation slowed yesterday in part thanks to the cut, but the Treasurer said he didn’t expect it to be extended beyond June 30. Why not?

This war is not over. Well, I think what the Treasurer flagged is that the inflation numbers yesterday are welcome, but obviously inflation remains above where we want it. He also welcomed the fact that the moves that we’ve taken in relation to the fuel excise, the 50 per cent cut, is already having an impact on the inflation numbers.

But I think moving forward, we just need to assess what the situation is, how the war and its implications unfold, and what the fiscal situation is. Okay, let’s talk about the legislation that you’re introducing today. So, you’re bundling changes to capital gains tax and negative gearing with the income tax relief.

Why are you introducing this legislation now when all we’re hearing from the government is that you’re consulting with business and industry and you’re leaving the door open to possible carve outs. Shouldn’t you wait? So, I think it’s really important with this Budget and the significant reforms that we’ve seen in this Budget that we put in place legislation of the overall framework as quickly as possible and that we provide clarity and certainty there.

It’s very normal with tax legislation that there be an overarching framework piece of legislation and that where there are details around specific issues, that there be subsequent tranches of legislation. We saw this with the GST legislation that John Howard introduced, where the original piece of legislation was then amended 7 times in the following 12 months.

We saw that with the 1999 changes, the Howard government brought in in relation the CGT. So, it’s very normal that there be an overarching framework and that there be consultation on particular issues, which is exactly what we’re doing. Will we be seeing some business carve outs from capital gains?

So, what the Treasurer identified on Budget night, but also reinforced at the National Press Club the day after the Budget, is that there are some particular situations. So, venture capital was one where there’s a very low cost base. And so we, we acknowledge that we needed to talk to industry around how that might interact with the proposed indexation methods that are going to be in the legislation.

So, that consultation is well underway. I myself have engaged with a number of representatives of that sector. I’ve been involved with a number of representatives of the biotech sector, for example.

And so those conversations are thorough and meaningful and there’s deep engagement going on and that’s consultation that we flagged right from the beginning and that is happening. WA Labor Premier Roger Cook isn’t happy either. He’s worried about the mining exploration sector and that could be hit.

How do you respond to that? Well, what I would say is that the government has received representations on a range of fronts. So, there are the VC issues that I just identified.

There have been a number of issues in relation to small business and again, I myself have been in discussions in relation to that. But I know of course the Treasurer is leading that and Treasury, the department is also engaged with those. I noted, excuse me, the Premier’s discussion on the issue of mining exploration.

So, we’ll, we’ll look at those issues raised and engage with him, I’m sure, on a, on a good faith basis. We know the Coalition is opposed to many of these changes. So, do you have the Greens support for this legislation?

Well, look, I don’t want to speculate on how this will play out in either the House or the Senate, but what I would say is this is a real test for the Opposition on 2 fronts. Firstly, there are 2 cuts for Australian taxpayers. There’s the working Australian tax offset and there’s the instant deduction.

This is a test to the Opposition – Well, the Coalition says it agrees with tax cuts. So, why bundle it all together then, if you’re not going to get them all through? Well, they have a track record of opposing tax cuts.

So, look, we’ll see what they do when it comes to those tax cuts. But it’s also a test in the terms of the Opposition, in terms of the housing market, there is broad acknowledgement amongst policymakers, but also in our community that the housing market isn’t working for first home buyers and young people in particular. And what I’m increasingly hearing from the Opposition is that when it comes to the housing market, when it comes to the way that CGT and negative gearing operates to keep young people out of the housing market, they’re the party of the status quo.

So, the second test of the Opposition is, are they open to changes to the housing market to get more young people into housing? The modelling shows that our proposed changes will get 75,000 individuals and homeowners shifting from renting to owning their own home. That’s a really material shift over the medium term.

The Opposition has a real choice when it comes to this legislation. Okay, well, let’s talk about housing, because the Australian Chamber of Commerce and Industry has come out saying there is no concession to the CGT changes that will be acceptable to business. They want the proposals to be limited to housing.

Now, if these changes are all about getting more young people into housing, why aren’t you just looking at changes to the housing market and the housing sector? So, changes to the taxes in relation to how they’re keeping young people out of the housing market is one of the overarching rationales for the Budget. But another one is that we need to better align taxes when it comes to people who are earning income from labour versus those who are earning income from capital and from distributions from trusts.

Now, this is a long‑standing issue that many experts, many people in the community, many business leaders have said we need to better align our tax system. Indeed, if you go back to the major tax reviews, to the ASPEY review in the 70s, the Henry review, and even reviews undertaken under the Howard government and under the Abbott government, there’s been a long standing issue in Australia that people who have looked at our tax system have said we need to lighten the burden on people paying personal income tax, particularly from Labour.

So, the other major rationale for this Budget is to better align taxes from those different sources. And so that’s the key rationale when we look at the way in which we’re dealing with CGT changes but also trust income. Assistant Treasurer Daniel Mulino, thank you.

Thank you very much.