Interview with Sarah Ferguson, 7.30, ABC

Subjects: One Nation, Angus Taylor, tax reform, NDIS, fuel excise Sarah Ferguson: Jim Chalmers, welcome, good to have you in the studio. Jim Chalmers: Thank you, Sarah. You’ve spent 3 years spruiking the government’s cost‑of‑living relief measures, rebates for fuel and energy, tax cuts, childcare, Medicare, I’m going through the list, rent assistance.

But it’s One Nation now that seems to have attracted the majority of voter support. Why do so many people think that you’re not helping them and One Nation will? Well, the pace of change in our economy and in our society is accelerating, and the global pressures are intensifying, and I think people have got legitimate concerns about where they fit in that story of churn and change.

And once you recognise that, you’ve really got a binary choice, and it represents the difference in politics right now; the right wing parties, One Nation, the National Party and the Liberal Party, they seek to capitalise on that sense of disconnection that people are legitimately feeling, whereas we’re trying to address it, and that’s really the difference in our politics right now.

But why do people think that One Nation has their backs? With that long list of cost‑of‑living relief rebates that you’ve been repeating and repeating now, why are people thinking that it’s One Nation are the ones that are going to have their backs and do something about it? Because despite all of the work we’re doing to help people with the cost of living, the 5 different tax cuts, and all of the other ways that we’re helping people, wages and the like, we know that people are still under pressure and they will express that pressure in political terms.

That’s not unusual. Now what is unusual is that we are, as the government, trying to change the status quo. Our political opponents are trying to cling to the status quo, and that’s because they want to benefit from it politically without fixing it.

In your speech that – you gave 2 speeches today – in one of them you made a personal attack on Angus Taylor for his privileged background. Do you have a problem with wealthy Australians? Not at all.

I want more people to succeed in our economy, and in our society. That’s the point that I made in the speech. Angus Taylor talks about a ladder, and the point that I’ve made about the ladder is there’s not much point in having a ladder if the first few rungs are missing.

Angus Taylor was born at the top of the ladder, good on him, but I think that that means he doesn’t understand that a lot of people are struggling, a lot of people are finding it hard to get a toe‑hold in a very difficult housing market, and that’s why our tax reforms are really all about making it easier for people to buy their first home, cutting income taxes for workers again and again, and better aligning that tax treatment of labour and asset income.

Now Angus Taylor wants to defend a broken status quo, which is locking too many young people out of housing. We are fixing and addressing that status quo. And that comes with political costs, we understand that.

Economic reform is always contested. Sure, but you – It’s always contentious, but it’s worth it. – were singling out his – the privileged beginning that he had in life. Now there have been very wealthy Labor Prime Ministers, Kevin Rudd, Paul Keating, for example.

When their children inherit those vast sums of money that Keating and Rudd both enjoyed, won’t they be in exactly the same privileged position as Angus Taylor? The point that I’m making about Angus Taylor is that not everybody is born already at the top of the ladder, that’s the point that I’ve made on other occasions, including in the parliament, and I mean that.

But are you saying that people who inherit wealth are, you know, should be worthy of criticism? No, I’m saying that we want more people to do well, and Angus Taylor is trying to prevent more young Australians getting a toe‑hold in the housing market. He’s done well, good on him, but not everybody’s had the same experiences that Angus Taylor has had.

And our responsibility, which we embrace enthusiastically, is to make it easier for more people to do well, whether that’s at work with better wages, whether it’s helping with the cost of living and tax cuts, or whether it’s helping people get a toe‑hold into a housing market that’s been too difficult for too long, especially for young people. Now One Nation is running, it claims, a very successful fundraising campaign calling the Prime Minister a liar over the Budget’s tax changes.

What will it take for you to convince people that those tax changes are in their interests? Well, first of all, One Nation on every occasion votes against working people. One Nation votes the way that Gina Rinehart tells them to do rather than the way that working Australians need them to do, we’ve seen that – Pauline Hanson rejects the idea that she does Gina Rinehart’s bidding.

Well, look at the voting record in the Senate and in the parliament. Again and again and again, One Nation votes directly against the interests of people who battle in our economy and in our society, and we’re seeking to make life easier for people. She always votes – One Nation always votes to make life harder for people, but particularly when it comes to cost‑of‑living relief or wages.

Now when it comes to the One Nation campaign, the one thing that people need to know about One Nation is that they are defending the current status quo in the housing market. They see this challenge, which is the intersection of the housing market and the tax system, which is locking young Australians out of their first home for too long, for some people forever, they are defending, clinging to that broken status quo.

Now that’s the difference. Now they will have all kinds of political campaigns to try and find every way that they can to raise money. They’ll focus on the politics of it rather than the substance of it.

But the substance of this is extremely clear. The reason I’m proud of the changes that we’ve made in the Budget, the reforms that we’ve announced, as difficult politically and contentious and contested as they may be, is that we are seeing this very real risk of people being disconnected and disregarded in our economy and therefore in our society. And we’re taking difficult decisions to address that.

Pauline Hanson and her ilk just want to benefit from that politically. Did you underestimate the backlash from investors that is crowding out your ability to sell the housing tax changes? No, because we understand that people have done very well out of the current arrangements, and again – So this is exactly what you – – expected, that you would be actually having a difficult time selling the housing tax changes because of the noise coming from that?

Obviously – People are unhappy with the CGT changes across the board. Obviously we expected and anticipated that some people would prefer things to stay exactly as they are. Obviously we expected – This is not just about a reluctance to embrace change though, is it, there are people in that group who think it is a wrong decision, not just a decision?

But that always happens with difficult economic reform. You know, there’s no big economic reform, particularly in the tax system, where people line up behind it unanimously. We’re not seeing this here, and we’re not seeing it on the other occasions the country’s embarked on big, difficult tax reform.

But that’s not a reason to not go down this path. Last time Labor did it, you walked it back. Do you have a – will you be able to stick to this, do you think?

All the way? Let’s talk about that, because you’re in negotiations over carve‑outs from the CGT tax changes for some businesses. How broad are you prepared to go with those exemptions?

Well, as the Prime Minister said people shouldn’t expect there to be broad scale changes. What we’ve – There are obviously requests for broad scale changes. Well, we flagged before the Budget privately and we flagged in the Budget papers that we do recognise that there are particular issues in the start‑up part of the economy.

So are we just talking about start‑ups? We said that there’s consultation with small business and with start‑ups. Obviously we listen very carefully when people raise issues with us and concerns with us.

We said even before the Budget was announced that we’d be prepared to do this consultation. That’s what we’re doing right now, and again it’s not unusual. Big tax reform often involves multiple pieces of legislation, it often involves consultation on the implementation details, and that’s what we’re engaged in.

But will it be clear before the legislation is presented to the parliament? The legislation is about the core elements which won’t change, the 4 key elements of this negative gearing, capital gains and the 2 tax cuts for millions of Australian workers. So those are the core elements, and we’re legislating them first to give – So we won’t know what you’re going to carve out from the CGT changes before the legislation appears?

It was never the intention that we – – would do that, and it wouldn’t be the norm when we look at other big tax changes that the country has embarked on. Shortly I’ll put out a consultation paper which sets out a position on some of these issues around start‑ups. We have recognised for some time that there are legitimate issues to be worked through here, and so shortly I’ll release a paper – – which will organise some of that consultation quite publicly.

Are you going to – are you looking at junior miners as well as part of the package of companies that you’re – sectors that you’re going to exempt from this change? That hasn’t been a focus of the consultation, the consultation – So they’re out? Well, the consultation has been with the tech sector, for example, obviously there are issues around, when it comes to biotech that you’ve read about in the media in recent days, that we’ve been working on for a little while now.

So there are legitimate issues that people raise. As a good consultative government, we’ll put out a paper, we’ll organise that consultation. But this legislation before the parliament right now is about the core elements which won’t change, those 4 key elements.

Later in the year we’ll legislate the trust changes. Again, it’s not unusual at all when it comes to big tax reform in this country, of governments of either political persuasion to do it in multiple pieces of legislation, to use legislative instruments and to consult on implementation. One of the people offering you advice on changes he wants to see in these changes is Matt Comyn, the CEO of the Commonwealth Bank.

He said on this program, ‘I don’t think we want to change the incentives towards risk and enterprise and innovation’. Are you listening to Matt Comyn? I do listen to Matt.

What about on that fact, he doesn’t want those CGT changes to stifle risk and innovation? Well, again, it would be strange if everyone had a unanimous view about these big ambitious tax reforms. You’re quite aligned with Matt Comyn though.

I spend a lot of time with Matt, and – So what’s your response to him? – I spoke to him in the last week or 2 about some of these issues. I take Matt’s views on board, I take them very seriously. But is he right that the risk is that you will stifle risk, enterprise and innovation?

I don’t believe so. The reason I don’t believe so is once you take the decision to fix this housing issue, the distortion that’s created by the capital gains discount on housing, and you replace it with another kind of discount, it’s best to apply that broadly, and the reason for that is because you don’t want to replace one distortion in the tax system with another.

But when it comes to investments like shares, there are some categories of shares where they have been undercompensated by the old arrangements. And so you want people making investments for good economic outcomes, not just necessarily for good tax advantages, and that’s why we’re applying it broadly. Your budget repair, as set out in the Budget papers, depends on huge savings coming through from changes to the NDIS.

How crucial is it for the government to avoid a longer inquiry which many in the sector want to see, to avoid delays to those changes to the budget that are so important to you? Two very brief broad points before I get to the specifics of that. The changes to the NDIS are about saving the NDIS from itself.

We believe in it, and that’s why we need to make it sustainable. The second point, which you rightly identify in your question, is something like almost 3 times the amount of heavy lifting in the budget, on budget repair, is being done by savings, not by tax changes, that’s not always recognised. Now on the specifics, I’ve learned not to take any outcomes in the Senate for granted.

There’re obviously negotiations underway about inquiries and the like, we engage in good faith with other parties in the Senate, but clearly, if there’s a big delay that has some risk of being costly. Now the most important changes when it comes to savings to the budget come in not on the 1st of July but in October, and I think at the beginning of 2028, from memory.

So not everything in the Budget that has been costed begins on the 1st of July this year, but if there is a delay created by the Senate, that does pose the risk of it being costly, and if that happens that will be on the Coalition, who say that they want to help make the NDIS sustainable – well then the onus is on them to prove that in the Senate. On the fuel excise cut, obviously today – yesterday we’ve had more bad news from the Middle East again.

Have you made a final decision yet on whether or not you’re going to renew it or let it lapse? Well, from an economic point of view the end of this war in the Middle East can’t come soon enough, I think that’s obvious. Now when it comes to the petrol excise cut, we’ve got this 3‑month cut.

It costs almost $3 billion in the budget. We haven’t budgeted to extend that, but we’ve been upfront with people and said, really, on a week‑to‑week basis that we review the arrangements for that. Obviously there’s only another 2 or 3 weeks left in this month, and so we’ll come to a decision closer to the end of the month, but that petrol excise cut is a really important way that we’re helping with the cost of living.

Petrol prices have come down in the last couple of months [indistinct]. The message the government’s giving is for people to get ready for it to be gone? Well, that’s what’s in the Budget.

But we’ve also said to people again, you know, trying to let people in on the sorts of decisions that we grapple with really from week to week, we review the settings here, but it’s an important way that we’re already helping with the cost of living. Treasurer, thank you very much indeed. Thanks Sarah.