Scott Morrison – Scott Morrison says property tax plan shows Labor can’t be trusted
“We want people to take the dividends of the recovery to invest it back into the recovery. We don’t want to take it off them,” he said.
“Our policy is designed to back in the decisions that people are taking, not to take decisions away from them.”
With a federal election due within 12 months and federal Labor hinting at either repealing or paring back the stage-three personal income tax cuts, which begin on July 1, 2024, Mr Morrison said Victorian Labor had “belled the cat” on its federal counterpart.
“That’s what Labor governments will do, they’ll put up taxes,” he said.
Mr Morrison said it was incorrect for anyone to demand the government demonstrate the growth effects of the tax cuts because they were already legislated and therefore their impact was already baked into the budget forecasts for growth.
Paring back or repealing the tax cuts would therefore hurt growth, he said.
“If Labor wants to put taxes up, they need to tell you how many jobs it’s going to cost and how much it’s going to slow growth,” he said.
“They’re the ones who have to make the argument for change. We did at the last election, won an election and implemented it. It’s now law.
“If they want to put up taxes in the middle of a recovery from the worst recession since the Great Depression, they can make that case. This is the worst possible time.”
This budget is for the situation we find ourselves in, and our responses to date have been all about for that time.
— Scott Morrison
The stage-three cuts will reduce from 37 per cent to 30 per cent the rate on incomes between $40,000 and $200,000, at an estimated cost of $137 billion by the end of the decade.
Labor has mulled not proceeding with the cuts if elected, or capping the 30 per cent income threshold at $180,000, a move it calculated last year would save $80 billion, which could be used for other policies or to pay down debt and deficit.
The budget forecast net debt to be $960 billion by 2025, and deficits for the next decade.
Mr Morrison said under present circumstances, debt accrual was preferable to austerity or tax hikes and he believed the best way to tackle debt and deficit was through growing the economy.
With monetary policy spent, interest rates low for the forseeable future and no other levers to pull, Mr Morrison said the government would have to continue to “lean in” for a while longer.
Restoring the budget to balance
“This budget is for the time. This budget is for the situation we find ourselves in, and our responses to date have been all about for that time,” he said.
“They are not business as usual. But they certainly are business as needed right now.
“There’s not a developed economy in the world at the moment that isn’t using the balance sheet to bring their economy through the pandemic, and they can do that because I think global central banks have been keeping rates pretty much zero.”
Mr Morrison believed the voters would stick with the Coalition, despite Labor saying the government could no longer lecture about debt and deficit.
The Coalition had a track record of restoring the budget to balance through growth and controlling spending, rather than tax increases, he said.
“They’re going to be looking for a government that has a record of being able to manage these things into the future. And I think we’ve demonstrated that on multiple occasions,” he said, citing his government and the Howard government.
“When we got the budget back into balance before the pandemic hit, yes there were good decisions made on controlling the growth of the expenditure, but fundamentally, when the economy grew people got off welfare and into work and the budget came into balance.”
Mr Morrison, who is under pressure from several quarters to be more definitive as to when borders will open, said he could not offer specifics.
“I understand the need for certainty in an uncertain world, but you can’t create false certainty either,” he said.
That, he said, did not mean the government was not working on plans for a staged reopening.
Mr Morrison repeated his aim was to enable vaccinated people to travel domestically and not be subject to state border closures or lockdowns. The second step would enable them to be able to travel overseas to so-called green zones, which were countries with the virus relatively under control.
“One of the easiest next steps is that if Australians are vaccinated, they’re not subject to the restrictions that are imposed by state governments. That is a rule next doable.”
To highlight the uncertainty, Mr Morrison pointed to Singapore, a country with which Australia is negotiating a travel bubble, but which is now going into lockdown again.
“We’re looking at what all those next steps are, when they can be undertaken,” he said. “You know it’s not something that any government anywhere in the world can get precision on.”
The property tax changes are set to be outlined in the Victorian state budget on Thursday.