Prime Minister, welcome to the program.
ANTHONY ALBANESE, PRIME MINISTER: Good morning, David.
SPEERS: Iraq says the strikes are disastrous for both security and stability in the region. Do you think they are appropriate?
PRIME MINISTER: We support the actions of the United States. These are proportionate. These are retaliatory for the actions of Iran-backed organisations. And they are not an escalation. So, we think that the United States has got it right. It’s important that, given the attacks that have occurred by groups backed by Iran, there be a response. There has been.
SPEERS: Where is this heading? Strikes, counter strikes. It is greater US involvement. Donald Trump reckons we’re on the brink of World War III. What do you think?
PRIME MINISTER: I don’t think that’s right. I think that the United States has played a responsible role in the region. You can’t have the sort of attacks that we’ve seen and see no response, whether it be the actions of the Houthis in targeting our trade, whether it be the attacks that occurred on Americans in Jordan. So, you will have seen a response. We want to see the area settled down. We’re working with our allies to play a role there.
SPEERS: Are you prepared to commit more Australian resources? We only have, I think, 16 personal committed to the combine maritime forces there.
PRIME MINISTER: We haven’t been asked for any further support.
SPEERS: If you are?
PRIME MINISTER: Our concentration is on the Indo-Pacific. That’s something that the United States and our allies certainly understand.
SPEERS: What about longer term? We now have the British Government talking about possibly recognising a Palestinian state after a ceasefire in Gaza, without necessarily waiting for years of negotiations over the details. The US also says it is in talks about the establishment of a Palestinian state. Benjamin Netanyahu, we know, is flatly opposed. Can I ask, would you be willing to recognise a Palestinian state without the approval of Israel?
PRIME MINISTER: Australia supports a two-state solution. We support the right of Israel to exist within safe and secure borders, but we also support justice for Palestinians. We support a political solution in the region. And it’s important that the international community play a role. I issued a statement with the Prime Minister of Canada and the Prime Minister of New Zealand that called for this, that called for the release of hostages, that called for a humanitarian ceasefire, that called for humanitarian support to the people of Gaza, but also, of course, recognised the right of Israel to defend itself. But it is important we look to, arising out of this crisis, what is the long-term solution. And, quite clear, that requires – the international community has had support for a long period of time that the two-state solution to be advanced.
SPEERS: Does it need Israel’s support, though?
PRIME MINISTER: Well, I think it needs a two-state solution. And one state is Israel.
SPEERS: So, Israel have to be on board?
PRIME MINISTER: Israel has an interest in security. Quite clearly, if you talk about the distance between Bethlehem and Jerusalem, for people who have travelled to the region, it is like the difference from where we are and Queanbeyan. The idea you can have security with the tension in the region, we need to de-escalate. Part of that might mean, for example, any existence of a Palestinian state would be one which was a demilitarised state as well. So, those are the sort of issues that need to be on the table. The United States, I know, is looking at these issues, as is the United Kingdom. Australia and certainly my Government has a position of support for two states and, indeed, the resolution that was carried by the House of Representatives indicated that as well.
SPEERS: More immediately, can I ask you about funding for UNWRA, the UN agency that delivers aid in Gaza? Australia is amongst a group of nations that suspended funding after the allegations that 12 of the UNWRA staff were involved in the Hamas attack on Israel. Where is this at? Are you still worried there are some links between UNWRA staff and Hamas?
PRIME MINISTER: Well, we’re examining it, along with other like-minded countries like Canada, the United Kingdom and the United States. We want that to be resolved. The issue here is one that is of deep concern, that this occurred, that there were some involvement. And those allegations need to be fully examined to ensure that every single dollar of aid is go going to just that, aid.
SPEERS: Right now you’re not convinced there are no links?
PRIME MINISTER: Well, what we’re doing is through the processes, along with our like-minded allies. All of us want to see the support for kids in Gaza can’t be in a situation where people with literally starving and the only organisation that can provide that support there is UNWRA. UNRWA are providing shelter for hundreds of thousands of people there. So, it’s an organisation that has had bipartisan support. It has been funded by Australia for a long time and funded by our like-minded allies as well. But we want to make sure that the organisation has every single dollar going to the purpose for which it is given.
SPEERS: Okay. Your notes are about to pop out of your pocket. I would hate you to leave confidential information on the desk at Insiders. Let’s turn to the tax debate. When will you make the legislation available for the Opposition, the Greens, for everyone to see the detail of these tax changes?
PRIME MINISTER: We will make the legislation available later today. It will be available for all to see. That that’s so it can be considered by the various party rooms over the next couple of days.
SPEERS: The Shadow Cabinet is meeting tomorrow. So, you are giving them the opportunity to see the detail before that?
PRIME MINISTER: We certainly are. The detail is pretty clear, by the way. We released Treasury documents when I spoke at the ³Ô¹ÏÍøÕ¾ Press Club ten days ago. So, they have had that detail out there. We will release the actual legislation later today. It will be introduced into Parliament on Tuesday by the Treasurer, Jim Chalmers.
SPEERS: When does it need to be passed? I assume making it available today is a desire to have it dealt with quickly. Employers and the tax office need to know the rules will be for July 1.
PRIME MINISTER: We want it to be passed as soon as possible. Certainly, it needs to be passed during this existing session, so as to provide that easy transition for employers, the tax office, for others as well.
SPEERS: So, before the Budget it needs to be passed?
PRIME MINISTER: We want it passed during this session, which finishes up before Easter. But the sooner, the better. We will be able to give consideration in the House of Representatives in the next two weeks and the Senate will return after just a one-week break and be able to consider the legislation. This is legislation which people see, which will give every taxpayer a tax cut. And it should receive the support of every parliamentarian.
SPEERS: You’ve obviously been selling this line of every taxpayer gets something, 84 per cent of taxpayers will get more than they would have originally. Here is what I don’t understand, if it is fairer, better for middle Australia, why didn’t you take it to the election?
PRIME MINISTER: Circumstances have changed. And what we have done is respond to the changed economic circumstances. You’d be aware, David, though I don’t think you or any other commentator was saying there would be 13 interest rate increases which started, of course, under the Morrison Government.
SPEERS: Perhaps not that number of interest rate rises. But you yourself were saying before the election, this is from your campaign launch speech, ‘This is the worst inflation rate in two decades. Families are struggling, worried about the future’. Why didn’t you want to give them more at the time?
PRIME MINISTER: What has occurred since the election is the cost of living pressures remained for a period – a number of reasons.
SPEERS: I’m talking about during the election. When you knew there was sky-rocketing inflation, why were you so wedded to the higher end tax cuts?
PRIME MINISTER: During the election campaign, David, you will recall that the former Governor of the Reserve Bank said, prior to that interest rate increase, that interest rates would stay at the level, 0.1 per cent, until 2024, until now.
SPEERS: Then they started increasing them.
PRIME MINISTER: Exactly. So, the outlook was very different for global inflation. We didn’t have a view that the Russian invasion of Ukraine and that war would be ongoing. There wasn’t the Middle East conflict. There were a range of measures that have meant that global inflationary pressure has been a major issue and that’s had an impact on prices.
SPEERS: Let’s be honest. You backed these tax cuts for political reasons. You never really liked the tax cuts, did you?
PRIME MINISTER: What we did, David, in the Parliament in 2019, is two things. One, we tried to amend out the stage 3 tax cuts. We weren’t successful. We failed by just one vote. When that occurred, we thought that we weren’t prepared to stand in the way of all of the tax cuts. But we said at the time, that it was a triumph of hope over experience for any government to say they knew what the economy would look like in five years’ time.
SPEERS: Nonetheless, you pledged to keep them, Prime Minister.
PRIME MINISTER: I’ve been really upfront, David.
SPEERS: You have.
PRIME MINISTER: One of the things that I have done is go to the ³Ô¹ÏÍøÕ¾ Press Club and say we have changed our position. Why have we done that? Because we listened to people. And particularly low- and middle-income Australians are under pressure, under financial pressure. What I can’t do as Prime Minister of Australia is to wring my hands and say, ‘If only there was something I could do about it’. What we needed to do was to look at what is the best way we can take pressure off cost of living without putting pressure on inflation. These measures, this legislation, is good for middle Australia, but it’s also good by not leaving people behind by giving everyone a tax cut, but it’s also good for the economy, David, because it will increase labour supply by some 900,000 hours which will make a significant difference as well for those long-term issues of labour supply that are also having an inflationary pressure.
SPEERS: Prime Minister, is your word still your bond?
PRIME MINISTER: What we’ve done, David, is be really upfront. I went along to the ³Ô¹ÏÍøÕ¾ Press Club.
SPEERS: Is your word still your bond?
PRIME MINISTER: David, circumstances changed over five years. I certainly, when we said what we did, we were very clear about that.
SPEERS: I’m asking whether your word is still your bond.
PRIME MINISTER: David, I’m an honest person.
SPEERS: Will you be less categorical?
PRIME MINISTER: I’m an honest person. I am up-front. What I have done, what I have done here is be very, very clear. And I’ve listened to people who are all saying, who are all saying to me, ‘Well, what are you doing about cost of living? What are the measures that you can put in place?’
SPEERS: A lot of people are saying, ‘What are you doing on negative gearing?’ Are existing negative gearing rules, in your view, fair?
PRIME MINISTER: Well, they make a difference for people. They’ve been there for a long time. There is a whole lot of analysis that says they encourage investment in housing. The key when it comes to housing is housing supply. So, in housing supply, what we’ve done, the only tax measure we’ve had when it comes to housing is a supportive measure to support Build to Rent. That will result in increased supply between 150-250,000 dwellings.
SPEERS: The negative gearing rules are fair at the moment?
PRIME MINISTER: Well, they’re there, David to be used.
SPEERS: You are the Prime Minister.
PRIME MINISTER: They’re there to encourage investment, David. They’re not an equity measure, they are a supply measure. They’re not about equity. Equity is through other measures in the tax system as well.
SPEERS: Are they responsible? Are they appropriate? Are you supportive of the current rules?
PRIME MINISTER: We’re supportive of the current rules. We have not considered changes to them. And we have, when we look at housing supply, we’ve had a whole range of measures, whether it be in social housing through the Social Housing Accelerator, whether it be encouraging of private housing as well, whether it be the work that we’ve done through states and territories about planning measures, with our housing bonus to encourage states and territories to increase that supply. That’s the key that we need.
SPEERS: What about trusts? They are used as a way of minimising tax. Are you comfortable with the existing rules on family trusts?
PRIME MINISTER: We’re comfortable with all of the existing systems, David. What we have done is target cost of living. And the big measure we can do on cost of living is we have this $106 billion pool there. What we’ve done is to have a sensible change that we are advancing. It will be up to the Parliament, they have to decide whether our plan is better than the existing plan put in place under Scott Morrison. That is what Members and Senators will have to weigh up. That is something that we are prepared to advocate for and campaign for. That is what will make a difference. A difference where everyone will get a tax cut, right up and down the income scale. What we are doing here is reducing that first rate from 19 to 16, so everyone gets a tax cut – that flows through beyond $45,000, then we’re increasing the rate from 120 to 135 and increasing the top rate, David. I will make this point. We’re increasing the top rate from 180 to 190. That is the first increase since 2008. That contrasts with when Peter Dutton was part of the Abbott Government that introduced, without any notice before the election, the levy, so-called ‘deficit levy’ on the high income earners, without any notice, at the same time as he personally tried to introduce a GP tax on going to the doctor.
SPEERS: Both sides are probably responsible for this. We rely increasingly on income tax in Australia. This chart from the Intergenerational Report last year really underscores the point. It is workers who will be shouldering more and more of the tax burden to pay for government services over the years and the decades ahead. Income tax as a proportion of GDP is going up and up. The changes you are making to stage 3, in fact, involve even more bracket creep to the tune of an extra $28 billion over a decade. Don’t we need to rely less on income tax?
PRIME MINISTER: What we’re focused on, David, is how we can make changes that make a difference right now. That is the focus of the Government. On equity, we had a range of other measures as well. I’ll tell you another area that made a significant difference to the fight against inflation. That’s producing the first Budget surplus in 15 years. So, responsible fiscal policy working with monetary policy, dealing with supply chain issues through fee-free TAFE and other measures that we’ve in place, fixing the migration system so it helps with labour supply.
SPEERS: But on income tax, do we need to rely less on it and more on taxing wealth and assets?
PRIME MINISTER: David, we have a tax system which is there. We have put forward these concrete changes. And what I am doing is arguing for these changes.
SPEERS: But longer term, do we need to tax wealth and assets more?
PRIME MINISTER: Those academic debates will take place, David. What I’ve interested in is what is real.
SPEERS: You’re the PM.
PRIME MINISTER: What I’m interested in is what is real and what is before the Parliament now. I know, as Prime Minister, I have a responsibility to make a difference. This change was not easy, was not an easy decision. But it was the right decision done at the right time for the right reasons.
SPEERS: The tax cuts flow from July 1. Inflation is coming down faster than expected. Economists thinks we might see some interest rate cuts before the end of the year.
PRIME MINISTER: Not by accident, David. Inflation is coming down because of the responsible policies my Government has put in place. And it contrasts with, you spoke about what happened before the last election, yes, inflation peaked in the March 2022 quarter before we came to office at 2.1 per cent, and the response of the former Government, under Scott Morrison and Josh Frydenberg and Peter Dutton all sitting there as part of the ERC, was to pour money into the economy which made inflation worse. We’ve been dealing with that.
SPEERS: The annual rate peaked a little later than the election. The point I was going to get to, if things are heading in the right direction, we see some interest rate cuts by the end of the year, there’s speculation, including from Phil Coorey over on the couch, you might be tempted to call an election before the end of the year. What is your thinking?
PRIME MINISTER: I think three-year terms are too short. I’ve supported four-year terms, which is what states and territories have right around the country. There’s been a referendum to try to change that. That was not successful.
SPEERS: So, no election this year?
PRIME MINISTER: Look, I’m looking at 2025 in the normal pattern of things. We will make a decision as Prime Minister, in consultation. I think governments as a general rule should serve the full term. And that means an election in 2025.
SPEERS: Prime Minister, thanks for joining our first show of the year.
PRIME MINISTER: Thanks very much.
