Patricia Karvelas:
For more on the government's tax policies passing the House, I want to bring in the Assistant Treasurer, Daniel Mulino. Welcome to the program.
Daniel Mulino:
Thanks for having me on, PK.
Karvelas:
Now, I know that you're arguing that these are not godlike powers, but actually they give the Treasurer extraordinary powers to make these determinations. Are you willing to move on that?
Mulino:
So, I think the Treasurer made the point very clearly today in the chamber and also in Question Time, that these are very normal when it comes to tax legislation. That it's very normal to have definitions and other matters contained in subordinate legislation. It's also important to remember that they will be subject to parliamentary scrutiny and be disallowable. So, the structure of the arrangements that we're putting forward is very much the norm for tax legislation.
Karvelas:
Ok. Not everyone agrees. They say that actually it goes further than the norm that you talk about. Of course, some things are determined that way, but the extent of it is wider. Is there any negotiation on the ministerial powers that you're willing to engage in?
Mulino:
Well, look, there is a Senate legislation review that will occur over the next 2 weeks. There will be a couple of days of public hearings, and then that committee will undertake its own determination. So, this, I'm sure, will be a matter that will be raised in that process and there will be discussions in the Senate between the government and the Greens. I mean, I've pointed out on a number of fronts that this is also a test of the Opposition. I mean, they are basically rejecting, by all accounts from what we've seen in the House today, a piece of legislation that contains tax cuts for 13 million Australians and also much‑needed reform of the housing sector. But look, we will of course discuss with parties in the Senate any issues they want to raise.
Karvelas:
What's the big rush? Doesn't even start till next year. What's the big rush with getting this passed before the mid‑winter break? Why not allow a longer inquiry?
Mulino:
So, it's very normal for complex tax legislation to occur in multiple tranches. So, when we look at the John Howard GST legislation, there was an overarching bill put in, which was then amended 7 times in the year between its passage and the commencement of the GST. And in fact, when you look at the GST, over its entire design and implementation, there was something like 30 bills involved. So, it is important to put this initial framework bill in place to provide certainty and clarity when it comes to the tax cuts, but also when it comes to the CGT and negative gearing design for investors and for other participants in the economy.
Karvelas:
Ok, if that's to be the case, will we have a clear answer from the government on who gets carved out then, if that's the framework?
Mulino:
No. So, this is the first piece of legislation, and we've explicitly indicated that there will be discussion on a range of additional matters. So, that was something the Treasurer flagged on budget night.
Karvelas:
So, to me, isn't logical because, and I'm sure lots of viewers feel the same way, you say you want certainty. Well, it doesn't provide them certainty. These, you know, will they be carved out or not? They don't know. It goes on and on and on, the negotiation. They don't know that the rush doesn't create any certainty for those businesses.
Mulino:
Well, no, so, we're providing certainty in relation to the fact that negative gearing will now no longer apply for established dwellings. We're providing certainty that there will be grandfathering for existing holders of negatively-geared properties. We're providing certainty in relation to the key elements of the negative gearing and the capital gains tax reforms.
But we have conceded that there are some matters that we're negotiating on. And this is very much the same as in previous tax reform legislation, where there were tranches, where the overarching design of the reforms would be included in the first piece of legislation and then additional matters would be consulted on and clarified in subsequent tranches. So, we've flagged that we're talking to VC, we're talking to startups, we're talking to small businesses around a range of matters. So, we will provide certainty on those matters as quickly as possible. But the bill that we see today in the House of Representatives, having passed in the House of Representatives, provides great clarity when it comes to that really important matter of making it easier for first home buyers.
Karvelas:
This point that you made 8 times, I think you said that the GST legislation was, that there had to be additional - do you see a scenario like that for this too? That you would have to go in and make changes?
Mulino:
So, look, I'm not kind of envisaging any particular number -
Karvelas:
Just trying to get a vision. We think in 8 times you're going to go in and change it?
Mulino:
I'm hoping it's less than that, but, you know, I certainly wouldn't want to predict precisely what number. But look, we are working -
Karvelas:
You're saying you're willing to go in again and make changes if things are going wrong. That's what you're saying.
Mulino:
Well, what we've said is that we've passed this initial piece of legislation. We've flagged explicitly that we're consulting on a range of additional matters, including in relation to venture capital, in relation to start‑ups and small businesses. So, there would be an additional tranche of legislation, and I imagine the expectation or the hope would be that we could deal with as much of that in that next tranche of legislation. There is also going to be a piece of legislation that may be separate to that, that will deal with trusts.
Karvelas:
Yes. Ok. Jenny Wilkinson today in Senate Estimates acknowledged rents would be slightly higher due to the tax changes, $2 a week. So, do you need more of a plan to help renters?
Mulino:
So, look, we've put in place a range of measures over our first couple of budgets to provide rent assistance to those most in need.
Karvelas:
The [indistinct] passed, and now you're pushing up rents with your changes.
Mulino:
Well, look, $2 a week is a very modest -
Karvelas:
It's a lot if you're a renter.
Mulino:
Yeah, but what we also have seen are significant changes in income taxes through this government. We're seeing the WATO passed. We're seeing the instant deduction. Importantly, also this government has supported a number of increases now in the minimum wage. So, 5 increases in a row. We've backed real increases in the minimum wage to the point now where it's over $12,000 higher than it would have been if those increases hadn't gone through. So, we are both pushing for sustainable and economically responsible higher wages. And we're also putting through a succession of tax cuts that will see somebody on the average income now up to $2,800 better off a year.
Karvelas:
Let me ask you about this. Treasury officials have said today that the package of tax reforms had not changed the department's medium‑term forecast for growth and productivity. Doesn't that worry you that your changes are not going to have any impact on growth, which is pretty fundamental to the economy and productivity, which you've said is your biggest challenge?
Mulino:
Well, look, I haven't seen that particular quote, and I want to look at it in context. But what I would say on productivity is that in the Budget papers, there is an explicit set of measures that the Treasury has estimated will add around $10 billion to GDP through higher productivity. That includes the passage of the EPBC Act. It includes freezing the National Construction Code and just under a billion dollars in my own portfolio, a range of 14 different measures. And so a lot of these measures came out of the 3‑day Economic Reform Roundtable, one day of which was devoted to productivity and to better‑designed regulation. So, there's a whole heap of productivity gains there.
The other thing I would say is that in the Budget papers again, our competition measures have been estimated at Treasury at adding $13 billion to GDP. And finally, I'd say if you look at the last national accounts figures, business investment up substantially, up around 6 times higher than expected. And private sector investment, including a lot of investment in data centres, driving that increase in the last quarter. So, look, there's a lot going on in productivity right across the government's agenda.
Karvelas:
Meta has made its submission to the News Media Bargaining Code draft legislation. It says the federal government's new News Media Bargaining Incentive, which you are behind, is a discriminatory tax that is poorly designed and grossly unfair. They've called it a tax on innovation dressed up as media policy. Are you worried about them not playing ball here? What's your response?
Mulino:
Well, first and foremost, I just want to reiterate that the government remains very committed to the incentive because we understand the importance of public interest journalism to tell Australian stories, to hold people account. It's a fundamental underpinning of our democracy. It is an incentive, and it's designed so as to prod the digital platforms across a range of countries, not just the US, but TikTok is also going to be included, and it's designed to prod them to enter into commercial agreements. The design -
Karvelas:
How come they call it a discriminatory tax?
Mulino:
Well, no, firstly, I wouldn't use the word tax. It's an incentive because we're trying to get commercial agreements, and I wouldn't accept that characterisation at all. What we're trying to do is to get the digital platforms to enter into fair commercial agreements, similar in quantum to the ones they entered into when the News Media Bargaining Code was introduced by the previous government. So, we support the broad direction the previous government adopted. Meta backed out of those. What we're trying to put in place is a scheme where they will re‑enter those commercial agreements and help support a thriving and sustainable, and diverse media community here in Australia.
Karvelas:
It's been great to have you in the studio. Thank you.
Mulino:
Thanks, PK.
