Television Interview: ABC Afternoon Briefing

Subjects: The Budget, tax changes, Federal Government’s response to domestic & family violence

PATRICIA KARVELAS [HOST]: I want to bring in my political panel for today, Peter Khalil is the assistant Defence Minister. Zali Steggall is the independent MP for Warringah. Welcome to both of you.

PETER KHALIL [ASSISTANT MINISTER]: Hi.

ZALI STEGGALL [MEMBER FOR WARRINGAH]: Thanks, Patricia.

KARVELAS: I want to start on the budget, which of course was only last week and some big changes. Starting with you, Zali, there's been a bit of a debate, I think that's an understatement, people want to see, not all but, you know, especially small business saying there should be a carve out, they should be exempt from capital gains tax changes. What's your view?

STEGGALL: Well, it's been quite a strange situation. There's been an extensive discussion around winding back capital gains tax benefits and negative gearing for property investment to try and bring down those demand side levers around prices around housing and trying to bring it back into being affordable, especially for first homeowners. So, there's broad social licence to that aspect of the change. But there has been a blind side in terms of the broader, more far-reaching changes around CGT and negative gearing, in particular CGT as it impacts businesses, start ups. And so, I've actually written to the Treasurer asking for what modelling was done around extending these changes to impact business, especially around tech and start ups. Why has the Government landed on the 30 per cent change? That is high compared to other corresponding nations when you look at capital gains tax. So what is the rationale for the Government's decision to go about this way?

KARVELAS: It's an interesting point about a broad social licence. Peter Khalil, the argument at least by Zali Steggall there is that the licence might be there, although it didn't go to the election to be clear but, you know, the licence might be there on property, but not broader.

KHALIL: Well, I think it's interesting because Zali was talking about what the rationale is and I'm interested to see obviously the Treasurer responding to you, Zali. But I'll have a crack at it as far as a rationale. There has been, very clearly, a rebalancing of the tax system that has favoured, frankly, those who are earning income through investment, with the discount that was placed on capital gains tax in previous governments. We have put it back to its original form and it's going to be indexed through indexation, it will be determined, and there's a minimum of 30 per cent. But what's interesting too is no one's really talking about the fact that the budget includes $3.5 billion in tax relief and measures to incentivise small businesses. We've made the $20,000 write off of assets permanent. That's going to mean $890 million that's been modelled that will provide relief there as far as cash flow for small businesses and cut compliance and hundreds of thousands of hours of compliance and all the work that the small businesses have to do. We've also got a loss refund ability for the first two years for small businesses and also ensure that sole traders are able to benefit from the $250 tax cut as well. So, these are things that   and I think the other thing I would say, you know, we've expanded tax incentives for venture capitalists to invest in small businesses and start ups. Now what's interesting about this, culturally here in Australia there's been a structural foundation where people have from previous Government decisions, where people are investing in property and in blue chip shares and all that kind of type of investment. We're trying to open this up to incentivise investment in start ups and small business and really shift the balance there and rebalance to make it a fairer tax system and that will benefit not just income earners but small businesses.

KARVELAS: Okay. Zali, that's the counter from the Government about what else they're doing, and they are doing some of the things, there's no doubt, it's all in the budget. Does that end the issue?

STEGGALL: I don't think it does. I think we have a very clear and difficult situation when it comes to affordable housing and for first homeowners being able to get into it. There's been a strong focus from Government around supply and building, but I took, for example, to the last election a policy to Warringah that we needed to wind back CGT advantage when it comes to property investment. So the question around homes is not getting more affordable even though supply is increasing, and so we need to look at that when it comes to property. There has not been the discussion around changing the levers around CGT when it comes to business investment, especially start ups. Now, the small business measures that Peter talked about; they are indeed there but we have had them already before. The 20,000 instant asset write off has been there each year. In fact, the crossbench has been pressing the Government to make these changes permanent to give the small businesses certainty, and in fact we should increase those instant asset write offs to give more capacity for businesses to grow their efficiencies and capabilities. So, I don't dispute that those measures are good measures for small business, but it's quite a different rationale when you start talking about the capital gains changes for start ups and especially    

KARVELAS: Okay.

KHALIL: I have a question.

KARVELAS: Quick answer.

KHALIL: It's not an answer, but it's kind of a clarity here. Zali is an independent MP, she represents her community and there are the crossbenchers that she mentioned. Are they really saying that there shouldn't be a return to the CGT or removal of the discount on CGT that was put in place which distorted the system to advantage, frankly, people were earning income through investments in this way? Is she saying that it's not fair to go back to a minimum 30 per cent, which is through   and then determined through indexation going forward, as it was originally intended, in order to rebalance the tax system?

KARVELAS: Okay.

KHALIL: These are hard decisions that we've made, and Jim Chalmers has made the hard decisions.

KARVELAS: Zali, very quick answer on that, you know, I don't usually let panellists asking each other questions.

KHALIL: Sorry.

KARVELAS: But you can clarify your position, Zali.

STEGGALL: Again, there is no information. The rationale, the calculations are not there. There hasn't been a social licence around these changes and so the Government's taking it upon itself to do a broad change. But again, those questions come back that the debate hasn't been had, there isn't a clear rationale for that. So, Peter says do I not think it’s fair? I want to understand the modelling and the basis on which Treasury has come to this conclusion. We know the US and the UK have lower levels of [indistinct] --

KARVELAS: Alright, I want to move on just to can a couple of other issues.

KHALIL: We've been discussing this for seven years. There's been a long discussion around CGT and tax reform.

KARVELAS: Okay. I don't think there's been a big discussion about it on other issues, it's been about property. But let's just park it and have the debate another day. The call for a Royal Commission into domestic violence, Anthony Albanese was asked if his Government would take action in a petition with more than 93,000 signatures. He said no, it's just a lawyers' picnic essentially was the spirit of what he said. But not everyone's very happy with that answer, Peter. I mean this is a pretty serious issue. Was he too dismissive?

KHALIL: Well, I understand what the Prime Minister's saying. I mean the call for a Royal Commission's coming from a good place, but frankly the fact is that we've had over eight Commissions and inquiries, over a thousand recommendations, and the PM is rightly pointing out the need for actions. We've invested record breaking amounts of funding to deal and to address the scourge of domestic violence, over $4.3 billion by this Government, and that includes educational perhaps, it includes programs to support women who have experienced DV. I mean even in my local electorate we've done things like; we've got funding for accommodations for women who are escaping domestic violence situations, we've got educational programs that we've announced for high schools and for younger people to understand respectful relationships, particularly younger boys where it starts. So we have done a lot, and this requires action. And one last thing I'll say about this, there was a moment, as we all know, in our political discourse in this nation where it was front and centre, the scourge of domestic violence. It was a couple of years ago; everyone was talking about. And I remember even being on your program, Patricia, talking about the fact that I really hope that the circus of the media, not just your media but the media generally and everyone just doesn't move on. We have haven't moved on. We're taking actions against this. This is a terrible scourge. But another report is not going to help, we know what needs to be done.

KARVELAS: Alright. I'll give you the final word, Zali.

STEGGALL: I respectfully disagree because I wrote to the Prime Minister calling for a Royal Commission because absolutely we do know what needs to be done but it's not being done. That's the very problem.

KHALIL: Well, that's not true.

STEGGALL: Yes, the Government has put more funding, but we know there's a cross section around men's wellness, around mental health services, around crisis accommodation and funding, gambling, the scourge of gambling which exacerbates it, alcohol. We know there are so many cross sections, and only a Royal Commission can in fact hold that accountability across police, across state and territory Governments. Everybody coming to the table to participate, to elevate the issue, and to get some accountability on actually, yes, the Government may know what it should be doing but is it doing it? Have we implemented all those recommendations?

KHALIL: There are 583 programs around the country under the National Plan to end violence against women and children…

KARVELAS: We are out of time…

KHALIL: … they are real actions and real programs.

KARVELAS: I suspect this debate is not going anywhere, this particular discussion and the calls for this. Thank you to both of you.

KHALIL: Thank you.

STEGGALL: Thank you.

ENDS