Treasurer
Doorstop Interview

Treasury Place

Melbourne

Sunday, 8 January 2006
12.00 noon

SUBJECTS: Families, Childcare

TREASURER:

Of all the challenges that we are facing up to this year, we have got to make

sure that we keep a focus on families. Families are the backbone of Australian

society and there are three areas that families really need help – the

first of course is to keep mortgage interest rates low, so they can afford housing;

the second is the availability of childcare, so that there is the provision

to look after the kids particularly, as mothers rejoin the workforce; the third

is the education system, families are looking for good education for their children.

And in the challenges that we are going to face in 2006, many challenges from

all around the world in relation to the international economy, our focus is

going to be on families, the people that are raising children, the people that

want good education and low mortgage interest rates and the people that need

help in contributing the greatest gift to the future of our society –

children – which are going to drive our future.

JOURNALIST:

Any reason why families are becoming such a focus?

TREASURER:

Families are a focus because we know that raising children, caring for them,

seeing their educational needs are being met are critical, not just for mums

and dads, but they are critical for the future of our society. We know we are

going to have an ageing population and we know that we need good strong education

and we know that young people are going to give us the skills in the future

that we need. So families are the focus of our policymaking and in all of the

challenges confronting international issues, let’s remember that the reason

we want a strong economy is so that people can service their mortgage, raise

their children, educate them and have strong family life in this country.

JOURNALIST:

What do you as Treasurer intend to do to those families to alleviate the tax

burden?

TREASURER:

What we want to do is we want to make sure that families have the option for

childcare, to make sure that where mum returns to the workforce they have the

ability for care for their children, strong education and low interest rates

is a big part of looking after families and keeping them front and centre when

you are considering tax and economic policy.

JOURNALIST:

So what tax cuts are you proposing to help those families?

TREASURER:

Well of course one of the big things that we have introduced is the $600 payment

which is available for parents on an annual basis. We are going to make sure

that stays in place and we are going to make sure that as we focus on childcare,

education and mortgage interest rates, families are the people that will see

the benefits.

JOURNALIST:

Well the tax scales themselves, the $40,000-$50,000 range, are you intending

to do anything in that bracket?

TREASURER:

We will make sure that if there is any chance to help families through the

tax system that we will do it. That is our focus – to make sure that we keep

on helping families.

JOURNALIST:

It doesn’t sound as though you are promising tax cuts then, income tax

cuts specifically?

TREASURER:

Well, Vic, I think the Budget is in May and I won’t be announcing it

on the 8^th of January.

JOURNALIST:

But you won’t rule out cutting that marginal rate…

JOURNALIST:

You can if you…feel free.

TREASURER:

I would love to give you an exclusive but we do have to save a little bit of

information until the Budget.

JOURNALIST:

Will you rule out cutting that marginal rate in that bracket in the Budget

or in any other bracket?

TREASURER:

What we will do is this, we will make sure that when we lay down financial,

tax, childcare, education and economic policies – families are the focus.

That means low interest rates for their housing; good education for their children;

availability of childcare when mum returns to work and a helping hand in relation

to tax and family assistance packages.

JOURNALIST:

Will you consider making childcare tax deductible?

TREASURER:

We will do better than that. We will be introducing a 30 per cent rebate on

childcare which for many people is better than tax deductibility. For most people

it is equivalent to tax deductibility because for most people they are on a

30 per cent tax rate. So the childcare rebate which is going to become available

to families will be of enormous assistance in helping with the cost of childcare.

JOURNALIST:

When does that start?

TREASURER:

Well it has already started. People should be keeping their records so that

when they file their tax returns they will be in a position to claim it.

JOURNALIST:

Is there any reason why on the interest rate front, interest rates should change

at all this coming year?

TREASURER:

Well the most important thing you can do for families is keep interest rates

low. There is no…

JOURNALIST:

(inaudible) Reserve Bank, do you see any reason why they should change?

TREASURER:

It is no consolation to families, if their largest monthly bill – their mortgage

– increases and keeping interest rates low is the focus of economic management

in this country. Low inflation; growth; jobs; low interest rates; that is our

focus.

JOURNALIST:

What new childcare measures do you have in mind then?

TREASURER:

Well all matters that can help families are being assessed and we have got

to make sure that we have availability of childcare; that we have affordability

of childcare and that childcare is of assistance to mothers who want to return

to the workforce.

JOURNALIST:

There is not enough places, are you going to increase the number of places

actually available in childcare?

TREASURER:

Sure. We have in train procedures at the moment which are increasing numbers

of childcare places and it is important we continue to work on that to ensure

that there is availability for mothers who are looking for childcare places.

JOURNALIST:

You have spoken about having to…

TREASURER:

Last question.

JOURNALIST:

…keep expenditure in check if there are tax cuts. Is that where Malcolm

Turnbull went wrong with his plan?

TREASURER:

The thing is, if you want to cut taxes on a permanent basis you have got to

restrain expenditures on a permanent basis and the key to keeping tax rates

low is keeping expenditures contained and the key to keeping interest rates

low is keeping the Budget in balance. And if you lose sight of all of those

factors, a movement in one area can have adverse consequences in another area.

So here is what you have got to try and do, restrain expenditure, keep inflation

low, keep interest rates low and then you can continue to work on reducing the

tax burden which we are doing in this country. Thanks very much.