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Surprise! A teeny tiny tax cut in the Budget · The Front

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  Speaker 1: All right, I better go there. I'm going to start
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  Speaker 1: this lock up now, so thanks for that, appreciate it. Okay,
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  Speaker 1: see it. But Matthew Cranston, thanks you.
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  Speaker 2: Live from the federal budget lockup in Canberra. This is
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  Speaker 2: the front. I'm Claire Harvey. A tax cut for everyone
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  Speaker 2: at a cost of seventeen point one billion dollars over
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  Speaker 2: the next five years, working out at an extra at
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  Speaker 2: five or ten dollars a week back in your pocket.
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  Speaker 2: That's the big surprise in Jim chalmers fourth federal budget,
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  Speaker 2: handed down in Canberra on Tuesday night. Charmers and Prime
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  Speaker 2: Minister Anthony Albanezi have cooked up a budget designed to
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  Speaker 2: return labor to power and to make life as difficult
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  Speaker 2: as possible for Peter Dutton. This year we'll see a
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  Speaker 2: twenty seven billion dollar deficit and the budget won't be
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  Speaker 2: back in balance until twenty thirty five twenty thirty six,
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  Speaker 2: a year later than the government thought. There'll be one
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  Speaker 2: hundred and fifty dollars off every power bill by Christmas,
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  Speaker 2: and a reduced medicare levy for one million low income Australians,
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  Speaker 2: plus a giant war chest for the election campaign. The
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  Speaker 2: Opposition has already said it won't support the tax cut,
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  Speaker 2: setting us up for a fiery election debate. Today on
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  Speaker 2: the front are experts sift through the spin for the
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  Speaker 2: bits you need to know.
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  Speaker 3: Physical budget papers are ready.
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  Speaker 2: In the budget lockoff in Canberra, when journalists are sequested
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  Speaker 2: in their press gallery offices to digest the federal budget papers,
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  Speaker 2: the atmosphere is a little bit school.
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  Speaker 4: Role call Frek Brown Shanahan and a little.
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  Speaker 2: Bit Christmas morning.
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  Speaker 3: Sarah is down, thank you.
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  Speaker 2: Here's what it sounded like on Tuesday afternoon in the
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  Speaker 2: Australians Canberra Bureau. As our political and economic specialist, it's
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  Speaker 2: got amongst the goodies, wrappings are being ripped off eager
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  Speaker 2: hands searching for treats. Usually just like Christmas, the kids
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  Speaker 2: have looked in the covered weeks ago and there are
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  Speaker 2: no surprises left. Well, this year the government managed to
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  Speaker 2: keep a very big secret.
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  Speaker 4: Well it's a big surprise, but yeah.
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  Speaker 5: Not much.
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  Speaker 2: Nobody had any ideas, comment I've done go job. Given
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  Speaker 2: that a secret they.
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  Speaker 6: Have tonight the government is proud to be delivering more
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  Speaker 6: tax relief. This will take the first tax rate down
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  Speaker 6: to its lowest level in more than half a century.
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  Speaker 6: These additional tax cuts are modest, but they will make
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  Speaker 6: a difference.
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  Speaker 2: But the issue is how much is it going to cost?
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  Speaker 7: Hey, Jack, have you seen a costing for this tax
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  Speaker 7: cut yet?
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  Speaker 2: And how much is left over to spend on the election.
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  Speaker 4: It's a tax cut which people will like and it's
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  Speaker 4: also a wedge for Peter Dutton.
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  Speaker 2: Dennish Anahan is The Australian's National editor and Paul Kelly
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  Speaker 2: is The Australian's editor at large.
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  Speaker 5: Sad to say this budget fails Australia's national challenges. It's
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  Speaker 5: a failure in terms of physical accountability, structural policy, productivity
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  Speaker 5: requirement and strategic imperatives.
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  Speaker 2: Are the tax cuts a mistake?
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  Speaker 5: No, I don't think the tax cuts are a mistake.
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  Speaker 5: They're very cute. Perhaps they're the smallest tax cuts in
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  Speaker 5: tax cut history as a proportion of GDP, so if
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  Speaker 5: you can feel them, they're okay.
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  Speaker 2: Those tax cuts work out at five dollars a week
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  Speaker 2: in twenty six twenty seven and ten dollars a week
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  Speaker 2: by twenty seven, twenty eight, by twenty thirty one thirty two.
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  Speaker 2: Though it's all been eaten up by bracket creep.
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  Speaker 5: But we need serious tax reform We've got spending at
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  Speaker 5: higher levels for the entire decade and we're going to
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  Speaker 5: have to finance that through high attax and that's going
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  Speaker 5: to need tax reform. In tactical terms, it's a budget
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  Speaker 5: for an election. Inflation's going down, the economy is picking up,
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  Speaker 5: interest rates are falling. Jim Chalmers wants to run on
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  Speaker 5: the economy. I think he's going to have a reasonable
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  Speaker 5: brief to do that. I think it's a student in
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  Speaker 5: terms of an election budget, and I think it is
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  Speaker 5: very disappointing in terms of a long run budget for
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  Speaker 5: the national interest.
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  Speaker 2: As our experts try to work out what's what in
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  Speaker 2: the budget papers, we talk to our colleagues and editors
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  Speaker 2: around the country, it's just.
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  Speaker 3: A huge election theme. Rank populism, fescal are, responsibility at large.
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  Speaker 3: You know about of a positive message on the economy
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  Speaker 3: is going. But essentially this is a budget to win
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  Speaker 3: an election and nothing else.
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  Speaker 2: Remember I said Budget day is a bit like Christmas
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  Speaker 2: Morning for politics fans. We knew what was under the
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  Speaker 2: tree because as is traditional, the government pre released bits
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  Speaker 2: and pieces before Budget Day. We knew about one hundred
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  Speaker 2: and fifty dollars in energy bill relief. We knew about
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  Speaker 2: increased support for home buyers and that the government would
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  Speaker 2: bring forward one billion dollars in defense spending, way less
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  Speaker 2: than the US wanted us to grow military spending. We
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  Speaker 2: knew there'd be eight point five billion to increase bulk
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  Speaker 2: billing rates and grow the health workforce.
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  Speaker 6: Gross step will hit nine hundred and forty billion dollars
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  Speaker 6: this financial year, one hundred and seventy seven billion dollars
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  Speaker 6: lower than what we inherited.
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  Speaker 2: Matthew Cranston is the Australian's economics correspondent.
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  Speaker 1: To go from a twelve billion dollar surplus to a
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  Speaker 1: twenty seven billion dollar deafice it within a matter of
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  Speaker 1: two years, it is quite extraordinary. There was clearly an
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  Speaker 1: opportunity for them to be on a better footing, and
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  Speaker 1: with their not being a crisis like COVID or GFC,
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  Speaker 1: you thought they would be in a much better position
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  Speaker 1: by now and not to have such a dramatic turnaround.
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  Speaker 1: In fact, you'd say that some economists would think that
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  Speaker 1: you've got to try and hold your surplus a bit
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  Speaker 1: more for when there is a crisis and you have
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  Speaker 1: a bit more dry powder for things.
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  Speaker 2: One figure that got years pricked up in our budget
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  Speaker 2: lockup was the medicare levy, But it turns out the
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  Speaker 2: government's not quite as magnanimous as they're making out. The
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  Speaker 2: budget says the government will increase the threshold by four
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  Speaker 2: point seven percent, backdated to the first of July twenty
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  Speaker 2: twenty four. Here's our reporter, Sarah Sen.
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  Speaker 8: That's not nothing. That's only five percent. And that jumped
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  Speaker 8: out to me, both because of the figure itself but
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  Speaker 8: the fact that it was like Par four on the
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  Speaker 8: big glossy fact sheet on how they're helping Australians.
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  Speaker 4: With cost of living.
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  Speaker 8: So it seemed like more people won't have to pay
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  Speaker 8: this levee and the government has been really intentional about
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  Speaker 8: that and raised the threshold manually, is how it seemed.
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  Speaker 2: But what you wanted to know is would this have
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  Speaker 2: happened anyway as inflation increases?
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  Speaker 8: That's right, And I wondered why I hadn't heard of
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  Speaker 8: this sort of measure before. It sounded really big and
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  Speaker 8: brand new, So I wanted to ask the Treasurer if
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  Speaker 8: this was tied to CPI or inflation, if it would
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  Speaker 8: have increased anyway, as you said, and he kind of
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  Speaker 8: bristled at that.
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  Speaker 6: It requires a government decision. It's not indexed year, not necessarily,
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  Speaker 6: it's a government decision. It's within the government's a range
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  Speaker 6: of decisions that they can take. And so what we're doing.
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  Speaker 8: But then I asked Treasury officials and they said, look,
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  Speaker 8: this payment does increase every single year. Now, it might
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  Speaker 8: not be automatic, you might need a government official minister
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  Speaker 8: to actually press the button, so to speak. But there's
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  Speaker 8: never been a year this hasn't happened. The only year
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  Speaker 8: that sticks out as being different is one year when
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  Speaker 8: CPI went backwards.
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  Speaker 3: This is not new.
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  Speaker 8: This is very much in line with what we expect
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  Speaker 8: and it was sold quite differently by the government on Budget.
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  Speaker 2: Day coming up. Why Peter Dutton will oppose the tax cuts.
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  Speaker 6: It's always looked surprised to see it's on a budget day.
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  Speaker 2: Jim Chalmers came swinging through the Australian's office on Tuesday
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  Speaker 2: afternoon to talk up his budget.
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  Speaker 6: So this is a very responsible budget, very very responsible budget.
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  Speaker 6: It's got elements of budget repair, economic reform and cost
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  Speaker 6: of living relief. It ticks all three boxes, just like
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  Speaker 6: the first three budgets.
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  Speaker 4: But are you being too optimistic?
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  Speaker 6: Well, first of all, I've known you for more than
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  Speaker 6: half my life, Dennis, and you know that I'm an
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  Speaker 6: optimistic fellow. I'm an optimistic feller.
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  Speaker 3: As are you.
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  Speaker 2: The budget will come back to balance in twenty thirty five,
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  Speaker 2: a decade away.
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  Speaker 4: I think this is the real downside of the budget.
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  Speaker 4: Jim Charmers talking all the time about us turning the corner,
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  Speaker 4: are soft landing. My concern is that when we turn
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  Speaker 4: the corner, we're actually going to have the repo men,
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  Speaker 4: the debt collectors, the Trump thugs already there to take
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  Speaker 4: a chunk out of what is the economy, either through
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  Speaker 4: tariffs and when that debt has to be paid. Jim
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  Speaker 4: Charmers runs the danger of being mug bo reality.
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  Speaker 2: Dennis Shanahan is The Australian's National editor. Dennis, were we
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  Speaker 2: surprised by the tax cut?
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  Speaker 4: Yes, we were. It was a success from Jim Charmers.
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  Speaker 4: He kept very tight about it. Obviously, you've got a
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  Speaker 4: vote in Anthony Alberazi to actually get that agenda. We're
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  Speaker 4: not going to get it legislated this week and so
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  Speaker 4: it's an election promise and it's one that will rely
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  Speaker 4: on Jim Chalmers producing a fist budget.
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  Speaker 2: On Tuesday Night, Angus Taylor of the Coalition said the
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  Speaker 2: Opposition would oppose the tax cuts. Taylor called them a
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  Speaker 2: cruel hoax and said the Coalition wouldn't support them. David
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  Speaker 2: Pearl is a writer with The Australian. David, what's your take?
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  Speaker 7: My take on the budget deeply cynical. I just can't
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  Speaker 7: get over the contrast between the Trump revolution we're seeing
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  Speaker 7: in Washington, which is literally upending the global security and
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  Speaker 7: trade orders, and we have a government in Australia and
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  Speaker 7: sadly an opposition also just pretending that the world hasn't changed.
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  Speaker 7: It's wonderful to give cost of living support to people,
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  Speaker 7: and at least the income tax cuts are targeted, but
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  Speaker 7: sadly all of this cost of living support will be
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  Speaker 7: fueling inflation. Rather than focus support on low income people,
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  Speaker 7: every millionaire is getting the same energy relief. By not
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  Speaker 7: targeting it, they're actually bringing down headline inflation. So it's
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  Speaker 7: a bit of a ruse, and it's providing totally untargeted
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  Speaker 7: relief that will have to be taken away soon and
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  Speaker 7: that's just going to double people's pain. Jim Chalmers, throughout
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  Speaker 7: his public career, has rejected the idea of spending restraint.
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  Speaker 7: He seems to believe that more spending generates growth and
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  Speaker 7: high living standards. Poor Keating, his hero, argued the exact
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  Speaker 7: opposite for many years, so that yes, you have spending
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  Speaker 7: where it's needed, targeted, means tested, but the best insurance
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  Speaker 7: policy for the broad middle class is a successful growing
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  Speaker 7: economy with government setting the rules but getting out of
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  Speaker 7: the way.
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  Speaker 2: For all our experts, reporting and analysis of this federal
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  Speaker 2: budget and what comes next, visit the Australian dot com
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  Speaker 2: dot au