PETER STEFANOVIC, HOST: Well, the US Defence Secretary, Pete Hegseth, wants Australia to up our defence spending to 3.5 per cent of GDP. That's significantly higher than it is now at a shade over 2 per cent. Joining us live is the Assistant Foreign Minister, Matt Thistlethwaite, and the Liberal Senator, Hollie Hughes. Good morning to you both. Matt, starting with you, what's the government's response to this claim by Hegseth?
MATT THISTLETHWAITE, ASSISTANT MINISTER FOR FOREIGN AFFAIRS AND TRADE: Thanks, Pete. We are increasing our defence spending over the course of the next three years. Defence spending increases by about $10.5 billion and about $50 billion over the course of the next decade. And that includes the partnership with the United States and the UK through AUKUS. But it also includes important investments such as increasing our marine surface fleet, our navy surface fleet, long long-range strike fire capability --
STEFANOVIC: [interjecting] Right, but what about the 3.5 per cent?
ASSISTANT MINISTER: Well, we believe that we are increasing our defence spending. We'll make decisions based on what we believe is in Australia's best interest. But we're doing that in partnership with our most important strategic allies, and that includes the United States and the UK.
STEFANOVIC: So, that's a long and diplomatic way of saying no, right?
ASSISTANT MINISTER: We believe that we will determine our defence spending based on what's in Australia's best interest. And we're actually increasing it. We're increasing it. We're at just over 2.5 per cent of the 3.5 per cent jump --
STEFANOVIC: [interjecting] Yeah, but we’re just over 2 per cent --
ASSISTANT MINISTER: But we're increasing it to close to 2.5 per cent of GDP and investments across the whole of Defence. But most importantly, that's done in partnership with our closest ally, the United States, through a program called AUKUS.
STEFANOVIC: OK, Hollie, your thoughts on this. Should we get to 3.5 per cent? I mean, it is a considerable jump from where we are now?
HOLLIE HUGHES, LIBERAL SENATOR FOR NSW: It is a considerable jump. But, you know, the reality is this is a government who had absolutely no idea that China was performing live fire exercises off our coast or having spy ships circumnavigate around our nation. The Federal Government has two roles: keeping the national economy strong and keeping Australians safe. And the reality is our part of the world, Indo-Pacific is where there is a lot of action, a lot of concerns and a lot of muscling up by China. And the reality is we need to be prepared for this. And, you know, the Prime Minister might like being Beijing's handsome boy, but the reality is he needs to see stand up for Australians and make sure that we have the defence capabilities should the worst occur. And I don't think any Australians could sit there hand on heart now and feel confident. You know, the Prime Minister is more interested in removing HECS debt to buy votes as opposed to investing in our nation's future. And I think this government needs to have a serious look at what its priorities are to keep Australians safe, both economically and strategically, in defence.
STEFANOVIC: So, Matt, the background for those who aren't aware to Hegseth's comments is that the US believes China is preparing to make a move on Taiwan by 2027. Are you of that view?
ASSISTANT MINISTER: Well, we want to make sure that the status quo is maintained within the region and that we work towards peace and stability in the Taiwan Strait, in the South China Sea and in the Indo-Pacific. And that's how we work with our partners through the Pacific, Pacific Islands Forum, through the Quad, through ASEAN. It's all maintained or it's all based on working together to maintain peace and stability.
STEFANOVIC: But do you feel like that's where China's heading within those two years?
ASSISTANT MINISTER: Well, we want to make sure that we work with our regional partners to achieve that. And that's the whole point of AUKUS. That's the whole point of the Quad, and it's the whole point of our partnerships in ASEAN. It's based on working together to maintain peace and stability. And in doing that, that's the way that you keep Australians safe. And that's why we're making sure that we make those investments in AUKUS, in the increased defence spending to keep Australians safe.
STEFANOVIC: Ok, I've got a couple of minutes left, but I do want to ask you about this one, Matt. Has Daniel Mulino offered up a hard truth on your super tax plan, that it will actually clip 1.2 million Australians in the long run? That's not the small amount you've all been saying.
ASSISTANT MINISTER: Well, this is a policy, Pete, that's aimed at ensuring that we've got fairness and equity in our taxation system --
STEFANOVIC: [interjecting] How's it fair if a PM gets a pass?
ASSISTANT MINISTER: Everyone who's on a defined benefit scheme will be treated the same --
STEFANOVIC: [interjecting] Yeah, but you can defer the tax?
ASSISTANT MINISTER: That's the basis of it, that everyone that's on a defined benefit scheme, regardless of your occupancy –
STEFANOVIC: [interjecting] You can pay it later. Not everyone gets that opportunity.
ASSISTANT MINISTER: Will pay the same. And it's all about ensuring that Australians pay their fair share of tax. At the moment, some people can divert money from income to avoid paying income taxation into superannuation to get a concessional rate. Now, the average teacher, the average childcare worker or emergency services worker can't do that. So, we just want to make sure that the system is fair and equitable and everyone pays their fair share of tax.
STEFANOVIC: Go, Hollie.
HUGHES: Look, I mean, I had dinner with a small business owner last week whose office building is part of a superannuation plan. And her message to me was incredibly clear: that if this goes ahead, she does not know what she can do because this is something that the business has invested in, she's invested in, it's her business. And now, because of the increase in property prices, she doesn't know if she can afford to pay a tax on an unrealised gain. She's not planning on selling it, but this tax would come knocking at her door while she's still operating that business out of those offices. Many people in small business and family farmers, I mean, if they don't start stampeding Canberra, family farmers whose property values are going up, agricultural products aren't necessarily generating that cash flow income to pay a tax like this. And if we want to talk about national security, this is the thing, Pete, this government seems to act in silos, whether it's family farms forced to sell for an unrealised capital gains tax on their self managed super funds. We've got Chinese inverters being used through Chris Bowen's race to renewables, which could put our energy grid at risk. I mean, these guys, the left hand doesn't know what the far left is doing. We need to make sure that part of this entire strategy, whether it's defence, whether it's energy, whether it is superannuation, that the entire government is actually looking at what the unintended consequences could be across the board. Yet we seem to see a complete intellectual bereftness or whether it is just an inability to communicate between Departments, on how Bowen's decision on a race to renewables, you know, by all of these materials from China, could have a real impact when it comes to defence. Things don't offer, you know, they don't occur in isolation. Yet this government is unable to get it together.
STEFANOVIC: So, just to wrap up just back to that point is, is that your understanding long term, Matt, 1.2 million Australians will be hit?
ASSISTANT MINISTER: Well, initially it's a very small --
STEFANOVIC: [interjecting] Yeah, initially.
ASSISTANT MINISTER: But long term it's a very small number of Australians, less than 5 per cent of the population. But at the end of the day, people have a choice --
STEFANOVIC: Yeah, it's 1.2 million, right?
ASSISTANT MINISTER: They receive an income, they can pay income taxation on that, as most Australians --
HUGHES: [interjecting] It's not income, Matt.
ASSISTANT MINISTER: They can then divert it into a superannuation account to get a concessional rate --
HUGHES: [interjecting] They're talking about assets. It's assets.
ASSISTANT MINISTER: But, I think we have got to realise we're only talking about above $3 million. It's a very small amount --
STEFANOVIC: [interjecting] It's going to involve 1.2 million Australians.
HUGHES: [interjecting] And that's going to get increased a whole lot more quickly.
ASSISTANT MINISTER: There's a very small number of Australians that are captured --
STEFANOVIC: [interjecting] Hang on, hang on. Is 1.2 million Australians a small number, Matt?
ASSISTANT MINISTER: They're projections, and we're talking about something that hasn't been legislated yet. But at the moment, what I'm saying is that people have the choice. They can pay their income tax. Well, they can divert it into superannuation to get a concession and that's what they are doing. And all we're asking --
HUGHES: [interjecting] Spoken like a true Labor Party person.
ASSISTANT MINISTER: What we're asking is for people who have got more than $3 million --
STEFANOVIC: [interjecting] Okay I gotta go.
HUGHES: [interjecting] Can I just say --
ASSISTANT MINISTER: More than $3 million to pay their fair share of tax. That's it.
STEFANOVIC: I'm going to have to leave it.
HUGHES: Seriously. Ted O'Brien has come out saying that he's prepared to work with the government and have conversations about this. The options are that Chalmers has a conversation with the Coalition and works through serious and sensible reform. Or they go to the unicorn farmers in the Senate and push this through with the Greens who actually want it to be 2 million.
ASSISTANT MINISTER: So, we're happy, we're happy to work with the Opposition, but it has to be fair and reasonable. So, they're paying fair, reasonable amount of tax.
STEFANOVIC: We will see. Gone over. Hollie and Matt, thank you. Talk to you again soon.