2GB WITH ROSS GREENWOOD
WEDNESDAY, 22 AUGUST 2018
SUBJECT: Liberal Party leadership crisis, policy paralysis.
ROSS GREENWOOD: A man who will be a senior member of his team, no doubt, will be Dr Andrew Leigh who is the Shadow Assistant Treasurer, who is on the line right now. Many thanks for your time, Andrew.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER; Absolute pleasure, Ross. That was quite an intro.
GREENWOOD: It was the day as it unfolded today and, as I said, if people think it's a schmoozle, it probably is. Let's go now to a Government that has no company tax cuts to the next election, it's had to drop those because of the political inevitability. It also doesn't have a National Energy Guarantee to take to the next election, or at least not in the form it wanted to. From Labor's point of view, it means that there is potentially more money in the tank to spend if you come to office after the next election. What will you do with that extra money?
LEIGH: Ross, it's never been about the extra money for us. It's always been about the choice - the decision to take money out of our schools and hospitals and give it to some of the biggest firms, despite the fact that there is very little evidence that it'll boost economic growth. It always seemed to us like a bad economic call. That's the number one policy that Malcolm Turnbull had in his 2016 budget and he's already said that he would be committed to it at the next election. Mathias Cormann said that ‘a moment will come when this Parliament will have to revisit the proposal’. I don't think anyone believes it’s off the table.
GREENWOOD: If Australia as the Prime Minister said today will ultimately become the least competitive of the OECD countries, I think except for Portugal, where does that leave Australia in a Government that you might have to help to run? Clearly, you would want Australia to be as competitive as it possibly can, not only from a wages point of view, but also from a taxes point of view, from a corporate point of view. So what do you do to make Australia competitive against the other OECD countries we compete with?
LEIGH: That's a great question, Ross. The first thing to say is that we are a big importer of foreign capital with our current 30 per cent company tax rate. We have the fifth largest current account deficit in the world, we're not the fifth largest economy. Probably one dollar in nine of the total investment in Australia is coming from offshore with our current 30 per cent rate. We've also got dividend imputation which takes about a third of the company tax revenue and gives it back to personal taxpayers. That's not a system that most countries have, so a 30 per cent rate with imputation raises about as much as a 20 per cent rate without imputation. Both of these things matter when you're comparing yourself with other countries.
GREENWOOD: But your party is looking to trim some of those benefits of dividend imputation, the excess credits that would go back to taxpayers, you know that there is some pushback, particularly from retirees and maybe some people with superannuation funds that might benefit right now. You're still determined to go ahead with that policy?
LEIGH: As I said, dividend imputation is unusual but no other country cuts those cheques for people who are paying no taxes. So we've said we would end that policy, which is unique to Australia, except for pensioners.
GREENWOOD: But you’re still determined, notwithstanding all of this, that you still believe that Australia is competitive? That we will not lose potential investment out of this country, that Australian companies will look to domicile themselves elsewhere as a result of the disproportionate company taxes they’d pay in Australia compared to elsewhere?
LEIGH: Businesses invest for a whole range of reasons, Ross. If you’re thinking about setting up a high skill business, I imagine you’re probably be more worried about the fact that Australian school kids’ test scores are slipping backwards on the OECD PISA tests, or the fact that we’ve halved the number of apprentices, or that we’ve got 200,000 kids who won’t be able to go to university as a result of the Turnbull Government capping places. For high-skill businesses, the quality of the human capital probably matters more than the company tax rate. If you’re a miner, sure – you can dig the iron ore out of Australia and that’s-
GREENWOOD: But what you probably know, Andrew, if you’re a miner, the deposit is where the deposit is. If that’s in Namibia or Australia, it’s there. You can’t do anything about where that is. But the point is that it’s where there’s mobile capital, where you’ve got steel makers, where you’ve got other businesses - big organisations like CSL - that might have a decision to make, where do they base their next plant? Will they base it here, will they base it in Switzerland, do they base it in the United States? That’s where maybe high skilled jobs that we don’t even know that exist might end up being domiciled somewhere else.
LEIGH: You captured it well. For mobile capital, the point I’m making is that they also care about skills. So if we rip money out of Australian schools to bring down the big business company tax rate, it might result in a workforce that less attractive than the workforce say in the Netherlands or Sweden. Yes, tax rates matter, but so do institutions. So does policy certainty, for example, on emissions and energy policy. One of the reasons we’ve had a strike on renewables investment is that there hasn’t been the policy certainty for anyone looking to build a solar plant or a wind plant. The trashing of the National Energy Guarantee hurts our prospects with foreign investors.
GREENWOOD: Just a final one for you – you’re a keen observer on the political scene. Who will Bill Shorten take on at the next federal election, do you believe?
LEIGH: Look, I don’t really mind who is the captain of their team. What I mind is the fact that the team as a whole is running in the wrong direction. They’re focussed internally, they’re squabbling. It’s all about who gets the top job rather than about crafting good policy.
GREENWOOD: So if you were a betting man, who would you think would be the leader at the next election?
LEIGH: You’d bet on the incumbent. But he’s a PINO – a Prime Minister in name only. Because they’re so focused on squabbling, they haven’t been doing the policy work. Because we’ve been united behind Bill Shorten, Labor has more positive policies than any opposition in living memory. Leadership stability has given us the space to focus on ideas, to craft a set of policies. Your listeners won’t all agree with every single policy we bring to the table, but I’m sure they would agree that we’ve got a lot of policy out there. We’ve done the hard work and we’re ready for government.
GREENWOOD: Andrew Leigh, the Shadow Assistant Treasurer, thanks for your time.
LEIGH: Thank you, Ross.
Authorised by Noah Carroll ALP Canberra