Andrew Leigh

E&OE TRANSCRIPT

RADIO INTERVIEW

3AW WITH NEIL MITCHELL

MONDAY, 4 MARCH 2019

SUBJECTS: Labor’s fairness fund; Banking Royal Commission; Labor’s support for domestic violence survivors; Labor’s plans to tackle tax havens and multinational tax avoidance; dividend imputation.

NEIL MITCHELL: On the line, the Shadow Assistant Treasurer Andrew Leigh. Good morning.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning, Neil. Great to be with you.

MITCHELL: Thanks for talking. We don't want Rupert Murdoch, what about a tax on him?

LEIGH: Neil, this is coming on the back of the Hayne Royal Commission which as you know has exposed some extraordinary behaviour. You've got the fees for no service scandal, you've got people losing their homes, you've got dead people being charged for financial advice-

MITCHELL: So how much of this fund will go to those victims?

LEIGH: Well, we've ensured that we're going to boost financial counsellors. We're going to put money into these flexible support packages for victims of family violence, but we've also announced-

MITCHELL: But why victims of - I mean, that's awful, victims of family violence, but what's that got to do with the banks?

LEIGH: There is a strong nexus between financial problems-

MITCHELL: So what's that mean, people who are victims of family violence will only get money if the family violence is provoked by financial problems?

LEIGH: These are packages which have been called for by a range of family violence experts. The flexible support packages have done very well in Victoria and one of the evaluations there have suggested that they make a big difference to people fleeing family violence.

MITCHELL: What about – Bob Maguire’s getting 200 grand. What about that? I mean, I like Bob, he does great work. But what's the 200 grand for?

LEIGH: He'll be expanding his operations. Bob Maguire, as you know, is a great icon of looking after some of the vulnerable and you know it has been some of the most vulnerable who've been hurt through the royal commission - people who've been given debts that they couldn't afford and found themselves not only losing their homes, Neil, but also losing their relationships.

MITCHELL: This I can follow. I can understand why you'd have a bank levy and say ‘okay we identified these victims of the banks, here's your compensation, here's your assistant’. But this broad brush approach – what else is going to go - it'll go to domestic violence, Bob Maguire, what else?

LEIGH: As we’ve said, we're expanding financial rights legal assistance sector. So at the moment, that's about helping victims and there's about 40 lawyers involved in that work at the moment. We'd expand that to 240 lawyers and they'd be assisting victims of bank and financial services provider misconduct. They'd be running complicated cases in court through the Financial Complaints Authority. So again that's directly targeting some of the behaviour that's come out of the royal commission.

MITCHELL: Will the levy stay beyond four years?

LEIGH: We’re intending this to be a four year package, which will focus on the needs we've identified here. But, Neil, you do want to say-

MITCHELL: Sorry, sorry - so after four years it comes off?

LEIGH: That's my understanding, as we've said for four years and then I think we need to revisit it-

MITCHELL: So it could stay? It could stay after four years?

LEIGH: You've got to contrast this with the decision last year where the Liberal Government put a $6 billion levy on the banks, no direct nexus on how that money is spent going to the banks at all. This is $160 million a year - it's nearly one fortieth of the size. I appreciate your rigour for focusing on us raising money from the banks and spending money in a way that's directly related to that, but you should be 40 times as concerned if these are your worries about the banking levy that was put on by the Liberals last year.

MITCHELL: The Liberals’ six billion was over how long?

LEIGH: That’s $6 billion a year. So we're talking about something that is much smaller, which is directed at the issues raised out of the Hayne Royal Commission-

MITCHELL: I'm not objecting to the idea of it. My problem is that we've been told it will go to victims of the banks and it's actually a scattergun approach which really should be coming out of general taxation.

LEIGH: Neil, I think it's unfair to refer to this as scattergun. I mean, these families have-

MITCHELL: Bob Maguire, higher domestic - what else? Well who else is going to get some? You mentioned financial advisers. Does that use up the whole $640 million?

LEIGH: There’s also two financial components. One is expanding financial counsellors, so we'd be looking at doubling the number of financial counsellors from 500 to 1000 across Australia. That means about another 125,000 people would get access to financial counsellors. These people are working with those who are often indebted, they’ve maxed out multiple credit cards, they're losing sleep, they've often lost their job-

MICTHELL: So who will be allowed to access - I assume I won’t and you won't

LEIGH: The financial counsellors – I mean, you think of great organisations like the Salvation Army. So they do they tend to do their own needs based assessments, but typically it'll be people who walk in the door there-

MITCHELL: Will they have to pay for this or just walk in the door and the government pays?

LEIGH: They’re non-government organizations and their supported by government.

MITCHELL: I'm sorry. So the Salvos will get money to set up, for example, to set up financial advice.

LEIGH: They're already providing – really, we’d want to distinguish financial counsellors from financial advice.

MITCHELL: Sorry.

LEIGH: The financial counsellors are dealing with people who are in crisis-

MITCHELL: So is the money going into that?

LEIGH: Yes. I mean, they do incredibly important work looking after the most vulnerable-

MITCHELL: How much is going into that?

LEIGH: I don't have the exact figures for that one in front of me. The boost through to financial rights lawyers is $30 million a year and that will be for people bringing these specific cases.

MITCHELL: But do you see my point? I assume that you and I can’t access these government funded people?

LEIGH: If you've got a an issue with the banks, then you're able to-

MITCHELL: So you’ve got to have an issue with the banks? Is it not broad financial advice or counselling, you have an issue with the banks too?

LEIGH: If you're talking specifically about the financial rights lawyers, Neil, then that'll be for people who are bringing cases, who are victims of banking and financial services’ conduct.

MITCHELL: What about counsellors?

LEIGH: Counsellors are what I talked about with the example of Salvation Army workers before. That'll be a commitment - I've got the number you asked for before – of $80 million a year-

MITCHELL: And that goes to counsellors within organisations like the Salvos?

LEIGH: Yes, that's right.

MITCHELL: But you and I can’t access that, surely?

LEIGH: As I said before Neil, it would depend on how those non-government organisations do things. But when I've spoken to the Salvos, they typically say ‘look the first question we want to ask isn't are you eligible to be here, but welcome, sit down, have a cup of tea, let’s talk about it’.

MITCHELL: That’s very Salvos, you’re quite right. The other thing – the Salvos also do a lot of people have trouble with finances because of gambling, because of alcohol, because of chronic unemployment. Are they eligible or do they have to have trouble with the banks?

LEIGH: Those financial counsellors will work on all kinds of complicated problems and then often these problems are intertwined, as you would have seen Neil, as we look through the revelations from the banking royal commission. This cuts quite broadly across the community. Bill Shorten was speaking about the issue of farmers in Geelong yesterday and the impact that farm foreclosures have had on many rural communities. So the repercussions of the banks have been broad and this has been a seismic royal commission. Scott Morrison voted against it 26 times and said it was regrettable when it was announced. Labor's fought for it and our banking fairness fund is about making sure we provide some justice in the system afterwards.

MITCHELL: How do you guarantee it's not passed on to bank customers?

LEIGH: Well, when Scott Morrison put a $6 billion levy on, he said it wouldn't be passed on to bank customers and analysis from the competition watchdog afterwards suggested that that held up. Now if that holds for something which is 40 times larger, I think you can be pretty confident that this will come out about bank profits.

MITCHELL: So you really monitor and monitor it through those various agencies?

LEIGH: Absolutely. And look, bank profits last year were $30 billion. I think the big banks can afford to make a modest contribution towards financial counsellors, towards financial lawyers, towards providing these flexible support packages that we've announced today. There's a strong nexus in this between the problem that's identified the Hayne Royal Commission and the banking fairness fund. We simply can't say that for Scott Morrison’s banking levy last year.

MITCHELL: Look, I appreciate [inaudible]. There’s one thing that's been puzzling me this whole tax debate. Year One of a Shorten Government - and I think we only get one - how much larger will the tax take be than the previous year?

LEIGH: I haven't got the precise figures for you, Neil, but most of what we're trying to do is make sure that the tax system is fairer-

MITCHELL: But it will go up? I mean, is it beyond dispute that the tax take will go up under a Shorten Government?

LEIGH: In the case of tax havens and multinational profit shifting, absolutely. Their tax burden will go up. In the case of regular Australians, they'll get a better deal. They'll get a tax cut which is nearly twice as large, and so for 10 million working Australians, they'll see their taxes go down-

MITCHELL: But will the income tax-

LEIGH: For multinationals, their tax will go up.

MITCHELL: I'm sorry. Will the income tax take go up?

LEIGH: We'll be closing loopholes which are used disproportionately by those at the top of the income spectrum, but for most of your listeners Neil, they'll pay less tax under a Labor Government.

MITCHELL: You’re closing loopholes like the franking credits.

LEIGH: That's right, a loophole which-

MITCHEL: They're average Australians. I mean, they're not Rupert Murdoch. They're average Australians.

LEIGH: Half the benefits of that Neil are going to people with more than two and a half million dollars in their superannuation accounts. That is a tax concession which is used disproportionately by the most affluent Australians.

MITCHELL: The other thing I really don't understand and we really should just discuss this. The other thing I really don't understand is why the franking credits applies to self-managed super funds and not the industry funds?

LEIGH: It applies to anyone who pays tax. So if you pay tax, you can use franking credits to reduce your tax bill to zero. But it can't go below zero. You won’t be in a situation where the Tax Office can cut you a cheque-

MITCHELL: But it doesn't apply to those larger funds, does it?

LEIGH: That's because they're paying tax. So, anyone - an individual or a fund – that’s paying tax will be able to continue to use those franking credits to offset them. As will pensioners and allowees. So if you’re getting a pension, you’re completely unaffected-

MITCHELL: What rate of tax are the big funds paying?

LEIGH: They'll be paying 15 per cent tax on their earnings and it will differ across various phases, but again they can use the franking credits to reduce those that tax bill.

MITCHELL: For in a self-managed fund, I’m paying 15 per cent on my earnings, am I not?

LEIGH: That's right and-

MITCHELL: So why don't I get the same benefit as the big funds?

LEIGH: Well, you can certainly use it to reduce your tax bill. You simply can't use it to put yourself in a position where the Tax Office is sending you a cheque. And that’s the difference between our system and systems everywhere else in the world. There are a few countries that have franked dividends to make sure you don't have double taxation. There's no one else that cuts a cheque to people that aren't paying any tax. Let's take us out of being in the unique situation of being the only country in the world with refundable franking credits. It allows us then to take that $5 billion and spend it on better schools and hospitals, infrastructure, other things that Australians are clamouring for.

MITCHELL: Have you considered just a cut-off point on franking credits? It’s screwing around a lot of people that are relying on it and they're not rich, a lot of them - the ones I speak to are not rich, anyway. What about just sort of sitting where you can't get more than 15 grand back on your franking credits or something like that?

LEIGH: Our view, Neil, was that it was fairer to focus it based on the pension which goes - a full or part pension goes to the poorest two-thirds of retirees. So in that sense, you're targeting based on both income and assets. Our pension is the most targeted in the world. So we felt that that was the best way of making sure that vulnerable Australians weren't affected while ensuring that we close the uniquely Australian tax loophole so we can spend on better schools and better hospitals.

MITCHELL: But do you accept that some vulnerable people are being affected? People are not really getting a huge amount, they are going to lose money that will affect their quality of life.

LEIGH: The question is, Neil, if you didn't have this system right now, would you really think it was fair to take $5 billion-

MITCHELL: But that's part of the point. You know people have planned their lives around the system and you now change it.

LEIGH: But would you really think it was fair Neil, if we didn't have the system right now, to take $5 billion and to allocate it by sending out cheques to people who had paid no tax and were above the cut-off range for the pension? So if you're a couple, then the pension doesn't cut out until you've got more than $800,000 of non-housing assets. Then would you really think that the best use of taxpayer money at this stage is to take $5 billion out of schools and hospitals and spend it all on those who aren't getting a pension? That's the reverse argument of what we're doing with this policy.

MITCHELL: I think you're taxing us enough to pay for the schools and hospitals. But here-

LEIGH: You look under the Liberals-

MITCHELL: But you're going up, you admit you're going up under Labor. Taxes are going up.

LEIGH: For multinationals and tax haven users, absolutely. For regular Australians - this is really important, I can't emphasize this enough - most of your listeners are going to pay less tax under Bill Shorten, because they're going to see for the 10 million Australians who are regular POYG earners, who aren't splitting income through trusts, they’re going to see a lower tax bill under a Shorten Government.

MITCHELL: But I do have still these people who are, perhaps self-funded retirees, living on forty, forty thousand a year, who are going to lose 15 grand. And that's going to really screw their lifestyle. Put them on the pension, some of them

LEIGH: Neil, we have to be absolutely clear before the election as to how we're going to raise revenue. We've been clear with tax haven users that their time is up. We're being absolutely clear with people who are income splitting using trusts that we're going to change that relationship. We're not doing what the Abbott Government did before 2013 and saying ‘we're not going to cut anything, and then cutting everything’-

MITCHELL: I agree. That was dishonest, I agree.

LEIGH: Our plans are very carefully costed. We’ll pay down debt faster, we'll spend more on schools and hospitals and for 10 million Australians, they’ll pay less tax under Bill Shorten-

MITCHELL: But do you accept though, maybe they are unintended consequences, but there are people living on - self-funded retirees who are going to be forced on the pension or close to it because of your franking credit changes. Do you accept that? Maybe it’s an unintended consequence, but it's a reality.

LEIGH: All of our policies have been carefully modelled by the Parliamentary Budget Office. We're confident in the costings and we've said-

MITCHELL: But do you accept that as a reality? I'm living on 45 grand as a self-funded retiree, I suddenly lose 10 or 15 through this franking credits policy which I'd structured into my life. Gone. Do you accept that people at that level will be hurt?

LEIGH: I don't question that people who are getting franking credit refunds at the moment appreciate getting those cheques-

MITCHELL: They’re not all wealthy though, do you accept that?

LEIGH: I would never accuse anyone of being wealthy or not. The question is whether or not this is an appropriate use of $5 billion of taxpayer money. We want to expand early childhood to 3 year olds, something that many countries in the world already do, in order to give our young people a great chance. And at the other end of the income spectrum, we want to deal with the crisis in aged care packages. You can't do all those things, Neil, and keep every tax loophole open. We can either have the biggest tax loopholes in the world or we can have the best public services.

MITCHELL: It's not a loophole. This was something that was created by the Parliament and is being used by people legally and legitimately. Anyway, look, I understand your own-

LEIGH: It’s the very definition of a loophole, Neil. It's something which wasn't-

MITCHELL: It’s not a loophole, it’s policy.

LEIGH: Indeed, it’s set in legislation but –

MITCHELL: You make it sound a crook to be exploiting and it is not exploiting a loophole, it’s following a policy.

LEIGH: It's simply not sustainable. We can go back and forth-

MITCHELL: It’s a different argument here.

LEIGH: - on what a loophole is, but we're changing the arrangement in order that we can make sure that our society is fairer and so we can tackle challenges like housing affordability, sluggish wage growth. We need money for our schools to be performing much better than they are now as technology advances. All of those are priorities for Bill Shorten and he is honest enough with the Australian people to say very clearly where the money is coming from.

MITCHELL: I thank you so much for your time. We did cover a lot more than we intended.

LEIGH: We did indeed.

MITCHELL: Is the bottom line here, as Chris Bowen said, if you don't like it don't vote Labor?

LEIGH: Neil, we’ll be out there fighting for every single vote we can get between now and polling day. I'm going to be you're going to be in Melbourne couple of times this week-

MITCHELL: Come and see us!

LEIGH: We're working with our terrific candidates like Libby Coker in Corangamite, where they're making the case for why Australia can be stronger, better, fairer under a Shorten Government.

MITCHELL: And if we don't like it, don't vote Labor.

LEIGH: We're going to be fighting for every single vote, Neil.

MITCHELL: [laughter] You’re not going to say it!

LEIGH: [laughter] That's my style - you will find me advocating for each of our policies, advocating for each and every one of our candidates.

MITCHELL: So I can hate your franking policy, it’s going to drive me onto the pension, but still vote for us. [laughter]

LEIGH: I've spoken to people, Neil, who are going to lose their franking credits and they say ‘I can understand that this will affect me personally, but I want to make sure that we live in a fair and more decent and decent society’. And they say ‘look, I understand that no other country in the world does it like this, I can recognize there's a fairness benefit to changing that’.

MITCHELL: Thank you so much for your time, we’ve kept you too long. Thank you. The Shadow Assistant Treasurer Andrew Leigh.

ENDS

Authorised by Noah Carroll ALP Canberra.