Balancing the budget by making it fairer - ABC News Radio 22 August 2014

Following Treasury Secretary Martin Parkinson's call to bring forward the national discussion about tax changes, I joined Marius Benson to talk about changes that could make the Coalition's budget fairer. Here's the transcript:





SUBJECT/S: Ways to make the budget fairer; fuel excise; Tony Abbott’s broken promises

MARIUS BENSON: Andrew Leigh, do you agree with Martin Parkinson that it would be a good idea for the government to bring forward consideration of tax changes, particularly to look at tax breaks that favour the rich, as a way of balancing some of the budget measures that hit low and middle income earners?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: I think it would absolutely be a good idea, Marius, if the government looks at making savings across the entire distribution. What's wrong with this budget is not just that it breaks promises, but also that it asks so much more from those who have the least. So if you're a sole parent on $60,000, this budget is taking $6,000 away from you. It's taking one dollar in ten away from the poorest single parents. But at the same time, it's giving money back to the most affluent through tax breaks for multinational profit shifting, and through reversing Labor's very modest measures to ask those with more than $2 million in their superannuation accounts to pay a bit more. If you don't have a budget which is balanced and which looks at the whole community, then you end up with the kind of unfairness which this budget demonstrates.

BENSON: So what sort of changes would Labor support in terms of the superannuation tax breaks? 

LEIGH: Well you need to look at the sorts of things we did in government. We said that if you've got more than $2 million in your super account, then your annual tax break is larger than the full rate of the age pension. So we said that at that point, if you're getting a superannuation tax break bigger than the full pension, it might be reasonable to ask you to pay a bit more tax. The Coalition didn't think that was reasonable and that's one of the measures they reversed upon coming to office. That's an example of the unfairness of some of the measures which the Coalition has pursued. Cutting super taxes for those with more than $2 million in their superannuation accounts, but then raising superannuation taxes for those earning less than $37,000 a year.

BENSON: Another point Martin Parkinson was making was the general one that we need a more mature debate on the budget. Martin Parkinson made the point that the restoration of indexing of the petrol excise levy only amounts to an increase of 1 cent per litre, but you and others have simply jumped up and down on a verbal gaffe by Joe Hockey and ignored the policy.

LEIGH: Well the real problem with what Mr Hockey has said is that he was factually wrong in saying that he'd presented figures showing the tax change was progressive. In fact, all he'd managed to demonstrate was that more affluent Australians spend more money on fuel than lower income Australians. But he hadn't shown data as a proportion of incomes. Then he went on to say that the poorest Australians – for the most part – don’t drive cars, when in fact his own figures were showing that for those in the bottom 10 per cent of Australian society two-thirds drive cars. So Mr Hockey's claims were at odds with the facts that he presented, and I think that led many Australians to wonder if this is a Treasurer who is really on top of his budget brief. 

BENSON: But when you look at the substance of that petrol excise levy, and when Martin Parkinson, the Head of Treasury, calls for a mature budget debate – it only involves one cent a litre as an increase. When you go to the pump, you don't know within 15 or 20 cents what you're going to be paying anyway. It's just not a big deal and yet Labor has called it a 'great big tax on everyone' and 'Tony Abbott's carbon tax'. This is just rhetoric winning out over policy substance.

LEIGH: It was Mr Abbott, as I recall, who said to President Obama that this fuel excise change acted like a carbon tax; a bit strange given that he'd been railing against carbon pricing for the previous few years. The view that Labor has taken is that when the Coalition went to the election, they were free to say to the Australian people 'if you vote for us, then we will re-index fuel'. But they didn't do that. They very clearly said that there would be no new taxes. Mr Abbott is on the record saying that many times, and then backing it in by repeatedly saying that if you were to know anything about him, it would be that he would keep his promises. So we believe, on this, that it is appropriate that Mr Abbott sticks to the promises that he made to the Australian people.

BENSON: Andrew Leigh, thank you very much.

LEIGH: Thank you Marius. 



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