WEDNESDAY, 10 MAY 2017
SUBJECT/S: Turnbull’s budget for millionaires and multinationals, housing affordability, bank levy, Medicare levy, low wage growth under Malcolm Turnbull
[AUDIO CUTS IN]
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: This is a Budget that delivers very little to economic growth, but a huge amount to the pockets of these shareholders of some of the world's biggest firms. It's a Budget which is taking money out of Australian schools, which is taking money out of our universities, at a time when we know, Glen, if we want to be a prosperous, equitable, productive nation, we have to be investing first and foremost in education. Yet our schools, are saying they are going to have to raise fees. Universities may have to going to have to lay off researchers as a result of these cuts to those institutions.
BARTHOLOMEW: So what will you oppose?
LEIGH: We certainly don't believe it is the right time to be giving a huge tax cut to the big end of town. We are pretty sceptical about the idea that young Australians ought to dip into their superannuation in order to pay for a home. We believe that a housing affordability plan requires tackling negative gearing and the capital gains tax discount. At a time when only one in eight home buyers are first home buyers, they need to be given a leg-up that doesn't take money out of their retirement savings in order to allow them buy a home now.
BARTHOLOMEW: The Property Council seems to think some of the measure the measure the Government has put in place are good, they are saying they have done a pretty good job on housing affordability.
LEIGH: Our focus isn't interest groups, Glen, it's making sure that Australians can buy their home. You look at a home ownership rate overall, and it's the lowest it has been in 60 years. You see these increases last year where house prices in Sydney and Melbourne went up 10 times as average wage growth across the nation. And yet, at the time where every serious commentator is saying you have got to tackle negative gearing and the Capital Gains Tax discount, this Budget squibs the test. It doesn't go to the heart of the problem of housing affordability in Australia today.
BARTHOLOMEW: I didn't hear you say you are going to oppose probably the big ticket revenue raising items in this Budget. There is $21 billion extra in taxes and levies, the most obvious one is this increase in the Medicare levy, with most people - everyone in fact above an income of about $21,000 - donating an extra 0.5 per cent of their income to the federal government. Will you support that move?
LEIGH: It is, as you say, certainly a change from last year's budget when Scott Morrison said this wasn't a time to be increasing the tax burden ‘on hardworking Australians and their families’, and he's done precisely that. We don't we believe it is necessary if you don't go ahead with the corporate tax cut, but obviously we will take our time to consider what is a very substantial budget measure.
BARTHOLOMEW: So conditional opposition?
LEIGH: You'll hear Labor's position on that in the coming days. We are less than 24 hours from the budget coming down. We don't believe it ought to necessary to raise taxes on working Australians.
BARTHOLOMEW: What about as a general principle, using the Medicare levy for this purpose even though it is notionally hypothecated that this money raised will go towards funding the National Disability Insurance Scheme.
LEIGH: Glen, of course when we introduced the National Disability Insurance Scheme, Labor announced how it would be funded over the course of the decade.
BARTHOLOMEW: And that included an increase in the Medicare levy.
LEIGH: It did indeed, but I think Australians will take a different approach to being asked to pay a Medicare levy in order to get a new pillar in our social security system, to this idea that we are getting now that you ought to pay for it a second time. I'm not sure any Australian believes that you can trust Malcolm Turnbull when it comes to Medicare. He is saying that he is unfreezing his Medicare freezes but some things are still frozen for another couple of years.
BARTHOLOMEW: What about - what do you think people will make of this, suggesting that whether the Medicare levy is supposed to be used for this and might be sceptical that this is just a taste of things to come, that they'll just do this again?
LEIGH: Well, yes, in order to believe the money is hypothecated, you have to trust the Turnbull Government to be doing the same thing next year as it will do this year, and given the number of backflips and flipflops we have seen - well, you know, there are measures in this budget which the Liberals voted against just three years ago in the 2014 budget.
BARTHOLOMEW: Do you accept that Medicare is now safe? The Prime Minister says it is guaranteed by an Act of Parliament and the funding is there for all to see.
LEIGH: Only a Labor Government will be able to guarantee that Medicare is safe. Labor was calling for the Medicare freezes to come off in all cases immediately. Well we haven't got that - we have got Medicare freezes staying in place until 2019 for a range of procedures.
BARTHOLOMEW: Have we got you and the Senate crossbench to blame for some of these tax increases? The zombie revenue measures, the savings or cuts are now gone, you had your chance to avoid tax rises, you didn't take advantage of the Government's savings or cuts in 2014 and now we are facing tax increases.
LEIGH: Glen, we have got the most targeted social safety net in the advanced world. Australia has got a spending to GDP ratio which places us near the bottom of the advanced countries. So when you take money out of that welfare safety net, when you rip into welfare, you do hurt some of the most vulnerable Australians. We were absolutely right to stand up for those people in the 2014 budget and the Australian people supported us in doing so. But we have still got some of those 2014 zombies trying to make their way out of their dark holes...
BARTHOLOMEW: They are hard to kill. Now, let's look at this bank measure. I think Bill Shorten has already suggested he is pretty in favour of this levy on banks. It's a pretty decent one. $6 billion worth. Is there any doubt that this is likely to be passed on to consumers in some way?
LEIGH: That's a question for the Government to answer. Certainly when we announced a levy which was about a tenth of this size, with the money being hypothecated to financial sustainability, Chris Bowen was criticised as being somebody who is going to bring about the end of Western Civilisation, who was going to rob the banks, and yet you have got Malcolm Turnbull turning around and doing it.
BARTHOLOMEW: So do you have an answer? Do you think it will be passed on?
LEIGH: The Government says not, and these are questions that are appropriately put to them. I mean, certainly that is a live concern.
BARTHOLOMEW: Finally, what do you make of some of the ambitions or projections in these numbers? Very optimistic around wage growth and that it will go from 1.9 per cent now to 2.5 per cent next year, and then 3.75 per cent in about four years time. This is despite unemployment staying at around 6 per cent, so why would wages go up so much in what is obviously an employer's market? A buyer's market?
LEIGH: Indeed, and why would wages go up when you have got a Government which is supporting cutting weekend penalty rates, which by definition is a wage cut. I don't think the Government understands that money put in the pockets of weekend workers is money that goes back into our economy to help create jobs for others. In terms of projections, Joe Hockey in his first Budget was pledging that the 2017-18 fiscal year would be in balance. We have now got it in deficit to the tune of $29 billion. So we've the Government not able to follow through on their projections - real debt now 50 per cent higher than when the Government came to office. Every Australian now paying $500 a year in interest for a debt load that is rising faster that it did during the Global Financial Crisis.
BARTHOLOMEW: Hard to see how household spending might grow without higher wages…
BARTHOLOMEW: …economic growth projections fall down a little as well. It looks to be a fight on fairness, and we'll see whether the company tax cuts remain the main point of difference for now and give you guys a chance to absorb a bit more. We'll talk again. Andrew Leigh, thanks a lot.
LEIGH: Thank you, Glen.