Labor’s 10 year economic plan - 2GB Radio Interview

ANDREW LEIGH MP
SHADOW ASSISTANT TREASURER
SHADOW MINISTER FOR COMPETITION
MEMBER FOR FRASER

E&OE TRANSCRIPT
2GB RADIO INTERVIEW

MONEY NEWS WITH ROSS GREENWOOD
WEDNESDAY, 8 JUNE 2016

SUBJECT/S: Labor’s 10 year economic plan; wage growth; cuts to family tax benefits; infrastructure funding; Triple A credit rating.

ROSS GREENWOOD: Let’s start with the Shadow Assistant Treasurer Andrew Leigh. As Labor today put out its plan for the economy over the next 10 years, he joins me now. Many thanks for your time Andrew. 

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure Ross, good to be with you. 

GREENWOOD: As we speak, your leader – Bill Shorten, of course – is at the Broncos League Club in Brisbane talking to a people's forum that Malcolm Turnbull has chosen not to turn up to. [Shorten] is putting the case to the people through the Sky Network, and also to the people that are in that audience. The new plan that has come out today, the plan for the economy, many people have dubbed it as a glossy brochure. The full costings are not there – that's not where you are going to put them, are you?

LEIGH: We'll put out the full costings once we've announced our full suite of policies. But this is a clear statement about how the economy would travel under Labor, and what we would do to maintain a strong economy and boost living standards. We've seen living standards fall by four per cent since the Coalition came to office, the slowest wage growth in 30 years, the highest level of inequality in 75 years, and a government that is really lacking in direction. Labor would invest in schools and infrastructure, which the OECD tells us is where the heart of growth needs to come from. 

GREENWOOD: Go back to that issue about the lowest wage growth we have seen on record – because you are quite right to say that, and to highlight it I think. But the worry that many people would have is that unions would put in over and above odds claims to try and get wages higher, as distinct from necessarily having business growth or economic growth pushing wages higher. Which is what you’d actually want, because that would mean government revenues would also rise. The problem here is not necessarily that wages have simply fallen behind – because wages are still growing as fast as inflation – it is simply that the economy is sluggish, economic growth is sluggish, and that is the reason why wages growth is so slow. 

LEIGH: Ross you are absolutely right to point to the importance of productivity there. In the long run, wages can't get out of track with productivity, and good unions recognise the importance of growing productivity in order to grow the pie. The thing is we've got a government which is just interested in beating up on unions, rather than seeing how unions can actually be constructive problem-solvers in the workplace. 

GREENWOOD: But even you would understand, Andrew, that these days union membership has declined over a period of time. It is a relatively small part of our community, and the real heart of the community right now is small businesses and tradies, who are largely contractors. As a result, they represent probably a growing and much larger part of the workforce, and they are the ones that the Labor party, or the Coalition Government for that matter, has got to try to stimulate. 

LEIGH: Absolutely. Union membership used to be half the workforce in Bob Hawke’s day and now it’s down to about one in six. Labor supports the government’s small business tax cuts and we would go further with an access to justice policy that Michelle Rowland, Chris Bowen and I announced. That allows small businesses to take on the big guys without fear of getting an adverse cost order. But we also recognise too Ross that small businesses benefit when we have a well-educated workforce. And on international test after international test, Australia has been slipping backwards, not just in relative terms, but in absolute terms. And so a government that says that it’s alright to rip money out of schools and give it to multinationals is a government that just hasn’t been keeping its eye on the ball as to how our kids have been performing. We’ve got to boost those standards because if we don&rsq uo;t, we are not going to get those productivity increases that, as you rightly point out, are the key to living standards.

GREENWOOD: One other thing also is that a lot is made particularly by the Labor party of the fact that debt has grown under the Coalition Government, and the numbers say that it is absolutely true. But it could be argued of course that previous Labor Governments put in place systemic changes in our health and welfare systems that meant governments, unless they made sweeping cuts and reforms, were not really capable of being able to take away those systemic situations inside our health and also our social welfare systems. Now I do note that the Labor Party is suggested to be now saying that it will agree to some $7 billion worth of cuts which will largely come from family tax benefits. Is that the case? Is that what is going to happen?

LEIGH: Well Ross, we’ve supported a range of savings that the Government has made in the family payments and social security space, some $9 billion of savings, including some that were couched in ways in which we wouldn’t have put them originally.

GREENWOOD: I understand that Andrew, but up until now going all the way through the Senate you have actually not allowed those cuts to come through. So isn’t it one of those situations that now you may be poised to take government, that it’s actually a cut that you genuinely need, to try and address at least some semblance of budget balance?

LEIGH: Well Ross, we’ve applied a fairness test to every policy that comes before us, and we would go further than the Coalition on a range of spending cuts. We don’t believe that paying polluters is a good way of dealing with dangerous climate change. We wouldn’t spend $160 million on a marriage equality plebiscite that half the Coalition backbench say they are going to ignore anyway... 

GREENWOOD: Okay, go back to the family tax benefits for one moment because surely with family tax benefits – that’s hitting your heartland, that's hitting the families who, all of a sudden, will be on lower or middle-class incomes, and they're ones who are going to say, "Well hang on, I'm 30 bucks out of pocket. I’m 40 bucks out of pocket," or whatever it might be per week, and that surely is something that the Labor Party has opposed when the Government has tried to get these measures through the Senate and now all of a sudden you find you can make these changes as you may be poised to take government.

LEIGH: Ross, we've applied a fairness test to changes in the family payment space. There's dozens of these changes. The big picture thing to remember is that the Australian welfare net is the best targeted in the world. A dollar spent through our social safety net does more to reduce inequality than a dollar spent through any other social safety net in the world. Yes, there's ways in which we can improve it, but on the whole you take money out of our welfare safety net and you hurt the most vulnerable.

GREENWOOD: Okay just one other aspect can I pick up because I do agree fundamentally with where you come from and I think, to be honest, the current Government also goes there. That is on infrastructure. Both parties do agree that Australia more infrastructure and needs to build it more quickly. If there was one criticism I think of certainly the Howard-Costello period of government, and even then going into the very early years of the Rudd period of government, and that was there were not enough infrastructure projects shovel-ready to go if there was an economic downtown. I still suspect even today there are not enough ready to go if we need them to move quickly if there is a global economic downturn again. Is this part of your plan to make certain you do not repeat the mistakes of the past?

LEIGH: Absolutely Ross. You hit the nail on the head in terms of making sure projects are shovel-ready and also they’ve got to be determined by cost-benefit analysis, not by partisan pork-barreling. Our $10 billion financing facility puts the experts at the heart of infrastructure financing, with a bipartisan board and independence that allows the body to make financing decision for great projects. Congestion-busting projects like the Melbourne Metro, Badgerys’s Creek airport link, we've committed to the Monash Freeway in Melbourne, the ADELlink tram-system across Adelaide, the M1 Gateway Merge and Ipswich Motorway in South-East Queensland, Port Botany freight link in Sydney. All of these are projects which we know will provide a stimulus to the economy, both in the construction phase and also a productivity gain in the long-run.

GREENWOOD: So in other words – here's where we get some bipartisan agreement in regards to where we go as a nation. I mean, that's what the country wants to hear – that the Labor Party and the Coalition actually agree that there are projects that we can go ahead with full steam ahead and as a result get some action in the nation?

LEIGH: That's why we want bipartisan appointments to the board, because we don't believe that these long-range projects, Ross – and we're talking about projects not just over ten years, but over 20 or 30 years – can afford to be derailed by a change in government. But I've got to say too, there is great potential for Australia to make mistakes in this space. We have the third lowest population density in the world – if we let partisan politics drive out infrastructure spending, we'll end up with a bunch of roads to nowhere, rather than dealing with congestion and building public transport.

GREENWOOD: Well, can I just say Andrew that you better hope like hell in that case you don't get a hung parliament with some people, independents in some regional areas, holding the balance of power because that's what tends to happen isn't it? I think you know that.

Listen, before I let you go, a couple of bits and pieces. Number one, you would've heard earlier on, John Daly from the Grattan Institute. Now, he's been a supporter of the Labor Party and its changes to negative gearing, but he's now, along with Saul Eslake and also Stephen Anthony from Industry Super, critical of Labor in regards to risking the Triple-A credit rating by pushing out the time at which it will take for budget repair. Do you resile from that decision because quite clearly, if you don't get the cuts in the short term then Standard & Poor's, Moody's, Fitch, are all going to be looking at Australia and that Triple-A credit rating.

LEIGH: Ross, couple of points on this. Australia first got three AAA credit ratings under Labor, and we first got the shot across the bow from Moody's that we might lose one of them under the Coalition. That's because debt blew out by $5,000 a person since the last election, and the deficit has tripled from the Government's first budget to its latest budget. Labor would reduce the deficit in every year and over the medium-term we'd have a stronger structural budget position that the Liberals. We have said today that on current projections we will return the budget to balance in the same year as the Liberals. So we're confident in our budgeting position. We're confident that over the medium-term, which is what is important for Australia, we've got a firm fiscal story to tell.

GREENWOOD: Alright, Andrew Leigh, the Shadow Assistant Treasurer, has been a busy time for you as you try and get these out. When will we see the full costings, do you imagine? Have you got any timetable for that yet?

LEIGH: Well in advance than when you did from the Coalition last time around, Ross. I mean, that was on the Thursday before the election, after the media blackout had started. We'll do significantly better than that.

GREENWOOD: Too right. Andrew Leigh, it's always a cat and mouse game with that one and we appreciate your time on the program this evening.

LEIGH: Likewise, Ross. Thanks for having me on.

ENDS


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