SKY NEWS TV INTERVIEW
THE LATEST WITH LAURA JAYES
THURSDAY, 9 JUNE 201
SUBJECT/S: Labor’s 10-year plan; costings; AAA credit rating; Labor’s tough savings decisions
LAURA JAYES: Andrew Leigh, the Shadow Assistant Treasurer, welcome to the program. We're yet to see the raw figures but you've promised a better budget outcome than the Government in 10 years. What is the starting point? What are the figures and forecast that you're starting from?
LEIGH: Laura, we're starting from figures that are put together in the Pre-election Economic and Fiscal Outlook, prepared by the Secretaries of Treasury and Finance. And all of our costings are prepared by the Parliamentary Budget Office, which as you know under the Charter of Budget Honesty is an equal status coster to the Treasury. We're confident that over the decade we're going to do better than the Government. Because while they have the biggest promise of the election in this unfunded company tax cut, that starts small but ends up huge, we have grandfathered changes to negative gearing and the capital gains tax discount that don't affect the existing investors but over time build in their savings.
JAYES: Okay I'll get to that policy. PEFO does include $18 billion of what you called “zombie measures”. Now the Parliamentary Budget Office has just updated that – that will be $8 billion over the forward estimates and about $32 billion over a 10-year period. Also nominal GDP growth has been called “heroic”, as has the forecast for iron ore prices. So has Labor built in a buffer?
LEIGH: What we believe is that we need to be making sure that over the 10 years we've got a really good set of numbers to show. What the Coalition will be saying is that they can have some numbers up to four years, and then after that don't worry because it will be somebody else's problem.
JAYES: But Andrew Leigh, the Treasury figures have been notoriously unreliable really, four years out. Much more difficult when you are looking at 10 years. What kind of assurances do you give, given you haven't really shown your Parliamentary Budget Office costings on some key policies?
LEIGH: Laura, you're absolutely right to talk about the limitations of those costings, and indeed they are two of the limitations Chris Bowen went to in his National Press Club address. The iron ore projections, the unemployment projections and the nominal growth projections were all ones Chris Bowen raised concerns about. That's why Labor's committed to returning the budget surplus in the same year as the Government, it’s why every year our budget position will be better. It’s why – over the decade – we're looking at making structural savings. The Government has got this 10-year company tax plan which costs the budget a bomb in its final year. It begins costing only an additional $100 million over and above the bipartisan measures, but by the final year is costing the budget $13 billion a year. That’s why we’ve been asking for their 10 year number s. And frankly, that’s why I’m sceptical that we’re going to get them.
JAYES: Yes, but isn’t that much more easy to predict, because the Government can look at that and say “we know how much in revenue we are foregoing” whereas on the other side of this, your negative gearing policy is over ten years, you’ve factored that in by about $30 billion in revenue going back to government coffers. But have you built in, once again, a buffer for that? Have you taken into account that this change in the tax structure will actually change behaviour?
LEIGH: All of that is taken into account in the Parliamentary Budget Office costings, Laura. I meant this is so different from if you go back a decade ago before the existence of the Parliamentary Budget Office when Oppositions were relying on the back of an envelope. Sometimes a back of the envelope prepared by a modelling firm, sometimes a back of the envelope put together by a dodgy Perth accountant as the Coalition did.
JAYES: But who are you referring to there? You’re referring to Chris Murphy?
LEIGH: Well there’s been a range of private sector modelers that have been employed and Oppositions were in some cases doing their best, in some cases trying to hide the facts.
JAYES: But Chris Murphy underpinned the Henry review, didn’t he? So you’ve relied on him before.
LEIGH: I don’t think he did, Laura. But the point I’m making is that the Parliamentary Budget Office is an independent coster, same status as Treasury and that’s why Australia can be confident about our costings.
JAYES: Okay but once again you’re asking the electorate to trust you on the Parliamentary Budget Office costings, and if the Parliamentary Budget Office – I think what you’re saying – is so different from Treasury, shouldn’t we know what the discrepancy is?
LEIGH: Well the Parliamentary Budget Office and Treasury, Laura, work together on making sure their models are the same. There’s a lot of movement of staff between the two because it’s in no one’s interest for them to come up with different numbers from Treasury. We’ll be –
JAYES: Well we didn’t see that demonstrated though on the tobacco excise and your costings from PBO and the Treasury figures over 10 years.
LEIGH: We’ll be updating our costings over the course of the coming weeks. Some of those figures will go up, some will go down. But we’ll be getting the latest updates and we’ll be giving the Parliamentary Budget Office and Treasury a chance to reconcile any difference in their models. Certainly the model that the Parliamentary Budget Office used when costing Labor's tobacco excise plans were the same as had previously been used by Treasury. So whether or not Treasury has changed its model on that remains to be seen, but Australians should have confidence that Labor's costings are rock solid because they're based on the Parliamentary Budget Office. And the thing is, Laura, you then have to go beyond “how accurate are these numbers?” to “how sensible are these promises?”
JAYES: Just like the mining tax and the revenue that was due to come from that was rock solid? I think voters have a right to be a little bit sceptical because I'll ask you the question, has Labor learned anything from the mining tax and over spending and not actually getting that revenue in?
LEIGH: Laura, we can talk political history if you like but I'm far –
JAYES: You're a student of political history.
LEIGH: I'm far more focused on the choice at this election. A choice between a Labor Party that will invest in National Broadband Network, in arms-length funding of infrastructure, in our schools and hospitals. And a Coalition Government that wants to give a huge tax cut to multinationals, a big tax cut to the biggest banks.
JAYES: Is that the trade-off with our AAA credit rating then?
LEIGH: Well three AAA credit ratings were first earned under Labor, as you know Laura. And the first shot across the bows that we might lose one of them came under the Coalition when Moody's said the AAA credit rating might be at risk. Why is that? Well it's probably the $5000 per person debt blowout that we've seen under this Government. Perhaps the tripling of the deficit – completely at odds with what the Government said they would do – they promised a surplus in their first year and every year after that.
JAYES: Just quickly, Labor does need some revenue raising measures and perhaps savings as much as the Government. Would you rule out reintroducing the bank deposit levy or something like the Buffett Tax?
LEIGH: That's certainly not something that's on our agenda, Laura. What we've done is we've said that we wouldn't spend any additional money on the subsidies for polluters scheme. We wouldn't spend $160 million on a marriage equality plebiscite which half the Coalition backbench say they'd ignore. We wouldn't bring back the baby bonus, a discredited piece of John Howard-era public policy that Malcolm Turnbull frankly has only agreed to in order to get the Nationals' support to become Prime Minister. All of these are savings decisions that Labor has said we are willing to make. Tough decisions, not universally popular. You go too to our decisions around negative gearing, capital gains tax, superannuation and cigarette excise. All of those are structural budget savings, but long-term decisions we need. The budget would be in a better position in a decade under Labor than under the C oalition. And for families who are making decisions over the mortgages that last 20-30 years, over sending a child to school for 13 years, they don't want a government that can't look beyond four years. They need a government that is willing to look at the impact of decisions over the decade.
JAYES: Dr Andrew Leigh, Labor's Assistant Treasurer. Thanks so much for your time.
LEIGH: Thank you, Laura.