2GB, MONEY NEWS WITH ROSS GREENWOOD
WEDNESDAY, 24 AUGUST 2016
SUBJECT/S: Labor’s genuine solution for budget repair
ROSS GREENWOOD: Let's now go to the Shadow Assistant Treasurer, Andrew Leigh, who is very close to the decisions and the policies that the Labor Party will take to the government to try and push them through. Many thanks for your time, Andrew.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure Ross, great to be with you.
GREENWOOD: Can I just say, some of the superannuation – let's go there first up. Do you think the compromise that you are offering the government in any way shape or form places a question mark over its mandate to govern? After all, it took a set of policies to the Australian people. The Australian people have voted them in – by a very close margin – but have voted them in. Does that mean that the government has simply got to push through its own superannuation policies holus-bolus as they were?
LEIGH: Let's go through two things. Firstly why we have superannuation tax concessions, and secondly what a mandate is. We have superannuation tax breaks – as the government's own financial systems inquiry noted – to reduce reliance on the aged pension. But half of those superannuation tax breaks go to the top 20 per cent who – that report says – are unlikely to be relying on the aged pension.
The government's got a mandate to pursue the changes that it took to the election. But nothing in that says that Labor needs to fold and just pass whatever the government likes. What we're doing is we're putting constructive proposals on the table that we believe are more likely to get through the Coalition party room than the policies they took to the election, but also have the virtue that they're not retrospective. So we can add more money to the budget bottom line without making a retrospective change that's worried so many experts.
GREENWOOD: There's one issue about that though. Some of the money that the government is hoping to hoover off the plate comes from having that $500,000 lifetime cap on superannuation effectively back-dated to 2007. You talk about retrospectivity and all that type of thing. You'd say if these changes that you would cooperate on with the government were to come in, you would want that backdated to the election night. And I think there would be some public sympathy about that.
LEIGH: Yes, we've said budget night there, and we do recognise that that means you don't raise as much as if you do the retrospective change. Our answer to that is that you can change the high income superannuation threshold-
GREENWOOD: Bring it down to $200,000.
LEIGH: Bring it down to $200,000, exactly.
GREENWOOD: So in other words if a person earns more than $200,000 on their superannuation contributions, they would pay 30 per cent tax and not 15 per cent tax.
LEIGH: That's right. They're getting the same tax break that somebody on $80,000 does, but they’re not getting more. And there you're talking about the top 300,000 Australians or so.
GREENWOOD: The government has today indicated that those people who take a break from the workforce – that if the Labor Party at its word is what Bill Shorten announced today – were implemented, it would take away significant benefits in particular for women who take breaks form the workforce. Is there any compromise on this, because that's certainly not a part of what you have announced today?
LEIGH: You’re referring there to Labor’s opposition to the catch-up concessional superannuation contributions?
GREENWOOD: That’s exactly right. Yes.
LEIGH: Yes, we've looked pretty carefully at this, Ross. The AFSA estimate is that the number of people who'd benefit from those is fairly small – around 230,000 Australians. It's been sold as a terrific gender-equity measure, but many of the experts are really raising an eyebrow or two about that. It’s something that is unlikely to close the gender gap on superannuation. Compared to, for example, the low-income superannuation concession, which does a lot more to narrow the gender gap in retirement savings.
GREENWOOD: Bottom line about this – do you believe that there is genuine room for compromise between the government and Labor to be able to get a workable system through that sets ground rules that are very defined, are very clearly set out, that are there for the longer term? Because this is the fundamental problem that people have with superannuation in this country – the rules keep changing and people lose faith in the rules. If both sides of our parliament were to agree, then there would be more certainty. People would understand there is almost a bipartisan approach to this.
LEIGH: Absolutely, Ross. We certainly recognise that need for certainty and the need for bipartisanship, and Bill Shorten spoke very articulately about that in the Press Club today. But we also have to do something about the fact that these superannuation tax breaks are growing so fast and that such a large share of them are going towards the top. The top 1 per cent get more superannuation tax concessions than the whole bottom 40 per cent put together. So we need to change them, but you're absolutely spot on, we need to have a bipartisan conversation about slowing down the pace of change until we've got certainty in our retirement savings system. And we're trying to bring certainty too of course, by arguing that the government shouldn't make retrospective changes. We're saving them from themselves.
GREENWOOD: The other thing also that Bill Shorten mentioned today. He went through this during the election campaign, which you could argue, even though it was by a wafer-thin minority – it still was rejected by a majority of people in the Australian electorate – that was the crackdown on negative gearing and also the clawing back of the discount rate on the capital gains tax. Now certainly, according to Bill Shorten, that would bring in $37 million over ten years. But the fact of the matter is, it was rejected at the polls. So why would it be brought back now as a government policy, given the fact the people have rejected it at the polls?
LEIGH: Ross , the election was essentially a 50-50 election so let's not carry that one too far. The reason the government should accept it because it's good policy. The majority of economic experts recognise that the combination of a gains tax discount and negative gearing have worked together to make Sydney and Melbourne in particular among the most unaffordable cities in the world. We risk having a whole generation of young Australians who are priced out of the housing market. We've had a fifty per cent increase in house prices in those cities just in the last few years. Increasingly I'm meeting young couples at my street stalls who are tearing their hair out and saying we can't raise a family and buy a house. That's not the Aussie dream if we're going that way.
GREENWOOD: The one thing I think people might agree with you is on caps on VET FEE-HELP loans. Capping them at $8000 per year, which would bring some $7.9 billion over 10 years. But the real issue here, many people are arguing, is in particular with private education facilities is that it was in fact a Labor government that let that genie out of the bottle, which now could cost the taxpayers potentially some $300 billion dollars I think, it could eventually get out to once all those loans are added up and the private education system has got completely out of control
LEIGH: Most of this debt has been taken on in the period since the Coalition came to office, but let's not point fingers. Let's actually do something about it.
GREENWOOD: No because it was your policy. Even though they’ve let it go. They’ve had to try and fix it up. It was certainly a Labor policy, I think we’ve got to agree on that?
LEIGH: It was a bipartisan change. We've been urging the government for years to crack down on the shonks. The fact is, putting on a cap is an effective way of cracking down on some of the shonks and the sharks in the VET sector and making sure that the reputable providers are able to compete in that space. We don't want VET FEE HELP providers to be luring people in with the promise of free iPads, we want them to be attracting people with the promise of great education.
GREENWOOD: No doubt about that. Tell me, if you were a betting man Andrew Leigh, and we came back and had this conversation in 12 months’ time, how much of this legislation gets through?
LEIGH: I reckon if the government is serious about good budget reform they will support this. If you care about inequality, you care about boosting living standards, you care about housing affordability, and this is a solid positive package. We've come out just a couple of weeks after the election which shows how serious we are about policy.
GREENWOOD: And of course the Labor Party similarly would be all in favour of the government’s own solid policies if they were to come out as well?
LEIGH: If they're putting policies which we took to the last election, we're absolutely happy to support those Ross-
GREENWOOD: So that $6 billion of cost savings that you actually put in there at the last election? You'd be willing to support those if the government were to put them up – which they will – in the first week of our new parliament?
LEIGH: If the government puts up measures that we took to the last election we will absolutely support it. But right now they're going around the place saying, "will you support this bill, but, by the way, we can't show you the legislation." Show us the legislation, we'll tell you whether or not we're going to support it. But our principles are consistent.
GREENWOOD: Andrew Leigh, Shadow Assistant Treasurer, I've got to keep on moving. I appreciate your time on the program.
LEIGH: Thank you, Ross.