Liberals have debt rising faster now than it did in GFC - Transcript, 2GB

E&OE TRANSCRIPT

RADIO INTERVIEW

2GB MONEY WITH ROSS GREENWOOD

TUESDAY, 27 NOVEMBER 2018

SUBJECTS:  Liberal Party’s big economic announcement…of a Budget date; Julia Banks; Labor’s plans to right the economic wrongs of the Abbott-Turnbull-Morrison Governments.

ROSS GREENWOOD: Dr Andrew Leigh is the Shadow Assistant Treasurer, he is on the line right now. Thanks for your time, Andrew.

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

GREENWOOD: Will this government actually see that May 18 election date? Do you believe, given the fact that had Julia banks defecting to the crossbenchers and now the government does not control either in its own entirety the House of Representatives or the Senate?

LEIGH: Ross, I've been in the parliament for eight years now and rarely have I seen such chaos and dysfunction as what we're seeing today. Julia Banks’ defection was just another episode of any government that's been just lurching from crisis to crisis. This is making Tony Abbott’s reinstatement of knights and dames look like stable and responsible government. Whenever the election is called, we're ready to go.

GREENWOOD: Ok. But the one thing about this that cannot be denied is that the Australian economy and indeed the budget is in good shape right now. You could see it from the Department of Finance numbers came out on Friday last week, you could see it indeed in the forecast that came out from Deloitte Access Economics yesterday. It's a situation where they're saying effectively there is going to be a significant amount of taxation raised. There are more jobs being created. So while yes, the government might be dysfunctional, the truth of the matter is that the Australian economy is in good shape. This is something you could inherit.

LEIGH: The world is growing at the fastest rate seen since 2011’, Deloitte said on Monday, ‘the rivers of gold are running with good news revenues coming thick and fast’. But despite that, we have net debt more than doubling since the Liberals to office. It’s just hit a record high, some $350 billion. That's a large sum of money, probably larger than any of your listeners have the bank accounts. Let me put it in personal terms - that means that net debt per person exceeds $13,000. They've got debt rising faster now than it did in the global financial crisis.

GREENWOOD: But the truth is as soon as you back into surplus, the debt stops or slows down apart, from say infrastructure spending that might be out there. The truth is also one of the big problems, as even say Chris Richardson pointed out last night when he was on the program, election campaigns are very dangerous things for national economies because people tend to promise things that get baked in to the budget and baked into the economy. If times turn down the track, they are not easily taken out of the economy because of political reasons. Would that be something that the Labor Party has to be very careful of right now

LEIGH: I think the coalition has to be much more careful of it. Deloitte’s comment was that the oldest mistake in the budgetary book is to take good fortune of the moment and assume that will keep happening. That's why the Liberal Party’s permanent income tax cuts are such a significant cost to the budget. Meanwhile Labor's changes to tax loopholes, grandfathered most cases, mean that we'll see significant growth in revenues through closing those tax loopholes. Millionaires and multinationals will steadily be contributing their fair share of tax under Labor. We're confident, Ross, that we'll be able to not only deliver bigger surpluses over four years and 10 years in the government but also provide average Australians with more generous personal income tax cuts and ensure we get the spending on schools and hospitals that Australians are crying out for.

GREENWOOD: Their fair share of course is right, because they do already contribute in percentage terms a large proportion of the Australian taxation, as we know in terms of net tax. When people take out their benefits from the government, be it family tax benefits or other forms, that indeed it is people who are at higher income who contribute the most net tax to the government. That's the truth, isn’t it?

LEIGH: That doesn't justify, Ross, that you have tax loopholes that are only available to people who are buying their second, third and fourth house –

GREENWOOD: Oh, yes, look - I agree with that.

LEIGH: - it doesn’t justify tax havens, it doesn’t justify being the only country in the advanced world that provides refundable imputation credits –

GREENWOOD: But if they're the ones who are investing, putting their capital at risk, surely they are the ones who should get the benefit of tax arrangements, tax deductibility, because other people who pay no tax are actually not net contributors to the national economy.

LEIGH: Ross, let me make it personal. I'm in the top couple of percent of income earners. I believe I have a greater capacity to pay than somebody who's on the minimum wage. Not only a greater dollar amount, but a higher percentage.

GREENWOOD: But you do and that's the nature of the beast.

LEIGH: But that gets eroded when you've got tax loopholes that are only available to the most affluent –

GREENWOOD: But the truth if you, as a result of your higher income, therefore go out and create an investment property that is rented to a lower income earner surely that is actually for the benefit of the economy as well.

LEIGH: I can provide a benefit to the economy if I’m investing in a new built home. So that's why Labor's policy quarantines new built homes. Indeed that's the same philosophy that we have with foreign investors. We say that they can invest in the property market so long as it’s new built homes, adding to the housing stock, helping us all. With first home buyers, we say if they want to get the first home owners grant from the states and territories, it needs to be a new built home in most states and territories. We're extending that philosophy to negative gearing. These tax loopholes in some cases do have good justifications behind them, but at a time when the Liberals have doubled net debt in Australia, we need to think through very carefully which of these tax loopholes are serving the Australian interests. And that's the work we've been we've been doing over the course of the last five years as a united team under Bill Shorten.

GREENWOOD: There is no doubt that the team has been united and certainly there's been a situation where there has not been the rifts that you've seen in the coalition. But then the other thing also that many of my listeners would bring up for you and that is if you consider the opposition's policies on negative gearing, on capital gains tax and also on dividend imputation - the excess credits, the changes there. These are all a tax, if you like, on people who put their capital at risk. People who invest in property, people who invest with borrowed money into property, people who invest in shares. These are people who are actually putting capital at risk to invest in areas that may grow for them and so benefit is being taken away. Is this what you're trying to discourage people, putting their capital at risk in order that might grow in the future?

LEIGH: Ross, we'd actually encourage it. When I'm speaking to business audiences - as Shadow Assistant Treasurer I do that all the time – I’ll say to them that at the next election they will face the same company tax rate under Labor or the coalition, but under Labor they'll have the Australian Investment Guarantee which will allow more rapid write off of new investment - exactly that sort of investment you're talking about – over $20,000. I'll point out to them that under Labor, they’ll get an energy policy and our policy has been commended by groups across the spectrum including the Business Council of Australia. Under Labor, they will get certainty and predictability rather than the revolving door of prime ministers that we've seen under the coalition. All of those things are important to creating a strong business environment in Australia. I'm a pro-growth progressive, Ross. I understand we've got to have growth and productivity as a core engine of job creation in Australia.

GREENWOOD: I’ll tell you what, as I said, you believe the government will get to that date in May? Can it actually, can it get that far, do you believe?

LEIGH: [laughter] Ross, who’s to know? If you’d asked me last week I would have said yes, but you look at the decision today with Julia Banks, you look at some of some of the internal kvetching going on among Liberals. They're so focused on fighting one another. Here's one thing your listeners wouldn't have noticed - on the speaking list in Parliament at the moment, there’s essentially no Liberal or National members. They're pulling themselves off these debates when normally you'd expect to see equal coalition and Labor speakers. It's like they've sort of taken their bat and ball and gone home. There certainly is a lot of disquiet in Liberal ranks and clearly would be better for the country were they to go to the election sooner.

GREENWOOD: There you go. Dr Andrew Leigh, the Shadow Assistant Treasure. Always great with his time and Andrew, I appreciate it this evening.

ENDS

Authorised by Noah Carroll, ALP, Canberra.


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