THE LATEST WITH LAURA JAYES
WEDNESDAY, 13 APRIL 2016
SUBJECT/S: Malcolm Turnbull’s deficit disaster and warped priorities; royal commission into the banking and finance sector; Road Safety Remuneration Tribunal.
LAURA JAYES, PRESENTER: I spoke to the Shadow Assistant Treasurer Andrew Leigh this afternoon, and began by asking him why now is no longer a good time to implement a company tax cut.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Laura, the cost of a company tax cut is very large. Over the course of a decade it would cost around $35 billion in order to cut the company tax rate for big business. Our view is that if that money is going to be met by cutting services or by borrowing more money, then it doesn't make a lot of sense.
JAYES: But this was Labor's policy and you do see that there is a growth dividend in cutting company tax, so why not look at that growth dividend now?
LEIGH: Labor always aspires to have tax rates as low as they can be in order to deliver the services we need. But right now, Laura, we have seen the deficit go up massively under this Government. The deficit for this year alone has gone from $5 billion to $37 billion, it has more than sextupled. So when the Government is blowing out debt, blowing out deficits, the idea that they should borrow more money in order to give a tax cut to some of Australia's biggest firms seems a little strange to me.
JAYES: So Labor's policy is no longer to look at cutting company tax, is that correct?
LEIGH: What Bill Shorten said last year was an aspiration for bringing down small business rates. Right now though, we have got deficits running out of control under this Government. They used to drive debt trucks around the country. Frankly, they would need debt ocean liners these days given what they have done with blowing out the debt. That then means that it is important to choose our priorities. The Government says it can't afford to fund our schools properly, it can't afford to put money into hospitals to reduce waiting lists for elective and emergency procedures. And yet at the same time they seem to want to give money to the big end of town.
JAYES: Can Labor put a timeline on it?
LEIGH: We have to see what happens to the Budget numbers. The budget blowout under this Government has been massive. They want to spend $160 million on a taxpayer funded plebiscite on marriage equality which many of their own MPs have said they will ignore. They want to reinstate the Baby Bonus. They want to keep on giving money to polluters in a slush fund approach which we know is not going to reduce Australian emissions. Labor would make sensible saves. We also recognise it is really important for Government's to prioritise what tax changes they make. We don't believe company tax cuts for big businesses should be a priority right now.
JAYES: But Labor, you'd agree, also have huge spends on the agenda as well. Yes, you have outlined some revenue raising and savings measures as well, but every single poll shows that one of the biggest single problems for Labor at the election is your economic management. So you have a serious issue with overspending, so when are we going to see some of these spending cuts and to add to that we haven't yet even seen the cost of an emissions trading scheme.
LEIGH: Laura, we are pretty confident in our economic record which goes back to the reforms under Hawke and Keating, and back to saving Australia from recession when the Global Financial Crisis hit. Over this course of parliamentary term, Bill Shorten, Chris Bowen and the economic team have made some tough calls. On multinational tax we were out in the first half of the parliamentary term with a plan which is economically responsible, but also raises $7 billion over the course of the decade. We have put plans on the table around superannuation, reining in some of those unfair and unsustainable superannuation tax breaks, and also in closing loopholes which support property speculators over first home owners. The measures that Labor has announced go to more than $100 billion, and allow us crucially to answer the question where Labor gets the money from in order to improve our schools and hospitals.
JAYES: If I can ask you now on the banking royal commission, we heard from the head of ASIC, Greg Medcraft, and he says that essentially the cuts that were seen under the Abbott Government have hurt the regulator, which means some of the issues they wanted to look into, they've had to re-prioritise things; and also wanting to see some of the recommendations out of the Murray review fast-tracked. Now, beside a royal commission, are you willing to entertain those two suggestions?
LEIGH: Certainly the cuts to ASIC's budget, the $120 million that was taken away from Greg Medcraft by the Abbott-Turnbull Government, has made it harder for them to go after corporate wrongdoing. It is also the case that the same time as the Government thinks it is alright to put in place a royal commission looking into union who support low-paid workers, they are unwilling to have a royal commission to deal with banks who have systematically had a range of scandals come out.
JAYES: If I could put it to you, Andrew Leigh, not even Bernie Fraser supports a royal commission. He says he wouldn't be rushing into it because basically the problems are pretty clear. More importantly it would take so long for a royal commission to getting to the point of recommending some changes that might actually improve the situation, so even Bernie Fraser is saying is there a better way to do this?
LEIGH: Laura, I have got a huge amount of respect for Bernie Fraser, but I disagree with him on this issue. The call of a royal commission depends on whether or not you think that the scandals we have seen are just bad apples, just some individuals making mistake, or whether it is more systematic than that. What I am concerned about is that our big banks collectively go to the international capital markets for more than half a trillion dollars every year. They get that money not because they are ranked in the top couple of hundred banks worldwide, but because they ranked in the top 20. Their reputations are second to none. Australia's banks need to be like Caesar's wife - above reproach - in order to get that money at reasonable rates overseas. If they don't get that, then that drives up the cost of mortgages for all Australians. So the risk is these vertically integrated businesses - the insurance sales, the financial advice, playing on the money markets - are imperilling the reputation of Australia's banks to do their core business of borrowing and lending.
JAYES: So are you saying that some of these scandals are risking mortgage prices going higher?
LEIGH: It is certainly a risk to the reputation of our banks. The money markets overseas are not in general thinking carefully about the distinctions between each of our banks. They regard Australia's major banks as a job-lot, and banks which have an extraordinarily high reputation. Our banks did very well through the Global Financial Crisis. It is critical that we keep the banking sector strong because banking is not just another industry, as you know, Laura. It is the lifeblood of the economy and if you don't have finance being appropriately allocated across the economy, then that immediately impacts on growth and equity in every industry in Australia.
JAYES: Just one final issue, the Road Safety Remuneration Tribunal. It now looks like the Government has well and truly the numbers to abolish this in Parliament when it sits next week. What will Labor do?
LEIGH: Laura, we have just had The Conversation's fact check today say that Anthony Albanese and Bill Shorten are completely right when they say that there is a clear demonstrated link between road accidents and rates of remuneration. We want to make sure truckies are not driving through the night and taking drugs, holding their eyelids open with matchsticks, just in order to scrape together a living.
JAYES: So Labor be fighting against the abolition of the tribunal, is that right?
LEIGH: Absolutely. We don't believe, as Mr Turnbull seems to, that just because you disagree with an individual decision of a regulator, you go out and call for abolishing it. That is an extremist approach more fitting of Cory Bernardi than the centrist that Malcolm Turnbull said he would be. Twenty five people died on our roads in trucking accidents just last month. It is an industry which has a death rate 12 times higher than the Australian workplace as a whole, so we need to look at every way we can of making sure that our heavy vehicle users are safer and that all road users who share the roads with those heavy vehicles are as safe as can be.
JAYES: Dr Andrew Leigh, we thank you for your time.
LEIGH: Thank you, Laura.