New challenges, new rules for the sharing economy - Sky PM Agenda





SUBJECT/S: Rise of the sharing economy; Budget; Abbott Government’s cuts to pensions

DAVID SPEERS: You'll be aware of things like Uber – instead of catching a taxi and AirBNB – instead of staying in a hotel. This is a huge growth area at the moment. Services like AirBNB where you can go on a website and find a place to stay in thousands of cities around the world and do it relatively cheaply, it has had incredible growth. It has gone from a company worth about $20,000 to now being worth about $10 billion and it's available in 34,000 cities, 190 countries, 25 million guests have used it. Here in Australia, AirBNB has generated $114 million in economic activity in one year alone in Sydney. But it is completely unregulated at the moment, and is it being taxed enough? A lot of taxi drivers will complain that Uber drivers aren't paying a thing for a taxi licence, and they're cutting their grass essentially. Today the Shadow Assistant Treasurer, Andrew Leigh, gave a speech about all this at the National Press Club. He's launched a Discussion Paper and he joins me now. Thank you for your time.


SPEERS: This is a fascinating area, because it's a growing part of the economy here and around the world. But potentially it's not really regulated at all at the moment.

LEIGH: That's certainly the challenge, David. And I thought you did a really nice job in your intro there in talking about the sheer growth of this sector. 

SPEERS: Well, I pinched a lot of your numbers.

LEIGH: Just to give you a couple more: one in 10 Sydneysiders has taken a ride-sharing ride, despite Uber having launched there less than a year ago. One in 300 Australian homes are currently listed on AirBNB. So we see the possibilities of this being good for consumers. But Labor is also concerned to make sure that workers are looked after and that we have the appropriate public safety protections that really allow this industry to flourish.

SPEERS: Ok, well there's a couple of things there: public safety; workers being looked after as well; what about the taxman? Is the taxpayer collecting much from this economy at the moment? I mean if my next door neighbour is letting out a room or two, are they paying any tax on the income they're collecting?

LEIGH: They're certainly obligated to pay GST if they turn over more than $75,000 a year, and they're obligated to declare their income through the income tax system. 

SPEERS: Is it more of a cash-in-hand business?

LEIGH: This activity is mostly taking place through online platforms and apps which are almost entirely dependent on credit cards. So there's certainly a trail there in place. But one of the reasons Labor wants to get engaged in this conversation is exactly because of those issues you're raising. We launched a Discussion Paper today because we want Australians to have their say on the new economy. The last thing we want to do is to stifle the potential of these new technologies to make Australians better off. But we're also aware that, for example, 10 per cent of taxis are meant to be disability accessible. We won't want to leave people with disabilities standing by the kerb as the new economy accelerates.

SPEERS: So if you did those things: introduced regulations around so many cars have to be wheelchair accessible, the people driving them are entitled to this amount of leave and this amount of superannuation – are you essentially moving towards a licence system like taxis?

LEIGH: I don't want to pre-empt where we're going to end up. There's a range of ideas people have put on the table as to where this goes. The Victorians have launched discussion papers about the future of the taxi industry; New South Wales and the ACT are also looking at reforms. You can see the impact in somewhere like New York on the price of taxi licences. Sydney taxi licences are down 10 per cent; in Chicago and New York they're down 30 or 40 per cent already. So for these industries, they're being disrupted by business models such as Uber and Lyft. Labor wants to make sure that we get the benefits to consumers without the risks of an unregulated wild west.

SPEERS: What about for residents? Just getting back to the AirBNB example – I'm sure people will be keen to have input into the Discussion Paper on this. If you live in a nice apartment block, in a nice part of Sydney or Melbourne or Canberra and the next door neighbour is letting out the apartment a lot, that has an impact on your life, on the apartment block. What rights does a person have in that apartment block?

LEIGH: There's body corporate rules which will apply to many of these apartment blocks. That's an approach that some people have used. But I think it's a little unsatisfying for many people because these body corporate rules were written in a pre-AirBNB era where people just didn't envisage we'd have one in 300 homes listed on the internet.

SPEERS: So new rules actually are being written into the body corporate rules? That you can or you cannot do this stuff?

LEIGH: Some of the body corporates are certainly updating their rules. But I think, too, it's a conversation that state, territory and local governments want to be a part of. They recognise the potential of this. By my estimate there are nine million spare bedrooms in a country of 24 million people. We have house prices going through the roof and yet for every three Australians there's a spare bedroom. So we ought to be able to use these technologies to tackle the big challenges in Australia: traffic congestion, housing affordability, cost of living. But at the same time we need to make sure that the amenities of someone in a secure apartment aren't hurt by their neighbours renting out an apartment and having wild parties all the time.

SPEERS: It is a very interesting area to have a discussion about. Let me bring you to today's to-and-for in the parliament. The Treasurer has given a slideshow presentation to the Coalition party room, in which he said – amongst other things – we will get the budget back to surplus as soon as possible. No longer nominating a date. Does Labor agree with that?

LEIGH: It's an extraordinary turnaround for the Government. The Coalition were saying first of all that they'd have the Budget back to surplus in their first year, then in their first term, then they said they'd do it in the foreseeable future, and now it's gone off to the never-never. For a group of people who campaigned on a debt truck to now say that a 50 per cent debt to GDP ratio is reasonable is an extraordinary about-face. 

SPEERS: What do you think though – do you think that's too much debt? 50 to 60 per cent?

LEIGH: I certainly think Australia needs to move back into balance. 

SPEERS: But when is the key. It's all well and good to say that. But if you're critical of the government for pointing to debt levels of that scale, when do you think we should be back into surplus? What level of debt do you think is appropriate?

LEIGH: I certainly think we ought to be putting in place savings measures that move the budget back into surplus. We've proposed a plan to tax multinationals fairly. It would add $2 billion to the budget bottom line and it's fair. It is based in OECD work, costed by the independent Parliamentary Budget Office, and Labor will back it if the Government brings it to the parliament.

SPEERS: What about the pension? Is 70 the new 64?

LEIGH: Certainly life expectancy is going up and at any given age people are healthier than they were. But for Scott Morrison to think that it's reasonable to halve the value of the pension by mid-century is an extraordinary thing. If the Coalition had said to the Australian people, before the last election: we're going to break the link between productivity and the rate at which pensions rise, many pensioners would have said: that's outrageous.

SPEERS: What about, specifically, lifting the pension access age to 70 – not now but in, say, 20 years’ time?

LEIGH: It hits the most vulnerable in two ways. The first is that the most vulnerable tend to live six years less than the most affluent. So they have six years less access to the pension. 

SPEERS: But we're all living longer and healthier lives.

LEIGH: You can't just look at the average here, David. You've got to think about the distributional impact. If you're a bricklayer who has been working since your early 20s, it is darned hard to keep working from ages 67 to 70. When the Government says that they don't want to fairly tax people with more than $2 million in their superannuation accounts and yet they want to halve the real value of the pension by mid-century, then that's at odds with the egalitarian Australia I know and love. 

SPEERS: Andrew Leigh, we will have to leave it there. Thank you for your time today.

LEIGH: Thank you David.     



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