Tony Abbott has announced that he wants to radically alter the relationship between the federal government and Australia's states and territories. In response, I held a press conference outlining why Labor will never back proposals which alter the egalitarian character of our federation.
PARLIAMENT HOUSE, CANBERRA
MONDAY, 27 OCTOBER 2014
SUBJECT/S: Tony Abbott’s plan to increase the GST; boat turnbacks; Abbott Government inaction on Ebola; flawed Direct Action climate plan
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Over the weekend we saw Tony Abbott give a speech on federalism in which he resorted to coded language rather than being straight up with Australians. He talked about increasing the indirect tax burden and raising states' revenue capacity. Let's be honest: when you talk about indirect taxes, you're talking about wine taxes, fuel taxes, car taxes and the GST. What Tony Abbott wants to do ought to cause the hairs on the back of Australians' necks to stand up. Because after bringing down the most regressive budget in Australian history, he now wants to raise the GST. Mr Abbott very clearly wants to engage in the same sort of cheap politics that he did last year. He wants to pretend to Australians that he can deliver better services and not put in place tax increases. But federalism isn't a magic pudding. To the extent that Mr Abbott is promising more payments to one state, that's got to involve taking away from other states. Federalism is a fundamentally egalitarian institution, and Labor is going to work to prevent more unfair cuts being put in place through the excuse of a federalism review. Happy to take questions.
JOURNALIST: What's your view on increasing the GST?
LEIGH: Labor's view, and in fact, Tony Abbott's view at the last election, is that the GST should not go up because it is a regressive tax. If Mr Abbott wanted to campaign for a higher GST, then he had the chance to do that before the last election.
JOURNALIST: How do you think the states will respond?
LEIGH: What we're seeing is states having $80 billion ripped out of them. Funding to the states for health and education went down by $80 billion in the last budget. Very clearly, what Mr Abbott is trying to do is to starve the states into submission so that they go along with what the Liberal Party has always wanted, which is a higher GST.
JOURNALIST: Tony Abbott asked the Labor party to have a sensible discussion about this, but it sounds as though the debate will still go very much along partisan lines?
LEIGH: We're always up for a sensible discussion on tax reform. The Henry Tax Review was an important piece of tax policy. Let's remember too that pricing carbon and cutting income taxes was textbook economics - higher taxes on pollution and lower taxes on work. Mr Abbott has reversed that since coming into office. This Government likes to talk about its reform credentials, but when it comes to serious tax reform, Mr Abbott couldn't go two rounds with a revolving door.
JOURNALIST: Do you agree with Richard Marles’ comments that the boat turnbacks policy is working?
LEIGH: Labor's concern over turnbacks has always been primarily about what it does to Australia's relationship with Indonesia. President Jokowi used his first interview with the Australian media to raise concerns about Australian naval incursions into Indonesian waters. So our policy on turnbacks hasn't changed, we remain concerned about its impact on the relationship with Indonesia, which is a vital one for Australia's security and prosperity.
JOURNALIST: You said before the election that the policy couldn't be effected and wouldn't work – has that view changed?
LEIGH: We've always been concerned about the impact on the diplomatic relationship.
JOURNALIST: But does it work? We've seen it be enacted, and now it seems you're admitting it works as well. So you were wrong, weren't you?
LEIGH: Labor's concerns over the diplomatic impact of turnbacks have been realised in all of the statements that Indonesian officials have made, both during the Indonesian presidential debate and now through the new President's interviews with the Australian media. Our policy on turnbacks hasn't changed. We do remain deeply concerned about its diplomatic impact.
JOURNALIST: If those concerns were addressed, would you support Labor keeping the policy past the next election?
LEIGH: We've always supported policies which prevent people drowning at sea. Our policy on turnbacks hasn't changed. We remain committed to policies that save lives, but deeply concerned about a policy which is doing harm to our diplomatic relationship with Indonesia.
JOURNALIST: We've had another Ebola case where the initial tests have proved negative, is that a relief?
LEIGH: It is. But it's also a timely reminder that this Government has had its head in the sand about one of the greatest pandemics to hit the globe. We need to contain Ebola at the source, and the Abbott Government's approach of saying that it will act when the disease gets to Asia is the wrong policy. We know from the US Centre for Disease Control that up to 1½ million people could contract Ebola if this disease isn't dealt with at the source, so that means we need Australian personnel dealing with the challenge of Ebola at the source. That requires a more serious commitment from the Australian Government than we've seen to date. We've now got two philanthropists who, on their own, have each given more than the Australian Government.
JOURNALIST: It seems that there'll be a bit of movement on the Direct Action plan this week – if it's passed, is that a good thing for the environment?
LEIGH: We've seen little evidence from any serious economist that Direct Action is going to work. We know that this is Tony Abbott's fig leaf. Malcolm Turnbull was very clear about that after the Direct Action plan was announced, saying that its greatest virtue was that it is readily repealed. Other countries around the world – over 30 of them now – are putting in place prices on carbon because that's the most effective and efficient way to do it: putting a price on pollution rather than taxing households to pay polluters. It seems that Mr Abbott's answer to everything is higher taxes on Australian households.
LEIGH: We've seen little evidence from serious economists that Direct Action is going to work. Point me to a credible international economist who really thinks that paying polluters is going to be better than a straighforward price on carbon pollution. The effective carbon tax of Direct Action is very high. It's just that Tony Abbott isn't being clear with the Australian people about what that is. But if you look at how much tax he has to raise on households in order to get rid of a tonne of carbon pollution, probably the effective carbon tax that is Direct Action is one of the highest taxes in the world.
JOURNALIST: Nick Xenophon wants to see a system where polluters are penalised for exceeding a certain volume of carbon production, and he's suggesting that could be ramped up in the future - do you think that would act as an effective carbon price?
LEIGH: The devil is always in the detail with Direct Action. What are the baselines going to look like? Is the Government actually going to be serious about this? Or is it really just using Direct Action as a fig leaf for a government that doesn't believe in climate change and whose party room members are out there attacking the Bureau of Meteorology over the issue of climate science? This is a Government which is mired in the 19th century when it comes to one of the premier issues of the 21st century.
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