2GB MONEY NEWS
MONDAY, 22 APRIL 2019
SUBJECTS: Barnaby Joyce’s $80 million water buy back; Labor’s plans to crack down on tax havens; Facebook scare campaigns; negative gearing; Labor’s plans to give everyday Australians a pay rise.
HOST: Somebody who’s always great with his time here on Money News, the Shadow Assistant Treasurer Andrew Leigh, who is on the line right now. Many thanks for your time, Andrew.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Always a pleasure, Ross.
HOST: Look. I want to start in regards to Labor today giving a hint that it might set up a royal commission into water buybacks under the Murray-Darling Basin Plan. Now it's interesting, I had a yarn with Clive Palmer a week or so ago and there's two areas that he says he believes with all of his advertising he's gaining votes. One is in the very north of Queensland, in the coal mining areas where Adani is controversial, and of course the CFMEU is urging Labor to get on with building Adani. The other place he says is in the Murray-Darling Basin, where he believes he's actually taking votes off the Nationals. Why would a royal commission into water buybacks be so important for Australia?
LEIGH: We need to first see where the department comes back to with regard to the questions that we've asked. As Tony Burke said, we've put a number of questions to the department about why they seem to have paid Versace prices for a Reject Shop product. It looks as though they've been not only dealing with a company headquartered in notorious tax haven, the Cayman Islands, but also on the face of it significantly overpaying. We've said to the department we want answers on that within the next 24 hours and certainly a royal commission remains on the table.
HOST: So this is the company, Eastern Australia Agriculture. This is a company that Angus Taylor, who is the Energy Minister, was the director of. He helped to set that business up. Then subsequently a deal was signed off by the Agriculture Minister - the then Agriculture Minister, Barnaby Joyce. No tender process, at $2,745 per megalitre, $545 per megalitre higher than a price previously offered. But the real issue here is that that company, it's claimed, was based in the Cayman Islands. Is that correct?
LEIGH: It's absolutely correct. It's not a claim. You can see it from the Cayman Islands share registry. You know Ross, if you were setting up a company called Eastern Australian Irrigation, would you choose to set it up in the Cayman Islands? Doesn’t seem the natural location, doesn't seem that's where it's likely to do most of its business. It seems the only reason you'd set it up there is for the tax advantages that that jurisdiction provides.
HOST: It's actually interesting, you know, we had a quick look today. Did you realise that they restructured late last year and as of 19 December last year, it's now a subsidiary of Eastern Australian Cropping, which is wholly owned by a Canadian company. So whatever’s taken place here, because it certainly was connected with the Cayman Islands entity, the question I think many Australians would ask here is why is it that there are water buybacks going to an organisation that is or was based in a known tax haven? That would be something most Australians would really have question marks about.
LEIGH: Absolutely, and we know that tax havens are causing real problems for the global tax system. About two dollars in five of multinational profits now flow through them. These are jurisdictions which often don't comply with other countries’ tax laws. One estimate suggests that about 80 per cent of the money sitting in tax havens is there in breach of other countries’ tax laws. And when you're in tax havens, you're rubbing shoulders with some of the most questionable characters around - drug runners, extortionists, Al-Qaeda uses tax havens. So, one of the reasons Labor has said in our multinational tax plan that we have to crack down on tax havens isn't just the fact that they're hurting the global revenue, it's also that they’re a clear and present security risk.
HOST: OK, but in this particular case, it's an $80 million water buyback. It's not, it’s not in the whole scheme of things - it's, like, big numbers for you or me, for any normal person in the street, but it's not massive in the scale of the economy. Is a royal commission overkill in that type of situation?
LEIGH: What we want in the first instance, Ross, is answers. I mean, Barnaby Joyce seems to have gone off and got the lowest quality water he could at the highest prices possible. We need to know why that price was paid, which seems to be significantly out of whack with what would normally be paid in the market.
HOST: Ok. Let's go to a couple of other issues now. Facebook - there’s been a campaign around the place suggesting that Labor somehow is seeking to reimpose death duties or death taxes in Australia. Now, Labor's now demanding that Facebook investigate and bring down these so-called fake news posts in regards to suggestions it will introduce a death tax on inheritances. Given the fact that the Greens have a stated policy of wanting to reintroduce some sort of estate duties when a person dies, is there not perhaps a linkage here that if Labor has to do a deal with the Greens that that might become something more politically popular in the future?
LEIGH: None at all, Ross. Inheritance taxes died at the federal level 40 years ago in 1979. Labor has no plans to bring them back.
HOST: You have no plans to bring them back. You did of course write a piece in The New Matilda, which was in 2006, entitled ‘bring back the inheritance tax’. Your view has changed since then, I presume?
LEIGH: 13 years ago I was an academic floating ideas. Now, as a policymaker, I've been asked repeatedly my views on inheritance taxes, death taxes over the years. I've always said I don't support them. Labor doesn't support them. A Labor Government will not reinstate inheritance taxes.
HOST: So you’re suggesting whoever it might have set up this sort of Facebook posts, suggesting that there was a death tax might have been on the Labor agenda, might not have been dissimilar in some ways to the ‘Mediscare' campaign in the last election?
LEIGH: Let’s call it for what it is: it's a lie. It's a lie, pure and simple. What we are doing-
HOST: -That’s what you could argue about the ‘Mediscare' campaign, it was the same thing. But I mean, you know, two wrons don't make a right. I get that 100 per cent, but it is still a situation where clearly you've got to call these things for what they are when they're out there. You're saying it's not going to happen. There is a scare campaign which is sitting out there, somehow these things get into the political agenda rightly or wrongly. People have to defend them and come out and knock them down when they can.
LEIGH: Well, what we did with Medicare was we pointed out that the Government had frozen Medicare rebates, that they had cut into Medicare, that they had set up a review of Medicare and then they're surprised when we draw attention of those facts. The simple truth of Medicare is it was opposed by the Liberals for many elections and every time the Liberals get in they seek to shave off Medicare. Every time Labor gets in, we seek to make it better. And that was simply being upfront with the Australian people. This current campaign being run on Facebook by the Liberals has no basis whatsoever in fact.
HOST: Just another one on the negative gearing. A lot of our listeners will be interested to know where Labor right now sits on it. There was a lot of movement last week in terms of information. There was a significant amount of the policy that was taken down from the Labor Party's website. Now clearly many people in the property industry and those people in the mortgage broking industry believed that Labor had its numbers wrong in terms of the number of new properties that property investors finance through negative gearing. Was it a case where the maths was wrong? You needed to recalibrate that? Or is it something else that's caused much of that policy to disappear from the Labor Party website?
LEIGH: No, not in the least, Ross. I mean we have the virtue that this is a policy we announced before the last election and so the fact sheets that were up there on our website were dating back to prior to the 2016 election. So we needed to update those, for example, to be clear that the start date would be 1 January, 2020, if we were to win the next election and naturally existing investments aren't affected by either our negative gearing policy or our capital gains tax policy. We stand by our costings. They’re done by the Parliamentary Budget Office, which has the same credibility as a coster as the Australian Treasury does. They have access to data that isn't available to some of the sectional interests who are putting out their own claims. The Parliamentary Budget Office are confident about their costings of our policy and we're confident in them as an institution, and the Liberals should be too. I mean, after all, they used the Parliamentary Budget Office when they were in opposition.
HOST: Just as you would have done this year - you must have worked this out as the Assistant Treasurer - just what number of properties do you believe, brand new properties, are financed using negative gearing? Because the numbers have bounced around the place. The industry says it could be up to 40 per cent. We've heard from your side of politics it could be 7 per cent or 12 per cent. It has moved. Do you know what the number is?
LEIGH: Look, there's a variety of numbers that are around there. All of them suggest that the vast majority of people using negative gearing are purchasing existing properties. So, if you think of this as a policy which is aimed at boosting housing supply, most of those taking advantage of negative gearing aren’t adding to housing supply right now. So we've said that from 1 January next year, you'll still be able to negatively gear with a new property, so long as you're adding to the housing stock, that it's a new built property. Right now, those are a minority of the total negative gearing purchases.
HOST: OK. So, this week the Labor Party is going to concentrate on wages and the fact that Australians cannot get a wage increase. Just an interesting thing - can you, I know that Bill Shorten in the Budget in Reply speech said that Labor believes in a living wage. Just one question: does it believe in the same living wage that the ACTU does? Because according to the ACTU, it wants a living wage that would be around about $41,000 per year on my assessments. But it seems that somehow Labor and the Labor leadership has got a different view of what a living wage is. Can you explain whether it's different, your policy, to what the ACTU is?
LEIGH: Business, unions, community groups will all put in their own submissions, and ours will invariably take a different angle from that of the union movement, but we’ll argue for a strong increase in wages because wages growth has been lacklustre. Since the last election, we got profits up 39 per cent but wages only up 5 per cent. 5 per cent over the course of three years, Ross. This is hurting into retail sales, which are in the doldrums right now. New car sales were down in 2018 compared to 2017. The Reserve Bank Governor says Australia's got a challenge with household income growth and he slates that straight back to wages. So, a living wage is important to us, as is ensuring that labour hire isn't used to undercut wages, restoring penalty rates which many people should have been earning more of over the Easter weekend and making sure that we’ve got our tradie pay guarantee there so tradies who do the work on time get paid on time.
HOST: OK, but just to jump back in there again on the ACTU. Remember that their version of it is 60 per cent of the median wage which, median wage when you look at it, it ends up being $41,000 a year. But you're saying even though you believe in a living wage, you don't believe in the ACTU’s version of the living wage - is that correct or not?
LEIGH: We’ll take soundings from industry, we'll hear a range of points of view and we'll certainly engage across the community sector, but-
HOST: -But I’m, just think about the term living wage, because it's actually been said ‘we believe in the living wage’ in the budget in reply speech. Right. So that's been said, but a living wage is by definition 60 per cent of the median wage. So do you believe in 60 per cent of the median wage, which is what the ACTU says, or is it something different?
LEIGH: That’s one definition, Ross, and we’ll consult with unions, but also with community sector and with business. We want to make sure that we get it right, but we'll put in a strong submission on behalf of the 2 million workers who are earning those minimum award wages at the moment. We think they need a stronger pay rise. We know they're not getting their share of productivity growth. you've got productivity growth rising four times faster than wages right now and that's in a context in which we could get productivity growth faster in the country. So those workers will see a better deal under Labor. They'll get bigger pay rises under Labor as a result of us arguing strongly for minimum wage increases.
HOST: So, alright. Always good to have you on the program, you're always very, very good with your time. The [Shadow] Assistant Treasurer Andrew Leigh on Money News this evening and Andrew, I appreciate your time.
LEIGH: Likewise, Ross. Thank you.
Authorised by Noah Carroll ALP Canberra.