The challenges for the United States - Radio Transcript

E&EO TRANSCRIPT

RADIO INTERVIEW

ABC NEWSRADIO WITH MARIUS BENSON

WEDNESDAY, 23 NOVEMBER 2016

SUBJECT/S: “Trumponomics”; Trans-Pacific Partnership; Sugar Tax

MARIUS BENSON: Andrew Leigh, good morning.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good Morning Marius, how are you?

BENSON: I'm well. "Trumponomics" – entirely unknown in practice obviously at this early stage – but people are seeing and Kim Beazley saw Donald Trump as a very left Republican and particularly they are pointing to this proposal to use the government as the agency to revive the American economy and particularly those rust-belt states. Just on that specific proposal – big government spending – what do you think of the virtue of that for the United  States and for Australia?

LEIGH: The United States clearly has infrastructure challenges, particularly around its airports, but the challenge for them naturally is to make sure that they do that within a reasonable budget envelope. Some of the estimates that I've seen from independent experts put the impact of Mr Trump's tax plan as being between $5,000,000,000,000 and $10,000,000,000,000 additional debt. And that would be a big challenge for the United States going forward.

BENSON: I've seen figures of $5,000,000,000,000, in particular when you add together the proposals for big government initiatives in spending and to reduce taxation, and he's promising at the same time to reduce debt?

LEIGH: Naturally you want to make decisions for the long-term, but the challenges for the United States include dealing with climate change, tackling this huge inequality gap which has been rising and which has seen so many Americans suffering real wage losses over recent years. Many business people have this notion that they'd like lower-paid workers and higher-paid consumers. The problem is that when you move from running a business to running an economy, workers and consumers are actually the same thing.

The United States will benefit Australia most if it's engaged with the world. My real fear with Trumponomics is that these threatened tariffs could well see the United States retreat into protectionism, as it did indeed in the 1920s and 30s, with adverse impacts for Australia.

BENSON: In fact the first practical move by Donald Trump beyond words – well it's just words at the moment I guess – is that he said ‘the first thing I'll do is get rid of that TPP'. The Trans-Pacific Partnership – the trade deal seen by the Government as so critical for Australia?

LEIGH: Well indeed. That's dead and buried now it appears, but also we need to make sure that over coming years we continue to stand for our values. For multiculturalism, for tolerance, for ensuring that the United States is part of the big conversations in the world. We have had periods in which the United States has retreated and they haven't been good periods for Australia.

I'm also surprised that we've seen various business people saying that the best argument for cutting the company tax rate in Australia is that Donald Trump wants to cut the US company tax rate. Frankly our rate, when you take account of dividend imputation, is comparable with other countries in the world. It's close in line, evening ignoring imputation, with some of the biggest economies in the world. The idea that Australia needs to blow out our deficit and threaten our AAA credit rating by cutting the company tax rate is something that would be bad economics.

BENSON: Whatever the merits or otherwise of Donald Trump's program, the fact is that at the moment everyone in the political world is reacting to Donald Trump. We've seen the Prime Minister here for example railing against the elites, Bill Shorten is now the champion of local jobs although at the same time he is calling for reductions in the backpacker tax and so on to encourage international workers, but everyone is trying sound a bit like Donald Trump to those who like the sound of Donald Trump it seems?

LEIGH: Hearing Malcolm Turnbull – our Oxford and Sydney Grammar-educated, harbourside-living Prime Minister – railing against "elites" has been interesting for many Australians. But we need to make sure that we're also not overreacting to Mr Trump. The fact is we just don't know a lot of what this administration is going to pursue and so the best strategy for Australia is to continue focusing on the challenges we know we need to fix. We've seen a 20 per cent fall in public infrastructure investment. The promised roll-out of the National Broadband Network hasn't occurred in the way in which Australians were told it would. That's a big challenge for Australia which will remain regardless of what the United States does.

BENSON: Just quickly on another topic, Andrew Leigh. The Grattan Institute is advocating a tax on sugary drinks being 15 cents more on a can of coke. What do you think of the merits of that?

LEIGH: The Grattan Institute does important work and one of the things I've been struck by over the last couple of weeks is their contribution to fiscal debates, their contribution to education debates, their contribution to health debates. We'll clearly work through the implications of this report. My read of the evidence from other countries Marius, is that you get some significant drop-off in sugary drink consumption but that the impact on total calorie consumption or obesity is much smaller. But we'll work through the detail in a methodical way as you'd expect from a policy-focused opposition.

BENSON: Andrew Leigh, thank you very much.

LEIGH: Thank you, Marius

ENDS

MEDIA CONTACT: TAIMUS WERNER-GIBBINGS    0437 323 390


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