The country can't afford a big business handout - Transcript, ABC RN Drive

E&OE TRANSCRIPT

RADIO INTERVIEW

ABC RN DRIVE

MONDAY, 26 MARCH 2018

SUBJECTS: Dividend imputation reform, Malcolm Turnbull’s $65 billion handout for big business, cricket.

PATRICIA KARVELAS: All signs seem to point to pensioners being given an exemption from Labor’s plan to scrap tax refunds given to some shareholders on dividends. The Opposition has been under attack from the Government since announcing the policy for the effect it would have on retirees, though it’s so far ruled out any changes. But in an apparent change of heart, Labor is shaping up to exempt 200,000 plus part pensioners and 14,000 full pensioners from the policy. Andrew Leigh is the Shadow Assistant Treasurer, welcome to the program.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks, Patricia. Great to be with you.

KARVELAS: So how are you going to protect pensioners from the adverse effects of this imputation tax policy? What are you looking to do?

LEIGH: Patricia, the first thing to do is just to take a step back and look at what we’ve announced with this policy. This is a policy which is designed to curtail a uniquely Australian tax concession, which has turned the Tax Office into an ATM for multimillionaires. We have the unusual situation of people with many millions of dollars in their superannuation accounts receiving cheques from the Tax Office. Now most of your listeners driving home will be in the position where they think at the end of the year ‘how much tax am I going to pay’. But this cash refundability, introduced in 2000 at the peak of the first mining boom, is a system which is not only inequitable but doing nothing for growth in Australia. So that’s why we’ve announced this policy, to bring some integrity back to the imputation.

KARVELAS: Ok, so you’ve given me the sales pitch for the policy. I’m asking about the exemptions. Are you looking to exempt pensioners?

LEIGH: We’ve already said we’re exempting charities, we’re exempting not-for-profit institutions and Patricia, we’ve been facing down a scare campaign from the Government which has relentlessly sought to mislead by looking at taxable income.  The taxable income-

KARVELAS: Sure, but you haven’t answered my question. You’re going back to the policy and I respect that you want to explain your policy, but I’m asking if you’ll exempt pensioners.

LEIGH: Patricia, we’ll always be a party that looks after pensioners. Pensioners are always going to be better off under the Labor Party than they will under the Coalition. We’ve got a great track record on pensioners – as you know, the biggest increase in the aged pension and opposing the attempt in the Coalition to try to index pensions to prices rather than wages, opposing the Coalition’s attempt to raise the pension wage to 70, opposing the Coalition’s axing of the energy supplement, which is in the Parliament right now.

KARVELAS: Right, so is one of the ways that you could change the policy you’ve announced to create an exemption for pensioners and part pensioners from this policy?

LEIGH: You can certainly speculate on those things, but what I’m saying to you is the policy that Labor has announced has real integrity and I was frankly flabbergasted that rather than being willing to work with us, the Coalition immediately set out running a scare campaign.

KARVELAS: I don’t want to do any speculating. I just want to know whether you’re looking to exempt pensioners and part pensioners.

LEIGH: And I’ve told you that pensioners are always going to be better off under a Labor Government.

KARVELAS: So that’s a confirmation?

LEIGH: Labor has a great track record of looking after pensioners. If it wasn’t for Labor, then we would have had worse pension indexation, we would have seen the pension age go up to 70 and the Liberals are still trying to take away the access to the Commonwealth Seniors health card, to make it harder for seniors to go overseas. They’re trying to take away a range of pensioner concessions. The Liberals have, in every budget they’ve introduced, sought to make pensioners worse off. So to run this absurd scare campaign against Labor’s carefully targeted dividend imputation reforms-

KARVELAS: Well, you talk about a scare campaign and we’re all about facts here at the ABC, as you know, so we’re talking about the facts and the facts are that some pensioners and some part pensioners will be affected adversely. That’s a fact from your policy, which is why clearly Labor is now looking at exempting those pensioners, which you haven’t ruled out here in this interview. So with the benefit of hindsight, should you have gone into the policy making that decision, rather than trying to retrofit it later?

LEIGH: Well, I think it’s worth just taking a step back and looking at what the policy does. I mean, if you look at the cash refunds which go to people in self-managed super funds, 90 per cent of that is going to the top tenth of people in self-managed super funds. We’ve had independent analysis saying that on Labor’s existing policy as we’ve announced it 80 per cent of the cash refunds are going to the people in the top fifth of distribution. As I’ve said, Patricia, this is a loophole which isn’t doing anything for economic growth right now. I would love to see a more strongly growing Australian economy after a year in which the economy has basically been stalled. We need to think about ways of ensuring that our tax concession system drives growth, while also maintaining equity. This tax concession is doing neither of those things.

KARVELAS: So if you were to exempt pensioners and part pensioners, how much would it affect the amount you’re planning to save with this policy?

LEIGH: Patricia, I admire your diligence on focussing on this issue. What we can certainly say is that the vast majority of the revenue that is raised from closing this uniquely Australian tax concession comes from those in the very top. The impact on full pensioners, less than one per cent affected. Part pensioners, less than one in ten affected. This is a tax loophole which is unusual and frankly, many of your listeners probably didn’t even know that the Australian Tax Office was writing cheques to a group of multimillionaires before Labor announced the policy.

KARVELAS: Of course, but they’re also writing cheques to pensioners and part pensioners, as they would know.

LEIGH: Indeed and as I’ve said, that’s not to 99 per cent of full pensioners. The Coalition’s care campaign around people with low taxable income ignores the fact that superannuation draw down isn’t taxable. So you could for example have a couple with $3 million in super owning their own home having $200,000 of Australians shares held outside super. They might draw down $130,000 a year of superannuation income, $15,000 of dividend income but they’d still be reporting a taxable income of only $15,000 and paying no income tax at all. So you can have quite unusual situations where someone with a taxable income of $15,000 but assets between $3 and $4 million.

KARVELAS: There’s news just breaking that Pauline Hanson is doing an interview, saying that she will definitely support the corporate tax cuts. Of course the government still needs an extra two senators we know, but the One Nation party has struck a deal. Given that what's your view in terms of what Labor should suggest, should you repeal the corporate tax cuts if they are legislated?

LEIGH: Patricia, we’re talking about a change which is yet to take effect and were it to take effect, the 25 per cent tax rate for big businesses wouldn't come in until the middle of 2026, more than eight years away and probably three elections away. Labor said that we don't think this is something the country can afford right now.

KARVELAS: So does that mean that if it is legislated, that you are prepared to repeal the corporate tax cut?

LEIGH: Look, let's not get ahead of ourselves. This is something that hasn't even yet passed the Parliament but Labor has argued vociferously against it and indeed, I've got new research published in a the journal Economic Analysis and Policy, which looks at one of the core contentions the Government's been making - that companies that pay less company tax create more jobs. In fact when you look across a thousand profitable Australian firms, it turns out to be the opposite. My research shows on that question that firms which pay an effective company tax rate below 25 per cent are on net shedding jobs. The job-creating firms are those that are paying an effective company tax rate of above 25 per cent.

KARVELAS: So given you've talked about your own paper that you've published today and I've seen that, your instinct would be that you should repeal the tax cuts I’m imagining, given that you think they're useless at creating jobs?

LEIGH: Patricia, this is a hypothetical which is sitting eight years off an advance. Our first priority is to stop the government legislating this right now.

KARVELAS: But if you can't stop it and you're running to be the alternative government, people will want to know what you're prepared to do in relation to corporate tax?

LEIGH: Absolutely. But right now, the notion that we're going to rip money out of Australian schools, raise taxes to the order of some $400 for a worker on $70,000 in order that we can give a large give away to foreign shareholders just seems absurd. We've seen over the last two years that Malcolm Turnbull has been Prime Minister that corporate profits increase 32 per cent, wages increased four per cent. So what does Malcolm Turnbull want to do? He wants to give a company tax cut to big business and cut penalty rates. That's exactly the wrong prescription to get growth going and to bring down inequality in Australia.

KARVELAS: Just on another issue that no doubt you are all over, as we all are in this country. You do some work for the Indigenous Marathon Project, what kind of message is the Australian Cricket team sending young sportspeople across different disciplines of sport?

LEIGH: I think of that old Bill Woodfull line from 85 years ago when he says ‘there's two teams out there and only one of them is playing cricket’ and you never want that notion to be applied to Australia. It's such a reminder that in cricket, as in so many other sports, how you play the game really matters. The Indigenous Marathon Project is a great example of building sport as a way of instilling ethics in young people. As a marathon runner, I've learnt a huge amount from running alongside Deek and the Indigenous Marathon Project charges. We organised a sports forum last Friday with Heather Garriock, Sue Read and Rob de Castella at the University of Canberra to talk about some of these challenges of balancing sport and a good life for young Australians. It really saddens me when we see our sporting stars falling short because you know what that means in the heart of so many sportsmen and women around Australia.

KARVELAS: Many thanks for your time tonight. Andrew Leigh.

LEIGH: Thanks, Patricia. Great to be with you.

ENDS

Authorised by Noah Carroll ALP Canberra


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