SKY PM AGENDA WITH DAVID SPEERS
THURSDAY, 2 JUNE 2016
DAVID SPEERS: As to the substance of the Treasurer's attack today on Labor, let's bring in Andrew Leigh, the Shadow Assistant Treasurer. Thank you very much for joining us this afternoon.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER & SHADOW MINISTER FOR COMPETITION: Pleasure, David.
SPEERS: Now, putting that war-like rhetoric to one side, let's go through what the Treasurer is saying. You are proposing higher taxes than the Coalition is, on businesses small, medium and large, on capital gains, on negative gearing and on high-income earners. That's true isn’t it?
LEIGH: David, we’re with the Coalition on the small business tax cut. Bill Shorten actually led this debate in his budget reply last year. We believe small businesses should get a tax cut, but we don't believe that big businesses should be reclassified as small business.
SPEERS: So you support the tax cut for businesses up to $2 million?
LEIGH: That's always been the definition of small business in Australia David, but the Coalition wants to call billion dollar businesses small businesses. They're clearly not.
SPEERS: Look at what you are backing then. Most small businesses are unincorporated. Will you support the tax cut for them as well?
LEIGH: We’re willing to support the Government as far as small businesses are concerned. We’re not willing to back in this big business tax cut.
SPEERS: This is pretty important. Most small businesses aren't incorporated. Are you supporting a tax cut for them as well?
LEIGH: Yes. We support the Government's measures for small businesses. Absolutely.
SPEERS: Have you costed what that would be? Supporting the tax cut for unincorporated small business?
LEIGH: You'll have all of our costings at the end of the election. You'll have them well in advance of when you got the Coalition's, which was just two days before the last election. Each of those will be costed by the Parliamentary Budget Office, as we've been doing throughout the term.
SPEERS: You are supporting the small business tax break for those up to $2 million – incorporated and unincorporated.
LEIGH: Yes, that’s right.
SPEERS: Now the other measures there. You're not supporting any business two to ten million dollars, which would get a tax cut in the next few years under the Government. Why don't they deserve any tax relief?
LEIGH: You need to look at the budget situation. We've seen the budget deficit triple under this government. We've seen debt increase by $5000 per Australian. Under a government that said they'd have the budget in surplus in their first year and every year after that. And that's forced hard decisions on us. Obviously we would like to see taxes as low as possible in order to fund the services Australians demand. But we don't think it’s the right decision to have a $50 billion corporate tax cut funded by ripping money out of schools and hospitals.
SPEERS: But you do believe we can afford pumping more money into various things, schools in particular. We're yet to see your policies on family payments, on hospitals as well. So we can afford some spending but just not for those businesses?
LEIGH: We're now at the normal length of an election campaign. We'll have our policies steadily rolling out until polling day. This has been the longest election campaign since 1954. It's easy to forget sometimes that we've still got over four weeks to go. You will see a range of policies from Labor, each of them designed to spur economic growth.
SPEERS: Well what will spur economic growth in Labor's policy arsenal?
LEIGH: Sure, let me go through a few of those. In terms of infrastructure, we believe in making cost-benefit analysis the touchstone. We don't believe that using pork-barreling to decide where to spend infrastructure dollars makes sense. In the area of the national broadband network, you'll get better broadband under Labor. And in terms of school funding, Labor's committed to needs-based funding for every child – making sure all kids have the opportunity of a great education. We'll improve our vocational education system and we'll maintain demand-driven funding for universities. All of those will spur growth and frankly they will do it far better than a corporate tax cut on the Government's own figures.
SPEERS: On the Government's own figures, they are saying 1 per cent growth over ten years. So you'll do better than that?
LEIGH: Let's unpack that, David. They are saying 1 per cent GDP growth. But you can also look at the Treasury model and look at how much goes to households and there it is somewhere between 0.1 and 0.7 per cent. Not per year – over the long term. This is a tiny impact on households.
SPEERS: So you'll be able to do better than that?
SPEERS: How do we know though?
LEIGH: You can be confident that the investment in infrastructure will have a bigger pay-off than an investment in company tax and people will...
SPEERS: How do we know that? I mean is there modelling to show that? What's the evidence?
LEIGH: Absolutely. Infrastructure spending has an immediate impact on the economy when you create jobs in the construction phase, and then it boosts productivity. The investments that we made under Labor dragged Australia to number one in the OECD for infrastructure investment, have reduced congestion in Australia and made businesses more productive. We've seen a one-fifth fall in infrastructure spending under this Government and that means not only fewer construction jobs but also less productivity in the future.
SPEERS: So here you are talking about things like the Perth Metro that you want to invest in, and what? Some other transport projects – is that what you're talking about that will deliver this growth – this higher growth – than the company tax cut would?
LEIGH: Absolutely. You've seen a range of infrastructure projects announced by Labor, but you've also seen a principled announcement from Labor that we'd give Infrastructure Australia greater independence – we'd have a bipartisan board. We want to take the partisan politics and the pork-barreling out of infrastructure and really have projects funded based on their bang-for-buck. We've got the third lowest population density in the world, David, so we actually have great potential to make more mistakes than other places on infrastructure investment – to build roads in the wrong places based on pure partisan politics, rather than the right places based on cost-benefit analysis.
SPEERS: Now, superannuation. We've seen the Government – well some issues in the Government this week on this front. What about Labor? Will Labor actually change the policy it announced last year?
LEIGH: We committed to that policy last year. There's three parts to it, let's go through them. There's the low income superannuation contribution, a Labor measure abolished by the Government, and now reinstated under a new name. As my colleague Jenny McAllister put it, if we'd known the only problem that they had was with the name we could have fixed this two years ago! Then we've got bringing down the threshold for the high income superannuation contribution from $300,000 to $250,000. The Government's policy is a carbon copy of ours and we'll support that. The final question is how we deal with taxation in the retirement phase. Labor's policy there isn't retrospective. It involves higher tax rate in earnings over $75,000 than the pension phase, a 15 per cent tax rate rather than a 0 per cent tax rate.
SPEERS: This is the difference, because the Government is saying there should also be a cap on how much after tax you can put into superannuation. You're saying no cap at all on how much after tax you can put into Super. Yes, you'd have to pay 15 per cent tax, but as the Prime Minister points out today that is very concessional. It's a lot less than someone stacking shelves at Woolies pays in their marginal income tax rate, You don't have a problem with that?
LEIGH: Well the Prime Minister has finally come around to the point that Labor has been making for over a year.
SPEERS: But on this, in the retirement phase you're saying you could have millions in your super account and you'll only ever get taxed at most 15 per cent?
LEIGH: Well David, we're consulting on the changes that the Government announced less than a month ago. They didn't do the consultation –
SPEERS: What's your principle on this? There should be a cap or not?
LEIGH: Well our principle is that we're strongly disposed against retrospectivity but we recognise that the Government has come very late to the party in recognising that Australia's superannuation tax concessions aren't fair and they aren't sustainable. What worries us – just as what worries many in the Liberal backbench – is that the Government changes have a retrospective character.
SPEERS: So you could say, a cap will apply, but from today or from a certain date and anything you've put in before that will be ignored.
LEIGH: We are doing the consultations - through Jim Chalmers, Bill Shorten, Chris Bowen - that the Government didn't do before they brought this into place. We'll have those conversations, and frankly what is must disturbing about this is that the Government is looking at back-flipping not because they think they've got the policy wrong but because their donors are up in arms. That says it all about the Liberal Party.
SPEERS: It seems to me that people like a bit of time to digest changes before they actually vote on them.
LEIGH: Which is why we brought out our superannuation policies over a year ago, David.
SPEERS: You still don't know where you're going to land though?
LEIGH: We're consulting on the Government's changes; we're having the conversations that they should have had before they were put into place. This is a Government where economic reform is all about solving political problems rather than actually getting the long-term changes right. You've seen that with tax, when they've jumped from 15 per cent GST to state income taxes, lurching now back to an unfunded company tax cut. You see it again in superannuation. We'll do that careful, consultative work with business and the community to make sure we get the policy right.
SPEERS: Andrew Leigh, we'll have to leave it there. Thanks for joining us.
LEIGH: Thank you, David.