CNBC SQUAWK BOX
WEDNESDAY, 9 MAY 2018
SUBJECT: Budget 2018-19.
MATTHEW TAYLOR: We are joined by Andrew Leigh, he is the Shadow Assistant Treasurer, out here in the courtyard of Parliament House this morning. Andrew, thank you so much for joining us.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: My pleasure, Matt.
TAYLOR: Let’s just kick off on what’s happening geo-politically, because I know we were just having an interesting chat about what’s transpired with the Trump administration and Iran and the implications for Australia.
LEIGH: The IMF has upgraded its growth forecasts and they’re baked into this budget. But one of the things that this morning’s announcement by the Trump administration has illustrated is that for Australia significant global risks remain. Fragility in the Middle East is just one of those. Domestically, I worry about the fact that our household debt-to-income ratio is at an all-time high. I fear that the budget doesn’t put in place enough supports against those risks.
TAYLOR: Let’s talk about the budget. Getting back to a balance a year earlier than forecast, tax cuts for lower and middle income earners – will the Opposition be supporting tax cuts for those earning up to about $90,000?
LEIGH: Yes, we’ll support that first tranche of tax cuts. The second tranche is off in the never-never. Australians would have to re-elect Malcolm Turnbull twice to see the benefits flowing through. But it’s also important to think about what’s not in the budget. We don’t have sufficient investment in our engagement with Asia. Bill Shorten’s opposition has put forward our FutureAsia package which improves corporate boards’ Asia literacy and ensures Australian children are learning Asian languages. This really allows us to spearhead that engagement with Asia that is critical for our prosperity.
TAYLOR: Of course the Turnbull Government's big ticket item is the corporate tax cuts. Is there anything in the budget which would change Labor's view to come out and support these corporate tax cuts?
LEIGH: No, we don't believe the top end of town needs a corporate tax cut. Indeed, Australia's leading economists say it is better to put that money into schools. You see in the United States already, even Republicans like Marco Rubio acknowledging that the first round beneficiaries of their corporate tax cut have been shareholders rather than workers. The promised wage rise in America is just not materialising. Labor's policy is an Australian Investment Guarantee which is three times as effective for incentivising investment, shortens up those depreciation schedules but doesn't bust the budget.
TAYLOR: Of course we get the budget in reply speech tomorrow night from the Opposition, are we going to be hearing anything new? Of course you have already outlined some measures since the election campaign on things like negative gearing, we were just talking about no corporate tax cuts, but what can we expect later this week?
LEIGH: Labor has taken the philosophy of closing tax loopholes. I was very much inspired by my former Harvard Professor Martin Feldstein, a US Republican but who said that closing tax loopholes is both equitable and efficient. You'll see Bill Shorten and Chris Bowen talk about a range of ways in which Labor has looked to close tax loopholes and also our priority to tackle the issue of equity in housing affordability. Home ownership in Australia is at a 60 year low and wage growth is as low as it has been since records began. We need to do more on the equity side, and also ensure that our engagement with Asia is stepped up so we have the productivity growth that Australia hasn't seen in recent years.
TAYLOR: We are out of time but do appreciate your response to the budget this morning.
LEIGH: Great to chat again, Matt.
TAYLOR: Great, thanks so much.
Authorised by Noah Carroll ALP Canberra