MORNING WITH JON FAINE (774 ABC MELBOURNE)
FRIDAY, 10 MARCH 2017
SUBJECT/S: Inequality, Minerals Council of Australia Tax Conference, Housing affordability.
JON FAINE, PRESENTER: There's a big mining conference on in Melbourne today. The Shadow Assistant Treasurer from the federal Opposition - Bill Shorten's federal Labor Opposition - Andrew Leigh is going to go along and tell the mining community that they need to think about equality, of all things. Andrew Leigh, good morning to you.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning, Jon. Great to be with you.
FAINE: Not sure that the mining industry are that interested in hearing about equality, but why does it matter?
LEIGH: I think there's three reasons that the mining community, and indeed the business community more broadly, should care about inequality. One is that more inequality means less wellbeing. If you believe that a dollar buys more happiness for a battler than a billionaire, then you should care not just about the average level of income, but also about egalitarianism.
I think too, miners care about political stability, and we do know that the rise of far-right populism in Europe, the US and elsewhere is partly driven by growing inequality. And the third reasons is that a more unequal society is less mobile society, which we we don't make good use of the talents of all Australians; in which kids born into poverty tend to stay there. So these are all reasons why I think it in the enlightened self-interest of the business community to make equality a higher priority.
FAINE: Enlightened self-interest rarely works. These are people by-and-large in the mining industry - surely who love the bumper sticker that "Whoever has the most toys, wins".
LEIGH: Jon, the example I use in the case of the mining community is to look at how the relationship with Indigenous Australians has changed. It's not perfect today, but it's a world away from where it was in those brutal Native Title debates of the early 1990s. The mining community themselves take great pride in what they had done to reshape their relationship with Australia's traditional owners. If they can do that - which I think is frankly a bigger task than dealing with egalitarianism - then I think it shouldn't be beyond the wit of corporate Australia as a whole to make inequality a first order issue.
FAINE: Have you forgotten about the flatbed truck in Western Australia with then mining industry leaders on the truck killing Kevin Rudd's mining tax?
LEIGH: I think you can argue the toss on particular issues, and I think certainly I'd take a different view on that one. But on the whole...
FAINE: Sorry, on which one? I'm reminding you of the strategy, the tactics, the successful campaign, as an insight into the mindset of that industry.
LEIGH: Absolutely. And I'm not going there today to praise the miners for having made equality a first-order issue. I'm saying they ought to make it a higher priority.
FAINE: They don't want to pay tax, they don't care about tax, they don't care about other people. They showed it right then and there. They care about their industry, they care about their returns to their shareholders and pretty much anybody else's worries aren't theirs.
LEIGH: My argument to them would be: you can't play short-term politics if you're digging mines that are going to have the same lifespan as a human being. I went to Mt Whaleback in Western Australia a couple of years ago. It's got an 80 year effective life. So if you are going to be digging stuff out of the ground for 80 years, you've got to care about the political stability of the community in which you are operating. An unequal society tends to be an unstable society - you can see that it Latin America where inequality in the favelas makes it very hard to maintain sensible centrist politics. So I do think that unless the business community makes inequality a central issue, they will fall short in their prescriptions for Australia.
FAINE: Let's stop picking on the mining industry, after all they are very fragile people. Let's instead talk about some of the digital technology companies who are in fact the biggest tax avoiders in the world now, not just in Australia. I mean, the big international, multinational, not-based-anywhere, that pays tax - companies like Google, Amazon, Apple, and so on - they don't pay their way. Why don't you have a stern word in their ear and have a bit introspection sent down their way too?
LEIGH: I have certainly been speaking the last few years about the issue of multinational tax avoidance, Jon. We packaged up a set of policies that we took to the last election that would raise nearly $2 billion over the next four years from cracking down on multinational tax avoidance. Things like the 'Double Irish Dutch Sandwich' which have allowed technology companies to effectively move their profits so they are not paying them anywhere...
LEIGH: A US Congressional committee heard a couple of years ago that Apple was effectively stateless for tax purposes.
FAINE: Exactly, so why don't we do something about that?
LEIGH: We certainly should. We can walk and chew gum. We can focus on multinational tax avoidance and the bigger issue of inequality, and indeed, they are pretty closely linked together.
FAINE: Why don't we say to the Business Council "If you want your submissions considered, then tell your members who aren't paying tax that until they pay tax, they don't have a seat at the table. If you want to come and talk to Government, you want to lobby Government about other issues, you don't get an appointment until you show us that you are contributing to the infrastructure that you depend upon, otherwise you're just bunch of parasites".
LEIGH: I think you are totally right there, Jon, about the importance of looking at loopholes at the same time as rates. Past tax reforms - such as the 1980s cut to the corporate tax rate - were accompanied by a broadening of the base. If people expect the rate to come down, then they have to be committed to base broadening, because a small business can't take advantage of these debt deductions loopholes that currently some of our big multinationals are driving their trucks through.
FAINE: Alright, we're about to have a chat to people about community housing - it seems that Scott Morrison, planning for this year's federal budget, is going to create something on a bigger scale than the Victorian Government just announced on a local scale which is putting Government capital into a fund to help people buy houses. A couple of years ago this would have been screamed-at as "socialism, you can't do that, that's the government getting involved in the marketplace" - but it looks like the pendulum is swinging.
LEIGH: I'd certainly welcome what the Victorian Government has done. And during the Global Financial Crisis, federal Labor's decision to put money into a National Rental Affordability Scheme both supported the construction sector jobs but also added to the total supply of housing that we had.
FAINE: So when we've left things like housing to the market we've seen what's ended up, so we've got to go back to, what a novel idea, actual regulating and interfering in the market in order to make it fair.
LEIGH: In a marketplace like Melbourne where you've seen a doubling of house prices over the course of the last decade, and where house prices over recent years have been rising about $300 a day, lectures about forgoing lattes and smashed avocados don't cut it. You need sensible measures, but you have also got to look at why investors beat first homeowners out in auctions across Australia. Part of that is our almost uniquely generous system of negative gearing and the capital gains tax concession which together have acted to blow-up our housing market, particularly here in Melbourne.
FAINE: Thanks for your time here today.
LEIGH: Thank you, Jon.
FAINE: Just make sure you dodge the tomatoes and the rotten apples thrown at you at the mining conference. Shadow Assistant Treasurer from the federal Opposition, Andrew Leigh.