We must close unsustainable tax loopholes - Transcript, ABC Hobart Mornings

E&OE TRANSCRIPT

RADIO INTERVIEW

ABC HOBART MORNINGS

MONDAY, 19 MARCH 2018

SUBJECT: Dividend imputation reform, South Australian election, Batman by-election, Labor’s strong female representation.

LEON COMPTON: Shadow Assistant Treasurer Andrew Leigh’s in Tasmania at the moment. Andrew Leigh, good morning to you.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning, Leon. Great to be with you.

COMPTON: How many Tasmanians will be affected by the change – in other words, how many Tasmanians will lose money based on the changed you’re proposing?

LEIGH: I don’t have a state breakdown for you, Leon, but certainly what I can say is that half of the benefits of this uniquely Australian tax loophole go to people in self-managed super funds with more than two and a half million dollars in their accounts. This is a tax loophole put in place when John Howard and Peter Costello were swimming in money at the beginning of the first mining boom. It was at odds with the notion of dividend imputation, which Paul Keating introduced in 1987, which was aimed to avoid double taxation of dividends. Cash refunds actually avoids the single taxation of dividends.

COMPTON: So how many Tasmanians do you think may be affected by this based on the figures that you’ve seen? We’ve got two per cent of the national population, does that mean two per cent of this $5.6 billion won’t be flowing to Tasmanian people with low or no claimable income?

LEIGH: We know that on average, Tasmanian incomes are below those of the rest of Australia, so you would expect fewer Tasmanians proportionately to be affected by these changes. We know that across the country, 92 per cent of Australians aren’t affected. Indeed, most of your listeners Leon will be in the situation where when they’re dealing with the tax office, they’re thinking ‘how much tax will I pay?’ But this is a tax loophole where people are getting cheques written for them by the tax office. It’s uniquely Australia, put in place for unusual reasons. It’s not sustainable. It’s the cane toad of Australian tax policy and if we’re to make sure that we fund our hospitals and our schools properly, that we have a strong pension system, that we look after the most vulnerable, then we have to make sure we close these unsustainable tax loopholes. No one else in the world does it like this.

COMPTON: Ok, what is your party planning to do with that money? $5.6 billion, it’s forecast to rise shortly to $8 billion annually in money paid out – what are you planning to do with those savings in the lead up to an election which might be as soon as this year?

LEIGH: To give you flavour of it, one of the things we announced last week was the Australian Investment Guarantee. The aim of that is to encourage firms to make new investments by providing accelerated depreciation. It’s much broader than the government’s instant asset write off and it’s enduring, which means that firms are able to invest with greater confidence. Unlike the government’s company tax cut, which is a wing and a prayer, an investment guarantee guarantees that you get firms to do more investment. We know that firms are sometimes struggling in order to access capital and the investment guarantee provides the spur that the economy needs.

COMPTON: So you would move that tax savings from people, from individuals, and look at shifting it to the small business sector? What about actually lifting pensions or lowering tax rates for PAYE taxpayers?

LEIGH: In the area of pay as you go taxpayers, we’ve got a clear contest in the federal arena, Leon. At the moment, Malcolm Turnbull wants to raise income tax rates on people earning from $20,000 to $70,000. Someone earning $70,000 would be $350 a year worse off under Malcolm Turnbull’s plans. Labor doesn’t believe that’s fair. We believe that the budget deficit levy that was in place for the first couple of years for the Coalition ought to stay in place at a time when Australia is still in deficit and our gross debt has just crashed through the half a trillion dollar mark. We have always been the party standing up for pensioners...

COMPTON: So why not use this $5.6 billion saving that you're proposing and actually use it to pay off the deficit and then get rid of the levy sooner?

LEIGH: Certainly it is assists us in moving back to surplus, you're absolutely right about that Leon. We've got to make these decisions in order to make sure that we have the fiscal firepower to fight another downturn in the world economy if that's to come at us. I'm really worried about the growth prospects of the Australian economy at the moment. I think it's not obvious where the new sources of growth are coming from. Consumer spending is fragile, wage growth has been sluggish. The economy has basically been stalled for the last year so we need to invest in those sources of growth. That's why the Australian Investment Guarantee is really important to our future plans for the economy and for creating jobs.

COMPTON: Andrew Leigh, Labor had a poor result in South Australia and also recently in Tasmania. What's the lesson from that?

LEIGH: Jay Weatherill was asking South Australian voters for a fifth term. We haven't had a Liberal Government in South Australia since Facebook was launched. And as a result of the redistribution, four Labor seats became nominally Liberal. Jay needed a 3 per cent state wide swing in order to just hold office. He got a one and a half per cent swing but it wasn't enough. Jay ran a strong issues-based campaign and full credit to him.

COMPTON: Sorry to distil that, you don't think there are any lessons about the broad direction of Labor as a national party out of the election results you've just had yielded?

LEIGH: Certainly in South Australia it was just a ‘time for a change’ issue. It's genuinely tough in the fast-paced modern environment to be asking for a full two decades in office. I can't fault Jay in terms of what he did. He was really focused on the issues; a serious policy reformer.

COMPTON: And what about in Tasmania?

LEIGH: Again, Tasmania has been a challenge for pulling together a majority there. We saw Bec White produce a strong showing at the expense of the Greens largely who have now been waning around the country. They did poorly in South Australia, they obviously lost in the Batman by-election on the weekend and they’re waning here. So I think we're managing to build that broad progressive coalition. And we can't go commenting on this without mentioning Ged Kearney, a nurse who will bring up the number of women in the Labor caucus to 48 per cent and make a huge policy contribution from her understanding of the needs of working people as she enters the federal Labor caucus.

COMPTON: Indeed it was another interesting result from the weekend. Andrew Leigh, we've got to leave it there. Thanks for coming into the studio this morning.

LEIGH: Thanks, Leon.

ENDS

Authorised by Noah Carroll ALP Canberra

 


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