What can the G20 really deliver? Breaking Politics, 10 November

We're in the final countdown now to the G20 Leaders Summit in Brisbane, so I joined Breaking Politics to talk about what the Abbott Government needs to deliver from this. Here's the transcript:





SUBJECT/S: G20 growth target; Multinational profit shifting; China FTA; Renewable energy

CALLUM DENNESS: Joining us now outside his Electoral Office is Andrew Leigh, the Labor member for Fraser in the ACT. Good morning.


DENNESS: Good thanks. Now the G20 is due to kick off this weekend. The Government is promoting this growth target of 2 per cent over the next five years that it hopes the G20 will adopt. Is this an ambitious target? Is it a useful target?

LEIGH: Well I'm certainly all for improving the rate of economic growth in Australia, I wish the Government all the best in that target which is 2 per cent over 5 years, or 0.4 per cent a year. Where I'm troubled though is the sense that the government is missing some of the key issues and running in the wrong direction on others. We know that one of the ways of ensuring that we have sustained economic growth is to tackle climate change with an effective strategy, not to push it off to an expensive strategy like Direct Action. We also know that you can't cut your way to growth and that investing in health and education is absolutely vital for laying the foundations for prosperity. For the Government to suggest that somehow $80 billion worth of cuts to health and education will improve growth has it exactly backwards. 

DENNESS: Another of their suggestions for boosting growth is cutting access to the dole. Does this have any economic merit?

LEIGH: So these guys are from the old 'trickle down' school of economics, the idea that the only way of making the poor richer is to first make the rich richer. There's no economic logic in that. We know that people who are on benefits tend to spend all of their incomes while those at the top of the distribution can save about a quarter of their incomes. The latest budget transfers so many billions of dollars from the most vulnerable to the most affluent. In the process it is taking away from consumer spending, which is why consumer confidence is in the doldrums. And ultimately, it's going to have a detrimental impact on growth. We need to get people into jobs, we need to tackle youth unemployment. We need smart, evidence-based approaches for doing that, not old fashioned ideology. 

DENNESS: Delaying access to the dole isn't the only element of what the Government describes as an incentive to get people into work, there's bonus payments, greater access to training – surely you'd support those? 

LEIGH: Certainly boosting access to training is something that we know works. There's good evidence around wage subsidies as well. But we also know if you punish the most vulnerable then you can make it harder for people to find jobs. I've spent time in some pretty vulnerable communities around Australia recently, communities in high unemployment areas in Queensland and Tasmania. And there, there is a real fear among community groups – as there is among my own electorate in the ACT – for twenty-somethings left to fend for themselves for six months with no unemployment benefits. It's not a plan for growth, that is brutal punishment for some of the most vulnerable in the community.

DENNESS: Do you think we'll see from the G20 clear action on global tax avoidance?

LEIGH: I really hope we do, but let's be clear. The Government has dropped the ball on multinational tax shifting and they have given $1.1 billion dollars back to multinationals since coming to office. I thought they would build on Labor's plan, which put together by Wayne Swan and David Bradbury in 2013. But instead they've chipped away at it. They’ve given more than a billion dollars back to multinationals and are resisting Labor's plan to boost tax transparency. If they're serious about multinational tax shifting, they'll vote for my Private Members Bill that brings forward tax transparency, allows us to have an evidence based debate and allows us to start adding to revenue rather than from detracting from it as Joe Hockey has done since he came to office.

DENNESS: We saw at the end of last week the Business Council of Australia come out and warn the Government about going too hard on tax avoidance through the G20 and other means, essentially warning of unintended consequences. Does that response surprise you?

LEIGH: Sure, we've got to be smart about this. But this is a Government which is pretty tough when it comes to dealing with the weak and pretty weak when it comes to standing up to the strong. When you've got multinational firms paying lower rates of tax than your local corner store owner, your local carpenter or electrician, I think that's a real problem for Australia. It's an issue of fairness; fairness between businesses. Small businesses ought not pay a higher rate of tax than big businesses, there needs to be fairness between multinationals and others in the community. In the end, someone else has to make up the difference. So, if you've got a Government like this one opening up billion dollar tax loopholes for multinationals, it's a billion dollars more that the rest of us have to make up.

DENNESS: We know that a trade deal with China is imminent; we expect it as soon as a few days. A lot of the positive details of that agreement have been foreshadowed or leaked but trade deals rarely please everyone. What are some of the things you will be looking for and things you're concerned that we might see in this trade deal?

LEIGH: The Government doesn't have a great track record on trade deals. It's not pursing multilateral trade liberalisation which is the most effective way of boosting global trade. The Government’s deal with Japan was supported by no one in the industry as best I can tell and its deal with Korea allows private firms in Korea to sue the Australian government. What we're looking for from the China trade deal is a deal that is at least better than the one that the New Zealanders got. Rather than selective leaking out details of the China negotiations, we need a full and frank briefing to the Australian people. The Government is daft to have set itself a hard timetable like this. Imagine you were negotiating with someone to buy a car and they said 'I've got to sell it by the end of the day'. Would you strike a better deal? That's the position that this government has put us in vis-a-vis China on the latest negotiations.

DENNESS: Well to extend that analogy though, this is something we've been looking to buy for a decade, isn't it good that this is being finalised?

LEIGH: It's going to be terrific if the government can bring home a good trade deal with China, one that is better than the one New Zealand secured with China. We're waiting to see the details and we have a Government that again seems addicted to secrecy. That don't want to tell us what's happening in border protection, they don't want multinationals to report on how much tax they're paying, they don't want to come clear with the Australian people about where those China trade negotiations are at. In each case they're making a mistake. They should bring the Australian people into their confidence and they'll find that Australians are smart, thoughtful and will provide good ideas in all of those different policy areas.

DENNESS: The Government don't telegraph the details of their trade negotiations?

LEIGH: Well the Government is telegraphing details about the trade negotiations to selected journalists as a way of trying to bolster their standing in the opinion polls. What they're not doing is providing an overall picture to the community.

DENNESS: Let's move on. A Climate Institute report has recommended that Australia look beyond 2020 in setting emission targets and they nominate a figure of something like 40 per cent of the sort of reduction target Australia needs to look at beyond 2020. Does that sound like a fair and realistic number to you?

LEIGH: Certainly when Labor put in place an emission trading scheme we had those long run targets in mind because reducing emissions by 5 per cent by 2020 is a useful first step. But ultimately, Callum, what this is about is decoupling economic growth from the growth in carbon pollution. I believe Australia can be much more prosperous in a clean, low emissions environment and yet you've got a Government which is pursuing a very expensive policy. It is effectively an expensive carbon tax because what they pay polluters for, they have to tax households for. Yet they’re eschewing more effective strategies such as a price on carbon pollution.

DENNESS: Another report has found that investment in renewables has fallen by 70 per cent, this clearly points to the effect of uncertainty around the RET. What is Labor going to do with the RET? Are you going to negotiate with the Government to reduce it, bringing it closer to the 'real' 20 per cent, or will you be fighting to keep it as is?

LEIGH: Labor's ideal position would be if Tony Abbott kept his promises. In the case of the RET that would mean sticking to the 41,000 gigawatt hour target that he pledged he would stick to in the election. But Tony Abbott instead wants to sign up with the climate sceptics, he's got a climate sceptic to conduct his RET review and the effect now is that renewable energy investment is beginning to stall. For Australia, which used to be in the top four in the world for renewable energy investment, we're now languishing at 10th place. Renewable energy investors just aren't investing while the Abbott Government is throwing the sector into uncertainty. So Labor is negotiating in good faith to try and restore the bipartisan consensus which existed before the election, and which frankly could exist now if Tony Abbott took a reasonable position on renewable energy.

DENNESS: Okay, Andrew Leigh, thanks for your time today.

LEIGH: Thank you.



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