Andrew Leigh

This morning I had a chat with Mark Parton about Tony Abbott's Budget Reply

The Real Budget Reply

Tony Abbott likes to claim that he supports honesty in politics. But if he was coming clean with the Australian people, what would he say in his budget reply? Here’s one possibility.

Tony Abbott, the Honest Budget Reply

Last year, I had a bit of fun with my budget reply. We didn’t have much policy, so I reworded my speech to the Young Liberals’ national convention, and delivered it in parliament. But at the end, I said the thing that really mattered in politics was to be honest. That got me thinking – maybe I should really be honest. So this year, I’m glad to deliver my first ever honest reply to the Government’s budget.

The uncomfortable truth is that the Australian economy is doing well – really well. We’ve grown 13% since 2007 – while Europe’s economy has shrunk and over half all advanced economies haven't recovered lost output over this period. I was wrong when I said WorkChoices ‘was good for wages, it was good for jobs, and it was good for workers’, because productivity growth is higher now than it was under WorkChoices. The share market is up about 10% just since January. The level of expected business investment has never been higher.

We have one of the lowest unemployment rates in the developed world, and there’s few countries where you’d rather be looking for a job right now than Australia. Our net debt – as a share of GDP – is low. It is expected to peak at only 11.4 per cent of GDP, a fraction of the major advanced economies.   My own personal debt to income ratio is over 200%, So if I start accusing the government of taking on unsustainable debts, I don’t know what that would say about my own ability to manage money.

Former Prime Minister John Howard – a man I deeply admire – put it well last week, when he told a Sydney conference: ‘When the current prime minister and the treasurer and others tell you that the Australian economy is doing better than most – they are right. We are still fortunate that we have an unemployment rate with a five in front of it. I wouldn’t have thought that was going to be possible a couple of years ago, and I don’t think many people would have. Our unemployment has remained pleasingly quite low. And our debt to GDP ratio, the amount of money we owe to the strength of our economy, is still a lot better than most other countries.’

Tonight, I pledge to stop trash-talking the Australian economy. Rather than fearmongering on the cost of living, let me be honest: our best measure of the cost of living is the consumer price index, and it’s been consistently low over recent years. Interest rates are down, so a family with a $300,000 mortgage is saving over $100 a week compared to when the Coalition were last in office. So tonight, I pledge that the Coalition will scrap one of our promises: the promise that interest rates will always be lower under the Coalition. It’s a pity that getting rid of this pledge won’t save me any money.

Which brings you to my funding gap. The Coalition has spent the last few years saying ‘no’ to responsible budget measures and ‘yes’ to special interests. The result, as Andrew Robb and Joe Hockey have admitted, is a funding gap that a year ago we estimated at $50 to $70 billion. But that was before global economic circumstances and the high dollar helped wipe $17 billion off government revenues in 2012-13. So our gap today is $70 to $90 billion. That’s thousands of dollars for every Australian household.

And then there’s my spending problem. As a result of ongoing, unfunded promises, Joe Hockey and Andrew Robb now have a mammoth task ahead of them to see how it all adds up. Because we remain committed to:

• Removing the means test on the private health insurance rebate - $3 billion


• Bringing back the chronic disease dental scheme - $4 billion


• Bringing back the baby bonus - $1 billon


• Billions in unfunded infrastructure commitments – around $18 billion at last count.

The only way a Coalition government could spend more, tax less and have lower debt than Labor would be if we repealed the laws of maths. In my initial conversations, the Greens Party have been supportive of this, so I think I might be able to get it through the Senate.

In 2009, I told Lateline that Labor’s stimulus package was ‘not going to stop the recession being long and deep’. In the years since, it’s become clear that government stimulus saved over 200,000 jobs, and ensure Australia avoided going into recession entirely. So my response has been to pretend the Global Financial Crisis didn’t happen at all, and complain about debt, even although I know that two-thirds of our debt came through revenue write-downs during the GFC. Would the Coalition have taken the budget into debt if we’d been in power when the GFC hit? Of course we would have.

Similarly, I’ve spent the past few months pretending that the revenue write-down didn’t happen, hoping I could muddy things up with my usual lines about Labor spending. But tonight, I want to be straight with you: in a budget, revenues and expenses are different sides of the ledger. The revenue write-down has nothing to do with government spending. Following the fall in revenue, I have no idea how I’m going to make my costings balance. Even my regressive parental leave scheme doesn’t seem to add up, because since 2010 wages have grown and company tax revenues are down. Do you think Coles and Woollies customers would mind if I raised company tax by a bit more than 1.5%?

As Peter Costello wrote about me in his book, ‘Never one to be held back by the financial consequences of decisions, he had grandiose plans for public expenditure.’ So in that spirit, let me tell you about some of the grab-bag of ideas that currently constitute Coalition policy.

First we have a $30 billion policy to construct dams. Yes, some biased and uninformed groups – like experts – have characterised the plan as ‘unfunded’, ‘uncosted’ and ‘barking mad’. But what these elites don’t get is that this policy is the voice of the Australian people. Every day, people come up and tell me to announce some damn policy.

Second, I’m proud to re-announce our $4 billion centrepiece saving: re-introducing the 15% superannuation tax on low-income Australians. I expect people will support this measure because, I’ve said before, superannuation is a con job. This tax increase will mean 3.6 million Australians have to delay their retirement – so it’s not just a saving, it’s a job creator. Central to the Coalition’s values are senior Australians and hard work. Making senior Australians work hard is our ultimate aspiration.

Third, I’m especially happy have the chance to talk about my Paid Parental Leave scheme. Now Alex Hawke may say that it ‘does not pass the fair-go test’, Mal Washer may say that he doesn’t see how it will assist productivity, and Peter Reith might have argued that ‘it is obviously bad policy’. But the one thing everyone agrees on is that it was my idea. So I’m sticking to it. This is because I understand the needs of Australian families: it’s not people on Family Tax Benefits that need assistance through things like Labor’s Schoolkids bonus, it’s people who are earning over $150,000 that we should be helping most. High income earners are the true women of calibre, and they deserve fair dinkum assistance.

Fourth, continuing in this vein of providing assistance to those of calibre, the Coalition if elected in September will ensure that Manly Football Club, which has never won the wooden spoon in its 63 seasons, the longest period of any current club, receives another $10 million in addition to the $1 million I got them in 2005 to create some undercover seating.

Fifth, the Coalition is committed to meaningful tax cuts. So meaningful, we can’t say what they are, who they’ll be for or how much they’re going to cost. I’ve said that I aspire to a lower tax to GDP ratio, but given that it’s fallen from 23.7% to below 22% under Labor, even the dries in my partyroom have started to ask me how much lower it can go. In fact, someone reminded me the other day that another 1% reduction in the tax to GDP ratio would be equivalent to slashing the entire schools budget, cutting almost all Family Tax Benefit payments, or axing three quarters of the defence budget.

Sixth, there’s the interweb. Some call me old fashioned, but I am proud to be a man who believes in tradition.  I believe in Australia’s future as a constitutional monarchy, I believe that marriage should be between a man and a woman, and I believe in our decades-old copper wire. I’m no tech head, but I just don’t see the need to bring our technology into the 21st century. Personally, I get my staff to print out my emails and I dictate the responses and have them sent to the typing pool.

Seventh, we will use soil magic to mitigate that climate change thing. We call it ‘direct action’, because it directly acts to take money from the pockets of households and give it to big polluters. Households will need to pay $1,300 in new taxes annually in order to meet the $100 billion that the Grattan Institute said we’d need to put towards an abatement purchasing fund.

You’ll notice that there are a few things missing from this list. As I said in 2003, ‘Transport infrastructure is a state responsibility.  The Commonwealth Government should no more have to fund … [it] than the State Government should have to buy new tanks for the army.’ So don’t expect me to follow Labor’s historic investment in roads, rail and urban public transport. And under cover of a Commission of Audit, I’m hoping to cut spending on ports too. The experts tell me this is my best chance of stopping the boats.

As Coalition leader, I have been described as ‘not a policy-driven person’ who ‘sees politics as a game’. But by being honest and upfront tonight I have shown the Australian people what kind of Prime Minister I would be. And frankly, even I’m kind of worried. Honestly.

I spoke on the Matter of Public Importance debate today about the strong Australian economy, and the choices that Mr Abbott faces with his budget reply.

Matter of Public Importance - Australian Budget, 15 May 2013

Dr LEIGH (Fraser—Parliamentary Secretary to the Prime Minister) (16:12):  It is my pleasure to rise on this matter of public importance to speak about the strength of the Australian economy and the important choices that this budget makes. The Australian economy is performing strongly by international standards. As previous speakers have noted, we have grown 13 per cent since 2007. It is a period when the United States has only grown a couple of per cent and when all of Europe has actually shrunk. The European economy is smaller now than it was then. Australia's economy has moved up the rankings from being the 15th largest to the 12th largest in the world. We have seen faster productivity growth over recent years than we saw under Work Choices, giving the lie to the notion that all that stands between Australia and stellar productivity performance is cutting back workers' entitlements. We have seen the sharemarket up. In fact the sharemarket is up more than 10 per cent just this year.

You do not have to take my word that. As former Prime Minister John Howard has noted, ‘our debt to GDP ratio, the amount of money we owe to the strength of our economy, is still a lot better than most other countries’. Former Prime Minister Howard has been willing to speak the truth on this. While the member for North Sydney used question time to fearmonger about debt, former Prime Minister John Howard has acknowledged that Australian debt levels are low. In fact the Leader of the Opposition himself has a debt-to-income ratio well over 200 per cent, so it is hard to see why he would envisage a debt-to-income ratio of 11 per cent as being unsustainable.

If we go back to 2009, we had the Leader of the Opposition telling Lateline that Labor's stimulus package was 'not going to stop the recession being long and deep'. He was of course completely wrong about that. Thanks to the stimulus package, Australia avoided going into recession entirely. We did not cut back on government spending when the private sector turned bad. Two-thirds of the debt that Australia took on was due to revenue write-downs with just one-third being due to the stimulus spending we put in place. So when you hear those opposite fear-mongering about debt, they are really saying that the Australian government should have cut back when the private sector was cutting back. That would have led to a long and deep recession of the kind the Leader of the Opposition forecast incorrectly in 2009.

Mr Deputy Speaker, if you believe those opposite, you would believe that coalition governments spend more, tax less and have less debt than this government. Indeed, I even heard a voice from one of those opposite. 'Yes, we can do that,' they said. The problem is it is mathematically impossible. You have got to make choices. You actually have to make choices—and our budget does that. We make difficult choices but they are responsible savings measures: $43 billion in savings adding up to $180 billion in savings under this government. We understand those trade-offs. It is not sure those opposite do. Those opposite have a fiscal crater which was $70 billion before the revenue write-downs and now, with nearly $20 billion of revenue write-downs, it must surely be in the order of $90 billion.

Part of the reason they have that is their unfair paid parental leave scheme, which gives the most to those who have the most. Of course, you do not need to hear my criticisms of this scheme, which may cost between $12 million and $17 million over four years, as you can simply go to those opposite. The member for Mitchell said it did 'not pass the fair-go test'. The member for Tangney said he was 'aware of a number of colleagues that have similar concerns on this policy'. The member for Moore said, 'The Labor Party scheme is quite good.' He said he was not sure 'why it is necessary to go to this level and how it will assist productivity.' The member for Wentworth said he was 'not going to comment on whether it should be reviewed or not'. Senator Cormann said that he is yet to announce how they will fund it, and they have not released the costings yet. Peter Reith goes further. He just says 'it is obviously bad policy'. Nick Minchin: 'I have been on the record many, many times as saying that I'm not a supporter of the paid parental leave scheme of the opposition.' He says, 'I think Tony and the opposition should now put that in the aspirational category.' And Peter Costello says, 'My view is that it is a very generous scheme.' Well, yes, it is generous but it is generous to the most affluent; it is not generous to the neediest.

The opposition leader claims that he can pay for paid parental leave with a 1.5 per cent impost on Coles and Woolies customers. The trouble is that was predicated on company tax revenues being up and we have seen company tax revenues being written down, so 1½ per cent likely does not cover the cost of the opposition's unfair paid parental leave scheme. It is likely they would have to increase company taxes and therefore increase grocery prices by even more.

They have claimed that the tax increase combined with parental leave could even save the affected businesses money. But, unfortunately, business leaders have quickly come out to say that this did not fit the mathematical test—again similar to the claim that they can increase spending, cut taxes and pay down the debt faster. The opposition leader could not name a single business that would be better off under his parental leave scheme, because there is not one. It is no wonder that former Liberal leader John Hewson said the opposition leader has no interest in economics and called him 'innumerate'.

That brings me to the opposition's soil magic plan, a direct action plan which they originally said would cost $3 billion over four years and now will cost $2 billion over three years. But that is at odds with the costings of independent experts. The Grattan Institute say that it will cost $100 billion to achieve the coalition's emissions reduction target via soil magic, with $1,300 in new taxes because the opposition will not deal with foreigners in order to combat climate change and that again drives up the cost. If they were serious about this policy, they would submit it to the Parliamentary Budget Office for scrutiny. They would come clean with the Australian people. They would not go around making statements like the Leader of the Opposition has made that 'we will spend no more and no less on reducing emissions than we allocate'. The fact is that something has to give. Clearly the opposition cannot both meet its budgetary targets and meet its emissions reductions targets. It will have to do one or the other.

Then there is the coalition's $30 billion policy to construct dams. That shows the priorities of the coalition: $30 billion on a very odd dam scheme which seems to bear a curious resemblance to a major coalition backer's plans to develop the north. But there are no plans for investing in the education of Australia's children and no plans for paying for disability care. The opposition want to spend $1½ billion on drones, another thought bubble. When I first heard of this policy I thought we should just remind them that their coalition with the Nationals still remains strong. So there is $1½ billion on drones apparently and there is $10 million for upgrades to the opposition leader's football club, Manly-Warringah Sea Eagles, and there is $400 million for a green army.

I could go on all day but the coalition's fiscal woes are the result of saying yes to every special interest and no to every sensible revenue-raising measure. What the opposition leader must do tomorrow night is come into this place and back Labor's responsible saves. He must come into this place and he must say that he backs our revenue measures, because if he does not all he has done is dig deeper into his $70 billion crater. As the advice goes, when you are down deep the best thing you can do is stop digging. The opposition leader could stop digging by backing Labor' measures to get rid of the baby bonus and replace it with a targeted $2,000 for those on Family Tax Benefit Part A. He could back our company tax changes which see a fairer and more responsible company tax system being put into place. He could back the series of these measures but then he would still have to make swingeing cuts. When he is asked about his cuts he likes to speak about the cuts that he will make in my electorate of Fraser and the 20,000 Canberra public servants that he will get rid of. But that is only a small drop in the ocean compared to the budget gap that the coalition leader finds himself in. He wants to give tax cuts to big miners and big polluters. They have been guaranteed. But he does not want to provide tax cuts to the Australians who are at the bottom of the income spectrum. He is going to reverse Labor's cuts to superannuation taxation for low-income earners. He is going to reverse our tripling of the tax-free threshold. Both are policies that will disproportionately hit women. Budgets are about priorities and values. It is time for the opposition leader to show tomorrow night where his are.

MEDIA RELEASE

Liberals must use Budget Reply to be upfront about cuts hurting Canberra

ACT Senator Kate Lundy, Member for Canberra Gai Brodtmann and Member for Fraser Andrew Leigh are calling on Tony Abbott and Joe Hockey to be upfront about any planned cuts on Canberra in the Opposition’s formal budget reply on Thursday.

With only one day until the budget reply speech to Parliament, they are calling on the Coalition to use this unique opportunity to make clear their plans for Canberra.

The Coalition has already proposed a number of cuts that would hurt local workers and families, including:

• At least 20,000 jobs from the public service in Canberra


• Household assistance payments typically worth over $1000 a year to local families


• The School Kids Bonus – used by 14,000 local families in our electorate


• The Instant Asset Write Off that 34,100 of small businesses in our electorate are eligible to use if they purchase new equipment


• The re-introduction of a 15% superannuation tax on 46,500 of Canberra workers earning below $37,000.  This is worth up to $500 a year to their retirement savings.


• Labor’s fibre to the home NBN now confirmed for roll out in the suburbs of the Inner North and Gungahlin, and the whole of Canberra within 3 years.  The Coalition will make people pay up to $5,000 to get optic fibre all the way to the premises

Given the Coalition’s track record, ACT Labor representatives are concerned the Coalition may also cut:

• The Income Support Bonus payments going to 9321 people in Canberra.  Payments of $210 per year for singles, and $350 to couples – the next payments are scheduled for a week after the election.  The Coalition voted against this cost-of-living help only a few months ago in Parliament.


• The Fair Entitlements Guarantee scheme that supports workers who would otherwise lose entitlements if their employer goes bankrupt or into liquidation.  Since 2007, 829 local workers have received $8,699,566.73 in entitlements under this scheme

If these concerns about possible cuts are unfounded, then Tony Abbott should use his Budget reply on Thursday to make absolutely clear that he will not take the axe to these programs if elected.

If Tony Abbott is going to be honest and upfront with our community, he needs to assure us that important help for local families and communities won’t face the axe.

If he is not prepared to give that assurance, then he must clarify what is on the chopping block.

Canberra deserves detailed candour in Thursday evening’s budget reply so voters can make an informed choice on 14 September.

Labor have been absolutely clear about our future investment and spending plans – it is there for all to see in Tuesday’s budget.

MEDIA RELEASE

ANU to receive $3 million endowment to establish Tax Studies Institute

Dr Andrew Leigh, Federal Member for Fraser and former professor at the Australian National University has welcomed the establishment of the Tax Studies Institute (TSI) at the ANU.

As part of last night’s Budget, the Labor Government will provide a $3 million endowment to establish the TSI with ANU providing additional support and funding worth $750,000 each year plus $500,000 upfront.

With plans to establish the Institute in 2013, the TSI will help raise the quality of national debate on tax reform and the awareness of taxation policy issues.

The TSI will be a centre of excellence which will collaborate with academics and institutions across Australia and overseas. A new Chair in tax policy, to be taken up by an internationally renowned tax and public finance expert, will direct the new institute.

Member for Fraser, Dr Andrew Leigh said that continuing the national debate on ways to reform our tax and transfer system will help position Australia for the challenges and opportunities of the 21^st Century.

“Labor has delivered a budget that will make Australia a stronger, smarter and fairer country,” said Dr Leigh.

“It’s very fitting that the Tax Studies Institute be placed at the Australian National University given the reasons why ANU came into being in the first place,

“The Crawford School is fast gaining an excellent reputation not only in Australia, but in our region too. It’s fantastic to see an Institute that will play such an important role in future policy housed in one of Australia’s most prestigious and fast growing schools,” said Dr Leigh.

TRANSCRIPT – POST BUDGET REMARKS - DOORS
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
15 May 2013

TOPICS:               The Budget



Andrew Leigh: The Budget that was handed down last night lays the framework for what will be a very clear choice for Australians come September. A choice between a Labor Government that’s chosen to make responsible saves in order to invest in road infrastructure, in better schools and in disability care, and the Coalition which must either back in all of our responsible saves and then make more cuts of their own, or else, keep their cuts in the top drawer as they’ve been continuing to do. I think Australians will recognise that the high dollar has been a big hit to the government revenues and they will recognise too, that it is time for Tony Abbott to stop saying yes to every special interest and no to responsible savings measures, back in the Government’s saves and then be clear about how he will balance his budget. Happy to take questions.

Journalist:          Is the Treasurer being again, too overly optimistic? With the carbon tax and the mining tax in this budget, there’s been $13 billion lost out of those two initiatives together, and then the Treasurer is still forecasting a return to surplus in 2-3 years?



Andrew Leigh: Our forecasts are based on the best available data and what we saw over the course of last year was a once-in-fifty-year episode in which nominal growth for a sustained period was below real growth and that’s driven in large part by the high Australian dollar. Australians recognise, I think, the high dollar hurts our revenues. But our choice then is to make the responsible savings that you saw in last night’s budget or take the alternative that Tony Abbott would have of cutting to the bone.

Journalist:          The believability factor here is going to be a big issue with four months out from the election. Last budget, Treasurer Wayne Swan promised a surplus, this year we’re getting a $19.4 billion deficit. How can voters believe Labor?



Andrew Leigh: What you’ve seen from Wayne Swan and what you never saw from Peter Costello is a willingness to have a serious economic discussion with the Australian people. I mean, when you look at the great Australian Treasurers, Paul Keating and Wayne Swan, each of whom won the Euromoney Finance Minister of the Year Award, they’re people that were willing to talk about nominal and real growth, to talk about the impact of the high Australian dollar and to talk about trade-offs. That’s why I think Wayne Swan is a terrific Treasurer and it’s why Joe Hockey hasn’t measured up, because Mr Hockey talks ‘age of entitlement’, but when it comes to making tough decisions he compared our modest changes to the Baby Bonus last time round to China’s One Child Policy. This is a guy that just can’t make the serious trade-offs that are required to be a Treasurer. He gets rolled by shadow cabinet every time he tries to make a responsible saving, and then as he said last night to Laurie Oakes, “I’m a team player”. Well, that doesn’t cut it when you have big revenue downgrades on top of the $70 billion dollars the Coalition starts behind.

Journalist:          How do you think those in your electorate will react to the axing of the Baby Bonus? Do you think it will be met well in the electorate?



Andrew Leigh: I think there will be a recognition within my electorate that we have to make responsible saves and that changing the Baby Bonus and so it’s targeted to people receiving Family Tax Benefit Part A and comes down to $2000, is a responsible savings measure. We know that the Baby Bonus didn’t have a big impact on fertility. A Melbourne University study coauthored by Mark Wooden had the cost of each new baby induced by the Baby Bonus at $150,000 a year. So, this was never good public policy and what we’ve done by means testing it and bringing the amount down has been in the spirit of the means-tested, targeted, Australian social safety net which has served Australia well for decades.

Journalist:          How can you rectify scrapping the Baby Bonus but keeping a cash hand-out like the SchoolKids Bonus?



Andrew Leigh: The SchoolKids Bonus is targeted at those school expenses. It comes regularly in the beginning of each school term and it’s designed to encourage Australians to invest in their child’s education, to help ends meet around uniforms, books, we know school is expensive and we want to make sure no child turns up on the first day of school without an essential textbook, exercise book or uniform. The SchoolKids Bonus does that in a targeted way.

Journalist:          The mining tax raised ten per cent of what was originally forecast. Surely now is the time to rethink the design?



Andrew Leigh: When you look at the Petroleum Resource Rent Tax over its 25 year history, if you’d analysed the PRRT one year in, you would have said, “well this tax isn’t raising what we wanted it to raise”. But over the course of the last quarter century, the PRRT has bought in, I think, around $25 billion. The Minerals Resource Rent Tax depends on commodity prices and it also depends on the deductions that mining companies are making, and that will change with the point of the cycle. But anyone who says going back to the old royalties regime is better than a profits based mining tax has got rocks in their head. There’s no sensible economist that would argue that.

Journalist:          But, you’re a sensible economist, no doubt you’d agree with me in saying that, surely you would agree that there’s a structural flaw here that needs to be rethought into the future because Wayne Swan’s predictions about what that tax will raise are again, very overly optimistic over the forward estimates.



Andrew Leigh: But Laura, I don’t think it’s a structural problem that we’re not forecasting mining tax revenues down to the last dollar. I don’t think it’s a structural problem that we…

Journalist:          (inaudible) at all, this raised ten per cent of what was originally forecast: $200 million dollars.



Andrew Leigh: I don’t think it’s a structural problem that mining tax revenues are going to fluctuate up and down. There’s two things here. First of all there’s the slight drop-off in commodity prices. Secondly, the timing of deductions and companies are putting a lot more deductions in in the investment phase than they will be in the volume driven phase of the mining boom that we’re now shifting to.

Journalist:          Ok, you know how forecasting works and there’s been a lot of criticism of Treasury and how these forecast have been so out. Is Wayne Swan taking the high end of forecasting, the range given to him, or is Treasury getting it wrong?



Andrew Leigh: These forecasts are not a political choice. The forecasts are economic judgements done by our best forecasters. Now they’ve never been precise down to the last dollar. In the Howard years we saw underestimates of revenue and last year we’ve seen an over estimate of revenue. That’s not because of any mendacity by the people doing the forecasts; it simply reflects the fact that forecasting is an inexact science and changes in the global economy such as the huge demand for Australian bonds affect government revenues. All right folks, thanks very much.

I spoke this morning with Mark Parton about the federal budget, and the clear choice it presents for this year's election: between Labor's nation-building reforms in health, schools and DisabilityCare, and the Coalition's threatened cuts. Here's a podcast.

TRANSCRIPT – 2CC BREAKFAST WITH MARK PARTON
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
15 May 2013

TOPICS:                The Budget.

Mark Parton:     Andrew Leigh is the Federal Member for Fraser, for the ALP. He’s an economist of some note, and he’s a contributor to this program of some note, he joins us right now. Hello Andrew.

Andrew Leigh: G’day Mark. Does that make me a commenter of calibre?

Mark Parton:     That it does. Now obviously you are happy with what Wayne Swan delivered last night, because you have to be.

Andrew Leigh: Well Mark, it’s a tough international situation for our budget. This high dollar has had a big hit on government revenues and we’ve had to make a set of hard decisions last night, decisions that in an ideal world, you certainly wouldn’t want to be taking. But the choice that Australian families will have come September is between the sort of strong Labor investments and the cuts that Mr Abbott will have to make because he spent the last few years saying ‘yes’ to special interests and ‘no’ to any sensible revenue raising measure.

Mark Parton:     So many interesting things about this document from last night, among them that we’re only three or four months away from an election. And I’ve never seen a pre-election budget like this because there are no carrots, there are no sweeteners. There’s a stark honesty which I think is extremely responsible.

Andrew Leigh: Mark we’re being level with the Australian people about the challenges for the revenue. What we’ve seen over the last year is a $17 billion fall in what the government takes in. That’s got nothing to do with what we spend; just a large fall tax revenue, driven to a large extent by the high dollar driving down company taxes. That’s a challenge for us, but it’s a challenge for everyone in parliament and I really hope that Mr Abbott is going to stand up on Thursday night and he’s going to be able to say ‘well, I’ll back Labor’s saving here, I’ll back Labor’s saving here, I’ll back Labor’s saving here, I’ll back Labor’s saving here’. If he can’t, then he’s basically hiding cuts in his top drawer, hoping he can keep them secret until after the election.

Mark Parton:     I guess the other fascinating thing about it is so much of the pain here comes, in theory if there’s a change of government, not under you guys but under them. And it will be interesting to see how much they want to tinker with. So many of these measures won’t even be passed in this current term of government, will they?

Andrew Leigh: Mark I know there’s many people on the Liberal side of politics who think they’ve got the election sewn up. I take a different view, I’m pretty respecting of the voters and I think they’ll make a considered judgment in September. But the budget invests over a long horizon – we’re looking at putting in place important road building measures in Australia’s big cities, like we saw with the Majura Parkway investment for the ACT in last year’s budget. We’re looking at putting place DisabilityCare, which is going to be a pillar of our social safety system, hopefully for generations to come. And we’re putting in place that school investment that you’d expect from a responsible Labor government, recognising that great schools drive prosperity.

Mark Parton:     We spoke with Alex Malley from CPA, from the accountancy group earlier, and he was suggesting that there were massive missed opportunities here in shoring up Australia’s competitiveness, that it’s all well and good to beat the corporates over the head and try and get as much money out of them, but ultimately if we can’t compete on the business front, well the whole country is not going to be served well.

Andrew Leigh: But our company tax changes Mark, and I don’t know if he’s talking about the thin capitalisation deductibility rules, they’re driven by shifts that we’re seeing around the world. Countries trying to make sure that firms don’t shift profits in order to avoid paying tax. You and I can’t shift our salaries over to avoid paying tax, and we’re basically applying that principle to companies. That strikes me as being pretty fair and responsible in a budget in which we’re asking a lot of people to give a little to build a better country.

Mark Parton:     Andrew, thanks for your time this morning, we appreciate it.

Andrew Leigh: Thank you Mark. Appreciate it.

TRANSCRIPT – BREAKING POLITICS WITH  TIM LESTER
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
14 May 2013

TOPICS:                The Budget.

Tim Lester:         Andrew Leigh, Senator Fiona Nash, welcome into the Breaking Politics studio - on budget day, which makes it a fascinating one. This morning we’re told that the government will outline in tonight’s budget ten year plans for big spending programs: Gonski and NDIS. Andrew Leigh, can we really honestly forecast ten years out, meaningfully, given that revenue forecasts went awry in a year?



Andrew Leigh: Tim I think it’s important to have that big picture, long-term thinking. And Treasury actually has a track record of doing that. The Intergenerational Report, which was produced under the Coalition, looked decades ahead. Our view is that with big and important reforms, like the schools reforms and DisabilityCare – which is so sorely needed by families whose child has a disability, people who are watching this program that were awake in the middle of last night caring for an adult child with a disability. Those people want DisabilityCare, and they want to know that it will last and so this is about outlining the saves we will make, and hopefully saves that Mr Abbott will come on board and support.

Tim Lester:         But Fiona Nash, surely big social objectives like deserve long-term planning, so wouldn’t the Coalition at least support the principle of taking big-ticket plans out to ten years?

Fiona Nash:        Well I think that’s one of the criticisms of the Labor government, that there hasn’t been any vision. There hasn’t been any look to the future of the nation and how we want to look since they’ve been in government. And it must be a little frustrating for Andrew, with his economic credentials, watching his government make a mess of it. The things is that people out there in our communities just simply don’t believe Wayne Swan any more. His forecasts from one budget to the next have fallen over, what he said in last year’s budget hasn’t come to pass, he’s predicted surpluses and now we’ve got a $17 billion black hole. So for him to now say ‘I have this ten year plan and everybody believe me I’m going to lead you to the promised land’, it’s a bit of a stretch and people are just really questioning whether or not he has the ability to deliver it, and whether or not he’s actually telling the truth. It just seems like a last minute opportunity to convince the Australian people that he has some vision for the future.

Tim Lester:         Credibility problem with the Treasury, you say. What about the philosophy though of ten year planning in our budget? Good, bad or indifferent?

Fiona Nash:        Well it depends obviously on the cycles, what’s coming up in the future, you can’t have a crystal ball. It’s obviously admirable to look towards the future, right, for the nation, where do we want to be in ten years. For those big ticket items, how are we going to get there? Unfortunately for the Treasurer, nobody believes a word he says anymore, because everything that he has said has turned out not to be true.

Tim Lester:         Just before we return to Andrew Leigh, do you think – given you support the idea but not the person delivering it, or the record of the person delivering it – do you think the Coalition will back these longer term plans? Or do you think they’ll say uh uh, it’s got Wayne Swan’s fingerprints, we don’t want to be near it.

Fiona Nash:        We’re going to have to look at the budget tonight and see what the government’s actually going to deliver. There’s no way you can make any commentary now about what post the budget until we’ve seen it. So we’re going to very carefully and methodically work through what the budget has, what the government brings us this evening, and then we’ll make decisions on that basis.

Tim Lester:         Is it fair for the Coalition to say we’re not going to commit these plans til we’ve looked right through them, we can’t talk about the philosophy of ten year plans. And indeed to say they want to leave their hard-nosed budgeting for the election campaign, when they get the budget numbers then?



Andrew Leigh: Tim, I was actually a bit worried, listening to what Fiona had to say. I’m sure she, as I, have spoken to people with disabilities in the electorate, but then what I heard from Fiona just now when you asked her whether she’d support the long-term DisabilityCare reform was wait and see.

Fiona Nash:        No, no I didn’t – to be fair, I said how that would be funded, we’d wait and see what the budget is. Of course we support those principles, absolutely.



Andrew Leigh: It is one thing to support DisabilityCare, it is another thing to say how you’ll pay for it.

Fiona Nash:        There are different ways for paying for things, yours will not be the only way. We don’t have to sign up now to the way you say you’re going to pay for it, when we haven’t even seen the budget. That would just be ridiculous.



Andrew Leigh: What you need to do, if you back a big reform, is to say how you’ll manage to pay for it. The Coalition are starting $50 to $70 billion behind, not my figure, Joe Hockey and Andrew Robb’s figure. Beginning from that starting point, they have to make massive cuts, and that’s before they even get to the point of thinking about how they’ll pay for DisabilityCare. Words are cheap, but if Mr Abbott decides that his top priority is a tax cut for big miners, and a tax cut for big polluters – two things he’s locked into – and he is going to oppose the responsible Labor savings measures that will set up DisabilityCare for the next decade, then that is a scary future for people with disabilities.

Tim Lester:         There is a disconnect here a bit in that the Coalition’s position, Fiona Nash, in that you are saying that we support these worthy projects – certainly disability insurance as one. Support for it, but we’re not going to tell you how we’re going to fund it, we don’t know the numbers and we don’t want to base any numbers on tonight’s budget, and we’ve got to wait until the election campaign two weeks out from when we get to vote. That’s a bit of a leap of faith for voters to assess all of that in such a crammed time before the election isn’t it?

Fiona Nash:        I don’t think so at all, I think they want the Coalition to be sensible about how we’re going to plan for the future for the economy. Now they can trust that, to the current Labor government, that has continually told the Australian people that economically certain things were going to happen, we saw that in the budget last year for Wayne Swan and clearly, clearly what he predicted has been incorrect. So I just think it’s sensible that we take a very pragmatic view. We in the Coalition make sure that we have a very clear view of the base we’re working off economically before we go and say to the Australian people this is how we’re going to fund what we’re going to do. I think that’s actually what the Australian people expect of us. No one wants to run in half-cocked and say ‘yes we’re going to do this or we’re going to do that’. They actually want the contrasted view of the Coalition of a measured, well-though out approach to managing the economy, which they’re not seeing from Julia Gillard and the Labor government.

Tim Lester:         Andrew Leigh, doesn’t Fiona Nash have a point in as much as she says the long term plan is great, but when you’ve got a Treasurer who’s just sworn black and blue that he’s going to deliver a surplus, black and blue, time and time again, did not – and now he’s going to come back and promise another surplus and a ten year plan, who is going to believe it?



Andrew Leigh: Tim, I think that everybody understands the high Australian dollar has a big impact on government revenues. The Australian economy is performing strongly – we’ve gone from the 15^th largest to the 12^th largest economy in the world over the last 6 years. We’ve got debt to GDP of 10%, well below most other countries.

Tim Lester:         But can we forgive Wayne Swan the mistakes?



Andrew Leigh: We’ve taken a hit to revenue and Wayne Swan has been honest enough to talk to the Australian people about the implications of that hit to revenue, and what it means to how we’ll pay for important reforms. Mr Abbott and M Hockey seem to hiding their policies in the top drawer, and I think Australian people are entitled to say if these policies were really so good for households, would they be sitting in that top drawer, or would they be out in the open? There are swingeing cuts that the Coalition will have to put into place to if it is to pay for the promises it has signed on to. This gold-plated parental leave, you know that is a $5billion plus scheme. If you’re committed to that, if you’re committed to the tax cuts for big miners and big polluters, then you’re going to have to make bigger cuts: not just the hit to low-income earners on superannuation, not just taking away the schoolkids bonus, but tax rises, pension cuts, cuts to major social expenditures that people rely. We’ve seen this with past Coalition governments, we’ve seen this with the Newman government in Queensland, where a commission of audit has acted to hide some cuts which have seen nurses, police officers, teachers losing their job. That’s a scary future. The Australian people, if they’re going to vote for it, ought to at least be given the dignity of seeing those choices, those trade-offs, put forward by major parties. Not at a minute before the election, but months in advance so they can be properly debated. And this in the Coalition’s interests as well. Good policy rarely comes out of a smoke-filled backroom with two or three blokes gathered around a table. Policy improves by being put into the public air. The Coalition’s policies would be better if they were to put them out, have that public debate, talk about the things they’re going to cut, be honest, come clean with the Australian people.

Tim Lester:         Well in fairness to Tony Abbott, there is some policy out, there’s probably not the costings back it that you’d like to see in its place in a detailed budget, but the policy is at least partly out there. I’d like to ask you both before we close is to nominate a year in which you think we ought to be back to surplus, if the road back to surplus is going to be a credible one. Cast aside your views of Wayne Swan for a moment and just say which year in the forward plans ought we see a black number on the bottom line of the budget and go ‘yeah that’s fair enough, I believe that we can do that’. You first, Fiona Nash?

Fiona Nash:        Well I think that if the Labor government had done a decent job of managing the economy since 2007 that year should be this year.

Tim Lester:         Right – that’s in a perfect world. From the world we now sit in, the position we now enjoy or don’t enjoy, where do you believe we should arrive at a surplus if it is to be a credible one?

Fiona Nash:        Look I’m not an economist, I can’t give you a 2015, 16 or 17 date. I just know that the Australian people want a government that’s going to start managing the economy properly, because there is no confidence out in the communities. Andrew talks about all the headlines figures of how well as a nation we’re going, I don’t think the Labor government is spending enough time walking up and down the main streets – particularly in regional communities – because what they want is some confidence back. They don’t have it under this government and they are looking for someone, a grown up, to run the economy, run the country properly, so they can get on and do business and get on with their lives in the way that they want to.

Tim Lester:         Ok, you’ve chosen not to nominate a year from where we stand. Andrew Leigh, will you nominate a year? You are an economist, by the way, so  you don’t get the get out of jail card.



Andrew Leigh: Tim we’re filming this eleven hours before Wayne Swan will bring down the budget, let’s let the Treasurer bring down the detailed budget figures in eleven hours’ time. I’d encourage people to tune in, I’m sure Wayne will deliver a strong speech there. And he will level with the Australian people what we’ll do, and how we’ll pay for it. The question then is whether on Thursday night Mr Abbott will do the same thing, whether he will talk about the trade-offs and how he will pay for things as well.

Tim Lester:         Fascinating couple of days ahead, and great to have you both regulars here to chew the fat over it. Andrew Leigh, Fiona Nash, thanks for coming to Breaking Politics.

Listen Here: http://media.smh.com.au/news/national-times/details-please-4270757.html

MEDIA RELEASE - 14 MAY

Federal Budget will mean a stronger, smarter and fairer Canberra

Initiatives outlined in Wayne Swan’s sixth Budget will mean a stronger, smarter and fairer Canberra.

While Canberra is small compared to other Australian states and territories, initiatives outlined in this Budget demonstrate the special role Canberra plays as a city of culture, learning, and a provider of important services to the whole country.

The Budget also captures the relationship forged with the ACT Labor Government on important reforms such as the National Disability Insurance Scheme, now called DisabilityCare Australia.

This Budget delivers a range of initiatives that map a path back to surplus. The initiatives outlined in this Budget are offset by responsible savings ensuring that the cost of nation building programs such as DisabilityCare Australia and the National Plan for School Improvement are shared across the whole community.

Canberra will be able to share in over $690 million in additions and amendments to the Pharmaceutical Benefits Scheme and $29.6 million for support in the dispensing of chemotherapy medicines.

$96.7 million will be made available to increase the number of Commonwealth Support Places in sub-bachelor and post-graduate level studies.

Labor’s historic Paid Parental Leave Scheme will also be improved as a result of this Budget to make it easier for working mothers with children born close together to qualify for Paid Parental Leave for subsequent children.

This Budget prioritises Australian jobs and growth by taking responsible decisions. This directly contrasts with Tony Abbott’s arbitrary measures which will cut Canberra to the bone.

Tony Abbott has promised that should he get elected in September, at least 20,000 Canberra jobs and the local businesses that rely on them stand to be wiped out, to pay for promises like Mr Abbott’s tax cuts for big miners and big polluters.

The reality could be worse still. After the 1996 election, John Howard sacked ten times as many public servants as he had promised before the election.

With a self-confessed $70 billion black hole, Senator Lundy and members Gai Brodtmann and Andrew Leigh call on Tony Abbott to outline what cuts he will make to Canberra in order to fund his promises.

On Sky’s “The Nation” program with David Speers, Andrew Leigh MP joined an “all economist” panel with respected commentator Jessica Irvine, Liberal MP Paul Fletcher and former Liberal leader John Hewson. We discussed the strength of the Australian economy, the hit on budget revenues, Labor’s DisabilityCare reforms and the Coalition’s regressive parental leave scheme & “WorkChoices lite” policy.http://www.youtube.com/v/Bdi6zSCKr04?version=3&hl=en_US