2CC CANBERRA AFTERNOONS WITH LEON DELANEY
FRIDAY, 1 DECEMBER 2023
SUBJECTS: Productivity Commission interim report into philanthropy; Reform of tax deductions system for charity donations; House of Representatives Committee Report on Employment Services; Advanced manufacturing policy; Cost-of-living relief in MYEFO.
LEON DELANEY: Well, there's a lot going on in the Federal Parliament at the moment. I think there's only one more sitting week left to go. Assistant Minister for Competition, Charities and Treasury, Assistant Minister for Employment, and local member for Fenner, Dr Andrew Leigh, good afternoon.
ASSISTANT MINISTER FOR CHARITIES, COMPETITION, TREASURY AND EMPLOYMENT ANDREW LEIGH: Good afternoon, Leon. Great to be with you and your listeners.
DELANEY: I've got that right, haven't I? There's one more week to go.
LEIGH: There's a week for the Senate and a day for the House, an extra day to deal with any legislation that gets amended in the upper House.
DELANEY: So, next week's a sitting week, except in the House of Representatives where you've got pretty much the whole week off, except Thursday.
LEIGH: Well, when you say a week off, it basically means a week in the electorate working with my constituents. But, yes, that's right.
DELANEY: Okay, there's a lot of things going on, but let's start with the one that is directly in your area of responsibility as the Assistant Minister for Charities. The Productivity Commission has released a draft report on charitable giving. So, what have they found?
LEIGH: Well, they found that there's about $13 billion a year being donated to charities, but they've argued that the charitable deductibility rules aren't fit for purpose. And at a time when the charity sector is under pressure, they've argued for simplifying that system and making it more principles-based. This is a draft report, Leon, so it reflects the view of the Productivity Commission. It's a great moment for people to dive in and offer them bouquets or brickbats, according to how you feel about it. But it's all part of our goal to double charitable giving by 2030 to ensure that those who are helping the community have the resources they need into the future.
DELANEY: All right, what's complicated about the tax deductibility of a charitable donation? Anything above $2, it's tax deductible. Send it to your accountant, write it off at tax. So, it's simple, isn't it? That's straightforward.
LEIGH: That's right. And the Productivity Commission has recommended getting rid of that $2 threshold. So, it would be all donations.
The question comes at the other end, as to which organisations are eligible. Right now, there's 52 different categories, and you have to be in one of those categories. You can't cross the streams. There's some organisations that are left out. And so animal rights, public interest journalism are two that the Productivity Commission points to as not being covered by the current rules.
There have been some who've said that every charity should automatically be tax deductible. The Productivity Commission doesn't go that far, but they do call for a principles-based reform of the system.
DELANEY: Well, obviously, charity needs to be regulated like any other form of transactional activity. We're dealing with people's money after all, there does need to be regulation. So, charities, generally speaking, have to be registered. They have to follow the certain rules. But if they comply with all that, they should be tax deductible, shouldn't they?
LEIGH: The case that the Productivity Commission makes, Leon, is that simply because you're a charity, it doesn't mean that you ought to receive the benefits of tax deductibility. And they point to the risk of charities which might be set up that end up benefiting private individuals rather than having a public benefit. So, they argue for most charities getting tax deductibility, but not for all. It's a draft recommendation, as I said, and we're also working on a whole suite of other reforms in this space, making sure the charities commission can speak out more readily about misconduct. You and I have chatted about that one before. Carrying out the largest charity consultation in Australia's history and engaging on a blueprint process to deal with issues such as cyber uplift for charities who are increasingly vulnerable to hackers.
DELANEY: Yeah, this removal of the minimum threshold is a bit curious, isn't it? I mean, I saw one headline today saying, if you donated $0.15, would you bother making a tax deduction claim? Who would make a donation less than $2 anyway?
LEIGH: Well, they claim that it's simply to get rid of it. Why would you have a threshold in the first place? You don't have a threshold for a range of other things, but you claim a deduction for a tax time. The Productivity Commission's case is just get rid of that threshold. But as you say, there's not going to be a whole lot of $0.15 donations claimed if the government wishes to go down that path.
DELANEY: No, exactly right. Now, obviously, at this time of the year, there's a lot of committees reporting. We've had the House of Representatives standing committee on Workforce Australia Employment Services deliver its report. And apparently, this report, not having read every word of it, but from what I've read about it, it's been pretty scathing about the current employment system, the employment services system that we have here in Australia, effectively saying the whole thing should be dismantled and we should go back to having the old good old CES. Now, how many times have I said that before?
LEIGH: I'm not sure that they go quite that far, Leon, but certainly Julian Hill and his colleagues talk about having a Commonwealth role, and so the Commonwealth has a bit of skin in the game. One of the ideas they talk about there is that over the last 25 years, since we went to outsourcing, the department has, in some sense, lost touch with what's happening on the front line, and that operating some employment services work at a small scale would allow the Commonwealth Department to be in better touch with what's going on in the community.
They also talk about sharing best practice. Make the argument that at the moment, too many of the employment services providers are operating as though they have a secret recipe which they're not willing to share with everyone else. The committee makes the case that if you're receiving taxpayer money to move people into jobs, you ought to be sharing with everyone what's working and what's not.
DELANEY: The report really is quite scathing of the current system, and it highlights instances of individuals that have had their welfare payments interrupted or stopped through no fault of their own because an employment service actually stuffed up. We've had cases where - I think the inquiry has found that it's far too punitive and does far too little to actually help people to get work. It's really been quite the damning critique, hasn't it?
LEIGH: I mean, Julian Hill has a wonderful way of words and talks about a Hunger Games scenario and the way in which the myth of the dole bludger has been perpetrated for too long. Certainly under the former government, you had that whole rhetoric about leaners and lifters and Joe Hockey and others, the idea that people who are looking for a job are somehow a drain on society. We need to see everybody as a resource who needs to be invested in by the community. And we have an opportunity now, Leon, with unemployment at historic lows, this extended period, 17 months now under this government, where we've unemployment under 4 per cent, to find work for people who wouldn't have had a chance of getting into the labour market with double-digit joblessness, as there was when I left high school.
DELANEY: Yeah. He's also used the phrase, I believe, using a nuclear bomb to kill a mosquito to describe some of the punitive measures that exist in the current employment services framework. I can't get over just how strongly worded some of this stuff is. It's right, of course. And it's well past time for some sort of reform, isn't it?
LEIGH: Yeah, I mean, the challenge is ensuring that people are turning up for their interviews as they're meant to, but not breaking trust between the employment services provider and the individual. And if the employment services provider is the one that's effectively docking someone's payments, then using that sanction can lead to a breakdown of trust between them and the person that they're intended to help. All of us who are parents know what it's like when you take away something from a child who wants to hang onto it. That sort of breach of trust can make it pretty hard to then work constructively with your child. I'm not suggesting for a moment that people in the employment services are children, but I think the same sort of issue of trust does arise.
DELANEY: Okay, we're going to run out of time, unfortunately, but I also wanted to mention another standing committee report on advanced manufacturing in Australia. Probably not quite in your portfolio, but obviously, this is a very important issue, particularly. We find ourselves really at something of a crossroads in our history here, don't we? We've gone down this path of globalisation and of relying heavily on offshore sources for many of our manufactured goods. Then we've had COVID, the pandemic supply chain issues, and the sudden discovery that maybe we should still manufacture things here in Australia, but how can we do it smarter and better. And one of the ways of doing it smarter and better, of course, is developing an advanced manufacturing industry sector here where we can provide top-quality goods, not just to Australia but to the world.
LEIGH: Absolutely. We already do this very well with medical devices and medicines, but as Ed Husic, the Minister for Industry, noted yesterday, Australia has half the world's critical minerals and yet produces only 1 per cent of the world's batteries. So, there's opportunities through the new National Reconstruction Fund, which has seven big priorities: renewables, medical science, transport, value add and agriculture, value add and resources, defence capabilities, and enabling technologies. And that's moving Australia up the value chain. There's no suggestion that we'd go back to making kids pyjamas as we did in the 1970s. But that in a globalised economy, there's manufacturing niches that Australia can move into. Complexify our economy, ensure that we have an economy which is more resilient when the global prices change.
DELANEY: Okay, we're not far away from the mid-year economic and fiscal outlook, otherwise known as the budget update. The Treasurer has indicated that while many observers are counting on some sort of surplus to emerge once again due to stronger-than-expected revenues, the Treasurer has indicated that we should not expect any largesse in terms of new measures to address cost of living issues. Surely the Government finds itself in a position where it probably can do a little more to ease the pain of inflation, can't it?
LEIGH: We're doing an awful lot at the moment, Leon. We've got that childcare package rolling out, which is seeing childcare costs going down where they otherwise would have gone up. We got the energy bill rebates flowing through, we've got the biggest increase to Commonwealth rental allowance in 30 years. All of those things are being delivered to Canberra households right now, making a difference to people's cost of living pressures. So, it's not as though there were payments in the past, and they've now stopped. Those payments are continuing. But at the same time, as you said, we delivered the first surplus in 15 years, and our responsible economic management has ensured we're not making the Reserve Bank's job harder. Now, if we just cut a big check to everyone in the country, then that would place upward pressure on interest rates, make the Reserve Bank more likely to raise rates and put more pressure on homeowners. By targeting the assistance, we ensure that we're working hand in glove with the Reserve Bank. And they've said as much, noting that our measures have taken about half a percentage point off inflation.
DELANEY: All right, we're out of time. Thanks very much for chatting today.
LEIGH: Real pleasure, Leon. Thank you.
DELANEY: Thank you. Dr. Andrew Leigh, Assistant Minister for Competition, Charities and Treasury, Assistant Minister for Employment and our local member here in Fenner.