SKY NEWS, AM AGENDA WITH TOM CONNELL
MONDAY, 19 DECEMBER 2016
SUBJECT/S: MYEFO 2016
TOM CONNELL: You're watching AM Agenda and joining me now in our Canberra studio is Shadow Assistant Treasurer, Andrew Leigh. Andrew Leigh thanks for your time this morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure Tom.
CONNELL: Now, we don't quite have the full picture yet but it's pretty clear we're going to see company income tax revenue down, deficit up – sounds a lot like the annual Wayne Swan MYEFO doesn't it?
LEIGH: Well, there was a Global Financial Crisis in that period, Tom -- the biggest downturn since the Great Depression. All the Australian economy has been hit with in recent years is Scott Morrison. I mean this is a government that said, in 2013, they would have the budget in surplus in their first year and in every year after that. They ran on campaigns of debt and deficit disasters – driving debt trucks around the country. Yet we've seen this year’s deficit eight times larger. We've seen net debt blow out to the tune of thousands of dollars for every Australian, under a government that said they would have the budget under control.
CONNELL: Yet, as I said, the GFC happened but even up until 2012 – I think it was right near Christmas – Wayne Swan finally faced up to him not facing a surplus You can argue the tough decisions weren't made there and the government's trying to make a few tough ones that you won't agree to this time round.
LEIGH: During the Global Financial Crisis, almost every advanced country took on debt and Australia was one of the best-performing. The OECD, the IMF, experts like Joe Stiglitz, say that Australia's performance through the Global Financial Crisis was first-class. But over recent years, you've seen a government that's lacked an economic agenda. Malcolm Turnbull came to office with this promise of economic leadership. But the slogan of "Jobs and Growth" is belied by the fact that we've got declining full-time employment and growth going backwards in the last quarter. The promise of tackling debt and deficit is belied by the fact that we've got the debt blowout and the deficit blowout.
CONNELL: Just on the point of the tax receipts down – this was the reason you can talk about the GFC – the impact was tax receipts down. It's the same thing now. You can say they were wrong to rail about debt and deficit then, but perhaps they're right to point out reasons today. You should have some sympathy for them, some empathy?
LEIGH: I don't have any sympathy and empathy for a government which is so economically inept. Australians are struggling to buy their first home. The home ownership rate is the lowest it's been in 60 years. And what does the Coalition-dominated housing affordability committee do? They come back with zero recommendations. There are major challenges in the macro economy. You mentioned sluggish wage growth. Inequality at a 75 year high. Home ownership at a 60 year low. And yet the government is just struggling around looking for someone else to blame. At what point does Scott Morrison man-up and say, "I'm the Treasurer of Australia, I'm taking responsibility"? By the sound of things, not today.
CONNELL: Right now though, whatever the reasons are, you were delivering deficits because of lower receipts than you thought. So is the government today for that same reason. That seems self-evident?
LEIGH: Tom, there was a Global Financial Crisis. Almost every country in the world-
CONNELL: As a result we had lower tax receipts. That was happening then and it is happening now. We haven't recovered is the problem, from the GFC. It's a new post-GFC world. Isn't it a fact that in both circumstances we're not getting surpluses because of the same reason?
LEIGH: Well let's benchmark ourselves against other advanced countries. During the Global Financial Crisis, we were one of the best performing. Now we're falling behind the pack. This drop in real wage growth – that's not what you see across most of the OECD. The drop-off in growth, that's unusual as well. Many other countries' labour markets and retail spending are performing better than Australia's. We're falling off the mark under Malcolm Turnbull and Scott Morrison.
CONNELL: The credit rating, if that's downgraded – under Labor in this forward year period we'd be $16.5 billion worse off.
LEIGH: That's simply not right, Tom.
CONNELL: Well no it is in the forward year. Better over 10, but worse off over 4 years. That's what Chris Bowen took to the election.
LEIGH: I thought you were making a comparison out of 2013. You're saying that out of the last election?
CONNELL: No, since the last election $16.5 billion worse off over the forward years. My point is that if the credit rating agencies downgrade us now it's pretty hard for Labor to say that it wouldn't have happened under you because we'd be in a worse position over 4, albeit as you say, better over 10.
LEIGH: Two things. If Labor had been in office, we wouldn't have gone ahead with this unfunded $50 billion company tax cut-
CONNELL: It hasn't gone ahead yet.
LEIGH: It's on the books and it's one of the factors that's sitting in the estimates. If the government doesn't want to go ahead with it then they can announce today that they're scrapping the centrepiece of their last budget. That would be an economically sensible move. More than that, Labor believes that we need to reign in negative gearing and the capital gains tax discount. Tax breaks which are decreasing the home ownership rate and tilting the playing field towards investors and away from first home buyers. That's good fiscal policy but it's also good macroeconomic policy. My frustration Tom, is that the government's not getting either the macroeconomy right or the fiscal stuff. They should be able to balance the budget but they should also be able to invest in infrastructure where we've seen a one-fifth fall over recent years.
CONNELL: Ok. Andrew Leigh, we are right out of time, we'll see where it goes today but thanks for your time on AM Agenda.
LEIGH: Pleasure Tom.
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