MONDAY, 1 APRIL 2019
SUBJECTS: The Budget, Labor’s Climate Change Action Plan.
KIERAN GILBERT: Now the Shadow Assistant Treasurer Andrew Leigh. Ahead of the budget, Mr Leigh, thanks very much for your time.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure.
GILBERT: Already the Government's come out saying this is a carbon tax. What do you say to their criticism, their critique already?
LEIGH: It's not. And if it were then their own policy would be a carbon tax. Kieran, this is simply an extension of a scheme put in place by Malcolm Turnbull. Business has told us that they are sick of the climate wars. They're sick of the bickering over climate and they want bipartisanship. Our view is the best way of achieving that is to extend the Turnbull Government's safeguard mechanism that applies to 0.01 per cent of companies, puts in place a pollution cap and is part of our commitment to seeing Australia meet our internationally agreed carbon targets. As you've said before, we're also taking advice from business to improve the scheme by giving firms access to international credits.
LAURA JAYES: Interesting that under Malcolm Turnbull's plan, no one was actually penalised for exceeding it. That was at 100,000 tonnes per year. Your scheme will be at 25,000. So how many businesses do you expect to be captured by it?
LEIGH: Our estimate is it's going to be a couple of hundred businesses that are caught by it - as I said, 0.01 per cent of businesses. This is part of a broad suite of measures - we're investing in ensuring that we've got the Clean Energy Finance Corporation putting money into promising renewable projects, ensuring that Australians have the opportunity to install batteries in their homes as a way of firming up their renewable supply, and setting this target of 50 per cent electric cars by 2030 which is entirely in line with where the rest of the world is going. Right now we’re at the bottom of the advanced world when it comes to uptake of electric vehicles so that's an important part of reducing our emissions.
GILBERT: But why would you say it's not a carbon pricing mechanism? Doesn't it still technically, with a baseload and credit scheme, doesn’t it still put a price on carbon? Because, I guess, if there wasn’t, why would you be allowing the acquisition of international permits for example?
LEIGH: The acquisition of international permits doesn't turn it into a tax. It simply provides firms with another way of meeting their targets. It provides additional flexibility to firms. That's why businesses asked us to put it in place.
JAYES: Why is Labor supporting their one off cash payments the Government announced yesterday to help people with their energy bills? I mean, is this an admission that prices aren't going to be any lower under a Labor Government?
LEIGH: We'll always support sensible measures that help pensioners and low income Australians, but this is pretty rich coming from this government. I mean, let's remember Scott Morrison's record. He tried to cut pension indexation – moving pensioners from wage indexation to price indexation. He’s tried to raise the pension age to make us their oldest pension age in the world. He's consistently been trying to cut the energy supplement - not a one off payment but an ongoing payment-
JAYES: Yeah, but sure. But if you could answer this question – are Labor's prices – are prices for energy going to be any lower under a Labor Government?
LEIGH: Yes, absolutely. We’ll always ensure the prices are lower and that's because we'll be investing in renewables. People with solar panels on the roof will know the simple economics of this. Once you've installed solar, you bring down the cost of ongoing energy. Now that's what we've been doing across the economy, making sure that we decarbonise but also save Australians money.
GILBERT: You’re basically doing the approach of neutralise, neutralise the politics of a payment like this and then move on and get your own argument out there? I guess we could extend that to any tax cuts, expanded tax cuts that the government might adopt that you would be following suit. Is that a fair assessment?
LEIGH: Let's see where they go with tax cuts, Kieran. The position we're in right now is Labor's offering bigger, better, fairer tax cuts for 10 million Australians earning less than $125,000. If the government wanted to match us with that then they should have voted for our proposal in Parliament last year. They didn't. They opposed it. We're able to go to the election offering better income tax cuts, more spending on hospitals and schools and paying down the debt faster because we've made those tough decisions around closing multinational tax loopholes.
JAYES: Why have you chosen January 1 as a start date for the negative gearing plan?
LEIGH: Laura, it’s a natural period to introduce changes in the housing taxation policy because the housing market goes quite quiet over that period. It's also important for us that we have time to legislate the reforms. This would give seven months from the election until the implementation date. It's fairly consistent with what we did at the last election, where we looked at there about an 11 month lead time.
GILBERT: But can you be sure that even with this softening property market that you spoke about, people knowing instinctively that solar works because they get the benefits of that - I think people instinctively know at the moment that their net worth has reduced many of them because house prices particularly the major cities have softened.
LEIGH: Kieran, they'll instinctively know that our policy doesn't apply to existing investments. So if you're negatively gearing-
GILBERT: But it still impacts on those who would show up at an auction, for example, if you know they're not going to be getting the benefits of a negative gearing arrangement. Therefore, are you, are you sure that this won't exacerbate the already falling property prices?
LEIGH: I certainly don't expect it would have that impact and neither does Treasury. For all the Government's hyperventilating, their own modelling out of Treasury says that it would have minimal impact on house prices. But what I do expect is that after New Year's Day next year, you're going to see more first home buyers showing up at auctions and I expect you'll start to see the home ownership rate rising. This is in the event where we're elected. We want to get that homeownership rate going up again. It's now as low as it's been in six decades. We're in the bottom third of the OECD for home ownership. We want to be a nation of homeowners again. Yet what the tax statistics out last week showed is that the share of investors who have five or six properties is going up and up while young people are finding it tougher and tougher to get in the market.
JAYES: But Dr Leigh isn’t it true that under Labor's plan you can still negatively gear as many properties if you like? You can do six, seven, eight, nine, 10 if you like. They just need to be new properties. So why aren't you actually imposing that change?
LEIGH: That's a great question, Laura. We're going straight to the problem here, which is that the tax concession isn't adding to new housing stock. So we're taking the same approach that states and territories take with their first home owner grants, the same approach the federal government takes with foreign investors. Both those measures are limited to new built homes – so will negative gearing be under a Shorten Government. We're keen to add to the total housing stock because that's part of tackling this challenge of home ownership and housing affordability-
JAYES: Right, but by framing this as a fairness measure, you're saying it's not alright to, well it is still okay to negatively gear as many properties if you like if they are new homes and it's okay for taxpayers to subsidize that. Can you see how that a bit confusing?
LEIGH: It's fair for new home buyers to have a situation in which investors are only getting the tax break if they're adding to the housing stock. That's a fairness outcome. But this is also important, Laura, in terms of financial stability. The Reserve Bank's warned about the challenge of encouraging investors to put all their eggs into the property basket. We know it's vital in terms of economic productivity. There's nothing productive about young families being unable to buy a home when they need one.
GILBERT: Do you still see it as important from a Labor perspective just finally that you commit to substantial surpluses and will yours be larger than what the government promises at the budget tomorrow?
LEIGH: We do and they will. Surpluses are important in terms of providing fiscal buffers in an uncertain world. We've got US growth slowing, we've got challenges in Europe. There is a real risk of a significant downturn. We need those fiscal buffers to be able to put in place measures if the economy was to turn down. That's how we managed in 2008 and 2009 to save 200,000 jobs and tens of thousands of small businesses. So those surpluses are vital. The Coalition has doubled net debt under their period. It’s gone to over $14,000 per person in Australia. So we need to get debt under control. The Coalition has utterly failed to do that.
GILBERT: Shadow Assistant Treasurer Andrew Leigh, thanks for your time. Appreciate it.
LEIGH: Thanks, Kieran. Thanks, Laura.
Authorised by Noah Carroll ALP Canberra.
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