Labor is passionate about tax fairness - Transcript, Sky News Karvelas





SUBJECT/S: Buffett tax; Penalty rates; National Accounts.

PATRICIA KARVELAS: My next guest is the Shadow Assistant Treasurer, Andrew Leigh who I'm sure was listening in there. Andrew Leigh, welcome.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks Patricia, great to be with you.

KARVELAS: I'll just start with the question I'd love to get your view on, do you support the Buffett tax?

LEIGH: The Buffett tax is essentially the notion that as Warren Buffett put it, it's unfair for a billionaire like him to be paying a lower rate of tax than his secretary. It has inspired a range of people to do work around tax fairness and that tax fairness package made its way into Labor's last election platform where we said it wasn't fair to have breaks like negative gearing, capital gains tax and the high income superannuation tax breaks and it was appropriate to rein those in. The Buffett tax tackles two issues essentially; deductions and the 50 percent capital gains tax discount and we went to both of those.

KARVELAS: Lots of MPs raised this in Caucus this week, there are a couple I can name; Andrew Giles, Terri Butler. We know that consideration of the tax is part of the Labor Party platform but don't you leave yourself vulnerable with all these people speaking out about this on a campaign by the Government to say that Labor just wants to more taxes on high income earners?

LEIGH: Patricia, Labor is passionate about tax fairness – Terri Butler, Andrew Giles, Pat Conroy as well as Chris Bowen and Bill Shorten and the rest of the economic team. From Labor you've had constant leadership on making sure that our tax loopholes are there for a good reason and where they're not that they're closed down. The package we took to the last election was first rate tax reform, not only was it fair but it also proved housing affordability. No country has an absolute Buffett rule, no country says to a high income earner you can't get a tax break for that charitable donation because that would bring your tax rate below that of a low income earner. But many companies have taken inspiration from what Warren Buffett put on the table and the Labor Party's package at the last election was a very fair package, very much in the spirit of what Warren Buffett said ought to be the case.

KARVELAS: Sure, but does it need to go further?

LEIGH: We're always looking at sensible tax reform, Patricia. We're up for that conversation and if only the Government would join us on this. We know that Scott Morrison and Malcolm Turnbull took to their own cabinet a package not dissimilar from Labor's package on negative gearing and capital gains tax but they got rolled. We know that in recent months they've been considering again sensible changes to capital gains tax but then ruled them out when it got into the public domain. The thing is when they talk about great tax reform in governments, you look at governments such as the Hawke and Keating Governments that managed to close loopholes in order to bring down the rate. This Government's only tax plan is a $50 billion unfunded company tax cut to the big end of town. While at the same time, they want to cut the wages of the people that clean their offices. That's not tax reform, that's a recipe for more inequality of the kind we've had over the last generation.

KARVELAS: On penalty rates, how can you attack the independent decision making process? Aren't you setting a dangerous precedent here for wages intervention that could lead to interventions that I guess you won't be happy about in the future if the other side of politics is intervening like that, aren't you setting a dangerous precedent for short term political gain?

LEIGH: Patricia, you're quite right that you want to weigh up in any intervention the immediate impact of an intervention, and the impact on the institution itself. But in this case, Labor has taken the view that it is appropriate to intervene. Because we never expected that the independent umpire would make a decision which would reduce the take home pay of low wage workers. Kelly is somehow trying to conflate that with wage deals done by unions in which a higher base rate of pay is received in exchange for trading off penalty rates. But that's not what we've got here. We've got a direct cut to penalty rates of the kind that over 60 Liberal MPs including Kelly O'Dwyer, including Malcolm Turnbull have been arguing for in the past. The restaurant award is about $600 per week, it's about half of the median earnings in Australia. So people in hospitality are doing it tough already, they don't need money taken out of their pockets. I think many Australians are pretty happy to pay a surcharge in order to see people to get Sunday rates. When I left my family at a restaurant this evening in order to come on your program, it was a restaurant that charges a surcharge and I was happy to pay that in order to support the workers who work there.

KARVELAS: Pauline Hanson says she supports in principle the cuts to penalty rates, she says it's pro-growth. It is the consistent argument that's now being made, you've got Pauline Hanson, you heard Kelly O'Dwyer there making the argument that this was good for jobs. What's your message to people who are unemployed who might get the job because of this change?

LEIGH: Well I think people that make this argument often forget the fact that low wage workers spend their entire pay packet. If you look at people in the top of the income distribution, they save about a quarter of their income. If you look at people in the bottom fifth of the distribution they spend all their income and often more – they're often going into debt. So when you take money away from low wage workers, you take it out of spending in the economy. That affects other businesses and it means that cuts to penalty rates can deter growth. I don't think this is going to cause job creation in the hospitality sector, indeed I mentioned to you before the Sunday surcharges that I'm sure many of your viewers would be happy to pay because they know when they're there on Sunday they're being served by somebody who isn't with their own family. We have Sunday rates for the same reason we have a weekend, it's a good way of ensuring that people get to spend time with their friends and family. It builds social capital in Australia. To take away penalty rates is not only to increase inequality but to further diminish the strength of community life in Australia.

KARVELAS: The National Accounts were out over the week and it's a positive story; we haven't gone into recession. The Government was obviously trying to spruik this as an achievement. You must be pleased with the figures?

LEIGH: I'm not sure a Government ought to be patting itself on the back because we didn't go into recession, Patricia. Of course I'm pleased that didn't happen, that would have been a terrible outcome to see us go into recession for the first time in a quarter of a century. But we've still got wages growth at record lows, we've got home ownership as low as it has been in 60 years and inequality is as high as it has been in 75 years. The only number going gangbusters at the moment is corporate profits. Which does raise the question as to why big banks, big mining companies, the big end of town really needs this company tax cut the Government is spruiking? Living standards are barely above where they were in 2013 when the Abbott-Turnbull Government won office. Many people are feeling the squeeze that is being placed on them by rising house prices and sluggish wage growth. I worry particularly that if there is to be a kick up in interest rates, that many home owners could be placed under extraordinary stress given where wages and house prices are right now.

KARVELAS: Andrew Leigh, thank you so much for joining me tonight.

LEIGH: Thank you, Patricia. 


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.