WEDNESDAY, 23 SEPTEMBER 2015
SUBJECT/S: Tax reform; Labor’s positive plans for innovation and education.
STEVE CHASE: We're hearing a lot from the new Cabinet under Malcolm Turnbull about re-setting policies. That puts pressure on the ALP, especially on the issue of raising the rate of the GST, which the Labor Premier of South Australia, Jay Weatherill, wants.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Steve, Labor strongly welcomes a conversation about ideas - that's exactly where our policy should be. We shouldn't be trading slogans and insults. That's not edifying for the Australian people and it's not good for the job we do. On the conversation about the GST, Labor's considered view is that raising the GST wouldn't improve either efficiency or equity, which are two of the key touchstones when you're looking at tax reform. The Treasury's own tax white paper puts the cost to the economy of the GST at about the same level as income tax. So it's not this fabulously efficient tax as some would have you believe, but it is a tax that falls disproportionately on those at the bottom of the distribution. I think one of the attractions of raising the GST has been that people have thought they could spend the money on a whole lot of almost mutually exclusive things. Social services groups have sometimes argued that you can give it all back as transfers and tax cuts to the bottom; Mike Baird has been arguing for spending it on health; Joe Hockey used to argue for spending it on cutting federal taxes and others to use it for cutting state taxes. But you can't do all those things with a GST rise.
CHASE: But isn't the Labor Party painting itself into a bit of a corner? I know that Chris Bowen has ruled out raising the GST and he doesn't accept that it's the best way to pay for company or income tax cuts. But there are other areas of the economy where unions and business want real economic reform and it seems as though on this issue of the GST and how to fund reforms, the ALP seems to be one out.
LEIGH: Steve, I'm entirely up for economic reform. I think we have big challenges in Australia. Most OECD countries, for example, have seen their patent filings per person rising over the past decade; ours have been falling over that time. We're not producing enough ideas that are new to the world. So at a time when we've got inequality rising and some of our innovation statistics causing us trouble, we absolutely need reform in taxes and other areas. That's why in the first half of this term Labor brought out a multinational tax package which raises $7 billion over the decade, and shortly after that a superannuation package that raises $14 billion. This is real tax reform, Steve. It's tackling an unsustainable tax concession in superannuation tax breaks, which are the fastest-growing in the budget.
CHASE: But you're in a new situation now. You've got Malcolm Turnbull looking at you across the despatch box, it's completely different from what it was with Tony Abbott. Isn't Labor going to reframe its policies to look at that particular challenge? Indeed, there are some reports this morning about nervousness within your party about developing new policies and meeting this challenge from Malcolm Turnbull.
LEIGH: Steve, as a person who got into politics to make a difference, I couldn't be happier if politics is going to move more towards talking about ideas that make a difference for the future of our country. The innovation issue that I spoke about before really does keep me awake at night, worrying about how we're going to continue to generate new jobs into the future. You look at the NASDAQ where Israel has 100 companies listed and Australia has only seven. Inequality is also a problem that troubles me. We've got slow wage growth. And over the past generation, wage growth has been one-third the pace for the bottom tenth as for the top tenth. So these are serious problems and we need to be looking carefully across tax reform. Labor has said, for example, that we won't rule out a conversation around negative gearing. It's a difficult one but I think it's an important area of tax reform. And it is, I believe, more in the nature of real reform. I mean, if you simply say: my idea of reform is to raise the GST 50 per cent, I'm not sure that you win any great prizes for innovation or creativity on that one.
CHASE: I take your point about negative gearing, you've set out your stall on that one in terms of trimming it a little bit and not affecting existing people who have negative gearing benefits. But I'll leave you with this question, we've got a new Essential poll out today and there's just one figure I'll put to you. They compare the two leaders, Malcolm Turnbull with Bill Shorten, on one measure: visionary. Malcolm Turnbull is seen as a visionary by 51 per cent, Bill Shorten by 26 per cent. Surely that tells you that Bill Shorten has to have a bit more oomph when it comes to looking at economic policies?
LEIGH: Steve, in every conversation I've had with Bill Shorten, he has been excited by ideas. Occasionally when Parliament is sitting, we'll get to go for a run together and invariably his first comment to me is: what's your new idea? Bill is somebody who is hungry for ideas to make Australia better. You saw his Budget Reply speech, where he spoke about innovation and –
CHASE: But why isn't it flowing through to measurements in polls like Essential? Sorry to interrupt you there.
LEIGH: Well I don't place much stock in polls, Steve. I'm probably the greatest poll sceptic in the federal Parliament, and I've argued we spend too much time focusing on them because it takes us away from good conversations about ideas like the one we've had this morning. Bill is up for the conversation about ideas - he's been speaking about the importance of learning coding, of engaging with Asia through teaching Asian languages, of getting more people studying science, technology, engineering and maths. His announcement this week around higher education reflects the fact that as technology advances, we have to have education running to keep up. That's good for growth but it really matters for equity as well.
CHASE: Andrew Leigh, thanks for giving us the ALP's perspective this morning.
LEIGH: Thank you, Steve.
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