Labor will fight key measures in Government's tax-it or cut-it budget

This morning I spoke to ABC NewsRadio's Marius Benson in the wake of Labor leader Bill Shorten's spirited budget-in-reply speech in which he hit back at changes to Newstart and Medicare.



FRIDAY, 16 MAY 2014

SUBJECT/S: Debt levy; Budget deficit; Newstart cuts for people aged under 30; GP tax.

MARIUS BENSON: Andrew Leigh good morning. 


BENSON: It was very clear from some of the things Bill Shorten said last night you will be opposing measures some of which we just mentioned in that lead, it's not entirely clear some others, the fuel excise indexation, the reintroduction of that, you are opposing that?

LEIGH: Yes we will Marius, we've been very clear about number of issues: raising the pension age, putting a GP co-payment in place, and the cuts to unemployment benefits are measures that will definitely be opposing. 

BENSON: But the debt levy applying to people over $180,000 increase in their marginal tax rate, you haven't made up your mind on that?

LEIGH: We're still working through internal decision making processes on that, and it's not the priority it was for us when the threshold was at $80,000. 

BENSON: Isn't it just too easy being in opposition at budget time? All you've got to do is oppose everything painful and then you know, you seem like the good guy in the block, but basically, you're stopping $18 billion in revenue savings so, it is incumbent on you surely to indicate where you could make up that shortfall of $18 billion?

LEIGH: Well Marius we need to move away from this notion that this is a budget which is making significant savings and paying down debt. We've just got to compare this budget with the Pre-Election Economic and Financial Outlook brought down by the Secretaries of Treasury and Finance. Is the deficit for 2013-14 bigger or smaller? Well it's bigger under this budget. The deficit for 2014-15? Well that's bigger under this budget than it was at the election. The four-year deficit? That's bigger again. So the extraordinary thing about this budget is that this is not a budget which is about changing the deficit. In fact it worsens the public finances, what this budget is about is re-prioritising moving spending from low income Australians to high income Australians, after a generations in which we've seen one of the biggest rises in inequality in Australian history. 

BENSON: Are you saying that it's not affecting debt and deficit?

LEIGH: I am indeed. Look that's going to be surprising for many of your listeners, but what you need bear in mind is that Mr Hockey upon coming to office doubled the deficit through things like saying no to billions of dollars of mining tax and carbon price revenue and by giving $9 billion to the Reserve Bank that they hadn't asked for. Having done all of that, he's then made a series of very savage cuts, the burden of which falls primarily on low income Australians. But the net effect is not fiscal consolidation. The net effect is the deficit is higher than it was when Mr Hockey came to office. 

BENSON: National economies are baffling things, but I was reading Chris Richardson in the Financial Review, he's an economist with Deloitte Access and a man highly regarded, he was saying that this budget takes out $18 billion from the Australian economy, about 1 per cent of national income, and he compares that to the Hawke-Keating budget of the early 1990s, and that took out $50 billion, took out money at about three times the rate of the current budget, but money is coming out of the economy as a result of this budget to the tune of $18 billion. 

: Well what you see in this budget is a shift in spending from people who put their money, their pay cheque, straight back into the economy, to people who tend to save. Take for example the measure which raises the threshold on superannuation contributions that get a tax benefit that from $150,000 to $180,000. That's a huge benefit to people who are putting more than $150,000 into super, but that's not money that's going to go immediately back to the economy. But when you tell someone on Newstart, a twenty something year-old on Newstart, that they have to wait six months before they can get any unemployment assistance, before they can indeed get onto Newstart, well that's money coming straight out of the economy, so I think this will have a contractionary effect. On top of that there's the confidence effect, a Treasurer who seems to have not made the transition from Shadow Treasurer. He is still a Shadow Treasurer in drag, still trash talking the economy. I think that's bad for business confidence and Mr Hockey needs to grow into the role. 

BENSON: You were singled out for one remark about the $7 co-payment in that context, he said Labor itself, this is Tony Abbott, Labor itself introduced a co-payment for doctor visit back in the 1990s, smart front benchers like the current Shadow Assistant Treasurer think the co-payment makes sense. Is that right? 

LEIGH: Well it's certainly true that in 2003 while I was a university I thought that this was a good idea. Since then I've spoken to experts and changed my mind. In fact there's not a health expert who came out over the last few days, not the AMA, not the Doctors Reform Society, not the Royal College of GPs, that thought this was a good idea. The striking thing though is that Mr Abbott seems to think that it's okay to focus on what a junior front bencher on the Labor side said more than a decade ago, rather than what he said last year while campaigning to be Prime Minister. I mean, the litany of broken promises is such in this budget that it's really a matter of playing pick the kept promise rather than pick the broken promise; cuts to ABC, cuts to health, cuts to education, new taxes. For a man who campaigned on being different, on keeping promises, Mr Abbott has deeply, I think, let himself down. 

: Andrew Leigh, thank you very much. 

LEIGH: Thank you Marius. 

16 May, 2014

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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.