TUESDAY, 22 MARCH 2016
SUBJECT/S: Malcolm Turnbull’s election stunt, tax transparency, tax reform, negative gearing
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks very much for coming along. My name is Andrew Leigh, the Shadow Assistant Treasurer. We learned today, thanks to the release of data from the Australian Taxation Office, that one in three big private Australian firms are paying no tax. One in three of Australia's biggest private firms didn't contribute a brass razoo to the running of our schools and our hospitals. This comes following the release of information last December showing that when it comes to big public firms, one in four are paying no tax.
We only know this information as a result of Labor's transparency laws, which we introduced in 2013, and which were opposed by the Liberals and the Nationals at the time. Tax transparency is absolutely vital to make sure big firms are doing the right thing. But they have been watered down under this Government. Thanks to a dodgy deal between the Liberals and the Greens, two out of three of the big firms whose data should have been released today have enjoyed tax secrecy. Because the Greens wilted like week-old kale, we haven't been able to find out the full extent of the information about big private companies.
All of this comes in the context in which the Government is running towards an early budget saying they hope to deliver a tax cut for Australia's biggest companies. That's right: Australia's biggest companies – of whom one in three to one in four paid no tax – are going to be the key beneficiaries of a tax cut under Malcolm Turnbull. We see a Turnbull Government still holding out against transparency. They are proud they took two-thirds of the private companies out of the tax transparency net. In fact, the only thing more secret than the tax affairs of some of those big private companies is the Budget date to the Australian Treasurer.
Going into this election, it is going to be a clear choice of values and priorities. Labor will be arguing for a fair tax system, in which multinationals pay their fair share, in which our $7.2 billion multinational tax plan adds to the budget bottom line while improving the fairness of our system. In contrast, we have got a Government which is in chaos and dysfunction; for whom the Budget is coming down a bit like a surprise party for the Treasurer, and where they are more addicted to secrecy and to maintaining tax loopholes for the big end of town than they are to investing in schools and hospitals that benefit all Australians. Very happy to take questions.
JOURNALIST: When it comes to the company tax rate that you think the Government is going to announce in the Budget, there the suggestion seems to be that if company taxes come down it could help to continue to grow the economy, potentially hire more workers, those workers will spend more money?
LEIGH: The key question there is 'if'. The Liberals on company taxes are a bit like Lucy and Charlie Brown with the football. In 2010, they went to the election promising to cut company tax, they hold the football out there, and then when it comes to Parliament pull the football away and vote against it.
In 2013, they again go to the election promising company tax cuts, and then when they decide to not go ahead with their unfair parental leave scheme they again pull the football and say they won't deliver on the company tax cuts. So when the Liberals come back saying they are going to deliver company tax cuts, it's not unfair for the Australian people to wonder about their bona fides. Let's wait and see what they can actually do. And let's wait and see how they can pay for it, or whether this is going to be a company tax cut that is simply paid for by higher borrowing.
JOURNALIST: Are you expecting the Government to announce any changes to negative gearing in the Budget? I know obviously they are not going to go to the extent that Labor has, but there seems to that they have left the door open to make some changes like capping the deductions for example.
LEIGH: I have lost the capacity to be able to anticipate sensible economic reforms from this Government. They love a cunning plan, this mob do, but they don't seem to be able to recognise as so many economists have that curtailing negative gearing makes sense. Labor's plan grandfathers the existing stock, allows negative gearing for new built homes so we encourage negative gearers to add to add to housing supply. The Government is all wily and tricky, trying to play the Australian people and play the Parliament, rather than get on with the sensible business of governing.
You know, Malcolm Turnbull in 2005 said that negative gearing was skewed to the upper end of the distribution. When Labor's carefully thought-through plan came out, he doesn't go with the four-fifths of economists who think it's good economic policy. Instead, he tried to run an old Tony Abbott-style scare campaign.
JOURNALIST: Is there any more modelling that you will be releasing on your negative gearing policy ahead of the election?
LEIGH: This has been thoroughly modelled and Labor's confidence in the impact of these policies is reflected in the recent survey of economists which showed that they don’t believe the scare campaign the Government is running and they believe that this is sensible policy. We need to move away from the system where the Government is giving more assistance to property speculators than first home owners. Like the young couples who come up to me at so many of my street stalls, just tearing their hair out as to how two people on a modest income can raise a family and buy a home. It is not too much to ask that Australian might make some sensible changes to negative gearing. And yet, Tony Abbott is absolutely right: Malcolm Turnbull's not just going to this election running on Tony Abbott's record, he's going to this election being a Mini-Me Tony Abbott when it comes to scare campaigns.
JOURNALIST: In terms of negative gearing, will Labor's policy go beyond new houses? Will negative gearing happen on other assets as a result of Labor's policy, for example shares?
LEIGH: Our policy is out there in all of its details and I invite people to go to those details. We have said we would curtail negative gearing across the board, allowing deductions of investment losses only against investment income for any new purchases after the middle of next year. The exception to that is new housing, where we want to encourage negative gearing to continue because we want add to the housing supply. By the way, that's the approach the federal government took to the first home owner grant about a decade ago, and the approach every state and territory has recently taken to changing the first home owner grants. That's the approach that the federal government takes to foreign investment: encouraging investment in new housing stock. If it's the right approach for first home owner grants and the right approach for foreign investment, it is hard to see why it is also not the right approach for negative gearing.
JOURNALIST: Will it apply to other asset classes, Labor's policy that is?
LEIGH: Yes, we have been absolutely clear that under Labor's policy, from the middle of next year, existing assets are grandfathered. So if you've bought a home under the existing negative gearing arrangement, that doesn't change. If you've bought shares under existing negative gearing arrangements, that doesn't change. But for new purchases after the middle of next year, negative gearing only continues for new built homes. Otherwise, you can deduct your investment losses from only against your investment income. That’s how it works in Britain and the United States, and I have to say contrary to Malcolm Turnbull, Scott Morrison and Peter Dutton, you don't see their housing market and sharemarkets collapsing.
No more questions? Thanks everyone.
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Why dont they criticise APRA for restrictions imposed on investment lending, as detailed by Saul Eslake today?
APRA has considered it wise to restrict investment lending in a major way – yet no comments from anyone in the LNP.
What is Treasurer Scott Morrisons view on APRA policy? or Minister Dutton’s view? Is APRA stopping people from getting ahead?