2GB MONEY NEWS
THURSDAY, 29 SEPTEMBER 2022
LUKE GRANT (HOST): So back to our October budget and the balance between spending and saving. Of course, it's crucial. One man who's been a big part of the budget process unsurprisingly is the Assistant Minister for Competition Charities and Treasurer Andrew Leigh. Minister, welcome back to the show.
DR ANDREW LEIGH, ASSISTANT MINISTER FOR COMPETITION, CHARITIES AND TREASURY: Good to be with you.
GRANT: Nice to talk to you. Firstly, before we get to the budget, the government has just introduced legislation to crackdown on anti competitive behaviour and unfair contract terms. I note that the Small Business Ombudsman, Bruce Billson, has been effusive in his praise of the legislation. Can you take us through what's changing and how that's going to help small businesses operate, Minister?
LEIGH: Well, competition is a bedrock of a fair economy and we need competition to get better prices and more choice for Australian households. The government has been worried that too many big firms are starting to treat competition fines as just a cost of doing business, rather than a real deterrent to bad behaviour. So we're raising the maximum penalty from $10 million up to $50 million to make sure that big businesses do the right thing. And the other thing we're doing for small businesses is making unfair contract terms illegal. These are terms that are lopsided. So, for example, a big business might have a contract with a small supplier that says they can change the prices any time they like or they can get out of the contract anytime they like, although their smaller counterpart can't quit if they want to. So those unfair contract terms will now be illegal. There will be fines for putting those into contracts.
GRANT: Now, you're preparing, or part of the team preparing the budget for just under four weeks from now, getting the balance right between saving and spending in a potentially high inflation environment, not wanting to make the job of the Reserve Bank too difficult. How has it been working through that process? That must be somewhat challenging.
LEIGH: It's a really challenging process. And Jim Chalmers, Katy Gallagher, Stephen Jones and I have been thinking very much about the importance of the quality of the spend. We want to make sure we're spending on areas like cheaper childcare, cheaper medicines, getting wages moving for aged care workers.
GRANT: And you've just, as I mentioned before, won an astonishing election result for Labor. You've got so much goodwill out there, political will, you can afford can’t you to go hard now.
LEIGH: I don't think of it as going hard Luke, I think of it as making the right decisions. Clearly, we're going to have to go through the rorts and waste and that's why we've got a rorts and waste audit. But we also need to make sure we're a government that does, after the election, exactly what we said we'd do beforehand. There are too many stories in Australian politics of government's breaking promises and that's not just bad for their ability to then go through and deliver. It also erodes people's faith in democracy. The share of Australians who have lost faith in democracy was at historic highs before the election. I don't want to go back there. I think it's really important the Australian polity works well. I think people on both sides of politics should believe in that. It's one of the reasons I'm really hoping that everyone in the Parliament votes for the National Anti Corruption Commission, because that's the kind of major reform that deserves widespread support and if it gets, it will really help to raise the standing of politics that's been eroded over recent years.
GRANT: Yeah, I agree with that. I know in the lead up to the poll, there was a lot of talk about going through the budget line by line to stop the rorts and the waste, as you mentioned a couple of times, and I've got the feeling Minister and I might have got this, might have misread what's been said, but is there a pot of gold? Is there enough there to make a meaningful difference? We've already seen a massive improvement in the bottom line, but is there more that we'll hear about on budget night that you've discovered that will no longer happen?
LEIGH: Look, there'll certainly be savings that will be made beyond those we identified at the election. But on the tax front, we've been very clear that our focus there is just on multinational taxation. We need to make sure multinationals pay their fair share, not just to add to the budget bottom line, as we've talked about Luke, but also because we don't want regular Aussie small businesses, disadvantaged by being competing with one hand tied behind their back, going up against a multinational that's stashing profits in the Cayman Islands. That's not good for business. So multinational tax reform is going to add to the budget bottom line and add to the fairness of the economy.
GRANT: Now you've seen like we've all seen what the UK government has done in relation to tax cuts and the like and you might choose not to comment on that. Which is fair enough. But what they've done and the reaction to it in particular. Does that not make a case somewhat of a case. For the government to relook at the stage three tax cuts? Deviate from that plan and maybe save a dollar or two and not to kind of pump up inflation any further?
LEIGH: Look, I can see the attraction for people wanting to draw an analogy between Britain and Australia, but I do think they're quite different situations. In their case, we're talking about tax changes that take effect very quickly in April of next year. In contrast, in Australia, the stage three tax cuts don't kick in until 2024. And they're also talking about reneging on a pledge to raise the company tax rate from 19% to 24%. So I don't want to get into critiquing the UK government, except to say that the IMF has made this pretty unprecedented intervention in doing so.
GRANT: I want to talk about the fuel excise or the discount, which is now over. And, look, we haven't done any official poll, but I get a sense from our listeners that particularly on the back of and no one is suggesting that you or Jim found $47 billion down the back of your couch and said, whoopie, here we go. But to extend that fuel excise when everything else seems so expensive as a cost of $3 billion now, I know I've heard Jim, I've probably heard you, Andrew, to be fair to say. Well, you know, that was a policy of the previous government, but you're in there changing things, you're running the show now. Did it not even for a moment appear to be a decent idea?
LEIGH: It's just so expensive. I mean, you're looking at some $3 billion just to extend it for another three months. This is a policy which is very expensive, and ultimately, people think of the fuel excise as going on to fund the road system. If you maintain that linkage, then you'd be worried about the sustainability of one of the core sources of funding to fund road upgrades. My hope is that we're able to increase the transition over time to electric vehicles. We're cutting the taxes on electric vehicles in order to try and encourage the uptake, because for every ten kilometres you drive, an electric vehicle is a dollar cheaper and running costs than a petrol vehicle.
GRANT: But that's not going to help the battler listening to you and me now, who's maybe got a $10,000, I don't know, Toyota Camry. And that's as best as he and his family might have for the future, to be able to get that family, that hard working, battling Australian family out of his car to save whatever it is, a day driving a Tesla. It's so far out of reach, isn't it?
LEIGH: You're right. And EVs are expensive and no one's going to be going out and buying them in response to the change in the fuel excise immediately. We should also say we've got the ACCC looking very carefully at the behaviour of petrol stations. They've got some 700 million litres which are in their tanks that have been purchased at a time before the fuel excise went back to normal. And so it should be five days or so before those price rises come through. They shouldn't be happening immediately.
GRANT: Okay, let me ask you this as an economist. If we see, as some are predicting, a recession in, let's say, the USA and the UK, how confident are you that won't happen here? And what are you doing specifically now to avoid the R word becoming a thing in this great country?
LEIGH: Yes, let's hope it doesn't come to that. Certainly we're seeing a lot of inflation in those countries, but we're also seeing historically low unemployment. So the hope is that the good news on the labour side ultimately sustains the economy through. Then in all of those countries, you're seeing rapid responses by the monetary policy authorities in ensuring that they're doing what they can to engender a soft landing rather than a hard landing. We're invariably affected by these things. You know how interconnected we are to the global economy. But it's not quite the old days where America sneezes and Australia catches a cold.
GRANT: And we've got all those commodities at near record prices and they might stay high for a couple more years. I mean, that could be just such a thing for our country, couldn't it?
LEIGH: Yeah. The iron ore price has come off a bit, but still the commodities prices are sitting solid. It's different from the set of indicators that typically you'd expect to see ahead of a major slump.
GRANT: Very good. I'm sure we'll talk around budget time, but for now, the Assistant Minister for Competition, Charities and Treasury, Andrew Leigh. Thank you so much for your time.
LEIGH: Real pleasure, Luke. Thank you.