SKY NEWS, AM AGENDA
TUESDAY, 14 FEBRUARY 2017
SUBJECT/S: Government threatening the NDIS; Government’s $50 billion company tax cut; Government lurches closer to One Nation
LAURA JAYES: Andrew Leigh, thanks for your time.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure Laura. Happy Valentine's Day to you and your viewers.
JAYES: Thank you. Thank you so much. First of all I wanted to ask you about this Omnibus Bill. Labor's obviously not going to vote for it. But, is there anything you can salvage out of it that hypothecating of funds to the NDIS to ensure it will go ahead and there is that funding pool there? What about things like the carbon tax energy supplement? We don't have a carbon tax, what do we need it for?
LEIGH: Laura, this is a pea and thimble trick. As you well know, the budget has a single amount of money in it. And the notion that if Labor doesn't support cuts to families the government is going to take money away from people with disabilities is profoundly offensive. The government shouldn't be playing these sorts of political games, particularly not at a time-
JAYES: They're not saying they'll take money away, they're just saying that the budget will go deeper into deficit to pay for it.
LEIGH: No, they have been threatening the viability of the National Disability Insurance Scheme. For a sleepless mum with a child with disabilities that's the last they need to be hearing on the news. It's particularly hypocritical too, at a time when the government wants to break the budget with a $50 billion dollar company tax cut.
JAYES: We'll get to company tax, but our welfare bill, every year, is $160 billion. That it is projected to go up to beyond $250 billion in the next decade or so. Are you really saying that there are no savings to be made? That money can't be better spent within that social services and welfare bill?
LEIGH: I'm sure there's always constructive tweaks to be made, but no country's social safety net-
JAYES: Ahh, what are those constructive tweaks that your willing to put forward?
LEIGH: Let's also recognise the context here. No country's social safety net is as well targeted as Australia's. A dollar spent in the Australian social safety net does more to reduce inequality than a dollar spent in any other country's social safety net. It's a lean-
JAYES: OK, well what about this argument that we still have an energy supplement? It was meant to be there to compensate for the carbon tax, but we don't have a carbon tax. How can you justify that?
LEIGH: But this is money being taken away from some of the most vulnerable Australians, at a time-
JAYES: Sure, but it is not doing what it is meant to do. Nor should people who spend 8 months overseas still be receiving some kind of welfare, should they?
LEIGH: We'll certainly look at a range of these measures. Jenny Macklin has indicated a willingness to be constructive. But let's not pretend anything other than the fact that Australia operates a fairly small government model. Much closer to Mexico, Korea and the United States, than the much bigger spending economies of Europe.
JAYES: Let's talk about the company tax now. Philip Lowe, the Reserve Bank Governor, seemed to endorse a lower company tax rate, but Labor's still railing against it. Are you ignoring the advice of Australia's top independent economist?
LEIGH: He did. And then he also suggested we need to pay down debt faster and and spend more on infrastructure. Ultimately, governments have to make hard choices and that involves making sure that the budget balances. I don't think this is the time – with the AAA credit-rating under threat – to be cutting company taxes. And the government's modelling on this suggests that the benefits are very, very small. The scenario of a company tax cut that's funded by higher personal income tax – that's the most likely scenario – delivers 0.1% of extra household income in 2035.
JAYES: Why wouldn't a company go elsewhere? If there's a company tax rate in its teens in Hong Kong and Singapore, perhaps in the United States if Donald Trump gets his way? Germany, United Kingdom, the list goes on. I think the only comparable nation perhaps is France and you might say Canada as well. So we're looking at the raw economic data – the figures – if a company wants to make more profit, why wouldn't they move the operation off shore?
LEIGH: France, the United States and Japan have higher corporate rates than ours. Germany's is approximately the same as ours, at 29.72 per cent. But companies also make their decisions based on a whole range of other things; the quality of the workforce, the quality of the infrastructure, the quality of the government settings, and whether they have a government – for example – that's committed to long-term investment in clean energy. All these things matter to corporate investment. And if that wasn't the case then you would see all of the corporate investment in the world sitting in the one country with the lowest company tax rate.
JAYES: Corporate investment in the last year – I think in the last two years – has gone down from around three per cent to around 1.2 per cent. What do you put that down to?
LEIGH: We've seen multinationals pulling back on their offshore investments around the globe. The Economist had a piece on this recently. It is not a trend that is unique to Australia. What Australians have to recognise is that our corporate rate has dividend imputation. That means we take a third of the company tax revenue and we give it back. So a corporate rate of 30 per cent with imputation raises as much as a rate of 20 per cent without imputation.
JAYES: I'd like to move to one more issue on this, and it kind of ties in. The Coalition citing in the Senate One Nation have proven themselves to be economically more rational on legislation it's passed, than the Labor Party. Is that true?
LEIGH: Well, it's extraordinary coming from the Trade Minister in particular, Laura.
JAYES: There hasn't been that protectionist legislation passed though. He's going on what has passed in the Senate to date.
LEIGH: One Nation says that we should back away from free trade and withdraw from the World Trade Organisation, which would be economically disastrous.
JAYES: Let play devil's advocate here. Is One Nation helping to pay down the deficit more than Labor is?
LEIGH: One Nation are deeply economically irresponsible, as they've always been. They want a two per cent tax rate, they want to get rid of federal taxes, they want to withdraw from globalisation, they would smash Australian living standards. The fact that these statements are being made reflects the fact that it’s the Liberal Party of today that's in bed with One Nation. John Howard could say 'no' to One Nation preferences. Malcolm Turnbull can't.
JAYES: Could Labor say no to One Nation preferences?
LEIGH: Absolutely. Bill Shorten has consistently done that.
JAYES: Through formal deals but you do accept preferences? They do flow your way.
LEIGH: I don't know what you mean by "accept", Laura. If you're suggesting that somehow we should be going in there and physically tearing up ballot papers, that would be a breach of the electoral law, right?
JAYES: Lucky for you.
LEIGH: We do what we can do, which is on our How-to-Votes we put One Nation last. Consistently and we've always done that. And this notion somehow in the Parliament that if someone numbers a Labor box after they've numbered One Nation first, that that reflects badly on our political party – it's just ludicrous. The decisions we make-
JAYES: So no deals being done? I mean, Pauline Hanson stood up yesterday and said that Bill Shorten's always on the phone to her asking for policy ideas, that there was some kind of conversation being had between the Party Director in Queensland and One Nation about running dead in some seats. Would you be comfortable with that or is it just all part of the political brinkmanship and game-playing when it comes to an election?
LEIGH: Our Queensland State Secretary, Evan Moorhead, has categorically rejected those suggestions.
JAYES: He said it was "absolute crap".
LEIGH: Indeed. But it was Valentine's Day; I was trying not to use that language on your program. He said very clearly that he was approached by One Nation and he said there wouldn't be deals. And that's consistent with the approach Labor has taken for the last two decades, the approach that John Howard would take, and if only Malcolm Turnbull had the spine of John Howard.
JAYES: I'll leave it there. I think a free hit there at the end for you, Dr Leigh. But given it's Valentine's Day; I'll let you have it. Thank you for your time. We'll speak to you again.
LEIGH: Thank you Laura.
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