Rough start to the year in economic terms - Doorstop, Canberra





SUBJECT/S: Tax reform, multinational tax, GST, bracket creep, Kevin Rudd 

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks everyone for coming out beautiful Hackett. My name's Andrew Leigh, I'm the Shadow Assistant Treasurer. It's been a rough start to the year in economic terms. We've already seen more than $100 billion wiped off the Australian share market. We've got jitters in China. We've seen the Westpac - Melbourne Institute consumer confidence figures down. In the face of all that, Australia demands clear economic leadership, rather than simply the continued floating of thought bubbles. We know that this government promised before they came to office that there would be a tax white paper delivered in the first two years. And yet, we've seen Scott Morrison now saying that tax reform is going to be kicked further off down the line. Australia doesn't need more dog-ate-my-homework excuses from Scott Morrison. Instead, we need clear promises.

The clear promise you'll get from the Labor Party is that we won't raise the GST. We are absolutely clear on that. We will not raise the GST and we don't support increasing its base. We believe that because of the hit it would have to consumption. Scott Morrison on some days said he supports consumption and then on other days thinks he wants to raise the tax on consumption. That would be bad for the Australian economy, because we know after all the economy shrank after a GST was first introduced. Labor's been absolutely clear we would make budget savings and we would raise revenue in areas like high end superannuation and multinational taxation. We need to see the government's proposals

On the issue of the Google settlement in the UK today, we're still waiting to see all of the details around that. But it's absolutely clear that if you're serious about raising revenue from multinational taxation you need three things: you need strong laws, you need transparency, and you need a well-resourced tax office. While Labor's been willing to support the government's package, even though they couldn't tell us how much revenue it would raise, the government is still unwilling to support Labor's multinational tax package, costed by the Parliamentary Budget Office to raise $7 billion over the decade. They've wound back Australia's transparency laws at a time when Australians want to know more about the tax affairs of our biggest companies. They've been cutting thousands of jobs out of the Tax Office, leaving the Tax Office without the resources it needs to raise the revenue for Australian demands.

Just finally, I wanted to make a comment on bracket creep. Scott Morrison was saying today he wants to tackle bracket creep. But the majority of the government's return to surplus by 2021 relies on bracket creep. So if Scott Morrison really plans to tackle bracket creep, he needs to explain to Australians how he ever intends to get the budget back into surplus. Happy to take questions.

JOURNALIST: Andrew, the GST has obviously been a massive focus for Labor in the last couple of weeks. How certain are you that the GST can be an election issue and a positive one for Labor, for the Opposition?

LEIGH: Well, we don't want this to be an election issue. We want the Government to be absolutely clear that it rules out an increase to the GST or an expansion of the GST base. We've seen growth downgrades ever since this government was elected. We've got inequality now at seventy-five year high. The last thing we need is an increase to a regressive tax like the GST, that hurts household consumption. The Japanese economy went into recession after they raised their GST. Australians who care about growth and inequality should not be supporting raising the GST. We've warned the Government to rule it out today.

JOURNALIST: Have you backed yourself into a corner though by refusing to engage in this debate?

LEIGH: We've been happy to engage in this debate. We've done so with a clear and principled position. The Government are the ones who are refusing to engage with the debate. After promising a tax white paper in their first two years, they are now saying it'll take the at least three years. They ought to be engaging in this debate and that's why Bill Shorten has called upon Malcolm Turnbull to meet him at the National Press Club for a debate on the GST the day before Parliament resumes.

JOURNALIST: The Treasurer has acknowledged there would be problems with broadening the base of the GST to cover health and education, the same issues as when the tax was first introduced. Is that some comfort that he doesn't seem overly convinced of going down that path?

LEIGH: Scott Morrison seems to have a different position on tax reform every day. Tax reforms are a vitally important issue for Australia and that's why the Opposition has been out there with clear Parliamentary Budget Office costed plans. Australians want to know from Scott Morrison not only that he cares about an issue, but precisely what he's going to do about it. We see so little precision in tax from the Government and I think that's why Australians are increasingly wondering whether Scott Morrison is up to job of telling a strong economic story for Australia and laying out his plans to get us a higher growth, lower inequality Australia.       

JOURNALIST: Is it unhelpful that you have the likes Jay Weatherill going out and arguing that everyone including Labor politicians need to be realistic about the fact Australia need more revenue and call upon increase in the GST to pay for health and education.

LEIGH: I can sympathise with state premiers who are finding their budgets squeezed by the $80 billion in cuts to schools and hospitals since the Abbott-Turnbull Government came to office. Federal Labor has a clear position: we believe there are fairer ways to make budget savings, including getting rid of the slush fund for polluters, not reinstating the baby bonus, raising superannuation taxes at the very top end, better multinational taxation, increasing the cigarette excise. Together, those measures give you around $70 billion over the decade without hurting growth, without worsening inequality.

JOURNALIST: What can we expect to see from Labor at the next election? Will Labor go to the next election promising lower personal income tax brackets and what will Labor do about corporate tax rates which are also debated?

LEIGH: You'll get a flavour of Labor's policies to come from the policies we've announced already. Policies which have productivity at their heart, and are aimed at boosting growth for Australia and not simply going for the lazy solutions of a 50 per cent increase to the GST. Labor is aware of the cost of living pressures on Australians. We're aware under this Government so many Australians are struggling to make ends meet. We don't believe it does anything to business or consumer confidence to be talking about cutting penalty rates, taking money out the pockets of the low wage workers working in a café on a day like this. We don't believe that it is any good for household consumption to be talking about whacking up the GST.

JOURNALIST: It's no good for household consumption if you're an average weekly earner and you are in the second-top tax bracket either, is it? So will Labor do anything about that, because we'll get that next year?

LEIGH: It will be a while before the typical Australian, the median Australian worker, is in the second-highest of the four tax brackets we have. But Labor recognises making sure that the tax system is efficient and effective is absolutely vital. Tax efficiency goes to the heart of what Labor believes in. Curiously if you look at the Government's early tax discussion paper it suggested the GST was no more efficient than the income tax. Which makes it strange that Malcolm Turnbull is often seen in Parliament claiming the opposite.

JOURNALIST: Do you admit that Labor with all of this talk of about the GST could just be for nothing? I mean, Labor could be wasting its time. It is an argument that easily could be, in the next couple of months, could be lost. The Government could just turn around and say 'Look, we're not going to do it'.

LEIGH: It's not for nothing, I expect, to regular constituents who are concerned about the impact on their cost of living. Adding 50 cents a loaf to a loaf of bread or making it more expensive to pay school fees or to pay childcare fees, to pay for the ordinary necessities in life. The cost of living is an important factor, and inequality is an important issue and that's why Labor has been out there making the case against a GST rise. If the Government wants to make the opposite case, it needs to do so to the Australian people rather than just keeping on with these dog-ate-my-homework excuses for failing to engage in tax reform.

JOURNALIST: Doesn't that make you concerned about the scare tactic - that you're just scaring the Australian public about a policy that hasn't been made or rolled out?

LEIGH: The Australian public are scared about what might happen to their household budget under the Abbott-Turnbull Government. You only have to look back at the last couple of budgets to realise that those fears are reasonably founded and to recognise that Australians don't want to see a GST rise. That's the side Labor is on.

JOURNALIST: The Government has made it clear that any tax reform package would be taken to the next election. If they receive a mandate for raising the GST would you still block it even if they do receive that mandate?

LEIGH: Let's not get too far ahead of ourselves in hypotheticals. I was just answering a question suggesting that the Government won't even take a GST rise to the next election. Labor has a consistent position. We don't believe the GST should be increased, full-stop. It's up to Malcolm Turnbull and Scott Morrison to say the same thing.

JOURNALIST: What steps would you like to see authorities - or should authorities take any steps - in the wake of the Google tax decision in the UK?

LEIGH: It does highlight the importance of having the strongest possible laws, good transparency, and well-funded tax administrations. The Abbott-Turnbull Government has been on the wrong side of each of those issues since it came to office.

JOURNALIST: The Treasurer says that the policies Labor has announced so far wouldn't even get to a starting point when it comes to long-term revenue sources. When will you be announcing more proposals?

LEIGH: If the Treasurer believes $70 billion over the course of a decade doesn't get you to the starting point, I'm not sure what that says for his own proposals. Labor's been active in the debate. We were out with our multinational tax plan in the first half of this parliamentary term which is almost unprecedented for an Opposition, but we did it because we believe that these economic debates require strong leadership from Opposition. We're waiting for the Government to announce their plans and be clear with the Australian people about their plan to boost productivity over the long term.

JOURNALIST: Is there the possibility that there are other issues; that Labor should be looking at jobs, the economy, not just the GST and pinpointing that one issue. Is there a possibility you should be looking at other things that might get more traction?

LEIGH: Absolutely there are a range of important issues in Australia. You would've seen over the course of last year more than 50 policies that Labor announced, including making sure we have stronger renewable energy, a family violence summit, an entrepreneurs year. We've been out there in the public debate articulating a range of important policy issues. That's not to say we shouldn't also be out there making an argument against bad policies, such as a 15 per cent GST.

JOURNALIST: What's Labor's position on Mr Morrison's benchmark that government spending should be below 25 per cent of GDP.

LEIGH: The big challenge is whether we can get government spending to match revenue. Right now we have got a one and a half percentage point gap between what the Federal Government brings in and what it spends. We need to close that gap and Labor's identified areas we wouldn't spend in and areas where we would raise more money. In talking about magical figures for government spending doesn't get Mr Morrison around the basic problem that he has been unable to articulate an economic strategy which will deliver a surplus. Indeed, what he has talked about on TV this morning seems to be suggesting the surplus wouldn't be in the first year of government - as they promised from opposition - wouldn't be in 2021 as they're now saying, but would be in many further years down the line.

JOURNALIST: The Queensland Treasurer has raised concerns about the state Treasurers Meeting won't be held next month and not held until March. Do you share this concern?

LEIGH: Yes. I was disappointed to see that Scott Morrison doesn't appear to be doing Curtis Pitt the courtesy of engaging with him about the economic debate. Engaging the states and territories in the tax debate is absolutely critical. According to standard economic wisdom, states have both the most inefficient taxes and the most efficient taxes. Engaging with people like Curtis Pitt is vital if Scott Morrison is really going to fulfil on that promise of providing economic leadership. So far he seems to have failed.

JOURNALIST: Julie Bishop in New York says that the Australian Government would have to consider what support it would give Kevin Rudd if he ends up being a candidate for the UN Secretary-General Job. What would Labor's position be on Kevin Rudd becoming the UN Secretary-General?

LEIGH: The issue is entirely speculative at the moment. I expect Tanya Plibersek will respond on behalf of Labor if an announcement comes to light.

No other questions? Thanks everyone.


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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.