ABC NEWS BREAKFAST
SUNDAY, 1 OCTOBER 2017
SUBJECTS: New book ‘Choosing Openness’, trade, immigration, foreign investment, Turnbull tax proposals, Labor’s fairer tax plan, inequality.
MIRIAM COROWRA, PRESENTER: Cutting the company tax rate and stimulating wage growth are two key issues that have been topping the political agenda this week. The Treasurer warned that if these two issues are not addressed now Australia risks falling behind the rest of the world and the nation's economy will suffer.
GREG JENNET, PRESENTER: To discuss this and other political issues of the week we're joined by Shadow Assistant Treasurer Andrew Leigh from Parliament House in Canberra. Andrew Leigh, you've just written a report for the Lowy Institute which is normally preoccupied with matters of national security and strategic policy. Why is the subject of income inequality being bracketed in among those topics?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Greg, I think one of the central challenges of our age is this rise in right-wing populism. We've seen not only the British Brexit decision and the rise of Donald Trump, but also right-wing parties in Germany and Austria and Hungary really making the argument that those countries would be better off retreating from the global economy. My new book Choosing Openness argues that for Australia that would be the wrong choice, and that our prosperity has been grounded very much in the benefits of open trade, migration and foreign investment. We need to manage those things properly. As you say, there's been a significant rise in inequality in the past generation. But if we have the right social protections, then Australia can benefit significantly from engaging with the world.
JENNET: You have written this and you are arguing for this. But at the same time in this report Choosing Openness, you note that in 2016 the typical Australian voter had more of a quote-end-quote "Closed economy" view than the typical candidate that runs for office. So there is this disjunction between those of you in politics and politicians in Parliament verses the predominant view of Australians. You are really losing this argument so far, aren't you?
LEIGH: Greg, it is really interesting you pull out that point. I wanted to highlight that divergence as a way of making the case for stronger advocacy in favour of openness. I think it is important politicians make the case that trade is another instance of specialisation. If you don't cut your own hair, make your own clothes and fix your own car, then you benefit from specialisation in the labour market. So too Australia - constituting just 0.3% of the global population - can benefit from doing what we do best and trading with the world.
JENNET: So you're calling for Australia, indeed the world, to have more Trudeaus, Merkels and Macrons to lead this argument. You're obviously trying to do it yourself as well. Who else is grasping this openness nettle in Australia or Australian politics in particular at the moment?
LEIGH: Right now my party had a significant week of focusing on our global opportunities. Bill Shorten and Penny Wong have been spending time in South Korea and Japan. Chris Bowen along with Matt Thistlethwaite and Penny Wong have just launched an important policy called FutureAsia, about how a future Australian Labor Government would engage with our region. Jim Chalmers has an important book out too talking about the rise of the robots and how we need to deal with that. Many in the Labor team are thinking about how we optimistically engage with our region and make the best of these opportunities, despite significant challenges around sluggish wage growth and rising inequality.
JENNET: You make this argument about openness. For Australia I suppose it's always seen through a prism of wanting to sell our goods to Asia, to buy back cheap consumer items. Is it truly a two-way street when it comes to immigration? Australia has always been highly protective of its labour market, as, indeed, is your own party now, when you look at its policy on the short-term work visas - 457s. Are we actually reciprocating and engaging with Asia in the ways that you would outline in your report?
LEIGH: We've to got to make sure that migration works for the typical Australian. We see a strong correspondence between the unemployment rate and the share of Australians who are worried about migration. We have to make sure that if we are taking in temporary migrants that they're filling jobs that couldn't otherwise be done by Australians. Moreover, that they're not being mistreated in the Australian labour market.
JENNET: So more of a regulatory approach is it? Making sure there is a cop on the beat at Fair Work or wherever it is?
LEIGH: We haven't had enough enforcement of labour standards around temporary migrants. I know my colleague Shayne Neumann has been concerned about the way in which backpackers might be mistreated. We also need to make sure that those temporary migrants fit the skill needs in the economy - that we're not taking in temporary migrants to do jobs where there are plenty of Australian workers ready to go. Overall, Australia has been a big beneficiary of migrants. It is important to remember that migrants are not just mouths to feed, they're minds that may be the next Victor Chang, the next Frank Lowy or the next Anh Do. Yes, we've got challenges around traffic congestion and housing affordability, but let's focus on tackling them directly through investment in public transport and though fixing up our tax code, rather than putting up the shutters, hunkering down and rejecting migration.
JENNET: You mention tax there. The point's been made this week, I think by the and others that bracket creep over time, coupled with some of the other tax increases that Labor has on the books does make for a very high threshold of taxation generally. Should a Labor government be elected, will you address that specific question of bracket creep and the income tax scales?
LEIGH: Bracket creep is always a concern for a system that doesn't index its tax brackets. Although given that wage growth has been the slowest on record, bracket creep is also correspondingly the slowest on record. Both parties at the moment are proposing to raise income tax as a way of curtailing the growing deficit. My party says we ought to do that for the top 2 per cent. Scott Morrison's party says we should do it for everyone earning more than $20,000. Given the rapid rise in inequality, you have to wonder why Scott Morrison doesn't want to raise taxes on millionaires but does want to raise taxes on low wage workers.
JENNET: Alright, Just quickly and finally, Andrew Leigh perhaps not being an economist, but one who has looked at polling and campaign activities over the years, the same-sex postal survey is moving into a mature phase now. We will get an update on Tuesday, we believe, from the Bureau of Statistics as to the response rate with these. What do you think of the levels of campaigning from here on in? Do they bring diminishing returns? Do you think most people have done their thing and posted the paperback to the bureau?
LEIGH: I'm sure they have. For anyone who hasn't gotten it back, I would urge them to use a relaxed day today to take their survey to the post office and post it off. For anyone who knows friends or neighbours who might not have had a chance to get that survey in, use the opportunity of listening to Macklemore in the break of the grand final to remind everyone to post the form.
JENNET: Helpful reminder I'm sure. Andrew Leigh, for your thoughts today, thank you.
LEIGH: Thanks Greg.
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