SKY NEWS TO THE POINT
MONDAY, 8 MAY 2017
SUBJECT/S: Federal budget, housing affordability, Government inaction on negative gearing / Capital Gains Tax discount, corporate tax cuts rates for banks, Government’s $22 billion in cuts to schools, Eliud Kipchoge
KRISTINA KENEALLY, PRESENTER: Let's bring in our guest today, Shadow Assistant Treasurer Andrew Leigh. Joining us, not out of Perth, but Canberra. Great to see you.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks Kristina, great to be with you. G'day Peter
PETER VAN ONSELEN, PRESENTER: G'day, what do you think of Sam Dastyari not getting the approval of residents whose houses in some cases he mocked, in others he made legitimate statements about. What do you think of him rabbiting on about housing affordability when he himself has an investment property in Sydney, taking advantage of all of those perks of negative gearing.
LEIGH: Peter, I think young Australians are less worried about four-letter words and more worried about seven-digit house prices. These rapid house price rises we've seen over the last few years have been well in excess of what wages have been doing, driving houses out of the affordability range for so many young people. They come up to me at my street stalls - a young couple the other month, a builder and a teacher, saying they thought they were there in the market and then the prices just accelerated away from them. Why are they doing that?
VAL ONSELEN: But should he have gotten approval?
LEIGH: Sam is a backbencher who is perfectly entitled to engage in the press, and I think he does that very energetically.
VAN ONSELEN: But should he have the approval of the people who own the properties, because at least one of them is not happy about him using his property without approval.
LEIGH: It is a question you can put to Sam, but I think he's putting his finger on a critical issue for Australians. Young Australians are fed up with the tax system that advantages investors over first home buyers, and a Government that is unwilling to act on negative gearing and only is looking at these crazy ideas like ripping money out of superannuation – so young people can be poor later in order to drive up house prices now.
KENEALLEY: Let me ask you a question about the Budget and some of the housing affordability measure we anticipate we will see in it. Apparently there will be an opportunity for first time buyers to create savings accounts. Isn't this something Labor looked at doing, even did model of when they were in Government?
LEIGH: Yes, we had a pilot program along those lines when in Government, Kristina, and it was of course abolished in the 2014 budget. So Malcolm Turnbull will now be proudly re-announcing a program that only three years he voted against. This budget has turned into a triumph of tactics over strategy, much as the 2014 budget was a triumph of strategy over tactics. It is a Government that has given up the fight on debt - we are now seeing debt increase by more than $4000 per person - and which has shown no economic leadership with underemployment now at record high, with living standards still pretty sluggish, and with home ownership as low as its been in 60 years.
KENEALLEY: So if we got back to that pilot program that Labor had put in place - what were the results of that as far as it was going when it was canned, do you think is a good idea?
LEIGH: We will have a look at the detail of what the Government is proposing. I don't have in front of me any evaluation that was done of the program back then. But really, any housing affordability program that doesn't tackle Capital Gains Tax discount and negative gearing is a sham. We know that these things are critical to address. Malcolm Turnbull wrote about this when he first did tax work after entering the Parliament. Joe Hockey called on the Parliament to address negative gearing in his outgoing speech. Jeff Kennett, the Grattan Institute, the Financial Stability Enquiry, the Reserve Bank - I could go on for hours listing the organisations that are calling on this Government to do something about negative gearing. That is where the action is at, Kristina.
VAN ONSELEN: What about this speculation that there could well be a levy imposed on the banks in the Budget. Would Labor, or do you, support the idea of a special levy on banks?
LEIGH: The banks are about to get a huge corporate tax cut under this Government, so I suspect that any levy that is imposed upon them would be a much lighter burden than the benefit that the Government is going to be bestowing upon them. We know that this is going to be fundamentally a Government which is taking money away from school kids in order to be given to bankers and shield the banks from a Royal Commission.
VAN ONSELEN: Yeah, but what do you think though? Specifically, though, on the issue of a levy specifically on banks. I mean, do you like that kind of compartmentalising of a tax?
LEIGH: I think the simpler way to do it is not to give them a huge corporate tax cut, Peter. A huge benefit of $7 billion.
VAN ONSELEN: But that's been legislated.
LEIGH: No it hasn't already happened. The tax cut to the big banks has not legislated and the Government should use this budget to drop it. That would effectively mean that the big banks paid $7 billion more tax than the Government currently wants them to do. That would be a serious piece of action. A Royal Commission would be a serious piece of action, but "here's your tax handout and by the way here's a small levy" - that makes no sense.
VAN ONSELEN: Well what do you think of this concept of the levy - that's really my question. I mean, a targeted levy on one particular industry?
LEIGH: I think it's utterly hypocritical that a Government would seek to give a tax cut to a group of companies and then at the same time impose a levy upon them.
VAN ONSELEN: Okay, but what do you specifically think of the economic merit or otherwise of a levy on a particular industry?
LEIGH: Peter, you're asking me the same question, I'll give you the same answer. It is complete hypocrisy.
VAN ONSELEN: You're not answering.
LEIGH: No, I've given you an answer.
VAN ONSELEN: I'm not asking about hypocrisy, you've made your point.
LEIGH: It is utter hypocrisy!
VAN ONSELEN: You've made it, I'm not disagreeing with you even. But I'm actually just wondering - you're the professor of economics, not me - what do you think of a targeted levy on a particular industry like that, and namely on bank I guess.
LEIGH: Peter, you're asking the question in a different way, but I've answered it. What the Government plans to do is to give a huge tax cut to big banks. What Labor believes is we shouldn't give a huge tax cut to big banks. That's where the action, and let's not get distracted by things like levies - let's focus on where the action is: the Royal Commission and the banking corporate tax cut. That's the main game here.
KENEALLY: Andrew, can I ask you about Catholic schools and education funding? You are a representative, of course, from the ACT, representing an electorate in Canberra. My understanding in that the Catholic school system in Canberra gets a pretty sweet deal when compared to other Catholic schools across the country. In fact, my understanding is their funding represents an average of all the Catholic schools across the country. So therefore kids in Catholic schools in Canberra get a really nice deal out of the Commonwealth Government. Given the increases that are going to occur going for Catholic schools under the Coalition's new Gonski 2.0 funding deal, is it really accurate for the Catholic schools to say they are going to get a funding cut?
LEIGH: Kristina, that's what the Government's own Budget papers say. They say there is a $22.3 billion saving relative to what the offers that Labor had on the table at the last election. So the Government itself is admitting the $22 billion funding cut. The Catholic Education Commission is saying this could lead to increases in fees. They are talking about fee rises of up to $5000 a student. We don't in front of us the detailed school-by-school breakdown, but what we do know is the Government is claiming a big budget save in education in order to give their corporate tax cut to multinationals. That's the wrong prescription for a country that needs to invest in innovation, needs to reduce inequality, and needs to boost living standards. All of those things require better investment in education, in government and non-government schools alike.
VAN ONSELEN: What's your take on David Gonski giving his support to what he regards as a pretty strong implementation of what his report was recommending by the Government? I get that Labor doesn't like the quantum - you want more money to be tipped in - but I mean in the reforms themselves that David Gonski says essentially mirror what he was advocating in his report.
LEIGH: David Gonski is a strong contributor to public policy, we engaged him in government, and of course we're pleased when any expert who has assisted the Gillard and Rudd Governments is also called upon to assist the Abbott and Turnbull Governments. But it doesn't change the fact that this is a proposition that is going to see many schools worse off. Funding cuts averaging $2.4 million over the course of the decade. We are talking the equivalent of 22,000 teachers. This is a massive cut to the education system and all because the Government can't manage to make the tough decision. Bill Shorten last week announced a package of measures that would target multinationals, adding $5 billion to the budget bottom line over the decade. But the Government won't go down that route, they won't close the debt deduction loopholes. Instead, they prefer to take money away from school kids. That's the wrong prescription for Australia.
KENEALLEY: Andrew Leigh, just before we let you go. On a lighter note, you're a keen runner. What do you make of this weekend's 'almost history' - Eliud Kipchoge nearly broke the two-hour marathon mark.
LEIGH: It was a phenomenal run there Kristina. You see him running at that pace, the equivalent of cranking up the treadmill to 21km an hour - try that next time you're at the gym - or running around an oval in 68 seconds. Then try doing that for 2 hours.
VAN ONSELEN: Yeah, but the thing is Dr Leigh, I know you hold the record for a parliamentarian on a marathon. 2 hours and 42 minutes if I'm not mistaken. You didn't do it with all the assistance that he had to try and break the two-hour mark.
KENEALLEY: He just had a photo up there with Matt Thistlethwaite.
VAN ONSELEN: He had people running in front of him to break the wind to make it easier for him to run, it was on a specific track, there was all sorts of games played.
KENEALLEY: Are you saying that Andrew Leigh, if he had that level of support, could make it?
VAN ONSELEN: Well, who knows - I think he would have done much better than 2 hours and 42 minutes if he had all that assistance. This was just a gimmick wasn't it? It doesn't mean that he is going to break that mark any time soon in a real marathon and it wouldn't have counted, Dr Leigh, as a world record had he even been able to achieve it.
LEIGH: You're totally right it doesn't stand as a record there, Peter, but those pacers played an important role - among them, of course, Australian Olympian Collis Birmingham who was out there doing some of those 5km pacing runs. But Kipchoge is just an amazing athlete. He won the Berlin a couple of years back with his insole hanging out of the back of the shoe in 2 hours and 4 minutes. He last year won the Olympic marathon and he did it by getting to the 30km point and then basically sprinting to the line with a pace for his 30 to 35km stint that would have won him Olympic gold up until 1950. The man is a machine and he does it while smiling too - he says because he wants to remind himself that running is joyful. So you see this smile flash across his face even when he is at the 1 hour 40 point, where his body must be in extraordinary amounts of agony. Kipchoge reckons he can get over the line. He reckons he can knock off those 25 seconds in years to come, and I reckon plenty of us are going to be watching.
VAN ONSELEN: I tell you what Andrew Leigh, I reckon that if you stopped taking such an interest in this bloke's career then you'd be able to write that many more books it wouldn't be funny. I can't believe how much you know about him. We're out of time, we appreciate your company.
LEIGH: Running is an important part of life, Peter. Thank you.
VAN ONSELEN: Thanks for that.