Treasurer’s ego writing cheques the economy can't cash - Transcript, Sky News AM Agenda

MONDAY, 17 JUNE 2019

Subjects: Hong Kong protests, tax cuts, Paladin, medevac.

LAURA JAYES: Joining me now from Canberra is Labor frontbencher Andrew Leigh. Before we get to the economic, the economic policies and those tax cuts passing or not passing through Parliament, I want to ask you first Dr Leigh about your view of what's happened in Hong Kong in the last week and whether the Australian Government has done enough to support these protesters or has there been this fear of a China backlash perhaps.

ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good morning, Laura. Great to be with you. I really take my hat off to the bravery of those two million Hong Kongers who've taken to the streets to demand their fundamental liberties. Under the 50 year handover that was agreed in 1997, it is important that Hong Kong maintain that separate system and I’ve been surprised frankly that the Australian Government hasn't been speaking out in support of those protesters who've been arguing against the fugitive extradition laws.

JAYES: Why do you think that is? The, I guess, timid approach from the Australian Government.

LEIGH: I'm not sure. I think we should always be confident in our values and there's nothing more Australian than the notion that the rule of law protects us all. Those protesters who've been out there braving rubber bullets and tear gas are standing up for those values, and I think Australians would expect our government to do so as well.

JAYES: All right. Let's return home now to some domestic policy and what is central or what will be central when Parliament resumes is the government's income tax cut package. Now this is a three tiered approach and the government says it will not break up this package. Is Labor any closer to supporting its passage through Parliament?

LEIGH: Laura, we're very keen on the stage one part of this, which ensures that money is put in the pockets of low and middle income Australians immediately. In fact, we’re so keen that we were wanting to see it passed back in April. The government dismissed us away with a wave of the hand saying ‘no, it's fine, it can just be done administratively’. We now know that's not the case, that the first stage of the tax cut won't be paid when required. In regard to stage three, we know it will increase inequality and most of it will go to men. But I also think that it's unwise given the fragile state of the Australian and global economy. This is really a case of the Treasurer’s ego writing cheques that the economy can't cash. We know that the Australian economy has seen a decline in retail sales, we've seen falling new car sales. We've got wages flatlining and a real problem with living standards. In a world in which we could well see a serious global crunch, we need the fiscal room to be able to deal with that crisis rather than locking ourselves into expensive 2024 tax cuts.

JAYES: Ok, you've made two points there. I'll start with the first one. You said that giving the stage three tax cuts, which is still a couple of years away, will increase inequality and most of it will go to men. What evidence you're using to suggest that?

LEIGH: Well, that's the Australia Institute’s analysis. Of course, we'd like to see the government's own analysis, which is why Jim’s written to Josh are calling on the government to say what share of those income tax cuts will go to those earning over $180,000. If the government thinks that these stage three tax cuts won't increase inequality, it would be good if they actually said so-

JAYES: But why would it? In principle, how does giving tax cuts to a high end increase inequality?

LEIGH: When you're putting more money into the pockets of those who have most, it’s what's called horse and sparrow economics – the notion that best way of feeding the sparrows is by feeding the horse. The fact is that this sort of approach to economics has been discredited. At a time when middle Australia is hurting, the most sensible thing to do is get on and pass those stage one tax cuts, to ensure we get the economic stimulus. Right now you've got the Reserve Bank having to do through monetary policy what the government should be doing through fiscal policy. The RBA has been cutting rates now below what were once called emergency levels, down to one and a quarter of per cent, with markets suggesting they could go below 1 per cent. The Reserve Bank’s saying that we needed to get unemployment down closer to 4 per cent. The government seems pretty happy with unemployment sitting at 5.2 per cent. I don't think that's good enough, Laura. I think we need to achieve full employment in Australia. We need the productivity measures to get us there. We need tax measures that will stimulate the economy, not lock in a high end tax cuts in 2024.

JAYES: Okay. But looking at the economic argument that you're putting forward, why not pass that the full package of legislation? It would give that stimulus to the economy which you say is required at this point and it's structural reform isn't it that some, particularly in business, are crying  out for?

LEIGH: Laura, I don’t think any serious economist would argue that it’s structural reform to lock in high end tax cuts in 2024. Even Liberal treasurer Peter Costello's in recent months been criticising the idea of legislating now tax cuts which don't get paid for five years. What’s really important that we do for the economy is ensure that we have the productivity boosting measures. This is a government that's been asleep at the wheel when it comes to school funding, that has seen traineeships and apprenticeship numbers fall, that's capped the number of university places. All of those things hurt the productivity potential of the economy. We really need to make sure that we're boosting that growth potential of the nation. I'm very ambitious for what we can do right now in order to boost the productive potential of the economy. I'm also concerned though that we're not sure that we're not locking ourselves out of being able to respond to a global downturn in a timely and targeted way, just as we did when the last global financial crisis hit.

JAYES: Yeah, sure. But when you look at - we've just had an election, it was barely four weeks ago. What does it say to the business community, Australians more broadly - this was central to the Government's re-election strategy. I mean, Labor accuse the government of not having any agenda. This was one big part of it and you're not recognising that mandate. What signal does that send?

LEIGH: Laura, the signal it sends it that Labor is serious about fiscal responsibility. There's no reason these two tax measures need to be tied together. None at all. This is the government putting its own political interests ahead of the interests of the Australian economy. We ought to be about ensuring that low and middle income Australians get their promised tax cuts immediately. The Government's decided to tie it to 2024 for tax cuts. They could just as well-

JAYES: But they took it to an election. They sought a mandate from the Australian people. And that was resounding, wasn't it?

LEIGH: Laura, it's true – they did get 51.5 per cent of the vote. But the theory of mandates is that you do after an election what you said you’d do beforehand. Before the election, we were very clear that Labor stood for fiscal sustainability. We would deliver bigger surpluses than the government, pay down debt faster than the government. This government doesn't take debt seriously. More than half the net debt Australia has been taken on by this government during the period since they came to office in 2013. We need to take debt seriously because we need to be able to respond if the economy goes south. This is a bit like an adult with a couple of teenage kids who's worried about losing their job, who says ‘I'm going to promise I'll buy the kids each a new car when they graduate high school’. That would be crazy. And this is similarly unwise economics to be locking in significant expenditures at a time of global uncertainty.

JAYES: Okay, let's have a look at a few other issues a little bit outside your portfolio area. But, we're looking at a situation where the government might be extending a contract for Paladin Solutions in offshore detention centres. Do you have a problem with that?

LEIGH: I think every Australian who has looked at Paladin Solutions has a problem with it. Imagine you're walking around Kangaroo Island and you came across a bloke in a beach shack who said can you give me 20 bucks? You might be pretty skeptical. The fact is Peter Dutton gave $20 for every Australian to that bloke in the beach shack and now Mr Dutton is looking at extending the contract for Paladin-

JAYES: Are there any other options? The argument has been made by some of Labor's critics that part of the problem is that the environment is made so toxic that some of these contractors who actually service offshore detention centres are targeted quite publicly, so there's not a lot of people that want to take on these contracts. Is that fair?

LEIGH: It's certainly true that it is a stain on Australia's global reputation that there are still people in Manus and Nauru six years on. When the Senate hearings took place into this Paladin contract, there were global firms that said they would have been happy to bid if they’d been given the opportunity. We now have the Papua New Guinean government saying they’re keen for some of their local firms-

JAYES: Is that a good solution, a local firm to be running Manus?

LEIGH: I think an open tender would be a good solution, Laura, and I think that's the way in which Australians expect their tax dollars to be spent. Not given to mates, contracted openly where we’re able to see who is willing to do the work. This Paladin scandal is yet another example of Peter Dutton being willing to blame everyone and take responsibility for nothing. He’s not a minister who is up to his job.

JAYES: 30 asylum seekers have come to Australia under the medevac legislation that was passed earlier this year. Does that justify Labor's support of this legislation or do there need to be some tweaks to this?

LEIGH: We believe it was the right decision to follow medical advice, but allow a backstop decision to be made by the Minister. The Minister's yet to tell us what the real problem is. He was saying at the start of the year that there would be hundreds of people coming to Australia as a result of the medevac laws. As it is, there's been some 30 and there might have been more outside this framework. We know outside the medevac framework that people were getting into medical attention in Australia. All the medevac laws ensured was that we listen to doctors.

JAYES: Dr Leigh, appreciate your time this morning. Andrew Leigh there, live from Canberra.

LEIGH: Thanks, Laura.


Authorised by Noah Carroll ALP Canberra.

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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.