What Australia needs isn't more tax cuts for the top one per cent but a strategy to ensure that everybody shares in prosperity - Sky AM Agenda





SUBJECT/S: Chifley Institute on inequality; superannuation; Chinese investment; Country Fire Authority; same-sex marriage

KIERAN GILBERT: With me to discuss this and the other issues of the day – the Shadow Assistant Treasurer, Andrew Leigh. What exactly does that mean? To stop trickle-down politics? I know Wayne Swan's used this quite a bit in terms of criticisms of the Business Council of Australia. As far as you see, what does that actually mean?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: It’s recognition of the fact that inequality's grown massively in Australia over the last generation. We've seen earnings grow three times as fast for the top 10th as for the bottom 10th. We've got the top one per cent share having doubled and the richest three Australians now having more wealth that the poorest one million Australians.

What Australia needs isn't more tax cuts for the top one per cent but a strategy to ensure that everybody shares in prosperity. Because otherwise you get the nasty politics you're seeing emerge in the United States and Europe. Part of which is caused by the increase in inequality in those places. 

GILBERT: And one of the things that this Chifley Report argues is a couple of the ways to preclude that anxiety and lack of engagement with big cohorts of our population is one – more spending on infrastructure to make people's lives easier, but also the second one – and this is something the government's already doing – and that is reigning in high-end superannuation exemptions and other tax exemptions to provide benefits at the lower end. So, in that context, surely it’s incumbent upon Labor to cooperate with the government as much as you can in terms of reigning in those superannuation exemptions?

LEIGH: Let's get the chronology right in this. Labor led this debate from the middle of last years when we released our superannuation package. It was heavily criticised at the time by the government – who said you shouldn't touch superannuation tax concessions. They then took their own package to the election. And the challenge now is not whether Labor will support sensible superannuation changes, but can the Coalition get theirs past the crazy wing of their party room?

GILBERT: But obviously also incumbent upon Labor to agree as much as possible with the government, given its own internal difficulties, if you want these serious reforms through?

LEIGH: Absolutely. Kieran, in that spirit I've just written to Treasurer Scott Morrison, saying that Labor would support the rapid passage of some legislation that extends the remedial power of the Commissioner of Taxation. That's good for businesses, good for taxpayers, but also good for government revenue.

GILBERT: If there is some compromise, say for the lifetime cap for non-concessional contributions to superannuation, set at $500,000 by the government, if that was increased to $750,000 or $1 million – would you see that as a retrograde step?

LEIGH: It looks like the Prime Minister's "iron-clad" commitment is starting to rust a little, doesn't it? He seems to be struggling to get these changes through his own party room. Let's wait and see what the Coalition position is, and then we'll give you Labor's position.

But we also believe that inequality needs to tackled on a whole lot of other fronts. We went to the election arguing that we need more needs-based funding in our schools. Because ultimately, education is one of the great bulwarks against rising inequality. Australia has got a great egalitarian tradition as a nation that doesn't much like tipping, where we tend to sit in the front seat of the taxi, where we don't have private areas on the beaches. But that egalitarian tradition is very much at risk if we don't do something about the rising gap between rich and poor.

GILBERT: In terms of Labor's approach though, as you've argued the chronology, Labor was out first on the superannuation exemptions, but then by arguing about that retrospectivity issue, are you in the end possibly going to frustrate your own aims here by giving the government an out from what would have been a reigning in of exemptions at the higher end? Doing what you've argued and doing what the Chifley Research Centre is arguing today?

LEIGH: I don't think so, Kieran. I think we can rein in the superannuation tax breaks – more of which goes to the top one per cent than to the bottom 40 per cent – while not making retrospective changes. We haven't been silly about the retrospective aspect; we've simply said that the Government should set up an arm’s length review that assesses these questions of retrospectivity. If it's not retrospective then we're happy to support it.

GILBERT: Given the decline in inequality, does Labor have to accept a fair bit of accountability here as well given your six years in office in recent times?

LEIGH: Well when you look at Wayne Swan's period as Treasurer – on most of the inequality measures I can see that's a period of flat or declining inequality. In contrast to the Howard Government's period where inequality does rise. But you can also look at the measures that were changed. Under the Howard Government, the tax scale becomes less progressive and we know that that was one of the reasons why inequality rose. The Coalition is now trying to take away penalty rates. Who gets those penalty rates? Well it tends to be low paid workers. Strip away penalty rates and you'll increase inequality.

GILBERT: In that context, if the government doesn't deliver their superannuation changes as taken to the people at the election, would you see that as a green light to Labor then back tracking somewhat on some of the fairness component of the omnibus savings, this package of $6 billion worth of savings? For example, cuts to family payments, cuts to the lower and middle income earners if the government doesn't deliver the superannuation changes at the higher end. Will you see that as an opening to renege on those other savings?

LEIGH: We don't play those silly political games. Our commitments after the election are the same as they were beforehand. We had very clear commitments before the election and we'll keep those. But we'll also apply a basic fairness test to new questions that come up. We've been doing that over the last course of parliament – supporting some savings that the Coalition has made – even in ways that we wouldn't have done them, where we saw that they didn't damage inequality. But being unwilling to allow the Government to rip away payments from, for example young job seekers, which would have terribly worsened inequality. 

GILBERT: Chinese donors apparently gave $5.5 million worth of donations to the major political parties – what should we read into that beyond the fact that the Chinese are seeking greater influence in this country among our decision makers?

LEIGH: Kieran, I'm not across every twist and turn of who donates to political parties in this country, but I do think we need more transparency. We need to bring down the disclosure threshold, and I'd like to see more rapid disclosure of donations, because transparency is really what counts most when it comes to critical donations.

GILBERT: And you would like that to be consistent for Labor and the Coalition, across the board.

LEIGH: Absolutely. And we already voluntarily disclose at a lower threshold level than the law requires because we're philosophically committed to more transparency in donations.

GILBERT: Is it appropriate for Chinese companies to be, you know, with links to Chinese Government as well, to be making large donations like this?

LEIGH: It needs to be transparently acknowledged. I don't think it would be appropriate to say we're going to allow an American corporation to donate, but we're not going to allow a Chinese corporation to donate. That would be flat out racist.

GILBERT: Indeed. Let's ask you about the CFA law change. The Government is going to be announcing that today in terms of the Country Fire Authority – what's your reaction to that? The Government is going to stop this from ever happening again – a union trying to take over a voluntary organisation.

LEIGH: It's a state issue and Malcolm Turnbull is just using it to bolster his own political position, isn't he Kieran?

GILBERT: A state issue that resonated during the election campaign.

LEIGH: But let's call a spade a spade. The regulation of the Country Fire Authority is squarely a state matter. There's litigation proceeding through the courts at the moment, and for Malcolm Turnbull to dive into the middle of this shows how desperate he is to distract from his other economic problems.

GILBERT: Final question relates to the same-sex marriage plebiscite. Is it time now for Labor and those who want change in this area to realise that’s going to be the reality, and get on and start arguing the case? Start prosecuting the case?

LEIGH:  Let's get on and just vote in Parliament. That's the simplest and most straightforward thing to do. There are 31 couples in my electorate who married in 2013, now have been waiting nearly three years for their marriages to be recognised. I've got a photo of one of the young couples, Emily and Ellie, up on the fridge in my office, and I think about them each day – about what they have had to go through in not having a government that allows them to recognise their love in marriage, as straight couples are able to do.

GILBERT: Shadow Assistant Treasurer Andrew Leigh, thanks for your time.

LEIGH: Thanks, Kieran.


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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.