Andrew Leigh

No country ever tax dodged its way to prosperity

Address to the McKell Institute, Sydney

Tuesday 27 January 2015

Thank you for that very kind introduction. It’s an absolute delight to have the McKell Institute as host tonight.

There’s been a lot of talk over the years about the need for more investment in progressive think tanks, and a lot less action. You are an exception. In just four years, McKell has established itself as perhaps the leading voice for practical public policy in this city and state.

Taking Bill McKell as your inspiration is a particularly, well a particularly inspired choice. My mum’s dad was a boilermaker, so I almost feel like I’m among family here. And McKell’s name is a constant reminder that Australian Labor’s practical, progressive, pro-growth tradition dates back a lot further than thirty years.

Your team’s efforts are quite remarkable and the evidence of that is right here in this terrific group of people gathered for an important discussion – so once again, thanks.

Friends.

As Shadow Assistant Treasurer in the Shorten Opposition, I’ve got a lot of fascinating responsibilities.

CGT, DGR, FBT. 

I get to dabble in EMTRs and the IGOT, and if all the work is done for the week by Friday lunchtime, then we break out MTAWE and MAWTO – five letter acronyms we reserve for a very special tax nerd afternoon.

But the four-letter word I’m spouting the most at the moment is ‘BEPS’.

As the Abbott Government gets down to work on their second budget, ministers like Josh Frydenberg are already talking about making new and deeper cuts. But they wouldn't need to do that if they hadn't said 'no' to real and significant sources of revenue, as I explain in this op-ed for The Australian.

When you're in a hole, stop digging, The Australian, 27 January

As Australians continue to rage about the unfairness of the Abbott Government’s first budget, Treasurer Joe Hockey is preparing to hand down his second one in just four months’ time.

His new Assistant Treasurer, Josh Frydenberg, has flagged that spending may again be slashed in the 2015-16 fiscal plan. He seems determined to prove that this government’s entire economic strategy can fit into one four-letter word: cuts.

Then again, that’s about the nicest four-letter word Australians have been using to describe the government’s economic strategy.

Australians who have watched the government rip $80 billion from schools and hospitals, $23 billion from pensions, $11 billion from foreign aid, $5 billion from universities and $3 billion from Medicare in its first year alone will rightfully be worried about where Mr Frydenberg’s fresh round of cuts will come from.

With the government announcing a Productivity Commission review which looks set to hack into unions, the minimum wage and unfair dismissal laws, I joined Linda Mottram on Sydney's ABC 702 to talk about why these things are an important protection against growing inequality. Here's the transcript:

E&OE TRANSCRIPT

RADIO INTERVIEW

ABC 702 SYDNEY

FRIDAY, 23 JANUARY 2015

SUBJECT/S: Productivity Commission review; minimum wages; inequality

LINDA MOTTRAM: Joining me now is the Shadow Assistant Treasurer Andrew Leigh. Andrew, good morning.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning Linda, how are you?

MOTTRAM: Well thanks. Now, what do you make first of all of the review itself – is it necessary?

LEIGH: I don't believe so, Linda. If we look at the story of the last couple of decades, it's been a period in which we've seen much slower growth in minimum wages than we have in average earnings. We've seen a rise in inequality and we've seen a fall in industrial disputes. Union power is lower now than it was in the past, and the union density rate is the lowest that it's been in my lifetime. So the notion that when we've got the slowest wage growth in a decade, the real problem for Australia is a ‘wages breakout’ just seems to be askew from the fundamental facts of what's going on in the economy. 

“When Australians spend the first six months of the year working for the government with tax rates nearly 50 cents in the dollar it is a disincentive. You’re working July, August, September, October, November, December just for the government and then you start working for yourself and your own household income after that.” – Joe Hockey, 3AW, 19 January

Joe Hockey's suggestion that Australians pay almost half their incomes in tax doesn't stack up, so why does he keep repeating it?

Why applied maths is too taxing for Joe, Daily Telegraph, 23 January

Since Joe Hockey claimed Australians pay almost 50 cents in the dollar in tax, plenty of people have pointed out the flaws in his maths.

But is it true that the man running Australia's economy really doesn't get the basics of our tax system? Or is he just so focused on the wealthiest Australians that he's lost sight of everyone else?

The first thing wrong with Hockey's claim is that Australia's top tax bracket is 45 cents in the dollar.

Factoring in a further 2 per cent each for the Medicare Levy and the government's high-income levy gets you to 49 per cent. But that would still only apply to people earning more than $180,000 a year; the back of my envelope suggests that less than 2 per cent of Australian adults have an individual income that high.

On the back of news today that the Abbott Government is going to wave through a big increase in private health insurance premiums, I joined David Speers on Sky PM Agenda to talk about why that would be bad for everyone's health. Here's the transcript:

E&OE TRANSCRIPT

TELEVISION INTERVIEW

SKY PM AGENDA

THURSDAY, 22 JANUARY 2015

SUBJECT/S: Tony Abbott’s attack on Medicare; spike in private health insurance premiums

DAVID SPEERS: Let me bring in the Shadow Assistant Treasurer now, Andrew Leigh, our guest this afternoon. I wanted to talk to you about health insurance premiums. But can I just pick up though on the Medicare changes firstly. What is Labor's approach to any sort of co-payment? Even if there was further change to only apply it to wealthier Australians, is it something you would contemplate at all?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: David, all we have got at the moment are thought bubbles from the Government. I mean, the Government apparently thinks today that its main problem is that the prime minister doesn't ‘skite’ enough. I think what the Australian people want from their Prime Minister is not more skiting, but more considered policy development. We know in the case of the co-payment, that doctors are against it, patients are against it and the health experts are against it. They don't want patients being priced out of going to the GP and ending up in the emergency room. That’s the more expensive bit of our health system, and the bit where – compared to other developed countries – we spend far more of our health budget.

On the 18th of February I'll have the pleasure of interviewing young American lawyer Bryan Stevenson, whose efforts have reversed death penalties for dozens of condemned prisoners in America. The event will be jointly hosted by the Australian National University and the Canberra Times, and everyone is welcome.

You can find out more about Bryan, the event and his book, "Just Mercy", here.

My ACT Labor colleagues and I are really worried about the Abbott Government's moves to privatise public service functions. All Canberrans know what that means: even more jobs on the chopping block.

JOINT MEDIA RELEASE

PUBLIC SERVICE BRACES FOR MORE JOB CUTS

Labor’s Federal representatives are extremely concerned about the Abbott Government’s plans for privatising public sector functions, which will ultimately lead to more job losses in Canberra.

The Abbott Government is making plans to privatise tens of thousands more public service jobs as part of its ‘contestability program’.

Reports out over recent days suggest more than 30,000 Commonwealth Government jobs may be lost over the next few years as a result.

There is no doubt this will impact services across the country.

Thousands of workers in Canberra now have little to no job security, placing them under enormous personal strain. This new threat comes on top of the rolling redundancy program which is already underway, and will see 16,500 public servants laid off over the next few years. 

Australians rarely have much sympathy for public servants. But as I outline in this piece for the Canberra Times, they're real people and are facing real challenges because of the Abbott Government's public service cuts.

Public service recruitment freeze keeps Canberra locked in uncertainty, Canberra Times, 19 January

At one of my regular mobile offices in Gungahlin, I met a young couple – let’s call them Jess and Dan. Jess struck me as the kind of person employers are always crying out for: bright, well-spoken, professional, passionate about her work.

Like a third of all Canberrans, Jess works for a federal government department. She has three degrees and has volunteered overseas, as well as having years of experience in the public service which she gained by working on short-term contracts. She’s obviously seen as a great asset to her current agency, because in October last year her bosses ruled her eligible for a permanent position.

Unfortunately for Jess, that news came on the same day that the Abbott Government declared a total hiring freeze across the public service. Federal public servants are always amongst the first to be sacrificed when Liberal governments are looking to make savings, and the current Government has proven itself no exception. Having said they would axe 12,000 jobs, the Abbott Government is cutting 16,500 positions from the public service over the next few years. The Government has put a hiring freeze in place as a way to get to that target.

Despite being pinged for this last year, Joe Hockey has repeated wrong claims about how much tax Australians have to pay. Let's set the record straight on this.

MEDIA RELEASE

ANOTHER HOCKEY CLAIM UP IN SMOKE

Treasurer Joe Hockey has resorted to outright mistruths in an effort to sell his unfair budget.

In an interview with Melbourne’s 3AW radio, Mr Hockey falsely claimed that Australians are paying “nearly 50 cents in the dollar” in tax.

Based on that incorrect figure, he went on to claim that: “Australians spend the first six months of the year working for the Government.”

These claims are false, as Mr Hockey well knows.

Australia’s top marginal tax rate of 45 per cent takes effect only when a person’s annual earnings exceed $180,000. In 2011-12, the most recent year for which tax statistics are available, just 293,540 Australians earned above that threshold.

On the first AM Agenda of the year, I joined Kieran Gilbert to talk about the government's latest backflip on Medicare and the sustainability of health spending in the long term. Here's the transcript:

E&OE TRANSCRIPT

TELEVISION INTERVIEW

SKY AM AGENDA

MONDAY, 19 JANUARY 2015

SUBJECT/S: Abbott Government’s cuts to Medicare; Queensland state election; Joint Strike Fighter espionage; Bali Nine executions

KIERAN GILBERT: Welcome to the program Assistant Education Minister Simon Birmingham and Shadow Assistant Treasurer Andrew Leigh. Gentlemen, good morning. Senator Birmingham, first of all I want to get your thoughts on this leak yesterday in the Sunday Telegraph. Samantha Maiden is reporting that Peter Dutton, the former health Minister, and Joe Hockey argued against reducing the rebate for GPs for shorter consultations. That didn't go ahead anyway as we know, that was due to start today. But the fact that we're seeing leaks from the Expenditure Review committee, that very senior portion of the Cabinet, has got to be a big worry to start the new year?

SIMON BIRMINGHAM, ASSISTANT EDUCATION MINISTER: Good morning, Kieran. Look, I'm not terribly worried nor interested in unsourced leaks, whether they're accurate or not, who knows. What I'm more interested in is, and what the Government is more interested in, is getting the policy settings right. Sussan Ley as the new Health Minister is going to go out and consult extensively with the health sector, with the medical profession to try to ensure we can come up with the right policy that delivers sustainability for Medicare in the long term. We want to ensure we can secure Medicare's future in a way that recognises that those who can afford to make a contribution to their healthcare should be making a greater contribution. It is hard; let's understand that this policy, as with so many measures the Government is pursuing at present, is all about getting the budget back under control. It’s about ensuring our economic settings and our fiscal settings and our budgetary settings are sustainable for the long haul.

GILBERT: Do you accept that the approach to this point has been a bit below average, to put it mildly, in terms of the efforts to reform Medicare? There's been two backflips in two months when it comes to your approach to reforming Medicare.