PARLIAMENT HOUSE, CANBERRA
TUESDAY, 28 JUNE 2016
SUBJECT/S: Coalition’s costings; Budget repair that is fair; Superannuation.
CHRIS BOWEN, SHADOW TREASURER: Thanks for coming. Well the Liberals have done it again. Same old Liberals. Today, in election week, the Government has released costings based on fantasy. Based on the fantasy the unfair measures in their 2014 Budget will pass the Parliament. And also refusing to outline the ten year implications of their policies.
Firstly, on the zombie measures. If Scott Morrison wants to say to the Australian people he goes to this election on the basis the Parliament and the people will all of a sudden think it is fair for unemployed people to wait four weeks for payment so they can eat, then he is living in a different universe. If he thinks the Parliament and the people will think, all of a sudden, it’s ok to make it harder for pensioners from ethnic backgrounds to return to their homeland on holidays, then he is living in a different universe. If he thinks the Parliament and the people are going to say it's alright to make Australians work to 70, of course, in the longer term, he is just not right.
We released our costings on the weekend and our costings show those measures will not pass the Parliament. They're incorporated in that sense, in our costings. The Treasurer even had a little graph. I notice in the costings document he released the only graph was about previous governments. Nevertheless, at his presentation he had a graph which showed, again, his alleged deficits under the Labor Party. But he claimed the Budget deficit under our plans in 2019/20 would be double what the Government plans. That is a lie. He claims a budget deficit of around $5 billion and he will deliver a budget deficit, at least, of $9 billion, because of those zombie measures.
You have to be honest with the Australian people, and the Government is failing that test. They refused to outline the ten year impact of their decisions. I noticed again the Treasurer was asked about the Emissions Reduction Fund and he failed to answer the questions. The Government signed up to commitments in the Paris Accord, but they only have short-term funding. In addition, they have the $50 billion corporate tax cut, the biggest structural ram-raid on this Budget and in this campaign. In fact, the biggest structural ram raid on the budget in a long time. A commitment which will increase to a $14 billion a year hit on the budget, which the budget simply can't afford. We've taken the approach of having four year costings and ten year costings in our document. Of course, over ten years, there will be economic circumstances which change, but the impact of our decisions is there and clear for all to see.
Finally, the Government announced some savings measures today. I note the Treasurer struggled to detail and explain those savings measures. We would like to know, of course, how different these are to the savings measures which were announced in the Budget and then MYEFO, which look very similar. They don't appear on the election costings' website, which means they were probably costed by Treasury before PEFO. We question whether they are the most up to date costings available. Of course we will look at them in detail. I noticed the Treasurer referred them to the Social Security Minister; he couldn't answer the questions about them. We look forward to those answers and we will consider them in due course. Obviously, we would need to know exactly how many people would be affected and how it is different to the $5.7 billion in savings announced since the 2015/16 Budget from better compliance. This Government has a habit of announcing compliance measures with very significant amounts of money attached to them but, of course, we would like to see a report on just how successful those measures have been in considering the Government's current measures.
I should say, instead of having the costings out on the Thursday before the election, the Liberal Party has improved its form and we now have them out on the Tuesday before the election. That is an improvement, I suppose. In three years' time they might get them out on the Monday. But, nevertheless, we now have a clear choice for the Australian people. Labor will invest in Medicare, in schools, in infrastructure and jobs. We will have better quality medium-term budget repair, which sees the budget improve structurally, which sees the Budget no longer hostage to the assumptions and parameter variations, by good-quality structural improvements, which build the budget over time. Negative gearing and capital gains tax reforms rising to $8 billion a year in return to the budget. On the other hand, the Government giving away $14 billion a year at the end of the decade in corporate tax cuts. They are the choices for the Australian peopl e. I will ask Tony to add to the remarks and then we will take questions.
TONY BURKE, SHADOW FINANCE MINISTER: The Government is offering the worst of all worlds in these figures. They have continued deficits with no structural reform. When you take account of the zombie measures, measures which will never pass the parliament, across the Forward Estimates there is a 10 per cent difference in the cumulative deficit between Labor and the Government's figures. But embedded within Labor's figures you get structural reform. Both sides of politics hit surplus in the same year. Both sides of politics have deficits across the forward estimates. But only one side of politics, that is Labor, is dealing with the structural deficit. Our reforms, year on year, make structural improvements to the budget. Their changes, year on year, see the budget deteriorate structurally.
How does this happen? Simplest example: compare capital gains tax and negative gearing reforms from Labor to the corporate tax giveaway of the Liberal Party. Neither makes a massive difference to the budget in the first year. In the first year, our changes improve the budget by $600 million; theirs hurt the budget by $200 million. By year ten, ours is improving the budget by $8 billion; theirs is an attack on the budget by $14 billion. Now, people will say, ‘Oh, yeah, but by year ten will those numbers be precisely the same?’ Of course you'll always have changing assumptions, but the structural shift those numbers represent is locked in, and Scott Morrison has made clear from the Government's perspective locked in, in legislation. They will not shift from the ram-raid they want to conduct on the Budget bottom-line as part of the corporate tax giveaway.
What does this ultimately mean for Australians? Australians are looking through these figures and saying, what's the difference for them? Labor's plan gives the structural improvements for the budget and makes sure in years to come we are not held hostage by parameter variations for whether or not we get just over the line or just behind the line each year when it's Budget time. It also means, by not making the hits on the budget the Government is making, people can be assured of a Medicare system. People can be assured of proper funding in schools. People can be assured of a first-rate NBN.
BOWEN: Ok folks.
JOURNALIST: Your predecessor as Treasurer, Wayne Swan, carried the private health insurance reforms from '09 through the '10, had them down and they were rejected by the Senate until he finally got it through a new Senate after the 2010 election. What's to say those zombie measures aren't approved by a new Senate, of which no-one actually knows what it will turn out like?
BOWEN: We don't know exactly the makeup of the Senate, but I know the Greens, the Labor Party, and in my knowledge of the cross benches currently existing and those are likely to be elected, they're not going to cop making unemployed people wait. They're not going to cop the sorts of measures which affect pensioners in the budget. They are not going to cop them. There has to come a time when reality is reflected in the budget documents. There just has to. Now, that is just simply a statement of fact. The fact is those measures will have to be dropped from the budget. The fact is, Scott Morrison doesn't have the courage to drop them now. That's the difference.
BURKE: If I could just add to that before we move on. The extra issue is - this is a double dissolution election. It was open to the Government to make any one of those zombie measures a trigger, in which case they would be eligible for the joint sitting if they win the election. They didn't do it with a single one of them. These zombie measures are entirely an accounting trick the Government is engaging in to prop up their budget bottom-line. If they were serious about getting them through, they would have been a trigger for the double dissolution. They are not, because they know these are measures that will never pass the Parliament.
JOURNALIST: A question on your superannuation position. Take for instance the $500,000 lifetime cap, what exactly is the feature of that policy you might seek to change? Is there a problem with the $500,000 level? Is it mainly the start date? It's meant to start immediately; it started from the Budget night right?
BOWEN: It started on 1 July, 2007 in fairness.
JOURNALIST: I think the cap itself, or that policy...
BURKE: The revenue from it.
JOURNALIST: Yes, it started on Budget night. So my question is: aren't you causing huge uncertainty in superannuation by not being able to say what exactly about that measure you would change?
BOWEN: Well, it is a fair question and I will deal with it in some detail. Just look at what Alex Malley said, for example. When the changes were announced on Budget night, we said they had been made without consultation and the Government was completely underestimating the impact they would have. The changes were announced less than a week before the Government called the election and went into caretaker mode meaning there would be no more details about how this would work. That is just one quote from a long list of quotes. I could give you, from the superannuation sector, from accountants and experts saying the Government has got this wrong and they haven’t thought this through. Plenty of experts say this can't be implemented, couldn't be done. The records aren't detailed enough and the records aren't able to be implemented in such a way this could be sensibly implemented. What we&rsq uo;ve done is exactly the same formulation as what the Government has done on the backpacker tax. The difference is we're doing it to a Government policy, the Government is doing it to their own policy. The Government has said ‘oh, we don’t know how this is going to work and this is all too hard, we’ll have a review.’
REPORTER: Have you sought a briefing from Treasury for instance…
BOWEN: I haven't finished answering your question, with respect. When I finish answering, feel free to ask another. I want to answer your question. What we've done is similar to what the Government has done on the backpacker tax. What we've said is, we've never had a quarrel with how much money the Government raises through these measures, but we do have a quarrel with two aspects in particular. The retrospective nature of the measure you refer to and whether it could actually be implemented. Whether it could actually be done. It's possible neither side of politics will implement this measure if it's not implementable.
Very frankly, we do not have the resources of Government to make the determination as to whether it is implementable. We remain and will remain deeply concerned and opposed to aspects of retrospectivity. There are some measures in the total package of superannuation which we are comfortable with. Like the measure we actually announced, the contributions tax which the Government then copied. The $1.6 million cap and our $75,000 earnings measure are quite similar. So we don't particularly have an in-principle objection to that. There are some issues with transition to retirement which have been raised, but we want to do the right thing and not do what the Government did and rush to failure. You need the resources of government to work those issues through. I think I've pointed to the two areas of concern for us, retrospectivity and implementation, whether it can actually be done. The Government says it can. The sector says it c an't. It would be irresponsible for us to say, ‘yeah, well, we will do it too,’ if we just don't know whether it can or can't be done. We remain of the principle retrospectivity should not be implemented. They are the concerns.
Now, I understand, it is a fair question you ask, but we are saying we commit to the same amount of money; the broad outlines of the other measures are ones which we take less quarrel with. But that particular measure has caused us concern, as it has caused concern right throughout the community. I believe, as a former Minister for Superannuation, a former Assistant Treasurer, a former Treasurer, knowing the superannuation sector as I do, they would sit down with us in Government, work quickly through those issues and come up with, together, sensible ways of achieving the objective without offending the principles of retrospectivity and not being able to be implemented.
REPORTER: I think Andrew Leigh might have suggested yesterday, from one of his remarks it sounded like opposed to retrospectivity, but might have to accept it, is that accurate?
BOWEN: No, I've answered the question. We are all doing lots of interviews, with respect. I've answered the question. They are the issues we’re concerned about that we’ll have to move through.
REPORTER: What if you’re in Opposition, what is going to guide your approach when the Government wants to legislate?
BOWEN: I'm not getting into hypotheticals about what if we're in Opposition. What we hope to be doing is holding press conferences around the corner in the blue room around the corner, Tony and I, in coming weeks.
REPORTER: Where will you get the money from if you can’t do it? Somewhere in the super system?
BOWEN: Obviously we have said we're banking that amount of money. We are committed to that as an objective and we would sit down with the superannuation sector and work that through. I think I've outlined, in fairness, of the measures, which ones don't cause us much concern and which do. I think that's fair to say. We would concentrate our consultations on that measure.
REPORTER: So the money would come from within that superannuation area, within that portfolio?
BURKE: That is the same problem for the Government in terms of implementation.
BOWEN: Correct. It is distinctly possible the next Treasurer of Australia will be coming before you and saying, ‘I’m sorry this measure can't be implemented.’ It might be Scott Morrison or it might be me. I’m prepared to say so, he is not.
REPORTER: Another area of your super policy that isn’t clear on your list of positive policies. The Government froze the super guarantee at 9.5 per cent until I think it was 2018. After that, I presume it increases. At the time you were very vocal against that decision. I assume now you accept that, because we've had no policy?
BOWEN: We would have liked to have increased it faster. We would have liked to. The fiscal circumstances meant we prioritised our decisions. We really would have liked to have increased it faster. I think the difference, frankly, we know what Liberals do. They freeze it and when it gets time to implement it, they freeze it again and again, and you never actually see it increased. That's what they do. They just never increase superannuation. They pretend they will in a couple of years' time and when it gets to a couple of years' time they say they can't afford it. When it gets to the time to increase it under us, we will increase it. That is the difference.
REPORTER: You will increase it from 2018 then?
BOWEN: Yes, that's right, the timetable. Any more questions?
REPORTER: If you do decide to propose the $500,000. Jim Chalmers said, when he gave that speech a couple of month ago, you would be looking at the $500,000 prospective?
BOWEN: Options that consultation will be able to sort out.
REPORTER: If you had to find $500 million elsewhere, could you look at things like lowering the annual concessional cap on contributions?
BURKE: That's well in advance of the consultations.
BOWEN: That's what consultation is for, Phil, that's how it works. We respect, we consult and then we will deal with those issues.
REPORTER: Could you have sought a briefing on the workability from Treasury?
BOWEN: Well, it is the sector that says they are not implementable. We want to consult with the sector about that with the resources of government.
Thanks, ladies and gentlemen.