THURSDAY, 2 JUNE 2016
TONY BURKE, SHADOW FINANCE MINISTER AND MANAGER OF OPPOSITION BUSINESS: The Government's economic plan is in tatters; absolute tatters. Let's go through the measures that on Budget night were meant to be locked in and how they've been changing. The first to hit the fence was the backpacker’s tax. Where, by the Government's own admission, it won't be implemented in the form it was presented in the budget. They don't know, other than a six month delay, exactly what their proposal is. Yet they've still banked the full revenue after that.
Secondly, Scott Morrison in the debate against Chris Bowen made clear, on the basis of their track record, there would be further cuts he was willing to make after the election he would not tell people about before the election. Thirdly, on the centrepiece of their economic plan, the company tax cut. Not only has the Prime Minister stopped talking about it as a plan for 10 years and has gone all the way back to now only wanting to talk about the first the years of it, we also have the Treasurer offering to recalibrate the legislation if required.
Today we see their plans to change superannuation are in a mess. We've had some respected journalists talk about a backbench revolt, but let's also look at what is on the record. On the record last night, Secretary to Cabinet, one of the closest members of the Government to Prime Minister Malcolm Turnbull, Arthur Sinodinos made clear after the election they would look to further changes in their superannuation policy. A policy where everybody all the way up to the Deputy Leader of the Liberal Party has been incapable of explaining. A policy where Arthur Sinodinos has made clear, in terms of what it will end up looking like, he says they're leaving that open.
This drives a hole through the middle of their budget plans, drives a hole through the middle of their economic plan. The Government is in a situation where they told us the budget would be the blueprint for what they wanted to achieve as a government after the election. Measure by measure, day by day, their election promises are falling apart. In the first instance it’s because you've got right up to the Deputy Leader of the Liberal Party unable to explain any part of them. Secondly it’s because they then have decided to shelve, measure after measure, what was meant to be locked in and said ‘oh, we'll keep banking the money from it but we can't tell you whether we will do it or not’.
I'm also deeply concerned about when you look at the reason for the backbench revolt. The backbench revolt, as it's been explained by the senior journalists who have been talking about this, they've been talking not about whether or not they believe the measures are fair, but whether or not it's having an impact on Liberal Party donations. That's the extent to which the policy debate in the Government has completely collapsed. Dare I use the phrase same old Liberals.
Against that, you have the Labor plan with measures that have been put out there for public explanation and for the public to have a debate about for more than a year. Before the budget came out, we had put forward more than $100 billion worth of improvements to the budget bottom line across the decade. In the budget reply alone, Bill Shorten added $70 billion worth of improvements to that budget bottom line. As the election campaign has gone on, we've been methodically announcing different areas of policy and making those announcements and have kept rigidly to our fiscal rule of keeping to more improvements to the budget bottom line than spends across the medium term.
I'd add to that, if you want economic growth, you don't just throw all the wealth to the top of the economy and hope some of it might trickle back down. You have to invest in the middle. You have to invest in people; you have to invest in infrastructure. The number of businesses who will talk about the fact the broadband speeds they're getting are too slow for them to be able to function properly is extraordinary. This is a Government that wants to talk about business and jobs but they can't even explain or keep to their own plan.
JOURNALIST: You said that you're going to keep the deficit levy because there is still a deficit, you're keeping it for a decade. By virtue of that, yes or no, do you think that under Labor there will be deficits for ten years?
BURKE: What we've made clear is the top tax bracket shouldn't be the only one that's special. If you look at the Government's budget papers, the Government budget papers where they've got that graph going through what their projections are over the next decade that presumes every tax rate will be the same with the exception of the top tax bracket. So for 10 years in their own documents, the graph on which the 10-year projections are based in budget, they presume all the tax brackets will be the same. The only one they give a cut to is the top tax bracket.
JOURNALIST: So, that's a yes or a no then?
BURKE: What we have said, what we have said is it won't be the only tax bracket that's special. That's the reason we've said the 10 years, that's the reason we've used the language of permanent because it's nothing to do with the concept of return to surplus date whatsoever. So the premise of that, the answer to that is squarely no. In terms of is that the link between the two, no, it's not. It's the principle we can't have a situation where everybody else has their tax rates projected as though they're permanent except for people on $180,000 or more a year.
JOURNALIST: Under you, will we go back to surplus in 19-20 or not?
BURKE: We will have a lot more, a lot more to say on this as the campaign goes on. I've said our budget bottom line figures will be out well in advance of what the Government did when they were in Opposition, when they released theirs on the Thursday afternoon.
The simple thing worth noting with the budget measures we've put forward including our changes to superannuation, but also our changes to negative gearing and capital gains tax. If you look at the profile of those, they don't raise large amounts of money in the first four years because we decided to not be retrospective. We were committed to make sure things weren't retrospective and that means over the first four years you don't get really big changes in the budget bottom line through those specific measures. As you go year on year and the policy matures, you get what the Government has failed to do and that's have a structural change to the budget. That means in the long term you end up with a budget in much better shape.
JOURNALIST: Mathias Cormann has this morning effectively ruled out any change to the super changes. Given what Arthur Sinodinos said last night, what does that say about the Government?
BURKE: Well, we've got one person who’s meant to be in charge on the finances and another person who’s meant to be in charge of the cabinet and they're giving diametrically opposed views. This is not a backbencher arguing with a leader. This is the person in charge of the cabinet process arguing with the Finance Minister of Australia. You can only draw one conclusion from that; they don't have a clue whether or not they will be implementing their budget.
This measure in particular, we're talking about more than $6 billion over the decade in the measure that’s argued to be retrospective and the measure about transitional. Those two combined, you're looking at much more. Actually the $6 billion is across ten on the first of those measures and it’s a bit over half a billion across four on the second one. So you are looking at a big hole in the budget they have brought forward. What can we presume when one person is saying it's up for review and the other person is saying it isn’t? I think we can only presume on thing: the Government doesn't have a clue as to what they'll do on superannuation. That creates uncertainty for the superannuation system and a black hole in their own budget.
JOURNALIST: Mr Burke, what do you think the RBA is going to do on interest rates?
BURKE: It's not something that I'll speculate on. The interesting thing for the numbers which came out with the national accounts, is the domestic economy is relatively soft. If you take out the export part of those figures, and a big part of exports, there's a few things that affect it, but obviously a big part of it is international demand, which we're not in charge of it, you do have a softness in the domestic economy. Now the Reserve Bank has a whole lot of issues there to balance out, they do so independently and so they should.
JOURNALIST: I know that was a cautious answer and you said you won't speculate, why then should Bill Shorten be speculating on what another independent body, the Fair Work Commission, has been doing?
BURKE: If you have a look at what the Productivity Commission has previously reported on what the Fair Work Commission takes into account. What the Fair Work Commission takes into account, the first thing on their list is a submission from the government. It doesn't make it determinative, but it makes it a highly influential. It's quite public exactly what issues they should take into account.
The other thing I think gets lost sight of in the penalty rates argument is the Fair Work Commission and the different umpires that have preceded it, are where penalty rates came from in the first place. The independent umpire created penalty rates in Australia, that's where they've come from and that's been the process in Australia.
JOURNALIST: So it's okay to verbal them then.
BURKE: I don't accept the premise of what you just asked.
JOURNALIST: On the deficit levy, can Labor guarantee that that money you'd raise over the next 10 years would go to reducing the deficit and not be spent to fund other policies?
BURKE: When our final figures come out you will see very responsible action from the Labor party on dealing, across the median term, with making sure we're getting the books back into shape well and truly. You'll see that and I'm not going to pre-empt where that lands today. But simply to say if you take into account what I've said about a shift in the structural state of the Budget and you can combine that with the measures and our fiscal rules you'll see a very responsible approach.
JOURNALIST: But does that mean that the deficit levy should go towards driving down the deficit?
BURKE: Our principle is we shouldn't have only one income tax rate considered special. So this concept it's the only one that was temporary, let me just put it in these terms: if the argument was as Joe Hockey put it two years ago, the argument you've just described, then that argument is even stronger today because today we are about to enter a financial year where the deficit will be triple what the government said it would be in their first Budget. Purely on their own figures, the deficit for the next financial year has gone from $10 billion to $37 billion. On their own figures they've tripled the deficit. On their own figures they've added $100 billion to net debt
JOURNALIST: So will that later be used to reduce the deficit?
BURKE: As I say, have a look when our final figures come out and you will see, like all the different taxes go to all the different measures and the Budget outcomes. I tend to not hypothecate in large terms individual measures to very specific items of expenditure or to debt.
JOURNALIST: So should it then be called something else, other than a deficit levy?
BURKE: I think what matters is every taxpayer knows Labor will not have a view only the top tax bracket is special.
JOURNALIST: The Australian Council of Social Services penned an open letter to both major parties calling for action on addressing inequality and poverty reduction. They argue despite sustained economic growth, 2.6 million Australians live below the poverty line and are being left behind. They've proposed a national target to reduce poverty. Do you see any merit in that measure?
BURKE: I haven't seen the specific letter you refer to, it may well come to me today. Right at this moment I haven't read what you just referred to. In terms of the battles we've had over the course of this term, changes like the change the government wanted to make which would have caused, over 10 years, there to be an $80 a week hit to the age pension, would have gone right to the core of the areas of inequality you've just referred to.
The other thing that goes to the core of what you've just referred to is the fact that budgets are about choices. We all want economic growth. Do you have an economic growth model that's about shoving all the money to the top or do you have an economic growth model about creating demand in the economy and investing in the middle and making sure you bring the community with you. When you make choices like the government has made, choices to provide the gift of $50 billion to the top end of town, at the same time you see a government making a choice to wind right back on support for Medicare, to wind right back on support for schools. You know when those sorts of hits occur people who have tighter household budgets feel those hits much more personally.
JOURNALIST: An analysis of GDP growth shows 30 of 150 electorates are going backwards, especially outer suburban seats and seats not heavily involved in exports. Is enough being done for them? Are they being left behind?
BURKE: I think a lot of people would have looked at the GDP announcements when national accounts came down and thought that's not the reality they're living. A lot of people would have looked at those numbers and said it sounds good, it's being spoken of positively, but they would have trouble matching how that fits with what they've seen happen in their own household budget.
The analysis that's now being done, looking at it electorate by electorate I think brings this home. There are discreet parts of the nation that have done extremely well and there are many areas where people have been well and truly left behind.