WEDNESDAY, 11 MAY 2016
SUBJECT/S: Election 2016; changes to superannuation; company tax cuts; small business tax cuts; negative gearing; Prime Minister’s visit to Western Sydney; Greens and Liberals preference deal; Labor will do no deals to form government.
JOURNALIST: One of Labor's key New South Wales strategists is Tony Burke, the Member for Watson in Sydney's inner west and the Opposition's Shadow Finance Spokesperson. Tony Burke joins me on the line now. Tony Burke Good morning.
TONY BURKE: Good morning.
JOURNALIST: You heard there Treasurer, Scott Morrison, saying the Government’s changes to superannuation will only change the treatment on future earnings from the first of July this year. Where is the retrospectivity you say undermines the confidence in the system?
BURKE: Well the hint to the retrospectivity is when it says it applies from 1 July 2007. That's what the Budget papers describe it as and when you want to know whether or not something is retrospective, when the start date is July 2007 that's a pretty strong starting point on retrospectivity.
JOURNALIST: John Daly from the Grattan Institute says that argument is a bit of a furphy. He says lots of changes effect investments made in the past, such as buying shares in a company. Future earnings on those will be subject to a person's marginal income tax rate but if that tax rate changes you wouldn't expect the old tax rate to be grandfathered to apply to all future earnings. This is the same, isn't it?
BURKE: You don't have exactly the same flexibility on buying shares as you do as money you put in superannuation; I don't think the analogy stacks up the same way. But certainly, if it was not retrospective they wouldn't have a start date of 1 July 2007. Just as basic first principles: when the start date is six years ago and more, we're going right back here, eight years ago, you've got a situation where this is clearly retrospective.
JOURNALIST: But it will only apply to future earnings though, won't it?
BURKE: It applies to future earnings based on those investment decisions. When the start date, you go back to the Budget papers, the state date there is 1 July 2007. We put our policies out more than a year ago. We haven't had anything like the dissembling we've seen from the Government's announcements last week in the Budget. Nothing like it.
JOURNALIST: It's obviously an argument we'll hear over the next eight weeks quite a lot. I'll turn to campaigning in Sydney in a minute, but first if we can just cover off on another one of the central fights that does seem to be dominating the campaign which is this argument about economic growth and productivity.
The Government argues its company tax cuts will boost the economy by one per cent over 10 years, yesterday Chris Bowen argued Labor's education funding boost would lift productivity by 2.8 per cent, and he cited an OECD report but it seems that forecast was projecting a benefit over 80 years. It all seems to be getting a bit confused in the number of decades doesn't it. What's the comparison you can make with education over 10 years?
BURKE: Can I just clarify that OECD report? It does have a figure out to 2095, but that's an 11 per cent economic growth figure. The figure Chris Bowen quoted, the 2.8 per cent figure, is what the increase in the GDP would be today if Australian students had the improved skills and finished high school. So the deception or the error that's in the paper today claiming it's out to 2095, that would be if Chris had quoted a completely different number, which is the 11 per cent figure.
JOURNALIST: Okay, so your central argument then is your education funding boost would lift productivity immediately?
BURKE: The moment you have children going through with better skills and finishing high school you get the 2.8 per cent growth according to the OECD report. That's how that has been calculated.
What the government has done, when you say over 10 years, that modelling they released, the 10 years doesn't start until the end of the company tax cut period. So their numbers on their growth figure are in fact what would happen after 10 years at the end of the first 10 years of bringing down the corporate tax rate. Theirs is a policy where, under their own modelling, it's one per cent growth by the time Malcolm Turnbull is in his 80s.
That's what they've done there. Budgets are about choices. Anyone who wants to claim you can give a $50 billion tax cut to the top end of town and do it for free is just making it up. You can't. The Government has chosen to give $50 billion to big companies at the expense of providing the money needed in schools, and, at the last election, they promised they would deliver for schools.
JOURNALIST: Let’s turn to the campaign which is going to be focusing on Sydney today with the Prime Minister campaigning in some of the marginal seats in Western Sydney...
BURKE: You know it is an election when Malcolm Turnbull is in Western Sydney.
JOURNALIST: Okay, this is going to be a tough battleground though isn’t it? It always is.
BURKE: Always is. And in Western Sydney you have got people who would be questioning well and truly the choices the government has made. The small business tax cut for small businesses is something that is bipartisan. Redefining a ‘small business’ all the way up to a business with a turnover of a billion dollars is just bewildering for people.
When people are having to make choices about their own budgets; when people are making choices about what they can afford and how they can make ends meet; to see a government that puts its priorities at the company tax cut for some of the biggest companies in Australia and providing an income tax cut at the top marginal rate for people earning more than $180,000, those sorts of priorities just don't stack up for people who are managing their own budgets.
JOURNALIST: They would be concerned about changes to negative gearing too, I would assume, and the impact that may have on their house prices too wouldn’t they?
BURKE: Well certainly people will be pleased out there we have a situation where Labor has made sure negative gearing can continue for new build. It is important that people know that you are able to continue to have that investment that improves housing supply. That’s critical.
But out there, and throughout all parts of Australia really, where you’ve got people who have been to auctions and have been out bid by investors, the concept the Government will provide a subsidy to someone buying their second, third or tenth home but won’t provide the same support to a first home buyer is another example of a priority people know is unsustainable.
JOURNALIST: You have also got a fight on your hands in the inner west of Sydney in some formerly safe seats you have got to fight from the left, from the Greens, particularly in seats such as Anthony Albanese's seat of Grayndler. Is that stripping you of resources you would otherwise spend in fighting those marginal seats further out?
BURKE: There is no doubt the agreement in place between the Greens and the Liberal Party makes a number of our battles tougher. There is no doubt about that.
The deal that has been referred to as the ‘Michael Kroger deal’ where the Liberals preference the Greens in certain seats and in return the Greens deliver open tickets in other seats is all about trying to have a situation where the Greens might get some extra seats in Parliament but Malcolm Turnbull remains Prime Minister. That’s what is currently there and when a deal like that is being cut, no one can pretend that doesn’t add an extra layer to your campaigning.
JOURNALIST: Ok, just quickly. You've ruled out a Greens alliance, that was very clear last night from Chris Bowen, but what happens if the election is close and that is the only option of forming a government. Do you go back to the polls?
BURKE: We have made our position clear. You have just referred to what Chris Bowen said yesterday, Bill Shorten has made similar comments as has Tanya Plibersek on, I think, this program yesterday. The comments have been absolutely clear that’s not just what we take to the election that’s how we operate.
JOURNALIST: So that is back to the polls? How do you resolve that?
BURKE: We certainly would not be forming any sort of coalition agreement with the Greens.
JOURNALIST: Alright we’ll leave it there. Tony Burke, thanks for joining us.
BURKE: Thank you very much.