SUNDAY, 29 MAY 2016
SUBJECT/S: Election 2016; Labor’s Positive Plan for Australia’s Future versus Malcolm Turnbull’s $50 Billion Big Business Tax Cut; Schoolkids Bonus.
BARRY CASSIDY: We're joined this morning by the Shadow Finance Minister Tony Burke.
TONY BURKE, SHADOW FINANCE MINISTER AND MANAGER OF OPPOSITION BUSINESS: Good morning, Barrie.
CASSIDY: Yesterday Bill Shorten said of the $50 billion company tax cuts they're useless, hopeless and shocking. Since when is a tax cut useless and hopeless to the economy?
BURKE: This tax cut is effectively the biggest single giveaway of the election campaign. We're talking about $50 billion to some of the biggest businesses in the country. Now, the impact of that, in the first instance, means that is why Malcolm Turnbull is making the decision he can't fund Medicare and he can't fund schools.
What does it mean for Australian shareholders? Australian shareholders, and that includes anyone with a superannuation account, receive a fraction of the benefit that goes to foreign shareholders. I won't go through the technicalities of dividend imputation and how franked credits work, but the impact is, if you're an Australian shareholder you get very little of this benefit. If you're a foreign shareholder, that's where the lion's share of the benefit goes.
CASSIDY: OK, but if you extend that argument, is that now a permanent fixture within Labor Party policy? A company tax cut into the future would be considered useless?
BURKE: It needs to be in the context of the choices being made. The choice being made, at a time when money is tight, is Malcolm Turnbull doesn't have a problem spending money, he just doesn't like spending money on Australian households.
As I say, this is the biggest single spend. You have to look at it in the context of when they're cutting Medicare, cutting money to our schools, yet they can find this sort of money where the chief beneficiaries become foreign shareholders rather than Australian shareholders.
CASSIDY: If a tax cut is useless to the economy, what then is a tax increase? You've got plenty of those.
BURKE: We make no apology for closing down significant loopholes. Negative gearing and capital gains tax have been a very significant loophole someone needed to have the courage to shut down in terms of getting rid of what even Scott Morrison used to describe as excesses.
Importantly, that's not just an immediate shift in the budget bottom line, it's a structural change. That takes some years to get to maturity, but means throughout each year of the policy, the improvement to the budget bottom line becomes greater.
CASSIDY: The Coalition will obviously argue a $50 billion tax cut to business will grow the economy.
BURKE: But they will argue it's free. That's effectively their argument.
CASSIDY: What's your answer? How do you grow the economy?
BURKE: When you close down the loopholes I referred to, so the benefit from negative gearing is a simple example to start with. We shift the benefits for the tax concession to the part of the property industry that actually creates jobs in construction.
In the same way, the changes we've been making in making sure we have proper investment in education, that's not only school education, that's in university as well. It's in higher education, it's in making sure you have a better skilled work force. Now bizarrely in this election campaign, the Liberal Party have wanted to argue somehow there's no productivity improvement for having a better trained and skilled work force. I don't think anyone would believe that would stack up.
CASSIDY: In the debate on Friday between the Treasurer and the Shadow Treasurer, Scott Morrison conceded they might need to cut further after the election. He was being honest and open about that. Are you prepared to concede the same thing? That you will need spending cuts beyond the election?
BURKE: The interesting thing Scott Morrison did in that debate, he referred specifically to their track record. Now their track record is to promise no cuts to health, promise no cuts to education, promise no cuts to the pension and then do the exact opposite after the election.
What we've done, and in fairness I thought it was reasonable to do that first, what we've done is lay out, in a way no Opposition has before in living memory, what our improvements to the budget bottom line will be well in advance of announcing any spending measures. That's how we've behaved this election. That means our first budget, far from what the first budget of this Government was, our first budget will be for the purposes of implementing our election promises.
CASSIDY: But you're saying the budget measures are inadequate, you're saying the triple-A rating is under threat, you're saying the Government is operating on heroic assumptions. Doesn't that all suggest if you were to win office you would have to make further spending cuts?
BURKE: Chris Bowen was asked exactly this point when he addressed the National Press Club a couple of weeks ago and gave the exact same answer I've given. We have made decisions in opposition previous oppositions have not been willing to do, which is to announce our improvements to the budget bottom line in advance.
The last Government, when they were in opposition, tried to get away with claiming they'd only get rid of taxes and they'd freeze all spending. It all unravelled the moment they had to deliver the first budget. We've been making sure our improvements to the budget bottom line have been announced well in advance.
We're at end of week three of the election campaign at the moment, it's an eight week campaign. There's plenty more to announce as we go on. But the fiscal rule we've been keeping to the whole way through, is to make sure there are more improvements to the budget bottom line than spends over the medium term.
CASSIDY: You have spending initiatives to come, haven't you? You will be announcing funding around hospitals and around the NBN?
BURKE: There will be more announcements we'll have during the course of the campaign. Some of them will deal with government waste, some will deal with better targeting, some will deal with spending. But the fiscal rule we established quite some time ago, is something we're keeping to and keeping to rigidly.
CASSIDY: And the rule is you put it on the spend-o-meter?
BURKE: The rule we've been keeping to, is there will be more improvements to the Budget bottom line than spends over the medium term.
CASSIDY: On the black hole and the spend-o-metres, even if you accept the black hole was exaggerated, Scott Morrison said Tony Burke is saying: "I only burnt half the house down."
BURKE: It's a nice try from Scott Morrison. I think it's a bit much when the Treasurer and Finance Minister of a nation think it was a really clever strategy to prove they couldn't add up. When the fundamental starting point of their entire media conference started to fall away to the tune of nearly $20 billion at the first question, I think for them now to claim it was a cunning plan is probably a reach too far. When you look at it, all they established was in week three of the election campaign we hadn't finished making our announcements. That was all they in fact established.
The other thing on that media conference is, they kept going back to this $18 billion figure. Now, a number of these measures they've described as ‘blocked measures’ have, on the last time this was printed, a 1 July start date this year. Now that can't possibly be right. We won't even have a Parliament until sometime after that. So they need to come clean as to whether or not they have revised their figures for a different start date or whether they are planning to introduce to the Parliament retrospective legislation when it comes to those cuts.
I presume within a couple of hours Mathias Cormann will be standing up doing a media conference saying ‘I've been dreadful’ or ‘Bill Shorten is wonderful’, depending on whether there's a glitch. In that media conference, Mathias Cormann will need to make clear, otherwise it's left to Malcolm Turnbull tonight, are they seriously claiming they will have spending cuts that start before we even have a Parliament?
CASSIDY: You said they didn't achieve very much with the news conference, but they did force you to drop the Schoolkids Bonus?
BURKE: There's a series of announcements we're making during the course of this campaign. All of them will keep to fiscal rule. But the important thing to remember with the Schoolkids Bonus, Malcolm Turnbull's Government, with Tony Abbott, abolished the Schoolkids Bonus some time ago in a deal with Clive Palmer. That legislation has already gone through the Parliament.
In the same way as the cuts to the pension were negotiated in a deal between this Government and the Australian Greens political party, the legislation on those has in fact already gone through. We continue to model different ways we can provide better targeting for families and we'll have more to say about that later in the campaign.
CASSIDY: Bill Shorten did say the decision around the Schoolkids Bonus was made on Thursday, that was after David Feeney lost his way during that news conference, it was after Scott Morrison and Mathias Cormann got stuck into you about the black hole. Clearly a response to that or just coincidence?
BURKE: It was also after the pre-election economic forecasts came out. We, for a long time, have been trying to find a way and we fought –
CASSIDY: There was no difference between PEFO and the Budget?
BURKE: That's right, but PEFO was the final statement. PEFO was the final statement where it was clear this Government, under their own figures, had more than tripled the deficit for the financial year we are about to enter.
CASSIDY: But you knew there was no difference between the PEFO and the Budget. How can you now use PEFO as an excuse?
BURKE: It was clear from when this proposal first came down in their 2014 Budget, by the time of PEFO the deficit for the financial year we're about to enter had more than tripled.
Be in no doubt, we fought this like we fought a series of measures from the 2014 Budget. On some of them the Government backed down. You might remember they had a proposal in that budget to cut the aged pension by changing the indexation rate which was going to result ultimately in an $80 a week cut to the aged pension.
Now we've campaigned against these measures and fought them. We're now in the election campaign. Some of those measures the Government has backed down on well and truly. Some of them are issues where further announcements will be made. We're at the end of week three, it's an eight week campaign.
CASSIDY: So you say this was all a response of PEFO. Did you get together, did you take an unofficial decision this Schoolkids Bonus had to go as a result of PEFO and then you signed off on it on the Thursday? How did it happen?
BURKE: I'm not going to go through the day-by-day intricacies of Labor Party processes. What I will say, is the critical point when it was clear we were not going to be in a position to reinstate these measures was when it was clear, beyond any doubt, this Government had more than tripled the deficit for the financial year we're about to enter and added, despite everything they say, $100 billion to net debt.
CASSIDY: Jenny Macklin, your spokesperson for families, was still arguing in support of this policy early this week, was she not in the loop on this?
BURKE: You've referred earlier in questions to Bill Shorten making clear when the final decision was made. That's when the decision was made. The chief piece of evidence that informed that decision was the final set of accounts brought down by the Secretary of Treasury and the Secretary of Finance.
CASSIDY: Tony Burke, thanks for your time this morning.
BURKE: Good to be back.