MONDAY, 27 JUNE 2016
SUBJECT/S: Labor’s costings; Superannuation; Brexit.
CHRIS BOWEN, SHADOW TREASURER: Good morning everybody. Yesterday Tony Burke and I released comprehensively and in very detailed fashion, the impact of Labor's plan for Australia on the federal Budget over four years and over ten years. We also released information as to the rigorous costing process which has been undertaken. Not only costing all our policies over four years and ten, but also engaging the services of three eminent and expert Australians to satisfy themselves as to the rigour of the assumptions and behavioural impact parameters of our policies. Professor Bob Officer, Dr Michael Keating and Mr James McKenzie.
As of today, we are yet to see the Liberal Party's bottom-line. As of today, we are yet to see the impact of the Government's commitments during this election campaign over four years or ten. We know we won't see them over ten because Scott Morrison does not trust the Australian people enough to come clean about the impact of his policies over the next decade. We've taken a different approach.
When Scott Morrison and Mathias Cormann eventually get around to releasing their Budget bottom line, it may well be Thursday, it may be Wednesday, but when they eventually get around to releasing their Budget bottom line, we know, as Tony will go into in a few moments in more detail, it will rely on those fundamentally unfair measures from the 2014 Budget which have been rejected by the Parliament and the people. Making unemployed people wait a month to receive Newstart. Reducing the ability of Australian pensioners, who have heritage from overseas, to take their pension when they visit other countries. We know those measures, which have been rejected completely and utterly by the Parliament, 16 separate measures will be the fundamental building block of Scott Morrison's fantasy Budget projections.
We also know the Government has an Emissions Reduction Fund. Now, included in our costings, of course, was our policy. The Government has an Emissions Reduction Fund which will run out over the course of the next few years. Scott Morrison claimed to have it funded for the next decade in the Budget today. Well that contradicts evidence being given in the past by public servants before Senate estimates. Scott Morrison, if he has nothing to hide, will release the full 10 year impact of his policies. We know it would include a $50 billion hit to the Budget bottom-line from his big business tax cut. We know he claims it would include an Emissions Reduction Fund, which the public servants have said has not been budgeted for beyond the next couple of years.
Labor has been completely upfront about our plans. We've been announcing policies for the last two years and leading the policy debate. Of course, during this election campaign, we've continued to announce policies and to lead the debate while Mr Turnbull and Mr Morrison have flitted from ridiculous scare campaign to ridiculous scare campaign. All our figures are now out there to be seen. All our figures are out there to be seen well before the next election, unlike Mr Morrison and Mr Cormann, who are seeking to delay the impact of their announcement. We've stood before the media and had all our figures out there for the Australian people to see. We're more than happy to continue to answer questions about it. Mr Morrison continues to hide from the truth. Tony.
TONY BURKE, SHADOW MINISTER FOR FINANCE: Without structural change to the Budget, every Budget will continue to be held hostage to variations in parameters like the iron ore price. If you have a look at what the Government has done, and the reason the Government doesn't want to talk about ten year costings, is their ten-year centrepiece of their own Budget is the largest attack on the Budget bottom-line in this election campaign. If you compare simply the structural shift between Labor's negative gearing and capital gains policies against the corporate tax cut giveaway from this Government, the message couldn't be clearer. While in the first year each of them makes a modest impact on the Budget, because Labor supports the genuine small business part of the tax cut for companies with a turnover of $2 million or less, the impact on the Budget bottom-line in the first year is negative, but only negative $200 mil lion. The impact on the Budget bottom-line in the first year of the negative gearing and capital gains tax changes is $600 million in the positive. But by year ten, these changes become extraordinary. The hit to the Budget in year ten of the corporate tax giveaway becomes $14 billion. The improvement to the budget bottom line in year ten from negative gearing and capital gains tax changes is an improvement of $8 billion.
Parameter variations can cause these numbers to improve or to go down, but the essential structural story will not shift. Have a look at the Budget bottom-line in year ten, of the Budget itself, of what the coalition would actually achieve, because of the zombie measures, and what Labor would achieve. For the Budget bottom line in year ten, under the 2016-17 Budget, $6.2 billion in surplus. Under what Labor is putting forward, because we've resisted the company tax giveaway and made the structural changes to the Budget, year ten becomes $19 billion positive. For the Government, when you take away their accounting trick with the zombie measures, only $1.6 billion in surplus. That means they are determined to keep Australia on a pathway where any parameter variations, any headwinds, take us into negative territory immediately. We know what that means. What that means is, straight after the Budget they'll do exactly what Scott Morri son has flagged. Don't think they've already reached the limit of their cuts. They're the same old Liberals. We know what they'll do and Scott Morrison even conceded it in his debate against Chris Bowen.
After this election, there are more cuts to come, deeper cuts to come, that will hit Medicare, will hit schools and will continue with their pathway for a second-rate NBN. Labor's plans involve investment in people, investment in infrastructure, and importantly, a structural change to the Budget bottom-line that means our nation is no longer held hostage to any changes in Budget parameters.
BOWEN: Thanks very much, Tony. Questions?
REPORTER: Mr Bowen, you've announced yesterday you would effectively bank $3 billion due to the Government's superannuation changes and said you will look at them. Does that mean if the review finds they are a good idea, that you will adopt the Coalition's policy?
BOWEN: Well what it means is, you're right, we're committed to raising the same amount of money as the Government. We had, of course, released our policies last year. The Government carbon-copied some of those, so of course we support the imitation of those. They're exactly the same as the ones we announced in April 2015. There are others we have concerns about in terms of retrospectivity. We'd like to consult with the sector from Government, with the resources of Treasury, to ensure any measures we implement are implemented in a very fair manner.
The Government is the one committed to the retrospective tax changes. We're committed to ensuring superannuation is as fair as possible. We've led this debate yet again, pointing out last year the current treatment of high-income super is unfair and unsustainable. The Government campaigned against that, said they'd never do it. Then on Budget night they jumped up and implemented not only our policies, but a raft of other policies. Some of which, obviously, have caused concern in the community. To be very frank with you, we don't want to rush to failure like the Government has. We want to use the resources of government, and it will be a complicated process, to consult with the sector about the implications of the Government's policies.
REPORTER: You may adopt the retrospectivity, the ones you have criticised, they may be adopted by Labor after the election.
BOWEN: We've expressed grave concern about the retrospective nature of one measure in particular, the $500,000 cap. That's the one expressed the most concern about it. We want to sit down with the sector and work out the best way to proceed to raise the same amount of money.
REPORTER: Don't voters deserve to know the details of your policy before the election rather than after they vote to hear what he details will be?
BOWEN: I think, with respect, we've outlined a more detailed policy platform than any Opposition over the last 20 years or more. We're very proud of that. So voters who vote for us know they are getting better investment in schools and know they're not seeing a $50 billion hit to the budget bottom-line through a big business tax cut. They know they're voting for reform to negative gearing and reform to capital gains tax, controversial but we've led the policy debate and we'll continue to do so.
On the superannuation measure, we're raising the same amount of money. I don't think we can be accused of something which involves more consultation being a bad thing. If you ask the superannuation sector: ‘would you rather have the retrospective measures or have a government which will sit down with you and work the issues through with you?’ I think they'll say the latter. That's what we're offering.
BURKE: On that, I hear what you're saying in terms of making sure voters know the detail. But let's face facts on the superannuation changes; Government ministers don't know the detail of their own superannuation changes. I think it's fair and reasonable that consultation continues.
REPORTER: Mr Bowen, as you said, you've had your policy out there for a long time. You've done a lot of consultation with the superannuation industry. Why are you now moving away from what was a very clearly defined position? Also after heavily criticising government for changing their policy midterm after an election, not getting a mandate, you're now saying you're going to an election without a clearly stated policy.
BOWEN: With respect, that's not right. I don’t accept the premise of that. We've outlined the policy. The Government has said they will raise more than us through their policy. We've indicated, given the pressures on the Budget, we would raise the same amount of money. Some of the measures we have not expressed as much concern about. For example, I refer you to Dr Chalmers' speech from a couple of weeks ago where he outlined, in quite an amount of detail, what was concerning us and what wasn't. Most of the focus was on the $500,000 cap.
Obviously we have not expressed the same degree of reservation about the $1.6 million measure that is a different policy. So there are lots of moving parts here. We have got detailed policies. As I said, if you ask the superannuation sector would you rather have the Government's policy or a policy in which we'll sit down and work the issues, they would say the latter. Then of course, there is our firm commitment of no changes after that for five years, the implementation of a council of superannuation custodians, all the measures which Bill Shorten and I have been proposing for several years now to provide more certainty and stability in the superannuation sector.
REPORTER: Mr Bowen, would Labor consider running higher deficits to cushion the impact of Brexit if, for example, you were to deliver some economic stimulus measures?
BOWEN: Well, let's not get ahead of ourselves. I think, with respect, the withdrawal of Great Britain from Europe is an event which will have its impact on Australia through general global volatility and uncertainty. The direct impacts would be very limited. I would regard the impact of Britain leaving Europe as being much less intense, even on the global volatility scale, than the events of 2008-09, much less intense. I see in some commentary in the papers this morning, from Treasury officials, to that effect as well.
What we're doing, we're making the big, important, structural improvements to the Budget, which mean for Treasurers, over the next ten years, they know the Budget is in good shape, in better shape than it is now, to enable them to respond when and if necessary. But neither the Government nor the Opposition should be talking about, frankly, at this point, the need for some sort of emergency stimulus. There is no such need. Compared to the collapse of Lehmans, which was a huge shock to the system, the world has known for some time this referendum was coming. It was hoped until more recently Britain would vote to remain, that is true, but nevertheless this has been factored in to international discussions. I do not see the need to contemplate the sorts of actions you're suggesting there.
REPORTER: Mathias Cormann has said the Government won't increase the Budget deficit if such measures were necessary. He's completely ruled that out. Will Labor do the same?
BOWEN: We've outlined our fiscal approach in a very detailed fashion yesterday. That's the approach we're taking. That's what we will deliver. What we've talked about is the impact of our decisions on the Budget. We've compared them from the same baseline. My views about the Government's assumptions and forecasts are well known. That's why we'll bring down an economic statement to update those forecasts and assumptions as well as implement Labor's policies as have been announced, and implemented by us in a series of election announcements and leading up to the election.
REPORTER: Mr Bowen, just some more clarity on the superannuation policy. Does that mean you have moved away from your commitment of taxing earnings over $75,000 per year? What exactly is on the table after the election?
BOWEN: Well, the contributions tax is one we announced last April, the Government has appropriated that. That is now bipartisan policy. Our earnings tax measure and the Government's $1.6 million measure have some similarities. There are some complexities that would need to be worked through. We've expressed concern and reservations about the retrospective nature of the $500,000 cap which we want to consult with the sector on.
REPORTER: Labor has criticised other people like Mr Sinodinos, for consulting on superannuation implementation. Why are you now doing the same?
BOWEN: I think, with respect, it's different when you're the Cabinet Secretary and the Government has brought down a budget and you're out there spinning basically ‘don't worry about our policies, we'll fix it later. It's got to go to the party room yet and they may knock it off.’ That's effectively what Mr Sinodinos said. What we're saying, and we have been talking to the superannuation sector quite continuously since the Budget, there is deep concern from many in the sector about the retrospective nature of the Government's policies. We would seek to raise the same amount of money, but we listened to the sector about their concerns about the retrospective nature and there are other ways in which we would talk to them about proceeding.
REPORTER: Just getting back to Brexit, doesn't an unexpected event like that show how the ten-year costings you've put out are very hard to have any trust in? I mean, it's such a long term, there's going to be a lot of unexpected events in the next ten years.
BOWEN: I will answer briefly and Tony will add. What we're talking about is the impact of government decisions, ours versus theirs. As I said yesterday, over the next ten years there will be of course changes in the global economy, which will impact on Australia. But starting from the baseline of today, where we were in a significant deficit and a structural deficit, we will return to structural balance, which will enable those changes to be better absorbed. Tony will add.
BURKE: If you take the lazy path and never deliver structural change to the Budget, then you are always held hostage to international events like that. If you take the figures I quoted before as to what's projected in year ten. In the Budget numbers a $6.2 billion surplus. Labor a $19 billion surplus. The Government, when you take the zombie measures out, a $1.6 billion surplus.
Now, if parameter variations are good, all those numbers would move up. If parameter variations are bad, all those numbers would move down a bit. What wouldn't change is the fact Labor is making the structural changes to the Budget which makes our Budget far more resilient than what the Government's doing. The Government's game of playing an accounting trick of presuming measures will make it through the next Parliament, that have not been able to make it through the Parliament since the to 2014 Budget, will be shown for the irresponsible game it is.
BOWEN: Ok. Thanks for your time.
BURKE: Thank you.