ABC AM PROGRAM
FRIDAY, 3 JUNE 2016
SUBJECT/S: Malcolm Turnbull’s $50 billion big business tax giveaway; Superannuation.
MICHAEL BRISSENDEN: For more on Labor's position I spoke a short time ago with the shadow finance spokesman Tony Burke. Tony Burke, good morning.
TONY BURKE, SHADOW FINANCE MINISTER AND MANAGER OF OPPOSITION BUSINESS: Good morning, Michael.
BRISSENDEN: As we heard there as assistant treasurer in 2011, Bill Shorten arguing "cutting the company income tax rate increases domestic productivity and domestic investment, more jobs and higher wages". What's changed?
BURKE: Well, I think your story missed out one critical detail on that proposed tax cut which was the Liberals and the Greens voted against.
BRISSENDEN: But the point is you supported it.
BURKE: We are going to this election, we are going to this election promising a lower company tax rate for small business. That's what we're doing. What Malcolm Turnbull is doing is saying he then wants to, every year, change the definition of small business.
So at the time of budget last year everyone agreed that small businesses would be defined as businesses with turnover of $2 million or less. What Malcolm Turnbull decided to do a few weeks ago in the new budget, was every year change the definition of small business and who gets that concessional rate until eventually companies with one billion dollars in turnover get the small business tax cut.
Now that is an extraordinary redefinition of small business. It fails any reasonable test of what a small business is. Make no mistake, Labor is going to the election promising, in an affordable way, company taxes will go down for small businesses as they've been defined every year up until a few weeks ago.
BRISSENDEN: But cutting company tax has been a fundamental Labor policy now for more than 30 years. When Paul Keating became treasurer the top marginal income tax rate was 60 cents in the dollar. You reduced that to 47. He cut company tax from a high of 49 to 33 per cent and the argument all along for it was growth.
BURKE: And at the same time the process of doing it was always that it was affordable.
BRISSENDEN: But it wasn't just small business, was it?
BURKE: Let's not forget Michael, Paul Keating brought the company tax rate down while building Medicare. Malcolm Turnbull wants to bring the company tax rate all the way down to 25 per cent, $50 billion over the decade, while cutting and trashing Medicare and attacking bulk-billing.
There's all the difference in the world as to whether or not something is affordable. When the price of making the decisions that Malcolm Turnbull wants to make is an attack on Medicare and an attack on school funding, then it's a price Labor won't pay.
We will make sure that there's room for the small business part of the tax cut but you don't get these tax cuts for free. If you give it, it means other things hit the fence on the way through.
BRISSENDEN: If this measure produces growth as has been argued by Labor in the past, won't that increase the revenue for other things?
BURKE: The growth is not instant. You don't get tax cuts for free otherwise we'd say why don't we reduce it to zero if it was just all automatically seen through growth? You have to do it in an affordable way. Even the Government's own projections, when they talk about one per cent over the decade on growth, that one per cent over a decade doesn't begin until a decade from now.
When Mathias Cormann was asked about what the term is he's referring to, he referred to 20 years. The modelling they've got about that growth rate doesn't actually kick in until the final year when you're at 25 per cent.
You know, people would love every tax rate to go down but you've got to ask what are we cutting funding to in order to do that and the budget is pretty clear as to what they've targeted.
BRISSENDEN: The principle is about, is about creating the right environment for future growth and better growth, isn't it? The argument here is the Government says that cutting the corporate tax rate will do that and you seem to be saying that it won't.
BURKE: What we're saying is anything like that can only be done at a pace that's affordable and right now it is affordable to provide a small business tax cut and that's what we'll do.
But if you wanted to make sure you were doing the right thing by business, for the businesses I talk to, the complaint I get constantly is people on broadband speeds that are a disaster.
People still buffering while they're trying to make money and trying to run a business; people whose download speeds might be a little bit better but their upload speeds keep crashing; people who've said that the ADSL was better than Malcolm Turnbull's second rate broadband; people who thought broadband meant more fiber and then discovered that the Turnbull Government's been buying copper.
Let's not pretend this Government in fact has a plan for a transition beyond the mining boom. The only plan they have is the tax cut, that's it. Over 10 years the price that has in the other cuts that hit the budget are direct hits to productivity, the productivity of the work force.
BRISSENDEN: Clearly some business is unhappy with your approach. Do you accept that your policies are not as friendly to business as the Government's?
BURKE: Oh, if someone is offering a giveaway, obviously you'd prefer the giveaway to the party that's being responsible if you're only looking at your own circumstance.
The damage done over the next ten years to the budget by Malcolm Turnbull's business tax cut plan is extraordinary. The only way he's tried to mitigate against that damage is through attacks on Medicare, attacks on schools. They've ripped a billion dollars out of the infrastructure budget. They've had a cost blowout of doubling the NBN and its cost at the same time while they've slowed down the speed.
Let's not pretend that they're providing a better environment overall for business. They're not.
I don't doubt there are some businesses where they get the tax cut and they say, ‘you beauty’. I don't believe for a minute every dollar of that tax cut though, those same people will be saying ‘well let's all put that entirely into creating new jobs’. I don't accept that.
But I also accept on any tax cut, at any point whether it's income tax whether it's a company tax cut, you have to make sure you do it at a pace that is affordable.
BRISSENDEN: Okay, just quickly on the superannuation issue. I see the superannuation funds of Australia have found 4.3 million individuals or 31 per cent of account holders would be better off thanks to the tax offset for low income earners and other benefits in the Government's super changes. It's a fairness measure, isn't it
BURKE: Well, the tax, the low income offset that you've just referred to was Labor policy the Government abolished in the 2014 budget. Back then the letters named it was LISC. In the new budget they've reproduced these same policy, called it LISTO, but the rules are basically the same. It's the same policy that was Labor's that they abolished in the 2014 budget.
BRISSENDEN: Okay but it's there.
BURKE: Yeah, I'm not, if they reintroduce a Labor policy that they spent two years railing against and they reintroduce it just before an election, good on them. We're not opposed to them introducing Labor policy.
What I do think is a bit bizarre, is for them to say, ‘look, we said we were going to get rid of something. We've renamed it and now claim that it's our own idea and therefore there's fairness in this budget.’ I mean it's really a stretch too far.
BRISSENDEN: Okay, Tony Burke, we'll leave it there. Thanks for joining us.
BURKE: Talk to you again.
BRISSENDEN: The shadow finance spokesman, Tony Burke.