SKY NEWS FIRST EDITION
THURSDAY, 25 FEBRUARY 2016
SUBJECT/S: Defence White Paper; The Turnbull Government Abandoning Tax Reform; Negative Gearing; Senate Reform.
KIERAN GILBERT: We’ve got now, for reaction from Labor, the Shadow Finance Minister and Manager of Opposition Business, Tony Burke. Mr Burke, thanks for your time. The funding, as the finance spokesman for Labor, can this be achieved?
TONY BURKE, MANAGER OF OPPOSITION BUSINESS AND SHADOW FINANCE MINISTER: Well, it’s a very serious financial commitment and we’ve said we wanted to wait until we saw the white paper and to ensure the Government had a credible way of paying for the trajectory. These are very significant decisions that go into the decades in terms of their implications for the nation. We’ve quite responsibly been saying we’ll wait until we’ve seen the document itself. We had been told earlier in the week…
GILBERT: It’s in line with that you’ve suggested previously, the new government as well, these sorts of figures are ball park where Labor was at.
BURKE: Yes, so we’ll have a look at it. You want to be able to get through these issues in a bipartisan way, it’s the correct thing to do and the right way to deal with it. We were told originally in Parliament this was going to come out tomorrow, for some reason the Government’s brought it forward to today. There’s important issues here that go across the nation. On employment issues, you’ve had one and a half thousand jobs lost in the ship building industry while the Government’s been going to and fro on this white paper. Hopefully we get a good document for the nation today.
GILBERT: Let’s move on to the tax debate. Reports in Fairfax suggest the Government’s going to look at two main areas in terms of tax reform. One on negative gearing: capping overall tax deductibility people can claim each year; the figure they’re talking about is $50,000 each year. The other is capping the amount people can put into their superannuation accounts pre-tax. I think the cap at the moment is $30,000 for those under 50, they’re looking at $20,000 for those under 50. Do these two ideas resonate with you?
BURKE: If this is where the broad ranging tax debate lands us, then every claim Malcolm Turnbull made that he would provide economic leadership for the nation is dead, just finished. If the changes are as modest as this and they’re going to put it straight into income tax changes, it means every one of the 2014 Budget Abbott cuts is still there. Malcolm Turnbull owns them all because he will not have made the significant changes to the taxation system you need to be able to have Australia on a credible path.
GILBERT: They could find other savings. You don’t know they’re necessarily going to stick to the 2014 Budget framework.
BURKE: Maybe they could be worse, I’m not sure. But what they are doing with this taxation decision as reported today, is they’re saying: ‘anything about broad ranging tax reform, no matter what sort of expectations Malcolm Turnbull might have raised, gone.’
The other thing in what’s being described today, is it looks like they may well be going down a retrospective path on how they deal with negative gearing. Now you remember Malcolm Turnbull’s original criticism of our policy was it didn’t raise enough money in the first four years. The reason the figure over the first four years is half a billion dollars, is we’ve grandfathered all existing properties. So, everybody who already owns an investment property, nothing changes for that property. If they’re going to do what’s described in the paper today, that would mean retrospective changes for people who already own properties.
GILBERT: Isn’t this plan from the Government - if they do adopt that, and we don’t know, this is a report in a couple of papers this is not a government announcement…
BURKE: The Defence White Paper is the same at the moment.
GILBERT: This negative gearing plan, on the surface, looks fairer than yours because you’re going to cap the amount people can claim as losses at $50,000, so you’re really hitting the higher end, whereas yours is everyone?
BURKE: No. The fair thing is to make sure we get rid of the situation where the Government, at every auction of an existing home, has a situation where the person buying their second or tenth house is getting more help from the Government than the first home buyer. That’s the critical unfairness in this. People who want to get into their first home can’t find a way into the market.
GILBERT: Will you concede then that means assets will be lower? Prices will inevitably be lower because you’re talking about affordability?
BURKE: No Kieran, I’ve answered that question before. Let me just finish this point, which is: the other problem is what they’re proposing would have no economic purpose in terms of where you’re targeting the concession. Whenever the concession goes into existing property, there’s no jobs created from that, there’s no assistance to housing supply created by that. Our policy, not only in terms of fairness but also in terms of dealing with supply and job creation, targets that additional money and assistance from the Government into new build, into new housing.
GILBERT: You talk about the equity in terms of housing and existing properties, that therefore you don’t have investors going in for their eighth, ninth, tenth property against first home buyers. Inevitably, does that not lead to more affordable housing, in that sense, from that existing stock, but therefore those who own those houses are going to get less money for them? That’s the bottom line.
BURKE: The claim from the Government housing prices will fall as a result of this has been modelled to death. ANU, you’ve had the McKell Institute, there is no support for the Prime Minister’s claim.
GILBERT: That it won’t rise as fast.
BURKE: There’s been no support – we’ve had extraordinary crazy price spikes in some cities of late and…
GILBERT: They won’t rise as fast, can you accept that though? Can you…
BURKE: It takes one of the upward pressures off. But have a look at the evidence that was provided…
GILBERT: So that’s a yes?
BURKE: No, it takes one of the upward pressures off. The reason I describe it in those terms, is that’s exactly how it was described by Treasury officials under questioning from Ed Husic. They said: when you’re talking about investment decisions, there’s a whole lot of decisions in the market that are taken into account and their view is taxation alone is not the principle driver. So, if that’s the advice coming from Treasury, then I presume the only person Malcolm Turnbull’s getting his advice from is his pollster.
GILBERT: My last question to you relates to Gary Gray, the Special Minister of State spokesperson for Labor. He says this argument there will be 800,000 votes wasted under the Coalition Senate reform plans, he’s described it as – he’s said he doesn’t agree with that: “I’m astonished by that dumb view.” If you translate that argument put by Sam Dastyari and others, I think including yourself to the House of Representatives, isn’t every vote that’s not provided to either Labor the Liberals or, in one seat, the Greens, aren’t all those million or so votes wasted as well?
BURKE: The argument I’ve made, because you referred specifically to me in that, is not about a rise in informality, it’s about the exhausted vote. This is more than 800,000, this is millions of people who – I wish they all voted Labor, they don’t. A lot of people vote for these minor parties…
GILBERT: But if the people who vote for lose, why should it count?
BURKE: If you have a look at what happens where you have optional preferential voting in state parliaments, for state elections, you end up with about a 90 per cent exhaustion rate. In Australia, at the federal level, we’ve had compulsory preferential, which means every vote ends up finding its way to a candidate…
GILBERT: Even if it’s Ricky Muir? Nothing against Ricky, but he got half of one per cent of the vote.
BURKE: And if the approach to deal with that, the Government has put forward, is to take in the order of three million votes and say: ‘ultimately those votes will get no representation in the Parliament,’ that’s hardly a democratic solution.
GILBERT: Mr Burke, thanks for your time.
BURKE: Good to be back.