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Transcript of interview with Kieran Gilbert: Sky News AM Agenda: 8 May 2018: 2018/19 Federal Budget, Government's $80 billion big business handouts; refundability; Peter Costello attacks SloMo on debt; FutureAsia; Government's milkshake or hamburger income tax cut; Labor's Australian Investment Guarantee



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CHRIS BOWEN MP SHADOW TREASURER

ACTING SHADOW MINISTER FOR SMALL BUSINESS AND FINANCIAL SERVICES MEMBER FOR MCMAHON

E&OE TRANSCRIPT TELEVISION INTERVIEW SKY NEWS - AM AGENDA WITH KIERAN GILBERT TUESDAY, 8 MAY 2018

SUBJECTS: 2018/19 Federal Budget, Government’s $80 billion big business handouts; refundability; Peter Costello attacks SloMo on debt; FutureAsia; Government’s milkshake or hamburger income tax cut; Labor’s Australian Investment Guarantee.

KIERAN GILBERT, PRESENTER: Thanks so much for your time. What do you make of the news of that tax threshold to increase from $87,000 to $90,000 tonight?

CHRIS BOWEN, SHADOW TREASURER: Well we will apply the same test as we have said we would apply to all of these Budget measures including income tax cuts; fairness and Budget responsibility. Let’s just say at the outset of this interview Kieran, as the Treasurer has said, the Budget is tonight. We could go through all sorts of elements of the Budget but I am going to give a similar answer to all of them and say we will wait for the detail. But the test for us will be fairness and responsibility. We have said that the Government has finally recognised low and middle income earners who should be getting tax relief. The centrepiece of their Budget will remain their $80 billion giveaway to big business. That’s the centrepiece of the Budget. Mathias Cormann has said it himself, it’s not tax relief to low and middle income earners.

GILBERT: To be fair it’s $35 billion isn’t it?

BOWEN: It is $80 billion over the decade.

GILBERT: But they’ve already legislated a lot of that.

BOWEN: Over the decade the total will be $80 billion because it goes up by $15 billion a year, that’s how much of a structural long term drag it is on the Budget. We’ve also

said that in these best global economic circumstances in a decade, 120 economies experiencing economic growth year to year. First time that’s happened in a decade. The Government should be making Budget repair and return to surplus a priority. Returning to surplus early, that’s almost inevitable in this global environment. But what is important is we have long term, good quality, healthy Budget surpluses. Half a per cent of GDP is a wafer-thin surplus. We need better than that and that’s what we are looking for tonight.

GILBERT: Well I am told there will be more from the Treasurer on that when it comes to debt reduction. But we will see as you say. But in relation to tax as a percentage to GDP, you thought that was a good idea just a couple of years ago.

BOWEN: Well five years ago I pointed out that the Rudd and Gillard was a low taxing Government on GDP ratio and Tony Abbott talked a big game. But in those five years we’ve also pointed out that the Budget has a revenue problem and that things like negative gearing needs to be reformed, capital gains tax needs to be reformed, dividend imputation refundability needs to be reformed. What Scott Morrison is talking about when he says 23.9 per cent is one, a handbrake on Budget repair, and two, leaving future generations to pay off the debt.

Now of course we will be laying out fiscal rules. We’ve been very, very active in our policy development, very forward leaning. We’ve been leading the policy debate. That enables us, all that hard work that Jim Chalmers and I, Bill Shorten and the entire Labor team have engaged in, in building those important reforms now gives us flexibility to have the conversation about tax relief. But also to be pointing out that we believe in Budget repair and stronger Budget repair.

If the Government doesn’t deliver serious Budget repair with healthy surpluses, not wafer-thin surpluses but healthy surpluses, we will.

GILBERT: So you will regardless out-do them on that?

BOWEN: Well look I’m not announcing the fiscal rules today. I’m not announcing the entire Budget Bottom Line -

GILBERT: But you did say that you will out-do them regardless?

BOWEN: - Jim and I will do that in due course, but we are making the point that we have done the hard yards. I mean Scott Morrison can’t call on the benefits of negative gearing reform or dividend imputation reform for Budget repair, I can.

GILBERT: You said 23.7 per cent was the mark that you looked at in the Press Club speech back in 2013.

BOWEN: Five years ago, that was the rate of the Rudd/Gillard Government.

GILBERT: But why is it not a good idea to have a speed limit on tax now?

BOWEN: Well because it’s an arbitrary judgment, isn’t it? I mean, 23.9, 23.7, 24, we could all just pick a figure.

GILBERT: Were you wrong to do it then?

BOWEN: In the last five years Kieran, I’ve built Labor’s agenda when it comes to Budget repair. We, all of us in the Labor Party have recognised that there is a revenue problem in the Budget. We believe in Budget repair, we believe in getting back to surplus. We believe it for the right reasons and we’ve done the hard yards to do so. Scott Morrison might be prepared to pick an arbitrary figure going forward, this is about the 2018 or 2019 election not the 2013 election, an arbitrary figure going forward. I mean he had a Budget rule just last year of 1 per cent of GDP as a surplus. I mean he can ask me about a line from the Rudd/Gillard government five years ago, his own Budget had a rule of 1 per cent of GDP of surplus and that’s gone.

GILBERT: Well we don’t know do we?

BOWEN: Based on his comments, just looking at what he has said he has basically indicated that the tax to GDP ratio is now more important. Well let’s see, let’s see tonight.

GILBERT: I think there might be some surprises on that. When it comes to…

BOWEN: And also just Kieran let’s also just remember that we have got to look at the forecast underlying the return to surplus. I mean what does it say about wages, wages growth is just automatically going to get back, wure back to some great figure? What are they going to do? What’s the forecasting underlining the return to Budget surplus? Is it credible and realistic? We will be having a good look at that.

GILBERT: Is it true that so much of this just depends on, you mentioned the international environment, so much in terms of our trajectory depends on what happens in China? There’s only so much you can do here.

BOWEN: Well of course China is our largest trading partner, they are a very strong implications for our economy and what’s happening with China. Now I am by and large an optimist when it comes to the Chinese economy. The Chinese economy is changing very rapidly. It’s moving from big demand on resources to a more consumption based economy. Australia has to, if we want to keep growing our share of China’s economic growth we need to adjust with that as well but by and large.

GILBERT: You’ve been focusing on Indonesia a lot as well, I know you have been learning Bahasa. Is that something which is untapped?

BOWEN: It is, absolutely. Indonesia will be the fourth largest economy in the world in the next few decades, not currently in our top 10 trading partners right next-door to us. We need to be focusing much more on Indonesia and Asia more broadly. We’ve got the FutureAsia framework, one of our key economic policies. We are going to have much, much more to say about the policies under our FutureAsia framework. We have already announced a bunch, we have more to go. Indonesia is a key focus for me personally, as I said it’s this growing economy right on our doorstep.

GILBERT: Particularly with speed bumps in the China relationship?

BOWEN: Absolutely, I mean you can’t put all your eggs in one basket. The three countries that will add the most to the world’s middle class over the next decade and two will be China, Indonesia, and India.

GILBERT: And they are our next-door neighbours so it doesn’t make sense.

BOWEN: Exactly.

GILBERT: When it comes to company tax cuts, because we spoke about your shifting view on tax as a percentage of GDP. What about the shifting view when it comes to company tax cuts because you, Andrew Leigh, Mr. Shorten you have all advocated it before. Now it is this drag on the economy instead of a boost to growth.

BOWEN: Again, I’ve always pointed out consistently. I mean Malcolm Turnbull when he quotes selectively he doesn’t read the full quote. It has got to be paid for going forward. I said it wouldn’t be affordable for the foreseeable future and it’s got to be paid for. Now what we have done is we have paid for our commitments. I mean Scott Morrison and Malcolm Turnbull say “Oh terrible Labor party, they are going to spend $17 billion on the schools, completely unfunded, not paid for.” Well it is funded like all our measures but they say “$80 billion don’t worry about it, we don’t have to fund it”. Now how can it be wrong to spend $17 billion on schools but right to spend $80 billion on a corporate tax cut with no guarantee of investment. Now we have got a corporate tax policy we have announced. Upfront depreciation allowances, the Australian Investment Guarantee which is on the condition Kieran of investment, on the condition. I mean you don’t get it unless you invest. They are going to give away $80 billion in corporate tax cuts which says to people “You might have made an investment decision five, 10, 20 years ago. You are going to get a windfall gain out of that. You might be an offshore investor, you don’t have to invest anymore in Australia”

GILBERT: They are saying competition internationally is dictating that. You heard Mathias Cormann say that even the Swedish government led by Social Democrats, a very progressive government is cutting…

BOWEN: I am happy to have our corporate tax policy compared to theirs. Ours is on the condition of investment, it is carefully targeted. It is more sustainable and it is better

designed than theirs. There’s all sorts of things you can do with the corporate tax rate, the Trump administration has cut the headline rate.

GILBERT: Will we still get enough investment though here under your plan?

BOWEN: Well there are plenty of economist who will tell you that our plan will generate more investment, absolutely.

GILBERT: Foreign investment?

BOWEN: Absolutely because it goes to, doesn’t matter where the investment is coming from, it goes to companies that are investing. It gives them an upfront depreciation deduction.

GILBERT: Have you over cooked the dividend imputation assessments?

BOWEN: No not at all.

GILBERT: Reports this morning that your numbers are overdone.

BOWEN: No, that’s not right Kieran. I mean congratulations to the headline writer in The Australian for trying valiantly to find a way. The report actually vindicates our costing, actually vindicates. In fairness to Joe Kelly as it says in the body of the piece, our four year projections and our 10 year projections are right as is vindicated by that costing.

It also indicates the fact that we have said that the biggest goes to the biggest self-managed superfunds. They say, what’s the thing that they have jumped on? Only five people they say have got $2.5 million worth of tax refunds, tax credits even though they didn’t pay income tax. Now that might be alright to them, I say 5 too many. I don’t care if it’s 5 or 10 or 20. I mean, $2.5 billion in tax refunds when you haven’t paid a dollar tax, you haven’t paid a dollar in income tax. Scott Morrison might think that’s okay, I don’t. And that report in the Australian today, a PBO document, utterly supports, vindicates every letter, every figure that the Labor Party has said in relation to our costing on dividend imputation. Every single one.

GILBERT: Okay, let’s turn to one of your predecessors, as former Treasurer, and possibly, you know, future Treasurer as well yourself. But Mr Costello raised the problem between the disparity between tax as a percentage of GDP and spending as a percentage of GDP, that if spending remains above the other, then you’ve got a problem. As government people have said to me privately this morning, I mean they are not going to come out and bag Mr Costello publicly -

BOWEN: Well they’ll do it behind his back.

GILBERT: They’ve provided some detail behind him, in private, in relation to the fact he hasn’t factored in non-receipts, things like dividends, asset sales, interest, cost recovery, which is 1.5 per cent of GDP as confirmed in the most recent MYEFO.

BOWEN: I thought it was telling. I mean, he’s a former Liberal Treasurer, the Liberal Party says their respected long serving Liberal Treasurer not holding back last night when it comes to this Budget. He’s entitled to his views, I don’t agree obviously with everything Peter Costello says, but I agree with him that we need a much bigger focus on debt management, on debt repair and bringing down the debt. It has grown exponentially under this Treasurer and this Government. I agree that it is a problem in the long term. I don’t want to be spending that amount of money each month on each year on interest repayments. I want to be spending that amount of money on hospitals and schools and investments to lift our productive capacity.

GILBERT: We’re a bit younger than Mr Costello, but going to be paid off in our lifetimes?

BOWEN: I think we absolutely need to be having that as our focus. Yes.

GILBERT: And if we can conclude our discussion where we started, on the tax cut idea. Tanya Plibersek said that it was not even a hamburger and a milkshake, that it’s a hamburger or a milkshake. I guess by deriding the Government’s approach, you’ve got to beat them? If you’re already talking about their numbers.

BOWEN: It’s fair enough to make the point. The Government’s out there saying ‘look at all these largesse and goodies we’ve got for you.’ This is the Government which has taken $77 a week off people who are happy to earn and commit no crime for example. They won’t be feeling better off as a result of this Government’s tax policy.

GILBERT: That was the independent arbiter.

BOWEN: Well the Government could’ve fixed it. We will. It’s a clear contrast there. You’ve got people paying much more for private health insurance, much more for energy costs. I mean, $10 a week.

GILBERT: The will people get a hamburger and a milkshake with this? Because Tanya Plibersek is already having a crack at the Government.

BOWEN: Kieran, we’re making the point. This isn’t just a tax cut that’s being announced today. Malcolm Turnbull first announced these tax cuts in principal in broad last November. They have been out there beating the bowl ‘tax cuts, tax cuts, tax cuts. Look over here, shiny thing: my Government’s falling apart but here’s a tax cut’. And now they turn up with $10 a week. Now, the Australian people can judge that. Now again, as I stressed, Kieran, we’ll look at the detail tonight. We’ll be in different lock ups, but we’ll both be in lock ups throughout the course of the day. I’ll be on your network tonight. I’ll be responding and then Bill Shorten will be responding on Thursday night, and I’ll be

responding again at the National Press Club next Wednesday. We’ll be making further policy announcements. The federal election won’t be called next week. We’re ready for it whenever it’s called. But I’m very much ready for it to be called as a vote on economic responsibility and a contrasting Budget repair trajectories and a referendum on their corporate tax cut.

GILBERT: Mr Bowen, thanks so much. Big day for you I know.

BOWEN: Thanks Kieran.

GILBERT: Chris Bowen in the morning and the evening. Never too much.

ENDS

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Authorised by Noah Carroll ALP Canberra