ABC RN BREAKFAST
THURSDAY, 24 AUGUST 2017
SUBJECT/S: Mathias Cormann’s desperate rant
FRAN KELLY: The Shadow Finance Minister is Jim Chalmers. Jim Chalmers, welcome back to breakfast.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: G'day Fran, how are you?
KELLY: So Mathias Cormann says Labor under Bill Shorten is socialist revisionism at its worst. Are you guilty as charged?
CHALMERS: You've got to laugh sometimes, Fran. This is just the latest in a long line of pretty bizarre conspiracy theories from a Government that's getting more and more desperate because they're more and more divided and dysfunctional. Last week we were conspiring with the New Zealanders; this week we've got reds under the beds. And we all know what's going on here with this sort of unhinged hyperbole: it's a desperate attempt to distract from a Government that's lurching from crisis to crisis.
KELLY: Well let's forget the hyperbole then. Let's go to what's at the centre of Mathias Cormann's argument, referring to Labor's policy of imposing higher taxes. We've got opposition to the business tax, Labor's policy on that; Labor's demanding tax concessions like negative gearing and capital gains discount be reformed; crackdown on trusts; the reinstatement of the deficit levy. The Government says all of those add up to about $150 billion in extra taxes. At what point will Labor say "enough is enough"?
CHALMERS: We think that it's important that the rules of the economy accord with our values. That means inclusive growth and reward for effort and a decent safety net. You need to pay for those things. You need to fix the mess that's been made of the Budget by Mathias Cormann and Scott Morrison and others. That means tax reform. It also means growing the economy in an inclusive way and it also means savings. And yes, some of our big substantial announcements in the last two years have been to do with revenue, but we think that we can make the tax system fairer by ensuring that the biggest tax concessions don't go to those who need them least and that will also help repair the Budget.
KELLY: But is it a simple formula really of slugging the rich because, I mean, you're looking at the top marginal tax rate under Labor of getting close to 50 per cent - over 49 cents in the dollar. That looks like a pretty tried and true formula for slugging the rich.
CHALMERS: We come at it from the point of view that we've got some big challenges in the Budget and the economy. And the big challenges in the Budget and the economy are: the Budget's blowing out; we've got inequality on the increase; and we've got a tax system which doesn't reward aspiration, which doesn't reward effort, because it lets some of the wealthiest Australians effectively choose how much tax to pay when it comes to things like their trust arrangements. So we think by making that fairer, we...
KELLY: Yeah, but the trust thing is not the reason why you're looking at a top tax rate of over 49 cents.
CHALMERS: Altogether, Fran, you're right to list off the changes that we're proposing in tax. We think that altogether they will make the tax system fairer. That's an important way to actually support aspiration in the economy.
KELLY: But is it fair to tax those who are working hard and some of the most successful at such a high level? I mean, Mathias Cormann says Labor's policies will lead to thousands of people, our most successful people, leaving the country, become tax exiles presumably, which is what happened, he said, in France when the previous socialist Government attempted to impose a 75 per cent income tax on the very wealthy - people left the country.
CHALMERS: That's just more of the desperate ranting that we saw from Mathias Cormann last night. It's not borne out by the facts. If you believe Mathias Cormann, the only way to grow the economy is to give the biggest tax breaks to the top end, to jack up taxes on millions of middle- and low-income Australians earning under $87,000 a year, which is the Government's policy to actually increase income taxes on low- and middle-income earners. There is a substantial difference between us and the Government on this point. We think that you won't grow the economy by giving $65 billion to big multinational corporations and the big four banks. You won't grow the economy by paying people less to work on the weekend, and you certainly won't grow the economy by ranting about Bill Shorten and socialism.
KELLY: Mathias Cormann says that all that Bill Shorten and Labor is doing, and I'm quoting here, is "praying on the politics of envy and the economics of snake oil". There clearly has been a shift to the left from Labor in recent months, probably inspired by Jeremy Corbyn and the success he's had and Bernie Sanders before him in the US. Bill Shorten said back in July fighting inequality would be the defining mission of a Labor Government. Was that, again to quote Mathias Cormann, a "deliberate and cynical political judgement"?
CHALMERS: Right around the world I think people are realising that the rules of the economy are not written in a way that supports aspiration and supports reward for effort. That's happening around the world and certainly here more and more Australians feel like the rules of the economy are written to benefit somebody else at their expense. I think that's a widely held view in the economy and with some justification. And what we're saying is that if you make the tax system fairer, you can support aspiration. What Mathias Cormann is saying, with this rubbish about the politics of envy, is an argument that rests on this tired old absurdity that says that the only way to maintain cohesion and growth in the economy is to give the biggest tax breaks to those who need them least, or pay less to those to people who work on weekends, or to jack up taxes on the low end to pay for a tax cut on the top. We think that's a recipe for more division. We think it's a recipe for more inequality and it certainly won't grow the economy.
KELLY: So we've got two very different paths being put forward by the Government and the Opposition at the moment. Overnight the ratings agency Moody's says it's confident that Australia will keeps its AAA credit rating. It says Australia's credit profile reflects very high economic strengths, supported by robust growth potential. So it's giving the Government a big tick for the story it's got to tell on the economy.
CHALMERS: The AAA credit rating has been under some pressure the last little while and it's because we've got a deficit for this year which is 10 times bigger than predicted in Joe Hockey's first Budget and...
KELLY: Yeah, but Moody's is suggesting that pressure's coming off because, as to say again, very high economic strength supported by robust growth potential.
CHALMERS: There are some things in the Australian economy that we can be optimistic about. But one of those things is not the way the Government is managing the economy, with this sort of trickle-down approach to the economy. But certainly we have some strong economic fundamentals in this country. That's been true for some time. But it's also true that the AAA credit rating has been under pressure and that's because we've actually been accumulating debt - not many people appreciate this, Fran - we've been accumulating debt faster under this Government in pretty good global conditions than we did under Labor which had to deal with a GFC. They’re actually accumulating debt faster now than we were under Labor.
KELLY: Jim Chalmers, thanks very much for joining us.
CHALMERS: Thank you, Fran.