Sky News (4)

20 April 2018




SUBJECT/S: Banking Royal Commission; dividend imputation reforms; Liberals’ $65 billion big business tax cuts


TOM CONNELL: Joining me live now is the Shadow Finance Minister Jim Chalmers from Brisbane. Jim, thanks for your time. Can I begin by asking where Labor's at? There appears to be positioning for a compensation scheme. We've heard some lives have been ruined and these are just a few of the examples this week. Would you look at proposing something before all of this wraps up, get it done as quickly as possible?


JIM CHALMERS, SHADOW MINISTER FOR FINANCE: G'day Tom. We do want to see compensation being part of the mix, part of the considerations of this Royal Commission. And you're right to point out that Labor has been campaigning for this Royal Commission for years now and our position is being vindicated by the light that's being shone on these rorts and ripoffs in the banks, some of the scandalous revelations that we've seen in the last few days. And a lot of Australians will be asking themselves why did Malcolm Turnbull for so long resist this Royal Commission and resist these things coming to light? Yes, we want to see compensation as part of the conversation. Yes, we want to the strongest possible penalties and we want to make sure that Commissioner Hayne and his team have the time and the resources they need to finish the job properly. They're doing a terrific job getting to the bottom of some of these issues and we want to make sure that they can finish that adequately.


CONNELL: It looks as though they could have longer, according to at least signs from the Finance Minister. But on this compensation scheme, when the Government proposed the bank levy, which did pass, Labor was saying straight away this could just end up being passed on to customers. If banks have to pay for a compensation scheme, couldn't the same thing happen?

CHALMERS: We supported the bank levy, as you would recall. And I think it's not beyond us to make an argument that people who have been treated shabbily by the big banks - some of these revelations around financial advice, insurance, charging fees from people who had passed away - these are scandalous things which have happened. So obviously people have been treated shabbily and it should be in the mix to be compensated for that. We wouldn't want to see that being passed on to customers. We want to see the banks brought to justice for this behaviour. 


CONNELL: A lot of talk about your franked dividend plan. This is going to raise in the order of $55 billion or so over 10 years. We know this area is complex. The tax system is complex as well. Is it responsible to commit all of this to spending, given we've got to look at what changed behaviour might happen and perhaps it won't raise as much as intended?


CHALMERS: We haven't committed all of it to spending. We've announced the policy, as you said, that raises something like $55.7 billion over 10 years and $10.7 billion over four years. And we've said that we'll be responsible with the proceeds of that. Some of it will be to try to help fix the mess that the Government has made of the Budget. Some of it will be to make room for other priorities. We've got a big problem in the Budget. We've got this $65 billion giveaway to multinationals. We've got handouts to millionaires, which we wouldn't proceed with as a Labor Government. But at the same time we've got to make room to invest in hospitals and schools and to support people dealing with the rising costs of living. And so what we've done here is responsibly, well in advance of the election, put out a policy, put out the costing. We won't be spending every single cent of it. We'll be allocating it to our priorities. One of those priorities is fixing the mess the Government's made of the Budget.


CONNELL: So does that mean then that if the Government comes out with an income tax cut of a certain nature we could see Labor not match the generosity if you'd rather put some money more towards the Budget bottom line?


CHALMERS: It's not really worth us getting into the hypotheticals. We've only got less than three weeks now until the Budget's handed down. The income tax changes that the Government's proposing at the moment is actually an income tax hike for people on middle and low incomes in this country, which we are opposing. We don't think that people should be paying more income tax if they earn less than $87,000 a year. That's what's on the table at the moment. We've seen the speculation, we've seen the commentary from Scott Morrison and Malcolm Turnbull. We'll deal with whatever they announce when they announce it. But as it stands, what this Budget is defined by, and Scott Morrison said the next Budget will be like all the others which is part of the problem, it'll be defined by that $65 billion handout to big business, which comes at the expense of hospitals and schools in middle Australia.


CONNELL: And just to return to that franked dividend policy, because obviously a huge factor for this and how it works is to do with superannuation accounts. Now the change to cap tax-free super at $1.6 million only came into effect last July. So we don't actually know what the impact is on the changed behaviour. Is it a little bit hard to lock in that spending over 10 years? You said you're not going to spend it all. Are you going to wait and see what that changed behaviour is perhaps alter how much you think this will get over 10 years?


CHALMERS: The costings aren't determined by the Labor Party, they're determined by the Independent Parliamentary Budget Office which has a legislated mandate to provide impartial and considered costings. They've done that on this occasion and they have included the policies which are currently in the Budget which feed the current Budget bottom line, including that $1.6 million cap, which you refer to. The Parliamentary Budget Office takes that into account. I've seen some commentary to the contrary today in the papers as you obviously have too. But as Chris Bowen and others have made clear for some time, we're confident that the PBO has taken that into account, and we've released the figure that has been costed by the Parliamentary Budget Office.


CONNELL: Just the figure though, not the details. Is it fair to say you're ready for perhaps this to change? Yes they've made an estimate on what that tax-free super policy will have an impact on, but presumably you're ready for this to change. You said you haven't spent all of it. Perhaps that's part of the reason?


CHALMERS: We're not contemplating that, Tom. We've got a costing from the PBO. Some very talented people in the Parliamentary Budget Office do these costings for the Parliament, for people of all parties and all political persuasions. They know what they're doing. They've factored in the policies currently in the Budget and the current Budget bottom line. Our responsibility is to release that number. We've done that. We said we'd be responsible for the proceeds of this very important tax reform, which really ends what the Government wants to do which is to continue to spend what will soon be $8 billion a year on tax refunds for tax that isn't paid in the first place. So we're proud of our policy. We're confident in the costing that has been provided by the PBO and will be responsible with the proceeds of the change.


CONNELL: I want to ask you about a Budget reply coming up - will we finally get to know Labor's position on the segment of the company tax cut that's already been passed?


CHALMERS: We'll make our view on that known well in advance of the election, Tom. I'm not prepared to identify the day that we will do that. We've made it very clear that we don't support shovelling billions of dollars of largesse at the very top end of town, and we've made it clear that we support the tax cuts for genuinely small companies.


CONNELL: Right, and I know that. But just on this position, and the reason I ask is that you've got business making decisions, you've got another financial year about to start. You say in time before the next election, but business would like it a lot sooner, wouldn't they? Is it going to be well ahead? You're not going to announce this a week before the election or a week after the election's called?


CHALMERS: Our view will be known well in advance of the election, Tom. And more broadly, one of the things that I'm proudest of in terms of our economic policy and particularly our tax reforms driven by Chris Bowen and Bill Shorten and Andrew Leigh and others is that we make our intentions known in time for people to make a considered judgement of them. And that will be true of our position on company tax, as it's true on our position on other tax reforms that we are proposing.


CONNELL: So at the next Budget reply?

CHALMERS: You'll know in plenty of time, Tom. I'm not prepared to say the day that we'll announce our final position on that part of the company tax system. We need to see the Budget numbers.


CONNELL: This year will it be though, Jim Chalmers? You can see those Budget numbers presumably this year rather than next year when it's all helter skelter towards the election.


CHALMERS: I would anticipate making our view known this year. It's not nailed down yet when we would make that view known. We've got discussions to go through with our colleagues based on the most relevant and recent Budget numbers, which we won't get for another two-and-a-half weeks now. It'll be some time after the Budget, but it will be well in advance of the election so people know where we're coming from.

CONNELL: We will wait and see. Jim Chalmers, Shadow Finance Minister, thanks for your time today today on Sky News.


CHALMERS: Thank you, Tom. Good on you.