SKY News AM Agenda (4)

05 November 2015


SUBJECT/S: Liberal Government’s Plans to Jack Up the GST; Trade Union Royal Commission; Gary Gray

DAVID LIPSON: G'day there, welcome to the program. I'm David Lipson filling in for Kieran this morning. Well, one of the reasons that the Abbott Government's attempts at significant reform fell flat is that many people felt that the Government didn't lay the groundwork - didn't make the case - for reform before the first Budget. It looks like Malcolm Turnbull and Scott Morrison are seeking to avoid making the same mistake twice. Today, in major economic speeches in Melbourne, they'll lay down the markers for tax reform, saying that the system must provide incentives rather than holding people back. Well, to discuss this further, I'm joined by the Shadow Assistant Trade Minister, Jim Chalmers. Thank you very much for your time. What do you read from that statement that the system must provide incentives if there's going to be change?

JIM CHALMERS, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: Well, I've got to pick you up, David, on something you said in your introduction. I think where Malcolm Turnbull and Scott Morrison are headed really represents continuity with the Abbott model, not change. What we're seeing with the unfairness at the core of what's being proposed - whether it be in GST, penalty rates or family payments - is that the new Leader, the person who's changed the words of the Government, hasn't changed its ways. He hasn't changed the Government's ways. And they're showing every sign of repeating the mistakes that characterised those first two budgets, in their third budget.

LIPSON: But I was talking about them making the case for reform first, before surprising everyone with major reform changes.

CHALMERS: Yes, but what matters is the substance of what they're proposing and the impact on ordinary people throughout Australia, and what they're proposing is just as unfair as what Tony Abbott and Joe Hockey were proposing, when you combine the impact as NATSEM has shown today and ACOSS has shown today of a GST that's jacked-up. Combine that with taking away people's penalty rates and cutting people's family payments and other things, really what we've got is the same unfairness at the core of Malcolm Turnbull's agenda that was at the core of Tony Abbott's agenda.

LIPSON: To be fair though, they haven't actually released at all any detail, and we don't expect detail - I should say - by the end of the day on what will be, we believe, a significant tax and economic reform. What, though, about the claim that the current system is holding Australia back, what do you think of that?

CHALMERS: Well, I think there is unfairness in the current system. Certainly when it comes to tax concessions at the very top end of the superannuation system, there's unfairness there. That's something that needs to be fixed and we've got a proposal in that space. We're up for a conversation about other ways to make the tax system fairer and more effective. But what they have put on the table over and over again - not just the last few weeks but before the leadership change then after - is this idea to jack up the GST. What the independent research that's been released today says - it proves what we've been saying all along - that this kind of proposal hits people on modest incomes the hardest, and the Government doesn't have the capacity or the intention to adequately compensate people for that huge whack to living standards right through the middle and lower income strata of this economy and this country.

LIPSON: Yeah, that research from NATSEM was independently conducted by NATSEM, but it was commissioned by ACOSS. And one of the things that they looked at - and we'll be speaking to Cass Goldie a little later this half hour - was a 5 per cent tax reduction across the board to compensate for a GST rise of 5 per cent, up to 15. But we can't assume that's what the Government is going to do. They may, for example, give greater tax concessions for low and middle income earners in order to, sort of, compensate for the regressive nature of the tax. If that compensation was there, would Labor still be opposed?

CHALMERS: Well, first of all, the National Centre for Social and Economic Modelling is the absolute gold standard when it comes to independent research in this country and so what they say and what they reveal carries real weight. You referred to the 5 per cent income tax cut that they've assumed, that's in the absence of the Government providing more detail around what they're planning to do, so you're right about that as well.  The point that we've made over and over again is if the Government does jack up the GST, as they look like they will be doing, already the proceeds of that increased tax on people at the low and middle income levels has been spent over and over again. Some people say it should improve the bottom line, some people say it should go into health, should go to the states, should replace state taxes. And my concern is that low and middle income people would be last cab off the rank when it comes to the Government's plans. We know that because they've got form, not just in recent weeks but in the last two years. So I'm deeply skeptical that the Government has the intention or the capacity to adequately compensate people who will be hit the hardest when they jack up the GST.

LIPSON: So how would you, or how would Labor, deal with some of the elements of the system that are holding Australia back, like for example bracket creep, like for example a fairly high - comparatively - company tax rate?

CHALMERS: Look, we're up for a conversation about those things. Chris Bowen's on the record over and over again talking about an aspiration for a lower company tax rate, for example. We are cognizant of those sorts of pressures in the economy. We're up for a conversation. But we're not in the cart for jacking up the GST to fund these things. We've got other suggestions on the table, like at the high end of superannuation tax concessions, things like multinational tax avoidance. We think you should go there first if you're serious about trying to improve the tax base in this country, which allows you to -

LIPSON: But they don't raise nearly as much tax as raising the GST or broadening the base.

CHALMERS: Well that huge sum that was released by the Liberal Party earlier in the week, with a 15 per cent GST and broadening the base, that is a huge number. That would raise a lot of money, but it comes straight out of the pockets of people on low and middle incomes. So just because it's a big lick of money doesn't mean we're for it. We think it's an unfair way to go about it. And really what's happening here, David, is we're really sharpening the choice for the election to come. We've got this independent modelling out here that shows the impact of the Government's plans to jack up the GST. It really sharpens the choice for people: if they think that people who are low and middle income earners while multinationals pay less, then they should vote for the Liberals. If they think that people on low and middle incomes should pay more for health and education while these unfair tax concessions at the very top of super continue, then they should vote for the Liberals. But we think there's a better way.

LIPSON: I want to turn to the unions royal commission. We saw pretty explosive evidence yesterday that the New South Wales State Secretary of the National Union of Workers, Derrick Belan, was allegedly involved in using corporate credit cards - union money - to pay for things like jewellery from Tiffany's. There were claims of cruise ships and other gifts and the like. Regardless of the reasons for which the Commission was set up - of which you and the rest of Labor is very critical - it is, you'd have to concede, uncovering pretty serious evidence of very serious wrongdoing in the unions.

CHALMERS: I think that it is important that we get to the bottom of some of these issues. Where we differ with the Government is we think that's a role for the police and for the Crime Commission, not for a politically motivated royal commission with a royal commissioner who thinks it's okay to speak at Liberal Party fundraisers. But I do think that there's an important issue here. I've got to resist the temptation to give a running commentary on the evidence before the commission, but I'll make a couple of general points. The first point is if this kind of behaviour has been going on, it's disgraceful and it's disgusting. My problem with it - apart from all of the other obvious issues - is that I think the union movement is a force for good in this country, and every time we get something like this amongst a tiny minority of people involved in unions, it diminishes the good work of the rest of the union movement which is doing a great job speaking up for people who can't speak up for themselves.  So I'll leave the running commentary to others, but I think in general unions are a force for good. We need to ensure that they're doing good work with members' money. So any instance where that hasn't been happening, people should have the book thrown at them by the police and the Crime Commission and the courts.

LIPSON: Yeah, well the unions obviously still play a very big role in the factions within the Labor Party. And we've seen not so much the unions, but the factions very much at the forefront of a dispute in WA, where former minister Gary Gray is at risk of losing preselection because he won't accept what's known as a candidate's pledge. Now this demands that he quote "obey" the directions of the WA State Secretary. Now that State Secretary at the moment is from the Left, Gary Gray from the Right. Should such an order, a pledge, have to be made do you believe? It's not your state, I know, but is it suitable?

CHALMERS: I have enough trouble navigating my own state branch, without getting too much involved in the WA branch! But a couple of points about that. First of all, every party has factions. When Malcolm Turnbull tried to suggest otherwise, he was booed and heckled at the New South Wales division. So it's not just the Labor Party that has groupings. When it comes to the issues around Gary, I think that Gary really broadens and enriches our Party and the Federal Caucus in particular. I work very closely with him from time to time. I think it would be a tremendous shame to see him knocked over. He's got a big contribution to make, and we don't want to get in the habit of narrowing the range of opinions and voices in the Federal Caucus. So, I don't have a vote in WA preselections, but if I did have a vote, I'd vote for Gary. And I hope that Gary comes through this process and that it can all be sorted out, so that he can continue to make a terrific contribution to the Federal Caucus.

LIPSON: Jim Chalmers, joining us from Brisbane. Thanks so much for that. We'll have to leave it there.

CHALMERS: Thanks David.