E&OE TRANSCRIPT
TELEVISION INTERVIEW
SKY NEWS SPEERS ON SUNDAY
SUNDAY, 24 JUNE 2018
SUBJECT/S: Labor engaging constructively with business; Labor’s united team; Liberals’ $80 billion corporate tax handout; income tax and Liberals’ $10 billion interest bill; Labor’s record on promoting women; Labor’s NBN Service Guarantee
DAVID SPEERS: First to our main guest this morning, the Shadow Finance Minister, Jim Chalmers. Thank you very much for joining us this morning. Can I just start on this speech from Anthony Albanese on Friday night, the Whitlam oration. When it comes to relations with the business community he said: "Labor's job is not to sow discord, it's to bring together people in the service of the national interest. Labor doesn't have to agree with business on issues such as company tax rates, but we do have to engage constructively with business large and small." Do you think Labor under Bill Shorten is engaging constructively with business?
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: I do, David. And indeed, a big part of my own role is engaging with business. I spend a very big proportion of my time getting business perspectives, getting ideas, spending time in the business community. That's true as well of Bill Shorten, Chris Bowen, right across the board. But I had a look at that speech that Anthony Albanese gave after I saw that there was a bit of a fuss about it in the papers. And I don't necessarily think that Anthony's interpretation is different from the broader interpretation from Bill and from others. We need to work with as many people as we can, people of goodwill, people who want to grow the economy, people who want to see the right kind of inclusive growth. So the points that Anthony made I think are shared across the board.
SPEERS: So you're not one of those Labor MPs who is, quote, "violently angry" about this speech.
CHALMERS: No, David. I don't get violently angry about many things. If we lose tonight I might be angry.
SPEERS: (Laughs)
CHALMERS: No, I think people will give speeches all the time and they’ll have their different interpretations. And really, the points that Anthony made really feed into the arguments that we've been making. Let me give you a couple of other examples. Anthony talked about the need to bring the country together after a pretty divisive period under this Government, and I think Bill is uniquely suited to doing that. He's spent all of his professional life working with employers and employees trying to find common ground so we can all go forward together. So I think that's a point well made. Another point that he made is that we need to be a reformist, forward-leaning Opposition which proposes big alternative policy ideas. I think any objective observer of the last five years would conclude that we're meeting that standard as well.
SPEERS: Bill Shorten, as we know, constantly rails against giving big business any tax relief. He's even suggested this would, quote, "impede growth" because it would accelerate national debt. That's clearly upset many in business. You don't find it at all passing of interest that Anthony Albanese is at this moment, in the lead-up to these by-elections next month where there's a lot on the line for Bill Shorten, making this speech saying "we shouldn't be sowing discord with business, we should be working with them"?
CHALMERS: Even Anthony himself as you rightly pointed out in your introduction, he said we're perfectly entitled to disagree with elements of the business community about the company tax cut, and self-evidently, if you give $80 billion to multinationals and the big banks, then that money's not going to paying down record debt, which has doubled under this Government. So that point is well made as well. We are allowed to disagree with the business community. The difference between Malcolm Turnbull's approach and our approach is that we listen to business and we want to work with business, but we're not beholden to business. And it's entirely within our rights to say where we have a different view to the business community. The BCA wants to raise millions of dollars to campaign against Labor's position on the company tax cuts, that's a matter for them. Whether it's me, Chris Bowen, Bill Shorten and others, we have tremendous respect for business. We spend a lot of time in the business community, because as Anthony rightly says, when we govern this country we need all shoulders to the wheel if we're going to grow the economy in an inclusive way where people get a stake in our national prosperity.
SPEERS: OK, so you don't see any of these comments on this, or on the need to reach out to non-union members, you don't see any of this as Anthony Albanese stoking leadership trouble?
CHALMERS: No, I don't David.
SPEERS: OK, let's go to the company tax debate. This will be the big debate for the week ahead in Parliament. Do you believe cutting company taxes would grow the economy?
CHALMERS: Not the way these company taxes are constituted, David. One of the big problems we have with them, as Goldman Sachs and others have pointed out, is the vast majority of these tax cuts would actually spray around offshore, and would be spent on things like executive bonuses and pumping up dividends, share buybacks and all of those sorts of things. So we won't get the bang for buck that we need in the Australian economy from these $80 billion in tax cuts. So the reason that we oppose them is that they're unfair, because they come at the expense of middle Australia. They're unwise, because even the Treasury says that the growth dividend would be negligible at best and felt far down the track. And they're unaffordable, because we've got that record debt; that record debt which has doubled since the Government took office, and where we've got gross debt at over half-a-trillion dollars for the first time in the nation's history.
SPEERS: OK, I want to come to that. I get the point there about the timing given we're in deficit now, but are you saying in principle that cutting company taxes does not grow the economy?
CHALMERS: I'm saying that there's a better way to give tax cuts to business which will ensure that money is invested here in Australia, and that's why we've got an alternative which is called the Australian Investment Guarantee, which will get much more bang for our buck when it comes to growing the economy. Because our alternative, which comes at about an eighth of the cost of the Government's big business tax cuts, is contingent on companies investing onshore in Australia, in Australian growth, in Australian jobs. So what I'm saying is, you can cut company taxes in a way that will grow the Australian economy; I'm not convinced that the Government's big $80 billion giveaway to multinationals will do the trick.
SPEERS: But this is a pretty fundamental principle, and one that Paul Keating certainly believed in. He cut company taxes. Certainly one that some of your colleagues have previously argued in favour of - Bill Shorten and Chris Bowen amongst them - and indeed the Henry Tax Review under the Rudd Government was quite clear that company taxes should be prioritised over income tax cuts. It said the company income tax rate should be reduced to encourage investment in Australia, particularly highly mobile foreign investment. But you are doubting that, clearly?
CHALMERS: No, I'm saying that we've got a better way of achieving the same objective. Yes, you can use reform to the company tax system to grow the economy - I'm saying that our proposal is a superior proposal when it comes to meeting that objective. The other thing that has changed since the examples that you raised is that we've had net debt going through the roof and we've had gross debt growing through the roof. So what you need to do is you need to work out where you can get the maximum bang for buck, where you can do something which is fair, which is affordable, and which makes sense in the economy.
SPEERS: Well let's talk about that, because even though we've got those high levels of debt that you rightly point to, even though we're still in deficit, Labor has committed to more generous income tax cuts over the forward estimates, certainly than the Government. So why is that the right time to splash money on income tax cuts. Do we get any growth for that?
CHALMERS: Our priority in the income tax system is on middle Australia, and Malcolm Turnbull's priority in the income tax system is to give 60 per cent of benefit to the wealthiest 20 per cent of Australians, and in total his tax package is far more expensive than Labor's. One of the consequences of that, which not many people have cottoned on to yet but they will, is that Stages 2 and 3 of Malcolm Turnbull's tax cuts, being spent in the way that he proposes rather than being used to pay down debt, will actually cost the Australian taxpayer something like $10 billion in extra interest repayments. So it's bad enough that he wants to give most of the benefit to the wealthiest Australians, but he's also asking the rest of the Australian workforce to pay a $10 billion interest bill because he's showering that money on the top end of town rather than doing as we're doing - prioritising middle Australia or paying down debt.
SPEERS: Can I come back to that point about the interest bill, because that's interesting, but just on what I was asking, over the forward estimates you are planning to invest a lot more in income tax cuts, and yet at the same time saying we shouldn't do company tax cuts because we're in debt and deficit. What's the difference?
CHALMERS: The Government is in Stages 2 and 3...
SPEERS: Just on Labor's plan, sorry just on Labor's plan because you are saying you're prepared to invest all these billions of dollars in income tax relief, even though we're in debt and deficit.
CHALMERS: Yeah, I understood your question, David. What I'm saying is that the two stages that we don't support in the Government's tax plan cost an extra $122 billion, which we're not proceeding with. That's why our approach is more responsible. Yes, we're prioritising middle Australia. And yes, if you earn up to $125,000 a year, you'll get a bigger, better, fairer tax cut under Labor over the next four years, that is true. But the totality of our tax plan versus the totality of their tax plan, the difference is we won't give those tax cuts to the top end of town. That's why our approach isn't just fairer, as important as that is, but it's more responsible as well. That applies to company tax cuts too. Our approach costs an eighth as much, and we think it will be much more effective than what the Government proposes.
SPEERS: I hear all of that, I hear all of that. But my point was, your argument against company tax cuts is that we shouldn't do this while we're in debt and deficit. Yet you're willing to go with income tax cuts which, I don't know, do they have any growth benefit?
CHALMERS: Of course they do, because our tax cuts prioritise people who are more likely to spend in the economy and support our local businesses. What I'm saying is, you've got...
SPEERS: So what growth will they achieve?
CHALMERS: Well by growing disposable incomes in the part of the population which is more likely to spend in the economy, that has an obvious growth dividend. The tax cuts that Malcolm Turnbull prefers...
SPEERS: Has that been modelled?
CHALMERS: Have we modelled the impact on the economy?
SPEERS: Yeah, have you got any idea what growth you'll get out of this?
CHALMERS: I don't have a specific number for you, David. But it's well known that when people who are more likely to spend - a propensity to spend in the economic jargon - when they are given tax relief, they're more likely to spend it in the economy than the wealthiest Australians.
SPEERS: Not according to the Henry Tax Review. It said company tax cuts are going to deliver more growth.
CHALMERS: But you're asking about income tax cuts, David. What I'm saying is, if you give income tax cuts to people who are more likely to spend it, there's more likely to be a benefit for the economy. On company tax cuts, I've answered that question multiple times too. The key there is to make sure that you get investment onshore in Australia. The Government's proposal won't do that as well as our proposal will do, and our proposal costs something like an eighth as much. So I'm confident in our tax policies. What we're going to see, David, when the Parliament resumes this week is we've had a Prime Minister who's spent the last week giving billions of dollars of income tax cuts to millionaires, and next week we're going to see Prime Minister Turnbull give billions of dollars in tax cuts to multinationals and the big four banks. That's all in a fortnight's work for one of the most out-of-touch Prime Ministers we've ever had. What we're saying is, we've got record debt. We need to invest our money where we can do the most good. That means prioritising middle Australia and income tax cuts. It means prioritising onshore investment in company tax cuts. We've got a superior position to the Government and we'll be prosecuting our arguments.
SPEERS: When it comes to those income tax cuts that passed the Parliament, are you really willing to say in Government you would roll back those tax cuts for people earning more than $90,000 a year?
CHALMERS: Our tax cuts are better up to $125,000 a year, but yes, we've said...
SPEERS: Well not after 2022.
CHALMERS: Then Australians are better off up to $95,000 a year, which is something like 70 per cent of the workforce. So again, even after...
SPEERS: So you're willing to take back that tax cut that's been legislated?
CHALMERS: Yes, David. We've made that very clear that we don't support Stages 2 and 3 of the Government's tax proposals. And what we say about that is that every day between now and the by-elections, or every day between now and the general election, will be a reminder that Malcolm Turnbull thinks that his highest priority is to make sure that 60 per cent of the benefit of his tax cuts go to the wealthiest 20 per cent of people. He also, by the way, wants to ensure that if you make 40 grand a year in this country, you're in the same tax bracket as someone who makes 200 grand. We've got a better, fairer alternative which says middle Australia first. If you work and struggle in this country, you should be prioritised over everybody else, and that's why our alternative's better.
SPEERS: Just on that fairness argument, the Government points out that the top 20 per cent under their plan will in fact be paying more as a proportion of the overall tax take than they do now. So will the top one per cent than they do right now. And in fact, someone on 200 grand as you mentioned there, they earn five times what someone on 40 grand earns, but they pay, or they will pay, 12 times as much tax as someone on 40 grand. How is that not fair?
CHALMERS: We have a progressive tax system, David, and the Government's proposal under Malcolm Turnbull would make the tax system less progressive. It's self-evident that when you want to put someone on 40 grand in the same bracket as someone on 200 grand, we lose some of that progressivity, and what the indepdent modellers of the income tax cuts have concluded across the board - whether it's Grattan or the ANU or NATSEM or all of the other credible modellers of the Government's Budget - what they've said is 60 per cent of the benefit goes to the top 20 per cent of income earners. The Government has tried to re-cut and carve out and spin their tax cut as an excuse to give most of the benefit to the top end of town, but the independent modellers have belled the cat on that. And I think the Australian people understand that he will always favour the top end of town over them.
SPEERS: Well let me tell you just one fairly credible observer of these things, Chris Richardson from Deloitte Access Economics says on this fairness issue, quote, "if you want to pull out the microscope it makes high income earners slightly worse off" but you need a microscope. He doesn't think there's a worsening of progressivity or fairness here.
CHALMERS: I've got a lot of respect for Chris and obviously he's an important commentator, but that's not the consensus view among the independent modellers. It's not the consensus view from the academics and experts and institutions which have modelled the Government's tax cuts. And I think it's self-evident when you want to give $122 billion in those second two stages to higher income earners in this country and see most of the benefit flow to them and not to middle Australia, I'm confident that our position is fairer but also more responsible as well.
SPEERS: Just a couple of quick ones to finish, Jim Chalmers. There's bit of an argument apparently over who should take a vacant Labor frontbench position; Nick Champion given the nod by right faction leaders but others have pointed out it needs to go to a woman. What do you think?
CHALMERS: There's lots to say about that, David. We've got a very proud record of promoting women in the Labor Party. Almost 50 per cent of the caucus, almost 40 per cent of the Shadow Ministry, compared with I think 20 per cent in Malcolm Turnbull's ministry. But we can always do better. That's why we're pre-selecting such terrific women around the country. When it comes to vacancies in the Shadow Ministry, they are pretty rare and they're hotly contested. They're rare because we've had a remarkable period of stability and they're hotly contested because we've got so many good people to choose from, which is a pretty good problem to have. That vacancy you referred to isn't finalised yet. It'll be finalised in the next little while. But there's a heap of great people to choose from. It's an embarrassment of riches on our side really, when it comes to talent. So whoever prevails through that process will be a big contributor to the ministry when they're promoted.
SPEERS: But your rule about 40 per cent women on the frontbench may indeed cost Nick Champion a go here. Would you be willing to make room for a woman, just to ensure that 40 per cent target is met?
CHALMERS: We all need to do what we can to make sure the target's met, and when vacancies arise, we need to make sure that we're doing the right thing. The process referred to in that story hadn't been concluded. It's not entirely right to say that Nick was being promoted and then it got stopped, the process hadn't finished yet. We've got a rule about women on the frontbench and we'll make sure we comply with it.
SPEERS: Alright. I wasn't by the way suggesting you should make way, Jim Chalmers, by any stretch! Just a final one, quickly, Labor's going to be announcing today plans to fine the NBN for delays, faults, missed appointments and so on. Just tell me the thinking behind that. Would it add to the cost of the rollout of the NBN and how would this work?
CHALMERS: No, it wouldn't change anything in terms of what the NBN costs the Commonwealth. It wouldn't change anything in terms of the peak equity funding of the NBN. Any costs borne by the NBN will be minor. But really what we're trying to address here is you can't walk down the street in Australia at the moment without people telling you about missed appointments or taking too long to get a connection or to get a fault repaired. And what we're trying to say is we need to make the NBN accountable for service standards. We need to make sure that where they fall short of legitimate community expectations about connections, about repairs, about technician appointments - all of those sorts of important things - there should be a remedy for the consumer and for the small business. Too many people are left waiting too long or being asked to cop inferior service standards and we want to fix that. Bill Shorten and Michelle Rowland and others will have more to say about that later today.
SPEERS: Alright, Shadow Finance Minister Jim Chalmers, appreciate your time this morning. Thank you.
CHALMERS: Thank you, David.
ENDS
