E&OE TRANSCRIPT
TV INTERVIEW
SKY NEWS THE LATEST
TUESDAY, 13 DECEMBER 2016
SUBJECT/S: MYEFO; Government risking AAA credit rating; Government’s $50 billion big business tax cut; Joint Strike Fighters
TOM CONNELL: I spoke earlier to the Shadow Finance Minister, Jim Chalmers.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: This is a Government that's failed the three tests it set itself: the economy is shrinking, full-time jobs are disappearing and the deficits are growing. They said they'd be all about jobs and growth and improving the Budget. But at every stage the Budget's gone backwards. We've got debt blowing out by more than $100 billion. Last year's deficit was eight times bigger than they inherited and this year's deficit is at least three times bigger. So I expect to see more of the same failure.
CONNELL: Pre-empt this I will, by saying we know Labor want to ditch the company tax cut, you want to raise money from negative gearing. But from Opposition, focusing on what might more realistically happen, you think cuts should be made to appease the credit ratings agencies, or do to protect the economy first and foremost?
CHALMERS: It's important to understand that the Government on Monday can lock in Australia's AAA credit rating, just by doing those two things you mentioned. If the Government abandons its $50 billion big business tax cut and adopts Labor's sensible proposals on negative gearing and capital gains, that will improve the Budget by more than $80 billion and it will lock in Australia's AAA credit rating. If we lose the AAA credit rating on Scott Morrison's watch, it will mean higher mortgage repayments and it will smash business confidence. The Government needs to get serious about avoiding that credit rating downgrade. It needs to protect the AAA credit rating. The best way to do that is to lock in more than $80 billion in Budget improvements that we are proposing.
CONNELL: What if the Government's beating expectations on Monday and MYEFO is looking a little bit rosier? Will you concede that perhaps their way could be working?
CHALMERS: I don't think anyone who's looked at the way that this Government's gone about the Budget – under Hockey or Morrison, under Abbott or Turnbull – has gone about it in an effective way, and they certainly haven't gone about it in a fair way. We've done our best to be constructive and to propose alternative ways to fix the Budget in a fair way. It's important to remember as well that Monday's mid-year update will contain higher terms of trade, higher prices for our commodities. So the usual excuse that they point to; commodity prices as the reason why they'll fail so spectacularly – that won't be available to them. So at an absolute minimum we should see in Monday's MYEFO, when the higher prices for our commodities flow through, we should see a Government that doesn't go backwards. If they go backwards, they'll have nobody to blame but themselves.
CONNELL: Labor's big thing that they blame over the years is also tax income, but that was down across the board. So, if that cancels out the commodities prices, what you say there is not really true, is it?
CHALMERS: Ordinarily they say: "Look, it's all out of our hands because the terms of trade are so low." I'm just pointing out that that excuse won't be available to them. The other excuse they use is it's all factors beyond their control. But if you look at the last two Budgets – the 2015 and 16 Budgets – the policy decisions that they've taken, the decisions that they have consciously made have deteriorated the Budget bottom line by $10.9 billion. So really the point I'm making, Tom, is that it's long past time for the Government to accept responsibility for the mess they've made of the Budget – the growing deficits, the growing debt. This is a time for them to take responsibility, to stop pointing the finger, stop trying to shift the blame on to others and say that the Budget is in a mess because of the steps that they've taken. And it's long past time for them to abandon that $50 billion gift to big multinational corporations and to pick up our negative gearing policy. If they do those two things, the Budget will be more than $80 billion better off and we'll lock in the AAA credit rating, which will be good news for Australians at Christmas.
CONNELL: What they might also do in the end, because of the Senate, is have that company tax rate of course extended only to companies with a turnover of $10 million or so. Is that something that Labor would consider moving on at all from your current position of a small business as one that turns over $2 million?
CHALMERS: As you know, we support a tax cut for legitimately small businesses; businesses with a turnover of up to $2 million. We don't think that the country can afford tax cuts beyond that. It's not an ideological thing for us. It's a fiscal thing for us; it's a Budget thing. And we shouldn't be proceeding with things that the country can't afford and jeopardising that AAA credit rating, especially when it comes at the cost of things we can't afford to lose – things like Medicare, things like proper investment in our schools. Budgets are about priorities and we think the Government is wrong to choose a $50 billion tax cut over protecting the AAA credit rating.
CONNELL: But we also can't afford to lose business activity. You've got the definition of a small business effectively shrinking every year, because of inflation. This has been happening for seven or eight years so surely, eventually this two million figure needs to be looked at.
CHALMERS: Businesses make their decisions about how they operate based on a whole range of factors and tax is one of them, but there are others as well – the quality of our physical capital and our infrastructure; the quality of our human capital, principally our training and education systems. There are a whole range of things that businesses factor in, not just tax. In an ideal world, businesses would prefer their taxes to be lower but we've got to trade that off against things that we value more, including repairing the Budget in a fair way, protecting the AAA credit rating and properly investing in things we actually need, like better investment in our schools.
CONNELL: Because the next question for Labor is, if the Senate goes ahead as they are expected to and there is support for a company tax cut for up to $10 million turnover, will you take to the election campaign a plan to hike tax for companies of that size, which are not in most cases, big companies at all?
CHALMERS: You're a very brave man, Tom, to try to predict what this Senate may or may not do. We'll cross that bridge if we come to it. We'll take a tax policy to the next election, whether that's in 12 months or in three years. I wouldn't want to try to predict what the Senate will do. We've got our policy on the table. We're proud of what we said about tax. The country can't afford that $50 billion big business tax cut. We've got other measures on the table, including negative gearing. And what we're doing is we're demonstrated to a Government that is incapable of fixing the Budget in a fair way; we're showing them how to do it. If they weren't so pigheaded about it and so incompetent about it, they'd pick up our suggestions on Monday and they'd lock in that AAA credit rating. Because at the end of the day, Tom, it comes down to this: the Government can keep its $50 billion tax cut, or Australia can keep its AAA credit rating, but we can't keep both.
CONNELL: Just one other question that could impact the Budget – the joint strike fighters comments from Donald Trump have led some to have fears that this could blow out our contract on these same destroyers. This really isn't the Government's fault, is it? It seems to be maybe one of these consequences that we could feel of a Donald Trump presidency from January.
CHALMERS: These planes are very expensive pieces of kit. As you know, it's a multi-billion dollar project. And these projects will influence our decision making in the Defence sphere for half a century or so. So what we want to see – regardless of what the President-elect says about the American's own processes, they acquire these sorts of planes – we want the Government to carefully monitor the implementation of our buy. We listen very carefully to what Christopher Pyne said today about the purchase. We want to make sure that the Government stays on top of it because, at the end of the day, our number one priority is to get value for money for these big defence acquisitions. They're tremendously important to our security and they have big implications for our Budgets, so we want to make sure that the Government gets it right.
CONNELL: Jim Chalmers, Shadow Finance Minister, thanks for your time on Sky News today.
CHALMERS: Thank you, Tom.
ENDS
