National Press Club Q&A - 25/6/19

June 25, 2019

SUBJECTS: Income tax cuts; Government adopting Opposition’s policies; regional Queensland road trip; Newstart; Logan City; aspiration; Bob Hawke; John Setka; tax policies; wages; Liberals’ election lies
SABRA LANE: Thank you for your speech. The election was characterised in many quarters as a referendum on tax, on the Liberals' plan for tax cuts versus Labor's tax hikes. Why not just pass the entire package and if the situation is as you paint and the economy continues drifting or indeed it tanks, why not let the Government bear sole response ability for that?
CHALMERS: I think the election turned on a range of issues, not just on tax. Tax was an important part of it. I think as I said in my speech, clearly we couldn't build enough support for some of the proposals that we were making around closing down some of the tax loopholes in the system. I am not convinced that income tax cuts were as big a part of the election campaign as what the Government now likes to pretend. Remembering of course that Labor took to the election more generous tax cuts for people on low and middle incomes than the Government did. And we wanted to get more traction for those ideas than we ultimately were able to do. So tax was a part of the election campaign. It wasn't the whole thing, and I am not sure that there was that much attention paid necessarily to income tax cuts. 
On the second part of your question, Sabra, the issue around what we should do with what the Government is proposing. We have found a better way to deliver income tax relief in this country. We have found a more responsible way. We have proposed a way to get more money into the hands of more workers sooner, so that we can boost an economy which is growing at quite a feeble pace. It is our responsibility, as the Opposition, where we can see a better way to go about things, to propose that and to argue for it and to seek the support of the Parliament in implementing those proposals. I have seen people write that we should just let the Government be their own worst enemy and let them cannibalise the Budget. That's not really our approach. Our approach is to be as constructive as possible and that's why we have landed on the position we have taken.
PHIL COOREY, AUSTRALIAN FINANCIAL REVIEW: When you were talking about stage three, you expressed a number of reservations about the $95 billion stage three. You made no mention today, nor did you or Anthony Albanese make any mention yesterday, of the first part of stage three which is already law, the $42 billion that was legislated last year and that would give us a flat rate of 32.5 cents between $41,000 and $200,000 in 2024. You went to the election promising to repeal that if you were elected. You've made scant mention of it since the election. Is it your policy now to leave that sitting there, or does it still remain that potentially you could reverse that along with proposing the remaining stage three?
CHALMERS: Thanks very much, Phil. You're right that we've expressed our reservations about the unlegislated part of stage three, that $95 billion which is two thirds of the package. And for all the reasons identified in my speech, we are concerned that would be irresponsible to sign up to that five years out when we don't know what the economy or the Budget would look like. The decisions that we have taken so far as the Shadow Cabinet under Anthony's leadership really revolve around the negotiating position that we announced yesterday. And you would have seen that we announced our position on stage one. We shifted on stage two; we proposed a better way to get stage two, or part of stage two out the door sooner than what the Government is proposing. And we have said that consideration of stage three in the Parliament should be deferred for a subsequent parliamentary sitting after that. And if and when we are able to achieve that, then Shadow Cabinet will have another discussion about the existing and unlegislated parts of stage three.
COOREY: (inaudible)?
CHALMERS: That's what I said. We'll have a discussion about the existing and the unlegislated parts.
GREG BROWN, THE AUSTRALIAN: Greg Brown from The Australian. Just following on from that, does that mean you're leaving the door open to opposing the legislated part of the Government's plan going into the next election? And on the unlegislated part, will you push amendments to the Government's plan if it is clear the Senate rejects your proposals? And if the Parliament does reject your amendments, will Labor then be prepared to follow the will of the Parliament and pass through, vote in favour of the full package?
CHALMERS: Our priority and all our efforts, Greg, are about getting stage one and two passed. What we proposed yesterday was a more responsible, more sensible, more economically effective way of getting income tax cuts into the hands of workers and circulating in the economy. We've expressed reservations about stage three, not just yesterday but for some time. We've expressed reservations in the past about the existing part of stage three. We have not taken a decision as a Shadow Cabinet about what we would do with stage three, existing or unlegislated.
ANDREW PROBYN, ABC: Dr Chalmers, Andrew Probyn from the ABC. I'm reliably informed that should you have won the election, one of the active considerations was to bring forward your Australian Investment Guarantee. I think that was meant to come in in 2021. I understand there was consideration to bring it forward to July 1, because of concerns about the economy. What other adjustments were you going to make? And I ask in the context of Arthur Sinodinos commenting on election night, that he said that perhaps the Government needs to borrow some ideas from the opposition, those that might have some value.
CHALMERS: Thanks very much, Probes. They should borrow our idea to bring forward stage two for starters. We think that that would give the economy a shot in the arm that it desperately needs. And so I think, Arthur, if that's his view - I didn't see that on election night - but if that is his view that they should be more willing to pick up and run with proposals that the Opposition has made, I think they should start there. Certainly in the life of the last Parliament, we were concerned about the state of the economy. A responsible Opposition, a responsible alternative Government, does brainstorm ideas to try and get the place moving again. We think the best way to do that is to accelerate stage two and to get stage one happening as well. We think that we should also be looking at the infrastructure spend because, as you would appreciate, there is a heap of infrastructure spending in the Budget that doesn't begin for some time and we should be exploring what can be brought forward in a responsible way that doesn't jeopardise the forecast surpluses. So there are things that should be being looked at right now by the Government. Arthur is 100 per cent right if he says that they should be more prepared to pick up and run with ideas that we have proposed, and we suggest that they begin with the one that we proposed yesterday.
SAM MAIDEN, THE NEW DAILY: Dr Chalmers, Sam Maiden from The New Daily. In preparation for today's speech, I had a look at your PhD on Paul Keating, "Brawler Statesman", which I assume I am joining a very small group of the Australian population that has had a look at that.
CHALMERS: There might only be two of us!
MAIDEN: There might only be two of us. I am going to continue perusing that, it's quite a read. But I am going to ask you a question about the tax cuts. Picking up on what you were saying in relation to Shadow Cabinet hasn't actually made a decision on stage three that you've got a negotiating position in place. Surely it would be open to you for example, as some have suggested, to amend stage three but not insist on those amendments. In doing so, you would not be seen to actually oppose those tax cuts flowing and delaying them in Parliament. That would then leave you free to form a position on, for example, repealing them or taking a different position to a subsequent election. Do you think that that is a viable approach or do you agree that once you hand out a tax cut, it is very hard to take it away?
CHALMERS: Thank you, Sam. My answer to your question is a bit like the answer to Phil's and to Greg's. We have actually found a better way to deliver these tax cuts. All of our effort is in trying to convince the Parliament that the most responsible thing to do in the context of a floundering economy is to pass stage one and two, to defer stage three for a subsequent discussion. And, as I have said already, the Shadow Cabinet has not come at any of those contingencies because we are putting all of our effort into getting our superior idea up. One of the things that I don't think has been focused on as much as maybe it should be is that we have shifted our position. The position that we took to the election was to support stage one, actually to do better for low and middle incomes, and to not support stages two and three. And we've shifted on stage two. We've recognised that we can do a better job of giving stage two tax cuts, getting them into workers' hands and flowing through the economy sooner. And so we have made that proposal. We've made that compromise suggestion. If the Government was thinking rationally about what the economy needs now, and what's possible in the Parliament, and the fact that stage three doesn't come in for another 262 weeks, then they would pick up our idea and they would run with it, and all these other issues you are asking about legitimately would be moot.
LANE: To your trip that you took through Queensland, Queenslanders can be pretty blunt, I know. My brother is a Queenslander. Hello, if you're listening.
CHALMERS: Hi Sabra's brother.
LANE: What was the biggest character-building moment for you on that listening tour knowing that Queenslanders can be quite blunt?
CHALMERS: The biggest character building experience, if you can believe it, is that Anthony Chisholm likes listening to Slim Dusty. He is the youngest Slim Dusty fan on the planet and I found that troubling and a trial. But in terms of feedback, one of the things that I really appreciate about the four days, the 10 towns, and the 2800km that we've just covered is that people are remarkably frank, and I'm so grateful for that. There's a guy called Paul, we met him in the Prince of Wales pub in Proserpine, and he'd definitely be watching. He told me he watches every Insiders, every Q&A and every Press Club, and he used to be a truck driver in North Queensland. I met him in Proserpine and we had a beer at the PoW there. He and others were the inspiration for where I began my speech this afternoon. He's a Labor supporter, he said, yep, we didn't get the outcome we want, can't change it now, just get on with it. And I think that's important. We got feedback around people feeling that we sent mixed messages on the coal industry, that was obviously important in central and north Queensland. I think that explains why some of the biggest swings that we got were in some of those communities, even where we had amazing candidates like Zac Beers and Russell Robertson, that they cost such big swings. I think it's because perceptions around our position on coal kind of turbocharged our other challenges. So we got a heap of frank feedback about all of that as well.

ERYK BAGSHAW, SMH AND THE AGE: Thanks very much for your speech, Dr Chalmers. Eryk Bagshaw from the Sydney Morning Herald and The Age. You've proposed bringing forward stage two, or at least part of it. It'll cost about $3.7 billion to do that. And you're also saying we should think about more infrastructure spending. How close should the Government go to a deficit in order to stimulate the economy, or should it even consider going that far?
CHALMERS: Thanks very much, Eryk. We think that they should maintain the forecast surpluses. We think that that is important. You watch these things as closely as anybody in this room, and you know that the iron ore price is higher than budgeted for, profits have held up. So a lot of the things the Budget is relying on have actually been going OK, some of the other issues around growth, productivity growth, wage, have not been travelling so well. We think there is no excuse for the Government to ditch their forecast surplus. We think that you could responsibly bring forward that part of stage two, the threshold change from $90,000  to $120,000 for about half of the projected surplus in 2019/20, and we're up for a discussion about what infrastructure you could responsibly bring forward as well. But we said yesterday and I've said again today that we don't think that should come at the cost of the projected surpluses.
MARNIE BANGER, AAP: Thanks, Dr Chalmers. Marnie Banger from Australian Associated Press. Following up on your sentiment that some people are struggling in the economy. We know that before the election, Labor said it wanted a review of Newstart and suggested heavily that it would be increasing what people looking for work would be receiving. Do you think Labor should conduct a review in Opposition, potentially getting experts together and putting forward a plan to Parliament with a Private Members' Bill?
CHALMERS: Thanks for that, Marnie. I think one of the unfortunate consequences of the way the election panned out is that that review won't happen. Whether you are an Australian on Newstart, whether you're a pensioner who can't afford to get their teeth fixed, whether you're a family struggling with the cost of childcare, there are a lot of things we were proposing which had the potential to make a real difference to people's lives. And when you think about what happened on election night, one of the things that does get you down is that we weren't able to implement some of those policies and plans that we think would have made a real difference, particularly to vulnerable people in Australia. We have to accept the reality that we are three years from another election. I don't think a review at the start of that from the Opposition would necessarily shift the needle on Newstart. If people want to see a boost to Newstart, then they have to convince the Government.
JON MILLARD, FREELANCE: Thank you Sabra, Jon Millard, freelance, and thank you Dr Chalmers for your address. Many people in the Shadow Cabinet have come from a union or political apparatchik background and there is nothing wrong with coming from a union background, I hasten to add. You, on the other hand, have come from an academic and a research background. To what extent do you think you, as a Shadow Treasurer, will affect your performance, your views? Second, coming from an academic background doesn't necessarily guarantee a position in the Cabinet - one notable exception. To what extent do you think ability should triumph over factionalism?
CHALMERS: Obviously, I think we need to put our best team on the park and at the risk of talking about him as if he's not here, I think it's terrific that Andy is in our economic team. And one of the great joys of being in the Parliament and working on economic policy is working with Andy. I think is terrific, whether you think about him, Katy, Stephen, Matt, all of the colleagues. We've got a really strong team working on economic policy, and I'm proud of that and looking forward to that. My own background is there for everyone to see. Everybody brings different perspectives to these roles. If you asked me what the primary influence is on the way that I think about politics and the way that I think about policy, I think it's where I'm from. I am essentially a scrapper from Logan City on the outskirts of Brisbane. And everything that is in my head, and everything that is in my heart comes in some way or another from growing up in the area that I represent now. And that's why I get so dark about this stuff about aspiration. Like, the idea that aspiration can be thrown around as some kind of marketing term that is on the front page, the summary page of a focus group, that just drives me nuts. Because aspiration is not something that exists in a focus group report. Aspiration is something that exists in communities like the one I grew up in, where people just want to know that if they study hard, they go to bed later than everyone else, they get up earlier than everyone else, then they've got a shot. Right? And that's what this country should be about. And that's what our economic policy will be about. If you work hard, you get the rewards. Whether I'm here for nine years or longer, that will be the primary determinant of everything I do and say while I'm here.
SARAH MARTIN, THE GUARDIAN: Thank you for your speech, Sarah Martin from The Guardian. You spoke fondly about Bob Hawke. Hawke, of course, famously deregistered the BLF in 1986. Given the recent behaviour of John Setka - and happy to stick to historical facts rather than anything under way in the courts - do you think the Labor Party and the ACTU should consider cutting ties with the CFMEU, as Hawke suggested you should consider? And do you think the behaviour we have seen from the union and others in the industrial left reflects a broader cultural problem within the union movement?
CHALMERS: I’m happy to come to that, Sarah. Just first on Bob. I think the whole country mourned the passing of one of the greatest ever Australians. And I guess I wanted to pay tribute, not just to Bob, but to everyone who put together that amazing memorial that we had in Sydney a couple of weeks ago, including my predecessor in Rankin, Craig Emerson. But others who did a really marvellous job celebrating one of the great Australian lives. I just wanted to pay tribute to Bob and the people around him and his family for that. When it comes to John Setka, there are two issues here which have been conflated. The first issue is his role in the Labor Party. Anthony has taken a strong stand on this which I support 100 per cent, which is that John Setka has no role in the Australian Labor Party. That doesn't go into the legal issues or the issues about his role in the union movement. His role in the CFMMEU is a matter for the union. His role in the ACTU as an affiliate is a matter for the ACTU and for Sally and others. The bit that we control, that Anthony and the Labor Party controls, is the bit about his ongoing role in the Labor Party. And when our national executive meets, they will determine that he has no ongoing role in the Labor Party, and that's a good thing.
DAVID SPEERS, SKY: David Speers from Sky News, thanks for your speech. Can I come back to stage three of the tax cuts? I just want to go to your concerns about it. You're concerned obviously about legislating something now that doesn't kick in for another five years. But today you've also gone to whether this is a worthwhile thing to do at all, whether it is going to generate growth. Can I just get for the record, do you think cutting that 32.5 per cent rate to 30 per cent is it a reasonable thing? Is good for the economy or not?
CHALMERS: Thanks, David. My concern is that you get more bang for buck from tax relief from the people who are most likely to spend it. One of the reasons why we're asking about stage three and how it's distributed through the tax brackets is because the higher you go up the income scale, the less likely people are to spend that money in the economy. The economy needs a boost. So that is an important consideration. It's why we've been asking now for more than two months, for this information. You'd think if the Government wanted our vote, they would give us the information that we were seeking. I remember I think it was the first weekend of the election campaign, you had Mathias Cormann on your show, and you asked Mathias about this. And he said he was happy to provide the information. That was more than two months ago now. We don't think it's unreasonable that we ask. We think it would be irresponsible not to ask, to understand that. Because the economic impact of tax cuts on the economy is different, depending on how much disposable income you have and how likely you are to spend the proceeds of a tax cut.
JANE NORMAN, ABC: Hello, Jane Norman from the ABC. Thank you for your speech. You said that the complexity of Labor's tax proposals left you vulnerable. I know that Labor is hastening slowly, as Anthony Albanese says, but as Shadow Treasurer you surely have a view of which tax proposals were the most harmful and I guess my question is, which will be on the top of the chopping block? Is the changes to franking credits, negative gearing, capital gains tax? What would you think needs to go?
CHALMERS: Well you're right that the direction from Anthony is to take our time and go through our policies, and that's what we'll do. I've acknowledged pretty frankly that one of the issues was that we couldn't build enough support for some of those tax changes that you have just mentioned. I think the impact of that, or one of the consequences of that, was that people were more prepared to believe some of the stuff that was being made up about tax, death duties and the like. I spent the day on my polling booths in my own community assuring people that we weren't going to do a death tax, for example. And I think the climate that we created left the door open for some of those crazier lies to be told and to find fertile ground. On specific policies, we will take our time to work out which ones we will discard, which ones we think we can improve on, which ones we can take to the subsequent election. But the thing that I can be certain of is that we won't take the identical policy suite to the 2022 election that we took to the 2019 election. Circumstances change, the Budget changes, there's three years of water under the bridge to work out what our highest priorities are. We will obviously learn the lessons of what happened in the election campaign and why we got the result we did. It's the whole reason why we've been hitting the road and listening to people, and we'll come up with an agenda for the next election, which isn't the same as the last one, which revisits our policies, revisits our language, frankly, but doesn't revisit our values.
KATHARINE MURPHY, THE GUARDIAN: Hi there, Katharine Murphy from The Guardian. Can I take you to wages and the issue of wages? During the recent election campaign, Labor proposed a number of policies that would have had positive impact on wages growth. Given where income growth is at, that should have resonated, those policies should have resonated, but they didn't. The people who would have benefited from those policies voted for Hanson and for Palmer, and people who were concerned about asset protection voted for the Coalition. So my question is, do you think that when governments say in 2019, or aspirant governments, say we are going to increase your wages, that people believe that anymore? Do you think it’s a trust issue? Or do you think perhaps, the way Labor frames the discussion about wages in 2019 reflects an historical association with the union movement? So it's through the frame of employer-union relations, which a number of Australians have now moved on from in terms of their practical workplace experiences. Have you thought about this and what's your view?
CHALMERS: See Murph found a way to ask about 10 questions then and make it sound like one. I think, first of all, it's hard to disaggregate the reasons that people voted for us and against us in perfect terms. I think our positions on wages were probably supported by a heap of people. Maybe some people we were counting on voted for minor parties but I think our position on penalty rates, for example, was well supported, I believe. That's at least the feedback that I've got. Stagnant wages is the defining feature of the economy that's not delivering for ordinary people. And I think that's understood in the community and I think there was some appreciation that we were at least trying to do something about it. Your question about the kind of two old warring tribes of capital and labour and whether that works anymore, I think there is something in that to reflect on and I think one of the things that I'm proudest of or most pleased with with Anthony's leadership of the Labor Party the last few weeks, is he has sought ways to try and break free from the old arguments. He has tried to find ways to reach out to constituencies that may not have supported us at the last election, or may not have supported us traditionally. I know that in my role, that reaching out to businesses is obviously a crucial part of my role now, but I've seen it as a crucial part of my role for some time. We do need to build a bigger constituency than the one that we finished up with on election night. That is self-evident. And that means reaching out more. It means looking for more inclusive language, perhaps. All of those sorts of things are important.
LANE: When you talked about the scare campaign in relation to death tax, that Labor was putting forward a death tax that was going around on social media, when did you realise that was problematic for the party and how do you respond to those who say well that's a version of political karma payback for Mediscare?
CHALMERS: I think they're two very different issues. The Government put together a task force for Medicare privatisation. As Bob Hawke said, and Sarah asked me about Bob before, you don't put together a taskforce if you are not thinking about privatising Medicare. So I do think it is different. I know that people have conflated the two things. But I think they are two different issues. We said repeatedly for a long time we had absolutely no intention of imposing death duties on people. About three weeks out from the election, three or four weeks out from the election, it was clear to us that this lie about a death tax had kind of jumped the fence. It was out into the broader community, it wasn't just in the usual kind of online communities who lie about us, that it was in the broader community. It was in our multicultural communities. Because of the way that it got out, it was impossible to kind of rein it all back in. It was impossible to respond effectively to it, respond in time to it, remembering as well that we had three weeks of early voting so a lot of the really damaging stuff was flowing while people were actually voting. I think it is a big issue and there has been a lot of thoughtful stuff said since the election campaign from people of all political persuasions, that we do need to get a handle on this. Because as it stands right now, you can say anything about anything and you can get it galloping on social media and the major political parties, us or the others, have no prospect of reining it in in time.
LANE: Everybody, please join me in thanking Jim Chalmers.