SUBJECT: Tax cuts; John Setka.
ANTHONY ALBANESE, LEADER OF THE AUSTRALIAN LABOR PARTY: Well thanks very much for joining us. Labor’s first priority during this week’s debate and indeed prior to that has been ensuring that the national economic interest is served. To that end we’ve raised a number of proposals that we have pursued in the House of Representatives and we will continue to pursue in the Senate.
The first of those is a bring forward of Stage Two. We believe that if the increase in the threshold from $90,000 to $120,000 which would deliver up to $1,350 for every working Australian is a good idea in 2022, it’s an even better idea today. And that’s the context of the slowing that we’re seeing in the economic performance. Most notably underlined or indeed with an exclamation mark by the decision of the Reserve Bank of Australia to decrease interest rates to 1 per cent just on Tuesday. That’s one third of the cash rate that occurred at the downturn that was the greatest economic downturn since the Great Depression in the context of the Global Financial Crisis. We argued strongly and will continue to argue that that has merit.
The second bring forward is we want a bring forward of the Government’s infrastructure investment. Today in Question Time I raised the issue of Linkfield Road, just one of the projects that was committed to by the Government during the election campaign where the detail was left off. I don’t believe that the voters of Petrie and Dickson when the Prime Minister made that commitment in December 2018 thought it was at least eight years off before a hole is dug on that project. The Government needs to bring forward its infrastructure investment program. It’s one thing to talk about a big figure off in the never never what they need to talk about is what economic stimulus will occur right now. And we repeat our call for that to occur.
Given the uncertainty that’s there in the economy, as indicated as well by the Prime Minister’s non answer to the first question that I asked as the Labor Leader in Question Time today where I identified the key economic indicators: productivity, wages, interest rates, consumer demand. Which of these did the Prime Minister think was going the best? He didn’t answer it because the truth is that all of the national economic indicators at the moment including the job vacancy figures today reinforcing again the fact that the economy is really struggling on this Government’s watch.
The second thing that we did was try to separate out and we’ll continue to pursue the separation of Stage Three of the tax cuts. These are due in 2024-25, it is the triumph of economic hope over economic experience and reality to suggest that the Government knows what the impact would be and whether it’s responsible to propose those cuts right now and to lock them in. We think that’s the economically responsible thing to do.
The fact is that the economy has changed since May 18th. How do we know that? Because the Reserve Bank decisions say that that’s the case. The Reserve Bank changes interest rates because the economy has changed. That’s how it uses monetary policy, to either stimulate demand or to contract demand in the economy. That’s what monetary policy is. And yet the Government would have us believe that they know what the economy will look like in 2024-25.
Well I ask you to examine where Prime Minister Morrison or Josh Frydenberg said during the election campaign ‘vote for us and we’ll get two interest rate cuts in the next six weeks’. It didn’t happen and that’s why it was economically responsible for us to argue that in the House and that’s why we’ll continue to argue that in the Senate.
If our amendments aren’t successful – and you never know what happens in the Senate. It’s a funny place. Sometimes people change their mind according to debate but indications are that we will struggle to get those amendments carried in spite of the fact that some of the crossbenchers in terms of Pauline Hanson has indicated I think her support for example to split off Stage Three. But if that is not successful then we will not oppose the package. That’s consistent with the position that we have put from day one. We do not want the circumstances whereby an economy that’s struggling prevents people getting a tax benefit of up to through the offset measure of $1,080 dollars. The economy needs that, it needs that now and you can’t argue not just that but argue that Stage Two should be brought forward and then say well don’t worry we’re satisfied with nothing happening.
So we have at each stage put economic responsibility front and centre. The shadow cabinet met this afternoon and agreed that if our amendments fail in the Senate then the legislation should pass with the support across the board I suspect of the Senate. Because every Australian apparently apart from some members of the Government knows that the economy is struggling and the economy does need stimulus. Jim?
JIM CHALMERS, SHADOW TREASURER: Thanks very much Anthony. Labor’s priority right throughout this whole process has been to get more money into the hands of more workers sooner so that we can boost an economy which has floundered on the Liberals watch. We took to the election bigger, fairer tax cuts for people on low and middle incomes. Since the election we moved amendments in both Houses which were all about supporting Stage One and Two bringing part of Stage Two forward earlier and splitting off Stage Three because we don’t think that Stage Three is a good idea.
Now we’ve been fighting for these responsible changes but ultimately at the end of the day they don’t look like they will be supported in the Senate or indeed in the House. And when it becomes unlikely that you can get everything you want and for us the best outcome would have been to split off Three, fast track Two and support One enthusiastically. But when that becomes unlikely you need to prioritise what’s most important to you and that’s what we’ve done here and that’s what the Shadow Cabinet has decided to do.
And so we won’t oppose the full package if it comes to the Senate unamended because our highest priority is to make sure that Australians do receive that tax cut next week. We do need to get it circulating in the economy for all the reasons that Anthony has mentioned. Our highest priority throughout has been to get money into the hands of workers and circulating through a weak economy. And the economy as Anthony has said has deteriorated markedly even since the last election.
Now unfortunately the Government’s highest priority has been a $95 billion tax cut which doesn’t come in for another five years, where they haven’t revealed to us what services and what programs they will cut to pay for that tax cut. And they have tried to hold hostage tax cuts for workers next week for a tax cut in 261 weeks when they won’t come clean about what cuts will be necessary to fund that $95 billion tax cut.
Now remember this is a Government which has got the economy wrong at every turn. They can’t get the economy right from five minutes to the next. And now they want us to believe them when they say they know what the economy and their budget will look like in five years time. Now we have argued that it’s irresponsible to commit to $95 billion five years out which is Stage Three of the package. We maintain that view that it’s irresponsible but we weren’t prepared to hold up tax relief for workers next week and that explains what we’re doing today.
Now I think it’s true that a Government which couldn’t even meet its commitment to get Stage One flowing by Monday. I think that it’s hard to believe them when they say that they can afford to pay for this tax cut five years from now. We will review stage three closer to the election and we will propose our own policies which take into account the economic conditions at the time and the state of the budget at the time.
ALBANESE: Thanks very much. Happy to take a couple of questions.
JOURNALIST: Because you’ll review it, does that mean that you are not committing now as to whether you would stop those Stage Three tax cuts as part of your policy at the next election?
ALBANESE: Well what it means is that both major political parties, and I’m sure even the minors, will take different policies to the election. That’s the truth. That’s what happens. We are saying very clearly and unequivocally, we are opposed at this point in time to making a decision about Stage Three. We think it’s economically irresponsible. Now closer to the election we’ll examine those issues.
I asked the Prime Minister today in Question Time what cuts will be necessary. In the first year of Stage Three provides for a $19 billion reduction in government revenue. The idea that in one year you can have a $19 billion reduction from the previous year without there being any cuts to hospitals, to schools, to infrastructure, to a range of services that are provided for the Government frankly lacks credibility. And the Government throughout this debate – and it’s up to the crossbenchers who are prepared to vote for the three stages and not support our members to justify why they’re doing it in terms of Centre Alliance and anyone else who votes for it. But it is an absolute triumph of crossing your fingers and hoping for the best given the economic circumstances which are there.
JOURNALIST: So what would the economic circumstances need to look like as you get closer to the next election for you to see this as irresponsible –
ALBANESE: One of the things Sarah if you’ve been paying attention to everything we’ve said all week it is that you can’t say in 2019 a theoretical this is what the economy should look like then. We’ll examine the circumstances we’re clearly committed to – we supported Stage One, we supported Stage Two stronger than the Government. Indeed the Government’s first act in the 46th Parliament was to vote against a tax cut for all working Australians which is what our amendment to Stage Two would have done.
JOURNALIST: Does it remain your position to oppose the already legislated Stage Three?
ALBANESE: We will examine under the circumstances – and quite frankly if you knew or anyone in this room knew what the economic circumstances would be you could make a fair bit of dough out there in terms of speculation of what the economy was like in 2024-25.
JOURNALIST: Just to confirm, are you accepting Stage One and Stage Two from last year’s budget as well as this year’s budget and when you review before the next election are you reviewing Stage Three from last year’s budget and Stage Three from this year’s budget?
ALBANESE: Yes, effectively in terms of Stage One and Stage Two, we support Stage Three but let’s be very clear as well we’re not confining ourselves to the current paradigm. What we’re saying is we’ll examine, just as the Government, be very clear the idea if the Government tells you that they will have no economic policies between now and the next election then if you believe them on that then you’re likely to believe Scott Morrison’s statement before the Parliament that there won’t be cuts if you have a $19 billion reduction in expense in revenue in one year. Frankly all sides of politics review depending upon economic circumstances, we will do that we’ll put forward our own policies not just in terms of the economy but on social policy and on everything else.
JOURNALIST: If it turns out that these tax cuts stage three in a few years’ time could end up driving the budget into a deficit if the economy softens. Would that be a case for Labor to potentially repeal these tax cuts Stage Three if it was going to drive the Budget into deficit?
CHALMERS: John, we’ll take into account all of the fiscal conditions ,all of the economic conditions, we won’t prioritise one thing over another. We’ll take all of it into account and we’ll come up with the right and responsible policy for the future. And as Anthony said, that is the right of any opposition, any government, any minor party. It’s entirely unusual for parties to say that we will take to the next election the policies that we consider to be best for the economy, best for society, best for the future of this country. And that means taking into account the fiscal conditions as well as the economic conditions.
ALBANESE: Let alone it’s actually beyond this term, we are talking about 2024-25 here.
JOURNALIST: If you’re so concerned about potential cuts in the future why not just vote against this package tonight?
ALBANESE: Look that because our first priority we’ve said very clearly is to ensure that money gets in the hands of workers. We wanted additional money in more hands of more workers sooner. That was our position. Thanks.
JOURNALIST: Just one last question sorry, John Setka has lodged an injunction in the courts saying that if Labor expels him from the party it would prevent him from being an effective advocate for his union and its members. The party executives already extended the time on that. Would you think that they might a grant further extension of time on that decision?
ALBANESE: No he won’t be advocating as a member of the Labor Party after July 15th. Thanks.