SUBJECTS: Tax cuts.
ANTHONY ALBANESE, LEADER OF THE AUSTRALIAN LABOR PARTY: Good morning. Thanks very much for joining us. The Shadow Cabinet has met this morning to deal with a number of matters, one of which is the Government’s proposed tax changes that it will be introducing to Parliament in the first sitting week. We considered these proposals in the context of an economy that is weak, an economy in which the Reserve Bank of Australia cut rates to less than half of where they were at the GFC. An economy that has low growth, an economy where we have weak wages growth, weak consumer demand and one that is clearly in need of stimulus. The Reserve Bank, of course, when they cut interest rates, spoke about how monetary policy couldn’t do all of the job. And that’s the context – we need action now. And some of the Government’s proposals, of course, are off in the never never. What we have determined this morning to do is to propose a negotiating position to the Government which would bring forward tax cuts faster for those who need it and importantly those who will spend it to stimulate demand in the economy.
We have determined the following position. Stage One – of course, we’ll continue to support that stage and express disappointment that the Government has breached its clear commitment to bring in Stage One by July 1. That was one of the very clear statements that they made during the federal election campaign.
For Stage Two – we’re calling for the Government for the increase of the 37 per cent threshold from $90,000 to $120,000 that is already legislated but is down the track, to bring that forward to 2019-20. This would provide up to $1,350 for all those above $90,000. The costing of that we’ve assessed to be less than $3.7 billion. That’s based upon the Government’s own indications of what that would cost come 2022 when that change is due to come in under the already legislated tax cuts. So obviously the figure would be less than that figure.
The third thing that we’re saying is that infrastructure investment should be brought forward. This has been proposed by the Reserve Bank of Australia. We know that there are a range of road and rail packages that could be brought forward because they’re ready to go right now – projects including here in the south-eastern suburbs of Melbourne, projects in the northern suburbs of Melbourne. The Government could, of course, put money into a project like the Melbourne Metro, which is what we propose during the election campaign in order to speed-up the delivery of that project. But we’re prepared to sit down with the Government and identify projects, some of which were committed to by both sides of politics during the election campaign, but in the case of projects like Linkfield Road in Brisbane’s northern suburbs is due to commence around about 2027 in terms of actual shovels in the ground. We know that projects like that are necessary now and we think that a bring-forward of the Government’s proposed infrastructure investment would assist the economy, create jobs right now, help to boost productivity into the future.
If the Government is prepared to do that in terms of Stage One and Stage Two, while deferring Stage Three’s consideration to the following sitting of Parliament or whenever they deemed fit to debate it sometime between now and 2024-25 when it’s due to commence, then we would facilitate the passage of those stages through the Parliament next week. We would facilitate the passage through the House of Representatives before Question Time next Thursday, given that Tuesday will be largely ceremonial and Wednesday sitting will be devoted to the commemoration of Bob Hawke.
So we think that these issues should be considered separately. We think that Stage Three at a cost of some $95 billion down the track for an economy which is very soft at the moment, which no one can say what the economy looks like in 2024-25, is really a triumph of hope over economic reality.
What we know right now is that the economy needs stimulus. And what we’re looking for here is solutions rather than arguments. I have said as I have gone around the country that the country has conflict fatigue. They want to see us getting on with delivering real outcomes. This is a genuine approach by Labor, a constructive approach, and I hope that the Government receives it as such. We have already had some discussions with the crossbench about supporting a proposal such as this and I believe it would be a good thing for the country if we had unanimity across the Parliament about a package such as the one that we’re putting forward here today. I’ll ask Jim to add some comments.
JIM CHALMERS, SHADOW TREASURER: Thanks very much, Anthony. The economy is floundering, families are struggling and the Government has no idea how to turn things around. And we in the Labor Party, we’re very concerned, as Albo said, about the state of the economy. We’re particularly concerned about two things, especially – weak consumption as the Reserve Bank told us is a product of having stagnant wages growth for so long. That’s a key weakness in our domestic economy. The other problem we have got is we had productivity growth go backwards for four quarters in a row under this Liberal Government. So we have got a problem with consumption, we’ve got a problem with productivity. And what we are proposing today is a plan, a solution, or at least something that would help turn around those issues in the economy which are leading to the slowest growth for the ten years since the Global Financial Crisis. Under this Liberal Government, growth is slower than it’s been at any point in the last ten years since the GFC.
Now, the Government’s highest priority should be getting money into the hands of workers and flowing through the Australian economy. Unfortunately, so far, they have behaved as if their highest priority is Stage Three of the tax cuts which comes with a $95 billion price tag and isn’t implemented for another five years. Now, we do want to play a constructive role in helping the Government to get this right and so today we are proposing, with the agreement of our Shadow Cabinet, under Anthony’s leadership, we are proposing a solution in good faith and we ask that the Government consider it and pick it up and run with it.
We do support Stage One and we have all along. We are prepared to support Stage Two. We are arguing that part of Stage Two could be brought forward in a fiscally responsible way, in a way that doesn’t jeopardise the forecast surplus for 2019-20 and the subsequent surpluses. We are calling for infrastructure investment to be brought forward, to boost productivity, but also to try and get this economy going again. And as Albo said, if the Government comes at this solution that we’re proposing, we are prepared to get Stages One and Two through the Parliament quickly when Parliament resumes next week if they agree to defer consideration of Stage Three to a subsequent sitting of the Parliament.
Now, it’s true that we have shifted our position since the election. We have done that because as Anthony rightly says, people expect us to do what we can to do the right thing by the economy. The test that we apply to economic policy – is it good for the economy, is it good for middle Australia, is it right and responsible and do we get bang for buck in the Budget? Those are the tests that we will apply as we work through all of these issues in good faith.
Before we throw to you for questions, it’s worth commenting briefly on the speech that the Prime Minister’s given in the West today about the economy and about red tape and industrial relations. The point I make is this; if that’s the best the Prime Minister has got, it’s no wonder the economy is growing slower than at any point than in the last ten years. When we’ve got slow growth, we’ve got stagnant wages, we’ve got debt that’s more than doubled on the Liberal’s watch, all we’re getting is more of the same rhetoric about unions and more of the same rhetoric about red tape reduction. And none of that has created a single job.
If the Prime Minister and his Government are serious about turning around this floundering economy, they will pick up the solution that we are making today in good faith, they will get some infrastructure investment going sooner, they will get those tax cuts into the hands of workers and flowing through the economy sooner. That gives us the best chance of turning around the situation we find ourselves in in this country where the economy is floundering, middle Australia is struggling and the Government so far has no plan to do anything about it.
ALBANESE: Thanks very much, happy to take questions.
JOURNALIST: Mr Albanese, has Labor been shown the tax legislation yet?
ALBANESE: No we haven’t. This is part of the point. We’ve been having this debate in theory for some time. What this is an opportunity for the Government to do is to take on board these recommendations when it introduces the legislation I’d encourage them to introduce it in a form in terms of Stage One and the revision that we have to Stage Two here so it can pass the Parliament very quickly.
JOURNALIST: Why shouldn’t it be seen that Labor has just capitulated?
ALBANESE: Because very clearly what we’re doing is putting forward a solution based upon the problems which are there. We have an economy that is slowing. We have said consistently that we support Stage One of the tax cuts. What we’re doing here is saying that with regard to Stage Two if the Government brings forward the Stage Two tax cuts to changing the threshold from $90,000 to $120,000, we think that would be a good economic policy based upon what the economy looks like in June 2019. What we’re also saying clearly is that Stage Three is a triumph of hope over economic experience and reality.
We don’t know what the economy will look like in 2024-25. To lock in $95 billion dollars without the Government providing for us the information that we’ve asked for, without them saying what are the cuts to services that might be required as a result of that $95 billion cut in revenue is not economically responsible. So what we’re doing here is being constructive. We’ll continue to do that.
One of the things that I’ve said that will characterise my leadership of the Labor Party is that I’m the Labor Leader not the Opposition Leader. I will work with my colleagues in an inclusive way, in a constructive way. You’ll note some of the reports that were in the media aren’t right. What we are doing is standing firm with regard to our position on Stage Three. But we’re also saying very clearly that we are prepared to act in the national economic interest and that’s what we’re doing by having faster tax cuts and concentrating them in the area where people will spend them because of the nature of what happens when you give someone on a lower or middle income a tax cut as opposed to a higher income.
JOURNALIST: So if the Government were to agree to this and defer consideration of Stage Three. What then is your position on Stage Three?
ALBANESE: Well we’ve said very clearly that it’s economically irresponsible and Stage Three to pass legislation now for which won’t occur until not just the next election but potentially the one after that. We’ve said very clearly that the Government can’t be even confident of its own position because if they were, they’d put forward exactly what the distributional aspect of those cuts would be. And they’d also put forward what are the cuts to services that might be considered necessary as a result of those changes.
JOURNALIST: With the Stage Two brought forward and you’re asking for infrastructure spending to be brought forward isn’t it? Isn’t that going to blow what’s already been projected surplus?
ALBANESE: No one of the things that we’ve made very clear and the reason why we’ve chosen and we’ve given you the costing based upon the Government’s estimates so it’s less than $3.7 billion of the bring forward to the current financial year. If it’s $3.7 billion in 2022 it would obviously be less than that. But what we don’t want to get in an argument with the Government over what the costings are so we’ve used theirs.
The second thing that we’re saying very clearly is we don’t want to be in a position either of an argument about surplus. That’s why that’s about half of what the projected surplus is at the moment. Now some of the bring forward as well; if you were to bring forward projects like the second stage of the Mackay Ring Road, the fifth stage of the Townsville Ring Road, a range of those projects that are ready to go, then what you would do all of that expenditure wouldn’t be in the coming year. But what you do is you create certainty, you create that pipeline of projects which at the moment, the infrastructure investment, some of which is off on the never never, the Linkfield Road one I used as an example; I mean that’s just absurd.
The people of Petrie and Dickson who just went through an election campaign where Peter Dutton and Luke Howarth were promising to fix this congestion choke point, I’m sure they didn’t think that if the Government is elected, re-elected, re-elected again and re-elected again someone will start to dig a hole. But that’s exactly what the Government is proposing at the moment. So there are a range of projects that can be brought forward whilst ensuring that the surplus is maintained that we can sit down with the Government and constructively work those issues through.
JOURNALIST: So you’re effectively still having a bob each way on Stage Three cuts aren’t you?
ALBANESE: Look I don’t know what part of a very clear position is unclear to you. We are saying Stage One we support. Stage two, if the Government agrees to this proposal we would support and facilitate the package and we would defer Stage Three because of the concern that we have over whether it is economically responsible.
JOURNALIST: Mr Albanese, so are you saying that bringing forward the tax cuts would actually mean there won’t be in surplus next year?
JOURNALIST: Lower surpluses?
ALBANESE: Well obviously if you bring forward the tax cuts the surplus would be lower. But the Government’s projected surplus on their own figures would still be there and of course if you stimulate demand it’s not a zero sum game as well. So you would have $3.7 billion is costing a maximum but it would be less than that. But in addition to that of course if you create more demand in the economy that has an impact on revenue.
JOURNALIST: What if they knock you back?
ALBANESE: Well we’re putting this forward very constructively. I would hope that a Government that frankly as Jim said, this is a Government that is searching for an agenda. We had the Prime Minister today; I mean quite frankly why bother to give a speech with the Prime Minister if you’re going to say two things – one, we’re going to cut red tape. Well I thought they fixed that. Remember the legislation that they brought forward which was changing where the commas were in in bills, changing a word here and there, adding and, adding within some of the legislation. I thought they’d fixed all of that. Remember the big days we had whole days of Parliament devoted to this. Now they’re bringing out again and this isn’t bringing it out from the top drawer this is bringing it out from the wastepaper basket because they said they’d fixed it all.
And industrial relations; look the big challenges of industrial relations in this country are twofold. The first is wages. The Reserve Bank of Australia is saying this. Every economist in the country is saying this and they don’t have a plan to deal with wages growth and the fact that that is a constraint on the economy. The second challenge of course is productivity. There’s nothing that the Prime Minister said today that would feed into productivity. Our proposal of a bring-forward of infrastructure is about productivity. That’s what it’s about, productivity in the economy. That’s one of the ways that you boost productivity growth, is by investment in infrastructure. And we’re not even coming here, our good faith is there from the fact that we’re not saying you must do this project or that project. We’re saying within the Government’s own commitments that they’ve made off into the future, what if those projects can be brought forward. There’s a range of them that could happen right around the country that would make a difference. Perth Metronet, the North-South Road in South Australia where at the moment South Australia’s getting a pitiful amount across the forward estimates of that investment. It’s around about $100 million they have across the forwards of new investments that they announced in the budget. Now some of those on the North-South Road which is a critical issue in Adelaide in terms of congestion and productivity, some of those could be brought forward very easily.
JOURNALIST: Do you think maybe people haven’t fully grasped just how far out the timeline is for some of these infrastructure projects?
ALBANESE: I think certainly I didn’t see any pamphlet from Peter Dutton or Luke Howarth saying if you elect us four more times we’ll dig a hole and fix the congestion that you are having trouble with every morning and every afternoon. The other thing that the Government says about when it comes to Stage Three of the tax cuts. I mean I’ve been listening to a bit of media in the past weeks and I’ve been doing a bit myself and Jim has as well and receiving a bit of correspondence. One of the things that people are saying to me is can you please stop the single threshold being from $45,000 to $200,000. That’s one of the issues that we get asked, do we support that or not. It’s already been legislated in 2018 that the 37 per cent rate will disappear and it’ll go from $41,000 to $200,000. The difference in Stage Three is to lift that from $45,000 to $200,000 still a single rate but to reduce the rate from 32.5 to 30.
So when the Government says it has a mandate for all of this, go out there and do a survey of Australians and how many of them knew that though when they voted, they were voting that in 2024-25 there would be that shift. And indeed that the 40 to 200 is already legislated. How many knew that? There were people in the gallery, in senior positions who write about economics who don’t seem to know that. So the idea that the Government has a mandate for way down the track, for something that we didn’t talk about during the election campaign. All they talked about was tax cuts on July 1 and it’s broken that promise. One more.
JOURNALIST: So you still want the PM break up the plan? You still want the PM to back up the plan?
ALBANESE: Well Stage Three should be deferred. It’s off in the never never. There’s no rush. He’s got till 2024-25 if he thinks he can keep getting elected. If he can get elected in 2024-25 he can implement, he can implement whichever regressive policies he likes. But today what the economy needs is a sort of plan that we’re putting forward constructively. This is Labor leading from Opposition but being prepared to partner with the Government and the crossbenchers to have constructive outcomes in the national interest because what Australians want is outcomes not arguments. The Government keeps looking for arguments. What we’re doing here is putting forward a constructive proposal that’s in the national interest. I’d ask them to back it in. Thanks very much.