Jun 24, 2019

Transcript of Radio Interview – 2GB Money News – Monday, 24 June 2019

SUBJECT: Tax cuts.

ROSS GREENWOOD: But of course the man who needs to make a decision is the Opposition Leader, Anthony Albanese who is on the line right now. Many thanks for your time, Anthony.

ANTHONY ALBANESE, LEADER OF THE AUSTRALIAN LABOR PARTY: How are you Ross? I’ll correct you there. You said it may well be an election before 2024-25. I’ll give you the big view – there will be an election well before then. There’s an election of course probably that will come between late 2021 and early 2022.

GREENWOOD: So given that, doesn’t the Government have an ability to make long term plans rather than just trying to plan between elections? Shouldn’t we now as a community be giving our heads up and looking to try and create and see the sort of tax system that we do want as a community?

ALBANESE: Well Ross, you are one of the best economists in the country. But even you do not know what the economy will look like in 2025. So what we are doing is responding to the economy as it exists now. It’s soft, growth is very slow. Wages are constrained. We have low consumer demand. We’ve had interest rate cuts where the Reserve Bank when they made that decision; I spoke about the need for policies other than monetary policy to do their bit. They spoke about bringing forward of infrastructure being necessary. And that’s precisely what we’re doing. We’re saying pass the first stage of tax cuts that are aimed at low and middle income earners because they’ll spend it. We also are saying that Stage Two which is the tax cuts that are due to come in in 2022-23; so they’re also due to come in by the way after the next election as well, but just after; we’re saying bring them forward so that every Australian therefore would get a tax cut immediately. So we bring forward the increase of 37 per cent threshold from $90,000 to $120,000. What that would do would give up to $1,350 for all those who are earning above $90,000 basically from $120,000 would get that full $1,350. And everyone with an income higher than that would receive that amount as well.

GREENWOOD: Am I right in saying they are relatively, in the whole scheme of what is $158 billion package, those tax cuts are not really the expensive ones are they?

ALBANESE: And that’s correct. The third stage is $95 billion for Stage Three that comes in more than five years away in 2024-25. So the idea that you know what the economy will look like then is in my view irresponsible given the uncertainties that are there not just in the domestic economy, in terms of slow domestic demand, but of course in the global economy. You have issues between the United States and China that could well have an impact on our national economy. You have a range of variables which are there. So to try to make the decision in this Parliament essentially for two parliaments’ time is in my view just a triumph of hope over economic experience and reality.

GREENWOOD: OK. But I’ll go back to that idea about the idea of the tax system we would like. Surely philosophically having a tax system which basically says a person is going to be taxed no more than 30 cents on the dollar between $45,000 a year and $200,000 a year, the flattening of those tax scales long term is good tax reform because it says to a person, look you can go out and have a second job, you can go out and work a bit hard to get some overtime if it’s there. And I know that a lot of families right now have pressure upon them because there is no wages growth so there’s more people working in the so-called gig economy than ever before and have taken on a second job. Surely that gives them an attraction to be able to go and take on that second job work a bit harder and try and get ahead a little bit?

ALBANESE: But Ross I’m sure you’re aware, in 2018, the Parliament has already passed legislation which will see a flattening of the tax rate between $40,000 and $180,000. So with 32.5 per cent, that’s what’s been carried. What we’re dealing with; Stage Three is essentially a lifting of that up to $45,000 to $200,000 and a reduction of the rate. So a slight change in where it cuts in and a reduction from 32.5 to 30. So there’ll be a big gap between 30 per cent and 45. Now we can debate that in terms of I think that leaves the tax scales at an unusual level but that’s the decision that that the Government’s made and the Parliament’s already carried that legislation …

GREENWOOD: … because I think here’s the thing. I mean it all goes back to the issue of who’s wealthy and who’s poor in the country and who’s well off and who deserves a tax cut and so forth. But a person if they’re living in the city and they’re earning $150,000 a year and even if it’s a combined income between a family, those people in our major capital cities right now are not necessarily what you’d call the top end of town. Even somebody earning $200,000 dollars a year can’t be described as being in the top end of town. Because my observation is that a lot of tradies would be in that particular situation right now.

ALBANESE: Yes, that’s exactly right. And that’s why the proposal that we’re putting forward and be very clear, we are putting forward a proposal that would see those people under the bring-forward of Stage Two receive a tax cut right now. The Government is opposing that. You’re saying that that’s a bad idea.

GREENWOOD: Yeah but I understand why they’re opposing that because they’ve also gone to the electorate saying that they can get the Budget back into surplus. If they bring forward those tax cuts, their surplus which is already relatively razor thin is going to be basically eliminated and as a result you’ll jump all over them for not having delivered the surplus.

ALBANESE: That’s not right, Ross. Their own figures estimate that the change in terms of category Stage Two, that we’re asking to bring forward, has a cost at 2022-23 of $3.7 billion.

GREENWOOD: Yes.

ALBANESE: So it’s around half of the forecast surplus in the current financial year. But of course that’s in 2022-23. So the figure would have to be considerably less than that. In the Government’s own forecast of this change that they’re proposing that we’re saying should be brought forward, it increases by about $400 to $600million in each subsequent year. So the figure would be considerably less than $3.7 billion. We have been very conscious about the Government’s forecast surplus in terms of which is around about $7 billion in this current year. So it wouldn’t impact on that at all but what it would do, Ross is this is; it would allow for stimulus in the economy in a practical way by having the category one, Stage One tax cuts immediately and Stage Two as well at a time when it is needed. And by it being that flat increase effectively of $1,350 at the moment. And we’re saying Stage Three, you don’t have to pass Stage Three before 2024-25, so we can continue to discuss those issues. But what’s needed in the economy right now is stimulus. And this would do it, as well as we’re arguing there needs to be a bring-forward of some of its infrastructure investment because that’s all off on the never never.

GREENWOOD: Okay but the fear is at the moment though the fear at the moment though is it’s an all or nothing thing. So pick up Joel Fitzgibbon, one of your shadow ministers a senior Shadow Minister on ABC Radio talking about this. This is the thing that would worry people right now.

JOEL FITZGIBBON: If we can’t force the recovery and the Government wrongly insist on leaving the package as one, our only option is to support all of it or support none of it. And again the latter option would deny low and middle income earners much needed tax relief.

GREENWOOD: See that’s a worry for people as they get none of it simply because you’re opposing it. And that would be not the objective anybody would want.

ALBANESE: Of course. And that’s why the Government needs to act like a government and stop acting politically on everything. They need to actually govern Ross and they need to manage the economy. I mean they don’t have a plan for economic growth and they don’t have a plan to boost productivity which is going backwards at the moment. They don’t have a plan to deal with wages. They need to actually act like a government and stop …

GREENWOOD: … but don’t they have to work with you? But Anthony isn’t the point here and isn’t the election result all about this from both major political parties’ point of view? Don’t you have to work with them to try and marginalize the minority parties and the independents? Don’t the two of you have to work together? Isn’t there actually a faith of goodwill from the community at large at the moment to have the two major parties work together for the good of all Australians? Isn’t that what this should be all about?

ALBANESE: Absolutely. It should be about that. And that’s the basis of us putting forward a constructive proposition today. We haven’t said for example on the infrastructure bring forward we demand that Project X be brought forward. We’ve said that we’re prepared to you know; the Government should look at its own proposals that it has put forward. I used today in the press conference for example of Linkfield project in Brisbane in the northern suburbs which people just went through an election campaign. They would think that it runs between Dickson and Petrie, literally between those two electorates where government members were re-elected, Peter Dutton and Luke Howarth. They committed to that project as did Labor. The difference is, when you look at the detail, that’s due to commence in 2027. Now under the Government’s own details that we got out of Senate Estimates. Now I doubt whether the good electors of Petrie and Dickson if they change their mind because the Government was also supporting a project that we’d announced support for, thought that the Government needs to be elected for four more terms before they dig a hole.

GREENWOOD: Right. Final one for you. I just want to leave you with one thing tonight. One thing I want to leave you with is the Prime Minister today talking again about these tax cuts he’s what he’s had to say.

SCOTT MORRISON: Labor’s primary vote at the last election over a month ago was their lowest in a hundred years. If Labor can’t hear a one-in-a-hundred year message that Australians want to keep more of what they earned by endorsing our full tax plan as we presented to the Australian people, then they just don’t get it.

GREENWOOD: What Scott Morrison would say Anthony Albanese is that at the moment you just don’t get it.

ALBANESE: Well how many people out there do you think voted for a proposal to come in in 2024-25. And I’ll say this about the Prime Minister; he campaigned saying there’d be tax cuts coming in on July 1. Guess what, the Parliament isn’t even sitting before July 1 and that’s as a direct result of his decision to have the return of the writs this Friday when basically they could have done it much earlier and we could have had Stage One of the tax cuts in place on July 1. That’s what people were debating during the election campaign. We are arguing for a proposal that would see all people get an increased tax cut than what the Government has originally proposed. And I think not only is that what people want, it’s what the economy needs. And you have to be responsible when it comes to economic management. Labor is being responsible with this proposal.

GREENWOOD: Tell you what, good to have you on the program we’ll speak – there’s plenty more I want to talk to you about tonight we’ll save that for another time. The Opposition Leader, Anthony Albanese, we appreciate your time.

ENDS