Subjects: South Australian election, tax reform, superannuation.
HOST: Christopher Pyne, Anthony Albanese join us for Two Tribes. Good morning gentlemen.
CHRISTOPHER PYNE: Good morning gentlemen. Good to be with you.
ANTHONY ALBANESE: Good morning.
HOST: Now we are going to kick off with you if we can Chris. It has been almost 20 years since your lot were in power, the Liberal Party, here in South Australia. What has kept them out of power for so long and why do you think they can win this time?
PYNE: I think we will win this time because Steven Marshall has done the work necessary to put the policies together, to get the team together, to unite the team in a way that we haven’t been united in decades. It has been a great testament to his strength of character. I think we will win because of that, because we offer a real alternative, a real change from what has been a lacklustre government under Jay Weatherill. They’ve run a lacklustre campaign. You almost get the sense they are desperate to hand over the keys of government to someone else after 16 years. Sixteen years is a long time for one government to be in power and they look tired. So I think we will win tomorrow, I don’t think Nick Xenophon has come up trumps. He hasn’t got any policy, his candidates are unknown, he has run a stunt sort of silly campaign about, you know, jingles and laughs and I think people take it more seriously than that. So that is why I think we will win tomorrow. We have got the real plan for real change and I think Labor is desperate to hand to somebody new to get a change.
HOST: What do you make of it Albo? You are good mates with Jay Weatherill. You guys have been very close. You are in the same faction, the Left faction of the Labor Party. You would be collaborating at the moment to try get the local boy Mark Butler up as Labor Party President against the Right’s Wayne Swan. Would you be sad to see Jay go?
ALBANESE: Well Jay Weatherill deserves to be re-elected tomorrow. He leads a united team, a team with a vision for South Australia that is being implemented – growing the economy, dealing with the issues that we have had with the car plants being closed at the behest of the Federal Liberal Government and the fact is that Jay has managed that transition. Job creation is his priority. He also has a plan in my area of transport including the rollout of the AdeLINK tram extensions throughout Adelaide and he has a vision for the state. I I think the fact that Nick Xenophon has emerged as the third force in the South Australian election says that people have had a look at Steven Marshall and the Liberal Party and don’t see them as an alternative government. And anything can happen tomorrow of course. This time last election campaign Steven Marshall endorsed the Labor Party. He called for a vote for Labor.
PYNE: That is so lame. Honestly.
ALBANESE: We will see what he does today.
PYNE: Is that the best you’ve got?
ALBANESE: Well it is pretty lame. Steven Marshall is lame.
HOST: All right.
PYNE: … a four-year old story. You’ve got nothing better.
ALBANESE: He is a lame leader limping because he’s got nothing better.
HOST: Let’s get you to stick to your knitting and get back to a federal issue and for that Albo we return to you because Bill Shorten put up a policy this week regarding closing the loophole reading dividend tax imputation credits. So much debate and discussion has come out of this regarding whether this is a loophole, whether this is something that people have simply planned retirement around and the goalposts have been unfairly moved on them. But at its heart I think is a simple question: do you believe that people who are self-funded retirees are rich?
ALBANESE: No and no one is saying that. What we are saying here is that this is a loophole. You yourself described it as that in your introduction. Dividend imputation was about offsetting tax liabilities, not cash payouts. And the big change that has happened since, well there have been two changes; firstly Labor introduced dividend imputation to avoid double taxation in 1987. It was never envisaged that there would be tax payouts. That change was made in the early 2000s. But since then income from superannuation is tax-free for those who turn 60 or are older. So what has happened is that a cost that was originally $500 million to the Budget is now heading towards $8 billion to the Budget. That is more than we spend on public school funding at a federal level right around the country in every single school.
HOST: Is it possible though it can be good tax policy if we were starting from ground zero, but not fair when you consider that people have built retirement planning around this, because for those that don’t have other investment income to offset their situation and they lose the benefit of franking credits, they suddenly go from a zero percent tax rate to 30 per cent do they not?
ALBANESE: Well of course in a range of areas across the board you don’t have people who are paying less than zero tax. That is the case for the entire tax system and that’s why we are the only country in the OECD that does this. The Government itself considered doing this in a Treasury paper in 2015. This is Government that has tightened the assets test, which kicked 90,000 pensioners off the pension. This is a Government that is removing or trying to remove the energy supplement. This is a government that has committed to increasing the pension age.
PYNE: I am still here by the way …
ALBANESE: They have all of those changes …
PYNE: … if you want to give me a go.
ALBANESE: … running through.
HOST: You are up next Chris.
ALBANESE: Stop whinging, Christopher.
PYNE: Well you know, really.
HOST: Come on Chris, your turn.
ALBANESE: Well you have got nothing to say because it is Labor …
PYNE: This is like Mao Zedong’s last speech to the Chinese Communist Party national convention.
ALBANESE: It is Labor that once again is always leading the debate in this country. You are just sitting in the bleachers at Adelaide Oval watching.
PYNE: … four hours.
HOST: He was being very polite Albo. He gave you a good run.
ALBANESE: You have forgotten you are the Government.
HOST: What do you make of it all Chris?
PYNE: Well this policy makes the beach scene in Saving Private Ryan look like a dance party it is such a disaster. The truth is there are 1.1 million Australians, 610,000 have got incomes of under $18,200 a year who are going to be hit by Bill Shorten’s tax grab. Ninety-seven percent of the people affected have incomes of under $87,000 a year. Now Bill Shorten is trying to pretend that this is a soak-the-rich policy. It is actually the opposite. Five thousand people out of the 1.1 million have incomes of over 180 grand a year so we are looking at a massive hit on low-income earners, self-funded retires, pensioners who can’t change their position. They can’t come out and work more. They can’t come out and do extra hours or shifts. They are stuck on those incomes. They planned those incomes their whole lives and Labor’s come along and said: “No, we are going to pull the rug out from under them”.
ALBANESE: I’ve got a question for you Chris. Are you talking about low incomes or low taxable incomes?
PYNE: We are talking about people on low incomes.
ALBANESE: Low taxable incomes is what you are talking about.
PYNE: You go out and argue that. That will be good.
HOST: Hey Albo. Albo. Sorry. I’m jumping in. Albo, I reckon one big problem that you have got and it makes you guys look hypocritical on this: when John Howard quite rightly shut down the old and unsustainable and obscenely generous Parliamentary Super Scheme in 2004, talking about, you know, the super that you guys are entitled to because you were elected prior to that date, they didn’t do it retrospectively. They created a new, much more modest superannuation scheme for MPs like my wife who were elected that year. So you covered your own backsides by not making it retrospective to MPs who were already in the Parliament. If it is good for the goose why isn’t it good for the gander?
ALBANESE: For you to raise Parliamentary super in this context is rather bizarre.
HOST: No it’s not at all. It’s exactly comparable.
ALBANESE: No. No it’s not and you know it’s not. It’s a cheap shot.
HOST: It’s not a cheap shot.
ALBANESE: Defined benefits schemes are defined in the law. There have been cases that say that you can’t change defined benefits schemes because of essentially the contract of employment.
HOST: All right. I reckon a lot of listeners would regard that as convenient.
ALBANESE: There is a whole range of case law along there. Well so is having a shot at politicians David, convenient for you frankly. The fact is …
HOST: It’s not a cheap shot.
HOST: The point of the question was about pulling rug from beneath people that have made plans, who have planned under a certain set of rules.
HOST: The argument in 2004 for MPs …
ALBANESE: Let’s be clear here. The rules were set in 1987 by Paul Keating who introduced imputation and it was never, ever envisaged that there should be cash payments. Then when the change was made in terms of cash payments being allowed by the Howard Government what they then subsequently after that did was they changed the issue of – that’s why I raised the issue of low income as opposed to low taxable income. Because income from super is tax-free after the age of 60 what you have had is in particular some self-managed super funds with balances of well over $2.5 million, which is where 50 per cent of the funds here, of the revenue here, will come from – the top ten percent of funds. That is where overwhelmingly the revenue from this change will come.
PYNE: So the 1.1 million individuals don’t matter?
ALBANESE: And you have got to make, you have got to make your decision in terms of, I mean this is a Government that is proposing measures like increasing the working age up to 70, like removing the Energy Supplement – a range of measures …
HOST: But Albo, the point I was making though, it wasn’t a cheap shot at politicians, what I am saying …
ALBANESE: Of course it was. But that’s fine.
HOST: No, no no …
ALBANESE: But of course it was.
HOST: No hear me out. Hear me out. What I was saying was the argument at the time in the Parliament in 2004 was that it would be unfair to retrospectively change …
ALBANESE: No it wasn’t.
HOST: … superannuation for politicians because it was their nest egg.
ALBANESE: No it wasn’t. Well you are just wrong.
HOST: Mate I covered it. I was there.
ALBANESE: You are just wrong.
HOST: I remember talking to politicians about it saying we are not going to change the nest egg for existing MPs because it would be unfair.
ALBANESE: Well you are just wrong. It was done because there was advice that they couldn’t do that.
HOST: Right. Ok. Well I reckon it is going to be a hard path – the sell job.
PYNE: You two seem to be getting along well.
HOST: It wasn’t a cheap shot. I remember the argument. I remember the discussion around it at the time.
ALBANESE: The same argument is if you got out there and say do politicians earn too much money, do a survey and say should we be paid $200,000 a year or $100,00 a year with your listeners and guess what, 99 per cent would chose the lower amount.
ALBANESE: We know that is the case.
PYNE: The bottom line here is that Bill thought he was going to get a cheap shot attacking the so-called soaking-the-rich policy and it has completely blown up in his face.
ALBANESE: That is not right. The bottom line is this simply is not affordable.
PYNE: Just before the Batman by-election. Just before the Batman by-election and the South Australian election. I mean this is like Jay’s plan to increase the GST 10 percent.
HOST: That was also Malcolm Turnbull’s plan for a while Chris. Be careful going down that path. We are going to have to leave it there. It’s (inaudible) for you to get that fiery today. That came out of nowhere.
HOST: I must say they have made a powerful argument for Two Tribes to appear on a Friday every week. Clearly nerve endings are a little frayedat the end of the week in Canberra.
HOST: I’ll say. Sorry Albo.
HOST: Christopher Pyne, Anthony Albanese, Two Tribes. We do it once a week, usually on a Wednesday. Sometimes it is in fact boringly civil.
HOST: Not today it wasn’t.