SUBJECT: Tax cuts.
SHARRI MARKSON: First this evening my sit down interview with the Leader of the Opposition, Anthony Albanese. I started by asking him if he’ll support giving tax relief to Australians.
ANTHONY ALBANESE, LEADER OF THE AUSTRALIAN LABOR PARTY: Look we’re going to have a considered response. We’ve had one discussion already. We’ll be dealing with a whole range of issues on Monday, it’s our regular meeting. But we don’t have to make a decision on Monday. We’ll have a discussion. But the legislation won’t even be introduced until the following Thursday. So one of the things that I’ve said as Labor Leader that we will do, is to be inclusive, to give considered responses to issues that are before us.
MARKSON: Do you accept though that Scott Morrison does have a mandate for the tax cut package? And you could argue this is the only thing he has a mandate for. You know, this is the central policy that he took to the election.
ALBANESE: I accept that he has a mandate for the first stage of the tax cuts, because they come in on July 1. And we supported it as well. But of course many Australians voted for us at the election as well. Essentially it was …
MARKSON: Only one in three Australians voted for you at the end, actually, 41 per cent primary vote.
ALBANESE: More people voted Labor than voted Liberal at the election, by the way. We got the largest vote of any political party. So if we go down to that sure, together with the National Party and then other political parties – the LNP – that was increased. But the truth is that many Australians put their faith in us and in our agenda. Now we lost the election. So we need to reassess those issues. But the idea of in 2019 saying that you know what the economy is going to look like in 2024-25 is really a triumph of hope over economic reality. We know that even since the election, the Reserve Bank has cut interest rates because they’re worried about the state of the economy. They’re worried about the lower economic growth that we’re seeing, the weakness that is there in consumer demand. So certainly we need an injection and I have been calling not just for the tax cuts of stage one, but also calling for an increase in the infrastructure investment so that we bring forward some of that spending to create that demand in the economy.
MARKSON: If you say that more people voted for Labor than voted for the Liberals, do you think the Government has a mandate for anything out of this election?
ALBANESE: We have an election whereby people vote for political parties to represent their points of view. What we don’t have is an election whereby you simply give a tick to everything that the Government wants to do. And I think it is really hard to argue that if you went out there on the street and said to passers-by: ‘what will the tax rate be between $45,000 and $200,000 in the year 2025’; if you picked one hundred people if any of them could say: ‘well that will be the same rate and it’ll be decreased and they’re getting rid of the 37 cent rate and the changes that are occurring’, I’d be amazed.
MARKSON: Do you think people don’t understand what the Government was arguing for during the campaign?
ALBANESE: The emphasis that they had during the campaign was on the tax cuts coming in on July 1. We support those and we will vote for them.
MARKSON: The stage two tax cuts are scheduled to be introduced in this Parliamentary, you know within the next three years, before the next election. So would you support those as well?
ALBANESE: Not necessarily. They of course are due to come in, in 2022. And we don’t know when the next election will be.
MARKSON: But provided the Government serves its full term, they are scheduled to be …
ALBANESE: They’re scheduled to start to come in. We’ll examine those issues, but one of the things I’m quite disappointed by is that the Government hasn’t given us any information that we’ve asked for, which is reasonable. What is the Government’s modelling on what the impact will be on different income groups of the tax changes that they’re proposing? Will there be any cuts required? Because if you’re reducing revenue, money coming in, you have to reduce money going out as well, to some extent. Unless they argue that reducing the money coming in is somehow going to increase revenue by the same amount in some other way. So the Government needs to come clean about that. It’s hard for them to do that of course because there is such unpredictability in the global economy, as well as the softening that we’re seeing in our domestic economy.
MARKSON: In terms of the stage three when you say they don’t come in until 2024-25, isn’t it sensible though to plan for the tax revenue that you will have in the Budgets in four or five years’ time.
ALBANESE: We’ll have a big election between now and then. And that’s one in which I’m hoping there’s a different outcome. So the idea that you tie yourself to that is one that the Government’s arguing. That’s why we’re asking for the information from stage three of the tax cuts. We’ll give it consideration on Monday and we’ll certainly make a decision at some point between next Monday and the following Thursday, when we see the legislation.
MARKSON: When you say you’re concerned about what the economic climate will be in 2024-25 when the stage three tax cuts take effect; when the Global Financial Crisis hit, Labor’s response was cash handouts as a stimulus. Even if the economy does go south, surely the tax relief would similarly work, as a tax relief.
ALBANESE: We don’t know what will be required, that’s the point. That may well be that in 2025 you’re not looking to stimulate the economy. That’s a point about making these big macroeconomic decisions in terms of fiscal policy at a time when it’s so far in advance.
MARKSON: Economists have also argued, and I’m sure you’ve seen it, that reducing the tax rate from 32.5 per cent to 30 per cent for that $45,000 to $200,000 new tax bracket. That in effect is just a reversal of the bracket creep that’s happened over the past decade.
ALBANESE: But it’s doing more than that. And one of the things that it’s doing is removing brackets, it’s removing that mid-tier bracket that’s currently there. And it will mean that someone on $45,000 for the next dollar, gets the same marginal tax rate as someone who’s on $195,000 for the next dollar that they earn. Now there’s an enormous difference between someone who earns $45,000 and someone who earns $200,000. But under this proposal the marginal tax rate will be exactly the same. So that’s something that has some concern on our side and it’s one of the issues that we’ll examine.
MARSKON: From listening to your arguments it mainly seems that your concern is what the economic climate will be in six years’ time, rather than the fact that workers who are earning $200,000 don’t deserve a tax cut. Which was obviously the previous argument under Labor that this is the top end of town. Do you think workers who are on $180,000 do deserve tax relief?
ALBANESE: Everyone deserves it you want taxes to be as low as possible, but within this context, within the context that you can afford to pay for the services that you need to provide, because people’s income and standard of living isn’t just affected by their wage and the amount of tax they pay. It’s affected by whether their kids are going to a good school and whether that funding is available for that, if they get sick it’s affected by the health care they get at the local hospital. That also requires government funding. It’s affected by whether the infrastructure that they need to drive to work to earn those dollars or to get on a train or a bus to get to work to earn those dollars, how efficient that is, how productive that is.
MARKSON: Wages growth has been very sluggish.
ALBANESE: Exactly. And this Government has no wages policy, none. And you can’t have a wages policy by just looking at tax policy.
MARKSON: I guess what I’m asking you is, do you think that what Labor used to call the top end of town, you know workers earning up to $200,000, do you think they deserve a tax cut?
ALBANESE: I don’t regard someone who’s earning $200,000 dollars a year as being from the top end of town. I regard many people, of course in trades, many people who are earning a good living, who work. It’s a good thing that people all aspire to get a higher standard of living for themselves and their family. What it’s a question of though is, in terms of the economic policy that’s required, my concern is the Government is looking at tax, but what’s their policy on wages? What’s their policy on looking at the increased casualisation of work? The issue of insecurity at work? The issue of Labor hire, whereby you have two people working next door to each other, one on one income and one on $10,000 or $20,000 less, just because of the nature of the employment but they’re doing the same work. Those are issues that the Government isn’t addressing at all. The Reserve Bank has looked at the issue of wages and the fact it’s not keeping up with where it should be as being a real handbrake on the economy. And I’d like to see from the Government an economic policy that was about more than just this. They’ve just been elected for a third term. They can’t continue to not have a substantial agenda for the economy.
MARKSON: Just very lastly on this topic. You’ve obviously got your Shadow Cabinet meeting on Monday. There’s a suggestion in the paper today that you are taking, although it doesn’t sound like it right now, but a more pragmatic approach to passing the Government’s tax cut package in its entirety, whereas your Shadow Treasurer Jim Chalmers it was suggested is more ideological about it, and is really strongly opposed to passing that stage 3. Are you at odds with your Shadow Treasurer when it comes to whether to pass the Government’s tax cut package?
ALBANESE: Not at all. One of the things that’s happening here is that the Labor Party is having proper processes and proper discussion and proper consideration to issues. If that means that the media have got to somehow interpret things as being a difference between people without talking to – certainly no one spoke to me before that article was written – then that’s just not true. I am pragmatic as a politician. I look at issues based upon the circumstances where they are. And part of my pragmatism is looking at the impact some five, six years on, of what that will be. That’s part of my concern, is very pragmatic. As a matter of principle should we deal with issues of taxation policy, looking at issues like bracket creep and those concerns? Yes. But we should also look at the implications so that the first stage, because it’s aimed at the lower-middle income end; we know that immediately what will happen is people who are on $40,000 a year who have to pay less tax will spend each and every dollar. They don’t have a lot of savings, they’re surviving from day to day. And that’s why that will really feed into the economy and that’s why we’re disappointed that the Government isn’t passing those tax cuts prior to July 1. We offered to sit next week, it’s not too late. Scott Morrison can convene the Parliament next week if he wants to.
MARKSON: Graham Richardson said that if you don’t support tax cuts, what will you support? Aren’t you worried about being a new Opposition Leader who says to Australians you can’t get tax cuts that they voted for at the election?
ALBANESE: I’m worried about doing the right thing and we’ll be giving them the tax cuts that were due to come in on July 1, and we’ll be considering the other issues.
MARKSON: Thank you so much for your time, Mr Albanese.