JOHN LAWS:
Couple of things that you should try and avoid, one is taxation and the other is religion. Well, we've done religion and I've got to say that I couldn't think of anything worse than spending two days talking about taxation, but for some people it's going to be like feasting at a banquet.
Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten could talk the dry old stuff of tax until the sun goes down because he is extremely knowledgeable in that area. In fact, that's probably what's going to happen over the next two day Tax Forum, being held in Canberra this week.
There will be much talk about Australia's two-speed economy and the world's best treasurer promises to deliver a budget surplus by 2013, can Wayne Swan deliver? I don't know, only time will tell. In the meantime, the very loyal deputy Bill Shorten will be explaining the finer points of the Federal Government's tax policy and he joins me now, Bill Shorten good morning.
BILL SHORTEN:
Good morning John
LAWS:
Why no Carbon Tax on the agenda?
SHORTEN:
Because I think we had an amazingly long discussion about how we tackle climate change and carbon, I think it's been one of the most canvassed issues in Australian politics in recent years. There's no need to re-invent the wheel on that issue.
LAWS:
OK, but have we come to any conclusion on it?
SHORTEN:
Well, legislation will be debated in the Parliament next week.
LAWS:
So we still haven't come to a conclusion?
SHORTEN:
We'll vote on it, hopefully next week or the week after. So it has been a long journey, really from 2006 but I do believe the end is in sight on that matter, at least in the House or Representatives.
LAWS:
It's the most significant tax reform since the GST and it's one of the harder policies to sell since the GST, I mean, Are you only closer to having wide acceptance of that carbon tax or is it still a ball and chain around your leg?
SHORTEN:
I think the issue with tackling carbon pollution is that whilst it is a big reform, it's a long term reform. I think what will happen on the first of July next year, when the fixed price on carbon pollution is put in place, is that people will realise it isn't quite the dramatic change on day one that people have been led to believe it is. I think it will ease much more easily into the economy with gradual change than what some in politics have been accusing the Government of.
LAWS:
I've been hearing claims that businesses can make literally multimillion dollar claims for tax relief on takeovers, a loophole that could potentially put a hole in the budget billions of dollars. Can you explain in plain English what all that's about?
SHORTEN:
I can do my best. This current debate has its origin in about 2002 when there was a debate by the Howard Government which was bipartisan that we would at changing the right to future incomes in corporations, or in other words as companies consolidate there is a process of allowing tax losses of companies as the merge to be offset against other companies and so make it easier for companies to consolidate.
LAWS:
Is that legal?
SHORTEN:
Well the proposition was first put forward, as I said, in the Howard Government, then it was put into law in the first term of the Labor Government. What we found pretty soon after putting the law into place is that some accounting firms and some companies seem to be interpreting the law much more widely than was ever intended by the Government and by the initial reform.
LAWS:
Yes but this has taken place under a Labor Government.
SHORTEN:
Yes. So within several months on the changes being put into place, what we've then done is just ask the Board of Taxation to review how this law is working and they've come back and said there are problems with it and here is a range of options. So since April, May this year I've been meeting with stakeholders, the Treasury department and the Tax Office about how we fix this up, because there is no doubt that the law which was put into place is now being interpreted very widely and very generously and we're seeing the potential for our corporate taxation to be dramatically cut and we just want to make sure that companies pay their fair share of tax. It is complicated but we will fix this issue.
LAWS:
President Obama is talking about tax reform by introducing much higher taxes for the rich people. Is that a true Labor Government should also be considering?
SHORTEN:
Well I think that when you look at what a true Labor Government should do, we should be increasing the retirement savings for people, that's why are what we're proposing to do by raising superannuation from nine per cent to 12 per cent.
LAWS:
Yeah, that's good.
SHORTEN:
Well that's very good, our opponents are opposing that. We're also proposing to share the prosperity of the mining boom, the minerals boom, it won't go on forever but you've got some companies who are making record profits and one of the problems with that is we're seeing the dollar has been raised in value because of the value of our mining commodities on the world market.
LAWS:
Yeah, but isn't it a good thing when Australian companies make record profits?
SHORTEN:
It is, but the problem with it is that the dollar is rising, has risen to such a point that we've got other parts of the Australian economy who a suffering as a result. What I mean is, that if you're running educational services in Australia, if you're running tourism in Australia, if you're running manufacturing in Australia then it does employ literally millions of people. The high dollar means that it's cheaper for people to go overseas, it means it's cheaper for overseas students to go to other nations, it means it's cheaper to buy imports rather than our own manufactured goods.
So what we have is a two-speed economy or a patchwork economy, what we're seeing as a result that we need to help the rest of the economy cope with the prosperity of the mining boom so we're proposing a Mining Resource Rent Tax which will allow, as a result of that tax, a reduction in the corporate rate of tax, which will allow increases in superannuation, which will assist small business.
LAWS:
Okay, will there be increases in personal tax for those higher income earners?
SHORTEN:
Well if you talk about people who earn over $180,000 a year, no. The issue is of course, what we are doing is we're trying to address the imbalance for people who don't earn that sort of money, that's why we are abolishing taxation on superannuation for people who earn less than $37,000 a year.
We're proposing, as part of the package of the carbon tax, to increase the tax-free threshold to $18,200, so we're seeing improvements at the lower end of the income market and that's where this Government's efforts are going. We have to be careful about just simply saying that we're going to attack one section of the economy ...
LAWS:
I'm sorry we're losing you on that phone.
SHORTEN:
Sorry I don't know why that is, I'll speak more loudly. We need to be careful about playing the politics of class envy.
LAWS:
Well I'm aware of that and that's why I'm asking the question. Are the high income earners going to be hit harder?
SHORTEN:
We're not raising personal income taxes, no.
LAWS:
At all?
SHORTEN:
That's right, we're not doing that in fact something which of course John, you've been in the media for many years, good news doesn't sell newspapers like bad news. What we've done is we've reduced the personal income tax levels of people quite significantly... If you earn $30,000, you're paying 26 per cent less than in 2007.
LAWS:
Is that correct? 26 per cent?
SHORTEN:
Yes that's correct. And if you have a look at the reductions, if you're on $50,000 you're paying $1,750 less tax than you were four years ago.
LAWS:
Okay, the payouts and salaries of some of our top CEO's cause a hell of a lot of conflict, Qantas for example, or Coles, businesses are crying poor and looking for tax breaks but at upper management level, it's the same old story no matter what. Do we need to encourage more corporate conscience shall we say?
SHORTEN:
Well I've always believed from when I was a union man to being a Labor representative that when you look at some of the very high salaries CEO's pay themselves, I can't see the case. Now that's doesn't mean we pass a law and ban this, but I do wonder if share holders are getting value. I just don't believe that someone's worth, you know, $10 million to the average wage in their company of $50,000, I think those amounts are very large, but how you resolve that? It has got to be the common sense of the business, share holders and boards.
LAWS:
Can you tell me, have you learnt a great deal from the world's best Treasurer?
SHORTEN:
I think Wayne Swan adheres to the, I've never heard him say this but he adheres to the Winston Churchill's motto of never never, never give up. He's determined to get us back into surplus and I think it is important, what people expect in politics is that you try and navigate a future. People don't expect politicians to do everything for them but they do expect them to have a reasonable idea of what's happening in the next 10-20 years and I know that Wayne Swan focuses on the long term.
LAWS:
Something totally away from all this that we agree on is, I'm sure we agree on a lot, but something I know we agree on is the dangerous dogs issues, is any progress being made on a national front there?
SHORTEN:
I believe that the Attorney General and the Minister for Justice have followed up and contacted all the states. I know the Victorian Government has put legislation into Parliament...
LAWS:
They have, yeah.
SHORTEN:
So I can get an update for you but I know that having spoken to the relevant Federal Ministers that they've been raising it with their state colleagues.
LAWS:
'Cause I think it's a very good thing, it's the only way to go, it's stupid to have it any other way.
SHORTEN:
Oh there's no question, you don't need these... You just don't need an animal which has a three tonne pressure on its teeth as a household pet, I can't see the case for it.
LAWS:
Well I don't think there is one Bill. Okay, good to talk to you again, thankyou very much for your time and I'm sure we'll get to talk again soon, I certainly hope so.
SHORTEN:
Indeed John, thank you very much.