Patricia Karvelas:
For the government’s view, I want to bring in the Assistant Minister for Productivity, Competition and Charities, Andrew Leigh. Andrew Leigh, welcome.
Andrew Leigh:
Thanks, Patricia. Great to be with you.
Karvelas:
So, a lot of ideas around. I want to start with the Productivity Commission’s ideas around company tax. Business, they’re not great fans of it. They put out a joint statement last week saying that this idea of increasing taxes for the 500 top companies was unacceptable and it should be about lowering taxes. Is it dead on arrival?
Leigh:
Well Patricia, as you wrote this morning it’s important that we ‘ventilate big and radical ideas’. There is an appetite in the community for boosting productivity. As someone who’s been a productivity nerd for decades, I’m enormously excited by the fact that this productivity conversation is happening. And that the Economic Reform Roundtable will be the focus for important ideas that will potentially boost our productivity growth rate for decades to come. We’ve encouraged people to bring their biggest ideas to the roundtable, and we’re not going to engage in a kind of rule‑in‑rule out game in the lead‑up.
Karvelas:
Oh yeah. Look, I’m not asking you to rule it out, I’m just asking you to engage in perhaps the idea itself. Do you think it’s an idea – you’re somebody – you’re an economist, you see what they’re doing here; do you think the idea has merit of actually, you know, radically reducing the tax for a lot of businesses and then increasing it for these top 500?
Leigh:
I think you can’t talk about productivity without having the tax conversation. Whether this specific idea is the right one or not will be a focus for the productivity roundtable. But I really welcome the fact that people are looking to engage in ideas that aren’t just tweaks, but big generational reforms, reforms that future generations will look back to and say, ‘thank you for putting Australia on a better reform path’.
I find it pretty disappointing that the Coalition’s engaging in this fearmongering. After all, Sussan Ley is part of a party that went to the last election promising to raise income taxes on every Australian taxpayer. So, running scare campaigns in advance of the Economic Reform Roundtable really ought to be beneath the Coalition.
Karvelas:
Well, I think their view is that there shouldn’t be a net increase in tax, and that some of these ideas would lead to that. What’s your view on that?
Leigh:
Well, look at what we did in the last term. We put in place important multinational tax reforms to ensure that multinationals paid their fair share, and we cut income taxes for every Australian taxpayer. That’s our record, and they’re the sorts of principles that will guide us as we go forward to try and boost the productivity speed limit of the economy through reforms that invest in individuals, in infrastructure and in institutions.
Karvelas:
And that idea is just one of many. There’s also the ACTU’s ideas, many ideas there, but one of them, of course, to revisit negative gearing and capital gains tax concessions. Do you think those need to be debated again?
Leigh:
I really appreciated the point that Sally McManus made, which is that it’s vital that we have a housing system which ensures that essential workers can live near where they work. The Albanese Labor government is focused on a series of supply side housing reforms. Some of the biggest investment from the Commonwealth standpoint in housing but also working with states and territories to undo the thicket of regulations that slowed down housing approvals. Clare O’Neil has been very focused on the ambitious 1.2 million home target, and predominantly our focus there has been on supply‑side measures.
Karvelas:
Yeah. So, I’m going to try again. Do you think this idea of, you know, trying to really limit negative gearing should be considered not just for housing and the supply of housing but actually for other reasons – like intergenerational equity?
Leigh:
Intergenerational equity is absolutely fundamental, Patricia. As is ensuring that people have access to homes near where they’re going to work.
I’m not going to rule in or rule out a particular policy. But I’m excited by the fact that the ACTU, led by Sally McManus, is engaging in this important conversation about ensuring that we have more affordable housing.
The government’s got a big agenda already on housing. And we understand that it’s important to deliver on that reform for the intergenerational issues that you talk about, as well as the practical challenge of ensuring that Australians can afford a home near where they work.
Karvelas:
So, before the election there were a lot of questions about negative gearing. The government said that you weren’t interested in looking at it, but now that’s changed. Why did it change?
Leigh:
Well, what we’ve said is that we’re open to people bringing their ideas. I’m not changing the government’s position today Patricia. I’m simply welcoming the ideas as they come from business, as they come from the Productivity Commission, as they come from the union movement. Nothing more complicated than that. Recognising the value of having an ambitious discussion around the Cabinet table. There will be 23 representatives there all the way through the 3 days, with a range of representatives brought in to add their expertise to particular sessions.
Treasurer Chalmers is a reforming Treasurer, very much in the Labor legacy and is looking not just to tweak but to transform through this important national conversation.
Karvelas:
There’s a few other things I’d like to hear your views on. The Productivity Commission suggested also lowering the threshold for the Safeguard Mechanism today too. Is that something that you think should be considered as part of implementing a 2035 target?
Leigh:
Well, the Productivity Commission’s report is really focused around the importance of getting that energy transition right. Whether they point in particular to the importance of getting more renewable sources into the grid, which has been a big focus for Chris Bowen. We take their ideas very seriously, and their contribution is an important one as we shape up the climate policies.
But again, as with housing, this is an area where we’re already doing a power of work. Aiming to move the renewables share in the grid from just a third at the start of the decade to four‑fifths at the end of the decade. One of the biggest industrial transformations in Australian history.
Karvelas:
One of the big issues at the last election was this debate around working from home. The Victorian Government is trying to legislate 2 days of working from home. Do you think the Victorian Government is overstepping in this space? That it should be, you know, something that businesses negotiate with their workers?
Leigh:
Well, let me bring it back to productivity, which has been something of a focus of our conversation today. Nick Bloom, who’s really the international expert on working from home, talks about this as potentially a next big productivity driver. He points out that working from home can enable boosts in the number of workers who can engage, including those with caring responsibilities. It enables a better use of the capital stock through allowing more residential dwellings in inner cities because of less need for office space.
He points out that people don’t like commuting and it reduces commuting times. And it’s also reduced congestion on our roads. So, it’s got a lot of potential to make a difference, and in large part as you say, that’s going to be worked out between employers and employees. But Australians voted very clearly at the last election against the Coalition’s policy of shutting down working from home for a large section of Australian employees.
Karvelas:
Well, that debate was about the Commonwealth public service. This would be a state government mandating it. So you think it’s okay for state governments to mandate it?
Leigh:
Well, they’ll do what they’ll do. I certainly know though that if you ask economists about working from home there’s a lot of enthusiasm about the productivity potential.
In the United States, we’ve seen working from home approximately quintuple to about a quarter of all working days are now working from home. And that’s contributed to an increase in labour force participation, particularly among mid‑aged women. And so one of the possibilities that economists are looking at is that mums are now able to better combine work and family. That means that the cost of having kids doesn’t fall so disproportionately on women. That’s a good thing for gender equity as well as for productivity.
Karvelas:
Yeah, they’re all the objectives. But again, don’t you think that should be negotiated between workers and, you know, employers at an individual basis?
Leigh:
Well, it is, Patricia, and what state governments…
Karvelas:
Not if it’s mandated by a state. I mean, if that happens, doesn’t that complicate things?
Leigh:
Well, this is what they’re doing with their own employees. I’ll leave that to the Victorian Government to decide what’s optimal. We found within the Commonwealth public service that it allows us to bring in workers who might not otherwise have been engaged. It allows you to free up land in order to deal with the important housing supply issue. It’s got a lot of productivity benefits.
Yes, for people who are getting trained, starting in their careers, then a lot of that face‑to‑face interaction can be valuable. And so employers and employees will work together to get the balance right. But I don’t think anyone imagines that we would boost productivity if we went back to the working‑from‑home rules that existed pre‑pandemic.
Karvelas:
No, I think those days are long gone. Thank you so much for joining us.
Leigh:
Thanks Patricia.