KARVELAS:
I'm joined now from Canberra by the Shadow Assistant Treasurer Andrew Leigh and from Melbourne by the Parliamentary Secretary to the Treasurer, Kelly O'Dwyer. Welcome to you both.
O'DWYER:
Hi Patricia.
LEIGH:
G'day Patricia, g'day Kelly.
KARVELAS:
To the Treasurer's taxation discussion paper first: there's no prospect of an agreement on GST changes, but possible bipartisan support – I'm hearing noises, Kelly O'Dwyer – on removing tax breaks for superannuation contributions. Am I understanding the noises and the hand-signals right?
O'DWYER:
It's only been a day since the paper has been released, so I think it's too early to rule anything out Patricia. I think that one of the key things we want to do with this tax white paper is make sure we have a proper discussion around whether our tax system is currently fit for purpose. We know that in terms of the revenue that is raised at the moment, around 70 per cent in Australia is raised from personal and company income taxes. That compares to just over 30 per cent of our OECD competitors on average. So there's a lot of work for us to do. We know that when it comes to company tax, we've got 800,000 companies in Australia and yet 12 companies pay a third of all those company taxes. There's around 125 taxes that are paid at a state, territory and federal level but of those, just 10 taxes raise 90 per cent of the revenue.
KARVELAS:
It seems one area where you could get immediate support from Labor – and you always talk about this lack of bipartisanship – would be the tax breaks at the higher end for super. So why not do it?
O'DWYER:
What we're looking at is making it simpler. The long and the short of it is making it simpler, making it fairer and making sure that what we put in place is going to stand the test of time to make us internationally competitive. Because we are in a globally-competitive marketplace right now and we need to be competitive on personal income tax rates and company tax rates. On superannuation...
KARVELAS:
Let me just give Andrew Leigh a turn. Or actually, what were you just about to say on superannuation? That you need to reform it?
O'DWYER:
On superannuation, we're very interested in seeing what people have to say about the system. We know that there's been some views already put forward. But it can't just be a matter of simply raising taxes, which is what we often hear from those in politics who are very keen to raise taxes. We need to look at how we can also lower taxes - personal income tax rates, company tax rates. Because that is what is going to make us competitive.
KARVELAS:
Andrew Leigh, what do you think? I know that Labor supports superannuation reform, but when are you going to consider the GST? You keep saying you're playing the rule-out game on the GST, but so many significant business figures are saying this needs to be looked at. Why isn't Labor prepared to do it?
LEIGH:
Patricia, the tax debate is a broad one as Kelly has outlined. We need to make sure that we're looking at where we sit relative to the rest of the world. Our consumption tax is lower than the OECD average, which you've raised; our income taxes on the average worker, low-wage worker and high-wage worker all sit below the OECD average. It's our company tax that sits a little above the OECD average. Chris Bowen has talked in the past about an aspiration to bring that company rate down because ultimately the company tax falls predominantly on workers, and we're able to boost total economic growth if we can get that down. But we also need to make sure we've got equity there. Public finance economists talk about equity, efficiency and simplicity as being the cornerstones of tax reform. When we look at superannuation taxes, we've got the top five per cent of earners getting five times their proportionate share of the superannuation tax concessions. As a nation we're spending $31 billion a year on these tax concessions so we need to make sure that is money that's really as well spent as it can be.
KARVELAS:
Sure, Andrew Leigh. We know that you think that on super, but if you want bipartisanship shouldn't you be providing it on the other issues as well? Don't we need a real national discussion about the GST and how it should apply?
LEIGH:
Before the last election both parties were clear that they didn't support an increase in the base or the rate of the GST. It's a change which Labor believes would hit the most vulnerable the hardest.
KARVELAS:
But you argued that before the GST was even introduced, and how it's part of the system and Labor supports what we have now.
LEIGH:
We don't support an increase, Patricia.
KARVELAS:
Do you support the GST that we have?
LEIGH:
That's correct, we're not going to the next election proposing to repeal it.
KARVELAS:
You once opposed it, is my point. Politicians change their minds as they listen to the arguments made to them. That's true, isn't it?
LEIGH:
That's right. We can go back to the period when the Coalition went to successive elections saying they would repeal a capital gains tax and a fringe benefits tax as well as repealing the assets test on the pension. Parties do indeed change. But the fundamental values for Labor that stay the same are that we believe we need to advance this tax debate. It really contrasts with where the competition debate is at in this parliamentary term, where now there is a set of concrete reforms coming down from Ian Harper.
KARVELAS:
Are you trying to do my job for me? That's my next agenda item!
LEIGH:
Patricia, we all want your job. That's the admiration in which we hold you.
O'DWYER:
I'm happy with my job, Andrew.
KARVELAS:
In the studio I have Andrew Leigh, the Shadow Assistant Treasurer who is trying to displace me in some way, and Kelly O'Dwyer, the Parliamentary Secretary to the Treasurer. Yes, I now want to discuss the competition laws and the review that has now been delivered by the economist Professor Ian Harper. What do you think, Andrew Leigh, of some of the suggestions?
LEIGH:
Some of the suggestions are certainly worthy of looking at, Patricia. We're happy to have conversations the resale price maintenance, we're happy to talk about price signaling, ACCC governance and improvements in competitive neutrality. We have said that we don't think the effects test is good policy; Chris Bowen looked at this when he was Competition Minister and ruled it out. Craig Emerson, who has held the portfolio as well, has argued that he doesn't believe it is workable. The real risk here is that it turns into a lawyers' picnic – the report itself has said that an effects test could cause uncertainty and might increase the cost to the community. So we're very concerned about the effects test but there's much good work that Ian Harper has done. The thing about this debate, Patricia, is that we're so much further along in it. The tax debate is back where, really, the government should have been in the first few months after the election. They've got a discussion paper talking about broad principles, whereas we ought to be talking about what to actually do.
KARVELAS:
Alright, well it's Kelly O'Dwyer's turn. Kelly, which of the recommendations is the government willing to act on?
O'DWYER:
We're going to make sure that we work through all of the recommendations.
KARVELAS:
So that means medicines in supermarkets, and...
O'DWYER:
We're going to consider all of them. The government hasn't announced a final position because the report has only been released today. Andrew made the point about the tax discussion and the current discussion about competition, I mean, we're going through exactly the same process. This is now the final report that's been released, it has gone through an interim report where there's been a level of feedback. We've now got eight weeks-worth of feedback where we'll look at all the recommendations, and whether any unintended consequences would flow from the recommendations that have been put. Some of the issues that Andrew has raised, I would agree with. Some of them the government will consider more closely. But the main point is this: we need to make sure that we have a really competitive landscape.
That's not to say that some people in small business will never go out of small business. This is not about protecting certain competitors. It's about protecting the competition process. We saw with the Hilmer Reviews that took place 20 years ago now, that we unleashed a wave of new prosperity in this country because we unshackled business to be able to compete. We were able to do that through such things as the National Competition Policy, where payments were made to the states so that they would enter into that reform. It added to our GDP. We believe that if we get this right, this competition reform, we can similarly add to our GDP - our gross domestic product; we can grow our economy and ultimately that is going to be very important for our future.
KARVELAS:
On RN Drive, you're with me Patricia Karvelas, Parliamentary Secretary to the Treasurer Kelly O'Dwyer and Andrew Leigh, the Shadow Assistant Treasurer. I've just got two more agenda items I'd just like to sneak in. Andrew Leigh: should the ALP sack Martin Ferguson? Bill Shorten isn't happy and Labor Senator Sam Dastyari accused Mr Ferguson of a 'bastard act' over his comments during the NSW election on privatisation. Here's what Bill Shorten had to say:
SHORTEN:
The Labor Party is a broad church and individuals periodically contradict the policy or they even publicly have a disagreement, which you wish they wouldn’t, but that happens. But on the other hand, if there’s been an element of working with the Liberal Party to damage Labor’s chances, that’s in a different category of action altogether. I expect the Labor administration to investigate this matter fully.
KARVELAS:
Andrew Leigh, should he go?
LEIGH:
I think there's nothing wrong with people expressing contrary views. In fact, that's the great thing about a Labor party that is home to many different ideas. But Martin Ferguson did allow his comments to be used in a Liberal Party attack ad in the final week of the campaign, and I think it's clear that had a substantial, negative effect on Labor. It's an internal process, but I just want to be clear with you that I'm personally torn on what I think is a really difficult issue.
KARVELAS:
There is a Natalie Imbruglia song about that!
LEIGH:
Should we play it?
KARVELAS:
I'm keen to play it.
LEIGH:
Sorry, I'm trying to do your job again.
KARVELAS:
Ok, Kelly O'Dwyer I want to get you on something that's prickly for your side; everyone gets their prickly question. What do you think of the Victorian Liberal Party report which reveals female pre-selection candidates were asked who would be cooking the family dinner and what they were going to do with their babies. I think it's ok to reveal that you're about to give birth - not today hopefully.
O'DWYER:
That's true. Happily I was already pre-selected. Look, there was a very important review handed down by Caroline Elliott, Kay Patterson and a number of others. They did a proper investigation into some of the issues that are really barriers for women putting themselves forward for pre-selection and being more involved in the Liberal Party more generally. We're certainly not unique in having these issues; I'm confident the Labor party faces many similar issues. But there were some questions around intimidation and bullying which are real questions that need to be addressed.
This is where we believe shining a light on these issues means they will be addressed. I'm very confident that with this comprehensive review, we will be able to undertake some reform. But at the same time, one of the big issues that was raised at the state council on the weekend when this report was handed down was that there were many volunteers who had participated at the last state election in handing out how to vote cards, on election booths and doorknocking, who felt terribly intimidated by members opposite through their behaviour, and that's also something the party is committed to looking at as well.
KARVELAS:
Kelly O’Dwyer, I’m so happy you’re here and not cooking dinner for your husband tonight, it’s much more interesting talking to you than having you in the kitchen this evening – sorry I’m so cheeky. That’s Kelly O’Dwyer, the Parliamentary Secretary to the Treasurer in Melbourne with me, and Andrew Leigh thank you so much. Next time when you’re on let’s be a little less torn and see where you stand on Martin Ferguson, thank you for being on.
LEIGH:
Sometimes it’s good to express indecision.
KARVELAS:
Sometimes it’s just how you feel, thank you so much.