ABC NEWS WEEKEND BREAKFAST WITH ANDREW GEOGHEGAN AND JOHANNA NICOLSON
SATURDAY, 23 JUNE 2018
SUBJECT: Tax Package (personal and corporate), Energy policy including NEG, Anthony Albanese address to the Labor Party.
JOHANNA NICHOLSON, PRESENTER: Well, the Federal Government succeeded in passing its income tax package this week. The package will be delivered over the next seven years, but the Prime Minister Malcolm Turnbull, said that they would bring the tax cuts forward if the budget allowed.
ANDREW GEOGHEGAN, PRESENTER: Now, this coming week, the Government is hoping to pass their corporate tax legislation, but it remains to be seen whether if it can pass the Senate. For more on this and other political stories of the week we're talking with Labor's Pat Conroy in Newcastle and here with us in the studio Liberal MP, Craig Kelly. Welcome to both of you.
CRAIG KELLY: Great to be with you this morning.
GEOGHEGAN: Okay Craig, a good week for you. How important was this to pass the personal tax cuts legislation and how much of a boost will it give you, particularly ahead of the forthcoming by-election?
KELLY: You are absolutely correct. It has been a very good week for the Government to get those tax cuts through, was something very important for the economy and for the nation. We will see substantial cuts flowing from next year and the most important thing, as we go forward, we're going to get rid of that 37% tax bracket, reduce that down to 32. 5%, it will create a real incentive for people to get in, work a lot harder, take more overtime and keep more of their money in their pocket.
NICHOLSON: Pat, Labor said it would repeal at least the later stages of the tax plan. Is Labor standing by that?
PAT CONROY: Absolutely. What passed this week was an attack on working families in this country. It gives someone on $200,000 a year a $7,000 tax cut whereas a typical worker in this country earns around $50,000 and they are only going to get a $10 a week tax cut. It is unfair, it is unaffordable and it will give the Liberal Government an excuse further down the track to cut vital services like education and health when these tax cuts prove to be unaffordable.
GEOGHEGAN: Craig, how do you counter that narrative that Labor is running that this benefits higher income earners to the detriment of those on lower incomes?
KELLY: Look, the reality is that we are giving people more of their money that they earn and this is where we see the complete difference between the Labor and the Liberal party. We see the money that people, that they earn, belongs to them and we tax them. The Labor Government see what they earn belongs to the Government and they hand it back to them. So if we have lower and simpler taxes, that is the way we can create more incentive in the Nation and create incentives for people to get out there, as I said, more overtime, put more money in their pocket and that's what we are about in contrast with the Labor Party, we continue to see this class warfare all the time pitting one side against the other side.
NICHOLSON: Craig that message that higher income earners pay more tax and therefore will get more tax back, is that a hard message? Is that a complex message to sell to voters?
KELLY: I don't think so. You are right. Someone who earns more dollars pays much, much higher tax and makes a much greater contribution to the tax that we pay. That's what we want to encourage. We want to encourage people to go out and earn more dollars. Because ultimately, overall they pay more tax. That's more money we get in for revenue. More money we have for schools, hospitals, roads and education, everything we need.
GEOGHEGAN: Pat, you wanted to jump in?
CONROY: Yeah, I want to jump in on a couple of points. First, these tax cuts mean a family on a combined income of $300,000 will get a 5% boost in their income post tax. Whereas a family in my electorate on $65,000 which is a typical family, will get a boost in income of about 1 - 1. 5%. They are profoundly unfair. They are unaffordable and this whole argument around bracket creep has been totally distorted. I've never met a worker in this country who is on say $85,000 who refuses a promotion to a job paying $100,000 and says, " No, I'm not going to take it because my tax rate on that marginal amount of money will go from 32% to 37%". It is a rubbish argument. Our tax rates are comparatively low compared to the rest of the western world and we need that money to pay for services that people need like health, education, childcare, the pension and what this Government is doing is attacking those services by giving a huge tax cut for people earning over $200,000 and we're going to fight it every day until the next election.
GEOGHEGAN: Alright, let's move on to the issue of corporate tax cuts. Craig, you don't have the numbers. You are not going to get it through the Senate this week are you?
KELLY: Well, we'll see. We have to have internationally competitive corporate tax rates in this nation. At 30%, maybe ten or 15 years ago, they were internationally competitive. The rest of the world has moved. Almost every other major OECD nation since we reduced our corporate tax rate has reduced theirs back. The US is down to 21%.
GEOGHEGAN: That's fine. You're using that line, but you need to convince the Senate that that's the case and you simply can't do that. You don't have the numbers. Do you think compromises will have to be made?
KELLY: Everyone on our team, especially our senate negotiating team, is continuing to discuss these with the senators, the cross-bench senators, making sure that they are aware of, even if they may not like the idea of reducing the corporate rate of tax, we have to do it to remain internationally competitive. The US is down to 21%, the UK is down to 19%, we have Hong Kong and Singapore at 15% and 17%, if we are stuck at 30%, we are going to be internationally un-competitive in the years to come.
NICHOLSON: But Craig, If it is so vital as you say, why not make some concessions? Perhaps suggested there has been exempting banks for example or cracking down on multinational tax avoidance? Why not make some of those concessions?
KELLY: We are doing a lot of working on cracking down on multinational tax avoidance. This Government has done probably more than any other previous Government on this issue.
NICHOLSON: Would you exempt the banks from this corporate tax cut?
KELLY: Look I don't think you should. It might be very popular and trendy at the moment. There is a lot of bank bashing going on, but when you try and exempt and have different tax rates for different sectors of the economy, you create more distortions and more problems than you actually solve.
GEOGHEGAN: Alright Pat, before we come to you, Anthony Albanese addressed the party faithful last night where he mentioned tax cuts. Let's just have a listen to what he had to say.
PRE-RECORDING OF ANTHONY ALBANESE: Our job is not to sow discord, it is to bring people together in the service of the national interest and Labor doesn't have to agree with business on issues such as company tax rates, but we do have to engage constructively with business, large and small. We respect and celebrate the importance of individual enterprise and the efforts and importance of the business community.
GEOGHEGAN: Pat, is there concern within the Labor Party, certainly at the backbench, that Bill Shorten is going too hard on corporate Australia, on big business in particular?
CONROY: Not at all. Anthony Albanese's speech was entirely consistent with speeches that Bill Shorten and Chris Bowen have made. In fact Albo's speech last night was very explicit in its praise for the policy reforms Bill and Chris have announced. What Albo was saying was very consistent with what Bill was saying. We want a constructive dialogue with business just as we want a constructive dialogue with the trade union movement. They are all partners in growing this country, making this country fairer, employing more Australians and we have a right to disagree on the business tax cuts. We have a right to call out the BCA for example when it's just a cheerleader for the Government but we need a respectful relationship with the entire corporate sector and I think we've got that. That stands in contrast with the Government that's been ignoring the trade unions and bullying businesses. For example talking about nationalising Liddell, nationalising power stations. It is the Government that's been incredibly inconsistent in its treatment of industry.
NICHOLSON: Pat, Anthony Albanese also said in that speech, he warned his colleagues that it wasn't good enough to tell voters, "Elect us, because the other mob are useless." Was that a jab at Bill Shorten?
CONROY: Absolutely not. And if you read the full speech Albo talks about all the great policies Bill and Chris Bowen have announced in economics, whether it is reforms to negative gearing, reforms to capital gains tax, dividend imputation, we have been a very brave opposition putting out huge policies in education, health and tax and what Albo was saying is that's absolutely the right thing to do. You can't be a small target. You just can't be negative and we have been attacked for being too open, too visionary, having too many policies on the table. So Albo's speech is entirely consistent with the broader approach of the opposition. And what Albo was really concentrating on, the need for a fair go in this country, looking at the Whitlam legacy of Hawke and Keating and saying, "We need to reform this country. Kick out a negative government that's intent on dividing people and reintroduce the fair go for all Australians."
GEOGHEGAN: Alright we are running out of time. Craig, I know you'd like to have a crack at Bill Shorten but I'm not going to let you at this point because we need to talk about the National Energy Guarantee. You and Tony Abbott have now come out and said said you could be prepared to cross the floor if you don't get your way as far as the national energy guarantee is concerned, that they go too far. Make too many concessions. Do you stick to that?
KELLY: We are getting a bit ahead of ourselves here. We are still waiting to see the final detail of the National Energy Guarantee. We've got the Energy Security Board that have released some information last Friday afternoon. There's still a lot more detail to come through. The specific concerns that I have and other colleagues have is what this will do to 100 largest energy users. There is some mention in the original paper that these companies would actually have to have some kind of backup, where the power could be cut off to them in times of high demand. They would have to put in their own diesel generators; what contracts they have to enter in; these details will be finalised and that's the concern we are experiencing.
GEOGHEGAN: Tony Abbott has said the Government spends too much time or more time negotiating with the cross-bench than its own backbench. Is that true?
KELLY: Oh look, we have discussions all the time. In this respect we need to be very careful that we are trying to deal with the states, that we actually sort of give too much away to the Labor states and the ACT which actually the Energy Minister is agreeing. If we are going to satisfy him at COAG with some sort of agreement, that may not go down very well at the party room.
NICHOLSON: But would you like to see Malcolm Turnbull discuss more with the backbench?
KELLY: Oh no, look we are have great, good discussions. Look, you know, this is one thing that Malcolm does very well as Prime Minister. He enables us to have these discussions. You saw Anthony Albanese there having a direct crack at Bill Shorten. Those words "we cannot sow discord" that's a direct crack at Bill Shorten. Otherwise on our side we are debating policy and Labor are debating ideology amongst each other.
CONROY: Can I return to the NEG for a minute?
GEOGHEGAN: Yes, that's what we are talking about. Go ahead.
CONROY: Yes, look, I think the key issue here is whether in fact Minister Frydenberg completely surrenders to Craig Kelly and Tony Abbott in the party room through locking in our woefully inadequate emissions target to 2030. Labor has said we are prepared to engage and hopefully reach a bipartisan settlement, but it must be scaleable. We must be able to increase our ambition to actually meet what are internationally credible figures around emissions reductions and increasing renewable energy.
GEOGHEGAN: So you're sounding pretty negative that this isn't going to get up.
CONROY: We have been very clear that if the NEG locks in a ten year notice period so we can't increase Australia's emissions reduction target to 2030, that's unacceptable. That's a joke and we need to make the transition now. We are all in favour of a reasonable notice period to industry and industry have said as long as there is a reasonable notice period that's transparent, they are very comfortable with Labor having a higher emissions reduction target, but so far Josh, because he is worried about the Liberal Party room and the dinosaurs in there like Craig and Tony Abbott, locking in ten years of targets is unacceptable and it is a recipe for the NEG failing and means yet again that this Government has had five years of energy policy chaos in this country.
NICHOLSON: Okay Craig, a very quick response?
KELLY: Well the recipe for the NEG failing is Labor wanting to change all the targets. We already have the most onerous per capita targets in the world under the Paris reductions. Something that gets locked in, If Labor wants to change it, it destroys the certainty.
GEOGHEGAN: But cut back to the question, how on earth is Josh Frydenberg going to get this through when you are not going to allow concessions as far as Labor is concerned? You're not meeting in the middle? What's going to happen?
KELLY: We have to do what is best our nation in the long term. We are the Government of Australia. We were elected at the last election. It is our job to set the policy that's good going forward. Now if Labor then want to go and blow it all up and change it, the certainty that they talk about is absolutely destroyed.
GEOGHEGAN: Alright, Craig Kelly, Pat Conroy, thank you, very much.
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