Interview with Kristina Keneally and Peter Van Olsen

02 May 2016

MONDAY, 2 MAY 2016

SUBJECT/S: Bill Shorten’s Book; Labor’s Positive Policies for Election; Budget 2016; Superannuation Measures; Company Taxes

PETER VAN ONSELEN: We're going to talk to Jim Chalmers here on the program. We should do that right now, as tempting as it is in this incredibly confined space to leave him sitting there for about ten minutes and then throw to him just for the fun of it, we're not going to do that, are we?

KRISTINA KENEALLY: Indeed, let's bring him in.

JIM CHALMERS, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: I'm just really pleased you've got the accreditation sorted out, that you're allowed to be wherever you like and he has to be escorted, I think that's a very good arrangement.

KENEALLY: It is a good arrangement.

VAN ONSELEN: It actually is quite painful. It's the first time I've been stuck with one of these [waving security pass], and it is bloody annoying. Because you literally can't do almost anything without some-- alright, we'll move on. There are some other issues around this week.

CHALMERS: There are a couple of other issues.

VAN ONSELEN: Let's start with one before we get to the Budget, I want to ask you about this new book that Bill Shorten has written all about himself-- well it's true, it's a sort of autobiography.

KENEALLY: Well it's memoir, that's the definition.

VAN ONSELEN: Yeah, so he's written a book about himself. So if he says that he would govern like a union leader, does he mean for twelve per cent of the population? What does he mean?

CHALMERS: I haven't read the book, but I assume he means that he wants to look after people who are on low and middle incomes. That's a good thing, particularly when you contrast it with the way that the Government is going about things. He was a very successful labour movement leader. He worked very closely with business and with the workforce to get good outcomes, good outcomes for individuals but also good outcomes for the economy. So I think that it's great that he's put some ideas out on paper. Australians do want to know who they're choosing between when they go into the polling booths on election day --

VAN ONSELEN: His own version of Battlelines.

CHALMERS: That would be an unkind comparison! But certainly, there's a hunger for information out there about what we'd do differently to the Government. Sixty-one days out from the election, people have got plenty of time to buy the book and read it.

VAN ONSELEN: Jokes aside though, strategically in terms of politicking, obviously he's aware that this is an election year, he's aware now that there's an early election and he has been for some time, so the book would have been put together in that sort of context. But it is risky business even if it's been taking those factors into account, to put out something as substantial as a book which will presumably include ideas which aren't necessarily yet Labor Party policy?

CHALMERS: I think we should welcome it. You've written your fair share of books. I think the more people put their ideas to paper and are prepared to defend them in the public space, that's a good thing.


CHALMERS: And particularly for our leaders. People can read the book and they can work out what they think about where he's coming from. I think if they do that and if they pay attention to what he's been saying, not just in the book but the last couple of years there have been more positive policies out there than any Opposition Leader since I've been involved for two decades or so. And so I think people will welcome all of this information and all these ideas.

VAN ONSELEN: You were unimpressed with Kevin Rudd in Opposition? He just didn't spell out much, is that your point?

CHALMERS: I think almost any objective observer would say that this Opposition has put more policy out there probably since Hewson, and we're hoping for a far better outcome.

KENEALLY: Well let's go on to the Budget. It seems the Budget will include a boost to low income super. Surely Labor would have to welcome this?

CHALMERS: What the Government is trying to do is they're trying to put some sort of token measure on the table now so the Australian people think they care about low income super. We should judge this Government on the entirety of their term. They are abolishing the Low Income Super Contribution. They have frozen the Superannuation Guarantee multiple times. This has a huge impact for people on low and middle incomes, particularly women in the workforce and so I don't think Australians will be fooled when they see Scott Morrison speak about low income super really for the first time in almost three years.

KENEALLY: But the Government seems to be toying with the idea, and of course we'll find this all out in the Budget, but they seem to be toying with the idea or considering the idea that people who dip in and out of the workforce, including women, would be able to top up their contributions in years when they're making more money. That we'd move away from the idea of a linear work life, where you just consistently work the same amount of time every year. I mean, that's an innovative idea, isn't that something Labor could embrace?

CHALMERS: We've been talking about that for some time. My colleague in the Senate, Jenny McAllister, has led this extraordinarily good…

KENEALLY: But you haven't announced a policy in this area.

CHALMERS: Well for starters if you really care about women in the workforce, you wouldn't abolish the Low Income Super Contribution, you wouldn't freeze the Superannuation Guarantee. So I think whenever the Government now talks about women in super, you need to judge them by those actions which we've already seen. If you look at Jenny McAllister's Senate Report, there are a whole range of terrific ideas in there to deal with that issue that you rightly raise which is that women are more likely to have broken work patterns. That has severe consequences for their retirement incomes. Men retire on average with almost double what women retire with in their superannuation.

VAN ONSELEN: So are we going to hear more from Labor on this closer to the election?


VAN ONSELEN: So you welcome the Government looking at this, you say that they are late to the party and that there are other areas where they could have done things differently in super, but even whatever they announce we would expect Labor to go further?

CHALMERS: I'm not saying that. I'm saying we'll see what the Government comes up with in the Budget tomorrow. But we have been saying now, certainly since I've been in this job for seven or eight months, and before that, we've been saying that this is an area that does deserve the attention of policy-makers here in Canberra. We do think it's a real issue that needs to be addressed.

VAN ONSELEN: Can I ask you about taxation of super? I know that Labor has a policy for what over $75,000 will incur 15 per cent tax. Quite frankly, before this debate heated up when Labor initially announced this, I just kind-of assumed that there was some tax on super. I find it absolutely bizarre that there was no tax, even at least up at higher levels such as what Labor is announcing. So to me it's a no-brainer to do at least what you guys are doing if not more. But here's my question, it's more one about the problem with the architecture isn't it? Because you're doing something I would argue the Government would do as well, but you can't do more and tax it anywhere near what income tax is because people that are currently in the system have been taxed on the way in, and they would be taxed, you could argue, too much on the way out. There's a bit of a black hole there to get it right. If you started from year one now, Jim Chalmers, wouldn't you tax less on the way in than you currently do, probably, but tax a bit more - like income tax - on the way out? Is that a fair comment, Jim?

CHALMERS: I think it's fair to say that if we started with a blank page right now and designed a superannuation system, we wouldn't design the tax arrangements as they are. We've got something like forty per cent of the benefits going to the top ten per cent of people in the retirement phase. You wouldn't have that sort of situation. We have announced a policy more than a year ago now for earnings over $75,000 which means you've got to have quite a big balance to be impacted by our policy. But you're right, the tax arrangements are not as they should be. What really troubles us about what Scott Morrison has said so far is that he intends to leave that retirement phase entirely untouched. So you've explained the situation --

VAN ONSELEN: I just find that bizarre. I mean, I hate to give you a free kick on this, but I just find that bizarre. Before looking into it, maybe just because I'm not near retirement stage, I just assumed that no-one would pay no tax in super. I thought it would be less than what income tax was, but I didn't realise that there is none as is currently the case. That is just completely unsustainable with an ageing population.

CHALMERS: I think a lot of Australians share your view.

KENEALLY: Can I ask you about another, what I would argue unsustainable, ability in the super system now, the transition-to-retirement arrangements? It seems the Government may well make some changes here. For example a person over sixty who is working can put in $30,000 and take it out the next day tax-free. I mean surely this is the type of thing that we could find some bipartisan support, a loophole that we can close.

CHALMERS: We've got an open mind to looking at the transition-to-retirement phase that has attracted some attention in the last few months, and that's a good thing as far as we're concerned. But you have to judge these measures in their totality. Whatever the Government intends to do on super tomorrow night, we've got to remember they've been saying for months that first they wouldn't touch it, then they've been ruling things in and out. So we have to be a bit careful about putting too much stock into what we read in the papers. We'll see what happens tomorrow night.

KENEALLY: But surely you're open to these types of transition arrangements being reconsidered?

CHALMERS: That's how we approach all of these issues. It might be sixty-one days from the election but we don't actually sit down and work out a political angle on these things. If that's a good policy, we'll support it. If it's not, we won't.

VAN ONSELEN: The one thing that I think though, would it be fair to say that whatever happens -- I don't know where you pick the point in time with this between the two sides of politics -- but we do have to reach a point? Even though I've been sitting here in furious agreement about the need to tax more with super that comes out--

CHALMERS: It's unsettling!

VAN ONSELEN: Makes you question your belief structure! But even though I do agree with you about that, I do think we need for the sake of people who are relying on super or who are looking for some consistency, we need to get to a point where we get it right and then both sides of politics say we're going to leave it alone.

CHALMERS: I think that's right. A lot of people say we need stability in the superannuation system and we do. But what we really need is predictability. We can't use stability as an excuse to do nothing in superannuation. There are things that need to be fixed, but we need to chart the direction as we did more than a year ago, chart the direction and say this is what we're into, this is what we want to do and we want to give you long horizons and long timeframes to prepare for those changes.

KENEALLY: Can we move on to the tax cuts that we may or may not see in this Budget? There's a proposition that the Government might have a phased-in company tax cut. Now last year in his Budget Reply, Bill Shorten said that he wanted twenty-five per cent company tax rate phased in over a long period of time.

VAN ONSELEN: An aspirational target.

KENEALLY: Would Labor therefore be open to considering this so called 'glide path' that the Government might lay out there to a 28.5 per cent rate?

CHALMERS: You're right that Bill said that in the medium term it would be a good aspiration to have a lower company rate. But what you have to do is you have to judge these things, as you would know from your time, you have to judge these things against all the other priorities. And what makes people in the Australian community absolutely filthy is when the Government says to them you've got to accept cuts to schools and hospitals and Medicare at the same time as we want to give a company rate cut to the biggest businesses in Australia. That's what makes people angry.

KENEALLY: But wasn't that the case last year when Bill Shorten made that comment in his Budget Reply?

CHALMERS: He has said all along, as I have said all along, first things first our priorities should be making our schools better, having fairer taxes, all of those sorts of things.

VAN ONSELEN: But Jim Chalmers, how do you do those two things at once? How do you funnel billions more into schools and education at the same time as you lose billions by cutting company tax? By that logic you're never going to get there.

CHALMERS: Well that's my point. Simultaneously what the Government is trying to do is to say to people in middle incomes in this country, we're going to make Medicare less good than it is now and we're going to cut schools and hospitals, and we're going to give all that money--

VAN ONSELEN: But Kristina's point is that you knew all of that this time this last year and you still threw out that aspirational goal.

CHALMERS: But we have said all along that Budgets are about priorities. We don't think in the current circumstances that the country can afford a company rate cuts, particularly at the same time as Malcolm Turnbull is telling Australians they have to accept less services.

VAN ONSELEN: But presumably he couldn't have done that last year either when he announced it and if anything, the budget bottom line is going to be a bit better this year than it was at this time last year when he announced it?

CHALMERS: I think if you go through the last three years, probably the last thirty years, of Labor's statements on this, we have always said that the priority, even if we think that a lower company tax rate would be a good thing, our priority has got to be people in the middle and at the lower end first.

VAN ONSELEN: But surely he just shouldn't have said it then, because he put in the twenty-five per cent aspirational goal out there last year, little has changed -- the situation around health and education funding, there was actually less of it this time last year than there is now with the Government at least bumping it up a little bit…

CHALMERS: Don't fall for that trick.

VAN ONSELEN: The economy is arguably a little stronger this time than it was this time last year. Surely he shouldn't have said it last year because it was fantasy land.

CHALMERS: No, I think it remains the case that in the medium-term, Australia would go well out of a lower company rate than it is right now but that doesn't mean our priority shouldn't be hospitals and schools and all of the things that matter to people in middle Australia. That's our first priority. If people want to prioritise a lower company rate over schools and hospitals, they should vote for the Liberal Party. If they prefer to think about their schools and hospitals and all those sorts of things, they should vote for us. That's one of the really clear choices in the election in sixty-one days’ time.

KENEALLY: Jim Chalmers, that's all the time we've got today. Thanks for coming on To the Point.

CHALMERS: Thanks very much.