Sky News (2)

25 July 2017




SUBJECT/S: Tax reform, inequality, UNHCR claims

SAMANTHA MAIDEN: Now we’re going to go live to Sydney where we’re going to be talking to Labor frontbencher Jim Chalmers in relation to this debate the Labor Party is having about a new tax agenda. Jim, we don’t know exactly what you’re going to announce this week, I suppose we’ll get that surprise on the weekend but what is the organising principle that the Labor Party has decided that they need to take pretty radical action in this space?


JIM CHALMERS MP, SHADOW MINISTER FOR FINANCE, MEMBER FOR RANKIN: Hi Sam, I think what we’re really saying is that we’ve got two big challenges that we need to deal with. The first challenge is that the Budget’s a mess. We’ve got gross debt crashing through half a trillion dollars for the first time in Australian history. And we’ve also got a tax system that is unfair which feeds inequality. So what we’re doing is we’re showing the economic leadership which is sadly absent on the other side of politics and saying these sorts of tax concessions are worthy of our attention.


MAIDEN: The front page of The Australian newspaper today is suggesting you’re facing a war from small business, that there’s hundreds of thousands of small businesses that use these structures. What guarantee can you offer them today that these changes won’t hit struggling small businesses operators?


CHALMERS:  We’ll have more to say about all of these sort of issues in the coming days, indeed very soon, as Bill Shorten and Chris Bowen have both indicated. We encourage people from all sections of the community, not just small business but more generally, to engage in this discussion that we need to have as a country. It’s only right and responsible that we say to the people of Australia that the Budget can’t afford to continue to pay the biggest tax concessions to those who need them least. No doubt if we make an announcement in this space a lot of people will have views and that’s a good thing. It’s one of the reasons why, whether its capital gains, negative gearing or other changes we’ve proposed to the tax system, we try to give plenty of notice well in advance of an election so that we can have a national conversation about tax reform and fixing the Budget in a fair way.


MAIDEN: There were concerns of course when you announced the negative gearing policy that for many years this was a sacred cow of Australian politics, that you couldn’t change it. You took that to an election, the backlash didn’t seem to be as big as some people feared but many believe it would be a pretty brave political party that took on trusts. Why have you decided to do that?


CHALMERS: As Bill Shorten said in his very good speech last week, the situation is such that we need to take courageous decisions. I’m not pre-empting anything that we might say in the coming days but I think it is a broader point worth making that when the Budget’s a mess and the tax system’s unfair and we’ve got growing inequality in this country we do need to consider some of the tax reforms which may have been considered to have been too hard in the past. We did that with negative gearing, as you rightly point out. We announced that more than a year before the last election, more than two years ago now, people have had the opportunity to hold it up to the light. I think generally the Australian population supports what we’ve said on negative gearing and they are relying on us in the absence of leadership from the Prime Minister or Scott Morrison to come up with these sorts of tax reform ideas to fix the Budget and make the system more fair.


MAIDEN: Can you really tax your way to equality though? I mean is more taxes really a recipe for economic growth?


CHALMERS: There are a whole range of things you need to do to tackle inequality in Australia and around the world. The tax system is one very important lever. Obviously the industrial relations system is another one – we shouldn’t be cutting wages for weekend work as the Government currently supports. There are a whole range of levers and tax is obviously a very important one. There are two important issues here, and I saw that you had the Treasurer on your program yesterday. I think what he said yesterday about inequality was really his version of Joe Hockey's 'poor people don't drive cars' moment. You know, one of those really serially out of touch moments where Scott Morrison said we don't have an issue with inequality in this country. What people are realising around the world, even if Scott Morrison isn't, is that if you want growth in your economy it has to be inclusive, people have to have a stake in that prosperity. That means making sure the tax system is fair, it means making sure people are getting a fair day's pay for a fair day's work. All of these things are crucial in ensuring that people have a stake in our national economic success.


MAIDEN: The people that are using trusts are they tax cheats?


CHALMERS: The discussion that has been had about trusts over the last week or so, including a very good contribution from The Australia Institute, have pointed out that not many people have called for the abolition of trusts, they are a legal entity that are used by something like 800,000 Australians and their use has been growing in an extraordinary fashion in recent years. What people are saying is that we should consider and look at the tax arrangements for trusts so that the tax arrangements are as fair as possible. So the tax concessions aren't going to people who need them the least. That's not saying that trusts should be abolished, it's saying that there might be ways for governments to consider and oppositions to consider to make the tax arrangements more fair.


MAIDEN: So that's the first time I've heard a Labor frontbencher confirm that trusts is the space that you are looking at. What could you do to make them fairer? Would you grandfather it as you did with negative gearing changes? Or would these changes have to apply to everyone across the board?


CHALMERS: I don't accept that I'm the first one to say it, I think Bill and Chris and others have made it very clear, certainly in the last week, that we're looking at a whole range of tax concessions, that our interest is in Budget repair which is fair and making the tax system more fair, so that it can deal with our inequality challenge in the economy. Trusts are part of the tax concession system. That's not necessarily a new point that I'm making. As for the detail of any considerations I'll leave that for others in the coming days and weeks. But I think that it's really good and really important, whether it be on this show or in the newspaper or around the lunchrooms of this country that we do talk about tax concessions like trust arrangements and others, like we did with negative gearing and capital gains, to make sure we've got the best tax system which gives people a fair way to manage their affairs.


MAIDEN: And just finally on another issue that's a big story today in relation to the UNHCR's claims they had some sort of private discussions with the Government about allowing a small number of asylum seeker families to come to Australia so they were not split up. You're a dad, you have two young children. Do you think that in very, very limited cases the Government should show compassion and not force families into a situation where a father, for example on Manus, can never see their wife and child who are in Australia legally on a bridging visa ever again?


CHALMERS: Our position on all of those matters is well established and well known. I think the extraordinary thing out of that UNHCR report, that came to light yesterday afternoon and today in the newspapers, was that there seems to be a bit of a disconnect between the claims that Peter Dutton is making about the arrangements and the claims that the UNHCR are making. So I think before we get to those broader policy issues we should have Peter Dutton give a full explanation of why there is a different account. The Government has made a mess of this deal since day one and if there's a different account between themselves and the United Nations then they owe it to the Australian people to come clean on what the arrangement is and was.


MAIDEN: But why would you as a Government, say to a family that they could never be reunited, that they could never see their father again? Why would that be a just outcome?


CHALMERS: I'm not going to get into the ins and outs of our policy on the camps, these issues have been well ventilated for some time, as has the Government's policy. The issue that's come to light in the last twenty-four hours has been the disconnect in the stories. Peter Dutton has a bit of a credibility problem when it comes to some of things he says about these camps. So first things first, he should come out and clarify the claims made by the UNHCR.