Sky News Richo 30/5/18

30 May 2018




SUBJECT/S: Income tax cuts; Labor’s fairer tax plan; Turnbull’s $80 billion big business tax handout; Longman by-election;. Hanson an extension of the Liberal Party; energy


GRAHAM RICHARDSON: In our Canberra studio is Jim Chalmers. As I said, the Shadow Minister for Finance and every inch the up and comer in the Labor Party. Welcome to the program, Jim.

JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Thanks for having me on, Graham.


RICHARDSON: A great pleasure. Before I get to any detailed questions, I've been concerned about whether or not Labor is actually trying to introduce a note of envy into all of this. Is there a case now where we are anti-rich? And if we are anti-rich, what is rich?

CHALMERS: Not at all, Graham. I've heard that argument put before and apologies in advance for my croaky voice, I've been a bit crook the last couple of days. 

RICHARDSON: Yeah, you don't sound great.


CHALMERS: I don't sound great; I feel good, just I don't sound great. I've heard that argument before and it's rubbish, frankly. The point that we make is that we have a Budget that is a mess because we have record debt. Debt's never been higher in this country than it is right now. When you're thinking about things like tax cuts or other support, investment in hospitals and schools, you have to work out where you can get the most bang for your buck. What we have been saying all along is that our priority is people on middle and low incomes. When it comes to tax relief, when it comes to people accessing doctors or better schools, all of these sorts of things, our highest priority, unapologetically, is people who work and struggle. The other guy on the other side of the Parliament goes out of his way to represent the top end of town, and that's not us.

RICHARDSON: No, I don't think we'll agree with that. But when you say low- and middle-income earners, where is the line drawn? What is a middle income in Australia today as far as you are concerned?


CHALMERS: There is no hard and fast rule. But if you take what we have announced, what Bill Shorten announced in a very good Budget reply a couple of weeks ago out of this building in Canberra, what we said is everybody up to $125,000 a year would get a bigger, fairer tax cut under Labor because we are not doing some of the other things at the top end. We can afford to pay to give a bigger tax cut to people that work in struggle, and people who earn up to 125 grand. That doesn't mean we are saying if you make 125 grand and $1 that you are rich, or anything like that. We're just saying that people under that are our priority. Other people have had the argument about where you draw the line, who is rich and who is not rich. We come at it in a far more pragmatic way, which is to say, "OK, we have limited money; we've got record debt under this mob; where do we prioritise our tax relief, how can we afford to do it not just a fairer way, but a more responsible way?" and that's what we've said.


RICHARDSON: The figures show that the top one per cent of earners are paying something like 17 per cent of the income tax bill. That's a pretty fair chunk, isn't it?

CHALMERS: We have a progressive tax system, and that is one of the good things, frankly, about our income tax system. We have all kinds of challenges throughout our tax system. But one of the things we should cherish is that people with the capacity to pay a bit more should pay a bit more. We should not trade that in lightly. One of the things we are worried about in the tax proposals that the Government has put on the table is that they have got tax cuts two elections a way which overwhelmingly favour the top 20 per cent of income earners. That wouldn't necessarily be fair at the best of times, but as I keep pointing out we have a Budget that is still in deficit today; we have debt that last Friday hit a new record in this country, over half-a-trillion gross debt. We can't afford to just spray money around willy-nilly. We need to work out what our priorities are. One of the things people in the community have been responding to with Labor under Bill Shorten, is that we've been prepared to say, without pretending to be all things to all people, to the community: "Look, we can't do everything everybody wants us to do. So our priority is people who work in struggle in this country." I think that's a good, solid, responsible foundation to go to the people on.


RICHARDSON: I don't really disagree with that. I guess sometimes it is the way it is put that can have an effect. You pick up The Australian today, of course apart from reading my piece in The Australian...


CHALMERS: Of course!


RICHARDSON: see these remarks about Labor's tax sting for average workers. If you are a forklift driver, at the top of your ticket, you are earning something like 164 grand a year, which is pretty good money, but under Labor's plan you pay $4000 a year more. Is that what you'd say is true? Then there is a whole lot about nurses, policeman, everybody else that the Libs have picked out because this is all Liberal Party research that has been done; Government research, I should say. Where do you stand on that? Is it true?

CHALMERS: I appreciate the opportunity to respond to that, Graham. The Treasurer, Scott Morrison, he is notorious, frankly, for putting out all kinds of dodgy research. As I've said continuously, even tonight but at other opportunities too, if you make up to $125,000, you get a bigger tax cut under us. What Scott Morrison is doing is projecting far forward into the future to try to use what are pretty optimistic forecasts about wages growth to say this is what the situation will be five or 10 years down the track. He gets that written up. Good on him. He gets the headline that he always wants, and good on him too. But that doesn't necessarily mean it's a fair or accurate representation of what's going on here. We've had a whole bunch of independent think tanks, universities, some of the most respected institutions in the country; the ANU, the Grattan Institute and others. What they've done is looked at the tax cuts that Scott Morrison is proposing. They have determined, objectively, without any input or interference from us, that the tax package that the Government wants us to pass overwhelmingly favours the wealthiest people. Again, that shouldn't be the priority for tax relief for a whole range of reasons. Including, if you really want to get the economy going, you need to prioritise people who are more likely to spend in the economy, and those are people on middle and low incomes. That's why they're our priority.


RICHARDSON: There seems to be a couple of things wrong with Scott Morrison's approach. The first one, obviously, are the growth figures. The 3.5 per cent figure, within a week of the Budget looked pretty sick when we saw the last figures. It's hard to see how that comes to fruition. I doubt very much that it will. The other, of course, is the business tax cuts, which had been hanging around like a bad smell for the last year. But they still aren't going anywhere. When does the Government actually bury them officially? When do we see the funeral service? 


CHALMERS: That's the right question, Graham, but I just think that would be the most humiliating back down that Turnbull would have to go through, and he has already been through a bunch of humiliating back downs: climate change, GST, state income tax, a whole range of them. But this would be by far the most humiliating. I think the only way to really kill them is for the Liberals to take them to the election and let the people decide. I went doorknocking with our outstanding candidate in Longman, Susan Lamb, two weekends ago, Graham, and you would have done a bit of doorknocking in your time.


RICHARDSON: I've done a bit, yeah.


CHALMERS: And you would know that you get a good sense of people. When you show up on their door you get a good sense of people because you are showing up without warning and you get what's in the front of their mind. And I tell you, the main thing that people are filthy about in Longman and, if I had to guess, in Braddon as well and around the country, is that at a time of record debt, at a time when people are having money pulled out of their hospitals and schools, pensioners are getting their energy supplement taken off them, Turnbull wants to give $80 billion to, effectively, multinationals and the big banks. The thing that really fires them up, and I saw this on doorstep after doorstep after doorstep, is that the same banks that are being revealed in the Royal Commission to be responsible for all of these rorts and ripoffs, they will be getting something like $17 billion in tax handouts under Turnbull's plan. If you say to people that Labor wants to make sure that the victims of the rorts and ripoffs are compensated and Turnbull wants to actually compensate the perpetrators of those rorts and ripoffs, it doesn't take much imagination to think of the response you get on the doorsteps of Longman. 


[transmission cuts out briefly]


... for very good reason, but I think it would be too humiliating for Turnbull to walk back on them now. 


RICHARDSON: What are the chances of them going through the Senate? I know you see Pauline Hanson as in, as out, as in; I don't know where she is this afternoon, because I can't where keep up with her. But even with her, it's still difficult to pass it, isn't it?


CHALMERS: Who knows what Pauline Hanson will do. You are absolutely right, except for on the big legislative votes, I think she has voted with the Government something like 90 per cent of the time. She is effectively an extension of the Liberal Party in the Senate. Whenever Malcolm Turnbull or Mathias Cormann says "jump", Pauline Hanson says "how high?". If you had to guess, you would think she would change her mind again and vote for these big tax cuts for foreign multinationals and the big banks. But who would know? That's why we say the only way to effectively get some resolution on these is for Turnbull to take them to the people, and to let the people decide. I think it will be an election overwhelmingly fought on tax. Let the people decide, do they want to give $80 billion to multinationals and big banks? Do they want to see the banks responsible for these rorts and ripoffs in the system to be compensated by Malcolm Turnbull? Or would they rather have that money piled into their hospitals and schools, and a fairer tax cut for 10 million workers? I'm pretty confident that if that's the question at the election, I think we have a really good story to tell, because Bill Shorten's led on all of these issues.

RICHARDSON: What's your take on the other question, which is obviously the one the Liberals would be putting, and that is if we don't drop company tax, then foreign investment will dry up, because, in the countries we would consider our competitors, they have much lower rates of company tax?


CHALMERS: That's a relevant question. A couple of things I would say about that: I have spent a lot of time, as does Chris Bowen and other members of our economic team, we spend a lot of time in the boardrooms of this country. What a lot of business people will tell you, including some very senior business people, is that the headline tax rate is not the only factor in people's decision-making. They care about the quality of the workforce, the quality of the built infrastructure. They care about the capacity of this country to adapt to new technology; they care about political stability, all of these sorts of things. So the headline tax rate is only one the issues that they factor in. The second thing I would say is, a lot of the time people will ask, what about what Trump did in the US? Don't we need to get closer to what President Trump has done in America when it comes to company tax? President Trump has done two things. He has changed the headline rate. But he's also done something which has been far more effective, which is to change the ability of companies to write off their investments more quickly. That is the part of the tax plan that we have adopted here in Australia. We have announced this thing called the Australian Investment Guarantee, which allows businesses to write off their investments more quickly. We think that will actually get much more bang for buck when it comes to ensuring and guaranteeing that businesses invest in Australia onshore, so that we get that growth and we get those jobs out of it. The alternative is this $80 billion company tax cut which Goldman Sachs says most of it will spray around overseas in the form of executive pay, and puffed-up dividends and all of these sorts of things. I think we can do a better job, frankly, with a more targeted approach to company tax, which still says to businesses we want to encourage you to invest onshore in Australia without wasting all of this money spraying around overseas. 

RICHARDSON: You make a fair point. Can I ask you one last question? They are in my ear saying that my time is up. When it comes to electricity prices, they must also be registering on the doorstep? Because I get people talking to me about it all the time. I am worried about Labor's policy with the 50 per cent renewables. It seems to me that all it ever does is push the price of electricity up. 

CHALMERS: I obviously don't subscribe to that view, Graham. The main problem we have in the energy market is we have a lack of investment. We have a lack of investment because we have a lack of certainty and we have a lack of certainty because Malcolm Turnbull hasn't decided whether to side with the far-right wing in his party room, or to do the right thing and encourage investment in renewable energy. That is really the main problem. You have watched this very closely, our views on energy, not just the 50 per cent renewable energy target, but colleagues like Mark Butler and others have said repeatedly if the Government can come to a view in their party room and come to us and try to negotiate a sensible outcome, we are up for that conversation. But they've proven incapable so far of coming to any kind of conclusion and that's because they are at war internally.


RICHARDSON: I think Mark Butler came up with a great line, not that I always agree with everything Mark says, but he came up with a great line the other day that Turnbull and Josh Frydenberg's main enemy was the future. That was what they were fighting and that's one fight they couldn't win. Thank you so much, Jim. It's taken a long time for us to have a talk. I hope we can do it again soon. I think what you have had to say is worth thinking about. I always take these things as I want to learn something every time I interview somebody and I have learned a bit tonight. So thank you very much for your time and I hope we see you soon.


CHALMERS: I've enjoyed it too, Richo. Thanks very much.