Sky News Speers on Sunday

29 April 2018




SUBJECT/S: Labor axing tampon tax; 2018 Budget; Turnbull’s tax breaks for top end; Banking Royal Commission; National security leak and Government disunity 


DAVID SPEERS: Jim Chalmers is the Shadow Finance Minister and joins me now. Thanks for your time this morning. That was June 2016, Bill Shorten saying Labor was not going to remove the GST from tampons because it was unaffordable. What's changed now?


JIM CHALMERS, SHADOW MINISTER FOR FINANCE: We've found a way to pay for it, David. We've done a lot of work since that time to make sure that we can put forward a plan which deals with the fact that we have a status quo that is indefensible and discriminatory because it defines tampons and pads and female sanitary products as non-essential health items, and that's obviously not the case. That's an absurd proposition. So we've been working very hard to make sure we can go to the states and say, yes you would lose $313 million over 10 years in GST revenue by making the tax system fairer for women, but here is a way that we can replace that revenue - $324 million in GST revenue - by relying on the advice of the Chief Medical Officer and targeting the exemption towards those sorts of treatments which have a clinical benefit. So we've done the work, we've found a way to do it fairly. It's an important announcement today. We're very proud of it, and Malcolm Turnbull should pick up and run with it. If he doesn't, a Shorten Labor Government will fix this unfairness in the tax system, which discriminates against women.


SPEERS: The problem with the GST, as I'm sure you'd agree, is that there's a lot of anomalies - the tax on sanitary products may be one of them, because clearly they are an essential product. But there are other essential products like toilet paper, like nappies, that the GST applies to as well. Would you want to remove those?


CHALMERS: That's essentially the Tony Abbott defence, that you can't deal with this unfairness, this discrimination against women in the tax system because there's other unfairness as well. This is a top priority for us. We've been working on it for some time. Tanya Plibersek and Catherine King and Chris Bowen and Andrew Leigh and Bill Shorten; we've had our heads together for some time now to make sure that we could make this happen. Of course, right through the tax system there's other examples of unfairness and we're dealing with a lot of those too, around negative gearing and trusts and those other ones that you mentioned in your introduction. But this is a high priority for us. We've done the work; we've got a proposal and Malcolm Turnbull should pick it up and run with it. If he doesn't, we will act.


SPEERS: But just on the GST, sticking with that, most economists would agree that the best thing to do - because it is generally regarded as a good tax, hard to avoid and so on - is to broaden the base; extend it to more things, not take more things out of the GST net. So why not extend it to condoms and Viagra? Why not extend it to the natural therapies you're talking about there? Isn't that a better approach than taking it off more things?


CHALMERS: I think we do broadly in the tax system need to fix some of the holes in the revenue base. That's why we're proposing some of those other issues; that's a higher priority for us than some of the other things that you've just mentioned. But some of the examples you just used are an indication of just how absurd and indefensible it has been for so long for tampons to have GST applied to them when some of those other examples you raised are exempt. That's just one example of the unfairness. We're acting to fix it, and we're acting to fix some of the other unfairness in the tax system too.


SPEERS: Alright, just one more on this GST front though. To the point about why it needs to be broadened, there are other areas that are exempt from the GST like private health, private education. Are these anomalies that Labor would one day like to fix?


CHALMERS: We're not proposing to change the arrangements around that, David. Our proposal today is very targeted to remove that discrimination from the tax system, which wrongly classifies tampons as non-essential health items. That's a high priority for us and we'll deal with it.

SPEERS: And you've got to win over the states and territories. Has there been much discussion with them on it? What are the chances of them all agreeing to this?


CHALMERS: There has been some discussion and some consultation, David, and we're confident that we could sign the states up for this important change. It's been rejected before by them, largely on the basis that there wasn't anything to replace that lost revenue with. We've worked on that aspect of it. If a state government was to reject what we're proposing, I think the public pressure would be substantial. So for all of those reasons, and based on a couple of those initial conversations, we think this change can be made. It needn't wait for a Labor Government. Malcolm Turnbull could do it. But if he doesn't, then we will.

SPEERS: Let's turn to the broader Budget outlook. It does seem that the Budget bottom line is in a much healthier state than it's been in for, well, the past decade. Finance Department figures for the first three months of this year, so January, February, March, do show revenues are up over $5 billion, expenses are down nearly $4 billion. And it seems the big driver of this is companies no longer writing off Global Financial Crisis losses. So they're paying company tax once again. Do you give the Government credit for this healthier Budget outlook?


CHALMERS: (Laughs) Well, first of all we don't know what the bottom line will be in the Budget. What you're referring to is the fact that we have really an extraordinary amount of tax revenue rolling through the door now; billions and billions of dollars in new revenue, which has nothing to do whatsoever with any action that the Government has taken. And really what it means is with the global economy in the best condition it's been in for probably a decade, with revenue rolling through the door in really extraordinary numbers, the Government's ran out of excuses for the fact that they've got debt in this country much higher than what they've inherited; the deficit currently for the year that we're in is eight times bigger than it was in Joe Hockey's first Budget. So they've run out of excuses for the poor position that the Budget's in. They've got great global conditions; they've got lots of revenue; and we will see on Budget night on what the final impact on the bottom line is.


SPEERS: As I mentioned, expenses are down nearly $4 billion. You fought against many of the Government's savings measures, whether it's on pension reform or welfare reform. Surely the Government deserves some credit for getting those expenses down?


CHALMERS: The expenses that you're referring to, David, are a consequence of the fact that good global conditions are helping our Budget. Those are what the economist and the technocrats call the automatic stabilisers.


SPEERS: And record jobs growth?


CHALMERS: We've still near record underemployment, all of those sorts of things. The labour market is not as rosy as the Government would like you to believe. But the point I'm making is, a lot of the improvement to the Budget are automatic improvements to the Budget, which are delivered to us in part substantially by very strong global conditions. So I think if Scott Morrison and Malcolm Turnbull were to take credit for that, I think people would take a dim view.


SPEERS: But hang on, you're happy to blame the Government when the debt and deficit is increasing, but when there's a better result, you're saying this is just automatic? The Government's got nothing to do with it?


CHALMERS: One of the reasons why we have such high debt and deficit in this country, much higher than the Government inherited, is because they continue to defend these big tax breaks for the top end of town. And they want to make it worse by giving $65 billion to multinationals, including $13 billion for the big banks. So I think we can make a legitimate criticism of the Government, which said that there was a Budget emergency when the deficit was around $3 billion; we don't hear much about that now that the deficit's around $24 billion and we've got more than half-a-trillion in gross debt...


SPEERS: But if the deficit is improving, if the bottom line is improving, surely the Government therefore also deserves some credit?


CHALMERS: It remains to be seen whether the bottom line's improving. It depends how much of this enormous revenue upsurge that the Government spends. But I think it's entirely legitimate for us to point out the Government campaigned on fixing debt and deficit, said we had a Budget emergency, and right across the board across all the key measures, it's blown out substantially.

SPEERS: One of the things we know the Government is doing is no longer proceeding with an increase in the Medicare Levy, to help pay for the NDIS. Labor promptly agreed to also abolish any increase in the Medicare Levy. You wanted to do it for people above $87,000 a year. Why have you done that without seeing the Budget papers?


CHALMERS: It was the Government's tax hike. They wanted to apply it to everyone. We said that it wouldn't be fair in the first instance to apply it to low- and middle-income earners, so we came up with a compromise which is no longer required now because the Government's taken its tax cut off the table.


SPEERS: If that compromise is no longer required, why not do away with all of your compromise? Your compromise was to increase the Medicare Levy for those earning more than $87,000, but also increase the top marginal tax rate by two per cent for the highest income earners. You haven't yet abolished that, have you?


CHALMERS: No, we maintain our position on that. That levy is called a Budget Repair Levy for a reason, David. When it was first introduced, we had the deficit at around $3 billion; it's now $24 billion, as I said a moment ago. We've got record net debt, near record gross debt as well. So for all of those reasons and with the Budget in the mess that it's in, we don't think that we should be taking away the Budget Repair Levy. We never supported Malcolm Turnbull giving yet another tax cut, effectively, to millionaires in that last Budget. So we maintain our position on the Budget Repair Levy, because we've got still a very weak Budget position, even with these billions of dollars rolling in as a consequence of improved global conditions.


SPEERS: That would mean a two per cent increase in the top marginal tax rate, taking it to 49 per cent. And this is at a time, as we saw during the week with the tax office figures, the top 10 per cent of income earners are contributing 45 per cent of the overall tax take. You want them to pay considerably more. That would be historically the highest ever in Australia, wouldn't it?

CHALMERS: The top marginal rate has been higher than that in the past.


SPEERS: No, I meant the contribution to the overall tax take would be higher than ever.


CHALMERS: I'd have to have a look at the figures through the years, David, but I think our position is well known. We think that the Budget Repair Levy should stay on. We think that when we're trying to repair the Budget, we shouldn't ask the most vulnerable people to carry the can for the Government's Budget failures. We've got other proposals as well. We've got a Prime Minister who goes to the wall to defend tax breaks for the top end of town and we have a different approach. We make no apologies for that.


SPEERS: Well if you're not budging on that, there will clearly be some tax cuts offered to low- and middle-income earners in the Budget Tuesday week. Will Labor seek to outbid the Government on those tax cuts for those further down the income scale?


CHALMERS: It doesn't make a lot of sense for us to try to respond to tax proposals that we haven't yet seen. But obviously we would look more favourably on tax relief for low- and middle-income earners than we would for yet another tax cut for the top end of town. We'll keep our powder dry and we'll respond at the appropriate time once we've seen what the Government's proposing.


SPEERS: Let me turn to the Royal Commission. It's been a pretty damning couple of weeks and the board of AMP is a little later this morning going to be holding a special meeting. This was after the Royal Commission was told that AMP broke the law by charging fees for services customers didn't receive, appearing to mislead ASIC, and presiding over a culture that has not respect for compliance was the evidence. Do you think the chair of AMP Catherine Brenner should stay or go?


CHALMERS: We've seen some horrible revelations out of the Royal Commission and the things that have been revealed about AMP have been amongst the worst of those. It's not possible for us after every bit of testimony to make a judgement on which board members should stay and which should go, but there has been pretty extraordinary failures of corporate governance here amongst other things, so if board accountability is to mean anything, then I think the chair of the company should take responsibility and that means resigning.


SPEERS: So you think Catherine Brenner should be doing that?


CHALMERS: Yes, I think if board accountability is to mean anything, then Catherine Brenner should take responsibility for these extraordinary scandals at AMP and do the right thing.


SPEERS: What about some of the other recommendations that are already being made to the Royal Commission, not by the Royal Commission yet - financial advisers doing things like forging signatures, impersonating clients, and so on. Do you think banks should be required to divest their financial advice or wealth management arms?


CHALMERS: We'll come to a view on that in due course, David. Those are one set of revelations from the Royal Commission. There's been others as well. No doubt we'll have the time to respond in a considered way to each of those sets of allegations. But I will make this broader point: a lot of these scandals have happened in the two years that Malcolm Turnbull resisted having a Royal Commission in the first place. And I saw that he had him and Scott Morrison unsheathe the wet lettuce again yesterday with their hollow words about the banks and I'd say this: for as long as Malcolm Turnbull has in his Budget a $13.2 billion tax cut for the big four banks, he will not be punishing them for this kind of behaviour, he will be rewarding them for it. So all of the words that he has to say about the banks at the moment, along with Scott Morrison, are just hollow rhetoric for as long as he keeps in the Budget the $65 billion tax cut of which the big four banks will get $13.2 billion of it.


SPEERS: A final one, Jim Chalmers. News Corp today reporting the Secretary of the Home Affairs Department, Mike Pezzullo, and the Secretary of Defence, Greg Moriarty, have been discussing plans to allow the Australian Signals Directorate - this is our top spy agency, it's only at the moment allowed to spy on foreigners - allowing it to actually target Australians. The plan is apparently to help tackle child exploitation, cyber threats, terrorism and so on. Does this sound like a sensible move to you?


CHALMERS: This is a very, very big revelation today David. And I think even for a Government which routinely leaks on each other and where ministers dump on each other on a fairly regular basis, this is a really extraordinary leak. We need the Prime Minister to come out today and explain what he knew about the proposal, when he knew it, what advice he has received on it. On the face of it, it looks like a pretty extraordinary power grab by Peter Dutton, who has developed a reputation as a power-hungry minister. I think a lot of people reading that story in the paper for the first time today will wonder whether Peter Dutton is temperamentally suited to having those kinds of powers available to him. We've got some good form, David, in being constructive, engaging, with changes as they're proposed, but they need to be based on expert advice; they need to have strong safeguards; they need to have parliamentary scrutiny; they need to be based on all of those kinds of considerations, and not just another power grab by Peter Dutton in a hopelessly divided Government.


SPEERS: I just want to pick up on the point you made there about his temperament. At the moment, ASIO and AFP warrants have to be approved by the Attorney-General. The plan, according to this story, was to have Peter Dutton as Home Affairs Minister, and the Defence Minister Marise Payne approve these ASD warrants. Are you saying that Peter Dutton does not have the temperament to approve what's good in Australia's national security interests?

CHALMERS: I think a lot of Australians who observe the way that Peter Dutton goes about his job would be deeply concerned that he would have these sorts of powers available to him. Even if they were in partnership with other ministers. And I think the fact that this letter has leaked, it's a very sensitive letter as you know - things like this do not leak frequently. The fact that it is out and about now in the public domain, I think indicates that somebody shares those concerns about the Home Affairs Minister exercising those powers.


SPEERS: Jim Chalmers, Shadow Finance Minister, we'd better go. Thanks for joining us this morning.


CHALMERS: Thank you, David.