JON FAINE, PRESENTER: Chris Bowen is the Shadow Treasurer from Bill Shorten's Federal Opposition. Mr Bowen, good morning to you.

CHRIS BOWEN, SHADOW TREASURER: Good morning to you Jon. Happy New Year.

FAINE: If elected you'll wreck the economy according to the Prime Minister?

BOWEN: Well this is just the sort of typical shrill scare campaign we've come to accept from a Government which is devoid of its own economic agenda and interestingly

FAINE: Well lets subject it to some closer scrutiny.

BOWEN: Well interestingly it's fallen apart already because Scott Morrison is now denying that he ever said that Australia would be in recession under Labor. Of course it would be a deeply irresponsible thing to have said if he said it.

FAINE: He's got 1,250,000 jobs predicted in the next five years and says he's got the track record to do it and he has.

BOWEN: Well that's the promise that he's making and we will point out

FAINE: It's not just a promise. He says we've done it before we can do it again and they have done it before.

BOWEN: And that jobs growth is in keeping with historical trends. Of course jobs are created across the country in a very benign international economic environment for this Government. I mean the global economy has been working well over the past few years and of course Australia has received some of that benefit. But the fact of the matter is there's 1.1 million people in Australia who are underemployed or unemployed. That's what we see from

FAINE: Which is also in keeping with historical trends and you know the statistics as well as anyone.

BOWEN: Yeah of course. But the fact of the matter is you've got 1.1 million people who were underemployed. We've got another 683,000 people who are unemployed. So we've got 1.8 million Australians who want more work, who want more work. Now the Government talks a lot about job creation and that's fine. But we'll also point out that wages growth is at record lows. Many people have copped wages reductions if they work on the weekend and that's flowing through of course to increased household debt. Second highest in the developed world and weakening consumption growth because people are finding it harder to make ends meet. So bottom line Jon

FAINE: And youll make it worse is their scenario they say and the Prime Minister repeated what Josh Frydenberg said on this program last Monday. $200 billion of a tax take taken out of the economy. It weakens, it doesn't strengthen the economy so why is that a great idea?

BOWEN: I don't accept the premise of your question. I mean Scott Morrison, Josh Frydenberg will never tell you of course that the Labor Party is offering bigger and better tax cuts for 10 million Australians earning less than $125,000. They'll have a very high propensity to spend those tax cuts because they need to to make ends meet because wages growth has been anemic across the country. So we relish the economic debate Jon. I mean we relish it. Bill Shorten relishes it. I relish it.

Yes we will have alternative plans. Yes we pointed out that some things are unsustainable in our tax system and needs to be reformed. More than welcome that debate. We announced many of these things three years ago, two years ago, almost a year ago in the case of dividend imputation reform.

So we'll have that debate but let's have the debate in full on this Government's record and also the full context of our commitments to spend more on health and education, have bigger and better tax cuts for Australians earning less than $125,000.

FAINE: Well let's get to some of the details then Mr Bowen because one of the things that's causing you as much grief as any other of your policies, we will get to negative gearing in a second but abolishing excess franking credits needs to be clear; not abolishing franking credits, excess franking credits, and the capacity to cash them in. Why is it okay to be able to do that if you're in in an industry super fund where you'll get the benefit of it because of aggregation but if you're in a self manage super fund you won't?

BOWEN: Well the point is Jon and I'll come to the specific issue of your question but as you said we have committed to remove excess franking credits that is negative income tax. We're the only country in the world that does it and we spent a lot of money on it. We spend roughly the same amount on this as we do on public schools at the Commonwealth level and it's unsustainable. It's getting more expensive

FAINE: And a lot of people have organized their affairs to take advantage of it.

BOWEN: Absolutely they have and they're complying with the law but it's up to us as the alternative government to say this can't go on any longer. Dividend imputation is really important, really important we get rid of double taxation but franking credits that are refundable, its the only refundable part of the entire income tax system. I mean you can't, you don't get a cheque from the Tax Office for anything else if you haven't paid income tax. This is the only part of it, we're the only country in the world that does it.

FAINE: Doesn't mean it's a bad idea. It's part of, its a feature of the Australian economy and -

BOWEN: What it means Jon, what it means is that if for every dollar of corporate tax paid whether it's by Qantas or Telstra or you name the company, to the extent that their shareholders are people who don't pay income tax we then refund every dollar of corporate tax paid to those shareholders. So the society, society has therefore collected a tax rate from that company of exactly zero.

FAINE: Understood, could I ask you right now in the limited time we have can you address my question though?

BOWEN: Well because the industry funds just as the retail funds and the bank funds do, pay tax. Now if you didn't have that system in place you would be returning to double taxation, you would be taxing those funds to us. We're not doing that.

FAINE: Well self-managed super funds pay tax too. If theyre liable for it they pay it. What's the difference?

BOWEN: Yes and if they're liable for it they can also claim the franking credit to offset it. But we're not going.

FAINE: So what's the difference between a self managed super fund on the one hand which you will be targeting and industry super funds, your friends from the trade union, that you wont be?

BOWEN: There is absolutely no difference in the treatment where a fund has or an individual has paid income tax they can claim the franking credits to offset income tax but where a fund of any nature, of any nature Jon has not paid income tax or an individual has not paid income tax we will not continue to refund tax to people who have not paid it.

FAINE: But they've arranged their affairs specifically to comply with the law. They're not doing anything that's wrong.

BOWEN: Quite right.

FAINE: They're doing what anyone with prudent advice would do. So why target 900,000 retirees who now are spooked and angry?

BOWEN: Well I understand that people who have received the franking credits would like to receive them in many instances. Many people by the way have come up to me and said I've benefited from this. I will use this. I have complied with the law but I accept your logic. It can't go on. I mean I accept not everybody says that. Now sometimes theres arguments about lack of reform or lack of leadership. Well Bill Shorten and I and the Labor Party are more than happy to have our plans scrutinized and we have the courage of our convictions to announce it before an election. Not hide it until after the Liberals did in 2013 and to come onto your show, explain it, defend it as Bill Shorten has done in town hall meetings right across the country, as I've done in multiple interviews right across the country and electorate visits right across the country.

Now I say to you Jon, that means that we will have the moral authority of a mandate because we have had the guts to go out there and defend these policies. And if people very strongly feel that they don't want this to happen they are perfectly entitled to vote against us.

FAINE: Okay. Well move on to negative gearing Mr Bowen our time is limited. Negative gearing, you announced your reforms when the real estate market was hot. Now the real estate market has distinctly cooled. Are you rethinking your policies because of the changed conditions?

BOWEN: No it's the right policy. It's the right policy settings and you're right the market has changed somewhat but still house prices are very elevated compared to what they were five years ago. I mean there's been some softening lately. That's that's a statement of fact. But if you compare where they are now to five years ago they're still very high in most parts of Australia. Not every part of Australia. Perths very different to Melbourne for example. But the fact of the matter is Jon that we have to put first homebuyers on a more level playing field. Again we're the only country in the world with these negative gearing arrangements. Other countries get by without them. We will grandfather every existing investment, protect it so the people who have made those investments will see no change in their circumstances.

FAINE: Sure but if they're selling an investment property because of any changes in circumstances they'll be selling into a depressed market.

BOWEN: Well a depressed market, let's be careful about our language Jon. Again -

FAINE: A cooled market.

BOWEN: Again, there are a whole range of factors which go into house prices. Tax treatment, immigration levels, economic activity, land supply, housing construction, all sorts of things factor into the housing market and it will change over a 20 or 30 year period many many times indeed and it will change in different markets many many times indeed. But the basics, the fundamentals that we've got to give first homebuyers a better chance who are turning up at auctions around the country and find they are competing against investors again as you say quite rightly complying with the law. Acting rationally but it's the job of government to make sure the policy is fair going forward and it is the job of an alternative government to put forward an alternative vision and that's exactly what we've done and we'll keep on doing it.

FAINE: Our time is very tight. I do have to move on but just finally Bill Shorten says he will not meet with Rupert Murdoch when he, between now and the federal election. Have you ever met Rupert Murdoch?

BOWEN: No. And I have no plans to.

FAINE: Would you if you were going to New York would you seek a meeting?

BOWEN: Well I'm not going to New York and I've been to New York several times and I've never sought a meeting with Rupert Murdoch. As Bill correctly pointed out, Bill and I and many of our economic spokespeople meet with the Australian representatives of many multinational companies regularly and thats as it should be. And News Ltd is no different.

FAINE: Thank you for your time and I look forward to other opportunities between now and whats going to be -

BOWEN: There'll be many, I'll be campaigning solidly in Melbourne in the seats of Higgins, Kooyong and Aston and right across Melbourne so there'll be plenty of opportunities for a chat.

FAINE: Well your counterpart the Federal Treasurer Josh Frydenberg, this is his home town. Would the two of you agree to a head to head debate?

BOWEN: Yes from me.

FAINE: Alright. I didn't put it to Mr Frydenberg last week but I will follow that up and we'll see if I get an answer as soon as possible.

BOWEN: And Ill be campaigning strongly for Jana Stewart in Kooyong as well but I'll debate Josh no problem.

FAINE: Thank you indeed. Chris Bowen, the Shadow Treasurer from Bill Shorten's team.