JOURNALIST: I want to take you to a part of your speech before we take questions from the floor. By saying that Australia needs more room and more of a buffer, you seem to be suggesting there that a surplus of 1 per cent of GDP is no longer a big enough buffer. If that's the case, what kind of surplus is going to be big enough for a buffer?

CHRIS BOWEN, SHADOW TREASURER: Sabra, we pointed out that 1 per cent of GDP as a surplus is some way off from the Government's own projections, it used to be the holy grail, some way off. I think that you can regard a surplus of 1 per cent of GDP as a material substantial surplus. Peter Costello at times had surpluses of up to 2 per cent of GDP. But less than that, 0.1, 0.2, 0.5 per cent, is leaving the economy and the Budget in particular, subject to international circumstances. We talk of head winds, well a 0.1 per cent can be blown over in a light breeze, dont worry about a head wind. We can't think that if we get back to surplus in 2019, put our feet up and all is done. You know, either dip back to deficit or just roll along with small surpluses. Jim and I, as I said, will release the full accounting and you'll see the size of the surpluses but we're announcing principles, and importantly, not just principles, but principles that are underpinned by decisions we've already taken. These aren't just words - there's policies to back them up.

JOURNALIST: First of all, congratulations on becoming the second longest Shadow Treasurer. You must be delighted.

BOWEN: Commiserations?

JOURNALIST: Can I go to an issue straight to the heart of every Australian worker and that's wage growth. The ABS figures come today showing that it's 2.1 per cent for the 12 months to the end of March. First of all, that embarrasses the numbers in the Budget from last week. It's unlikely now to hit the 2.25 per cent. But I suppose that also changes some of the Government's projections as well as yours. Can we go to something, whether this points to something a bit more fundamental? That Australia, like every western Government, needs to perhaps look at a lower wage growth future? And that the numbers that you'll be potentially receiving as advice from Treasury, are going to be wrong because something has broken. Can you reflect on that issue, whether, indeed, we are in this new world and that the numbers that you're given, both in Opposition and in Government, are simply going to be wrong?

BOWEN: Thank you for the question. I'll take it in a few parts. Yes, today's figures are disappointing for the country. It's very, very difficult now for those Budget projections released just last week to be met. I agree with the premise of your question. Of course, the Budget baseline that the Government puts out is inevitably under our processes that we have the same baseline as us. But we point out that the wages projections in the Budget forecasts are, I think, the ambitious part. I don't quibble with most of the projections in the Budget. Most of the forecasts I think are fair enough. The wages one is the one that's most problematic, and of course, Budget surpluses and the projections for Budget surpluses are pretty dependant on the wages forecast. So I agree with all of that. But even more importantly than that, it's the living standards of Australians. That's even more important. Now, hence, we've been not only talking about this, but developing policy.

First do no harm - don't cut the wages of people who work on Sundays. We will restore the penalty rate cuts. First do no harm. Secondly, Brendan O'Connor has been consulting very widely, talking to me and our colleagues and business and unions about what can be sensibly done in the space of wages. And we'll have more to say about that. And thirdly, we do need to spur investment to create that growth, and that's why we have the Australian Investment Guarantee, for example. What I don't accept is the implication of your question - that we should just accept low wages growth. I accept it's an international problem. It's not all the fault of the Government and it's not all entirely Australian issues. Of course, there's an international phenomena going on here, but I think that any Government that just says Oh, it's all too hard and people won't have wages growth is giving up on one of our core responsibilities.

JOURNALIST: Thank you for the speech. You referenced Guy Debelles address yesterday and he also referenced the Banking Royal Commission and its possible impact on the broader economy, specifically on housing prices. The Federal Treasury in the Budget last week as well as the West Australian Treasury in its Budget also referenced the Royal Commission, as well as having possible negative impacts on the economy. I'm wondering whether you put your mind to how you would balance any recommendations out of the Royal Commission with what it may mean to the national economy, particularly around credit growth, credit standard tightening, and whether, as an incoming Treasurer, you'd ask the Treasury to put together an economic analysis of the recommendations of the Royal Commission? Is that something Scott Morrison should consider?

BOWEN: Thanks for your questions Shane. One; if we had a Royal Commission when Bill Shorten and I and Mark Dreyfus and I called for it, we would now be implementing the recommendations. We wouldn't be talking about the potential ramifications, the nation would be getting on with the job. Two years of wasted opportunity.

Point two, we didn't choose Commissioner Hayne, but we have respect and faith in the role he's doing and we should give him the room and the time to do his job.

Point three, the evidence that he has received, although I won't go into a day-to-day commentary obviously on the evidence before the Royal Commission, it's plain as day that some of the issues that have been raised about lending standards have been deeply concerning. Deeply concerning. The lack of rigour in some cases going into leaning standards. So it is right that the Royal Commission is focusing on that.

Four, of course, we take very serious note of what Deputy Governor Debelle says.

And five yes, I would think that firstly, any Government, I think, Labor or Liberal, will take very seriously the recommendations of the Royal Commission and you'd need a very good reason not to accept their recommendations. And then, should the Treasury be advising on the economic implications of those recommendations? Yes.

JOURNALIST: Will you have a check list of things that you'd like to see the Commissioner report on and keep it in your back pocket? And then compare and contrast once Commissioner Hayne does?

BOWEN: Having had two years of political argy-bargy and missed opportunities on the Royal Commission, apart from pointing out that it should have been called years ago, I don't want to particularly politicise Commissioner Hayne's role and the Royal Commission and the job its doing. He should be given the space to do it. Again, would we have written the terms of reference exactly how the Government wrote them? No. But he's getting on with the job. It's a serious effort, with respect to him and his counsel assisting, they are clearly, I think it's fair to say, conducting the role with rigour and let us see them get on with it.

JOURNALIST: Mr Bowen, there's concern that your income tax plan fails to sufficiently address bracket creep in the long-term. Can you explain why you're not looking at indexing tax brackets to CPI, or to wages growth so that the average tax rate isn't forever increasing?

BOWEN: Thank you, Olivia. Tax bracket indexation was tried once by Treasurer Lynch. It lasted year and failed and was cancelled. And I don't suspect that any Government of either persuasion is going to go down that path again. There are several ways to deal with bracket creep, but whichever way you deal with it, providing tax cuts, targeted to low-and middle-income earners, regardless whether it's through changes to the thresholds, changes to the rates or as we're doing through the low- and middle-income tax offset is providing assistance to the people who need it most and thats what we're doing.

JOURNALIST: Just staying on personal income tax cuts. I understand that Labor has accepted phase one of the Government's plan. But you haven't yet given an indication exactly of what you'll do on phase two. This would lift the threshold for the start of the 37 per cent tax rate to $120,000. If you don't accept that move, we crunched the figures and we found out that voters are worse off under your tax plan once they reach an income of $95,450. So I have two questions. The first is - is it still possible for Labor to accept phase two of the Government's personal income tax cuts? And secondly - if you don't, how can you go to an election where essentially you're promising to leave voters on more than $95,000 comparatively worse off. Is that the new rich in Australia?

BOWEN: Thank you. Yes, we support the Government's stage one. We said that we'd vote for it tomorrow, split the bill and no problems. Pass both houses. Bob's your uncle, everybody's happy. Split the bill. Easily done.

Point two, we'll take a little bit of time look at phrases two and three. I think our scepticism about phase three is pretty evident to everybody. We have an internal process that I'll make a recommendation to colleagues. But stage two is in multiple parts, it's fair to say. Stage two has got multiple parts to it, it's not just the measure that you referred to, theres other parts to phase two. The Government singularly refuses to release the year-on-year costings. They've got them. They know what they are. They're not that incompetent. Just release them. The reason that's important is because that helps us break down the cost of the different components. Scott Morrison actually tried to suspend standing orders to force us to vote on this the day after it was brought in and won't release the costings. Talk about Budget irresponsibility.

And finally, just on your analysis, I don't think that it takes into account the fact that middle-income earner, low- and middle-income earners will get a tax cut from us three years in advance of 2022, which of course is not just an issue in the 2018 election but in the 2021 election as well.

JOURNALIST: You've given ordinary people certainty about what sort of income tax cut they'd get under a Labor Government, and you've given big companies certainty about what tax cut they wouldn't get. But the question of the legislated company tax cuts is still floating. I think you said at one point that we'd know the answer to how much of this you would accept after the Budget. It's now after the Budget. How long are you going to wait to give that certainty to those middle-level companies? And isn't it unfair to them to delay that certainty?

BOWEN: Well thanks Michelle. The premises of the question are correct. Our position on the unlegislated tax cuts is very clear for all to see. We oppose the company tax cuts that have already been legislated, although of course we do support the tax cuts for businesses with a turnover of less than $2 million which is 91.4 per cent of businesses in Australia. They have complete certainty because there's a bipartisan position. In relation to those that have currently been legislated though other than those below the $2 million threshold, it is right and proper that we carefully consider it. We recognise that it having been legislated, despite the fact that we opposed it, is a change of circumstances, a material change of circumstances. You are correct to say that we said we would want to see the figures in the Budget. Company tax revenue is up very substantially. The Government won't tell us the 10-year costs, so again, it is right and proper that we take some time to carefully work that through. We will be announcing our position, which will be crystal clear. Not only to the voters but to the businesses of Australia. Of course, all businesses will receive our Australian Investment Guarantee, that's a certainty as well. Big and small. They all get the Australian Investment Guarantee and we'll do so at a time when we're satisfied that we have all of the information. The Government is not providing it. We have to get it ourselves. It's fair to say Michelle, as one of Australia's most respected, with all due respect to your colleagues, one of Australia's most respected and experienced political journalists, you would, I hope agree that weve put more policy out there than any opposition in living memory. So we can't be accused of hiding our policies, and this is one that will be clear for all to see in plenty of time for people to assess our plans before the next election.

JOURNALIST One of your revenue measures, to fund your promises, is lifting the top marginal tax rate from 45 per cent to 47 per cent, which would be 49 per cent with the Medicare levy. That's effectively re-introducing the temporary deficit levy as it was badged, which has since lapsed. Your rationale for doing that is that we need it while the Budget is in deficit. Given today that you've committed to a balance in 2019-20. Does that mean that you're going to cancel the plans to do that or youre going to rebadge it the 1 per cent of GDP surplus levy and keep it until you get to the strong surpluses?

BOWEN: Of course, the Budget repair levy was brought in to repair the Budget. We're making the case that the Budget is not yet adequately repaired so our objections to taking the Budget repair levy off remain. Bill has said, quite rightly, that that is a situation that we'd review when the Budget is back in sustainable surplus. That's our position. And of course, we'll continue with that position that we'll review it when the Budget is back in sustainable surplus. Sustainable surplus isn't 0.1 per cent. Sustainable surplus is better than that.

JOURNALIST: We're told that the Productivity Commission's review of the GST distribution arrangements will be released within weeks.

BOWEN: It should be days.

JOURNALIST: It should be days. You'd like to see it before the by-elections?

BOWEN: Yes.

JOURNALIST: Okay. I'm interested, what will Labor's approach be if the Government does indeed try to cut some sort of deal with the Treasurers to change the distribution formula, perhaps with some sort of compensation in the meantime for states like South Australia that could potentially be worse off. What would your approach be in coming to Government to try to rebalance that situation, potentially?

BOWEN: Thank you. And again, we've been proactive in leading this discussion. We went to Western Australia, Bill and I, and said, you have a legitimate beef, a legitimate concern. We will have the Fair Share for WA fund. It was our answer to their concerns, which doesn't take a dollar off the good people of South Australia or any other jurisdiction, because it comes out of the Commonwealth. The Liberals complained and said it was a cop-out and then effectively did the same. Just carbon copied our policy. So, we have the virtue that we can say the same in Western Australia as we do in South Australia, as we do in Tasmania. Our solution to the legitimate concerns of the people of Western Australia does not disadvantage the people of any other jurisdiction. In relation to the Productivity Commission review, there is no excuse not to release it. I don't expect him to release it on the day he got it. Fair enough. Take it home and read it. But share it with the rest of us. It doesn't need weeks. It should be released this week. There are by-elections, but put the by-elections aside.

This is a very big issue for many jurisdictions about the provision of services. I mean think of the people on the Northern Territory who are so reliant on the GST distribution. Get it out there. If there's nothing to hide, get it out there. Let us read it. Let you read it. Let the analysis continue

JOURNALIST: Just on the PBO plus. You said that PBO should be treated with the same respect as Treasury. If that's the case, why do you feel the need for the extra scrutiny with your new team? And do you feel it's right that a Government can ask Treasury to cost policies of the Opposition, when obviously your Government can't ask Treasury. And isn't that just politicising Treasury?

BOWEN: Thank you. Firstly, it's extra rigour. The PBO is a professional, well-resourced body, with full access to all the information. But as the Opposition, I think it's right that we just apply that extra piece of rigour, that extra piece of belt and bracing, with the three eminent Australians checking the assumptions and making sure that they're reasonable. Working with our costings and being able to verify them. If you're criticising us for being too rigorous, okay. You can make that criticism, but I think it's justified.

On the Treasury, I am concerned about the politicisation of the Treasury under this Treasurer in particular. Let me make clear my respect for the Treasury. I've worked with the Treasury in various portfolios. I have the deepest respect for their professionalism and abilities and they should, at all times, be consulted on Government policies and be at the heart of Government decision making and advice to the Government of the day. They should not be a political battering ram, and there is a pattern of this Treasurer, commissioning Treasury work, releasing it selectively to some journalists and not releasing the full work for full proper scrutiny. And indeed, on at least one occasion, claiming to have Treasury modelling and it being exposed as

Treasurers office Modelling. Treasurer's office modelling. That is a politicisation of the Treasury which is not on.

I will have a productive, professional working relationship with the Treasury, and I will not be engaging in the politicisation of the Treasury like this Treasurer has - used it as a crutch to support Government policies and used the Treasury, alleged Treasury analysis, as a political battering ram against us. And I'll criticise him for doing it. But I won't be doing it myself should I occupy the office.

JOURNALIST: The Treasurer said that you spent all of the money you raised on additional taxes on programs that you announced in the last election. You've now added tax cuts and new initiatives in the Budget reply. Just how much money is left for handouts, debt reduction and Budget repair now?

BOWEN: Thank you, Michael. I think you've answered your own question. The Treasurer says we spent all of the money on the 2016 election. There's a mistake that generals sometimes make which is fighting the last war. He's fighting the wrong election. The 2016 election is gone. We narrowly lost. It's over. We're fighting the 2018 election, or 2019 election.

The spending commitments we take to the people are ones that we take to the 2018 or 2019 election, ones that we announce. The relevant shadow minister announces, it goes through our expenditure review committee. Some of the things we announced in 2016 are obviously no longer necessary. And, of course, at the last election, there was a gap between us and the Government fiscally. $13 billion of that gap out of the $16 billion were measures that we said Government measures would not pass the Parliament and should be and would be dropped. Guess what? Most of them have been. Not all of them.

The clean energy supplement and the pension age of 70, but most or the rest were gone. Our position was vindicated. So the Treasurer is being disingenuous. This is another point about the Treasurer and other Government ministers. They say, Look at terrible Labor Party, they have all of these tax increases to fund their promises and by they way theyve got a massive big Budget black hole because they don't have enough money to fund their promises. Now both of the propositions can't be true. Pick one line of attack, Government. I mean, pick one. You can't have both. And you can't certainly have both in one sentence. (LAUGHTER)

JOURNALIST: Can I go to the superannuation changes announced in the Budget last week. The cap on fees for low balance accounts, the ban on exit fees and the opt-in for life insurance. I'm going to get your thoughts. Whether you've made a decision and what you think about these changes. Obviously some of the union dominated industry funds don't like them. But I think that one of the biggest, Australian Super, allows opt-in for life insurance for young account holders anyway. What do you think about these changes. What is Labor going to do?

BOWEN: I'm sympathetic to the objectives that are designed to be addressed by those changes. I think insurance, opt-in insurance is a legitimate issue, particularly for young people with low balances. Obviously when we see legislation, we'll send it to a Senate committee just to go through the normal processes of checking for unintended consequences, better ways of achieving it, any particular issues. But the objectives that are designed there to try to protect the balances of people with low balances are ones that I'm very sympathetic to. We did things in Government to do that. I'm very sympathetic to the objectives of taking those steps forward.

JOURNALIST: Can I go to the thematic element in your speech where you say that Labor gotten the big calls right. The big call that Labor made during these two big terms in Opposition, essentially politically, has been an appeal to people doing it tough, resonates more than an appeal to people who are lucky enough to be thriving in the current disruption, to aspirational Australians. Are you confident that that remains the correct call, politically, at a time where the economy is clearly picking up and sentiment along with it? And given I'm a bit confused what it is, can you explain to me what Labor's pitch is to aspirational Australians who are thriving in the current disruption?

BOWEN: Our pitch to aspirational Australians who are thriving in the current environment is, our economic growth has been exceptional and it is very good that people who are benefitting from that economic growth are able to do so. I mean, I would say, decisions by a Labor Government from Hawke and Keating to Rudd and Swan have facilitated that economic growth, and of course, participating in that, benefitting from it, is one of the objectives of Government. But across the country, people who are doing well also say We want to see all do well. And I've been struck, I've got to say to you, struck, since we engaged in this policy work, whether it was negative gearing or dividend imputation or capital gains or trusts of people who came up to me and said I am a massive beneficiary of the current situation. I use all of the tax concessions to their maximum advantage for myself, as I should for my family and I am really glad that you're getting rid of them because they're not sustainable and they're not fair. I'll do it for as long as is legal. I'll act rationally. I'll comply with the tax laws. But, something's got to give and at last somebody is saying so and doing something about it. And that is a very common view. I'm not saying that everybody holds that view, obviously, who loses a tax concession, self-evidently. But it's a common view. People know that our society is important. That how society is dealing with those who are not benefitting from the economic growth, from those in the regional towns of Queensland who are dealing with massive youth unemployment. Those in Tasmania - a state which has huge economic challenges in front of them who are not currently riding that growth. Who deserve the investment in them to grow their full potential - that takes money and resources and effort by Government. We talk of inclusive growth. That means people benefit from the growth. But it also means that all Australians have the investment in them to contribute to the growth. That we lift people, to be able to contribute.

To the 40-year-old tradesperson in Gladstone who has lost their job and has been out of work for two years and can't get back in. To the young people of Docker River who Jim and I spent time with singing nursery rhymes and looking at the smiles on their faces who, frankly, the way things are going, are not going to grow to their full potential. That's economic growth thats inclusive and it does requires something from Australians who have benefitted from Government policies which are no longer fit for purpose which aren't progressive, which haven't been reviewed for years, which no Government, until we came along as the alternative Government, have had the guts and the courage to address. But we've done it for a reason and many people recognise the merits of those reasons.

JOURNALIST: Can I go to aspiration for a different group right at the bottom, those who are aspiring for a job. Last week at the corresponding event, I asked the Treasurer if it was the case that Australia could not afford to pay people on Newstart more, or whether it was a concern of the Government that if it did, this would act as a disincentive for those people to enter actively into the job market. Can I get a clear values answer from you on those two choices?

BOWEN: Thank you, Mark. Newstart is a low payment, one of the lowest Government payments we have. And there is a strong argument going on that it's too low. I know that some people would think that this is a simple issue, I would say it is more complicated than that. Some of the things that need to be considered when considering Newstart;

One - its interaction with other payments. It's lower than the aged pension. It should be lower than the aged pension. The aged pension is for the rest of your life. Newstart is meant to for people in temporarily hard times. I do recognise though that many people end up on Newstart for longer than expected and it is a more permanent payment. We need to consider that. We need to consider what other Government payments people on Newstart are on. I think Im right in saying a significant minority of people on Newstart also receive other Government payments, including, most particularly, rent assistance. So just looking at the Newstart rate in isolation is not particularly accurate. For a full accounting, you need to think about how it interacts with other payments in the welfare system. Of course you need to look at the interaction with the minimum wage and you need to consider how Newstart interacts with the minimum wage, and finally you need to consider costs to the Budget and how you would finance or whether you would sustain an increase in Newstart. These are all very important concerns.

To do the Newstart issue justice requires all of those issues to be addressed that's why we've said we'll review the Newstart payment in Government, with all of the resources of Government, like we, in the lead up to 2007, said that we would review the age pension, where we would have a proper, thorough review of Newstart, taking into account the issues that I've raised, and obviously other issues, which may need to be addressed. The Government's position, apparently, is Newstart is fine and never needs to be touched and won't be increased. We're saying these things need a thorough examination.

JOURNALIST: At the heart of your pitch is that its fairer than what the Government is doing. Your negative gearing changes are grandfathered meaning that those who enjoy the benefits today enjoy the benefits forever; theyre largely baby boomers who enjoyed the growing economy every step of the way from free education all the way through to negative gearing with you, how is that fair?

BOWEN: Its fair Chris for two reasons, its right for two reasons. Its fair because those people have made investment decisions based on the rules at the time. Big investment decisions and we respect that. Secondly, its right because we need to consider the economic flow-through impacts if you didnt grandfather negative gearing, if you took that concession away immediately, it may have some impact on the market which is greater that if it were grandfathered. So its the right balance to grandfather changes. Its still controversial and the Government keeps on with its misinformation campaign on it. Its different for every reform, but for that reform weve got the balance right.

JOURNALIST: Thanks very much for your address. Just following on from Chris, subject to height limits, 37,000 apartments built on Northbourne Avenue

BOWEN: I thought you were talking about your height Tim?!

JOURNALIST: yes, working on that. Now under Labors plan a brand new apartment can be negatively geared.

BOWEN: Yes.

JOURNALIST: Right. On the other side of Northbourne Avenue and theres Northbourne Avenues all over Australia theres second hand apartments. Youre saying to those looking for affordable housing that if you have the dosh, you can negatively gear the new place, but under Labors plan, no tax deduction or negative gearing on the second hand apartment. How is that fair to the Australian taxpayer and how is that going to make housing more affordable, and at the end of the day, is this going to make affordable housing more available to Australians?

BOWEN: Thanks Tim. What our reforms do is put negative gearing to work. The Government says, and theyre right, that the best thing can happen for housing affordability is housing supply. Its a truism if you like. And the defenders of negative gearing say that it is so necessary to get the investment required to get new housing built. The trouble with that is that more than 90 per cent of negative gearing goes to existing houses. Now if thats your objective, to use the tax concessions to encourage developers to build new houses, youve got a more than 90 per cent failure rate.

Now Government policies can be designed to focus on new construction, for example, our foreign investment rules under governments of both persuasions, advantage new housing. They do so for the same reason as our negative gearing policy, because new construction is good. Increases the stock. We are saying to Australians who want to negatively gear Sure, do it in the future but work with us, increase the housing supply, build something new, get something on the market. Build it, rent it out and we will supply the tax concession because this is a public benefit of something new. There is no reason to say though that negatively gearing all houses somehow is a way which will increase housing supply because it has got a more than 90 per cent failure rate.

JOURNALIST: Our last question today is from one of our excellence in Financial Journalism award winners, Leo Shannahan.

BOWEN: Congratulations Leo.

JOURNALIST: Oh thanks, Just a question in relation to your commendable commitment

BOWEN: Youre going real well so far.

JOURNALIST: to Budget surpluses and I just wanted to ask you about some of the language in your speech. Following that commitment you say that if the Government decides to announce a new secret policy which is fundamentally unfair and is an attack on working people then we reserve the right to address that. What does that mean? Because it seems to leave a great deal of wiggle room to break that promise on surpluses especially in the context of pre-election spending.

BOWEN: No Leo, what it means is I dont trust this Government. Thats what it means. They say they are going to go to the next election with a 2018 Budget. That is the Budget I am responding to. That is the Budget for which we will have bigger cumulative surpluses over the election forward estimates compared to the 2018 Budget. If they come up with a new policy between now and the next election which is objectionable to our values, which they might design in some sort of cynical wedge for us, in that world that is not something that I am prepared to give a blank cheque to sight unseen. So I am responding to the 2018 Budget.

If they come out with for the cuts to the age pension or cut to the Newstart allowance, might seem unbelievable but theyve currently got a policy to cut Newstart for new recipients through the clean energy supplement. If they come up with something of that nature which has a big Budgetary impact, well Im not signing on for that. If they want to go to the next election with a 2018 Budget as their policies, we will go to the next election with bigger cumulative Budget surpluses over the forward estimates compared to the 2018 Budget. Thats what that means.