19 December 2017

KIERAN GILBERT, PRESENTER:Joining me now is the Shadow Treasurer Chris Bowen. Mr Bowen thanks very much for your time. A lot of focus in Washington over the next couple of days with the Trump tax cuts. Is it time that Labor got on board with tax cuts here as well, to ensure our corporate sector remains competitive?

CHRIS BOWEN, SHADOW TREASURER:Good morning to you Kieran. Kieran, we believe in Budget repair in the Labor Party and you can believe in Budget repair or you can believe in a big company tax cut, you cant really believe in both. This is very expensive for our Budget. Weve always got to have a view to competitiveness, but companies will always invest across the world based upon a wide range of factors of which tax is one. The fact of the matter is that governments have to prioritise.

Now youve got this Government in Canberra saying you need to increase tax on workers, on people earning more than $21,000 a year, seven million Australians, and were going to cut tax for big companies. So this is a matter of priorities. We have a different set of priorities. We believe in Budget repair but we dont believe in increasing the tax burden on Australians earning between $21,000 and $87,000 a year.

GILBERT:Is there a risk though that we miss the boat? That you see Trump cut the tax rate to 21 per cent, I think Shinzo Abe in Japan reducing their corporate tax rate to 20 per cent, but were still up at 30 per cent for the biggest companies?

BOWEN:Well Kieran I believe that Australia will continue to remain a very attractive investment destination, for a whole range of reasons, which go the strength of our economy, the strength of our workforce, our attractiveness as an investment destination. Now of course, as I said, you always have to have some view to the competitiveness of your tax system, but lets compare apples with apples Kieran. None of the countries you just mentioned have dividend imputation for example. In Australia, no domestic investor in effect pays corporate tax because you get it back through dividend imputation. That doesnt exist in the United States and it doesnt exist in Japan or any other country that often gets mentioned. We dont have state-based company taxes in Australia. Now some other countries do, so if youre going to compare tax rates, by all means, more than happy to have this debate, but do it properly and compare apples with apples.

GILBERT:Have you done the Government a bit of a favour though because by blocking the upper end of tax relief for the corporate world, youve opened up greater scope for them to deliver income tax cuts for individuals, a switch that of course, will go down pretty well politically, next year when theyre announced?

BOWEN:Call me old-fashioned but I take Malcolm Turnbull at his word. He said that he wont be doing that and that hes committed to the company tax cuts even if they dont pass the Parliament he will take them to the next election. Thats a debate were happy to have right up until the next election. On personal income tax cuts its remarkable youve got the Prime Minister making a big speech a few weeks ago, look over here shiny thing, personal income tax cuts, youve got the mid-year economic forecasts which doesnt mention them. The Treasurer didnt even refer to them in his opening remarks, you had to wait for a question from a journalist. And page 1, page 1, of the economic update confirms in fact a tax increase on working Australians, not a tax cut. So this Government will try and say anything when it comes to trying to get out of their political difficulties, well just stick to our well developed, well outlined plans, which weve been outlining now for many months and well have plenty more to say between now and the next election. Theyll be a very different plan for people to vote on at the next election.

GILBERT:But in tax increases,the Labor Party at the moment is the only party committed a definite tax increase with the debt levy that you want to put back in place for high income earners. Can you clarify how long that remains in place. Is it while there is any debt? Or any deficit? When would you remove it?

BOWEN:Well Kieran, just before I deal with that, can I just pull you up on one thing. We are not the only party going to the next election with a tax increase. The Government is. For every Australian earning more than $21,000 a year. A tax rise we oppose. Theyll be competing tax plans before the Australian people. Both will involve changes to personal tax rates. Ours will apply above $180,000. Theirs will apply above $21,000. Thats the difference. And weve said we dont believe that the only temporary tax rate should be the top marginal tax rate. That will be the rate. But of course, once you get back to Budget balance and youve got that in place, then you can review all your tax rates with a view to providing some tax relief. But at the moment we are in a position where we are saying, when youve got the Budget in deficit and despite the rhetoric and the patting on the back of Scott Morrison of himself yesterday, we have very substantial debt, growing debt, not falling, growing debt. Growing at a slightly slower pace than previously predicted. Tough decisions are still necessary and the Government can say we can afford a corporate tax cut and we can afford a tax cut for those earning more than $180,000 we disagree. But we also disagree that we need to increase tax on those earning between $21,000 and $87,000 which Scott Morrison will have to answer for at the next election.

GILBERT:You didnt always agree with that though, that wasnt always your view, because you did the same thing when Julia Gillard was Prime Minister, lift the Medicare Levy to fund the NDIS. It was good for you in Government and now not so much.

BOWEN:In a situation where youve got very low wages growth, youve got penalty rates actually being cut, youve got the Government cutting economic growth forecasts yesterday, and the Treasurer to his credit, honestly acknowledging its because consumption is being hit. Consumption is being hit because wages growth is low. In fact for some people its worse than low, its going backwards because they are losing their penalty rates. I dont think a tax increase on those particular people, at this particular time is the right lever to pull. Scott Morrison does, well thats a matter for him. I dont, lets have a debate about it at the next election.

GILBERT:Okay. Do you give the Government some credit for the strength of the labour market as reaffirmed yesterday in the mid-year update?

BOWEN:Well theres no doubt that theres some good signs in the international economy. Weve got a synchronised world uptick for the first time in a long time weve got the United States, Europe and Asia all heading in the same direction. That has obvious flow on effects for everybody including Australia. What we are seeing is continued stagnant wages growth and the Government standing by and letting wages be cut for many Australians, those who work on weekends. So if the Government wants to claim credit for one element of it, theyve also got to accept responsibility for the other element.

GILBERT:Okay. Just quickly a couple of issues to wrap up. On China, much of our economic growth and the better numbers weve seen yesterday in MYEFO down to a more resilient Chinese economy, are you comfortable with where that economy is at? Are they undertaking enough reform to ensure that growth continues in China?

BOWEN:By enlarge Im an optimist about economic reform in China and the path forward. They have some challenges but Xi Jinping and the reform program hes put in place, has received, I think the appropriate level of approbation. While there are always downside risks, I by enlarge come down on the side of the optimistic side of the equation when looking at the future of Chinese economic growth and its impact on Australia. The important part for Australia of course, is that that growth will change. Its not so much the headline figure in China that impacts us, its the makeup of the growth and they are moving very strongly from their investment focused economy to a consumption focused economy. That will have significant ramifications for Australia. It can be an opportunity for Australia if we seize it, and weve outlined several policies through our FutureAsia policy to do so. But it will involve fundamental change for the Australian economy.

GILBERT:Finally, Kristina Keneally for the Senate? Or should it be Tony Sheldon the Transport Workers Union chief?

BOWEN:Well Kieran we have a smorgasbord of talent in the New South Wales Labor Party to choose from, I think we are going to take some time to work that through. I imagine there will be a process where all party members can express their interest in being a voice of New South Wales for the Labor Party in the Senate. I know Kristina and Tony both very well. They are both very fine individuals and indeed there are plenty of other people who could make a strong contribution in the Senate. I think we have an embarrassment of riches when it comes to possible Senators from New South Wales and Im sure we will choose a very, very well credentialed one.

GILBERT:Mr Bowen I appreciate your time. Thanks so much.

BOWEN:Nice talking to you Kieran.