ALAN JONES, HOST: Chris Bowen, good morning.
CHRIS BOWEN, SHADOW TREASURER: Good morning Alan, good to join you.
JONES: Thank you, thank you for your time. Look, can I just ask you a question before we get onto the economics and finance things. You’re a senior figure in the Labor Party and you’re aware of this notorious AWU slush fund established in 1992 by the former AWU official Bruce Wilson with the help of his then girlfriend Julia Gillard. One person alone, Ralph Blewitt, was charged on 31 counts of fraud and I spoke to him earlier this week in relation to this, and a personal expense, he flew from Malaysia, he didn’t complain about the charges by the way he was quite prepared to face them. He was bailed, he flew back, he appeared again in court, he was bailed, again in court and bailed, all of these at personal cost, and suddenly last week 31 charges were dropped. The Royal Commissioner Dyson Heydon recommended that the former Victorian AWU State Secretary Bruce Wilson be charged, and a retired detective David McAlpine who lead the original police probe into the scandal 20 years ago said his investigation was subverted due to political influence. He said in February this year he still had key documents from his investigation and he wanted to give his evidence in court. Ralph Blewitt said he wanted the case to proceed so he could call Bruce Wilson, Julia Gillard and the former Slater and Gordon Partner Bernard Murphy who was made a federal court judge by Julia Gillard, he wanted them to give evidence. Yet on the eve of all of this, 31 fraud charges are withdrawn. Do you understand as a senior figure in politics that this has a political and justice smell about it?
BOWEN: Well Alan, all I can say about the general issue is that we had the Royal Commission as you correctly indicated at very great expense to the tax payer. The Royal Commission into the Trade Unions went through all these issues. They made recommendations to the police. How the police handle those recommendations is really a matter for the police. But the Liberal Government keeps trying to dredge up other issues to try and muddy the political waters now in relation to Bill Shorten. We had a Royal Commission, no adverse findings.
JONES: I'm just talking about Ralph Blewitt here.
BOWEN: I understand that.
JONES: But does this make sense? Just forget you're a political figure. To the bloke out there on struggle street does this make sense? You know, he gets lined up in court on a parking fine, this bloke has 31 charges, he's appeared five times in court, bailed, and then suddenly boom, they withdraw.
BOWEN: Well I guess Alan you've got the situation across the country on a regular basis that directors of public prosecution make recommendations, police make recommendations to the DPP, royal commissions or commissions of inquiries make recommendations. Now how the law enforcement agencies in different states, you know nothing to do with you or me, then decide that they can run those cases or the case might not stack up before a court or the lawyers say listen we are just not going to win. Look I don't know the full details, I'm not sure you know the full details, we don't know. All I know is there was a full Royal Commission, I mean what we've seen coming out of the Royal Commission into the banks is very, very concerning, but we've seen a Royal Commission that was designed to set up to damage Labor figures and you've got the Liberal Government keeping on that campaign against Mr Shorten today when they had a full Royal Commission into these matters.
JONES: Let's get onto this business from the National Press Club. We are not going to be able to cover all of these but I hope we can sort of talk again about them. Just to take three points perhaps that you talked about, a greater commitment by Labor to tackle debt and deficit, you talked about better and bigger tax cuts for 10 million low and middle income earners, and you talked about TAFE. Can I just come back to this Deputy Governor Guy Debelle, because you quoted him saying debt levels are always sustainable until they're not. And you made the point that we need bigger surpluses. Do you understand that Labor's record on the issue of deficits is an enormous achilles heel that you have got to be able to overcome. I mean Wayne Swan, I'm just looking at some figures here, 2008/2009 a deficit of $47 billion, 2010/2011 $47.5 billion 2011/2012 $43.4 billion these are all deficits. How do you overcome the public perception that the rhetoric never matches the reality?
BOWEN: Well a few points Alan, both sides have said things about surpluses which haven't come to pass. I mean Liberals said we would be back in surplus by now -
JONES: I've certainly made that point many times I assure you.
BOWEN: That's right, and of course economic circumstances can change. But what I would say is judge us by what we say but also judge us by the policies underpinning the commitments we are making. I mean I'm not just talking about surpluses, bigger surpluses, yes I'm committing to them, but I'm also pointing out that we've made the decisions which lead to it. So I did make some important commitments in that speech, back to Budget balance the same year as the Budget says, bigger cumulative surpluses over the forward estimates you know four years from the Budget. And using the majority of measures, the majority of revenue raised by measures to pay down debt. Now that's very important to me as the alternative Treasurer, Alan, because while I'm not alarmist and the world economy is going very well, there are big risks out there. I mean we talked about debt and Guy Debelle made that comment, I mean global debt is now almost Alan, 320 per cent of global GDP. I mean that's 42 percentage points higher than it was in 2007, just before we went into the Global Financial Crisis. I mean there's a lot of risk out there.
JONES: And the issue is expenditure right?
BOWEN: Absolutely, and -
JONES: So where are you going to say, I mean Morrison has been unable to do all of this, Tony Shepherd said when Tony Abbott was Prime Minister, you need to cut $70 billion by 2020. We are nearly at 2020 and that hasn't happened. You are going to have to make some unpleasant decisions.
BOWEN: Well we have to make big decisions and unlike the others in this debate I've always said that both revenue and expenditure have to be dealt with. You can't do it just by one. Anybody who says we can fix it all by revenue is wrong. Anybody who says we can fix it all by expenditure cuts is wrong as well. We've got to do both. Now we've made some tough decisions. Not all of your listeners will agree with all of them but I would hope that your listeners would respect that we've put those decisions out there way before an election for people to look and to consider. We know some people don't like them, negative gearing was always regarded as being too hard to handle, too politically -
JONES: I just want to ask you a quick one, we are not going get time to discuss these things in detail but I just want to ask you one question about negative gearing. Just supposing then you reduce or remove the benefits for negative gearing. Do you believe that would as a consequence lead to people saying 'well I'm going to put my investment money somewhere else' and that would lead to a shortage of housing stock and rents would go up. So the very people you are purporting to represent most likely would be slugged in the pocket with increased rents because of a shortage of supply in rental accommodation?
BOWEN: No because we designed this reform very carefully Alan. We grandfathered all investments so everybody who has already got an investment is protected, they've made their investments in good faith, we respect that, so there's no shock to the market there. And secondly we've said if you want to negatively gear into the future, sure, go ahead, buy something new, help us add to the housing stock. We need more houses being built, and if you want the tax concession that great, buy something new, build something new that adds to the housing stock. We get more houses being built and to the degree that there's any impact on the market it's creating more room for first home buyers to get into the market. Some people might say, oh well it's all –
JONES: Sorry, come back to this. What happens to the person who wants to negatively gear the new stock that he buys?
BOWEN: Then it’s the existing arrangements, no changes. You can negatively care going forward if you buy something new, something which is less than 12 months old or you build it yourself, that can remain negatively geared because we want people active in the construction market, building new houses, building new housing stock. That’s great but at the moment Alan about 93 per cent of negative gearing goes to existing houses. Now that’s not expanding the housing stock, that’s not getting new houses built.
JONES: I think that’s a fair point, move on, I think that’s a fair point. Can I just go back to your book ‘Hearts and Minds’ which was widely commented upon and indeed endorsed and in it you said “It is a Labor thing to have the ambition of reducing company tax because it promotes investment, creates jobs and derives growth quote”. Now if that is the case and they are the things you are trying to achieve, if you then resist overtures to reduce company aren’t you then achieving the opposite?
BOWEN: Well Alan, Malcolm Turnbull likes to quote that book and I appreciate the publicity. What he doesn’t do is go on to point out that I quote that it will be unaffordable for the foreseeable future, that all these things have got to be paid for and of course he is not paying for his company tax cut. Now what I’ve done is…
JONES: But to interrupt you there, it wasn’t just you. Penny Wong who is now the Opposition Leader in the Senate and she was the last Finance Minister in the Government she has also been the Senate has been quoted as saying “ We understand that the cut in the corporate rate is important to increase productivity, to promote broad-based economic growth and to encourage more investment and jobs across Australia.”
BOWEN: And look, we do believe that corporate tax is important for competitiveness, that’s why we’ve designed, I’ve designed with the Labor Party an alternative plan Alan which is conditional on investment. You see the Government is saying we will give you a corporate tax cut, give big business a corporate tax cut, they might invest it, they might have share buybacks, they might increase the dividends to the shareholders, wherever they are Australia or overseas. We say no. How about we provide some tax relief but we make it conditional on investment? We will provide 20 per cent upfront, upfront depreciation allowance in the first year over and above what you can claim already. That’s very generous in terms of depreciation Alan, that improves the cash flow of businesses but there’s a deal: you’ve got to invest first. You’ve got to actually create the jobs, create the growth in Australia then we will provide the tax relief. The problem with the Governments approach now is they say: “well look we’ll just provide tax relief even if the investment was made 20 years ago, 30 years ago, even if the shareholders are all offshore, overseas we don’t care. There’s a dividend, there’s a refund”. What we say is “We are more than happy, we can provide tax relief but work with us, make the investment, will provide the relief, we will prove improve your cash flow”. That’s actually a
JONES: And when you talk to corporate Australia about this, what did they say?
BOWEN: Well corporate Australia has mixed views. I mean there are plenty of business people who say to me Alan in the privacy of the meetings “Look of course we’d like to pay a bit less tax but so would everybody. It’s not our number one issue. Your policy is pretty good but we would like to work with you on vocational education and training, that’s a big problem, we’re not getting the skills we need…”
JONES: The company tax rate is lower than the personal tax rate?
BOWEN: Yes, of course lower than the top personal tax rate.
JONES: Can I just come to that personal tax issue then because you would have read all that stuff that came out yesterday and it was headlines everywhere on the personal tax thing. The Government is talking a bit about a tax package which when fully implemented would put incomes from $41,000 to $200,000 at 32.5 cents on the dollar. That’s the tax rate not the tax paid to just our listeners. 32.5 cents in the dollar. Now you are opposing the removal of that 37% marginal tax rate.
BOWEN: Well now Alan the Government has got a three point plan if you like. Now what we’re talking about here, what just raised and what the Government keeps talking about comes in in 2024. Now I think Australians are entitled to be very cynical, I mean you know the old saying Alan as well as I do Alan, a week is a long time in politics. How long is six years in the politics and in economics? I can’t say what is going to be happening in the economy, you can’t say what is going to be happening in the economy. Our plan is to say “Yes okay, the Government has got tax cuts in 2018 this year, good, tick, very happy with those. We support those. We would go further. If we win the election we will have bigger tax cuts not off in the never never Alan, not in 2022 or 2024 in 2019, almost double what the Government is providing so Australians earning less than $125,000 a year will be better off under our tax plan.” We’ve been able to provide those bigger tax cuts better targeted and earlier. Now 2022 and 2024, they are elections away. I don’t think Malcolm Turnbull will still be in Parliament then to be held to account if those tax cut sent delivered. I think it’s much better to provide the tax relief earlier, to provide it well targeted, that’s what our tax cuts do. 1 July 2019 under a Labor Government, bigger tax cuts than the Government.
JONES: All right, on the other thing I’m just letting my listeners hear so you can appreciate we are not getting into the argumentative point at this stage. I think it’s important for our listeners to hear what you are saying. You also had a lot to say and in that National Press Club speech about this very critical issue of TAFE.
JONES: You said that you would provide a 10,000 pre-apprenticeship programs for young people. 20,000 adult apprenticeship programs. Now forget for a moment that there is a shortage of 50,000 construction workers and 19,000 chefs in New South Wales alone and the head of TAFE New South Wales says that by 2021 we’ll need 80,000 nurses nationally. I’m just wondering if you have read the paper by James Mathias the executive officer of the Menzies Research Centre, quite a brilliant young man who said that when Mr. Shorten was Employment Minister Australia recorded its largest ever decline in apprentice numbers and the number fell by 22 per cent or 110,000 and that when he was the Education Minister he signed off on a $245 million cut to the incentives paid to the employers to take on apprentices. Does Labor accept any responsibility for the problems that we now face?
BOWEN: Well Alan what I clearly know is that since we lost office there’s been 140,000 apprentice places lost and there’s been $3 billion cut from TAFE and training.
JONES: But do you accept that Bill Shorten made a very significant cuts when he was in a position not to?
BOWEN: Well Alan what I accept is we’ve got a problem right now and what we want is young people getting the opportunities to get their training and skills, get their apprenticeships. We’ve lost the plot on apprenticeships in Australia. Let’s just be frank. You know in the old days, you remember them, I remember them, when you left school there was a chance for an apprenticeship. If you didn’t want to go to university, if that wasn’t your thing you got a chance to get a world class..
JONES: But see you’ve removed the caps on university so now people are going to university with say less than a 50 per cent pass mark. We need to encourage people about the rewards in the trades, don’t we?
BOWEN: Absolutely. We want people to have that choice. Now at the moment the choices aren’t really there. So we said at the Budget Reply for example we would scrap the upfront fees for 100,000 TAFE students in those areas of need, in many instances what are you just talked about. We want people going to TAFE, we want TAFE to be the centrepiece of our national education system. We want more people going to TAFE, getting those qualifications, and more people getting apprenticeships. We want more apprentices on the big infrastructure projects.
JONES: All right well as in the world of rugby and sport and boxing we are beaten by the bell. I’m wondering if we can talk again next week?
BOWEN: I’d love to Alan.