SUBJECT/S: Shorten Labor’s FutureAsia deeper engagement framework; Asian literacy; inequality; Turnbull Government’s cut to penalty rates; company tax.

FRAN KELLY, HOST:  Well Labor is promising a whole of government, whole of nation rethink on Australia's future relationship with Asia.  In a major speech later today, the Shadow Treasurer, Chris Bowen, will tell the Asia Society that Australia's only been paying lip service to the Asian Century.  The Shadow Treasurer will call for more smart engagement with Asia, not just a future based on quote: 'selling them more stuff'.  This comes of course as tensions on the Korean peninsula highlight broader geopolitical challenges. Chris Bowen, welcome back to Breakfast.

CHRIS BOWEN, SHADOW TREASURER: Good morning Fran, good to be with you.

KELLY: ‘Lip service’: that's a pretty damning assessment of Australia's Asia pivot in recent decades isn't it?  I mean China is our largest trading partner, it's more than lip service engaged there isn't it?

BOWEN: Well I think it's an accurate reflection of where we're at Fran, with respect.  I think that we do pay the Asian Century lip service, there's a lack of whole of government and frankly whole of nation effort.  Our Asian language literacy is stalled at best, and is going backwards in reality.  Our level of Asian business literacy is frankly lamentable.  We need a complete rethink in our engagement.  We kid ourselves that we understand Asia.  We forget that actually Berlin is closer to Beijing than Sydney is.  We've got massive growth in the middle class of Asia - 1.7 billion by 2020 which will be bigger than the middle class of Europe and North America combined.  And another little fact, you know Indonesia, on track to be the world's 4th largest economy - not yet in our top 10 trading partners, here on our doorstep.  We need a step change in our economic engagement with Asia, and what I'm outlining today is the approach a Shorten Government would take.

KELLY: What you're outlining today is close to what I think I recall many recent past Prime Ministers outlining.  I mean we're talking about better engagement with Asia and China in particular, since Prime Minister Paul Keating's policy focus in the 90s.  John Howard prioritised China and Japan.  Julia Gillard had the Asian Century White Paper.  Why haven't we turned lip service, as you describe it, into deeper engagement?  What's getting in the way?

BOWEN:  Well indeed that's one of the points I make, Fran.  I think we're seeing stop-start policy making.  We've seen new governments come in and frankly shelve good work that previous governments have done simply because it wasn't their work.  And we're seeing a lack of a coherent and whole of nation approach.  The Federal Government needs to provide leadership.  There are good things happening, I make that point, there are good things happening.  There are good things that the Asia Society is doing, AsiaLink.  Some federal government programs and state government programs are good.  There are international chambers of commerce.  But we are not seeing a coordinated holistic effort.  And that's got to come from the top. It's got to be led by the Cabinet. The Prime Minister, with engagement of the entire Cabinet. That's what we're proposing.  And what we're proposing is a FutureAsia framework - I'm announcing some elements today, there's a lot more elements that we'll announce before the election.

KELLY:  But what do you think... you've obviously thought deeply about this.  What do you think is getting in the way of that deeper engagement, and smarter engagement as you describe it?  Is it some kind of lack of cultural understanding, or cross-cultural relations?  What's getting in the way of it?

BOWEN: Well I think Fran, there’s a lack of a long-term approach. This doesn’t have a short-term pay-off. I think that our relationships with many Asian countries are too transactional. I think we’re taking Asia for granted. Our Asian literacy levels are appalling. And that shows a lack of commitment to understanding Asian countries…

KELLY: When you say ‘Asian literacy’, do you mean language or do you mean understanding?

BOWEN: It’s both really because they go hand in glove. The language is a window into a culture. When a young person in particular studies Asian languages they will be studying the culture as well, building an appreciation of that nation as well. Now most of our language skills in Australia come from migration, not from education. Now the migration element is welcome, but we need a fundamental re-think about how we’re approaching the education of Asian languages, across the board. That’s something that Tanya Plibersek and I and the Government would address through COAG…

KELLY: You are also critical of what you describe as the Asia literacy amongst our company boards and businesses.

BOWEN: That’s right. And there’s a recent report – it’s not just me that says that – a recent report from AsiaLink for example found that the lack of Asian business literacy on senior boards is lamentable. So I am announcing today a program which we would implement in government, working in cooperation with the Australian Institute of Company Directors, similar to what governments do with AICD on women on boards with some success, not enough success in my view. We need to lift the level of Asian literacy on boards. Now there are some notable, some honourable exceptions, but generally our performance has been pretty slack.

KELLY: Okay, it’s 18 minutes to 8 o’clock. Our guest is Chris Bowen the Shadow Treasurer. Just moving to the economy here, in a speech to the Business Council of Australia last night, the Treasurer Scott Morrison acknowledged that slow wages growth is an issue for 11 million employees in this country. He’s citing a new Treasury study that shows that it’s middle income earners that it’s middle income earners who are the most affected by this wages slowdown, in fact it’s university educated workers whose wages growth has been slowest and the lowest paid are faring better in a sense from the tax and transfer system. This is according to this report.

The Treasurer said that these facts “debunk the theory that soft wages growth has been contributing to growing income inequality, in fact it is the opposite”.

BOWEN: Well, if the Treasurer wants to continue with income inequality denial, he’s welcome to do that. We’ve consistently said that low and middle income earners are both facing the squeeze, but low income earners in particular have faced the squeeze. Low income earners are primarily the recipients of penalty rates Fran, the Treasurer laments low wages growth, but he’s part of a Government that is cutting penalty rates and watching as that happens. Inequality is on the rise and it’s real. Of course this has impacts on low and middle income earners. We have always, freely acknowledged that. I made a speech last year on the ‘Case for the Middle Class’, making exactly that point. The Treasurer is very late to that debate, but the fact of the matter is that he’s engaging in taxing policies that increases tax on every wage earner earning more than $21,000. That’s his policy. Someone on $21,000 is a low income earner, but both low and middle income earners will his pay increased income tax, at the same time as he’s using that in effect to pay for a corporate tax cut.

KELLY: Let’s talk about the corporate tax cut, because now the Trump administration in the US has unveiled more details of its tax policy including cutting corporate taxes significantly from 35 per cent to 20 per cent. The Business Council of Australia and others say that we have to be part of this. The Treasurer has said Labor will leave Australian businesses stranded on a tax island. If we don’t accept the Government’s policy to cut company taxes, their planned 30 per cent to 25 per cent to keep ourselves in this global race for business and investment.

BOWEN: Well let me make a few points Fran. Firstly President Trump hasn’t passed anything. I mean he’s announced -

KELLY: No but that’s the policy.

BOWEN: He’s announced the policy, he’s also got to policy to repeal Obamacare which is stuck in the congress. So let’s not get ahead of ourselves. Secondly Fran, of course our tax rates need to be competitive but we all need to prioritise as well. This is the single biggest hit on the Budget. Now the Treasurer lectures people about the need for Budget repair and the need for low and middle income earners to make sacrifices. We’ve got a $65 billion dollar hit to the Budget bottom line over the decade which is his policy for a corporate tax cut.

Now our 30 per cent tax rate has been in Australia for a long time. The effective tax rate of 17 per cent is at the bottom end of the OECD league table, it’s been addressed in American reports over recent months. But now of course Fran, of course, we need to be reviewing our tax policies when and if circumstances allow it. But we’ve got a Budget situation which is getting worse under this Government’s watch, and if the Government wants to argue that we need Budget repair at the same time as arguing for a $65 billion hit to the Budget bottom Line over the next decade, I’ll have that debate with them. This is about priorities. You can believe in Budget repair or you can believe in a big corporate tax cut, you can’t believe in both.

KELLY: Okay, just before you go let’s talk footy for a minute. Tony Abbott has been critical of the NRL’s decision to invite the US rapper Macklemore to perform his hit song and a few other songs too, actually, but ‘Same Love’ at the NRL Grand Final on Sunday. The Attorney General says that it’s bizarre that, you know, it’s a freedom of speech issue, the Prime Minister says look it’s not his job to tell the NRL who to hire for half time entertainment. What’s your view?

BOWEN: Well you believe in free speech or you don’t. And freedom of speech includes freedom of artistic expression. Some of the people who pretend to believe in free speech actually believe in free speech for people who agree with them. Now I think the AFL and the NRL are perfectly entitled to support their players, their fans, the members of the two code families who are LGBTI who believe passionately these issues. They have a right to freedom of speech, just as artistic performers do.

Now this particular performer is not my cup of tea Fran, he’s more my daughter’s taste, but I support his right to sing whatever he likes and to express whatever view he likes and the NRL is perfectly entitled to invite him to do so.

KELLY: Chris Bowen, who are you tipping in the footy?

BOWEN: Well the AFL the crows, Richmond beat my beloved GWS Giants last week so I’ve got to go the Crows. NRL, let’s go with the fairy tale of the Cowboys.

KELLY: Okay Chris Bowen, thank you very much.

BOWEN: Good on you Fran.