Subject: (Budget; Woolworths ANZAC Campaign)
E&OE…
KIERAN GILBERT: The world’s leading economic group, the World Monetary Fund, has cut Australia’s growth forecast as the nation feels the crunch from the route in commodity prices. It comes ahead of the Prime Minister’s important pre-budget speech later today to the Australian Chamber of Commerce and Industry in which Mr Abbott will outline a blueprint for his government’s second budget. With me this morning to discuss this and the other issues of the day, the Assistant Education Minister, Simon Birmingham and the Shadow Parliamentary Secretary to the Shadow Treasurer, Ed Husic. Gentlemen, good morning to you. Simon Birmingham, the fact that the Prime Minister’s giving this speech as opposed to the treasurer, should we be reading anything in to that?
SIMON BIRMINGHAM: Well you should be reading in to it that the Prime Minister provides the leadership for the government and the nation in all matters, including economic matters and that’s just the normal run of the mill and the Prime Minister today will give an important speech that will make clear that the government’s priority of reducing the deficit and continuing to deal with Labor’s legacy of debt and deficit will remain whilst sitting alongside our very strong commitment to make sure that we continue to grow the economy and create more jobs; and we’ve made great inroads in the first budget in both of those senses. We have halved the trajectory around debt and deficit, yet we have managed to double the jobs growth in 2014 compared with 2013. We are making significant steps towards getting the budget back on track and the next budget will deliver important components like a small business package including a tax cut for Australian small businesses, a better childcare system that provides the right incentives to get more people back in to participation in the work force. All of these measures are geared around trying to get the balance right between reducing that deficit and creating jobs for the future.
KIERAN GILBERT: Well Ed Husic, as Parliamentary Secretary to the Shadow Treasurer, of course you are looking at these matters very closely yourself. I guess the question is, this could be quite a compelling case if the government mounts it effectively, in the sense that it is providing childcare support, tax cuts for small business, whilst still reducing the overall problem with deficit.
ED HUSIC: It’s either a case of them cleaning up the mess or making new ones. In the case of cleaning up a mess, talking about changed childcare arrangements that get funded because the finally dropped an idea that everyone in the community thought was insane, which was Tony Abbott’s paid parental leave scheme which was exorbitantly expensive. He finally cut it and is now directing it, well saying he’ll direct it, in to childcare, we have to wait and see. So he’s cleaned up, well he’s trying to clean up, one mess and is creating another mess in terms of the corporate tax rate or the company tax rate cut which would see now differentials in the way in which company tax is levied and has question marks as to whether or not small business would benefit from it and we’re seeing the mess in a rise of new taxes with states talking up the fact that they’ll resuscitate new taxes because in the first Hockey and Abbott budget, they cut $80 billion in spending to schools and hospitals and this is all against the backdrop, Kieran of the IMF reflecting what the RBA has been concerned about which is when they look down the track, growth is not being at a level that is supportive or is healthy enough to cut interest rates. The RBA’s worried about growth, the IMF’s worried about growth and it all largely comes back to an inability by this government to get its act together.
KIERAN GILBERT: Simon Birmingham, you can respond to a few of those things in a moment. I suppose the thing I want to drill down on today is this confirmation by the Prime Minister at the Chamber of Commerce that there won’t be a tax cut for big business that creates a two tiered system, is that workable in the long term?
SIMON BIRMINGHAM: Well it is workable, Kieran and look I just want to make a point that the RBA and the IMF and all of the entities that Ed Husic was just sighting also identify a serious concern about the trajectory of debt and deficit in this country, about the state the budget was left in the Labor party need to recognise that. Now we are trying to strike the right balance in terms of incentivising growth in the country, creating an opportunity for small business by delivering a small business tax cut for them to be able to invest more in growing their businesses, particularly in some of the key growth pillars in the Australian economy, while at the same time delivering those tax cuts, getting the budget under control. It is, I think, a real credit to Tony Abbott and Joe Hockey and Mathias Cormann that last year’s budget managed to eliminate the carbon tax, eliminate the mining tax, reduce what would have been the nation’s tax take of some $7.4 billion yet still put us on a trajectory that halves the level of debt and deficit we would have had under the Labor party.
KIERAN GILBERT: Ed, what is the core problem then with a two tiered system if the government can make this work for small business? 30% of small businesses are incorporated so that’s pretty easy, I guess they’ll have to look at other ways to deal with the rest of the small business community. But if they can make it work, why not give that very important part of the economy a boost?
ED HUSIC: So you want to be able to ensure, for example, that a big concern of small business is cash flow and a big concern is if a big bill comes in, from say something not working in their small business, a bit of machinery failing or whatever and they have to dig in to their own pockets to correct it, what do you do to address that cash flow? We had a system in place, the asset tax right off, that would of allowed businesses to reinvest in their business if they had to have a problem like that that they’re dealing with and right it off in terms of their taxation. This was a big shot in the arm for small business. What did the Coalition government do coming in to office? They got rid of it and what are they thinking of replacing it with? A company tax rate cut. Which, as you said, will only benefit 30% of businesses and the other 70%, what do you do to fix it? So now they have to create a new system on top of that to try and deal with the 70%, in terms of having a simple system like what we had before and this is my issue, as I said earlier its either cleaning up mess or creating a new mess and in terms of taxation reform, bear in mind we’re supposed to be having a conversation about tax based on the discussion paper over it and the conversation hasn’t even ended before new ideas about new taxes come up or ideas about existing taxes are floated and this is what is stymieing confidence and what is stymieing growth and which is causing concerns either locally or internationally about where growth is headed in this country.
KIERAN GILBERT: Let’s get Simon Birmingham’s response to, I guess, your take on that. Simon, the other question to ask here is the Prime Minister gives this important speech a month out from the government’s second budget. Is the message clear? On the one hand he’s saying that there’ll be this initiative to help families through childcare support, small business through the tax cut and yet he’s also trying to make this case about making further savings in other parts of the economy to offset further spending. Is it all making sense? Does the government have a clear narrative on this?
SIMON BIRMINGHAM: Well we do, Kieran. Firstly, Ed Husic just repeated Bill Shorten’s clanger about confidence being low when, in fact the national bank’s survey of confidence demonstrates strong levels of confidence in the economy. Secondly, there is nothing complicated about saying you are going to cut the rate of tax for small business. That’s a pretty straight forward measure and I’m very concerned that what it sounds like, in terms of Ed Husic’s narrative, is that the Labor party is threatening to block a tax cut for small business unless that tax cut is also extended to big business. Now that’s an utterly reckless position when what we are trying to do, and this is where the narrative is very clear, but it is a balancing act in terms of the narrative but it is very clear that what we want to do is create tax cuts where we can, incentivise economic activity where we can, but also continue to deal with the deficit and continue to drive that down…
KIERAN GILBERT: Peter Costello’s not convinced…
SIMON BIRMINGHAM: …Peter Costello was a different Treasurer, at a different time, in different circumstances. The circumstances we have today are markedly different to the circumstances that Peter Costello confronted, particularly in his last few budgets and what we’re having to deal with is a trajectory of government spending that, if left unchecked, would have delivered Australia a trillion dollar debt in the years to come. Now, we’ve put actions in place to address that and we’ll keep working on that, but we don’t want to do that to the detriment of current economic growth and that’s why a small business tax cut, why a jobs package, why the incentive around childcare, they’re all such important components to keep the economy growing while we address the deficit issue.
KIERAN GILBERT: Ed Husic do you support the Prime Minister’s approach here today in this speech that he’s going to say that every new spending measure will be offset by an appropriate saving. Do you welcome that responsible approach?
ED HUSIC: It’s have to be breaking news, anyone lining up quickly to support Tony Abbott’s ideas, given the track record in the past has been woeful and you’d have to be very careful about signing up to a Tony Abbott idea. Read the detail before signing up to the headline. The fact of the matter is if things were going so crackerjack as what Simon was suggesting, the reserve bank would not be cutting interest rates. If jobs were growing as quickly as Simon Birmingham and the Abbott government is suggesting, they would be lower than what they were in the middle of the GFC. Joblessness would be lower than what it is, it’s actually higher now than what it was in the GFC. The reason that the IMF is concerned about where Australia is headed is again, it shares the concerns of the RBA and this government as much as they’re talking about how they want to provide stability, they can’t get there messages right. One moment they’re criticising the fact that the budget’s not passing the senate and on the other hand they’re saying well we’ve got the bulk of our budget through, and again, I come back to the point, they’re talking about having a conversation on tax while introducing new taxes or tax changes. They’ve got to get their act together because it is crippling confidence and crippling growth.
KIERAN GILBERT: Well Ed Husic, on the GST issue, do you say the Prime Minister’s got the right balance in his comments when it comes to having the states having to work this out? Because surely state tax, the states are the ones who are the beneficiary that they’re the ones to come up with any compromise if that’s to be secured?
ED HUSIC: Well the problem with the states is that they’re having to look at either changes to the GST or introducing old taxes we’ve finally seen the end of in terms of in terms of financial institutions and those financial taxes that we had gotten rid of through the whole GST reform of the late 90s, they’re bringing them back up for a simple reason, their money has been cut. $80 billion of spending for schools, hospitals cut in the first Abbott-Hockey budget…
SIMON BIRMINGHAM: …That’s not true…
ED HUSIC: …It is absolutely true, Simon. It is in your own budget papers, read your own documents…and so the fact of the matter is, you’ve got the Abbott government cutting the income flow on one hand, which forces the states to argue about GST and old taxes on the other and then Tony Abbott says ‘you guys go and fix it’ when he’s actually the culprit causing the problem that’s requiring a fix, and the fix is higher taxes as a result of what Tony Abbott’s done.
KIERAN GILBERT: I want to finish off, if we can, on this story which created a few headlines late yesterday. Woolworths’ ANZAC themed campaign ahead of the centenary of ANZAC, it’s a great company but, Simon Birmingham they made a meal of this one.
SIMON BIRMINGHAM: Indeed they did, Kieran. The sacrifice of our ANZACs and our service men and women over the years has been selfless and anybody honouring or remembering our service men and women need equally be selfless in their honouring of those service men and women. I think it’s a real reminder to people that the word ANZAC itself is in fact a protected word. What we saw yesterday was the Minister for Veterans Affairs taking swift action in contacting Woolworths and asking them to withdraw the campaign. Had they gone through the proper processes, he wouldn’t have approved that campaign, but they did not, and unfortunately they made a terrible mistake in their marketing and communications. They are otherwise a good and generous company in many ways but they made a bad mistake yesterday and the real reminder and message to all companies and anybody who seeks to profit out of it, is that when it comes to remembering our service men and women, when it comes to honouring the ANZACs, they should be as selfless in their honouring as those service men and women were in their service.
KIERAN GILBERT: At first I thought it was a joke when I saw it on social media, Ed Husic.
ED HUSIC: Well, great company, bad call, quick clean up, and shouldn’t have been there in the first place. Shouldn’t have had to clean it up in the first place, someone should have been able to clearly know that this is not something that you can, as people have said ‘BRANDZAC DAY’, you shouldn’t be able to score brand points off something that caused such a great loss to the country and is something that, particularly as we commemorate the 100 years since, you should be very sensitive towards. So, I just think it was a terrible call but at least it has been corrected and we can move on.
KIERAN GILBERT: Indeed. Ed Husic, Simon Birmingham, your thoughts on that and the rest of the issues, thanks so much, speak to you soon.