E&OE TRANSCRIPT
Interview on ABC Radio Adelaide, Breakfast with Ali Clarke and David Bevan
Topics: Labor’s proposed changes to imputation; Minimum wage; SA state election
14/03/2018
08:35AM
David Bevan: Good morning to Senator Sarah Hanson-Young. Greens spokesperson on finance and trade in our ABC studio in Adelaide. Good morning.
Sarah Hanson-Young: Good morning, thanks for having me.
David Bevan: On the phone line is Senator Penny Wong, Shadow Minister for Foreign Affairs, good morning Senator Wong.
Penny Wong: Good morning, good morning.
David Bevan: And Senator Simon Birmingham, Federal Education Minister also on the phone. Good morning to you.
Simon Birmingham: Good morning everybody.
David Bevan: Penny Wong if we can start with you, can you please…
Penny Wong: You always start with me, Bevo I know that you love me but really you always start with me and never the government. But go right ahead.
David Bevan: That’s because I don’t have any doubt Senator Wong that you will rush to defend what the Australian and the Government have described as brutal and cruel. The tax grab aimed at funding the opposition leader’s reckless spending agenda. Can you explain because I’m completely lost when it comes to dividends and franks and all sorts of things. But can you explain what is Bill Shorten’s plan regarding tax and then we will ask Simon Birmingham why it is brutal and cruel.
Penny Wong: You should probably also ask him why his pension cuts that he has already put in place aren’t brutal and cruel then, but look let’s start at the beginning. Paul Keating established this system of dividend imputation, it is based on the principle that you shouldn’t pay tax twice, so if a company pays tax on a profit people who own shares get franking credits on the dividends they get from those shares.
David Bevan: Again, and I don’t want to be pedantic but just to break this down. But do you accept the principle that you shouldn’t be taxed twice?
Penny Wong: Well that’s why we’re retaining the policy as Paul Keating announced it and for most people the vast majority of people what those credits do is reduce your tax bill and that will all be retained. There are some people who have structured their affairs so that they receive little or no income apart from dividends, and what John Howard and Peter Costello did was say for those people will go further than just reducing the tax they pay, we will give them a tax refund, a cash refund. Now, that was at the time when we had a mining booming, we had a Budget having the benefit of having very high prices for the resources we were selling. What we are doing is returning the policy, to the original policy that Hawke and Keating announced. We accept that there are people who will be affected by it, although only eight per cent of taxpayers will be affected, and ultimately budgets do come down to choices, so this is every dollar we don’t spend on this is a dollar that can either go to budget affair or that we can spend on health and education. And that is in the context where we know the budgets under pressure but we also know there are spending requirements that people want in terms of health and education.
David Bevan: Well Simon Birmingham, the way Penny Wong puts it, it doesn’t sound that brutal or cruel at all?
Ali Clarke: Well no David if you actually listen to what Penny has just said she has effectively said if you don’t have a low taxable income then you’ll still get the benefit of dividend imputation. But if you do have a low taxable income then you’ll no longer get those benefits. That’s exactly why this policy that the Labor party has announced actually affects, 97 per cent of people it affects are on taxable outcomes of less than $87 000. So pensioners and retirees and part-pensioners are the ones who will face the biggest impost as a result of this. They’re the ones who will see a real hit, ultimately more than one millions will be impacted as it hits their superannuation savings as well as many investments that individuals have, so this really is of course a policy that goes very much to the heart of hurting people who have worked their whole lives, paid taxes their whole lives, saved up to sustain themselves to some extent during perhaps their retirement phases and are now facing a very very big additional tax slug in addition to the many other additional tax slugs that Bill Shorten has already announced in terms of higher taxes on income taxes, on housing, on electricity, on small and medium and family businesses and the like.
Ali Clarke: Well Sarah Hanson-Young you’ve been listening to this. You’re a spokesperson for finance and trade for the Greens. Who is right?
Sarah Hanson-Young: Well I think actually Labor’s some good work here and I’d like to see more of the detail and as a party room we will go through that carefully. But on the figures that I’ve seen, 75 per cent of people who benefit from the current system are in the top ten per cent of income earners in the country. There is something inequitable about this from the beginning. We’ve got stories of people who are banking $2.5 million worth of credits and yet paying zero tax. So it’s about how people have structured their taxable income. Just because you’re paying zero tax doesn’t mean you’ve got zero money coming in. That is where the clincher is here. If you’re rich enough to put your money into shares and to be able to distribute them across various different companies in order to get all those credits, those franking credits, I suggest that you’re probably not down the bottom of the pile when it comes to pensioners who are doing it tough every day.
David Bevan: Can I just put this to you Penny Wong. We’ve got a text from a listener saying franking credits do not reduce the amount of tax paid. A taxpayer receiving franking credits pays exactly the same tax as any other taxpayer.
Penny Wong: Well which is the point I made about the Keating policy. But can I just respond firstly to Simon. I think it’s very interesting that the Liberal party now pretend to be the party for people on low incomes. Let’s remember there has been no government that sought to cut the pension more than this government in this last two terms. In the 2014 budget they cut a billion dollars from the pension, they axed the senior supplement, the $900 senior supplement to self-funded retirees. They’ve done a deal with the Greens to change the pension assets test to put 370 000 pensioners on to a lower pension or to reduce their access to the pension. They still want to cut the energy supplement to 2 million Australians which includes 400 000 aged pensioners. So I don’t think anybody out there is going to believe Simon when he says that somehow the Liberal party are the party for people on lower incomes.
Sarah Hanson-Young: Could I jump in there. I tend to agree with Penny on this one. The Liberal party now trying to wave the flag for lower income Australians is pretty laughable and the reality is here this is just one area within the tax system that needs cleaning up if we are to have more justice and fairness in the system. Simon if the Liberal party are serious about doing what’s right for low income people or people who are really struggling, well let’s get on with reforming negative gearing and capital gains tax, let’s get rid of all those inequities in the system and start putting in a bit more of a fairer system. And also of course, drop those hideous tax cuts that are only going to benefit big businesses that are at the cost of public services that those on low incomes desperately need.
David Bevan: Simon Birmingham.
Simon Birmingham: Well lovely as it is to hear this Labor-Greens high taxing lovefest going on between Penny and Sarah.
Penny Wong: You did a deal with them on the pension assets test mate. Just remember that.
Simon Birmingham: The truth here if you look at the policy that’s announced…
Sarah Hanson-Young: We’ll always back good policy Penny.
Penny Wong: Fair enough, but you know if the cap fits.
Ali Clarke: Simon Birmingham.
Simon Birmingham: Thank you, if you look at the policy that’s announced here and indeed in Penny’s opening intro was very clear, what she has announced, what the Labor party is backing here is something that takes away a tax rebate for low incomes earners while leaving it in place in terms of the way imputation works for people on higher incomes.
Penny Wong: Well you should be fair about that. And remind people that that is because people draw sown income from their superannuation funds in their retirement phase do not pay income tax on that withdraw down. You should be really clear on that so this is not the sort of people who are on pensions, you’re talking about the tax free incomes of people who are self-funded retirees and I accept that but we have made a choice.
Simon Birmingham: And what I would contrast this with is when the Government took superannuation reforms which weren’t popular with people, what we did was we tried to target them to people who had very high levels of superannuation, who had more than $1.5 million in savings, recognising that was a way of targeting the individuals who ought to be paying a little bit more tax, and that’s exactly what we have done and we have implemented. Whereas, what the Labor Party has done here, and you need only look at the Treasury analysis of the Tax Office data, is that the taxable income of the people affected by this measure, as I said before, 97 per cent of them earn less than $87,000 in taxable income. 54 per cent of them, some 610,000 Australians, have a taxable income less than $18,200.
Penny Wong: Tax-free superannuation income is what Simon is referencing. So he is saying that because somebody is getting tax-free superannuation income somehow it is unfair for them to be affected by this policy. They are getting income. They are not getting taxable income.
Simon Birmingham: Which is where we have already put reforms in place, to tackle the amount that people have very high amounts..
Penny Wong: We are the only country in the world that gives..
Simon Birmingham: You are now applying a double taxation on top of the reforms that the Turnbull Government has already undertaken.
David Bevan: Penny Wong, you began this conversation by saying this is about choices. Don’t we broadly have to face up to the fact that we need to make it easier for people to have self-funded retirement otherwise it is just going to be an unsustainable burden on the Federal Government. So isn’t there some merit in taking the pressure off self-funded retirees?
Penny Wong: This is about tax credits at the retirement phase. That’s what Simon is talking
about.
David Bevan: But this is about how much you are going to have to retire on?
Penny Wong: The first point I’d make is we are the only country in the world that gives a cash
refund in the circumstances that Simon is arguing for. So there is no other country that gives a cash refund from the Tax Office for what you call excess dividend imputation.
Simon Birmingham: Isn’t that great for Australians that have worked hard and saved hard
and built up their own retirement fund.
Penny Wong: Every tax concession – and I think I made this point when I was Finance Minister and we had lots of discussions David–every tax concession has the same effect on the Budget and on other programs as any expenditure. So it is a dollar that cannot be used for Budget repair and cannot be used for health, education and the pension and a tax concession, or a tax break, has the same effect. People seem to
think that franking credits or some other tax concession, it’s not free money but it is somehow more beneficial than a spending program. I’d say to you your point is right, of course we want to help people to save for their retirement which is why Labor has always been the party of superannuation. But there is a question about how much other taxpayers should be subsidising, through tax credits or through tax concessions people who have reasonable means.
Now, I accept there are people who will lose from this policy and I accept there are people who will be angry about it.
David Bevan: Around one million of them.
Penny Wong: I accept there are people who will lose from this policy. Probably not as many people who have suffered cuts to the pension or people who have suffered cuts to the Energy Supplement under you Simon, but ultimately we have to make decisions.
Simon Birmingham: They’ll be paying more for their electricity under you.
Penny Wong: The energy supplement is a direct cut to how much people pay for their electricity, Simon. But ultimately, I think this a sensible approach and it stands in stark contrast to a $65 billion company tax cut, most of which will go offshore, which is the centrepiece of Simon’s party’s economic policy.
Simon Birmingham: Which will go back into creating more jobs, lifting Australian wages…
Ali Clarke: Okay, hey hey, mum and dad, stop fighting, mum and dad, stop…
Simon Birmingham: It’s what Bill Shorten used to argue for.
Penny Wong: Most of it goes overseas.
Ali Clarke: Penny Wong and Simon Birmingham, thank you, thank you. Look, one of our texters I think sums it up: “Seriously, how are mere mortals supposed to deal with this level of financial complexity when making decisions about their financial future?” So on that note, we’ll leave that topic there. Simon Birmingham, when will the Government tell those on minimum wage if they’re going to get a pay rise or not given the National Retailers Association’s called for a freeze?
Simon Birmingham: Well the minimum wage case is heard by the Fair Work Commission each and every year through the standard processes. The Federal Government doesn’t make that decision, the Fair Work Commission makes that decision and I would fully expect it will make that decision in the ordinary course of events and that it will recommend a wage rise for Australians.
David Bevan: Should it be $50 a week?
Simon Birmingham: Well, I’ll leave to the experts at the Fair Work Commission to actually hear the evidence and to weigh the competing facts, but I want to make this point, what we do also know though is that in terms of the Government’s company tax cuts policy, that will help to stimulate wages growth as well, and that’s one of the key reasons to get that policy passed to help see wages growth and additional investment in Australian jobs on top of the 400,000 that we’ve already created last year.
David Bevan: Penny Wong, should it be $50 a week?
Penny Wong: Well I have to say his tax cuts to companies have certainly helped the wages and incomes of people offshore but anyway that’s another point. Look on the minimum wage, what’s the policy problem? The policy problem is our minimum wage isn’t a living wage anymore and the gap between our minimum wage and the average wage continues to increase. It’s got much worse under this Government because we’re seeing such low, for a period almost negative wages growth, and we’ve got growing inequality.
Simon Birmingham: Rather than the gesture policies of that statement Penny, what are you
saying?
David Bevan: Should it be $50 a week more?
Penny Wong: We have made a submission. We haven’t nominated an amount but we have said here are the statistics that demonstrate the problem that the Commission should deal with. We’ve got increases in health prices, increases in education costs, increases in housing prices, and we’ve got the gap between, as I said, the average wage and the minimum wage. I have to say Simon’s position is not benefited by the fact that he continues to support cuts to penalty rates, he’s implemented changes to childcare subsidies that have left, I think it’s about 280,000 families worse off including families on low incomes, and of course we’ve seen the only party that is advocating a tax increase for people earning between $21,000 and $87,000 is the Liberal Party. That is the only party, maybe Sarah is, she might speak for herself, but the only major party who is advocating for an increase in income tax is Simon’s party between $21,000 and $87,000.
Simon Birmingham: So in summary, the Labor Party’s position is the same as the Government’s, which is they’ll leave it to the independent Fair Work Commission to make a decision, that Labor isn’t advocating a particular position. But of course what I’d again note is 403,000 jobs created last year, an economy that is growing quite well across the country, not as well we’d like in SA, but plans to actually stimulate further jobs growth and wages growth through actually getting more investment in Australia, which is the way to do it. Not about the Labor Party seeking to either play gesture politics, higher taxes or legislate outcomes that will simply cripple investment.
Sarah Hanson-Young: I think the problem here is there’s such a disconnect from the rhetoric that we’re hearing out of Canberra and what people are really feeling. What they’re seeing is record profits being posted by big companies, big business, the big banks. Just take the big banks for a second, $31.5 billion last year they posted in record profits, and yet, people’s wages aren’t growing across the board, and people are struggling. Living costs are going up and wages aren’t, yet, CEOs are still taking home massive packets and shareholders, those who are able to have some of those big share dividends coming in, are singing high.
Ali Clarke: So do you think it should be $50 a week?
Sarah Hanson-Young: Well we are quite supportive of the ACTU’s campaign and we’re actually doing a bit of work ourselves at the moment to kind of look at how far wage growth for the minimum wage should go. But overall, the problem is that these big companies are making bucket loads of money and none of it is trickling down and that’s because trickle-down economics, despite what the Liberal Party continue to try and push, doesn’t work, is a myth, has been busted, and it’s time they gave up on it.
David Bevan: Sarah Hanson-Young, I have absolutely no doubt that it is incredibly hard to survive on the basic wage but I was also talking to a lady who runs a cafe in Waikerie on Thursday afternoon. Now, she was saying sometimes she doesn’t even bring home any income for herself after she’s paid for all of her bills and all of her GST and her power bills and all of that sort of stuff. She hardly brings home any money for herself. I can’t imagine what she’s going to do if she’s asked to pay an extra $50 a week for her staff?
Sarah Hanson-Young: Well I think this is part of the problem. The pressure and the pain that is being felt by people in the community, it’s not just those on the minimum wage, it’s those running small businesses, it’s the people who are on low and middle incomes across the board. Meanwhile, the rich keep getting richer and big corporations keep having their hands out for tax cuts. Simon, if you really gave two hoots about how people are struggling, you would dump your tax cuts and put that money into public services so that the people who can’t afford…
Simon Birmingham: And of course then one of the biggest things small businesses were talking about time and time again…
Sarah Hanson-Young: Trickle-down economics doesn’t work Simon…
Simon Birmingham: …are their electricity prices and that all the pain they feel in relation to record electricity prices, which is why it’s not just about federal reforms to drive down electricity prices, but importantly, what can be done at state level to drive that down and we have very clear contrast between…
Penny Wong: I’m very happy to respond to that.
Simon Birmingham: A very clear contrast between Jay Weatherill’s 75 per cent renewable energy target that has no modelling or costing as to what that will do to electricity prices versus Steven Marshall’s which has been modelled, modelled by reputable independent organisations…
Penny Wong: He got it wrong.
Simon Birmingham: That shows a $300 reduction for households.
Penny Wong: He got it wrong Simon, he told people that.
Simon Birmingham: No he did not, the modelling very clearly shows that Penny. Lie about that all you want, modelling shows a $300/per household average reduction as a result of the combination of business as usual with the changes that Marshall is then proposing applied on top of that.
Penny Wong: He said: “I’ll save you 300 bucks a year” and within 24 hours – I think even less – he had to backpedal and said it’s actually sixty bucks.
Simon Birmingham: He never backed down…
Penny Wong: Sixty bucks.
David Bevan: Okay, no please, pull them both down if they refuse to give each other a moment to speak, we’ll pull them all down.
Penny Wong: Pull it all down? I’ve been very quiet for the last few minutes.
David Bevan: We’re moving onto another topic, we’ve got another topic. Earlier today Ali was speaking to Kate Bickford, she’s an SA-BEST candidate, she and Frank Pangallo were talking about how atrocious the standard of behaviour has been in this election campaign let’s just hear a little bit of what Kate Bickford had to say.
Excerpt of Kate Bickford
Ali Clarke: We also heard from the Playford candidate who said she almost felt as though someone was following her letterboxing. That could just be good campaigning according to some, but is it appropriate Penny Wong that candidates in this election are feeling like this?
Penny Wong: I don’t know what the facts are. What I heard was Kate Bickford saying that the campaign was too negative. I think Jay’s run a campaign that’s talked a lot about the positives. He’s put out policy early, he’s talked about two billion dollars of investment in infrastructure, increase in Investment Fund to bring more jobs here to South Australia this is on top of the work the Government’s done to date, so I’m not sure what she’s particularly referring to …
Ali Clarke: She was talking about personal attacks as well.
Penny Wong: I don’t think personal attacks are the way people should decide their vote. I come on your show and I certainly have a go at Simon about his policy but I try not to engage in too much of the personal because I don’t think voters like it. If she’s saying that people shouldn’t ask to know how SA-BEST proposes to deliver their policies I think that is accountability and one of the things I’ve thought as I’ve campaigned or received stuff in my letterbox or seen stuff at the local coffee shop when you see SA-BEST pamphlets, I think they are a party that is promising a range of things and there’s scant detail about how they’re going to deliver it. That is a reasonable question for people to ask.
David Bevan: Simon Birmingham, do you think this campaign’s been any dirtier than any other campaign?
Simon Birmingham: I wasn’t surprised to hear that it was SA-BEST candidate for Playford alleging dirty tactics because of course Labor’s candidate for Playford is Michael Brown who was the author of the dodgy how-to-vote cards that Labor rolled out a couple of State elections ago, so I’m sure between now and Saturday we’ll see plenty of attempts by the Labor Party to trick voters. Equally I think SA-BEST’s campaign has been just a continuance of stunts and shallow announcements that really have no policy substance behind them and I just hope that South Australians see through that when it comes to voting, make a clear choice for change and elect a majority Marshall Government. Steven Marshall has announced 150 positive policies for the state’s future…
Ali Clarke: To be fair, the Liberals also robo-called everyone last night, there’s also been a Scratchie with Nick Xenophon’s face put out in letterboxes.
Simon Birmingham: Campaigns are a choice and you highlight indeed the negatives and the failings of your opponents in terms of their policies and positions, but equally there’s 150 policies out there of Steven Marshall’s. I invite anybody to go to the Strong Plan website where they can see very clearly those policies that will reduce the costs for their households, to create more jobs in SA, and ensure we’ve got the services, particularly in our hospitals like Modbury Hospital, the QEH, and restore services to the Repat.
Sarah Hanson-Young: There’s always nastiness in every election campaign, that doesn’t make it excusable. What is sad out of this story is any suggestion that women in particular feel less inclined to get active in politics. We need more women in politics particularly at Local, State, and of course Federal level. I must say over the last few weeks watching all of the leaders’ debates and seeing no women up there has been a bit confronting, really, for a state which has often led the way. Let’s hope at the next election we see more prominent women leading and speaking up for their parties and being front and centre because that I think will help to
deal with a lot of this.
Ali Clarke: Thank you all for your time.