16 April 2015
Transcript - #2015043, 2015

In the role of: Parliamentary Secretary to the Treasurer [23 December 2014 - 20 September 2015]

Interview with Kieran Gilbert and Jim Chalmers MP, AM Agenda, Sky News

SUBJECTS: East West Link, Credit Rating, Federal Budget, Tax Reform, GST, Hospital Funding, State Tax raising de-regulation of car industry

GILBERT:

With me on the programme this morning, the Parliamentary Secretary to the Treasurer, Kelly O’Dwyer and Parliamentary Secretary to the Opposition Leader Jim Chalmers. Good morning to you both.  First to you on this story, now there’s been a lot of talk on the issue of sovereign risk and so on but I want to put to you the reaction from both the Spanish authorities, the Spanish Ambassador welcomes this deal done, a compromise by Daniel Andrews as does the French Ambassador saying, to my mind, the outcome is good news for Victoria, for Australia and for the business relationship between France and Australia. Of course the French and Spanish companies key parts of the consortium so overall, Daniel Andrews has come up with a decent compromise given this divisive situation hasn’t he?

O’DWYER:

 Well what he’s come up with is ripping up the contract that was signed to deliver vital infrastructure that Victoria needs at a cost of more than 7,000 jobs. And around a cost of a billion dollars that we are aware of, although we are still trying to add up all the figures—it’s still unclear exactly how much has been spent on not building a road in Victoria. But let me say this, this Government has introduced for the first time the idea of sovereign risk. We are now being compared with countries like Venezuela, because of the decisions made by the Andrews Government. The Treasurer is overseas at the moment with the World Bank and the IMF and he is signing deals, signing memorandums of understanding for our global infrastructure hub. This was the project that we led at the G20 that will be based in Sydney. Now, when you have Australia being talked about as a sovereign risk country by virtue of what the Andrews Government has done in Victoria, it is a disgrace. It is also a disgrace that those people who are going to bear the cost of that are Victorian taxpayers.

GILBERT:

Jim Chalmers, your reaction to that and I guess the point that’s bring made is that it would be hard to see a Federal Labor Party with Chris Bowen, yourself and others included ripping up a contract, cancelling a contract of this sort if, after an election, what’s your take in all of this from Brisbane but you’d be very well aware of this very controversial issue down south.

CHALMERS:

Yeah of course. I think Daniel Andrews is to be commended for following through on an election promise. The reason why this is so unfamiliar to Kelly is because the Federal Liberals haven’t done a good job on following through on the commitments that they made to the Australian people, ah but Daniel Andrews made this commitment as you said in your question to Kelly, this is an outcome that has been achieved with substantial negotiation and discussion. People are generally happy about the outcome and Daniel Andrews has other ways to ease congestion on Melbourne roads.

GILBERT:

Let’s move on to some other issues now, Kelly O’Dwyer, you’re Parliamentary Secretary to the Treasurer, Mr Hockey says that the feedback from Wall Street, from Standard and Poors and others that they welcome, accept at least, Australia’s slower trajectory to surplus. Is that just basically the reality that we’ve got to deal with and, I guess, not everyone’s happy with this pace—certainly many in the business community think the Government should be putting the foot down a bit quicker in terms of reform here.

O’DWYER:

Certainly we have passed through the Senate more than $30 billion worth of savings. A number of those savings though that we have tried to get through the Senate have been held up deliberately by the Labor Party. Five billion dollars worth that the Labor Party themselves introduced when they were last in Government or spoke about introducing when they were last in Government, and yet politically now, they’re trying to obstruct. Obviously we would like to be able to deliver a surplus sooner by cutting spending and by getting the budget back under control—that is something we’re trying to do. We have been thwarted by the Labor Party who are not an honest partner in trying to get the budget of Australia back on track. Now I understand why the Labor Party doesn’t want to be part of the solution because they were very much part of creating the problem here, but they do have a responsibility to future generations of Australians to help fix the mess that they created.

GILBERT:

Do you Jim Chalmers welcome the fact that Standard and Poors still, according to Mr Hockey, sees Australia as structurally in good shape, in a good place and, I guess, you’d feel some empathy for him given that ever falling price of iron ore, given you, when you were working with the former Treasurer, faced a similar situation with a declining mining boom?

CHALMERS:

Oh well there are a lot of issues in that question Keiran, I think Kelly’s got a lot of nerve talking about honesty given that it’s the dishonesty and chaos and confusion on the Liberals side that’s smashing consumer confidence and flowing through into the unemployment rate, that’s the first point. But when it comes to the ratings agencies, one of the proudest achievements of the former Labor Government was that, for the first time in our history, Australia had a triple A credit rating from all three of the big ratings agencies. That had never, ever happened before, not under Costello, not under any of our predecessors, so that’s another important point. It is true that the ratings agencies look at trajectories, it is true that the ratings agencies generally take a favourable view of the Australian fiscal position and that we do need to demonstrate over time a responsible and careful and manageable way to improve the budget bottom line. Unfortunately for the Government and for Joe Hockey in particular, the budget deficit has got much worse under his watch—he said he would make it better but he’s made it much worse—and we’ve got this chaos and confusion in the economic commentary and the budget commentary from the Government. Just yesterday for example Keiran, we had the Prime Minister stand up and give a speech in Australia saying that he expected that the fall in the iron ore price would have big implications for the budget. In exactly the same day, the Treasurer in the United States said that he didn’t expect that there’d be a big impact on the budget and that’s just one of many examples of how the chaos and confusion in economic policy on the Liberal side of the Parliament is smashing consumer confidence which is down 10 per cent since the election—that’s flowing through to the unemployment rate which is higher now, unbelievably, is higher now in Australia than it was during the depths of the Global Financial Crisis and the Government has a lot to answer for when it comes to the way that their chaos and their confusion is damaging the economy. 

GILBERT:

Well Kelly you can respond to a bit of that and also I guess another point I want to put to you in terms of confusion I guess, relates to the corporate tax rate, having a two tiered system. In your view, is that sustainable?

O’DWYER:

Well first let me just quickly respond to a couple of points that Jim raised. He talks about rating agencies and being able to achieve triple A credit ratings—well let me say that it was under the Labor Party in 1986 and 1989 that we received downgrades from Standard and Poors and Moodys for our Triple A credit rating and we received those downgradings a number of times down to Double A and it was only under the previous Howard Costello Governments that we achieved those rating agencies back to Triple A. Now he’s talking about Fitch which is one rating agency—but all the hard work was done during the Howard Costello years when the budget was repaired. We’re undergoing that same repair job. We’re being obstructed in doing that right now but that is not going to dissuade us from the very serious task at hand. When it comes to tax obviously we are a Government that wants lower, simpler and fairer taxes. We have a record as a Liberal Government of cutting taxes. Already we’ve cut the Carbon Tax, we’ve cut the mining tax, and…

GILBERT:

Your former boss doesn’t agree with you though. Your former boss Peter Costello thinks you aren’t doing very much of a job – the morbid jokes, the way he called it.

O’DWYER:

Well, when I talk about the Liberal Record I’m talking about his record too at cutting taxes, both company and personal income taxes, and we have embarked upon that by at first cutting the Carbon Tax, the Mining Tax and now we’ve announced a company tax cut for small business. But that’s not going to be the end of it—that’s the whole reason we’ve brought about the tax white paper, to be able to discuss how it is that we can make our tax system more efficient, more fair and how we can actually cut taxes further to increase growth and productivity.

GILBERT:

We’ve got to take a quick break and we’ll be back with Kelly O’Dwyer and Jim Chalmers.

GILBERT:

This is AM Agenda. With me this morning, Parliamentary Secretary to the Treasurer, Kelly O’Dwyer, and the Parliamentary Secretary to the Opposition Leader, Jim Chalmers. Kelly, to you on Peter Hendy’s comments, he’s the member for Eden Monaro, he’s also a former head of the Chamber of Commerce and Industry, he says that the Government should stop indicating that it might be open to a rise in the GST, rather, he’s advocating that the States have re-instated their powers to take income tax, to have their own revenue stream in return for reduced Federal taxes. What do you say to this because this is obviously something that we haven’t seen for many, many decades in Australia—State income taxes?

O’DWYER:

Well look, Peter Hendy is somebody who I respect enormously. He comes with a wealth of knowledge and experience to this debate, as somebody who has participated in the tax debate over many, many years. He’s got a view on this issue which he is putting forward to be part of the Tax White Paper consideration and also the Federation White paper because what he is proposing would obviously be a reasonably significant change to the way that tax operates today. Now we haven’t ruled anything in or out, that’s for people to assess. What is clear though is that States are very, very good on the one hand at pointing the finger or putting the hand out to ask for more money and truthfully they have a lot of powers presently to raise their own revenue in a whole variety of different ways. The question has to be asked is are the States always making the best decisions about how they spend that money. We’ve seen the perfect example in the State of Victoria where a billion dollars is basically going down the drain as a result of the political and ideological decision of the Andrews Government to not listen to the hundreds of thousands of Victorians who want the East West roadway project built.

GILBERT:

Now Jim, given the Labor Party is so vehemently opposed to an increase in the Consumption tax, is this idea make sense, that the States be returned these powers to take income tax that they gave up in World War II?

CHALMERS:

Well Keiran you are absolutely correct to say that we won’t support and increase to the GST or a broadening to the base. We’ve said that repeatedly but we are up for a conversation about tax reform in other areas. The primary reason, or one of the absolute key reasons why State budgets are under so much pressure now is because the Abbott Government in the last Hockey budget cut $80 billion over ten years out of schools and hospitals right around the country. In my home State of Queensland, as the Health Minister Cameron Dick has pointed out today, that means $11 billion cut out of Queensland hospitals alone and that’s the main reason why State budgets are under so much pressure. We are up for a conversation about tax reform across other areas. We’ve put forward come very constructive proposals around tax on multi-national companies that arrange their debt, that arrange their profits in such a way as to avoid tax. That proposal is on the table. It has been worked up with experts from around the country and around the world and we’ve said to the Abbott Government that if they wanted to take that $7.2 billion in revenue over the next 10 years which would help alleviate the pressures on the budget and we would pass that through the Parliament.

GILBERT:

So you are not opposed in principle to this idea Jim, before I go back to you Kelly?

CHALMERS:

We’ve just made it clear about what parts of that tax discussion paper that was released by the Treasurer a couple of weeks ago that we’re not interested in and that’s principally the GST rate but we’ve said over and over again, whether that be Bill Shorten, Chris Bowen or Andy Lee or others that we are up for a conversation about tax reform more broadly.

GILBERT:

Alright, Kelly O’Dwyer, you wanted to interject there?

O’DWYER:

I just want to very quickly respond to just one point that Jim raised in relation to the cutting of hospital funding. Over the forward estimate period, over the next four years, we are actually increasing hospital funding. Nine percent this year, nine percent next year, nine percent the year after and six percent the year after that so it’s incorrect to say that it’s been cut.

CHALMERS:

Have a look at your own budget papers Kelly, have a look at your own budget papers.

O’DWYER:

However, the point I would also make is that he talks about an $11 billion cut in Queensland. Well let me say this, we are spending a billion dollars every month on interest payments alone, on the debt that has been borrowed by the previous Labor Government. Now if we can get our budget back under control think of how that money can be better spent.

GILBERT:

O.K. finally this idea of deregulating the car market. Kelly O’Dwyer, your thoughts. We’re almost out of time but just quickly your thoughts on this. Is the Government considering allowing consumers, everyday Australians to buy their cars from overseas dealers, and what do you make of this?

O’DWYER:

The Government’s consulting on this issue. This is obviously a proposal that has been brought forward. We’re interested in people’s views on this. We believe that it’s important to have competition in the market place and anything that can reduce the cost to consumers is obviously something that we think would be very welcome.

GILBERT:

Jim Chalmers your thoughts?

CHALMERS:

Yeah, my neighbour’s got a car yard in my electorate and he thinks it’s a good idea. We’ll balance a whole range of ideas a bit like the Government, we’ll work through all of the 50 recommendations of the Harper Review into competition with an eye to the best outcome for consumers whether it be on this issue about cars or across the board.

GILBERT:

It seems to make sense given the manufacturing industry’s going to be pretty much shut down within a couple of years Jim Chalmers, to allow Australians to have access to the best quality cars at the lowest price?

CHALMERS:

Well that’s right. I mean we want people to access the best cars they can at the cheapest price—that’s absolutely true so long as they comply with Australian standards and all of that but the point of having a Harper Review like this and discussing it properly and methodically working through the 50 recommendations is to balance all of the views on all sides of the argument first before we come to a view.

GILBERT:

O.K. alright, Kelly O’Dwyer thanks so much for your time this morning and Jim Chalmers as well, that you and good choice on the neck tie Jim as well. (pause) I endorse it (laugh). That’s all that we’ve got time for..