Sky News AM Agenda
Ashleigh Gillon and Mark Butler MP
26 April 2010 8:30am
E & OE
Subjects: Financial planners, Henry tax review, home insulation, childcare, Troy Buswell
ASHLEIGH GILLION:
Joining me this morning on our panel of politicians from Adelaide, the Parliamentary Secretary for Health Mark Butler. Good morning to you.
MARK BUTLER:
Good morning Ashleigh.
GILLON:
And from Melbourne this morning, the Shadow Parliamentary Secretary for Disabilities, Liberal Senator Mitch Fifield. Senator good morning.
MITCH FIFIELD:
Good morning Ashleigh.
GILLON:
Senator Fifield, I do want to get your reaction to these changes I spoke about with Chris Bowen this morning. The opposition obviously has some concerns. Does that mean that we can expect the Coalition will vote against these changes when the legislation does make it through to the Senate?
FIFIELD:
Well I’m always instinctively concerned whenever a government talks about seeking to regulate the pricing of an industry for their goods or services. Financial advisers do provide an important service to the community. They’ve got a right to sell their products and services. It’s important to balance that against transparency and the right of consumers to have adequate information about products and services and the true cost of what they’re paying. I’m yet to be convinced that the government has struck that balance correctly. I’d hate to see a situation where financial advice was priced out of the reach of average Australians. That’s something that we don’t want to see. I think the guiding principal should be that as long as all parties to any transaction are fully informed and fully aware, then they should be relatively free to enter whatever arrangement suit them. But we’ll certainly want to study the detail. We haven’t seen that yet. And we’ll want to read the words in the legislation itself.
GILLON:
Well this morning Chris Bowen of course was reassuring low income earners that under these changes they won’t be left worse off. Mark Butler, are you convinced that that’s right because as Mitch Fifield just raised there, this will lead to some changes in terms of how people are charged for these sorts of services.
BUTLER:
That’s right and changes for the better. We had a parliamentary committee look into the Storm Financial collapse and what it showed is that fees are too high particularly in the area of retail funds for average income earners. They can lose up to $50,000 of their retirement income for financial advice sometimes they don’t receive. What it also shows is that there are very real or least apparent conflicts of interest between the financial advisers and the investment funds into which a lot of that advice ends up seeing money go. So this is part of a broader agenda I think that our government has in terms of transparency and in removing not only real but perceived or apparent conflicts of interest. It’s work that we are doing in other areas. I know its work that I’m involved in in the medicines area. So I would be just astounded if the opposition wasn’t to support this measure which is being in the making now for some time. Our superannuation system of savings of more than $1 trillion of retirement income for Australian workers is the envy of the world. But we have to be always vigilant to make sure that its integrity is secure.
GILLON:
Well the changes that we’re all desperate to hear about of course are going to come in the Henry tax review report which will be released on Sunday with the government’s response. Of course there’s been a lot of speculation about what that is going to contain. Yesterday here on Sky News, David Spears spoke with the Treasurer Wayne Swan. David asked Mr Swan about the speculation that there could be a new resources tax. Let’s have a look at his answer.
Wayne Swan: What I would say to all of those that are concerned about the review, wait for the full publication of the review. Let’s take our time to discuss it maturely. I think our economy and our national interest demands that. Let’s not have hysterical short-term reactions to speculation which is probably inaccurate in the press. Let’s take the time to have a mature discussion about the recommendations from this independent review.
GILLON:
The Treasurer keeping mum on what we can expect in terms of new resources tax or not. The mining industry’s up in arms over even the speculation that there could be a new tax. Yesterday Wayne Swan said that he had guaranteed the states they wouldn’t be worse off under any changes the government makes to the tax system. But WA and Queensland would certainly be the ones to take a hit if there is this sort of new resources tax, wouldn’t they Mark?
BUTLER:
Well look I think we need to get ready for an avalanche of speculation over the next six or seven days and stock-up on Becks and places to have a good lie down. I’m not sure it really serves much interest speculating what might happen where. The main thing we’re focused on with the Henry review is to get a fairer and simpler tax system that helps lift the productive capacity of the economy. You won’t be surprised that the Parliamentary Secretary for Health hasn’t been shown the Henry review. So I can’t really help you about particular things that might be speculated about. But I think we can just wait for six days and there’ll be the release next Sunday and media will be locked-up and able to dissect the entrails of the Henry review and we’ll know where we’re going.
GILLON:
Doesn’t sound like we’re going to get much out of you on that this morning Mark Butler. Mitch Fifield, what do you think? Do you think there is any need for a new tax aimed at the mining sector or would it just be a blatant grab for more cash?
FIFIELD:
Well it would be typical of Labor to introduce a new punitive tax that hits a job generating industry. That wouldn’t surprise me at all. But I’ve got to say Mark and Wayne Swan, in the grab before, absolutely took my breath away with their complaints about the uninformed speculation that’s occurring about the Henry tax review. The only reason that there’s speculation is because the Government hasn’t released the Henry tax review. They’ve had it for four months. If they wanted to have the mature debate they say they want then they should have released it four months ago so that we could have had that serious and informed debate. I don’t think we will receive what we were promised which was a root and branch review of the tax system. We were told that was what was going to occur with the exception that the GST wouldn’t be looked at. Well that’s actually turned out to be a lie because the Government has looked at the GST in the context of clawing it back from the states. I suspect what we’ll see when it’s finally released is recommendations in three categories. The first category will be those things which are relatively straight forward and popular. We’ll probably see the abolition of mandatory income tax returns for a lot of Australians. We’ll see probably a punitive new tax on business…
GILLON:
…Which would be a good thing wouldn’t it Senator Fifield? Would you agree with that?
FIFIELD:
Sorry.
GILLON:
Would you agree with that move if that does happen to make the system simpler so that not all Australians do need to fill out a tax return? Is that something you’d support?
FIFIELD:
Well we’ll have to see exactly how the Government craft it. But simplifying the tax system is a worthy objective. But we’ll have to see exactly what the Government put forward. So I think there’ll be that category of recommendations. There’ll be a second category of recommendations which will be those things which are too hot to handle which the Government will dispense with immediately. And then there’ll probably be a third category of recommendations which the Government will put in to some new review process. And at the end of it all I think everyone will probably say “well what was that all about?” “What was the fuss all about?” I don’t think we’ll see genuine root and branch tax reform. One of the reasons for that is because serious tax reform should involve reducing the tax burden on Australians. This government doesn’t have that capacity because they’ve so comprehensively stuffed the budget.
GILLON:
We will all know the details on Sunday afternoon after that four hour lock-up which we can all look forward to in Canberra on Sunday. Nine days after the Treasurer releases the Henry review he’ll of course be handing down his third budget and as he said to David yesterday, Mr Swan was really hinting that tax payers won’t be expecting too many goodies this time.
Wayne Swan: This is not going to be some John Howard pre-election budget full of handouts. Tax cuts will be delivered as was promised. What we will be focusing on is important long-term reform such as health reform. But we will do that within our strict fiscal rules.
GILLON:
Mark Butler, in this budget the government will obviously be trying to rein in a record deficit and pay for all the health reforms we’ve heard so much about recently. But with the economy doing a lot better, we can probably expect to see a lot less red ink than was forecast around this time last year.
BUTLER:
Well that’s right. I mean as the Treasurer said yesterday there are tax cuts that are scheduled to take effect on the first of July already for working families. But in addition to that, the government is very much focused on its fiscal strategy about bringing the budget back into surplus and paying off the debt in the time-frame that we indicated at the time of our response to the global financial crisis. But of course there’s the very significant investment that the Prime Minister and the Premiers with the exception of WA agreed a week or so ago into a health and hospitals network system. So this will be a very important budget for the future of Australians. A sort of budget that I think people expect to see from a Labor government and didn’t see under the previous government.
GILLON:
Ok, Mark Butler, Mitch Fifield, do stay with us. We will be back after this very quick break.
GILLON:
Welcome back to AM Agenda. Joining me this morning, Mark Butler and Mitch Fifield. Senator Fifield lets begin with you this time. Look before the break of course we were talking about the budget and the impact that the global financial crisis had on the government’s bottom line in the last budget. The opposition has been saying that programs like the insulation scheme which we saw was scrapped last week. That programs like that weren’t worth the shot in the arm that they gave to the economy. But is that really fair considering that this is all in hindsight and back then of course we thought Australia was on the brink of recession going into some of those spending programs we saw delivered.
FIFIELD:
Well it’s not just with the benefit of hindsight that we’re saying this. It’s clear that the $2 billion insulation program was a complete and absolute fiasco. Complete and absolute waste of money and has resulted in house fires and deaths. I think those facts are now accepted. We know that the Building the Education Revolution spending on school halls has seen massive wastage of money. Has seen schools not receive value for money and it’s of doubtful utility for many schools who are receiving halls which they don’t particularly want, need and haven’t asked for. I’m firmly of the view that we could have had a similar stimulatory effect without this massive junk spending. Because if that money hadn’t been spent, the Reserve Bank would have reduced interest rates by more than they did having a similar stimulatory effect but without the massive debt. I’ve just got to respond to something that Mark said before the break. He said that this budget that’s coming will be the sort of budget that people expect from Labor and will be the sort of budget that we didn’t see from the Coalition. Well I think he’s exactly right. It will be a budget that is in deficit. Something that people expect from Labor. And he’s quite right that that’s something people didn’t see from the Coalition because we had successive surpluses. And one of the reasons why we weathered the financial crisis much better than comparable nations is because we had a budget which was in surplus. Because we had world-class prudential systems. Because we had world-class financial systems. They’re the reasons that we came through the financial crisis well. And we could have come through it even better and largely debt free if we hadn’t had this junk spending on schools, bike paths and roofing insulation.
GILLON:
Well as Mitch Fifield alluded to Mark Butler last week of course the government started off with the agreement on health reform. It all seemed to go downhill from there. Finding out that insulation program’s being canned. Also another broken promise in terms of childcare. The government saying it won’t be building as many childcare centres as it had promised. And both of those quite negative announcements the Prime Minister was no where to be seen. Is it that he only likes to do the big positive spending announcements as opposed to these sort of bad news issues Mark Butler?
BUTLER:
Well the media and the opposition can’t have it both ways. Sometimes the Prime Minister is criticised for trying to exercise too much control over all the government agendas and then when he lets the Ministers do their job and make announcements about their portfolio he’s criticised for running for cover. I think it was entirely appropriate for the Minister for Early Childhood Services, Kate Ellis to make an announcement in relation to childcare. That’s what she’s paid to do. That’s what people around the country who pay taxes to pay her salary would expect I think.
GILLON:
Mark, do these broken promises, do they show us that it’s a lot easier to make these sorts of pledges in opposition but much harder to deliver on these sorts of big picture things once you’re actually in government?
BUTLER:
Well if you’re talking about the childcare program in particular, I think what it shows is that childcare is a very dynamic sector. When we developed that policy four or five years ago back in 2006, we were seeing the consequences of the Liberal governments approach to childcare which was to let the market rip. We saw that later on with the collapse of ABC Learning. And what that approach led to was a crisis of affordability for working families who needed to use childcare services and also a very significant of shortage of accessible childcare places. In terms of affordability back then you had about thirteen per cent of disposable income for the average family using childcare going in childcare fees. We’ve got that figure down from thirteen per cent to seven per cent with our increase in the childcare cash rebate to 50 per cent paid quarterly. What you also saw back then was a significant shortage of places. Now that was a market failure that we said we’d address by building 260 new centres. What’s happened since then over the course of the last few years is that the market itself has addressed that shortage. There are about 1000 more long day childcare centres then there were back then. An increase of over 20 per cent in the market availability of childcare places. And the statistics that Kate Ellis revealed showed that 90 per cent of centres now have vacancies. 90 per cent in metropolitan Australia and much more than 90 per cent in rural and regional Australia. So for us to inject another 200 plus childcare centres into the market would put really significant pressure on those centres that have opened up in the past and really would be astounding for us to spend taxpayers money to go and destroy some businesses that have done the right thing over the past few years and tried to reduce the market failure itself. So now the opposition will paint this as a broken promise, but what it is a reflection of the dynamism of the childcare sector.
GILLON:
Well let’s let Mitch Fifield tell us what the opposition’s reaction is. Mitch Fifield, do you acknowledge that parents needing childcare are better off under the Rudd government then they were under John Howard?
FIFIELD:
No I don’t. But I’ve got to comment on the absolute irony of Mark talking about this government sending money into a sector to destroy businesses which is exactly what they did in the home insulation sector where they have destroyed hundreds of businesses that were operating. But just back to childcare. This promise of 260 new childcare places. This was the Labor Party’s promise. This was the promise that they solemnly made before the last election. They didn’t put any caveats on it. There weren’t any qualifications. They said that they were going to build 260 new childcare centres. They haven’t. They’ve broken their promise. They were embarrassed by that and they tried to bury it. Kate Ellis wasn’t sent out to make this announcement. Kate Ellis was sent out to bury this announcement. This announcement of a broken promise was deep on the second page of a press release, the heading of which gave absolute no indication that the broken promise was contained within. So this government is trying to hide its broken promise.
GILLON:
Ok, Mitch Fifield I do really need to just get on to one final issue because we are running out of time.
FIFIELD:
Sure.
GILLON:
It is the big political news or might say gossip centring in WA today. And that is the WA Treasurer Troy Buswell will hold a press conference this morning. He’s going to address the claims that he has had an affair with a Greens MP in that state. Mitch Fifield, do you think that Troy Buswell can survive this? Of course he’s already survived that chair sniffing incident that we heard so much about a while ago. Do you think he can live through this scandal as well?
FIFIELD:
I’ll make two points. The first is that I think commentators and journalists need to be very careful and very aware that there are families involved in these sorts of circumstances and that sensitivity needs to be shown. The second point is that my view is that a politicians private life is no ones business unless their private activities affect the performance of their duties. And there’s no suggestion that that’s the case in this situation. I think everyone agrees that Troy Buswell is an extremely competent Treasurer for Western Australia and I certainly hope that Western Australia continues to have the benefit of his skill.
GILLON:
Well of course we will find out the full detail when Mr Buswell addresses these rumours a bit later this morning in Perth. But Mark, we do seem to hear a lot of these sorts of scandals in politics. What is it do you think that makes this such a common occurrence in politics? With men in-particular. Is it stress? Is it the power going to politicians heads or what could we put it down to?
BUTLER:
Well I’m not a sociologist or a psychologist Ashleigh, so I’m not sure I’m the best placed to answer that. But we haven’t agreed on much this morning but I think Mitch and I agree on this issue. If there’s a public interest line of inquiry about these matters then the media should pursue it. But I don’t understand that there is one in this area. And so if it’s just about titillation then I don’t think the media should pursue this. This is a matter now, very difficult matter obviously, for two families and I think that it should be left with them to deal with.
GILLON:
Well ok Mr Buswell’s obviously going to deal with it himself this morning at about 1pm eastern time so we’ll bring any news associated with that news conference a little bit later in the day. Mark Butler, Mitch Fifield, thanks for joining us this morning.
FIFIELD:
Thanks Ashleigh.
BUTLER:
Thanks Ashleigh.
Ends.