31 January, 2011
Sky News – AM Agenda
Kieran Gilbert and Andrew Leigh MP
31 January 2011
8:35am
E & OE
Subjects: Flood levy, flood response, GST, Tax Summit
KIERAN GILBERT:
Welcome back to AM Agenda. With me now is our panel, the Shadow Minister for Disability Services Mitch Fifield, and Labor MP Andrew Leigh. Gentlemen, good morning to you both. Welcome to our first show of the year.
SENATOR MITCH FIFIELD:
Good Morning Kieran.
GILBERT:
Mitch, first to you. You heard what Greg Combet said, he believes that Tony Abbott and his comments are “disgusting” in the wake of the flood crisis. That he is being opportunistic – politicising the issue. Tony Windsor has also said that Tony Abbott is being opportunistic. What do you say?
FIFIELD:
Well I thought Greg Combet’s comment that Tony Abbott was “disgusting” was just extraordinary. You’ve got the Labor Government saying that we shouldn’t be playing politics with the floods, we shouldn’t be playing politics with people’s grief, yet that’s exactly what Greg Combet is doing. All Tony Abbott has been doing, and all the Opposition has been doing, is its job. And that is to apply scrutiny and to question. And this is a Government that has an appalling track record when it comes to spending public money. So we want to be certain that this money will be well spent, that there will be appropriate processes in place. But we also completely disagree with how this money is being raised the concept of the flood levy. It is certainly within the capacity of this Government, given their waste, to find another $1.8 billion. We’ve offered to sit down with the Government and identify that money.
GILBERT:
But Mitch, it’s not just the Government that’s saying that Tony Abbott has missed the mark here. As I said, Tony Windsor says, “this is an issue of tragedy that we’re talking about – tragic circumstances – and to try to use that as a skateboard to Government of itself vindicates the choice we made to support Labor.” That’s what Tony Windsor said.
FIFIELD :
We’re not seeking to use this issue to “skate” into Government. The fact is that Australians pay good money in their taxes, and one of the reasons they pay that money is so that in times of disaster, the Government can appropriately respond. The reason this Government doesn’t have the capacity to do that at the moment is because they’ve blown money on the BER program. On pink batts. On $900 cheques. And this Government is trying to pull back that money, that was given in $900 cheques about two years ago, from this tax. What they need to do is reprioritise. They need to identify further savings. Julia Gillard herself has said that is possible because if there’s an overspend, she said that she’ll find those savings.
GILBERT:
Andrew Leigh, that’s true. Julia Gillard, at the Press Club, said that if this blows out – if it’s more than $5.6 billion – that there’ll be more cuts made and that the levy won’t increase. So she said it – that there is more fat there. Why not make the cuts now?
ANDREW LEIGH:
Well Kieran it’s important to remember that this package is two-thirds savings measures and one-third a flood levy. The same sort of levy that Mr Abbott proposed during the election would fund his election promises. It’s a very modest levy, as we’ve heard Greg Combet say, 60% of taxpayers won’t pay anything at all. And for most taxpayers it will be less that the price of a cup of coffee.
GILBERT:
But why not make the cuts now?
LEIGH:
Well the Government is making cuts now. We’ve reprioritised spending. But a levy is appropriate. This is a massive natural disaster that we’ve seen in Queensland and in Victoria. And it’s appropriate to put in place a modest levy to do, to take a sort of pay as you go approach to that. But it’s important, Kieran, to also remember what we’ve seen from the Opposition side. Mr Abbott has talked about savings here, but they’re the same sorts of savings that saw an $11 billion hole during his election costings. If we can take a simple household analogy, Mr Abbott’s approach to paying for the floods has been like my wife telling me I need to tighten our belts, and me saying, ‘well let’s tighten our belts by taking money out of the bank account.’ Mr Abbott has said we should raid the Building Australia fund that’s not a saving. His other approach has been like my wife saying we should tighten our belts, and I say, ‘well we’ll just tell the builders to stop work half way through the kids’ room, and leave that undone and down tools.’ That’s like Mr Abbott suggesting that we should stop the school spending midway through. These are not serious savings, Kieran. This is not a leader who is trying to focus on the national interest. This is a leader who is trying to score cheap political points.
GILBERT:
Mitch, your response? Some of those things that have been said about the Building the Education Revolution, for example, 97% of the stimulus spending has already started is already underway. Is what Andrew saying there accurate? Is it like stopping a school halfway and saying ‘sorry, we’re not going to finish it?’
FIFIELD:
There’s still a billion dollars in the BER which hasn’t been allocated as yet. But even if we accepted what Andy was saying, and I don’t for a second, let’s hear the savings that Julia Gillard would identify if there’s an overspend in the flood recovery. Julia Gillard has said that she will not put the budget further into deficit. She has said that she will not increase this new income tax levy. So in that case – Julia Gillard – tell us, what are those projects, what are those programs, which you propose to identify savings in. She said they’re there, she should tell us what they are.
GILBERT:
Well let’s look, Andrew Leigh, at this other issue the disaster relief fund that Tony Windsor is proposing, and the national insurance scheme that Nick Xenophon is proposing. And we heard Greg Combet before talking up the urgency of this the need to implement this levy now and to look at those matters at another time. But it seems that they are adamant about their proposals. Should the Government be willing to listen a bit more, because you might have to to get these through?
LEIGH:
Kieran the Government is always, constantly listening. I mean, Julia Gillard scheduled consultation meetings with meetings all the way through last term and also during, in the coming year, is going to be constant. I mean we are constantly engaged, discussing ideas, taking ideas from everywhere in order to get solutions that best fit the problem. But in the case of a permanent disaster fund, our view is that this is a particularly unusual event, and that in normal times for a weather event that strikes Australia, normal budgeting processes should be appropriate. But this is a really unusual thing. And let’s think about the context in which John Howard put in place levies, which were supported by Labor. The gun buy-back levy – one of those things we think we should have to do perhaps once in a generation. The East Timor levy – again, particularly unusual circumstances, with the birth of a new country just off Australia’s shores. The Labor Government believes that this is that kind of an event one that happens very, very rarely. Therefore it’s appropriate to put in place a levy. But in normal budgetary times, the normal budgetary process applies.
GILBERT:
Senator Fifield what are your thoughts on these proposals put forward by the Independents?
FIFIELD:
Well, there’s nothing special about having a special disaster fund. It’s just a pot of money. It’s the business of Government to appropriately budget to make sure that they have funds for unforeseen events. One thing we know is that there will always be unforeseen events. We don’t know what they’ll be, but we know that they will happen. Whether it be a financial crisis, whether it be a military engagement, whether it be a natural disaster these things happen. And Governments need to budget accordingly. Andy referred to the levy that we put in place for the gun buy-back. Well that was at the start of our term of office, when we inherited a $10 billion budget deficit and a $96 billion debt. There was no cash to be found anywhere else for that important task. That was the only time that we increased, on a temporary basis, income tax. Never did it again. And Government shouldn’t need to do that if they’re managing their budget well, and if they’re making adequate provisions for these unforeseen events.
GILBERT:
No doubt Andrew will say that we’ve just come off the back of the financial crisis, and then we’ll get into that stimulus spending, but let’s move on…
LEIGH:
Yep.
GILBERT:
…because I want to ask about the GST debate. Now the GST Treasury figures suggest that the tax breaks related to the GST could rise to almost $23 billion, Andrew, within four years, prompting the debate that this should be part of the tax review that the Government is going to undertake. Now why not have the GST as part of the mix? If you’re going to have a tax review, surely you need the Goods and Services Tax to be part of the discussion?
LEIGH:
Well Kieran, the tax debate the Government has kicked off has been extremely wide-ranging. I mean the Henry Review looked right across the board it’s a three volume, 1000 page report that was finally handed down by Ken Henry. The Government has simply said that we’re not going to raise the GST. But this is going to be an important debate about tax that goes on later this year, and it’s going to flow out of the Henry Review.
GILBERT:
But no GST discussion you said that’s off the tables. It’s a fairly large component of the economy, and it seems odd to not even look at it.
LEIGH:
Well Kieran, we’ve said that raising the GST is off the table. But that’s not to say that we’re not having a substantial tax debate. I mean frankly, we’re aware that as soon as we get into the GST business there’ll be a scare campaign happening from the other side, and that’s going to get in the way of a good policy debate going forward. And we’re going to have a serious debate around corporate tax, around personal income tax, around a whole range of different taxes, and that will flow out of the Henry Review.
GILBERT:
Senator Fifield?
FIFIELD:
Andy you should have been here in 1999 when Labor were running the mother of all scare campaigns about the GST. Kim Beazley was going to roll it back at one stage, but that policy fell by the wayside. Labor opposed the GST, we got it through with some difficulty. There’s basically a community consensus now that what we did was good. There’s also a community consensus that the exemptions were appropriate and that the rate shouldn’t change, so that shouldn’t be on the agenda. But whether or not it’s on the agenda of Labor’s tax summit is pretty immaterial, because nothing’s going to come out of that tax summit. The Henry Review Labor didn’t adopt anything of note from the Henry Review. This massive tax summit which was going to see root and branch reform it’s now going to be a tax forum. It’s basically going to be a few people popping around for a cup of coffee with Wayne Swan. Nothing will come of it.
GILBERT:
Senator Fifield and Andrew Leigh, appreciate your time this morning. Thanks gents.
FIFIELD:
Thanks Kieran.
LEIGH:
Thank you.
ENDS