Bill's Transcripts




2 AUGUST 2013

SUBJECT/S: Economic Statement; Tobacco Excise; Labor’s Better School Plan


JUSTIN SMITH: Minister for Education and Workplace Relations.  Mr Shorten, good morning.

BILL SHORTEN: Good morning, Justin.

JUSTIN SMITH: Joe Hockey, Shadow Treasurer.

JOE HOCKEY: Good morning.

JUSTIN SMITH: Joe Hockey, hell of a way to spend your birthday, isn't it?

JOE HOCKEY: Oh, it's in Melbourne though.

BILL SHORTEN: Happy Birthday Joe.

JOE HOCKEY: Oh, thanks Bill.

BILL SHORTEN: How old are you now?

JOE HOCKEY: I'm ageing.  Well, I'm 48 today.

BILL SHORTEN: Well, every birthday should be viewed as a victory.

JUSTIN SMITH: That's right, exactly.

JOE HOCKEY: Especially at my age.

JUSTIN SMITH: Bill Shorten, just first up, on the new plans today for the banking tax.  Can you give us a couple of scenarios here?  If things happen to all go to hell, like a GFC style scenario and this tax is in place, what happens.  And if we all go to hell and the tax isn't in place, what happens?

BILL SHORTEN: Well first of all, the Treasurer and the Finance Minister are going to release the Government's Economic Statement later today and I'm not in a position to pre-empt that.  But what I can say in answer to your question and the principles underneath it, is that our financial system has held us in very good stead in recent years and in part it's a testament to the sound regulatory system we have in place.

But as our Treasurer said yesterday, International Monetary Fund has expressed the view that for some time that there is a gap in Australia's public policy when it comes to the provisioning for any potential bank or deposit taking institution failure.

Our financial regulators expressed the same strong views. So the Government has been appropriately consulting with banks and credit unions in how we tackle this issue. How to make sure that there is money set aside in the unfortunate event that a deposit taking institution in Australia comes into difficulty and, as I said, the Treasurer will be in a position to expand upon this later.

JUSTIN SMITH: Sure. The Banking Association say they weren't consulted.  They were told yesterday look, this is it. So that's it, suck it up.

BILL SHORTEN: Well, that's not my understanding.  I mean, I'm not surprised if the union for the banks has got a different view.  As I say, our Treasurer and Finance Minister will.

JUSTIN SMITH: Sure.  Well, can I ask who did the Government consult before making the decision, and as you say, look, the decision hasn't been made and you want them to make the announcement?

BILL SHORTEN: That's right.

JUSTIN SMITH: But who did they consult?

BILL SHORTEN: You’re going to have to ask the Treasurer and Finance Minister.

JUSTIN SMITH: Well, with respect Minister, you're the one that just said that they consulted and I'm just asking who they talked to.

BILL SHORTEN: That's right.  Well, I'm advised that they've spoken with banks and credit unions.  We know that the IMF has put this proposition forward.  The Reserve Bank of Australia has also expressed the view that there is a gap in Australia's public policy when it comes to provisioning for any potential bank or deposit taking institutional failure.

JUSTIN SMITH: Joe Hockey, do we need it?

JOE HOCKEY: Well, it's a good question.  Do we need it?  I hope we don’t need it.  But it's truly about revenue.  I mean look, if this has been around for a year or two years as the Government claims, then why didn't Wayne Swan do it? Bill was the Financial Services Minister. I mean he, you would think, would know about it, given it applies to financial services.  You know, the question is well, what does it mean? Where does the money go? And the simple fact is this is revenue. This is actually going into the budget as revenue.

Now they say they've got a revenue hole in the budget in the last four months.  Well, this is money that is going to be collected from taxpayers, from people with deposits of less than $250,000 in the bank account.  This is a tax on them that is going to be collected as revenue for the Commonwealth Government.

JUSTIN SMITH: But should we have it? Should we have this kind of a tax in there? Should we have a deposit tax?

JOE HOCKEY: Well, I actually, I do want to see the details. I want to see the details, because the starting point is what is the liability for the Commonwealth Government or the taxpayer has?  What is the risk associated with that liability and is it appropriate to have a tax on depositors now?  I mean, we're trying to encourage people to have money in their bank accounts, to save money, and the question is it appropriate to put a tax on savings?

BILL SHORTEN: That's an interesting question, Joe.  In terms of who thinks this is a good idea; a deposit insurance scheme was recommended by the IMF 2012 review of Australia's financial sector. So it's not out of the blue.

It's also been recommended by our Council of Financial Regulators.  They're not Liberal or Labor.  They're just the people who try and make sure that our system works and that includes the Reserve Bank of Australia.  In fact, listeners may be interested to know that until now, Australia has been one of the few G20 countries not to have a pre-funded deposit insurance scheme.

JOE HOCKEY: Yes, because we did it. We got rid of it Bill.

BILL SHORTEN: Sorry Joe, I didn't mean to interrupt you.  Sorry, go on mate.

JOE HOCKEY: What happened was, when we had the Wallis Reforms, we got rid of a range of different, you know, statutory reserves and a whole range of different things and we said that, with the agreement of the Labor Party at the time, that bank deposits were not guaranteed.

Now, the Global Financial Crisis hit and the Government, with our support, stepped in to ensure there wasn't a run on the bank.  But the challenge now is that there is a whole different economic environment and financial environment.  For example, cash management trusts and a range of other places where people could put their money.

Now, I said that we should be doing this and looking at the entire scheme and have a full financial system inquiry.  That's the place to do it, not one minute to midnight before an election.

BILL SHORTEN: Well first of all, the Council of Financial Regulators have already formed this view.  But secondly Joe, you said that the Coalition wouldn't support a tax on savings.


BILL SHORTEN: What's ironic about that is you're proposing to put on a 15 per cent tax on the superannuation contributions, people's retirement savings.

JOE HOCKEY: No we're not.

BILL SHORTEN: It's 15 per cent tax.


BILL SHORTEN: Hang on mate.  I gave you a go.  The 15 per cent tax, which used to be around, which Labor got rid of, is now going to be reintroduced if the Coalition get elected.  That's three and a half million people who earn less than $37,000.  They get about just north of $3000 super and you're proposing to tax their superannuation at 15 per cent, when they're not now.

I mean, if you are fair dinkum about not having taxes on savings.  How about today, here and now – Neil Mitchell is away, but Justin is stepping in – why don't you say here: we will drop this tax, this one and half times GST, on low paid people's superannuation savings?

JOE HOCKEY:  No, no. See Bill, this is where you are playing games.


JOE HOCKEY: Let me finish.  Let me finish.  There is not a new tax that we are proposing on people's superannuation.  What you're doing is you're proposing to give people a discount on some of their superannuation.  We were the ones that introduced a co-payment for low income people on superannuation and Kevin Rudd 1.0 abolished it.  Right?  Or sorry, reduced it significantly.  I'll even give him that.  He didn't abolish it.  He reduced it significantly.

Now, you're giving it back and trying to claim credit for it.  I mean, come on.

BILL SHORTEN: Joe seriously.

JOE HOCKEY: It's paid for out of the mining tax.

JUSTIN SMITH: Gentlemen.  I might jump in here, if you don't mind.  Joe Hockey…

BILL SHORTEN: I'm just responding to what Joe said.


BILL SHORTEN: He said there is a tax on savings.  Liberals don't like taxes on savings, but if they get elected they're going to make sure that people who earn less than $37,000 pay a 15 per cent tax.  Not a 10 per cent tax.  A 15 per cent tax.

JOE HOCKEY: That's not right.  That's just not right.

BILL SHORTEN: Are you changing policy?  What about your rolled-gold parental leave scheme which is going to be a tax on a range of businesses?

JUSTIN SMITH: Minister, just before we get into it.  Joe Hockey, I would like to ask you this question before we move on from bank deposits. If you get in will you roll this back?  Will you drop it?

JOE HOCKEY: Well, we've always said that we would have a financial system inquiry and the financial system inquiry, I would expect, would report back before this tax starts.  That's the starting point and I've said that.

BILL SHORTEN: How do you actually know Joe?

JOE HOCKEY: Hang on, hang on.  Chill out.  Chill out buddy.

BILL SHORTEN: I don't mind you going on and not answering.  It's good.  Yes or no?

JOE HOCKEY: And I'll tell you what.

BILL SHORTEN: Or maybe it depends.

JUSTIN SMITH: You know what I hate? Mr Hockey, I hate to side with anyone, but I'm going to have to hit you on that.  Is it a yes or a no?

JOE HOCKEY: No.  Well, I don’t know.  You are asking me to speculate on the details of it.  If it is going to pass through to depositors, we want to know what the impact is on the banks.  The second thing I want to know.

JUSTIN SMITH: Oh well, once you've had the detail, will you be in a position to? Once you've had a look at the detail that comes out today will you be in a position to say yes or no?

BILL SHORTEN: Oh, maybe.


BILL SHORTEN: Yes Minister in the fullness of time.

JOE HOCKEY: Hang on, hang on, hang on.

JUSTIN SMITH: When there's been six full moons and the dog has barked!

JOE HOCKEY: Well, can I just add one further point?

JUSTIN SMITH: Of course.

JOE HOCKEY: I want to know what the distortion is with smaller banks and credit unions, right and how it's going to apply to them. Because the big banks actually don't want a Government guarantee on their deposits.  They actually don't want it.  They say well, we've already got a strong credit rating.  We don't need to have a Government guarantee on our deposit.

It's the small players, the credit unions and smaller banks that have had this and the question is whether they're going to have the same fee and charge apply to them as will apply to the big banks?  We don't know.  We don't know that.

So that's the reasons why we don't have responses on the run for policy on the run.

JUSTIN SMITH: We are waiting for some detail to come through on it.  Joe Hockey, Shadow Treasurer, Bill Shorten, Minister for Education and Workplace Relations.  We'll come back after this.

[audio break]


JUSTIN SMITH: Mr Hockey, the cigarette tax, will you knock that one on the head if you – the brand new one, the brand new tax – will you knock that on the head if you win?

JOE HOCKEY: Well, it's effectively already started. It will be damn hard to reverse.  Quite frankly, I understand the health justifications but I also am mindful that for a pensioner who smokes, a third of the pension increase will go in increased taxes on cigarettes.


JOE HOCKEY: You know, it's a cost of living initiative again because the government's run out of money.

JUSTIN SMITH: Mr Shorten, we had word from the lobbies yesterday, from the big tobacco, who said that there's going to be a black market that’ll jump.  But I guess they've said that every time there's been a problem with cigarettes.

BILL SHORTEN: I mean, Joe's last answer was the classic definition of having a bet each way.

JOE HOCKEY: No it wasn’t.

BILL SHORTEN: Well, you bagged the idea but you're going to keep the money.

JOE HOCKEY: Well, mate, you're the ones that have spent all the money.  There's an increasing deficit.

BILL SHORTEN: All I'm saying, Joe, is if you really think it's a bad idea, just say you're not going to do it.  You can't think it’s that bad of an idea can you, mate?

JOE HOCKEY: Bill, I promise you there are a hell of a lot of ideas that Labor's come up with that I think are bad ideas but I can't reverse them overnight.

BILL SHORTEN: So you - are you saying overnight?  So you're saying that over time you'll do something?

JOE HOCKEY: Well, in this case, in the case of tobacco, it is impossible.

BILL SHORTEN: Mate, I tell you the difference between you and me.  I think it's an okay thing to do and I'm not going to say, you know, it's a bad idea but we'll keep the money.  You're either for it or against it.

JOE HOCKEY: The problem is, Bill.

BILL SHORTEN: The problem is 15,000 people..

JOE HOCKEY: I say to the audience that, you know, if you're on $20,000, or $30,000 a year, or $40,000 a year and you have a smoking habit this tax increase is going to have a hell of a bigger hit on your budget than someone on $200,000.  Right?  And you know what I actually care about those people.

BILL SHORTEN: So do I, Joe.  Joe, you do care about them but you know what, you're not going to do anything for them.  So I love your words.  You say I really care for you but by the way, I'm keeping the money.

I’ll tell you the difference between you and me and between Labor and Liberal on these issues.  You're proposing to review finances and you won't rule out increasing in the GST.  If you're so worried about people who earn $20,000, $30,000, or $40,000.  You're proposing to introduce a new tax on the superannuation contributions they pay.


BILL SHORTEN:  Let's go through the rationale for this tobacco excise.  First of all, smoking kills over 15,000 people every year.  It puts a huge strain on our costs.

JOE HOCKEY: Then ban it.

BILL SHORTEN: I'm thinking of that.  There are taxpayers who pay taxes into our health system who don't smoke.  That's fair enough.


BILL SHORTEN: This levy, this excise will only go towards a portion of the total cost of tobacco related diseases.  Did you know that there's over 750,000 hospital bed days per year attributable to tobacco related disease?

JOE HOCKEY: And you know what?

BILL SHORTEN: Tobacco is only the product that if taken as intended it will kill half its regular users.

JOE HOCKEY: You know, there's actually a really good assessment in, I think it was the editorial in The Australian today, that shows that actually…

BILL SHORTEN: There's another pro-Labor publication.  What did it say?  What did it say?  Well that's right, what did The Australian say?

JUSTIN SMITH: Go ahead, Mr Hockey, go ahead.

JOE HOCKEY: The editorial in The Australian actually pointed out that the figures that Kevin Rudd used the other day were grossly inaccurate.

BILL SHORTEN: The Tobacco Institute of America says that smoking is probably good for you.

JOE HOCKEY: No, I'm sorry but the direct costs associated with tobacco consumption were significantly less than the revenue that is being raised from it.  So I would say to you.

BILL SHORTEN: Even a crocodile wouldn't swallow that, mate.

JOE HOCKEY: Well, let me finish. One of the reasons why, and it's a very sad fact, is that smokers obviously die younger and, obviously over the course of their lifetime have left less of an impact on the health system.

The issue is, right, I mean there's no-one saying that smoking is good for you.  In fact, it's terrible for you, right.  But the fact is that when you increase the tax on three million Australians as this is an increase in tax on three million Australians.  It is going to increase their cost of living.  Now, if you're so outraged about it then ban it.

JUSTIN SMITH: Joe, both sides have been taxing the hell out of smokers for years.  So this is not a brand spanking new idea.

BILL SHORTEN: Joe, I've given you a good run.  You've quoted The Australian editorial.  Let me quote an eminent Liberal called Malcolm Turnbull.  He said on the Today Show, “There is no doubt you put the price up on cigarettes and fewer people smoke.”

JOE HOCKEY: Yes, that's right.

BILL SHORTEN: It's only trying to help people live longer.

JOE HOCKEY: Well, that's exactly – that is so banal.  You know what Bill, that is so disingenuous because the fact is three million people have to pay more, right.  And if you think that doesn't matter, well that's your entitlement.

BILL SHORTEN: Joe, you live in a bubble, mate, because you don't pretend there's a thing called the health system and that tobacco related cancer costs a lot.

JOE HOCKEY: Well, you know, obesity is a huge issue out there. Why don't you slap a massive tax on food?

BILL SHORTEN: I don't believe that you can compare eating food to smoking tobacco.


BILL SHORTEN: An argument somehow tackling cancer is the same as eating food?  What?  What planet do you live on, mate?  It’s just not the same thing.

JUSTIN SMITH: Joe Hockey, you would support an extra tax on fatty food, junk food?

JOE HOCKEY: No because…

BILL SHORTEN: Joe, don't raise a strawman and say if you want to do something about tobacco related cancers and putting up the price of cigarettes, don't say it's the same as people eating biscuits.  You know, give us a break.  Let's not insult the public.

JUSTIN SMITH: No, gentlemen, we're going to move on.  Just before we go, Bill Shorten, about time to call an election.  Get it over and done with, get it sorted out?

BILL SHORTEN: There'll be an election sooner rather than later.  That decision's up to the Prime Minister.

JUSTIN SMITH: I think we actually knew that one already.  But we had a date before.  We no longer have a date.  When are we going to have a date?

BILL SHORTEN: If you want to talk about key issues, let's talk about is it about time for the Liberal's to reveal their costings on their promises?  These guys are like the script writers out of Peter Pan.  It's Neverland!

JUSTIN SMITH: Nice diversion but you did have an election date.  You no longer have one.  When are we going to get one?

BILL SHORTEN: It'll be on a Saturday and it'll be soon, mate, and it's not up for me to call.

JUSTIN SMITH: That's a little insulting to people that are sitting there waiting for an election date for you to say it'll be on a Saturday and it'll be soon. It's a little bit flippant, I've got to say.

BILL SHORTEN: Justin, you know I'm not the person who calls the election.


BILL SHORTEN: Justin, when you set me up to say Bill Shorten, if you don't give us an election date today, you're insulting people.  You know that's not my job.

JUSTIN SMITH: No, no.  You insulted people by being flippant and saying it'll be on a Saturday and being soon.  There are people that are actually really waiting for it.



BILL SHORTEN: Do you know what, a lot of people are and it's a democracy and we have them.  When Julia Gillard set the date all the conservative critics came out and said she shouldn't have set the date.

Kevin Rudd will announce the date very soon, of that I'm sure.  But you're asking me and you sort of set me up with the question: Bill Shorten, if you won't tell us today when the election is, you're bagging, you're not doing the right thing by people.

JUSTIN SMITH: Gee. I didn't realise you were so easily set up.

BILL SHORTEN: Justin, you know I can't tell you what the date of the election is.

JUSTIN SMITH: But the Government already did give an election date.

BILL SHORTEN: Why don’t we talk about policy, Justin?  I can guarantee an election.  What I can’t guarantee is what the Liberal costings will be.

JUSTIN SMITH: God. Well you're setting me up now because we've just spent the last half an hour talking about policy and then you finish it off by saying why don’t we talk about policy?

BILL SHORTEN: Justin, but at some point, your producers did promise we'd talk about education.  Schools are important.  We haven't had a chance to go to that.

JUSTIN SMITH: Go for it if you want to.

BILL SHORTEN: Well, currently we’re negotiating…

JUSTIN SMITH: Mr Shorten, I don't see you having any lack of the microphone.  You've had plenty of opportunity to say anything you want to say.

BILL SHORTEN: I'm putting my hand up.  You can't see that because I'm not in the studio but I'd like to talk about schools.


BILL SHORTEN: We are negotiating with the Victorian Government.  They're very constructive negotiations.  There's a big debate going on about how do we best make sure that our schools, over the next six years, provided that they've got the resources to give kids the best start in life.

In the last month, the Catholic Education Commissions around Australia, the Independent Schools, the Tasmanian government have joined New South Wales, South Australia, the ACT to say yes they're interested in our school reforms.

Our challenge is, though, that the Coalition have said that if they're elected, they've had many positions on this - I think parents of schools in the Victoria, Catholic and Independent and Government schools, need to know what would the Opposition commit to over the next six years for the better funding of their schools.  Because we've got a clear policy.


JOE HOCKEY: What is Gonski?  What is Gonski?  I mean, if every state has a different negotiation on Gonski.  Everyone talks about Gonski, no-one knows what it actually is.

BILL SHORTEN: Well, he was the person who chaired the review.

JOE HOCKEY: I know who David Gonski is.

BILL SHORTEN: Okay.  I just thought you said none knows.

JOE HOCKEY: I'm asking you what it is because…

BILL SHORTEN: I appreciate the question.  What it is, it's a proposition that says that if we provide some more resources to schools, that will allow school communities and teachers to have more resources to help kids - school children between Prep and Year 12 get the resources they need, the extra tutoring, the special assistance for kids with disabilities.  The extra resources that we need to make our classrooms the best start in life for kids.

JUSTIN SMITH: All right.  Gentlemen, we're going to move on if that's all right.

BILL SHORTEN: All right.

JUSTIN SMITH: Bill Shorten, thank you for talking to us.

BILL SHORTEN: Thank you.

JUSTIN SMITH: But I would like to clear something up.  We never made a promise we would talk about education.  We don't do that.  You said that you would like to talk about education, we said that's fine.

BILL SHORTEN: Fair enough.

JUSTIN SMITH: Okay? Thank you very much for talking to us.  Joe Hockey, Shadow Treasurer, happy birthday, Joe.

JOE HOCKEY: Thanks Justin.  I'll take a deep breath and move on with the day.

JUSTIN SMITH: Thanks very much for talking to us, both of you.




Media contact: Jessica Lindell 0480 642 804