6PR MORNINGS WITH GARETH PARKER
WEDNESDAY, 11 APRIL 2018
SUBJECT/S: Labor’s Fair Share for WA fund; GST; infrastructure funding in WA; Turnbull’s cuts to pensions; dividend imputation; Labor’s priorities; Victorian redistribution.
GARETH PARKER, HOST: As I said I'm pleased to welcome to the 6PR studio, our special guest this morning is the Federal Leader of the Opposition, Bill Shorten. Good morning.
BILL SHORTEN, LEADER OF THE OPPOSITION: Good morning Gareth and by the way congratulations on talking about that terrible issue. I'm a parent, it would be every parent's worst nightmare and if someone is deported here, how could we not know this person was who they were? It's just shocking.
PARKER: Yes, and I think that there will be a lot more questions to answer. We'll talk about it after 9 o'clock this morning. Appreciate you coming into the studio, we've been keen to talk to you on the program for a while. You've been a regular visitor to Perth in recent times. So I'm sure that you understand that the gold, the silver, and the bronze in terms of political issues here -
PARKER: Are the GST. Your solution, a $1.6 billion infrastructure fund. I've said on this program before that's appreciated, we welcome more money for infrastructure. It's not however the solution to the problem. Why won't you tackle the solution to the real problem?
SHORTEN: Well I think it is a solution to the problem, and let's just agree on what some of the problem is. The problem is that West Australia has been receiving an unfair share, too small a share of GST revenue, which is a form of Commonwealth revenue. I want to see West Australia receive its fair share. I also want to make sure we do it in such a way that we're not robbing Peter to pay Paul. But I do think West Australia has been poorly treated and Mr Turnbull could adopt my solution of a de facto 70 cent floor tomorrow, and on your show I'll say we will support him and we will not bag him.
PARKER: In effect, that's what the Federal Government has been doing for some years. They've been offering one-off top up payments which is the same approach as you, it's a top up payment.
SHORTEN: Well there is one difference. We're legislating this separate fund. In other words it’s clear what the money is for, it's not at the discretion of the Commonwealth depending on what mood the Commonwealth gets out of bed in the morning in, and the allocation of it would be decided in conjunction with the West Australian State Government.
PARKER: But you get the say on the projects don't you?
SHORTEN: No, we'll do it with the West Australian Government. I'm not interested in coming to the West and telling them - being a wise man from the east, and telling the West what they need. I'm interested in what the West wants. I've done three events with Premier McGowan on Sunday, Monday and Tuesday while I've been here. Today we're announcing an extension to the Mitchell freeway. The only things I'm interested in helping the West with, I've got two goals one - they get their fair share, two, it's projects that the West wants not whatever I might dream up in Canberra or on the east coast.
PARKER: The problem with losing $2 billion, $3 billion of GST each year is that it creates a big hole in the State Budget for the recurrent day-to-day expenses of running the state; paying teachers and policemen, public servants, delivering services, public hospital services, school services. Your solution is effectively an infrastructure bribe, it doesn't tackle that structural problem which is destabilising West Australian finances, and which in due course, will destabilise New South Wales, and then on the downside it'll destabilise South Australia and Queensland and the other net beneficial states. That's really the national public policy issue that your solution fails to address.
SHORTEN: Well I think it does address the problem you describe. At the end of the day what we want to see is that taxes paid by people in large proportion gets spent somewhere close to their jurisdiction. Now we're a Federation. I'm not interested in robbing one state, I'm not interested robbing Western Australia to pay for what happens in Sydney or Brisbane. By the same token we've got to make decisions about outcomes. So, if we fund the money to help Western Australia build the rail lines between Morley-Ellenbrook, or from Midland to Bellevue, or the Stephenson's Avenue extension that we announced yesterday up in Stirling, or the Mitchell Freeway extension, which we're announcing today. All of that comes from the same pot of money which has got to fund all of the other needs, all of the other obligations of government. At the end of the day, for me what matters is outcomes, and what I'm offering is an outcome which doesn't rip off one state or the other, that recognises Western Australia's got a legitimate complaint. And the way we can do it by the way, is we're not handing away $65 billion to large corporations in tax giveaways which the nation can't afford. Not when Western Australia is not getting its fair share.
PARKER: You've talked about a de facto 70 cents in the dollar floor. Yesterday the Chamber of Commerce and Industry in Western Australia released some analysis that said that the amount of money you've got on the table would effectively put a floor under our GST distribution at that level for one year, maybe 18 months. What happens in - well, what happens when the money runs out?
SHORTEN: Well, we're establishing a principle of a de facto floor, that's what we're going to do going forwards. All the estimates show that the GST formula does actually rectify over time and provide a fairer distribution for Western Australia. The problem is this financial year, next financial year and the following financial year. Now I can't do anything about this financial year because I'm not the Prime Minister, but if I get elected I will rectify the problem. Now what you're saying is, if in the future there is a further problem, we're establishing the precedent.
PARKER: So there will be guaranteed top up payments every year of a Shorten Labor Government, if our share after it goes through the Commonwealth Grants Commission washing machine, comes out at less than 70 cents on the dollar?
SHORTEN: Our forecast is that, that problem of being less than 70 cents exists for the first two years. In the -
PARKER: But of course forecasts change, don't they, or can change?
SHORTEN: Well I'm going to come to that. In the event that the forecast changes, I'm saying we've established a precedent which we would then be minded to follow in the future.
PARKER: So is that a guarantee?
SHORTEN: I actually think that the scenario you're saying won't happen, which is that in four and five years’ time that West Australia will be ripped off. Having said that we're the ones with the solution. We're legislating the fund, if we've set the precedent then we're happy to have voters look at what we do in the future by the precedent we set. I have to say Gareth, in coming to 6PR this morning I didn't get stuck behind a cavalcade of white limos full of Liberal politicians offering a solution. Now what we're proposing is a legislative fund, where it's not just Canberra versus Western Australia, but Western Australia decides - has a big say in what we do. So I think ours is a fair dinkum solution.
PARKER: Alright, 9221 1882 if you'd like to ask Bill Shorten, the Opposition Leader a question this morning. A couple of weeks back you announced a new policy to stop people claiming tax refunds for dividend imputation. So you sold this policy as closing a loophole, a policy that benefited – well a situation at the moment that you said benefits the ultra-rich, but the reality seems to be somewhat different to that, and I think you probably acknowledge that with the changes you made to the policy exempting part pensioners and pensioners. But I keep getting feedback that there's a whole lot of people in the middle who aren't ultra-rich, they're people of modest middle class means, who have saved hard to provide for their retirement. They're going to lose a couple of thousand dollars, $5000, $10,000. Are you punishing those people?
SHORTEN: Well first of all, let's talk about the specific change we're making, because I didn't quite agree with your description of what we're doing. In 1987 - I'll be really quick, but it's an important issue and I respect people's concerns. In 1987 Paul Keating introduced an idea where he said that if you get dividends from shares - by the way for anyone listening who doesn't get dividends from shares it doesn't affect you. But if you get dividends from shares because the company who pays you the dividend from your shares has paid corporate tax, you could offset whatever the company had paid against your income tax. Then in about 2000/2001 John Howard took that measure and made it much more generous. He said that even if you haven't paid income tax, so in other words, you've got a bunch of shares, you'd get a dividend from it, the government will just send you a tax refund, even if you don't have any income tax that you've paid to offset it. So we're now the only country in the world who gives you an income tax refund even if you haven't paid income tax. Now that's not illegal -
PARKER: No, and it's cold comfort for people who followed the rules.
SHORTEN: Yes, but the point is the only rule they followed is they own shares, got a dividend, and the government sends you a payment. But this country can't afford to keep sending tax refunds to the people who don't pay tax. In a drawdown - in the retirement phase, the income you get from your superannuation up to $1.6 million is tax free. So we're not increasing taxes, we're not taking away anyone's superannuation payment. All this is, is saying that after 15 years of having a payment from the government, we're stopping that payment for people who aren’t – we’re stopping payment of a refund where you haven't actually paid any income tax. And that's our proposition.
PARKER: Can you understand how people who have followed the rules -
SHORTEN: I understand - it's not a matter of even following the rules. It’s perfectly fine if you're getting a payment, but the nation can't afford to spend more money on paying people income tax refunds than we do on schools in Australia. When Howard introduced this measure, it was costing the Budget half a billion dollars. Taxpayers were basically writing checks for half a billion dollars to some people. Now it's heading towards $6 billion, in the next 10 years it'll be $8 billion a year. The nation can't afford to hand money to people just because they have dividends from shares, and give them a refund when they haven't paid any income tax. I do get that if you're used to getting a government handout you don't want to give that back. But we do have a -
PARKER: Is what you think those dividends credits are? They're a government handout?
SHORTEN: Well they are payment from the tax office. I don't mind what you call it, but it's a payment from the tax office isn't it.
PARKER: We'll see what listeners think about that. Daniel, Good morning to you.
DANIEL, CALLER: Yes, good morning.
PARKER: Just before you go on I might just ask the Opposition Leader, just pop those headphones on so you can hear Daniel’s question. Daniel, good morning.
DANIEL: Good morning to both of you. Look, I'm 75 in September. I'm working full time still and 75 years of age. I'm not allowed to salary sacrifice anymore of my own money into my own super fund. What I want to know is, why and why discriminate against my age. Also, why has the superannuation legislation not kept up with people working longer?
PARKER: Thanks Daniel.
SHORTEN: Daniel that's a good point. I think the government should be addressing this issue. They're now saying that they want to create the retirement age at 70, lift it from 67 to 70, but they're not proposing to make it easier for employers to give workers comp to people over the age of 65, and they're not looking at the salary sacrifice issue for people over a certain age. And they're also not lifting the compulsory superannuation contribution from 9.5 per cent. So I think you've got a fair point and it's one we'll take onboard.
PARKER: Thanks, Daniel. Roy, good morning.
ROY, CALLER: Good morning. How are you?
PARKER: Good thanks, fire away.
ROY: I've got a question for Mr Shorten. Good morning, Mr. Shorten.
SHORTEN: Good morning, Roy.
ROY: Yes, I was one of those unfortunate people - I am nearly 70 years of age. Getting on for 18 months ago, I lost the majority of my pension. I mean pretty much all of it, for reasons that you well know. Would it be, if you were to get into power as Prime Minister, would you reinstate those 300,000-odd people like myself that did lose their pensions?
PARKER: Thanks, Roy.
SHORTEN: Roy, you're familiar with what happened but I'm not sure everyone else is, so I’ll very briefly explain. The Turnbull Government changed the threshold test for assets in order to be eligible for the pension, or put in plain English, it made it harder for people to claim a part-pension, because they looked at your assets and said that if you've got X thousand dollars of assets, you're no longer eligible for a part or full pension. Labor voted against the measure because we thought that was too harsh. Now, we don't know what state the budget is going to be in, but we voted against it. We wish the Government hadn't done it. And so we'll have to review the situation depending upon where the budget is at, because I can't write a blank check.
But what we also say to people who are part-pensioners, is that our change is about not giving people a tax refund when they haven't paid any income tax on their earnings, is that if you receive a part pension you will continue to get the dividend imputation that Gareth and I have been talking about. So, where the Government says that our measures going to help pensioners and part-pensioners, it's simply not. So I want to put your mind at ease on that, so if you're still on a part pension and you've got a puddle of shares and you're getting dividends, you'll still get an imputation, because we accept that the community standard for what should receive a government payment is the pension test and so we're happy to support that. But your question is can we reverse the changes of the Turnbull Government because they did hit actually, nearly 400,000 pensioners. We simply don't know, we don't know what the state of the books is going to look like, but we do think it was retrograde and if Mr Turnbull said he wanted to reverse it, well I think that would be a good step and we would support him in doing that.
PARKER: Thanks, Roy. Can I ask you a big picture question, Bill Shorten. Why do you want to be Prime Minister?
SHORTEN: Because I think Australia can do better than we're doing. I think this country works best when everyone has opportunity regardless of your postcode, regardless of your personal circumstances. I want to make Australia fairer, that's why I want to be Prime Minister. How will I do it? I'll make sure that you can afford to go and see the doctor when you need to. I want to make sure that your kids or your grandkids can get an apprenticeship or be able to go to a well-funded school. I want to be the sort of country which means that when your parents are diagnosed with dementia, you can get an aged care package and not be on a waiting list with 105,000 other people. That's the sort of country I want.
I was in Kalgoorlie yesterday; beautiful town, beautiful town. The real challenge for regional Australia and country towns is people; attracting people and keeping them there. I want to be a country and I want to help make Australia a country which isn't just Perth, Melbourne, Sydney and Brisbane.
PARKER: It seems to me that you are quite hostile to big business in your rhetoric and also your policies. Is that something borne of conviction, or is it because you think it plays well with the electorate at a moment when institutions, big institutions are generally on the nose.
SHORTEN: It's neither. And I want to be clear, I'm not hostile to business, I'm not anti-business. I'm just pro-worker; I'm just pro-family; I'm pro-farmer. The big interests in this nation can generally look after themselves. I am hostile about the way banks have treated costumers. I am frustrated with the big private health insurance companies who increase the premiums and at the same time, increase the exclusions in the fine print of their insurance clauses. The wealthy and the powerful in this country don't need a politician to be their shop steward. I just think this country works best when everyone gets an equal go. That doesn't make me hostile to business, it doesn't make me hostile to big business. But I just want big business to pay the taxes they need to pay in this country.
My background is I was a union rep. What it taught me is that when employers and employers work together, there's nothing that we can't do. My whole ethos is that this country works best when we work together but I'm not going to genuflect at the altar of great wealth and privilege, because I actually think that sort of trickle down economics that Mr Turnbull practices; big tax cuts for big business, tax cuts for millionaires - that doesn't actually spread the nation's wealth. I want to see growth but I want to see a fair distribution of the national income. I'm more motivated in the mornings when I get out of bed, to help your pensioner, to help your mum is trying to get the kids off to school, to someone who's waiting for elective surgery, than I am about the balance sheet of a large bank or Google or Apple or Facebook.
PARKER: Bill Shorten, we're pretty much out of time but I've just got to ask you, are you looking to switch to a safer Melbourne seat?
SHORTEN: Every six years, the Electoral Commission redraws the lines on the map. The Electoral Commission has cut my seat in half. I like the voters on both sides of my seat. We'll wait and see what the final maps look like. I’ll tell you what I am interested in; I'm interested in making sure that Labor gets more votes everywhere and we're going to do that by being fair dinkum.
PARKER: Appreciate your time this morning.
SHORTEN: Thank you, Gareth.