ABC RN BREAKFAST
MONDAY, 31 JULY 2017
SUBJECT/S: Terror raids; Labor’s plan for a fairer taxation system; political donations; dual citizenship laws.
FRAN KELLY: Well Bill Shorten joins us from our Melbourne studios, Bill Shorten welcome to Breakfast.
BILL SHORTEN, LEADER OF THE OPPOSITION: Good morning Fran.
KELLY: Before we come to your latest tax policy can we start with this alleged plot to bring down a passenger jet. We spoke to an airline security expert Rodger Henning earlier, who warns that Australian airports are still vulnerable to attack because he says there is major gaps in the airport security. Have you heard these concerns, are you concerned about our aviation security?
SHORTEN: Well I want to say that we have a debt of gratitude to our security agencies, I think they're doing a very good job. The security agencies will be briefing me and my security team on Wednesday and so we are looking forward to getting more information surrounding this latest threat. There are people who would do us harm, they are a very small number but they exist. If there are sensible measures to help make us safer then I think we have to look at them. I mean for one example and I'm not going to put myself ahead of the experts, let’s hear what they have to say. But in some countries when you travel you have to have photographic ID when you present to board a plane, in Australia you don't. I mean if that's one of the measures they're thinking about I'm interested to hear the case for it, it seems to me to me at first blush to be a bit sensible that you know who is actually getting on the plane.
KELLY: And he says there's more training of airport staffers needed too, that there hasn't been an evacuation drill in some of our airports for 10 years and that only a tiny proportion of the staff at our airports are actually trained in what to watch out for.
SHORTEN: Well it sounds sensible what he's saying, and as I said we'll raise that. In fact as a result of you raising that, we'll raise that point with the security agencies when they come and talk to the Labor Party.
KELLY: Okay let's go to your policy on trusts announced yesterday, the Government has already branded it quote "lazy and cynical, envy tax", that was the Treasurer. How do you expect to win over the electorate by playing as Mathias Cormann put it there "the politics of envy".
SHORTEN: Well I think the Government sounds desperate. I think the only envy going on here is that the Government didn't think about the idea. I think Australians are actually - I was listening to Cormann's sort of attack, I think Australians are up to their neck - they're over this every time one side has an idea the other side immediately want to get out a hammer and bash it into the ground.
In terms of our specific measure I can no longer see the case, in fact if one ever could, for allowing some high net-worth individuals to be able to split some of their income to avoid paying their fair share of taxation. Most Australians can't. Most of the people driving to work this morning listening to us, won't have the chance to split their income and give it to an adult member of their family who's not working so that they can avoid paying a higher marginal rate of taxation. We're cleaning up an anomaly. And interestingly there's been an explosion in this particular technical loophole in recent years, which shows that if we don't act, if we don't repair the leaks to the taxation bucket there will be $4.1 billion extra out of the Budget, $17.2 billion over the next 10 years. This is sensible tax reform. It's about ensuring that there's a level playing field for all Australians. The same deal for teachers, for nurses, for construction workers and for surgeons and barristers.
KELLY: The taxable - taxing distributed income at 30 per cent, is still a lot less than the top marginal tax rate which was what those high net worth individuals would be paying, 49.5 per cent under a Labor Government. Even at 30 per cent trusts will still be an attractive option for people who want to avoid paying their full tax liability, won't they?
SHORTEN: It's interesting Fran, listening to Cormann and Morrison's hysterical sort of witch burning attack yesterday on Labor where they were just trying to attack us, your question goes in the opposite direction, saying it's not punitive enough. We think we've struck a reasonable rate -
KELLY: Well I'm just wondering what your modelling is showing you that's all.
SHORTEN: Well we think it's a reasonable rate that strikes the right balance. It's not overwhelmingly punitive, but what it does is it sends a clear message, you can't get away with paying no tax on income that you've earned.
KELLY: You've carved out farmers and charities, they won't be affected. Your policy will affect 315,000 trusts, almost two thirds, 198,000 are small business trusts. The other 120,000 are regarded as pure income splitters, is one way I've seen it described. If a trust is being used for legitimate purposes by a small business like asset protection and succession planning which is why some farmers use it of course, why should they be slugged the 30 per cent tax? Is there any wriggle room in that for those small businesses?
SHORTEN: Well first of all, the farmers are not being slugged.
KELLY: No, no, you've carved out farmers and charities but not the small businesses, some of whom are using it for the same purposes as the farmers which is -
SHORTEN: You'll still be able to use a trust for asset protection, like we're not banning trusts. We're just saying that income splitting to adults in the family who have got nothing to do, and they're not sort of working in the business and drawing a salary, we're going to stop that income splitting which is not available to 10 million other Australians. But when we look at even those numbers, less than 200,000 you said might be self-classified as small businesses but many of these self-classifying discretionary trusts will not be active small businesses. Rather they'll be barristers, investment bankers, who are income splitting through their trust to the adult beneficiaries.
KELLY: And what about farmers as you said they're exempt but what about if they're income splitting. What's the policy basis for just holus-bolus carving farmers out of this?
SHORTEN: Well we think that people who work on the land, farmers, do it tough. When there are high commodity prices they're doing well, but when they're not they do very badly and this allows people to help deal with the exigencies of relying on the seasons and the climatic conditions, and Labor does respect our farmers. I think last week poor old Barnaby Joyce rolled out to say that you know, we were anti-farmer, I don't know what he'll say this week. Mind you whoever does know what he's going to say.
KELLY: We're going to be speaking to Peter Strong from the Small Business Association in a moment; you have this measure, you've committed to reversing the penalty rate cut which hurts a lot of small businesses. We're still yet to hear a commitment from you not to reverse the Government's tax cuts for companies with turnover up to $50 million, so that would hit a lot of small businesses. Can you see how some small business owners might think Labor has it in for them?
SHORTEN: Well Fran, you covered a few issues in that gallop. On the issue of income splitting, the vast bulk of small businesses are not benefiting from this so it's really hard to say that somehow we're disadvantaging people who are not using income splitting, 98 per cent of taxpayers don't. When you talk about penalty rates and you say that's hard on small business, I'll tell you who cutting penalty rates is hard on; 700,000 Australians who are getting an arbitrary cut in pay. And the problem for small business is that when you have flat lining wages growth, when you have increasing inequality in the work place, where you have penalty rates being cut, you see a reduction in expenditure in consumer confidence.
The people whose penalty rates are being cut are not people who save 10 and 20 per cent of their income annually. They spend every cent they earn so if you restrict the amount of money they're earning all you do is you see less money being spent in the suburbs and the shopping centres, the life blood of small businesses. On the very last issue in terms of corporate tax cuts, the problem we've got isn't the businesses under $2 million, which by the way we are supporting a tax cut for them.
KELLY: No, it's the businesses under 50 million that have a tax cut at the moment, are you going to reverse that?
SHORTEN: Fran, do you really think a business at $49.9 million dollars is a small business? I don’t.
KELLY: Does that mean that you're going to reverse it, is that your policy?
SHORTEN: We don't believe that the case has been made out for that. Let's see what shape the Budget is in and what I've got to say about the whole -
KELLY: So you might reverse the tax cut that's already in place?
SHORTEN: No Fran, what I'm saying here is that this is a government who has got a runaway train of national debt. We've now rocketed past the half a trillion dollar mark, and the more that this government gives away money to the large end of town - and that's where the vast bulk of these tax cuts are going, to multinationals and to big companies. What it means is that there's fewer people in the system, fewer companies in the system having to pay a large proportion of a declining budget, and what that also means is as debt goes up you've got more of the remaining shrinking budget, has to go in paying the debt payments servicing the national debt.
This corporate tax cut will impede growth, it will accelerate national debt on every Australian and the reason why we say that is because there's no compensating revenue. This is a government who thinks you can have your cake and eat it too. Poor old Mr Turnbull and everyone else, they're saying well we're going to hand away a lot of money in corporate tax relief, tax giveaways, but they don't explain where the replacement revenue is coming from which means that a greater proportion of the smaller amount of revenue will have to go to service the national debt that's gone up by this government.
KELLY: Well the Government's whole premise for it is that it will take the load of small business, more businesses will invest and that will grow the pie. And their whole criticism of you is you're just interested in sharing out the pie differently, you're not interested in making the pie bigger. How will increasing the tax take from trusts, how will that create one single job? Have you done any work on productivity gains from this?
SHORTEN: There's no doubt in my mind that Labor's policies, and this isn't the only one we've got. That we've got policies which will create jobs, we want to invest in public transport in our cities; that creates jobs. We want to make available some of the Northern Australian infrastructure money, this is a policy I announced on Saturday in Townsville. We want $1 billion dollars to be available for tourism projects. But the problem also for this government is not only does Labor have job creating projects in mind, but when you have increasing inequality that is a brake on growth. When the middle class and working class are getting a quality education, when TAFE funding is being restored, when a working class kid can afford to go to university, that actually ultimately improves growth. When you've got women getting the same deal as men in the workplace, that improves growth, it doesn't undermine it. Equality is a precondition to successful growth.
KELLY: It's 14 minutes to 8.00am, our guest is the Opposition Leader Bill Shorten. A couple of other issues Bill Shorten. Fairfax papers are reporting this morning that the ALP has received $400,000 in donations from the director of a tobacco company suspected of smuggling cigarettes. $200,000 for NSW Labor back in 2011, another $200,000 for Federal Labor in 2013. Now the ALP banned tobacco donations in 2004, can you confirm these donations were received from Peter Chen, the director of ATA International?
SHORTEN: No I can't, I found out about this this morning. I've been in touch with the administration of the ALP. This came as news to me. We do have a ban on tobacco donations and also both of these donations happened before I became Leader. I've actually led the way in terms of reforming our donations system. I don't want obscure foreign donations coming into our system full stop, tobacco related or not.
KELLY: On another issue, the NSW Labor Conference has passed a motion which some are saying marks a historic shift in Labor's approach to the Israel/Palestine conflict. This motion urges the next Labor Government to recognise Palestine. Now a similar motion was passed on the weekend by QLD Labor, the ACT Labor Party, will you now support a policy that recognises Palestine, and if not, why not?
SHORTEN: I've always supported a two-state solution -
KELLY: This is something different to that. This is recognising Palestine within then recognition of a two-state solution.
SHORTEN: If you support a two-state solution then ultimately that includes recognition of Palestine. But the other requirement that I believe is necessary is that - well, there's two issues. One is the legitimate aspirations, and I stress, legitimate aspirations of Palestinians to have their own state and I do support that. But also the legitimate aspirations of the people of Israel to live within secure borders.
Can I also just go - you dealt with donations in one quick question, but I want to make this point for the record. The Liberal Party is not supporting our reform banning foreign donations. Also, Labor has got electoral reforms to our donations system. We want the identity of donors above $1000 to be revealed, and we want donations to be declared in real time, not a year plus, later. So the Labor Party is up for donations reform and sometimes, and I make this offer to the Liberal Party, we don't even have to wait for the law to be changed if we could make changes together. That's why I think leadership as opposed to followership, which is what has been the lowest common denominator in a lot of the donation debates.
KELLY: Well just on that, and I'm not sure where Labor's policy stands at the moment, but as you say, you've been calling for changes to the law, until those changes happen will Labor not accept any foreign donations now? Is that your policy?
SHORTEN: I've asked the national Labor Party to not take foreign donations. Let's be clear they've said what if you get $50 over the internet. I want to wean us off relying on foreign donations. Now, in doing that -
KELLY: So Labor's policy is not to accept foreign donations?
SHORTEN: I have asked the party to consider that view, yes. Well, let's just understand the significance of what I am saying here. The Liberal Party will not do that until the law tells them. I have put the Labor Party at an electoral disadvantage because the Liberal Party can rake in millions of dollars but since that Four Corners episode, I have said listen, we've got to just move forward here. I am asking the Liberal Party to show leadership rather than relying on just the current electoral laws, because they're getting a distinct financial advantage because they don't care where the money comes from.
KELLY: And you're saying Federal Labor will not take foreign donations in the run up to the next election?
SHORTEN: We do not want foreign donations, yep.
KELLY: And just finally on the issue of parliamentarians who could be dual-nationals. This has created havoc really in the parliament over the last few weeks. The Greens are now proposing two inquiries; one by the House of Reps, the other by the Senate to audit all MPs and Senators to make sure they're eligible to sit in this parliament. That would end the ongoing uncertainty. Is that a good idea, will you back it?
SHORTEN: Well I am not sure I want the Greens fossicking through everyone's personal details.
KELLY: Well it wouldn't be the Greens, obviously, it would be some independent person you’d put to do the audit.
SHORTEN: Let me answer your question. It is going to the High Court, I want to see what the High Court says. I think Section 44. of the Constitution is pretty clear already. Listen, personally, I think it is a loss to have lost those two Greens Senators. Individually, they might not always vote for us but they were contributors, so I feel for them personally. But the Labor Party does have rigorous processes -
KELLY: Why not just accept the audit to make sure everyone is rigorously tested?
SHORTEN: Well Fran, the Labor Party has been testing these issues ourselves for a very long time. What I want to see is what the High Court says on Senator Canavan. I understand that the Greens want to refer the One Nation fellow to the High Court. I think we need to get the High Court, if that process is there, to resolve it. But I just want to again say to Australians, the Labor Party has questionnaires where we ask prospective candidates were they born overseas, were their parents born overseas. So I think that some of the latest discoveries are a bit surprising because the law has been established. If I had my way on Constitutional reform, it wouldn't be this issue which would be the first issue I’d tackle. It would be the recognition of our first Australians, enshrining their voice in the Constitution. And on Saturday night I did also say that if Labor is elected, within the first term of office we will hold a national vote asking Australians, do they want an Australian as our head of state. These are the big issues.
KELLY: Bill Shorten, thanks very much for joining us.
SHORTEN: Thanks, Fran. Lovely to chat to you this morning.