SUBJECTS: Chaos and dysfunction in Turnbull Government and management of the Parliament; Turnbull’s $50 billion company tax cuts; APRA’s second round of macroprudential tools; QLD sugar dispute.
FRIDAY, 31 MARCH 2017
SUBJECT: Chaos and dysfunction in Turnbull Government and management of the Parliament; Turnbull’s $50 billion company tax cuts; APRA’s second round of macroprudential tools; QLD sugar dispute.
CHRIS BOWEN, SHADOW TREASURER: Thanks for coming ladies and gentlemen. Well here we are. When this session of Parliament ends as with so many days of Parliament, with the Turnbull Government in chaos. Now of course we see the Turnbull Government scrambling whether it be to salvage the failure of their attempt to make it easier to engage in racist hate speech in Australia, or to engage in what was the centrepiece of their Budget – the big corporate tax cut. We will see what happens in the Senate over coming hours but the Labor Party’s position has been clear and consistent since Budget Day. We are the only ones who have had a clear and consistent position on corporate tax – that corporate tax should be reduced for businesses with a threshold or turnover of less than $2 million. Other Parties, including the Government, have changed their position; including I saw Treasurer Morrison on 730 not even be able to yet again confirm that the centrepiece of his 2016 Budget will be in the 2017 Budget despite the Prime Minister earlier briefing out that it would be. So this is utter chaos. The Labor Party’s position will remain consistent and just to preempt some of your questions we won’t get into speculation how we will respond, depending on what the Government manages to get through. But anything less than passing $50 million of tax cuts for big business the Government’s agenda today will be a failure for Scott Morrison.
Now just before I come back to the matter of chaos, there is one other matter I want to briefly comment on. Today APRA has released new guidelines for banks, new macro prudential regulation. We will go through the detail and will be briefed by APRA, but at the end of the day it’s a matter for them. But this shows that the regulators are happy to act while Scott Morrison sleeps. The regulator APRA has had to up to make more stringent there regulations about bank lending while Scott Morrison continues to refuse to act on negative gearing. Now APRA has indicated tighter guidelines and restrictions on interest-only loans which predominately is housing investment, not exclusively, but housing investment. Now we have the Murray Report recommend that the tax distortions which encourage gearing be wound back, i.e., reform negative gearing. We have had international body after international body, domestic expert body after domestic expert body say that negative gearing must be reformed. In this case because negative gearing creates financial risk in our system. So our negative gearing reforms are good for the Budget and good for housing affordability and reduce the amount of financial risk in the system and Scott Morrison refuses to act. This Treasurer is negligent in his responsibility to listen to David Murray in the Financial Systems Inquiry and deal with negative gearing.
Just finally before I hand over to my colleagues. One of the starkest examples of chaos in this Government over the last 24 hours has been the mess on sugar. Now I understand that sugar might not be a frontline issue. It might not be on the front page of every national newspaper over the country, but it’s very important to many hard working Australians particularly in NSW and Queensland obviously. More than that, this underlines the lack of process and lack of good government by this Government and this Treasurer in particular. Joel and I held a press conference yesterday where we commented on the late night press conference held the night before by Barnaby Joyce and Scott Morrison. Policy on the run and bad government.
We have since learned that this Code of Conduct will not be released for consultation before it is promulgated into law. This is unprecedented. I have been responsible for implementing Codes of Conduct in Government. The standard procedure is to consult widely, to issue drafts, get feedback, to talk to the affected people. These have force of law. These are important documents. These have impacts upon how our economy works. Scott Morrison and Barnaby Joyce are writing this on the back of a coaster, refusing to consult with the affected people in the sugar industry. We have also been advised there will be no regulation impact statement – that there will be an exemption sought. That is outrageous. This Government which prides itself and lectures everybody about the need to reduce regulation is changing the law without an regulation impact statement. This is utterly unacceptable. And the Labor Party of course continues to seek assurance that this Code of Conduct complies with our Free Trade Agreement obligations – and we demand that assurance from the Government. Jason Clare will comment more on that. So this is bad government. Policy on the run. And why? All because Malcolm Turnbull is so desperate to do whatever Pauline Hanson tells him to do to get his corporate tax cuts through. This is part of a deal with Pauline Hanson. So whatever tax cuts he gets through today, the Australian people are entitled to ask – what’s the price? And in this case, the price is continuing bad government. Joel, then Jason.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES, FORESTRY AND RURAL AND REGIONAL AUSTRALIA: Thanks Chris. Yesterday I described the sugar code and the process leading up to it as reckless vandalism. We dragged more information out of the Government this morning and we have only grown more concerned about the potential impact of this decision, both on growers, milling companies, the economy and of course the broader Australian community. I won’t repeat the points Chris made, but I will say that we have learned today that the code will act differently or operate differently in different states. This is an extraordinary thing and we know and are more sure than ever that this is not a code of conduct that is designed to operate in the economy, it is a code of conduct to prop up a sinking Government. The Government is not going to ask the Queensland Government or the LNP in fact in Queensland to remove the state legislation.
In fact, the code is going to operate concurrently with the Queensland legislation. Why would you do that? Why would you have different laws in different states, which is a constitutional revolution in this country in any case? Because they are not going to ask the original sponsors of the Queensland legislation to admit they were wrong, to admit they made a mistake when they legislated against the Queensland Government's will.
So we are going to still have Queensland legislation, we are going to have a code operating in other states. The code will also work in Queensland to the extent it goes beyond the Queensland legislation. What is the big difference? Well, the Queensland legislation has only one arm of compulsory arbitration, that is arbitration between the millers and the growers. The national code will have also arbitration between the millers and other marketing entities. So we have an extraordinary situation now, but extraordinary too, are the points Chris made: no process, no RIS, no stakeholder engagement whatsoever. They are taking a wrecking ball through this sector all for their own political purposes, and it’s going to have implications for other industries, other sectors who will be really concerned today that having the Government imposing a mandatory code with mandatory arbitration on one sector might come shopping in their sector as well, and that's going to have a big impact potentially on investment in Australia, just like their FIRB thresholds or effects tests, all these in aggregate now are combining to send all the wrong messages to potential investors in Australia.
JASON CLARE, SHADOW MINISTER FOR TRADE AND INVESTMENT: The only other point I want to add is that before this code of conduct comes into force we need to know whether it will breach the Singapore-Australia Free Trade Agreement. We've been advised this morning that this is going to get rushed to Yarralumla on Tuesday, that the Governor General is going to sign this code of contact off on Tuesday. We have also been advised that the Department of Foreign Affairs and Trade have provided advice to the Government on the risks of this breaching the Singapore Free Trade Agreement. We've been told that the Trade Minister has seen this advice and we've been told that the Trade Minister has signed off on this advice. Before this code of conduct comes into law we need to know whether it risks breaching this Singapore Free Trade Agreement.
We think that industry needs to be consulted, the code of conduct needs to go out for proper consultation. We need to hear back from industry, we need to know whether it's legally valid, whether it risks being on constitutional. But above and beyond that, we need to know whether it risks breaching a Free Trade Agreement with another country.
As Chris said this is a dirty deal that has been done at the last minute between Malcolm Turnbull and Pauline Hanson in a desperate attempt to try and get their changes to company tax through. We've got Malcolm Turnbull in bed with Pauline Hanson here trying to get changes to the company tax through and the risks that that poses to our Free Trade Agreement with Singapore is serious. So today we need the Trade Minister to release that DFAT advice and tell us whether there's a risk that this code of conduct would breach the agreement that we have made with Singapore.
BOWEN: Over to you folks.
JOURNALIST: Just in relation to the company tax cuts, whether it's $10 million turnover that gets through which is about $10 billion or $50 million which is $20 billion. What does that do for your own budget and costings? Would you go to the next election with a policy to repeal those tax cuts or would you find the savings elsewhere?
BOWEN: Sam I think in fairness I'm not sure you were here at the beginning of my opening remarks where I said what we will do is wait and see what the Senate resolves. I'm not going to get into speculation and hypotheticals, anything could happen in the Senate. Our position has been clear and consistent since budget day on the corporate tax cuts. We will maintain policy based on our values but anything could come out of the Senate this afternoon. The Labor Party while I've been Shadow Treasurer has taken clear detailed policies to the people in the most detailed policy offering since 1993 when it comes to economic policy from an Opposition. We will continue that. I will make a formal statement after we see what happens from the Senate. I will come to the House, I will make a statement in the House and will obviously continue to make public announcements but I'm not going to get into speculation about what the Senate may or may not approve.
JOURNALIST: But principally it is a fair question isn't it because you would expect the Government to give a clear answer whether it's going to adhere to its policies at the next Budget. Can you say principally whether you are going to add here to yours?
BOWEN: The next Budget is five weeks away. The next election is two years away. Our position will remain clear and consistent with the values we have expounded, the priorities that we have identified of budget repair, improved education funding, improved health funding. It will remain actually consistent with those things and we will have plenty more to say. It is a fair question, it's also fair for me to point out your asking me to engage in a hypothetical speculation that the Senate may or may not approve in a few hours.
JOURNALIST: What about your own baseline though for small business for a tax cut? I mean you're actually at $2 million turnover so you're offering a lower tax cut than Pauline Hanson and Jackie Lambie are prepared to offer.
BOWEN: We went to the last election with that policy, we argued for it. We will continue to argue policies consistent with our values and we will continue to argue it is about priorities. Everybody would like a tax cut. You would like a tax-cut Sam. Everybody would like a tax cut but not everybody can get a tax cut. The important thing is the Labor Party will provide robust, detailed alternatives, which we’ll continue to do.
JOURNALIST: With those controls APRA has announced today on investor loans, will that be enough or do you still think we’ll need to look at the tax treatment of investment?
BOWEN: Absolutely we need to look at the tax treatment of investment. More than look at it we need to fix it, we need to deal with it, we need to reform it. Labor’s policy to reform it, again, when I talk about detailed policy Labor has announced, you wouldn’t find a more comprehensive detailed policy than our policy on negative gearing, limited to new properties. It’s been out there now for 18 months and that remains our policy. We know that Scott Morrison argued there are excesses in negative gearing.
I mean the Treasurer of Australia thinks there are excesses in negative gearing but he wipes his hands and says it’s all too hard. You’ve got David Murray, international think tanks, regulatory bodies saying something has got to give. We have the most generous property tax concessions in the world. It is creating financial risk. That risk lies on the Treasurer’s shoulders and he refuses to act. He is negligent.
JOURNALIST: Mr Bowen last week the Commonwealth Grants Commission’s report on the GST carve up. Is it tenable that a state that is effectively in domestic recession, is only getting 34 cents in the dollar back? Does there need to be a reform to the CGC system?
BOWEN: Well this is a big issue Shane and I respect your interest. Without going through the entrails of what happened last week, because we all understand that.
What we won’t do is do what Malcolm Turnbull did, and say one thing and do another. He went to Western Australia and promised a floor. He promised a floor and he failed like on so many other things to deliver that. Bill Shorten and I won’t be doing that. We’ve spoken with Mark McGowan and Ben Wyatt and our Western Australian federal colleagues, Northern Territory colleagues, colleagues from every state. We’ll continue to do that and to carefully calibrate and consider all options. But what I won’t do is rush out, with all due respect to your question, just because you’ve asked me a question, give you the answer that you want to hear, without properly considering all the implications across the board. Not only for the great state of Western Australia but for all Australians. Anything we say about GST distribution will be like everything else, properly calibrated after due consultation and consideration.
JOURNALIST: But can the current system work?
BOWEN: I think, with respect Shane I’ve given you the answer, which is I’m not going to do policy on the run unlike my counterpart who is happy to change the law on a whim and write a code of conduct on the back of a coaster. I’m not going to rewrite GST distribution at a press conference. As you would imagine our Western Australian federal colleagues have been very assiduous in their role in representing Western Australia. The Premier and Treasurer of Western Australia, my mate Ben Wyatt has been assiduous, as has the Premier. Other states have strong views. The Northern Territory has issues. All these things deserve proper consideration. Bill Shorten and I and the Shadow Cabinet give them proper consideration. When we make a policy announcement it won’t be in response to a question from you, it will be in our own good time when we’ve considered all the relevant issues.
JOURNALIST: Mr Fitzgibbon just on the issue of sugar, you’re suggesting the Government hasn’t gone through proper processes with this code of conduct. I suppose the Government could also argue that when Labor was in power, what sort of processes did you go through when you banned cattle exports?
FITZGIBBON: Well on this point of process we checked this morning and this will be the sixth mandatory code of conduct but the only one not to go through a proper process. The only one not to face a regulatory… [inaudible]
JOURNALIST: But at the time the cattle ban didn’t go through a proper process, the cattle was just banned immediately. Cattle exports were banned immediately.
FITZGIBBON: Well I’m afraid trying to compare the two has all sorts of problems. I noted Barnaby Joyce tried to differentiate between the need for a code of conduct for the dairy industry yesterday and the sugar industry, implying that one wasn’t needed in the dairy industry which will have farmers everywhere across this country shaking their heads today. I note the Member for Kennedy is about to make a contribution. I always welcome his input into these discussions. It reminds me that Barnaby Joyce demonstrated at five o’clock yesterday on television that he either doesn’t understand the sugar industry, or he’s spinning. So I’ve given him the benefit of the doubt and assumed he’s just spinning.
But Labor has never opposed a code of conduct. We believe codes of conduct have a place in regulating behaviour in markets, particularly markets where people are holding significant market power. But let me make this point. Barnaby Joyce says this can’t continue as it is because there’s only one buyer. Whether we have a code or not, whether we have Queensland legislation or not, there will only be one buyer. Now in the case of the current dispute, Wilmar. The cane growers sell and will continue to sell their sugar cane to Wilmar. The ownership changes at the rail siding. Wilmar processes it into sugar. Then the decision is who sells that sugar overseas. There will only be one buyer regardless of whether we have a code of conduct or not. This is Barnaby Joyce spin, designed to compete with One Nation in the current dispute in Queensland. Do not believe that this is about public policy, this is about politics and of course whether QSL is selling the sugar, or Wilmar is selling the sugar, it is in their interest to secure the very best price they can.
So forget this idea that somehow Wilmar or QSL are doing the wrong thing for the growers. The growers have sold their sugar cane well and truly by now. There is a component in their price which is based on the futures market, a small component. But again it’s in the interests of Wilmar, QSL, whoever is marketing the sugar, to secure the very best price. This idea that Barnaby Joyce is riding into town to help the growers is a fiction, he is simply competing with One Nation for a vote.