SUBJECTS: Budget 2017, Medicare levy, Bank levy, inland rail, welfare recipient drug testing.
SKY NEWS PM AGENDA
WEDNESDAY, 10 MAY 2017
DAVID SPEERS: As I mentioned earlier the PM, the Treasurer, the Opposition Leader, the Shadow Treasurer are all out today, the hard sell of their various positions on last night’s Budget hitting the airwaves wherever they could – you might have caught some of it last night or this morning. Pretty hard to miss if you were turning on a radio or television station or picking up your newspaper. That’s what happens in a Budget Week. But if you really want to know what this Budget is all about- you don’t need to listen to them – you need to listen to Craig Laundy and Joel Fitzgibbon who join me now.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES, FORESTRY AND RURAL AND REGIONAL AUSTRALIA: Yes, listen to the experts.
SPEERS: Exactly right. We talk each sitting week – it has been far too long – I have missed you guys over the Easter break.
CRAIG LAUNDY: You should be a politician mate.
SPEERS: Let me start with you Joel Fitzgibbon. The Medicare levy, the Government wants to put this up half a per cent for everyone who pays it, what do you think? Good idea?
FITZGIBBON: Well their priorities are all wrong. We haven’t ruled it out but when you line it up against the deficit levy which is more fair? So, I mean they are giving up all these zombie measures -
SPEERS: But this will raise more money than the deficit levy.
FITZGIBBON: Well of course it does, but you could give a few less tax cuts to the big end of town too - to the big companies – without extending tax cuts
SPEERS: It sounds a bit like Labor is going to say no to this? Keep the deficit levy on -
FITZGIBBON: We have a Shadow Cabinet meeting tonight – we will have the conversation – we won’t be ruling things out without properly considering them. But this does demonstrate again that their priorities are all wrong.
SPEERS: You have low income earners, plenty of them, in your electorate –
SPEERS: - are you worried about what it will mean for them?
FITZGIBBON: Well they are low income earners not affected by the deficit levy of course –
SPEERS: But the Medicare levy?
FITZGIBBON: - but they will be dramatically affected by the Medicare levy increase – so where is the fairness in that?
SPEERS: Where is the fairness in that Craig Laundy?
LAUNDY: It is in the exact same place where the fairness in our tax system lies – the progressive nature of it. It is a percentage applied to your relevant income. The Labor Party love using the catch-cry as one of their political slogans – millionaires, millionaires. A millionaire who pays 2.5 per cent pays $25,000 in the Medicare levy. Someone on $30,000 pays $700. That’s where the equity in this lies. The other principle here - you were very kind as I thought you should be, I want to jump on board. Scott Morrison today – how he kept it together telling his own family story is beyond me. His brother-in-law was battling like buggery down the front there and I was – the concept it was – if you go out into my electorate and you say to everyone in my electorate do you want to give everyone a hand, and that there is a progressive nature to it, I strongly believe that it would be a resounding yes.
FITZGIBBON: You want my low income families to feel guilty about complaining-
LAUNDY: - no –
FITZGIBBON: - about a new Medicare levy –
LAUNDY: What I am saying is – everyone wants to help out. And this is what Scott was saying today. You can twist it to that Joel. But Scott was saying today, it is the best thing about Australian nature is that we want to help people less fortunate than us.
FITZGIBBON: That is a crazy argument. If the Government really wants to fully fund the NDIS, as we did despite –
LAUNDY: Joel – give us a break - crikey.
FITZGIBBON: - the last people they should be turning to are the lowest paid in our community. Don’t make them feel guilty –
LAUNDY: The nature of Australians is that they want to dig in and give a hand. As Scott was saying at lunch -
FITZGIBBON: - I can hear them cheering from the rooftops at the moment – you beauty -
LAUNDY: - they are chipping in a small amount at that end versus a massive –
FITZGIBBON: - I feel so much better about –
LAUNDY: - it is progressive – it is progressive Joel. And that makes it fair.
FITZGIBBON: Cuts for a millionaire and a new tax imposition for low income families –
LAUNDY: - $25,000 for a millionaire compared with 700 bucks for someone on 30 Grand –
SPEERS: Do you accept Craig Laundy that there are a number of ways you could pay for this, the NDIS, whether it is keeping the deficit levy, whether it is not going ahead with company tax - there are a bunch of ways you could do it.
LAUNDY: Mate it was fully funded. Joel just said. So why do we need to raise the money? Was it fully funded?
FITZGIBBON: - you are giving $50 million away in tax cuts –
LAUNDY: It wasn’t fully funded Joel. You put it outside – This is the old Labor trick -
SPEERS: It might have been when you were in Government but it has blown out now –
LAUNDY: The rubber is hitting the road now. Surprise Joel, four years ago they were outside the Forward Estimates.
FITZGIBBON: You are spending more and taxing more.
SPEERS: Do you accept more money is going to be needed in a couple of years for this thing? There are other ways you can find that money. Medicare levy is one of them. Deficit levy might be one of them. Maybe not raise as much. There is negative gearing. Not going ahead with company tax cuts. Why is this the best way to do this?
LAUNDY: It is the way we have chosen to do it.
SPEERS: That doesn’t mean it is the best way to do it.
LAUNDY: It is progressive. Because we think it is fair. We think it is fair. It is progressive. If you are on a low income you pay a low amount. If you are on a high income you pay a high amount.
SPEERS: It is the way you guys did it Joel Fitzgibbon. And initially Labor wanted to pay for the NDIS by putting up the Medicare levy.
FITZGIBBON: And we weren’t giving a $50 million tax cut to the big end of town. And we were refusing to make changes to Capital Gains and negative gearing in the process. Again it is about prioritising. You can’t compare something we did five years ago with 2017. It is completely different circumstances. And, by the way, as I said, purely when they are spending and taxing more –
SPEERS: But if you take this in isolation and I know you are not, but if you take it in isolation NDIS is costing more than we initially thought, the Medicare levy is how we wanted to pay for it initially, now it is costing more, the Medicare levy is the way to do it.
FITZGIBBON: So we will slug the punters?
SPEERS: Well that’s the Medicare levy –
FITZGIBBON: - we will give the big end of town the tax cut -
LAUNDY: Not for two years David. It is in two year’s time when the cost is incurred.
FITZGIBBON: beyond the election –
LAUNDY: No Joel – it is when the expense is incurred. Do you want us to raise it now?
SPEERS: Let’s turn to something you both agree on. The bank levy, Labor signed up to that lickety split last night, but you have heard the complaints from the bank bosses. The CEOs are all weighing in saying this is going to hit shareholders and customers, be they depositors or mortgage holders. Craig Laundy, they are right.
LAUNDY: No I don’t think they are right.
SPEERS: Well who is going to hit?
LAUNDY: The banks in this country are too big to fail so there is what we call an implied guarantee. That is worth, talk to experts in the market, you get a range between 20 and 28 basis points on their cost of funds. We are asking for 6 back. We don’t ask them for the 25. They make the additional profit on the that. That’s the reality of how the system works. Because when they go to the market to raise funds, the market determines that the Australian Government is sitting behind the banks because they are too big to fail. Now, if that’s the case and that is good enough for them in the good times, they shouldn’t take these 6 basis points and charge customers the rest.
FITZGIBBON: Craig that is true whether they have the $6 billion tax imposed on them or not. Now if you’re imposing a tax, they can only do two things. They can pass it on to their customers or they can suck it up on their bottom line. Which of course is a revenue decrease to the shareholders.
LAUNDY: So you don’t agree?
FITZGIBBON: We’re not going to stand in the way of your bank levy.
SPEERS: You just wish you thought of it first.
FITZGIBBON: Don’t pretend it’s not going to have knock on effects, it will do.
LAUNDY: It’s not Joel is what I’m saying.
FITZGIBBON: I suspect the main impact will be on shareholders.
SPEERS: It’s got to be shareholders or customers.
LAUNDY: How convenient is that argument when you talk about tax cuts for banks, it’s the shareholders that don’t get the tax cuts.
FITZGIBBON: It’s got to either be passed on or sucked up.
SPEERS: It’s either customers or shareholders. That’s what I’m saying it is either.
LAUNDY: Or it’s the bank that absorbs the costs.
SPEERS: That’s the shareholders?
LAUNDY: No, no, yes. But what I’m saying is they get 25 basis points.
FITZGIBBON: They get that regardless (inaudible).
LAUNDY: But Joel again, it’s fair.
SPEERS: Just to be clear, the shareholders you believe are the ones who should wear this?
LAUNDY: If they absorb, then yes the shareholders will get this 6 basis points or whatever that accounts to.
SPEERS: Which is not some fat cat with a top hat and cigar, it is a lot of mum and dad shareholders out there.
LAUNDY: It’s every shareholder irrespective of who you are.
SPEERS: Super funds.
LAUNDY: If that’s the way they go.
SPEERS: Everyone will pay for this.
LAUNDY: But David, what I am saying is they are quick to cry poor and never acknowledge the benefit they receive through the implied guarantee of Government. I think that is unfair.
FITZGIBBON: You know Craig there were going to be a lot of mum and dad shareholders.
SPEERS: Sorry, do you think that was unfair (inaudible).
LAUNDY: I’ve thought and I have argued this case for every time they increase mortgage rates more than the RBA does. I have raised this exact argument
SPEERS: Hit them with a tax.
LAUNDY: No they have an implied guarantee and they should not be raising it any more than they need to. There have been times over the last four years since I have been here, and I have repeated this implied guarantee consistently where there has bene no change by the RBA and they have put up the cost of funds to customers.
FITZGIBBON: Craig you know some of those mum and dad shareholders will also have their Medicare levy increase don’t you? It’s a double whammy for those low income families who saved a bit of money to invest in CommBank.
LAUNDY: We have decided to fund things in a particular way and we thinks it’s fair. Are we standing behind it? You bet.
FITZGIBBON: No, no, no you gave up the zombie cuts not because you didn’t think they were fair, we hadn’t somehow persuaded you they were unfair. You gave them up by the Treasurer’s own admission because you couldn’t get them through the Senate. There was no contrition, no change in values.
LAUNDY: Joel you have to be pragmatic. We have to be pragmatic. Australians are sitting at home right now and some are watching this, not many probably. Most are out there living their life. You know what there David. I’ll tell you one thing and Scott said this again at lunch time today, people want us to go get things done. You can sit there and try and bang your head up the side of the Senate wall.
SPEERS: If you had a better Senate, magically next election, if you get a better Senate, it’s Coalition majority, you’d go for it again on these spending cuts?
LAUNDY: Nice try, hypothetical.
FITZGIBBON: You could negotiate it with Mark Latham?
SPEERS: Let’s not speculate on what he might back. Now the inland rail, let me get your thoughts on that. We had Barnaby Joyce earlier making a case for inland rail. Labor supported this historically. You’d be happy to see the way they are doing this?
FITZGIBBON: The former Labor Government funded this first. I heard your interview with Barnaby and my God, talk about spin. We think this is a good proposal. We funded it first and welcomed the fact.
SPEERS: Hang on, you put in a little bit of money for buying a bit of land.
FITZGIBBON: Well that’s all you can do at that stage.
SPEERS: $300 million. This is an $8.4 billion.
FITZGIBBON: The Howard Government hadn’t progressed it. It wasn’t shovel ready when we came to Government. You can’t just build it tomorrow. We put in the necessary money needed for the planning and other processes prior to losing Government. They cut funding in the first three years of Government and now they are playing catch up. Darren Chester said they would be building the inland rail project by 2016. Why didn’t they? Because they cut the funding. Now it’s a good project and we support it. The cost benefit is not great but we think it…
SPEERS: It’s just better than break even.
FITZGIBBON: They are doing it off budget, that’s a bit of a slight of hand.
SPEERS: You wouldn’t do that?
FITZGIBBON: We had no intention of doing that, but that’s what they are doing. It’s questionable taking it off budget because there is no clear, fixed revenue stream. But let me say this. There is nothing in this budget for agriculture. He wants to talk about inland rail only. It’s well down the track.
SPEERS: It will help some farmers.
FITZGIBBON: Well down the track. What about farmers in Tasmania, South Australia, Western Australia, the Northern Territory and North of Brisbane? What does it do for them?
SPEERS: We’ll wait for the reply tomorrow night. What does the inland rail do for Western Sydney?
LAUNDY: Look David, it’s more about the whole package, The $75 billion over the 10 years and we are already seeing it. We have $1.6 billion going through my electorate in WestConnex, long overdue that will go out to the second Sydney airport.
SPEERS: What about a rail link out there? That’s what everyone is wondering.
LAUNDY: That’s up to the relevant Ministers at the time. It’s not just the airport and WestConnex, it’s also Northern Road and Bringelly Road and the M12 connection to the M7. For the first time in Western Sydney there is the cities deal with Minister Taylor and the Prime Minister signed with the eight local councils. You’ve got three levels of Government working together to actually build infrastructure ahead of time in Western Sydney, knowing Western Sydney will hold an extra 1.1 million people over the next 15-16 years. What’s the next thing we need to do off the back of that is drive employment out here, because at the moment, historically there have been dormitory suburbs. There’s 100,000 people go to Western Sydney to work and 300,000 people come into Sydney. We need to attack that at the same time and the projects that have been built, like the second airport and the precincts around that are very much aimed at that.
SPEERS: Let me ask you about another issues. It’s not a huge issue in terms of budget impact but it was, you know a significant one. This is the drug testing of welfare recipients. Do either of you know anyone on Newstart or has been on the Newstart allowance?
FITZGIBBON: I’m just going to take a second to say, in my electorate alone, we spent $3 billion on the Hunter Expressway and the third rail track.
SPEERS: Back to Newstart, do you know anyone who has been on Newstart?
FITZGIBBON: Do I know people who have been on Newstart? Yes David I do.
LAUNDY: I deal with them in my electorate.
SPEERS: Would you be happy to see them randomly drug tested. Do you think that’s fair?
FITZGIBBON: I’m open to all these ideas, but when 90 per cent of the people who do work for the dole can’t get a job at the other end, does the Government really want you to believe that by drug testing, they are going to change the dynamic? You know where this begins? Gonski and fully funding kids in our schools and breaking intergenerational unemployment by intervening at a younger age.
SPEERS: It would be great if no one ended up on the dole if you fixed (inaudible)
FITZGIBBON: You’d be far less likely to end up on the dole if we fully funded Gonski.
SPEERS: What do you think Craig Laundy. Would you be happy for those people you know in your electorate on Newstart to hit them with a random drug test?
LAUNDY: I’ll go one step further, why do we stop there, why don’t we do it here? I’d be very happy to be drug tested. I don’t have a problem with it.
FITZGIBBON: Coming from a former publican?
LAUNDY: Yeah as long as alcohol is not included.
FITZGIBBON: He obviously doesn’t have the Parliament House contract.
LAUNDY: That’s the breathalyser for the alcohol. It’s a case of, there’s a role out there where we are spending tax payers’ money, you need to ensure you are doing it responsibly and people are doing the right thing and I think that’s the balance that Minister Tudge has been pushing for and has been pushing for, for some time. I think that’s what the broader community in my electorate expect.
FITZGIBBON: It’s demonising everyone who relies on income support at some stage, that’s what it’s doing. It’s a stunt and won’t make any difference. Fully funding our schools will.
SPEERS: You don’t support?
FITZGIBBON: I’m not going to oppose it, we’ll have a discussion about it but I just know it’s fluff and is a stunt.
LAUNDY: It’s a pilot too.
FITZGIBBON: It’s a pilot.
SPEERS: The trap is if you oppose it, the question is do you think dole recipients should be taking drugs?
FITZGIBBON: No one should be taking illicit drugs. It’s as simple as that. We are demonising people because they have had the audacity to rely on income support at some point. Unemployment is on the rise under this Government and it is getting harder to get a job. Let’s not say it’s not all their fault because they had a drink or took an illicit drug. I mean really? Is that what we have come to in the National Parliament?
SPEERS: We are going to have to wrap up, but we have a much better argument of where both sides are coming from.
FITZGIBBON: Craig and I are going to go have a beer now.
SPEERS: As long as that’s all it is, that’s fine. Craig Laundy and Joel Fitzgibbon thank you very much, we’ll catch up with you next time.