SUBJECTS: Televised meeting between Foreign Minister and Russian Ambassador; cricket; Malcolm Turnbull’s $65 billion tax cuts; public interest test; imputation reform
DAVID SPEERS: Let’s bring in our panel, Craig Laundy and Joel Fitzgibbon. Good to see you both.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES, FORESTRY AND RURAL AND REGIONAL AUSTRALIA: We are so happy to be here.
SPEERS: That’s not something you see every day though is it? The full public dressing down, cameras and all.
FITZGIBBON: That is extraordinary footage.
FITZGIBBON: I don’t really know what the point is, frankly. I can’t believe the Russian Ambassador agreed to that structure.
SPEERS: He may not have.
FITZGIBBON: He may not have and that makes it even more doubtful if there is any efficacy about it from my perspective.
SPEERS: You don’t think it sends a message that Australia’s Foreign Minister is treating this all pretty seriously?
FITZGIBBON: Sending off two foreign diplomats is not already sending a message?
SPEERS: You sense a bit of theatre?
FITZGIBBON: Well it appears it be so yes. It seems to be more targeted at a domestic audience to me.
SPEERS: Well Craig Laundy I better get your response on that, is the Government playing this up for domestic gain now?
CRAIG LAUNDY: No. Absolutely not. It has been pleasing to know that there has been bipartisan support for the action that the Government has taken and I understand as late as just before we kicked off today up to 27 countries that have now expelled diplomats around the globe. Which is completely appropriate given the gravity of the breach we have seen in one of our closest ally’s backyards. I think the Foreign Minister is well within her rights to do what she has done.
FITZGIBBON: Spanking publicly?
LAUNDY: Joel obviously it is a very serious matter.
FITZGIBBON: It is. And you do have bipartisan support.
SPEERS: Ambassadors do get called in when it is a serious disagreement. That happens. Can you recall the cameras being allowed in for a such a moment and should that be the norm now?
LAUNDY: Look I can’t recall, however I’m an accidental politician not a career politician, so that sort of historically, looking back, and being able to call to mind - Joel you have been doing it longer than me.
SPEERS: Either way I can confirm the Russian Ambassador did approve of the presence of the media there. So he was OK with the cameras being there. So I guess if they are both OK we are certainly not complaining, as the media.
LAUNDY: It was fascinating.
SPEERS: We would love to be there for all of them.
FITZGIBBON: A bit of good copy there.
SPEERS: Absolutely. Alright let’s turn to well, the other international scandal, the cricket ball tampering one. Quickly let me get both of your thoughts on that. The three of them aren’t going to back, Steve Smith, Dave Warner and Cameron Bancroft, until tomorrow now. We don’t know what sort of penalty they are going to cop long term. I did note the Foreign Minister saying earlier I think to Kieran Gilbert about some of the international reaction she has copped from diplomats and so on about this. Is it that serious do you think? Do you think it has damaged Australia’s reputation Craig?
LAUNDY: Well it is definitely serious. There has been an incredible lack of judgement shown. And we are now, in the eyes of the globe, especially the world of cricket; although I note this has also permeated CNN’s news this morning, so obviously the US, not being a cricket loving nation. So it has drawn global attention and James Sutherland has had some very strong things to say overnight in South Africa. As was appropriate. At the end of an investigation there will be more said over the coming 24 hours.
SPEERS: Alright, do you think it is being handled appropriately?
FITZGIBBON: They are extraordinary circumstances. I am flabbergasted like most Australians. I do have some sympathy for the boys. I mean they have done a very stupid and damaging thing but it is going to be career destroying for them. From that perspective it is very sad.
SPEERS: Here in Parliament, which is about to wrap up for the week, a shorter week ahead of the Easter break, the Government has not been able to get through its Company tax cuts. Is it disappointing Craig Laundy?
LAUNDY: Yes. Yes it is disappointing. We were obviously hoping we would get them through pre the break. However it doesn’t change the determination to get them through because it is the right thing to do for the sake of the economy.
SPEERS: I am sure you saw Tim Storer’s comments, one of the Senators who is not yet won over, doesn’t sound like he is close to supporting them.
LAUNDY: Look, I have got to know Tim well over the past few weeks since being sworn in because I have got legislation I am attempting to move through the Senate. I have reached out to Tim and actually spent a fair bit of time with him. He is a, from my initial appraisal of him, he is a very deep thinker, he does come from a business background, especially through Asian trade and facilitating smaller family business trade through Asia. He is also an extremely keen reader and a quick reader, loves information and I am sure Mathias will be getting him a lot of information over the break because knowing Tim, as I have got to know over the past few weeks, he would have been asking for it. The great hope is…
SPEERS: He’s not out of the question then? You reckon he is still a chance?
LAUNDY: I wouldn’t think so. Knowing from the way my dealings with Tim have worked over the past couple of weeks, I found him to be a very straight shooter, genuinely wanting to do the right thing. If you can furnish him with information that backs up what you are saying, and he asks for it too, he will go through it methodically and stay in touch as he does. We obviously, when we come back, keep working on this.
SPEERS: We have seen business big and small Joel saying very clearly they need this tax cut to remain competitive with what the rest of world is doing. If we don’t do it we are going to be left behind. Do you accept any of that?
FITZGIBBON: We have also seen them thinking about making a commitment to jobs and wages and good things in the economy only to white it all out before distributing that piece of paper publicly so I think they need to have a look at themselves.
SPEERS: Do you get what they are saying about the need for this sort of reform to help them compete?
FITZGIBBON: The Labor Party has never said that it opposes company tax cut breaks. We have never said that. We have said a couple of other things. We have said that it is not a priority at this time when there are so many other things we need to do with the money. And of course we are willing to participate in a broader reform program; we have done the discretionary trust, we have done negative gearing, we have done dividend imputation. It is a pretty long list. We have been bold and brave and courageous from Opposition and if the Government would work with us on some of these things we would probably get more done. I agree with Craig’s analysis of Storer. He does seem to be a thinker. He does seem committed to evidence-based policy. I find it encouraging that he is thinking it through. Because Australians are asking themselves why is the Government coming back with in a month’s time or so? What are they trading in between now and then? What are they going to offer to buy another senator or two? That is of real concern I think.
SPEERS: It doesn’t sound like from what he has said that he is after any special deals.
FITZGIBBON: That’s my point, he does seem to be looking at it on its merits or otherwise and we are confident that if he looks at it on its merits he will reject it. But in other cases it seems that senators are trading off their vote for other concessions and I don’t think the public like that much.
SPEERS: Back to the point though of competitiveness, these great Australian brands, and smaller companies as well, are going to need some of this if US, France, many other countries, are moving to lower their company tax rate. Is this going to be a problem for us?
FITZGIBBON: There are a number of variables that determine our competitiveness, including skill sets of course, investment in innovation, real investment in innovation. Depreciation which allows investment which ensures there is a contribution to the productive side of the economy. We are not against competiveness and innovation we just think the Government is going about this the wrong way.
SPEERS: Joel referenced that leaked draft letter from BCA where they were thinking about all sorts of commitments including “pay our tax”. Should they make these commitments?
LAUNDY: Look David they do. You legally have to pay your tax and if you don’t you’ll have the ATO knocking on your door.
FITZGIBBON: It is their commitment to do things if they get the tax break.
LAUNDY: Look Joel I am not interested in the leaks mate. The law is you pay your tax and they do. But going back to the question you asked just before, which I think is the important one, the risk we run, if you are not competitive, and this part has been completely overlooked; is that these big businesses, the ones that miss out, if that’s the way it be, there is two issues. Firstly, is that they deal with small and family businesses every day in their supply chains. Now they have got money to reinvest back in Australia, small and family businesses are their clients as well and they win through that. But the second and most important part, and the part that has been completely missed, is that they are the most able to offshore because they have the resources to do it. So your risk is they offshore parts of their operations to jurisdictions with lower tax rates.
SPEERS: So you reckon if we don’t see this company tax cut some of them are going to move overseas?
LAUNDY: Yes. We are already seeing it. Parts of. It may not be whole operations.
SPEERS: But in fairness the biggest companies that you are talking about here aren’t going to get this company tax relief until, what is it, 2022/23?
LAUNDY: Yes but it is something they can plan for David.
SPEERS: But what is going to happen in the next few years?
LAUNDY: But it is something they can plan for, they know it is coming, there is some certainty there. The sad part, as far as they are concerned, and what they are saying to me is, historically it was bipartisan approach and I am not going to repeat all the comments you have heard through Question Time, time and time again. The rules of economics were appreciated and understood by both sides, if you have a more competitive company tax regime by lowering rates you get better outcomes for employees along the way.
SPEERS: The PM is going to take this to the election whatever happens. In May when you come back win or lose, if you lose you will take it to the election still as part of your platform, are you happy with that?
SPEERS: And Labor will repeal it if you win the election?
FITZGIBBON: We will be very happy to go to an election on that argument. $65 billion worth of tax cuts to the big end of town, big corporates already avoiding substantial tax obligations.
SPEERS: Where do you draw the line?
FITZGIBBON: Money invested in accelerated depreciation for example to get investment going in the economy, and heavy investment in people, education and of course health. These are the things people are concerned about.
FITZGIBBON: We have already backed many of the company tax cuts.
SPEERS: Where would the cut-off be?
FITZGIBBON: We will wait until Budget to see the detail.
LAUNDY: But how can you say that it is a $65 billion hand out when $39 or $29 billion has already gone to small and medium sized businesses? .
FITZGIBBON: We have supported tax cuts to small and medium sized businesses.
LAUNDY: No you haven’t. You voted against them.
FITZGIBBON: We are very concerned that this is the wrong priority and Craig is saying that the sky is going to fall in the economy if this doesn’t go through immediately is not a credible argument and won’t not be accepted by the majority of economists.
SPEERS: You spoke Craig Laundy about working with Tim Storer, I assume one of those pieces of legislation is one about a public interest test before big union mergers can go ahead. As of now the CFMUA, is that the new –
LAUNDY: That’s the new one.
SPEERS: The merged CFMEU and MUA happened, as of yesterday, so can that be unscrambled?
LAUNDY: Firstly David, and this is the part again that has been so poorly reported, this isn’t a piece of legislation about Unions. It is a piece of legislation about all registered organisations.
FITZGIBBON: That’s what it is all about mate.
LAUNDY: This wasn’t a piece of legislation based on this Union, this merger.
SPEERS: Can anyone unscramble this merger?
LAUNDY: David, look, my opinion is no. But it doesn’t mean this legislation is not important. The public interest test was put in place by the Hawke Government in 1988.
SPEERS: That might be but what you have said is interesting, that you as Minister you don’t think this merger can be unscrambled.
LAUNDY: Unless, there is court action pending and I don’t want to comment on that because the courts are where this can get taken to and that will play out. But as it currently sits today with the due date being today effectively, first day, my understanding is we can’t come up with retrospective legislation but that is why from day one I have been saying we have trying to do all we can to get it through. This doesn’t stop us trying to get this through because it is not about this merger, it is about the concept more broadly for all registered organisations so that there is accountability in the eyes of the public that the right thing is done.
SPEERS: Now Labor, and let’s finish on this Joel Fitzgibbon, we see the Government all day today rolling out all different examples of elderly retirees who are going to be hit hard by your plan to end cash refunds for franked dividends, a 91 year old nursing home resident who uses the money to pay the nursing home fees. Do you worry at all about how they are going to be affected?
FITZGIBBON: We are very happy to have an election fought on this issue too David. This is rort that needed to be closed. When John Howard introduced –
LAUNDY: A rort?
FITZGIBBON: Absolutely. Getting a tax deduction when you don’t pay tax is an inappropriate policy model.
LAUNDY: They do pay tax.
FITZGIBBON: Craig stop it.
LAUNDY: They are share-holders in a company.
FITZGIBBON: It was costing John Howard $550 million a year when it was introduced and now it is $8 billion a year. It makes no policy sense whatsoever.
SPEERS: But the companies pay tax.
LAUNDY: They are owners in the company Dave.
SPEERS: If you bought the shares, you would be able to claim it, but if a retiree –
FITZGIBBON: I would be able to offset it against other tax obligations yes.
FITZGIBBON: Which was Paul Keating’s intention.
SPEERS: But this retiree who can’t the 91 year old in the nursing home we heard about today, why –
FITZGIBBON: There is no double taxation, BHP has paid tax and the recipient of the dividends hasn’t paid tax and won’t pay tax. It is as simple as that. The Prime Minister is trying to confuse the issue to scare people. It is pretty basic. It is pretty easy. It is pretty straightforward.
SPEERS: That retiree is not able to claim a tax deduction.
FITZGIBBON: No. Government is about strong leadership and reform. We are not here to sit and do nothing. The Budget is in disrepair, the deficit has gone backwards since this mob were elected. We have got important things that require investment in the economy, we have got to make some tough decisions. And we are making them. To our credit I think unlike the other mob. We are comfortable with our decision.
SPEERS: You can’t argue Craig with the fact there are some pretty difficult decisions, tough decisions –
LAUNDY: The lack of understanding from not just Joel but from his entire team. The shareholders are the owners of the company, they’re the ones that have paid 30 cent tax. This is the part that is completely unmissable. It is a reality. They are being discriminated against. As you say, anyone else in the tax system can do it, just not them. The absolute travesty is that it is double taxation because a lot of these people have made non concessional contributions to their super where they paid their full marginal rate and then put in after tax dollars. That hasn’t even been spoken about.
FITZGIBBON: 80 per cent of this revenue is coming from 20 per cent of the wealthiest –
LAUNDY: 50 per cent of the people –
FITZGIBBON: I know a guy who is retired, he is getting $80,000 cheque from the tax office every year for no reason. $80,000 a year for no reason. He doesn’t want to lose it but he agrees that this is absolutely the right policy.
SPEERS: We will no doubt have more debate over that particular measure in the weeks to come. Craig Laundy, Joel Fitzgibbon, thank you.
FITZGIBBON: Have a great Easter.