Interview with Alicia Loxley, ABC 774 Pollie Graph

Share
Transcripts

ALICIA LOXLEY:

Joining me this week in the ABC studio from Parliament House is Kelly O’Dwyer who is of course the Member for Higgins, Minister for Revenue and Financial Services, along with Mark Dreyfus who is the Member of Isaacs and Shadow Attorney General and Shadow Minister for National Security. Good afternoon to you both.

KELLY O’DWYER:

Good afternoon Alicia and also to Mark.

MARK DREYFUS:

Afternoon Alicia, good to be with you, and hello Kelly.

KELLY O’DWYER:

Kelly O’Dwyer, I might start with you – your reaction to the news from Telstra this morning.

KELLY O’DWYER:

I was pretty shocked when I heard the news and obviously it’s very devastating for all of those employees and contractors who are directly affected by it and it is obviously devastating for their families as well. I understand the Prime Minister has spoken with the CEO of Telstra, Andy Penn, and that there is going to be a $50 million fund to actually help transition those employees. It’s not going to happen over the next 12 months, but will be over a period of time, is my understanding that these job losses will occur. But I suppose it reminds us how important it is to be able to have a strong economy and economy where there are other businesses that employ people so that people can go out of one job and into another.

ALICIA LOXLEY:

Mark Dreyfus, a $50 million fund from the Federal Government does that go far enough for these workers?

MARK DREYFUS:

These are very significant job cuts Alicia. Our thoughts are with the Telstra employees today and their families. The last thing we need in a period of low wages is more talk of cuts and I hope that the fund is enough, we will obviously look closely at what the Government is doing but it’s devastating.

ALICIA LOXLEY:

1300 222 774 if you have a question for either Mark Dreyfus or Kelly O’Dwyer on Pollie Graph this afternoon. Kelly O’Dwyer, I wanted to talk to you about tax cuts. Labor announced through the press this morning it will go to the election vowing to repeal $120 billion in future tax cuts, the stage two and three of what you are trying to get through the Senate at present. They affect middle and higher income earners. Your thoughts on that?

KELLY O’DWYER:

Well obviously we’ve got a very well calibrated plan that will actually help all Australians. We believe that it is important to understand that people have aspiration in this country. They want to be able to work hard, be rewarded for that hard work and be able to get ahead for themselves and for their families. And under our plan, our seven year plan, when it’s fully implemented, which by the way, we can legislate here in the Parliament this week if there is the commitment to do that, 94% of all taxpayers paid no more than 32.5 cents in the dollar between $41,000 right up to $200,000. Now that is very, very significant structural reform and it means that those people who would otherwise be affected by bracket creep or who might not go for that dream job promotion will actually do that and work that extra day of work a week, because they know they’re not penalised by the tax system.

ALICIA LOXLEY:

Kelly O’Dwyer are you prepared to split up this package do you think to get it through or is it all or nothing?

KELLY O’DWYER:

We have been very clear that it’s a comprehensive plan, that it fits together and we want the Labor Party to support this plan. Really they are the only ones standing between people and tax relief right now. We believe that this is a really important measure to encourage people to be able to work hard and be rewarded for that. The Labor Party have got a plan for tax and it’s about $200 billion worth of new or increased taxes. In particular, a very big retiree tax that is going to hit a lot of low income earners, particularly those retirees who don’t have the ability to be able to change their plans, and we just don’t think that’s right. We want to be a country that recognises the hard work that people have done and frankly we think that’s the aspiration that the Labor Party should have for this country as well.

ALICIA LOXLEY:

The Treasurer has said it is all or nothing, that he is not going to break it up, so has the stance softened at all or are you repeating that today?

KELLY O’DWYER:

No, we plan to implement the whole plan and that’s what we’re taking to the Senate. They will vote on it. We will obviously… (interrupted)

ALICIA LOXLEY:

But if you can’t get One Nation, let’s say, over the line, if you can’t get that final vote?

KELLY O’DWYER:

Well let’s see what happens. It is currently being debated right now, Alicia, let’s see what happens.

ALICIA LOXLEY:

Okay. It sounds like you are a little bit softer maybe than what the Treasurer was on Monday.

KELLY O’DWYER:

No, no, I’m not softer. I am not softer. I am just simply saying let’s see what happens.

ALICIA LOXLEY:

The stance has softened, sorry, you’re not softer.

KELLY O’DWYER:

No, no. We are very optimistic that we will be able to get our plan through.

ALICIA LOXLEY:

Mark Dreyfus do you think the Government will do a deal if they can’t get it through?

MARK DREYFUS:

Labor says that we should split this bill. We want fair dinkum tax cuts for 10 million workers from the 1st of July and we are ready to vote for those tax cuts for 10 million workers from the 1st of July. What Kelly missed out before was explaining that the other two parts of the tax cuts kick in in 2022, four years away, and 2024, six years away. We simply don’t think it’s responsible because we don’t know what the state of the Australian economy is going to be in 2022 or 2024. The time for considering tax cuts then is much closer to that time. Australia’s really been through a period of the Howard Government with what in hindsight can now be seen to be fiscal recklessness, handing out tax cuts, handing out what’s been described as middle-class welfare in the period right up to the end of the Howard Government in 2007. Within a couple of years Australia was hit with the Global Financial Crisis and we are still dealing with what are actually massive anomalies in the tax system which have had to be fixed up ever since the Howard Government was in power.

ALICIA LOXLEY:

Yes but it’s actually a risky strategy though isn’t it? Because if it’s put off until August then it means there are a whole lot of workers affected by that stage one section who have then missed out on a tax cut from July.

MARK DREYFUS:

Well it’s actually a rebate, it wouldn’t be paid until after the 30th of June 2019 in respect of the upcoming year. Of course it’s better that people know ahead of the commencement of the financial year exactly what their tax position is so, of course, it should be voted on now. We are ready here and now to vote for the tax cut next year and indeed Labor’s policy is for a bigger, better tax cut for lower and middle income people commencing on the 1st of July. It’s only the Government with its obstinacy here in saying it doesn’t want to do stages, it wants stages 2 and 3, as I say, commencing in four and six years’ time linked, linked to this immediate tax cut that is standing in the way of 10 million Australians getting a tax cut in respect of the income tax year that is about to commence. And let’s see how it comes as I came onto this program the Senate was in the middle of I think about the 10th or 12th or 15th division in their wrangle over whether or not the bill should in fact be split. I think it seemed likely as I came on here that the Senate was voting to split off at least stage 3, that’s the tax cuts in six years’ time. I hope that the bill is split and that we can have a vote and Labor can assist the Government to deliver a tax cut to 10 million workers starting on the 1st of July.

KELLY O’DWYER:

Can I just pick up on that, Alicia?

ALICIA LOXLEY:

Go for it, Kelly.

KELLY O’DWYER:

I think it’s important just to note that this is not fiscally reckless at all. Let’s not forget this money actually belongs to the people who have worked hard for it. Government should only take in tax what it absolutely needs to do the job of government after you guaranteed the essential services that people rely on and we’ve done that. You have to account for it over the forward estimates period and in the medium-term projections, which were done, so it’s not fiscally reckless. In fact, I think it’s amazing to hear Mark talk about Howard and Costello as fiscally reckless.

MARK DREYFUS:

They certainly were and I’m going to keep saying it.

KELLY O’DWYER:

They repaid $96 billion of Labor’s debt and left $20 billion in the bank – which did come in handy during the Global Financial Crisis I might add.

ALICIA LOXLEY:

Alright, let’s not wade back in to the history books we might take some calls, 1300 222 774. James has called in from Wallan. Hi James.

CALLER:

Good afternoon I just want to point out to Kelly O’Dwyer, this really looks like that the Prime Minister and the jobs minister Michaelia Cash are up to their arm pits in this – they have already known about it and this is their ideological way of dismantling anything that looks like government. They want a small government with their born to rule mentality.

ALICIA LOXLEY:

Kelly O’Dwyer?

KELLY O’DWYER:

I’m not entirely sure what we are directly referring to here, but I’m assuming that this is to do with Telstra’s announcement of the job cuts. I think that’s what your listener was perhaps referring to and I can tell you that that is a decision of the Telstra board and the CEO there. That is not a decision of Government at all. Over our Government we’ve seen more than a million jobs have been created. In fact, I’m Minister for Women as well and I’m happy to say that the majority of those jobs have actually gone to women. We want to see the creation of new jobs and happily that has happened under our economic management and our economic leadership and under our economic plan. But that is always at risk in an environment that is very competitive and it means that you actually do need to be able to have a plan in place that will actually help encourage businesses to invest, to grow and actually to create more jobs and that’s exactly what we’re doing with our small business tax cuts, our company tax cuts across the board and with our personal income tax structural changes.

ALICIA LOXLEY:

Thanks James for your call. Anne has called in from Moone Ponds, Anne?

CALLER:

Yeah hi, my question is to Kelly. I wonder how she is going on her $40 a day plan and I would like her to go and live in a rental property in the outer western suburbs of Melbourne and survive and bring up children. Also too how she thinks it is going to be so easy for somebody in their late 50s, who gets retrenched or whatever, unfortunately, to go and find other work.

ALICIA LOXLEY:

I think that might have been Julia Banks who made that comment, Anne, that she could live on Newstart, but Kelly O’Dwyer do you want to respond to that?

KELLY O’DWYER:

I have always acknowledged that it’s not a lot of money to live on, that’s true, and Newstart is a payment that is made to people as they’re transitioning into work. Most people on Newstart payments are on that payment for less than 12 months and they move into work. No one has said that that’s easy and certainly we want to create an environment where people can in fact get a job.

ALICIA LOXLEY:

Cheryl has called in from Ormond, hi Cheryl.

CALLER:

Hi, good evening. I’m in my late 50s and I work probably 55 – 60 hours a week. I think the tax rate to encourage people to do more and be self-sufficient is ridiculous. I think we should get rewarded if you want to put in the hard yards, you want to do the effort, I think you should be able to earn a reasonable income.

ALICIA LOXLEY:

Mark Dreyfus – your response?

MARK DREYFUS:

We’ve got a progressive tax system and I think that the incentive for working harder is that you get paid more if you work harder and I don’t think that we should move away from a progressive tax system which means, to be very direct about it, that people on higher incomes will pay not just a higher amount of money in tax they will pay a higher proportion in tax because for many decades Australia has worked on the basis that progressive tax systems are the fairest and it’s regrettable, incredibly regrettable that we now have a government that is not correctly representing the way in which the tax system works and wants to move away from that progressive tax system which has involved, and Kelly wants to jump in her and I’ll let her, but we have a government moving away from a progressive tax system. I don’t think there’s any lack of incentive in Australia for people that want to work harder. I don’t think that any party is in any way setting their face against aspiration. The Labor Party stands for aspiration just as much as the Liberal Party. We aspire to better working conditions. We aspire to better pay. We aspire to a better health system. We aspire to better education and it’s a nonsense that we’ve heard from the government this week about a lack of attention to aspiration.

KELLY O’DWYER:

Well I think that might have come from your Deputy Leader’s comments, and look I don’t include you, Mark, in that because I don’t hold you responsible for her comments that it mystifies her what aspiration is all about.

MARK DREYFUS:

She was taken out of context.

KELLY O’DWYER:

I have to say though, with the greatest of respect, you’re not right when you talk about the progressive nature of our tax system being changed under the tax plan that we have put. Someone who earns $200,000 will continue to have an average tax rate of more than 30 per cent, while someone earning $41,000 will have an average tax rate of around 11 per cent. The truth is, the more you earn, the more you will pay in tax. That’s the progressive tax system… (interrupted)

MARK DREYFUS:

But you’re flattening the rate.

KELLY O’DWYER:

That remains. People don’t go for that next job, they don’t work that extra day a week if in fact all they are doing is working for the government. We want people to be self-sufficient. We want people to have choices about their lives and we want people to keep more of their hard earned income. What is wrong with that?

ALICIA LOXLEY:

All right, 1300 222 774. Mark Dreyfus I’ll let you respond after we get a check of the traffic…

[TRAFFIC BREAK]

ALICIA LOXLEY:

Loads of your text messages coming in, one congratulating you from Dan, both of you, saying wow first time in ages I’ve heard a debate between Liberal and Labor politicians that was civilised so well done to both of you.

Another one from Jane in Warrnambool saying please, please ask where these jobs are, and whether these jobs are permanent or casual or short contract. A lot of us in the real world are finding the jobs that we can survive on just survive very elusive, indeed, especially if you are over 50. I assume that is in response to comments about Newstart, Kelly O’Dwyer.

KELLY O’DWYER:

I think that was in response to the creation of over a million new jobs. The majority of them are in fact permanent full-time jobs. I think there’s been a lot of misinformation out there in relation to those new jobs that have been created. But the majority of those jobs are permanent full-time jobs.

ALICIA LOXLEY:

Let’s go to your calls. Joseph has called in from Mount Waverley. G’day Joseph.

CALLER:

My comment is in response to Kelly O’Dwyer’s statement that if tax rates are high people will be disincentivised from applying or working harder and getting a bigger pay. That’s just dead wrong. I’ve been in the workforce for 30 years and I’ve never come across anybody who has ever refused a promotion or a bigger job because of paying a higher rate of tax.

ALICIA LOXLEY:

It is a big statement that people are perhaps looking at the tax rates and if they’re offered a job with a slightly higher pay, Kelly O’Dwyer, that they’re refusing it because they’re going to pay more tax. Is there evidence that people are actually doing that?

KELLY O’DWYER:

Well let me tell you. I’m also Minister for Women and I talk to a lot of women. A lot of women who decide that they will take on caring responsibilities in their families and who decide to go part-time. Now men do this as well, but the majority of people who do this part-time work are in fact women and many of them grapple with this idea as to whether they work two days, three days or even more, and they’re really smart about it. They think about it. They think about what will I be able to take home in terms of my pay after tax and after I’ve…

ALICIA LOXLEY:

Well that’s a different issue isn’t it, that’s the cost of childcare rather than getting a bump to your pay.

KELLY O’DWYER:

Well that’s one the costs, it’s one of the costs, but tax is also part of it. I mean your effective tax rate is also part of that as well so with the greatest of respect to your caller, I think that there are a lot of families who have these conversations.

MARK DREYFUS:

I have to say I agree with Joseph. I don’t think there’s anyone that refuses to take on a bigger job or doesn’t work harder because of tax rates. I think that Kelly’s actually talking about a different point about work life balance, or about how you pay for childcare. Of course people make complex calculations, but the raw proposition that people don’t work harder or don’t take on a new and bigger job because tax rates I just think is dead wrong and Joseph’s right on it to raise it.

KELLY O’DWYER:

I think, it’s a fairness issue. I mean why shouldn’t you take home more of the money that you work hard for? I mean we hear a lot about… (interrupted)

MARK DREYFUS:

That’s a different proposition again.

KELLY O’DWYER:

It’s another argument in favour of these tax… (interrupted)

MARK DREYFUS:

Progressive tax rates, a progressive tax system is fairer. Australians who like a fair go have understood that for a very long time and it’s often been said that the tax system, tax is the price of a civilised society. We understand, all Australians understand, I think, that paying taxes delivers the services that make this country an excellent place to live and in no sense have we got anywhere close to prohibitive tax rates. Australia is towards the bottom end if you look at tax rates and we need to have a much bigger debate, which the Government doesn’t seem to want to have about whether in four or six years’ time we should be having these tax cuts.

And the time for that is over the next some, next years and we need to wait, as I say, to see what the state of the economy is. The Government has in no way explained why we need to be rushing to have tax cuts in four and six years’ time, in addition to a tax cut in the current year for low and middle income earners, which I say again Labor supports and stands ready to vote for right now.

KELLY O’DWYER:

But can I also say this Mark. If that is the logic that you apply to these longer term decisions, why is it that the Labor Party will commit us to expenditure way into the out years when they don’t know the state of the economy. It seems that one argument is used for expenditure, one argument is used for tax. And let me say this. It is affordable to actually have tax relief. It is affordable because we have managed the economy well. We have done that through sheer grit and determination and because we have got the right plan in place to encourage that investment to be able to create new jobs and we have seen the benefit of those new jobs being created. But we want people to be able to take home more of the pay that they earn and we think that there need to be structural changes within our tax system, that still will remain progressive, but that will provide more incentive for people.

ALICIA LOXLEY:

Okay we’ll see how it goes in the Senate. Kelly O’Dwyer, on another issue around today, the Australian Electoral Commission has announced that some name changes and one seat that will not change name is Corangamite, but it is going to almost be split in two and it seems like Corangamite might be more difficult for sitting MP Sarah Henderson to retain. Your response to that?

KELLY O’DWYER:

Well look I haven’t had the opportunity, given it’s been a very busy parliamentary sitting day, to actually look at it in great detail, but the one thing I do know about the seat of Corangamite is that they’ve got a great local member in Sarah Henderson. She is an incredibly hard worker and she’ll continue to work hard for her local community. She makes a big impact in this place both in terms of policy and on behalf of her constituents.

MARK DREYFUS:

I’m looking forward to Libby Coker being elected as Member for Corangamite, as the new Labor Member for Corangamite at the next election.

ALICIA LOXLEY:

And not Member for Cox as was proposed.

MARK DREYFUS:

It won’t be Member for Cox.

ALICIA LOXLEY:

All right let’s go to Steve in St Helena. Hi Steve.

CALLER: Hi. I just wanted to point out an anomaly with the tax system. My marginal tax rate last year was 70 per cent. I was successful in getting an increase in my salary, but because that put me over the threshold for Family Tax Benefits, I lost 70 per cent of the extra income that I earned. Now I’m a sole parent, the other thing, I’m a sole parent with three kids, so there’s no other income earner in the family.

ALICIA LOXLEY:

And so you’d be hoping these tax cuts get through?

CALLER:

Well certainly, but it’s an anomaly. Here I am, a parent of three kids and I’m taxed like single person. I’m not getting the same benefits of other families that have the ability to share their income. So of a 25 per cent increase in salary, I only got to pocket 10 per cent of that.

ALICIA LOXLEY:

Mark Dreyfus would you like to respond to that first?

MARK DREYFUS:

You’ll be voting Labor at the next election because Labor stands ready to give you a bigger, better tax and you are in that marginal group. There are always going to be people in a marginal group that are affected by a change in income as it relates to Family Tax Benefit Part A or Part B. But you should be voting Labor at the next election for a bigger and better tax cut that will apply to you and I can say that without you telling me exactly what your income is because you’ve said about your relationship between your income and Family Tax Benefit.

KELLY O’DWYER:

Well I wouldn’t presume to tell anybody how to vote, but what I would say is that the Deloitte analysis of our tax plan says that our plan cuts the relative share of tax burden on the bottom 80 per cent of the adult population and those people who are on the highest tax bracket right now, pay around about 30 per cent of all tax and with our tax plan fully implemented would pay about 36 per cent, so it’s completely false to suggest that people in the highest brackets aren’t paying a significant amount of tax, they are, it’s progressive, and I think your caller makes a pretty strong point.

ALICIA LOXLEY:

Okay I hope that answers your question Steve.