SUBJECT/S: Budget 2015

CHRIS HAMMER: Tony Burke is the Shadow Finance Minister, he is also Manager of Opposition Business in the House of Representatives, which means he’s a key part of Labor’s strategy team. Good morning Tony.


HAMMER: It’s a couple of days now since the Budget and that vast amount of detail has been boiled down to a few points. Let me see if I’ve got Labor’s sort-of strategy right if you like. Let me run it past you and you tell me where I’m wrong, ok?

The big issues that Labor’s taken issue with is the paid parental leave scheme and the Government’s attack on the so-called double dipping. Child care: Labor’s generally supportive but not supportive of funding it out of getting rid of Family Tax Benefit B. Then there’s a whole lot of issues still left over from last year’s budget as well.

Are they where the major battle lines are drawn, do you think?

URKE: That’s right. There’s a degree of bipartisanship over the small business changes and from reports today the first reaction in the community appears to be largely good to them. It’s good that they’ve been put largely beyond politics. Obviously with any of these issues you’ve got to make sure that the final legislation matches what the Government says it’ll be, but you work on the basis that that will probably go through very smoothly and that gives a bit of confidence to the economy knowing both sides of politics are on the same track. Realistically the small business measures were not that different to measures that Labor had in place and the Government abolished twelve months ago. It wasn’t a difficult one for us to say we were going to, you know, be heading in that direction.

In terms of the battle lines, absolutely right. The childcare package we’re working through the detail as more comes to us, but the very strong objection is for that to be linked to Budget cuts, that hit families in the order of up to $6,000 a year, from last year’s budget. This is where, while the reporting understandably goes to what the new issues are, this Budget still contains the elements of what has not yet gone through from last year. So the $100,000 degrees is still there on the table, the $80 billion worth of cuts to schools and hospitals is still there on the table, and those horrendous cuts to family payments are still very much part of what’s in front of us now.

HAMMER: So the fairness test is still relevant?

BURKE: Oh absolutely, and that’s why we’ve objected so strongly to what the Government’s wanting to do on paid parental leave. The first reaction is just the hypocrisy of it, where these schemes we were told were hopelessly inadequate for four or five years, were hopelessly inadequate, we’re now being told by the Government ‘oh no, that’s not the problem, the problem is they’re ridiculously generous’.

Then when you peg down the paid parental leave scheme: What impact will it have on the Budget? Secondly, what impact will it have on people’s lives? I’ll deal with the Budget part of it first: Business has already come out and said ‘well if they’re already offering an extra benefit and the impact of offering the benefit is just the Government’s going to take another benefit away,’ they’ll stop offering it. Now if that happens these individuals fall back on the Government benefit anyway and the savings the Government’s claiming they’ll get fall away very very quickly.

The second thing is, how does this impact someone who’s about to be a mum, who has thought they’d negotiated something entirely within a legal entitlement? What’s happened is, Labor established paid parental leave which was meant to be able to provide women with in the order of up to 18 weeks. A large number of workplaces, not just the public sector, it is public sector in terms of nurses but there’s also private sector places like Woolworths, like Westpac, where employees have said ‘we’d like to have the option of being able to spend more than 18 weeks with a newborn child,’ and have negotiated for those extra weeks and have given up pay rises and other things to be able to get it.

The Government is now saying to them ‘well, you might have made that sacrifice but we are going to accuse you of rorting, of being involved in fraud, of double dipping.’ These accusations get made when all someone has done is legally negotiated to be able to spend more than 18 weeks with a newborn child.

HAMMER: Doesn’t the Government have a point saying to one group of workers, say the ones in small business whose award doesn't provide paid parental leave, ‘Hey you guys are worse off. There are all these public servants and the Commonwealth is paying them twice.’ This is the argument they’re presenting. That they get the, under the award, they get paid parental leave from the Commonwealth and then they also access the Commonwealth scheme. So you guys over here working for small business, you’re being left out. It’s a pretty potent political argument, isn’t it?

BURKE: Well let’s not forget, both sides of politics used to support employees being able to negotiate better deals with their employers. We’ve always supported it being done collectively through enterprise agreements. The Government used to say that you could do this entirely on an individual basis. That used to be their position. They used to believe it was good if an employee and an employer can agree on a better set of positions.

What they’re saying now is somehow that’s hopelessly unfair. If somebody has been involved in these negotiations and has got themselves a deal which means, through an enterprise agreement, they get to spend additional time with a newborn child, they have given up their entitlements on the way through. They will have given up things on penalty rates, they will have made, given up things in terms of wage rises, there are other sacrifices they’ve made to prioritise this. So a straight comparison with the award, you can’t only compare the things that are favourable. In a full negotiation that will have given the employer different parts of flexibility, but the employee has said ‘well, this is the bit I get.’ This Government says ‘we’ll bank all the things the employee has given up, but the extra time you thought you were going to get with your children? Not only are we going to take that away, we will ridicule you, humiliate you and blame you for taking that and use terms like fraud, rort, to describe what up until now had been seen as a common sense negotiation.’

HAMMER: I think you’d have to agree the Government has been more politically savvy with this Budget than it was with the previous one –

BURKE: Of all benchmarks.

HAMMER: That’s right. It’s clearly been more consultative, particularly with the Senate crossbenchers this time. I wouldn’t be surprised if Labor wasn’t also talking to them to see where do you think the Senate is moving on these issues, that you’ve agreed are the kind-of battle lines?

BURKE: I’ve had a rule my entire time in politics. When I was very briefly in a State Parliament I was in the Upper House and I learnt the rule then: members of the Lower House saying what an Upper House will do, doesn’t help make it happen. For the Senate cross bench, up to them to work through the issues and they’ll do that and they’ll come to their own conclusions. What we are in charge of is making it clear where Labor stands on these issues and voting accordingly.

Now, for the Labor party, the issues that don’t pass the fairness test? We don’t support. It’s as simple as that. The challenge the Government have in this is the Government are now effectively arguing, because they’re blowing out the deficit, the deficit’s doubled from where it was a year ago and that’s entirely on their own watch. The Government’s effectively now –

HAMMER: So is that now another battle line then, economic management? Something that the Coalition is usually in polls, you know, seen as being a better economic manager than Labor? Is that something you’re going to take up to them?

BURKE: There’s no doubt, this Government can’t spend years arguing that there’s a debt and deficit crisis then when the deficit doubles on their own watch say ‘Oh no, there’s not a problem with that.’ They have to have two tests: They have to be tested by their own rules and they have to be tested by the principles that we put forward.

Now under their own rules, they’re breaking all of them. What they viewed as the test of economic credibility is shot to pieces. Debt’s up, taxes are up, spending’s up, the deficit’s up and unemployment’s going up as well. So on all the issues that they might have thought were the key tests for economic credibility that they’ve put forward, they’ve failed on all of them. Effectively they’re now engaging in a strategy where they’re borrowing money because they think it’ll help grow the economy. The exact strategy that was, that principle is what guided us through the Global Financial Crisis and they thought was an outrage.

HAMMER: So you’d support it then? It is good policy at least in the short term?

BURKE: Well this is where if you only look at the fiscal part of it and the sense of growth, and that’s the test that they put forward. The next test though is, when you’re trying to raise your extra revenue, where do you go? Do you go to the people who can least afford it or do you go to the people who can most afford it? So, for example, when it comes to the measures to improve the Budget bottom line, last Budget, we supported more than $20 billion worth of measures through the Parliament that would help improve the budget bottom line. We’ve since put forward another two major policies, one on multinational tax avoidance, the other on high income superannuation, which improve the budget bottom line over ten years by a further $20 billion. Now they’ve ruled both those changes out.

Instead they’re saying ‘well if you want the childcare package you’ve got to hurt the family income by in the order of $6,000 a year.’ That wrecks the fairness test, doesn’t pass the fairness test for one minute. Not only that, they have said ‘well with multinational tax avoidance they’ll go their own way.’ How much does that help improve the Budget bottom line? In the Budget papers there’s an asterisk, they haven’t even got a number for their idea. That just shows how they’ve rushed it through.

On superannuation they have ruled out making any changes in this area. As superannuation tax concessions get closer and closer to being the value of the Aged Pension, we have to be able to say, when you’re talking retirement incomes, ‘why can’t we have a situation where people who earn more than $250,000 a year are given less of their money back from the Government through superannuation tax concessions to an extent that are simply not available to people on lower incomes?’

HAMMER: Tony Burke, thanks for your time today.

BURKE: Great to be here.

Tony Burke