SUNDAY, 17 MAY 2014


PETER VAN ONSELEN: Welcome back to Australian Agenda. Well Bill Shorten on Thursday night gave the Opposition’s Budget In Reply speech, there was some new ideas in the mix there. Some question marks about the ability to pay for them. We’ll discuss some of that with the Shadow finance spokesperson, Tony Burke, right now. Appreciate your company.


VAN ONSELEN: Before getting to that though, let me just ask you about some of the issues from Barnaby Joyce. You were Agriculture Minister yourself at one point in time. He was talking about a whole raft of new policies that are in the mix since the Coalition have come to power, dams amongst them. What’s Labor’s attitude federally about that?

BURKE: Federally we’ve never had a policy of no new dams. In fact the augmentation of Chaffey Dam, which he just claimed, was signed off by me…

VAN ONSELEN: He said there were more funds that went into it though. 

BURKE: Well when you’re augmenting you’re continually putting new funds in. The redesign of Meningie Lakes is something that was paused, it was paused because it was filled up, so there was a period when you couldn’t do those major works. The Tasmanian Midlands project, entirely new dams, like the Headquarters Dam as part of that project, were put in when we were there. One of the challenges on new dams, is you don’t just need lots of water, You need the right typography to be able to put it around. For example, there was a time in Opposition when Tony Abbott said, in fairness to him he backed off within about a day, where he referred to the possibility of damming the Daly River in the Northern Territory, which if you did would have put a massive area under about one foot of water. You need the right typography and the right place and then you’ve got the environmental concerns. But the concept of, if you can find the right place, is it appropriate to have dams? Some times it is, sometimes it isn’t.

VAN ONSELEN: Ok let’s move on to the Budget and more particularly the Budget In Reply speech from your Leader Bill Shorten. He had a lot of expensive ideas in there around small business, the tax cut, and around HECS adjustments as well. How are you going to pay for it? He didn’t put that detail in there.

BURKE: Well in terms of what we’ve put down for improvements to the Budget bottom line versus what we’ve put forward in that speech, across the next 10 years we’re still well in front. Well in front on that.

VAN ONSELEN: But that doesn’t include all of the things that you’ve blocked in the Senate.

BURKE: Well, let’s not forget a number of the issues that we’ve stood up against in the Senate over the last 12 months, the Government have now said they don’t believe in them either. So we’ll see - 

JUDITH SLOAN: They have replaced them, so you know, the wood will be on you won’t they? For example let’s take the pension: So, ok, they’ve, they’ve given away the idea of indexing it according to CPI but they’ve got a new proposal which is about trimming the taper rate, bringing down the asset test.

BURKE: A new proposal which we haven’t ruled out. I don’t think it’s fair to say that we’ve blocked that -  

SLOAN: Ok, ok, are you ruling it in?

BURKE: Well we haven’t seen the legislation - 

SLOAN: Ok, so you’re quite favourable to that?

BURKE: If I can answer. We haven’t seen the legislation, when you’re dealing with something as complex as taper rates on the pension, you want to make sure you get the detail on the modelling right. We’re working through that, but - 

PAUL KELLY: We have seen the policy. I know we haven’t seen the legislation, but we have got the policy details and Labor has said very little, what’s the inclination of the Party on this issue?

BURKE: We’re looking at the detail on it. On anything where we’ve looked at something and we’ve had an immediate ‘there’s no way we would support that,’ we’ve stood up and said so. Where something has clearly been, such as the small business package, something where there’s an immediate impact on confidence and for us to be standing back could have an immediate on the way that unfolds within the economy, we’ve taken a stand on that as well. On something like this, there is no harm done to the economy or anyone in having a methodical way of seeing how it unfolds.

SLOAN: Isn’t it confusing? I mean because Jenny Macklin has said that she regards the Age Pension system as entirely sustainable. So, you know, wouldn’t people therefore be led to believe you would’t countenance this change because why would you alter something that you regard as completely sustainable?

BURKE: Well something does’t have to be unsustainable to be able to be improved. I don’t think there’s - 

SLOAN:  But it’s being made less generous.

BURKE: I don’t think there’s any problem at all with an Opposition being methodical and calm in working through detail.

KELLY: Can I just ask, how concerned are you about 320,000 people will be worse off?

BURKE: We are working through the detail to determine exactly the extent of that, exactly who those people are. Similarly, in last Budget, there were measures in there in the family tax benefit system where the taper rate, where it finally shut out, went from $150,000 down to a $100,000. That meant some people were worse off, we still backed in that measure. So, you know, you need to get the modelling done, NATSEM does work on this, there’s a number of agencies that do work on this. If it is a sensible part of reform then we have already shown we are willing to be part of it.

VAN ONSELEN: Can I ask you about the small business tax cut idea, bringing it down from 30 cents to 25 cents. I’m interested in that vis-a-vis the overall company tax rate. The Government have said they’ll bring it down by 1.5 per cent, there’s been some criticism of potential complexities, but their ultimate goal is to then match that with another 1.5 per cent cut for big business. Presumably Labor is prepared to just have a long term different rate between small and big business because that complexity will be baked in. You can’t deliver a 25 per cent income tax, sorry I should say company tax, rate for big business?

BURKE: Not in the foreseeable future. I think if you talk to people in the small business sector, I’ve grown up in a small business family, many people on both sides of politics have had a lifelong engagement with it, there has for a long time been a view that there are a number of deductions, ways of structuring that are available to big business that are effectively not available to small business. I don’t think you’ll end up with a situation seeing very large corporations saying ‘let’s turn ourselves into a collection of small businesses.’ I don’t think you end up with - 

SLOAN: Well, but hang on, I don’t think you’ll get a sensible economist who would recommend what is effectively a progressive company tax scale. We had a progressive company tax scale many, many, many years ago. It did create exactly that problem that because you’re, you know, ending up, and the trouble for you I think is this: If it’s 1.5 percentage points and there are transaction costs in splitting yourself up, you mightn’t bother. You could bother for five percentage points and so, I mean, I just wonder whether for the use of money, because there’s a lot of revenue foregone potentially in this, you could have actually done a whole lot better by just bringing the whole company tax cut down. 

BURKE: At the moment what we’ve said is this is something we believe would have a significant impact on confidence. We’ve given a genuine bipartisan hand across to the Government in saying ‘let’s work together on the details and the progress as to how this might be able to work.'

VAN ONSELEN: So it’s not a costed policy it’s a sort of aspirational goal?

BURKE: Yeah, and we haven’t - there were issues in the Budget Reply that were specific costed policies. This was not of that ilk, but at this point in the cycle there is nothing wrong at all with an Opposition saying - 

VAN ONSELEN: But hang on, I’m going to jump in on that. At this point in the cycle, a lot of people within the Labor Party, at very senior levels, think that this point in the cycle is literally months away from an early election. 

BURKE: Well that’s Tony Abbott’s decision not ours. At this point in the cycle there is nothing wrong, and one of the problems in politics is we often don’t do this on either side of politics, you define the problem, you start to set out where you’d like to get to and then you get to the point of costed policies. Now - 

KELLY: Ok well I think the issue here is, is this serious or is this just a stunt? Now is Labor actually proposing, as a policy, that it will take this to the next election or is the whole thing dependent on bipartisanship?

BURKE: The best example on this, I hope we get the bipartisanship and I hope we don’t have to deal with the flip side of that. Let me give you the example of what happened on superannuation tax concessions, because on that one we had this exact scenario. Where the Government agreed with us that something needed to be done about it and the Government claimed they were wanting us to work with them, that was the appeal that came across the table from the Government in that instance - 

KELLY: We understand that issue.

BURKE: We then, when bipartisanship collapsed, went forward and put forward our own policy, which the Government has now ruled out. 

KELLY: Ok, so will you repeat that sort of process, that is, is the issue here that nothing will happen unless it’s bipartisan or is this 25 per cent commitment a serious policy commitment by Labor that it will end up taking to the next election?

BURKE: Right at this point in time we’ve put our hand across the table with the offer of bipartisanship. That’s where we’re at. That’s where we’re at, that’s exactly what Bill - 

KELLY: So it’s no more than at that stage? It’s going to be very hard for Labor to walk away from this now surely. I mean you’ve put it up there is lights. Bill Shorten has invited people to say he is mister 25 per cent on small business rates. I don’t see how he walks away from it. 

BURKE: And at the moment, right now, we’re at the beginning of the conversation about it, where Bill Shorten has said ‘this is where we want to get to,’ put a genuine offer of bipartisanship to the Government. If you start offering every permutation of the moment the bipartisanship becomes very hollow very quickly. A genuine offer of bipartisanship means you put that forward, this is where we’d like to get to and see if the Government’s willing to come to the table.

KELLY: You can’t be serious on this offer surely? Just given the history of politics in the last twelve months. I mean - 

VAN ONSELEN: You can’t be serious on expected bipartisanship?

BURKE: Well there have been issues which have been bipartisan and I’ve got to say, many people questioned whether we would get the full sensible cooperation of bipartisanship on the national security issues we’ve seen during the course of this term.

KELLY: Sure. 

BURKE: Many people said we should not be trusting that the Government would deal with us sensibly on those issues and those people who doubted that have been proved wrong.

VAN ONSELEN: This is a marker of your confidence in the sensibility of the Government?

BURKE: It’s a marker of the importance of the issue. We’d like to be able to get there. We have in good faith put that offer to the Government.

VAN ONSELEN: Welcome back, you’re watching Australian Agenda, where Judith Sloan, Paul Kelly and I are speaking to the shadow finance spokesperson Tony Burke. Tony let me ask you about the HECS announcement in Bill Shorten’s speech, where there would be sort of exemptions from it for certain classifications of study. Would that only be if you’re doing a degree in science or maths? Or could you do an arts degree and have a major or a minor in maths, for example, and those elements of it are not HECS based?

BURKE: And you’ll see that the policy is based on working with the universities on this. The costings are done though on the basis that you’re dealing with HECS based courses. One of the confusions that Christopher Pyne fell into where he’s wanting to argue the costings, was he forgot, apparently, the way HECS is budgeted is on a slow repayment of the debt rather than everything happening at the end of your degree, and basically confusing the fiscal balance with underlying cash terms. So it’s been budgeted on the basis of HECS repayments.

VAN ONSELEN: Ok but in terms of eligibility though for it, it’s only the courses that fall into that band, as opposed to cherry-picking in one degree from elements of other degrees? 

BURKE: When you get right down to that level that’s something that would be worked through with the universities - 

SLOAN: Which they’ll game. I mean, part of the trouble is, you know STEM, which is kind of the new black isn’t it, in the Labor circles? So, Science, technology, engineering and maths, particularly in the case of technology and maths, that’s not what degrees are called, that’s not how they’re classified in the bands, the HECS bands. You’re in quite a lot of trouble I think in terms of operationalising this. I mean it’s all very well saying you’ll go to the universities, the universities will want to be calling everything STEM. And as I also understand it, it’s not going to be all STEM graduates who have their debt forgiven, it’s only going to be some. So how do you make that decision? That strikes me as being a complicated and quite potentially conflicted part of this policy for people. 

BURKE: This is precisely why you don’t announce full criteria on the night of the announcement and is something you would work through with the universities - 

SLOAN: But is that really a good idea?

BURKE: Absolutely.

SLOAN: But you had a version of this which you dumped because it didn’t work. You had a kind of, you put these kinds of students into a lower HECS band, and our Government itself dumped it because it wasn’t effective at encouraging enrolments. 

BURKE: And there is a distinction between a lower HECS band and an elimination of a debt - 

SLOAN: Ok so one’s a subsidy and now it’s just free?

BURKE: In terms of the difference and in terms of would one have a bigger impact on incentivising? I think it’s impossible to argue otherwise.

SLOAN: But you’re doing nursing, if you’re doing teaching or stuff, aren’t you going to think ‘but look I’m worthy, I’m doing something that is a public good, why isn’t my HECS debt being forgiven?’

BURKE: The reason why we’ve chosen this particular area, Australia’s economy is in a very significant transition at the moment and you can either ignore the transition and presume current demand is all we’ll ever have, or try to work out where Australia is heading next.

VAN ONSELEN: Can I ask you on that, the exact transition that’s happening, certainly in Western Australia, engineers are being laid off - 


VAN ONSELEN: Studying engineering in the wake of the end of the mining boom may not necessarily be the way to go. People might choose to do it, if it’s HECS exempt. 

BURKE: And you’re talking there about one particular part of the country where there is a particular demand for a specific form of engineering as well...

SLOAN: That’s not true Tony, engineers all over the country are finding it very difficult. In fact, if you look at Andrew Norton’s work, who’s probably the most credible higher education commentator in this country, the employment outcomes for STEM graduates are extremely bad. High unemployment, high underemployment, poor wages. Yet you’re saying we need a whole lot more to transform the economy. I just don’t know who’s got in your ear about this stuff, you know?

BURKE: When you’re dealing with the transition that’s happening in the economy right now, you’ve had a massive decrease in investment and start-up stages of new mining investment, that’s true. But to look at the next phase of where the Australian economy needs to head, we believe growth will be in these areas.

KELLY: Can I just change the focus? Isn’t it divisive and unfair for Labor to support the idea of two classes of mother in this country? One class having access to two schemes, and the other class, usually less well-off, only having access to one?

BURKE: That’s pretty much how the Government has chosen to frame the issue and that’s how the public debate has - 

KELLY: Well is that...

BURKE: No, I think that that’s - 

KELLY: Is that fair or not?

BURKE: I think it’s a fair way to start the conversation. The way we view it is this: there is a Government scheme available to everybody. Some employees are in situations where they have negotiated with their employer to be able to get additional benefits. In those negotiations they have given up other things to be able to get that as part of their agreement. In doing so...

SLOAN: Tony that’s not true with the public servants, it’s in legislation, it’s been in legislation since 1972, they never gave anything up. So most of the double dippers, dare I use that word, are public servants. They didn’t give anything up.

BURKE: When it was first instituted, every employment condition becomes part of each negotiation on where you’re at, and you’ve written extensively on the right of employees and employers to be able to bargain effectively.

SLOAN: Of course...

BURKE: You write that it should be much more liberal than it currently is - 

SLOAN: You don’t get a Government hand out too.

BURKE: Effectively what this change does is take away any impetus for an employee and an employer to be able to bargain for better paid parental leave. And what will be the outcome of that? It’s not just bad in terms of flexibility in the workplace and the impact on those women, it also doesn’t deliver what the Government is claiming it will in the Budget. Because what will employers then do? If they’re offering a benefit that the Government says ‘well if you offer it, we’ll just take it away at the other end,’ it won’t be offered and the taxpayer will end up paying the money anyway.

SLOAN: But hang on, you said with the pensions, you’ve got to do the modelling. In fact most employer-provided schemes are way, way generous, way more generous. You take public servants, they get 14 to 18, earnings related pay... 

VAN ONSELEN: Why not exclude public servants and show that Labor is the party of business and actually continue to allow the double dipping at the business, at the private sector level? That’s something the Government’s not doing, they are being perhaps quite rightly criticised for. 

BURKE: The simple outcome of this will be that new mums get to spend less time with a newborn child. Now when the language of public servants is being used, we have to remember we’re also talking about nurses, about members of the Australian Defence Force, about members of the Australian Federal Police. I think the community support the Government thought they would have when they first started using the language of ‘double dipping’ was badly, badly misplaced.

VAN ONSELEN: So Labor’s not for turning on this issue?

BURKE: Absolutely not, this is - 

SLOAN: No one’s taking away those benefits...

BURKE: …one of the few issues... 

SLOAN: …from teachers or nurses or federal police, I mean that’s the point, the Government can control those things. So why is it fair, going back to Paul’s point, that one group of women do very very well. You know, they get up to $50,000 a year in paid parental leave scheme and you think, the Labor Party, which is all about fairness, think it’s fine for another group of young mothers to get $11,500, and that’s just fine by you. 

BURKE: You just said that no one’s taking away their benefits, that’s wrong. That’s what this entire conversation is about. It’s about a reduction in benefits.

SLOAN: In the public sector, it’s in legislation, you’re going to support the change to legislation?

BURKE: No, are you saying that those people in the public service will get no reduction in total benefits?

SLOAN: Yes. Well, they will because they will lose, quite rightly, the Government hand out. It’s a bit like being on sick leave paid by your employer, and also getting the disability support pension.

BURKE: No, it’s more like - 

SLOAN: No one would agree with that Tony.

BURKE: Can I give you a different parallel? People who are earning money and who are also receiving family tax benefits. Now they receive a payment from the Government to support their family, they earn a wage to support their family. The taxpayer is fine with that, fine with receiving two sorts of income for the same purpose – 

SLOAN: But all people here in the same category get treated the same. This is two groups of mothers. I’m telling you what, there is some anger for people who only get the minimum to see their sisters be able to top up on extremely generous employer payments and you think it’s fine for this quite substantial group, about 40 per cent of the paid parental leave recipients, only get $11,500 and you think that’s fine.

BURKE: We - 

SLOAN: Well you obviously don’t.

BURKE: If you let me answer, I’d love to. When this benefit was introduced, it was introduced by Labor. It was introduced where previously there was nothing. It was introduced publicly as this is additional to what people might have already negotiated.

SLOAN: Yeah because your union mates wanted that.

BURKE: I beg your pardon, don’t start trying to imply motivation. When we did the right thing to try to make sure that women were able to spend more time, if they chose to, with their newborn baby, to try to redress that in the way you have, I just think is the way of trying to make the argument shallow. This makes a real difference to how much women are able to spend with a newborn child.

VAN ONSELEN: We are out of time, so we’ll have to continue the debate off camera after our talk with Tony Burke. We appreciate your time on the program, thanks very much. 

Tony Burke