SUBJECT/S: Independent PBO Costing Of Tobacco Excise; Abbott-Turnbull Policies; The 2016-17 Abbott-Turnbull Budget; Labor’s Climate Change Action Plan.

FRAN KELLY: The Shadow Finance Minister, Tony Burke, is in our Parliament House studios. Tony Burke, welcome back to Breakfast.


KELLY: You heard Mathias Cormann; a $19.5 billion dollar funding hole in your costings, what does that do to your credibility?

BURKE: Not a bad attempt from the Government to deflect attention from the fact they've adopted Labor's policy. When you change the assumptions, which happens all the time with budgets, you'll end up with a variation in the costings. When the Parliamentary Budget Office independently costed Labor's policy, they were using long-held Treasury assumptions. Now, if those assumptions have now changed, it can presumably only be because they're assuming the policy will be more successful and the quit rate from smoking will be faster. If you presume that, you end up with less revenue, you end up with fewer people smoking and better health outcomes.

KELLY: We've never seen Labor's costings, you haven’t released them. Mathias Cormann says Labor should come clean. What assumptions did you use and do you accept now they were wrong?

BURKE: We used the long-held Treasury assumptions that had previously been used. Those were the assumptions determined by the Parliamentary Budget Office and they go through to previous assumptions used by Treasury. That’s what was done there.

Can I make clear here Fran, in the first instance, from the 2014 Budget to the 2015 Budget, what the Government projected to gain through company tax revenue, the next Budget was $21.5 billion less. That doesn't mean there is a $21 billion black hole. It simply means the presumptions were updated, that's exactly what's happened here. But more than that, if you look at the fact - I know in your intro you said this is specifically relevant to education, but I've got to say on that, we have never linked specific revenue measures to specific expenditure items.

KELLY: Ok, I’ll come back to that in a minute. I just want to stay on this because I think people will be confused now. Are you prepared to say now, Treasury's latest figures are more reliable than the figures the Parliamentary Budget Office had used when Labor got their figures? Are you happy now to revise down your revenue predictions from this tax?

BURKE: Chris Bowen has made it clear. Wherever there's an updated set of assumptions, then you adjust your figures as a result of that.

KELLY: Labor's happy to say this tax will raise closer to $29 billion than $47 billion, which means you will have close to $20 billion less to spend on election promises including on your promise of a $37 billion funding plan, extra money, for schools?

BURKE: And if you go through the commitments Labor has so far announced, we were already well south of even that revised figure. We have already more than the improvements to the Budget bottom line to pay for everything we have put forward. For anyone to claim education, or any part of our spending commitments, is unfunded, is simply wrong; factually wrong. You can't have a situation where a larger revenue figure can't pay for a smaller expenditure figure.

KELLY: If I can just rephrase what you're saying, you're basically saying Labor has publicly already identified savings and new revenue measures of around $100 billion and your funding promises, including your Gonski funding to schools, hasn't added up to 100? Is that what you’re saying?

BURKE: Nowhere near it. The Government's wanted to claim somehow it's unfunded. Well sorry, $100 billion, they want to claim $80 billion – there will be different figures as well, where the costings of some of our other revenue items may well go up, may well shift, as will happen with the Government, as happens every Budget, every MYEFO when assumptions change. But our expenditure is so far below the improvements to the Budget bottom line, the claim anything is unfunded is purely fictitious.

KELLY: How much help to you is that when everyone's - we're just days from the start of an election campaign, people are starting to tune in, are you worried this claim there's a $20 billion funding hole in Labor's promises so far, will damage your reputation for economic management? The front page of one of the national papers today: "Funds for Gonski up in smoke." Are you worried that will hurt your credibility?

BURKE: Well, one of the newspapers today has Chris Bowen explaining precisely how the change in assumptions looks like it's been made and then two sentences later claims Chris Bowen offered no explanation…

KELLY: A lot of people just look at the headlines.

BURKE: Fran, please allow me to finish. We're not in charge of what gets written in newspapers. We are in charge of doing what no Opposition in living memory has done, and that's to make sure we put forward the improvements to the Budget bottom line well in advance of putting forward any of the expenditure. We've kept that Budget rule rigidly.

What will change tonight though, is we will be looking at a Government that has all the wrong priorities. The Government tonight is ignoring the concept of there being a revenue problem, ignoring the warnings to the AAA credit rating and saying they don't have enough money to properly fund Medicare, they don't have enough money to properly fund pensions or family payments, but they do have enough money for people on the highest incomes in Australia to get a tax cut. Those sorts of priorities the Government's tried to deflect from today, but those sorts of priorities will be well and truly front of mind in this election campaign.

KELLY: You're listening to RN breakfast. Our guest is Shadow Finance Minister, Tony Burke. It’s 7:45am.

What will happen tonight - you're saying the government has all the wrong priorities – actually millions of small and medium businesses and sole traders will get a tax cut. They're going to think that's a pretty good priority, aren't they?

BURKE: We’ll wait we’ve seen the precise detail before we give our position on it. But we know, on income tax, the one group scheduled to get a definite tax cut are people earning $180,000 more. There's an article in the papers…

KELLY: Are you talking about the removal of the high-income earners.

BURKE: That's exactly right. You end up with a situation where, for an ordinary family on family payments, they get a cut of $5,000 a year, but for someone earning $300,000, they get half that, $2,600, as a tax cut. So you get an income cut for people on the lowest, a cut to their family payments, but for people earning $300,000 a year, they get a tax cut of $2,600. Those priorities are all wrong but they are what is in black and white in the Budget tonight.

KELLY: But a whole lot of people who aren't the richest in Australia, I go back to small and medium businesses, people running those businesses, which are big employers in Australia and a whole lot of people earning around $80,000, about to bump up into the next tax bracket, it looks like they'll get a small tax cut to stop that happening. These are not the richest people in Australia. Will Labor support those tax cuts?

BURKE: As I’ve just said, we'll wait until we see the final detail in tonight’s lock-up. I think it’s fair to say, the speculation over the last few months of what might or might not be in this Budget, various ideas have only lasted 24 hours, different thought bubbles and lack of direction has been the chaotic process of this Government in developing the Budget.

I think you can forgive us for waiting to see the detail on some of those measures. The tax cut we are sure of, is for people earning $180,000 or more, and on that, at the same time they're cutting family payments for ordinary households. That is an extraordinary example of all the priorities being wrong. How can the Government claim they’re being serious, being careful with the money, if the people who need help the least are the ones who get it.

KELLY: Can I just ask you finally, on another policy of yours. The Guardian website today says economist Danny Price says your proposal for an ETS in the electricity sector could lead to higher power prices; as high as an initial hit of 25 per cent in one state. Is he right?

BURKE: Well, that article also says he’s the person who designed the Coalition’s policy -

KELLY: Doesn’t make him wrong though.

BURKE: It also quotes Reputex, it quotes the Australian Energy Regulator, it quotes a series of independent bodies saying that those figures are just wrong.

KELLY: Alright, Tony Burke, thanks very much for joining us.

BURKE: Always good to be back.

Tony Burke