SUBJECT/S: Budget 2016;

EMMA ALBERICI: The Shadow Finance Minister, Tony Burke, joins me now.


ALBERICI: Given the substantial unfunded measures, many mentioned by the Finance Minister, measures you built into the Budget before you left government, do you concede getting the deficit down at all over the next four years was always going to be difficult?

BURKE: There’s no doubt there is a difficult task ahead. But let's not forget, when Mathias Cormann claimed spending in education and health was locked in, in their first Budget they abandoned it. In their first Budget, they abandoned $80 billion and made $80 billion worth of cuts. Having done that, they built those cuts into their trajectory; they've still ended up with this problem. It’s a bit much for him to be claiming there’s a problem with the trajectory of spending on policy issues which, from their first Budget, they completely abandoned; even though before the election they indicated bipartisan support for them.

ALBERICI: Of the $80 billion you talk about, the Government is accused of taking from the States over four years, much of that was money Labor in Government committed to things like hospital, the NDIS and Gonski, isn't it? But you didn't fund it.

BURKE: For the NDIS, the National Disability Insurance Scheme, for example, when it was produced there was a full set of savings measures, programs that would be cut to fund it and revenue measures that would be there to fund it as well. What the Government has since done, they've implemented all of them, we implemented some but the remainder they implemented in Government. They've pocketed that, taken it to consolidated revenue and said ‘look over here, the National Disability Insurance Scheme is not funded’. It was fully funded, acknowledged as such, and that was why they gave bipartisan support to it at the time.

They'll fund it if they believe in having a National Disability Insurance Scheme. But the game they've tried to play today, is to say ‘you either cut the pension or you get a National Disability Insurance Scheme’. That's the choice they are wanting to put in front of people.

ALBERICI: Will Labor support the move to address bracket creep?

BURKE: The shift in that middle tax bracket from $80,000 to $87,000, we'll be supporting. But at the $180,000 level, that tax cut of two per cent, that wasn't mentioned in the speech but was embedded in the Budget figures tonight…

ALBERICI: That wasn't a cut though, was it, given it was only ever for three years? That's the Deficit Repair Levy put on in 2014. That was only meant to be for three years?

BURKE: It was meant to lead to a very different deficit situation to where the Government has taken us three years down the track. Three years down the track, for the financial year we are about to enter, the deficit is tonight forecast at more than triple the level than what their first Budget forecast it would be. 

We can't have a situation where the only temporary tax bracket is the highest one, that automatically has some sort of shelf life and everybody else can just put up with it. We have a situation where below that you get $6 a week and three-quarters of Australians get nothing at all. At the very top end, there are very substantial tax cuts for very wealthy Australians…

ALBERICI: But there's also increased tax measures through superannuation that I'm presuming you'd support.

BURKE: They've adopted some of our policies…

ALBERICI: That taxes the very wealthy.

BURKE: Which they railed against for a year. Some of it they have adopted tonight, some of it they have come at from a different angle, which we need to work through the detail on. 

But for example, even on the $80,000-$87,000 shift, if you are a single parent on $87,000 with two high school-aged children, even once that's been factored in, because of what they've done on the Family Tax Benefit and other areas, you’ve got a $4,500 cut; you’re $4,500 worse off even after you’ve had the so-called tax benefit. At the very high levels of income, you get a tax cut. At family payments and pensioners, you just get a straight cut, not a tax cut, just a cut.

ALBERICI: When we are talking budget repair, it is important to ask the question: How is Labor going to fill the $19.5 billion hole that's suddenly emerged given your miscalculation on the proceeds of the tobacco taxes?

BURKE: I will have to take issue with the premise of that…

ALBERICI: You said it was going to raise a certain amount, it’s going to raise $19.5 billion less.

BURKE: We adopted a policy, a very specific policy framework, and we had the Parliamentary Budget Office independently cost it. The Parliamentary Budget Office used long-held Treasury assumptions for the quit rate when you…

ALBERICI: I’m sorry to interrupt you but the question was: How are you going to fill the hole?

BURKE: I’m not accepting it is a hole, but in the first instance…

ALBERICI: Are you not accepting it was going to generate an amount of money but it is $19.5 billion less?

BURKE: There’s a change of presumptions where the Government today has adopted an identical policy to Labor. They changed the presumptions and, as you know, when you change the presumptions you come out with a different number.

ALBERICI: Your figures are out $19.5 billion for whatever reason.

BURKE: What we will certainly not be doing is supporting the changes to the corporate tax rate announced tonight. We're up for a cut for small business. Over the next seven years, they redefined ‘small business’ so a business that has a turnover, not under $2 million, of up to a billion dollars turnover, will receive the small business tax rate. That is extraordinary that they proposed that tonight. There is no way…

ALBERICI: So you don't accept we should be aligning ourselves more closely to the middle of the OECD range of company tax rates which apply to all companies?

BURKE: I don't accept that companies that have a turnover of a billion dollars are small businesses. That's exactly where they've got us on the trajectory in seven years' time. A billion dollars is classified in tonight's Budget as something that will be considered eligible for a small business tax rate. If we were to develop satire on the Turnbull Government, I reckon we couldn't have come up with that one of a billion-dollar business being considered a small business.

ALBERICI: Tony Burke, thank you very much.

BURKE: Good to be back.

Tony Burke