SUBJECT/S: Paul Keating; Labor’s approach to a sustainable Budget; Superannuation Concessions; Kevin Rudd.

KIEREN GILBERT: With me this morning to discuss this and the other matters of the day, the Shadow Finance Minister, Tony Burke. Mr Burke thanks for your time. A lot made of Paul Keating’s intervention yesterday, but one thing he did say was essentially we have to trim our spending to the nature of our economy right now. Is Labor doing that sufficiently?

MANAGER OF OPPOSITION BUSINESS AND SHADOW FINANCE MINISTER, TONY BURKE: I think there’s been agreement across the Parliament for a long time. Even if you look at spending as a percentage of GDP when we were in Government, it was at a significantly lower level than what it’s at right now.

We’ve been saying you’ve got to cut the Emissions Reduction Fund; we don’t agree when the Government says there’s enough money around to reintroduce the baby-bonus; we don’t agree with throwing more than $100 million at a plebiscite. There’s a whole lot of waste the Government’s engaging in that we’re opposed to.

What we’ve said the whole way through, is it’s not only expenditure, there’s a revenue problem as well. Our argument has always been both.

GILBERT: In terms of the revenue problem, the taxes that you’ve put forward, we’ve seen more analysis today by the Parliamentary Budget Office that the tobacco excise increase, that those numbers aren’t firm. When you’re talking about an ever diminishing revenue source like that, hopefully when people give up smoking more and more, how can you actually fund things on a sustainable basis with that as one of your principle measures, the tobacco tax?

BURKE: And that’s why it’s been so important to have the measures together, not just that, but the superannuation tax concession and multinational tax avoidance. When you look at how they play out over time, you’re right, over time you get diminishing revenue from an increase in the tobacco excise for a very good reason, that’s that people quit smoking and that ends up saving you expenditure on the health end.

The change in superannuation tax concessions, that’s something which increases over time, because over time you get an increasing number of people who have those very high balances, or people who are on incomes above $250,000. So, you’ve got one measure there where over the very long term, you’re right, you get diminishing revenue, another where you get very significantly increasing revenue.

That’s why some people when they’ve criticised ‘well why do the 10 year projections?’ It’s exactly for this reason, to make sure in the long term you have a sustainable approach to the Budget, to the revenue challenge we currently have.

GILBERT: So do you say to people who argue it’s contradictory for Labor on the one hand to be talking about equity, in terms of the consumption tax, and arguing that flat out you’re not going to touch that, yet you are willing to hit the less well off when it comes to the tobacco tax? Is it a revenue measure or is it a health measure?

BURKE: Let’s make no mistake here, lower income people are more likely to smoke and are more likely to die. Both are true. This is a measure where we’ve been upfront about putting it at a level that means, yep, economically you get diminishing revenue. Why? Because you end up with fewer people smoking. Significantly, you get fewer people taking up smoking. That makes a difference in budgetary terms, you can’t deny that, at both ends. It makes a difference immediately in revenue, it also makes a difference in long term expenditure for health.

GILBERT: Ok, in terms of the superannuation plans for those higher income earners, to make it a more equitable system, there’s talk of an increase on the tax paid by people when they put money in to super. Reports today in the Australian that a super plan could hit 9.5 million savers, essentially it will have an unintended impact right across the spectrum. Is this something that Labor’s considered?

BURKE: Well what’s in the paper today is a different proposal to what we’ve put forward; quite a different proposal. We’ve brought the tax concession on contributions down from $300,000 to $250,000 in terms of how much you’re earning when you start…

GILBERT: Pay the 30 per cent?

BURKE: Yes when that kicks in. But what you’ve got the Government now considering is something that goes completely across the board. Now we’ve spent most of this term arguing the Government’s doing something different to what they said before the election. Now what they’re talking about is something completely different to what they’ve said the entire term they stood for.

Ever since we started talking about superannuation tax concessions, they launched an attack on Labor saying it’s something they would never look at, something they would never do. Now, not only are they breaking their word to the Australian people on what they said before the election, they’re doing a complete backflip on what’s been a pretty vicious attack on Labor in the Parliament and outside the Parliament until now.

GILBERT: You would welcome the fact…

BURKE: The way they’re doing it is not to go to the very large accounts or the very high income earners, what they’re looking at is having a hit across the board at everyone.

GILBERT: Well we don’t know for sure, we haven’t seen the detail yet. But in terms of…

BURKE: Well it’s odd that you get a story like that unless the Government’s doing some positioning.

GILBERT: In terms of the idea of using someone’s marginal tax rate and reducing it by 15 per cent, as opposed to the flat 15 per cent rate for all contributions, do you think there’s some merit to that idea?

BURKE: We made clear when we made our superannuation announcement, that that would be the position we would take to the election and we made clear that from the Labor Party we weren’t going to start putting forward additional ideas back and forth on that. For the very sensible reason you want industry to have a level of certainty as to what the Opposition is pushing for.

I’m not going to start floating other alternatives, only to say the level of hypocrisy from the Government on this one is extraordinary. Rather than just go after the highest income earners, there’s a hit across the board they’re looking at, that goes way beyond anything Labor contemplated.

GILBERT: Let’s just finish off on one issue. Last night Tanya Plibersek, your foreign affairs spokesperson, said Labor would support Kevin Rudd in a bid for the UN Secretary General position if he did formalise that. You and he didn’t always have great relations over the years, would you be relaxed with Kevin Rudd being supported by Labor in that post?

BURKE: Yeah of course I would be. It’s good for Australia if you have an Australian in that position. 

GILBERT: You think he’d be good in the role?

BURKE: Australia has a really good history of engagement with the United Nations. Kevin throughout his entire time in politics was known as having a very strong engagement in foreign affairs and very respected in the area. So Labor would have no problem at all supporting that.

GILBERT: Mr Burke, thanks for your time.

BURKE: Good to be back.

Tony Burke