Doorstop interview: Labor’s Pensioner Guarantee; dividend imputation

BILL SHORTEN, LEADER OF THE OPPOSITION: Good morning everybody. Two weeks ago Chris Bowen and I announced that this nation cannot afford to maintain the unsustainable tax loophole of paying $8 billion to mainly wealthy individuals for paying no income tax. A tax refund when you've paid no tax. And Labor is committed to reviewing this loophole because the nation simply cannot afford it. 
 
The nation cannot afford to pay out billions of dollars in income tax refunds to people who pay no income tax, especially at a time when waiting lists in hospitals are getting longer, when our schools are in desperate need of greater funding, and of course when working and middle class Australians need tax relief themselves directly. 

 

But I also made clear two weeks ago that pensioners will always be protected under a Labor Government, and so today I'm pleased to make good on that statement. 

 

Today I am pleased to announce that Labor will protect all pensioners from the changes to dividend imputation policy. We are calling this our Pensioner Guarantee. No pensioner will be affected, or every pensioner will be protected, by and from our dividend imputation changes. Labor is the party of the fair go and we're the party of the fair go for our pensioners. That's why I'm pleased, with Jenny Macklin and Chris Bowen, to be announcing our Pensioner Guarantee today. 

 

In light of our Pensioner Guarantee, we now think it is time for Mr Turnbull to adopt the rest of our policy, which is highly targeted and ensures that we can find the necessary money in our budget going forward to properly fund our schools and hospitals, to properly ensure that we can provide support for middle and working class Australians in terms of the tax system.

 

Today Labor makes a good policy even better. I'd like to hand over to Chris Bowen to talk further about our Pensioner Guarantee.

 

CHRIS BOWEN, SHADOW TREASURER: Thanks very much, Bill. Today what we're announcing takes a progressive tax policy and makes it even more progressive. We know under our announcement, 80 per cent of the benefit of excess imputation credits go to the 20 per cent of wealthiest households, and today our policy makes it even clearer, even more progressive, that the benefit of the policy will come from Australia's wealthiest households. 

 

After the announcement of the Pensioner Guarantee, we're removing 300,000 pensioners and income support recipients from the measure to make it even more progressive. Every recipient of an Australian Government pension or allowance with individual shareholdings will still be able to benefit from cash refunds. This includes individuals receiving the age pension, disability support pension, the carer payment, parenting payment, Newstart and sickness allowance. That's 232,000 part-pensioners, 45,000 full-rate pensioners, and 29,000 other income support recipients. 

 

In addition, self-managed super funds with at least one pensioner or allowance recipient before the 28th of March 2018 will be exempt from the changes. That means 13,000 self-managed super funds, 11,000 part-pensioner and 2000 other income support recipients. 

 Now, Labor's policy will improve the budget position by $10.7 billion over the forward estimates, $55.7 billion over the medium term - that's the key point. The policy integrity of the Labor's announcement is very clear, 94 per cent of the revenue created is protected even though we're exempting around 25 per cent of the people affected, which just underlines how progressive this policy was to start with, and how even more progressive it is today. 

 

Labor makes the big decisions with the courage to do so up front from opposition with plenty of time for them to be debated between now and the next election. And as Bill said, Malcolm Turnbull and Scott Morrison have nowhere to hide. They've been running around with their scare campaign trying to scare Australian pensioners, well now they stand exposed as defending this tax concession, which goes overwhelmingly to Australia's wealthiest households, with no alibi about pensioners, no alibi for their lack of willingness to take on this tax concession. And I will conclude with remarks from Ian Yates this morning, from the Council of Ageing, who welcomed our announcement and said that: the principal tax concessions on superannuation are still too generous for higher income, high asset people, still also giving them concessions through cash refunds or franking credits above offsetting taxation obligations, which is not justifiable. 

 

The federal budget. he went on to say, cannot afford to continue to forego revenue by giving concessions and tax breaks to people who are well off and who don't need more money to live comfortably when there are so many real needs not being met in our community. And as Bill has outlined, Labor will have plenty more to say about our priorities going into the election, we will also have plenty more to say about our responsible fiscal and budget management.

 

The Government has thrown budget management out the window, no longer cares about the deficit, are willing to give away $65 billion in corporate tax cuts - which Bill will say more about in a moment, and also refusing to deal with unsustainable, unfair tax concessions in our budget.

 

Jenny will say a few words and then Bill will say something about corporate tax.

 

JENNY MACKLIN, SHADOW MINISTER FOR FAMILIES & SOCIAL SERVICES: Thanks very much Chris and Bill. Well, what this Pensioner Guarantee demonstrates is that Labor is the party for pensioners. Labor will always give pensioners a fair go. By contrast you would have to say this Liberal Government is addicted to cutting the pension. Addicted to cutting the pension in every single budget that Mr Abbott and Mr Turnbull have been responsible for over the last four years. Whether it was trying to cut the indexation of the pension, taking more than $1 billion out of pensioner concessions, refusing to adjust the deeming rates. Right now, of course, there is legislation in the Parliament that would take away the energy supplement, a $14 a fortnight cut to a single pensioner, these are serious cuts to the pension that are in the Parliament right now. 

 

And the big one that the Government doesn't want anybody to talk about, but millions of Australians are worried about, is that this government wants to increase the age pension age to 70. Now that would give us one of the oldest age pension ages in the developed world. Australians don't support it. This government has the savings from the increase to the age pension age in its budget. It should either bring it on for debate or take it out of the budget.

 

But nothing more demonstrates this government's attitude to pensioners, their addiction to cutting the pension, than each of these changes that they've legislated, or tried to legislate, over the last four years. 

 

Labor's Pensioner Guarantee will make sure that pensioners in Australia are not affected by this very, very important change. Labor will always stand up for pensioners and we're very proud to do so. 

 

SHORTEN: Thanks, everybody. And just before we go to questions on our Pensioner Guarantee, I just want to make this clear about the corporate tax cut legislation in the Senate, the $65 billion corporate tax giveaway of the Turnbull Government. 

 

Labor, regardless of what legislation is passed this week, Labor will repeal this corporate tax giveaway of $65 billion to the biggest companies in Australia, the banks and the multinationals.

In terms of the earlier corporate tax legislation, which has already been passed prior to this week, Labor will consider its final position on that in the context of the information we receive in the budget. But I want to make very clear to the crossbench Senators and to Australians, Labor does not support giving away $65 billion to the top end of town in corporate tax giveaways. And the fact that the secret Business Council of Australia survey reveals that fewer than one in five CEOs intends to contemplate even passing some of the corporate tax cut in higher wages, just shows what a lie this whole corporate tax policy is built upon.

Happy to take questions.

 

JOURNALIST: Mr Shorten, just on the company tax, is your message to business therefore that should these measures pass the Senate this week or soon after, not to make any investment decisions until the election?

 

SHORTEN: No, not at all.

 

JOURNALIST: Not to make any investment decisions based on the lower tax rate?

SHORTEN: First of all, the corporate tax cuts that are proposed this week don't come into effect until after the next election.

 

JOURNALIST: But I'm talking long term, you know, make a long term investment decision –

 

SHORTEN: What we would say, is have a look at Labor's Australian Investment Guarantee. We're proposing a highly targeted support package for corporations to invest in new technologies, and new plant and equipment. Labor's proposing to increase the depreciation rate by 20 per cent. So the day that a company invests in new technology or new machinery, new software, new productivity-boosting equipment - we'll give them an  extra 20 per cent in accelerated depreciation.

 

The beauty of this policy is that's targeted incentive, targeted tax support for companies to invest in jobs. It is not relying on just shovelling taxpayer cash out the door and hoping the large multinational might, through the goodness of their own heart, choose at some unspecified point in the future to spend some of that money in Australia.

 

SHORTEN: Sorry Andrew and then –

 

JOURNALIST: Correct me if I'm wrong, but Labor's not against company tax cuts per se, it's just that you say the time is wrong. Is that correct?

 

SHORTEN: First of all –

 

JOURNALIST: No, is that correct?

 

SHORTEN: Let me answer your question. In the past, when Paul Keating was Treasurer, and then when Wayne Swan was Treasurer, Labor did support some reductions in the corporate rate when there was offsetting increases in revenue.

The big lie of the Turnbull Government is they think that you can reduce the tax revenue of the nation, $65 billion out of the nation's ATM, and not replace it. This is the lie of the Government.

 

They're trying to pretend you can take $65 billion out of the system, which is money which would otherwise go to schools or hospitals, paying down the interest payments on our large debt. The Government is trying to pretend that you can have your cake and eat it too, trying to pretend you can take $65 billion out of the system, not replace it, and then everything will be alright, it is just nonsense.

 

JOURNALIST: Just a follow up Mr Shorten, the Government argues, however, that the tax cuts to the big corporates happens when the budget is returning to surplus and therefore it is funded, if you want to use that word –  

 

SHORTEN: We all know, it's not funded. We all know it's not funded. And the point about it is, if you're going to engage in taking out billions of dollars out of the nation's budget, out of the nation's ATM, you've got to explain how you're replacing that income, and you and I both know the government hasn't.

 

I might get Chris to talk a bit further, I can tell he wants to jump in.

 

BOWEN: Thanks, Bill. Briefly this is the big lie of Mr Morrison, he says you put it in the budget and it is funded, that is a lie, something is funded when it is paid for.

 

Now for example, Labor has an education policy for which we are proud, there are school principals and teachers and in the building today arguing for more money and better targeted money for our schools.

 

Labor will do that, $17 billion. That $17 billion commitment is funded.  We have made the tough decisions. We've tackled negative gearing, capital gains tax, dividend imputation. We're actually doing the hard yards of budget repair. Mr Morrison has gone on a budget repair holiday as he gives away $65 billion and says it's all right, it's in the budget.

 

If the Labor Party tried something like that, if we said $17 billion for schools but we won't bother to make the tough decisions to pay for it, but it will be in our budget so therefore it is funded, you would laugh us out of the building and you should laugh the Treasurer of Australia out of the building for making that ridiculous comment.

 

JOURNALIST: On the dividend tax, why didn't you get the policy right two weeks ago, did you make a mistake?

 

SHORTEN: Well first of all, I said two weeks ago that we will always be a party that looks after pensioners better, and so today we are making good on that commitment with our Pensioner Guarantee. But I am not too arrogant to recognise that when we introduce a big police, that I don't listen to people. When did go out of fashion that when you have a big idea, a big policy, which most experts reasonably agree it headed in the right direction, that you stop listening to people? I am grateful for some of the pensioner groups that have spoken to us and so what we have done today is made a good policy better.

JOURNALIST: Were you surprised vehemence of the reaction to the policy two weeks ago, did that take you by surprise?

 

SHORTEN: It doesn't surprise me that some people who are receiving money from the government don't want that to stop. But what does surprise me is that Mr Turnbull says there is nothing good about this policy. What we have done is, we have robbed the Government of whatever scare campaign they might have had.

 

I think the Government needs to be upfront now and explain why they think it is fair, and I will use an example: where you can have a self-funded couple in the retirement phase, they have a $3.2 million superannuation balance, plus their own home. And they have $200,000 worth of Australian shares outside of superannuation. So even after drawing a $130,000 in superannuation income, and a $15,000 a year dividend income, they only record a combined taxable income of $15,000. They pay no income tax at all.

 

So why on earth should the Government and Australian taxpayers be giving people who are already very comfortable, why would Australian taxpayers be paying a tax refund to very wealthy people who don't pay income tax?

 

JOURNALIST: Mr Shorten –  

 

SHORTEN: Sorry I said Katharine, and then to you.

 

JOURNALIST: You said that Labor will repeal the big business tax cuts, and you'll tell us what you'll do about the previously legislated tax cuts after the budget. Are we to take from this that when it comes to business tax and Labor in the lead up to the next election that they can expect nothing in the way of tax relief? Might Labor consider measures like what you have already announced which is a depreciation measure for companies willing to invest? Are you saying there is nothing to see from Labor between now and the next election, or there might be something to see?

 

Also, another, while I've got you. Ged Kearney said to me in an interview last weekend that she's going to take up the cause of refugee and asylum policy at the National Conference. You guys know she's not the only one. Is there any room to move on Labor's current policy on refugees, offshore processing?

 

SHORTEN: I think I've got where you're going on that second question. There's two questions, why don't we deal with the first one first. In terms of business, what we are not going to do is promise business corporate tax cuts which this government can't pay for. The worst thing in the world you can do in public life is make the big promise, which this government is doing, but they know they can't fund this. And they know that it's going to cause all sorts of diabolical consequences elsewhere.

 

The Government is trying to sell these corporate tax cuts on the basis, that almost like it's a pigs might fly argument. That somehow, if you give all of these corporate tax cuts to multinationals, to big banks, to very large corporations, they will miraculously start writing cheques to their workforce which represents the tax cut they are giving wage rises to the workforce. That is just rubbish. It is rubbish, rubbish, rubbish, what they are saying.

 

In terms of business can expect from us, we have already announced an Australian Investment Guarantee. What we are doing is using scarce taxpayer money to; incentivise investment, to engage in capital expenditure in Australia, to invest in productivity. Our plan is to increase productivity, to make sure we have got a fairer wage system, to invest in our kids. We will give Australian business the best skilled workforce of the future. We are going to invest in people. We are the party of workers and we are the party of education. We are interested in providing a skilled workforce for business for the future.

 

But I might get Chris to talk a bit further.

 

BOWEN: I think you put it very well, Bill. We have been out there leading the policy debate, saying we will have tax relief which is targeted and which is on the condition of investment. The Government says, here is $65 billion, please invest, please give a wage rise. We say we will give tax relief on the condition of investment. Cheaper, better targeted, better designed, better thought through.

 

JOURNALIST: But is that it?

 

BOWEN: Of course we will have more to say about a whole range of areas, Katharine, a whole range of areas. But I would put to you that from this point of distance to the next election, no opposition in the last 30 years has announced as much policy as the Shorten Opposition.

 

SHORTEN: Katharine, on your second question, the National conference is in July. I have got no doubt that issues around people smuggling and people coming to Australia and refugees will be one of the topics of debate.

 

In terms of the policies that emerge, I make one thing very clear: we don't support the way the Government has treated people in detention. We don't believe that mandatory [indefinite] detention has to be the necessary result of stopping the boats. But what we will also do is that we recognise that the boat turn-back policy has been effective. And I have no interest in changing that policy.

 

Sorry, I did say you were next.

 

JOURNALIST: Just your position on two issues. Firstly, do you support childcare workers going on strike today? And second, separate issue, do you support the Australian Government's action on expelling two Russian diplomats, and is it strong enough?

 

SHORTEN: I think childcare workers have a fair argument, don't they? Their wages are disproportionately low compared to other industries and other sectors. But when you think about the importance of the early years of children and their development and education, you would think we would value our childcare workers better. I am sure that any childcare worker who is on strike today, this is a last resort. But for how long is this nation going to rely upon childcare workers to basically subsidise our childcare system? So I have got a lot of sympathy for the issues that they are talking about.

 

It is ironic, isn't it? Today, the Turnbull Government is criticising Labor because we want to crackdown on excess dividend imputations. Mr Turnbull wants to have the world's best tax loopholes, I want to have the world's best childcare system. It is all a matter of priorities.

In terms of the expulsion of the two undeclared Russian agents, the Prime Minister briefed me this morning, and I have also spoken to the security agencies. I am very supportive of this measure. There is no doubt that the actions Russians have taken in England has caused international outrage and that Australia, along with many of its allies, is taking commensurate responses to it.

 

It is also the fact that these are undeclared agents and so therefore, it isn't appropriate that they be in Australia. So I am very supportive of the actions today.

 

One or two last questions.

 

JOURNALIST: Just quickly on that, so you think it is beyond doubt that the Russians were involved in the use of the nerve agent in England?

 

SHORTEN: I think our security agencies have that view and therefore I think this is a proportionate action today.

 

JOURNALIST: Just back on pension dividends and such. When you announced your first super policies, I think it was 2014 –

 

SHORTEN: We have announced a lot of policy, haven't we?

 

JOURNALIST: Yeah, but you said that is it for superannuation, you won't touch it. You then adopted the measures the Government took to the budget which were far more comprehensive than what you have proposed.

 

BOWEN: After their scare campaign.

 

JOURNALIST: Can you say now to retirees, because you have just said there is more to come from Labor before the next election, is superannuation now off limits?

 

BOWEN: I was referring to broad question from Katharine about policy.

 

You're right, we led the debate on superannuation. The Government had a scare campaign against it and then adopted many of our measures, and then botched the implementation of other measures and had to rewrite it after the election.

 

JOURNALIST: Sure.

 

BOWEN: Point one, pretty important in relation to the Treasurer's comments earlier today.

Secondly, we have announced our further policy since then which go a little further than the Government's, and then we have announced this imputation policy, which of course impacts on retirees but is a broader measure.

 

But importantly, what Bill and I have said, is that we go to the election with our policies. And we have said that our taxation superannuation policies, so we have had to say what we are going to say about that, of course there are other matters in superannuation, like gender equity and the superannuation guarantee, which we continue to be concerned about, particularly gender equity, we will have more to say in that space.

 

But importantly, Bill and I, both as former superannuation ministers, we recognise the need for certainty. Hence, we go to the people seeking a mandate for change. We will also introduce the Council of Superannuation Custodians, which will be an independent body of experts looking at changes, after we have implemented the changes which we would have received a mandate. We would have the Council of Superannuation Custodians to take the superannuation system out of the annual budget cycle, put it on the same cycle has the intergenerational report, no changes for five years and only then after going through the superannuation custodians.

 

That is a much more robust policy when it comes to superannuation certainty than anything the Government can suggest because they always say no changes and then they do them.

 

SHORTEN: Ladies and gentlemen, we do have a caucus at 9:30am. Our caucuses are a quite happy and united affair –  

 

JOURNALIST: It’s at 9.30.

 

SHORTEN: One minute to go. Andrew, hang on a second. We have got the caucus meeting, we have answered the questions. We do want to start caucus on time. We will be available to chat straight after caucus.

 

BOWEN: I am sure you will send questions through which we will be happy to take.

 

SHORTEN: Thanks very much.