21 November 2017

LAURA JAYES, PRESENTER: Chris Bowen, thank you for your time. First of all whats wrong with this plan articulated by the Prime Minister last night. Whats wrong with giving people an income tax cut?

CHRIS BOWEN, SHADOW TREASURER: Well I think you have a different definition of plan and a different definition of articulated than I do. There was no plan articulated last night. There was a puff of smoke, a thought bubble, one line in a speech say tax cuts are good. Thats not detail. Thats not a plan. That is a distraction from the Governments extraordinary and unprecedented cancellation of Parliament. Look over here, dont worry about the fact my Government is falling apart, Ive got a plan for tax cuts.

Well he doesnt have a plan for tax cuts. Hes got a thought bubble. Now in fact, Laura, hes increasing personal income tax. Hes got legislation before the Parliament to increase the tax paid by every Australian on their income earning more than $21,000. Thats a tax rise. Its called the Medicare Levy increase. Its a fancy way of saying hes putting income tax up. Now if he thinks he can put income tax up, and then, put it down again and get credit from the Australian people, I think he is being cynical, even for him.

JAYES: Arent you being a bit cynical yourself, when it comes to the Medicare Levy increase though, because that is to pay for an increase in the cost of the NDIS. Labors original plan did have an increase in the Medicare Levy to pay for the NDIS, so whats wrong with the Government doing it?

BOWEN: Well Laura, what increase in the cost of NDIS? There is no increase in the cost of NDIS.

JAYES: Right, so this Medicare Levy will raise about $8 billion over the forward estimates. When you look at all of the projections for the NDIS it says there will be a big ramp up in costs in the outer years. So that is in preparation for that. This money is hypothecated to spend on the NDIS.

BOWEN: Well a couple of points Laura, firstly Christian Porter himself has said the Productivity Commissions original projection of the cost of the NDIS is being met. There is no blow out. There is no increase in costs and thats why I pulled you up earlier. That is just fundamentally not true. There is no increase in cost, no blow out over and above projections. The Labor Party in Government fully funded the NDIS and it is fundamentally dishonest for the Government to claim otherwise and it is irresponsible because it means people are scared about the future of NDIS. They think it might be cancelled under the Government because the Government keeps telling them its not funded. Its fundamentally irresponsible. But the fact of the matter is, Laura, an increase in the Medicare Levy is an increase in personal income tax. People will be paying more. Malcolm Turnbull said last night, we want workers to have more in their pocket. In case theyll have less in their pocket because the Medicare Levy increase. You can cut it whichever way you like, its a tax rise under his watch.

JAYES: Just on the NDIS though, and this Medicare Levy, I just want to get this straight because I think its fair that this be fully funded because we all might need it one day. You say that the Productivity Commission says theres no blow out, theres no cost. Well Treasury has said something different in Treasury

BOWEN: Well Christian Porter says that.

JAYES: Well the Treasury Secretary has said something different in Senate Estimates, and my understanding of this is theres this initial funding gap the Government, this Coalition Government has had to meet. Do you dispute that?

BOWEN: Yes, absolutely Laura because the Government just denies all of those decisions that the Labor Party took in office to fund the NDIS. Yes, one of them was a Medicare Levy increase and there were others. Now that was to set up the NDIS, now the fact of the matter is that Christian Porter himself has said that the costs are tracking along just as the Productivity Commission predicted they would.

There has been now cost blow out, its just not the case. Its just a matter of facts and a statement of facts that there is no cost blow out. It was fully funded, and as I said Laura, is the Government saying that theyre going to rip up the NDIS and their agreements with the states that weve signed with every state and territory? Is that what theyre saying if they dont get their way on the Medicare Levy increase? But as Ive said Laura, we can all have these arguments about whether its hypothecated or not, the fact of the matter is, its a tax rise. The one thing he cant deny, he cant dispute, is that. People will be paying more PAYG tax as a result of the Medicare Levy increase.

JAYES: Okay, but just to play devils advocate here, people sitting at home would be thinking okay, Labor set up the NDIS, it paid for it with an initial Medicare increase, and now the Government says whether you believe it or not there might be a cost blow out, could be a victim of its own success, more people taking it up in the future and its only fair that those on a higher income, for example, if youre on $200,000 a year, you pay $1000 a year towards that Medicare Levy. But everyone pays. It goes right down to the bottom tax bracket. So youre saying on the one hand that you dont want the Government to pay for any increase in the NDIS, but you used the Medicare Levy to pay for it originally.

BOWEN: Well what we are saying, for one, there is no case for the Medicare Levy increase at this point given the NDIS is fully funded. Point one. Point two, putting that argument to one side for a moment, the Prime Minister has a thought bubble last night, a puff of smoke and says Im going to cut your personal income tax. He doesnt like being reminded that hes increasing it. Its like the worlds most famous television used car dealer, Arthur Daley, putting up prices one day in his car yard and putting a big sale on the next where he cuts the price by half saying look, youre better off.

This is the Malcolm Turnbull approach. He makes it up as he goes along.

I mean this is the Prime Minister who in Penrith said he wants to give the states income tax power to increase income tax, not that long ago. It lasted a day. Now hes had another thought bubble, its not a plan, its not articulated, its a look over here. Youve got the Government, in this banana republic moment saying we might not like what Parliament decides so we wont convene Parliament, and then to try and change the conversation because he is being rightly hammered across the country, he says, we are going to cut income tax. Well I doubt he even told the Treasurer that he was going to say that, the Treasurer is back in the witness protection program this morning, not out backing his Prime Minister, not making the claim, not providing any detail on who gets the tax cuts, when they get them, how they can return the Budget balance, how will it be paid for.

JAYES: Look I think thats a little unfair, I think Cabinet are at a meeting this morning Chris Bowen, but look yes, we will give you the benefit of the doubt. Let's get back onto policy though, there has been plenty of politics around, let's get back onto policy. Labor, it's correct isn't it that you are going to the next election promising a top marginal tax rate of 49.5% and you're also threatening a real increase for some medium businesses going into the next election. That's true isn't it?

BOWEN: Well it is the case that we are going to keep the deficit levy in place, to reimpose that. That is the case because we still are in deficit. Yes and you know these are difficult decisions and that's why we are putting out all our tax policy. Now in relation to corporate tax Laura, we are doing the responsible thing, the Government has already legislated some. They have a $65 billion plan, a lot of which isn't legislated which we oppose, what they have legislated we are taking our time, assessing the books, assessing the implications and we will have plenty more to say in terms of the approach we will take in office well before the next election but the responsible thing for us to do is to do exactly that, take our time to work through what the Government has legislated, see what is affordable going forward.

We are not going to lurch from announcement to announcement like the Government does and we are not going to have one line in a speech somewhere.

When Bill Shorten and Jim Chalmers and I announce all our fiscal plans, you will see them fully detailed, fully outlined fully paid for and the impact on the budget bottom line.

JAYES: Okay, just one final question on the NDIS. Look I'm just looking at some information here that I've just quickly looked up, you have said that you don't need to look at an increase in the Medicare Levy because it's fully funded. Well why are you proposing that it only be put to people that are earning over $87,000 a year. Is that just a safety net you are trying to build in?

BOWEN: No, Laura because we don't accept the hypothecation but we do except that difficult decisions are necessary and that the budget is under real pressure and that we have to have a proper return to budget balance which is paid for by difficult decisions. We don't like saying that the Medicare levy should be

JAYES: Right but you are saying the Medicare levy should be on those earning over $87,000 not hypothecating the spending to the NDIS but because the budget is not yet in surplus? Is that right?

BOWEN: What we have said is that we would vote for the Medicare increase levy to apply over $87,000.

We don't accept that the NDIS is unfunded or underfunded because it's not but we do except that difficult decisions are necessary. We need a budget repair plan and in that context applying the increase to people earning more than $87,000. Well we don't do it with any alacrity, we do it reluctantly but nevertheless we do it but we will resist and oppose moves to apply it to people on $21,000, $40,000, $50,000 et cetera below $87,000

JAYES: But since when is earning $87,000 a year not a middle income earner? So you're saying you are willing to impose the Medicare levy on those earning over $87,000 to pay off the deficit, not to pay for the NDIS and apparently they can afford it?

BOWEN: Well, Laura of course nobody wants a tax rise but you've got to prioritise. I mean the Government actually made a big song and dance last year about the fact that they were cutting income tax for those earning above $80,000. Well when we actually increased tax we look at where can be prioritised. The Government has taken all that back but what they want to do is apply it to people on $21,000 a year, some of whom work on weekends and lose their penalty rates and so yes we make no apologies for saying these are the people where we have to make difficult decisions, we will oppose the changes to them, putting their taxes up as their wages growth is stagnant and in many people's case going backwards with penalty rates, we will protect those people. Where we have difficult decisions to make for those over $87,000, not a decision we made lightly but we could have a post the lot and then you would be calling me and the Labor Party irresponsible because we didn't have the ability to agree with the Government reluctantly on the Medicare levy increase above $87,000.

JAYES: So I just wonder why you have let go, why are you are looking at $87,000 as the kind of cut off here? What about those people out there --

BOWEN: It's the existing threshold Laura. I will answer your question, it's the existing threshold.

JAYES: Right so you are making your decision that these people at that level, they can afford it?

BOWEN: We are making the difficult decision that that's where the tax rise needs to apply to make the necessary revenue, you don't want to create a new threshold. You don't want to make the tax system more complicated by creating a $95,000 threshold or $90,000 or $100,000 threshold, something like that. The existing threshold is $87,000, if you don't go to $87,000 you go above $180,000. That's the threshold, that's the laws that apply at the moment, The rules that apply. Reluctantly that is where we would cut off the Medicare levy, it would not apply lower than that. That's the existing tax threshold Laura, it's as simple as that.

JAYES: Even Paul Keating has criticised your top marginal tax rate plan of being 49.5% for those earning over $180,000. Would Labor consider adjusting that top marginal tax rate? Do you still consider earning $180,000 a year to be rich for a family?

BOWEN: No, look Laura, I think you can get into silly debates about what is rich and not rich, and who's a high income owner and who is not. The fact of the matter is that when the Budget returns to balance as we have said consistently, then you can look at tax relief across-the-board and the various thresholds. I mean low income owners haven't received a tax cut since Julia Gillard was Prime Minister. High income owners are receiving one this year from this Government. Low income owners haven't received one since Julia Gillard was Prime Minister.

JAYES: The Government hasnt been in surplus since then. Okay, okay, fair enough

BOWEN: Exactly and that's why I'm saying when the Budget returns to balance you can look at tax relief. This Government is providing tax cuts for people on the top marginal tax rate while the budget is still in deficit, despite the fact that they call is the deficit levy. Look Laura, we are being very upfront and clear with our plans, we have a proper return to budget balance unlike the Government. We have much more to say and do in relation to our economic policy, we have more economic policy detail out there now. The reason you can ask me these questions is because we have policies, because we have announced detailed plans. Malcolm Turnbull has a line in a speech, a vibe, that's what he's got. You can't ask Malcolm Turnbull these questions, you can't ask Scott Morrison these questions because they don't have a plan or detail. Bill Shorten I and the Labor Party do, that's the key difference.

JAYES: Chris Bowen I look forward to get more of that detail as we get closer to the next election. Plenty on your side of politics are saying that might be in just a couple of months, though perhaps we will see that detail very shortly.

BOWEN: Well we will be ready regardless.

JAYES: Chris Bowen we will have to leave it there, thanks so much for your time.