WAYNE SWAN MP
MEMBER FOR LILLEY
SUNDAY, 1 JULY 2018
SUBJECTS: company tax cuts; trickledown economics; Labor’s pro-business agenda; Labor Party leadership rules; Longman by-election; income tax cuts; executive pay; ALP National Presidency.
ANNABEL CRABB: Wayne Swan, nice to have you back on Insiders.
WAYNE SWAN, MEMBER FOR LILLEY: It's great to be here again.
CRABB: And congratulations on your election.
SWAN: Thank you.
CRABB: Look, Labor finished the week with senior frontbenchers assuring Australian businesses that 99.6 per cent of them would pay less tax or the same tax under Labor as the Coalition. Were you surprised to end up on a unity company tax ticket with the Coalition by the end of the week?
SWAN: Well we are nowhere near a unity ticket with the Coalition. They are setting out to destroy progressive taxation, both in the company tax system and in the personal income tax system. And the big beneficiaries of the Coalition's company tax cuts are still large multinationals and of course—
CRABB: But that hasn't been legislated yet, so at this stage, for this term—
SWAN: $17 billion to the banks—
CRABB: You are kind of offering the same thing.
SWAN: No, we're not. Because if you look at what the Coalition is doing, in the long term, both in terms of company tax – huge cuts to foreign multinationals and the big banks – but also look at what's going on in the personal income tax system. Down the track, if they get their way, someone on $40,000 will be paying the same marginal rate as someone on $200,000. This is a recipe for—
CRABB: We'll get to personal income tax in a second. I do want to talk to you about that.
SWAN: But they're both together.
CRABB: But in terms of the events of this week, on Tuesday, Bill Shorten came out and said that Labor would be removing company tax cuts for companies north of a $10 million turnover. A lot of people in the Caucus seemed to be taken a little bit by surprise by that, were a bit horrified by the prospect of rolling back those tax cuts. Were you among them?
SWAN: Well no, I wasn't. Because I was aware of what the leadership had been discussing. The key economic committee of Cabinet had settled on that. He made an honest error in making that announcement—
CRABB: What was the error?
SWAN: He announced it before it went to full Cabinet. That was the only error.
CRABB: And was that just inadvertent?
SWAN: It was inadvertent, absolutely it was. Following that, there was a discussion, and I think the leadership and the Shadow Cabinet decided to go to the $50 million threshold. And that puts into that bracket medium-sized companies. Absolutely where the bulk of these tax cuts go is to foreign multinationals and the big banks.
CRABB: Do you reckon, if it hadn't been for that inadvertent slip, that the ERC and Shadow Cabinet could have prosecuted that $10 million through the Caucus?
SWAN: Well I'm not going to look back and rewrite history.
CRABB: But you would have been comfortable with it?
SWAN: I was comfortable with that. I'm more than comfortable with our current position. Because the focus is on where the big inequity is. Which is these massive cuts to large companies who have no obligation to invest that in this country and they will certainly not be investing it in jobs and growth as the government claims. The experience overseas with company tax cuts is that it's all going to share buybacks and executive salaries. It's not going to the workers.
CRABB: The events of the week highlighted a bit of an interesting divide in Caucus. There were some people pushing for a $2 million cut-off and some pushing for a $50 million, so the $10 million seemed like a bit of a compromise. There seems to be a divide between people who think that, like Anthony Albanese, it's better to be nicer to business and be more courteous to business; which camp are you in?
SWAN: It's not anti-business to oppose the Coalition's business tax cuts. Because what they do is they drive inequality in our economy. That is bad for living standards, bad for economic growth, and it poisons society. And at the end of the day, it gives a lot of money to very powerful vested interests in our economy. And that crowds out our democracy.
CRABB: On Friday, you gave a speech to the New South Wales Labor Conference, saying it was time to tear down the neoliberal system—
SWAN: Too right.
CRABB: —and declaring enemies number one as the Murdoch press, the Business Council, large multinationals and vested interests—
SWAN: Well the whole of the business community is not supporting what you call the neoliberal agenda and I call the trickledown agenda, which is just tax cuts for the wealthy and large corporations, and wage suppression for the rest. Because that's bad for economic growth. What it actually leads to is wealth concentration.
CRABB: So I gather from the tone of your rhetoric that you're not in the Albanese—
SWAN: It's not rhetoric; it's good economics actually!
CRABB: Your language is not really in accordance with the Anthony Albanese model of being more courteous to business. Did you disagree with that speech that he gave?
SWAN: Look, I've got plenty of friends, like Anthony has, in the business community. And there are voices in the business community that are not heard. There are people out there who acknowledge that the economics of our current situation, with low income growth for working people, is that we have to look at what's going on with wages. And we also have to invest in the drivers of growth. In the health and education of our people. And that is a respectable economic argument, and it is one that will drive growth and it's therefore pro-business, not anti-business.
CRABB: What did you make of the Albanese speech in general?
SWAN: I thought it was a pretty standard speech. I read all of the speeches of our frontbench; I take a deep interest in what they do. I thought it was unexceptional, to be frank.
CRABB: Obviously there's some discussion about his motivations. He said this week that he's always supported every Labor leader; is that your recollection?
SWAN: Oh, look, I'm not going to go through all of the ballots. But the one thing that I do want to do as party president – because I've been through the good times, and I've been through the bad times – is to make sure we put the past behind us. The stunning success of this opposition over five years is to put forward a courageous program of reform with an unparalleled degree of unity and consensus. And that's what's going to take us to the election. We went within a whisker of winning last time. We can win next time. We have to have the unity, the discipline and the policies.
CRABB: Has Bill Shorten earned the right to lead Labor to the next election?
SWAN: Too right he has. He's been spectacularly successful. As you know, being the Opposition Leader is just the toughest gig in politics. He has done extraordinarily well as the Opposition Leader and he deserves the opportunity to get out there and take government at the next election.
CRABB: You’ve got some dicey by-elections coming up; we saw that polling in Longman that makes it look difficult for Labor; (a) do you think Labor can win that by-election, and (b) do you think it's a reflection on Bill Shorten if they don't?
SWAN: I know Longman well. We've held it for five years out of 20, 22 years. It's a tough seat. So the decision of One Nation to preference the Liberals to preference the Liberals makes it even more difficult, because we only won the seat on one nation preferences in the last election. Look, it's doable but it's extraordinarily difficult. It's a very difficult seat for us, but we're going to give it our best shot.
CRABB: Wayne Swan, as newly elected Labor president, you're the custodian of the rules. And one of those rules is the one that Kevin Rudd installed that makes it quite difficult for the Caucus to remove a leader. You've made it pretty clear that you endorse Bill Shorten very heartily. But how functional is that rule in practice?
SWAN: I think it's been really successful. I think it's been the foundation of the unity that we've seen over the past five years. It gives the rank and file a say in our leadership, but it still gives a really strong voice to our Caucus. A strong voice for MPs is important because we're in a system of representative democracy. So I think as a compromise it's pretty good and it's worked very well for the Labor Party.
CRABB: So you wouldn't like to see the Caucus working around or repealing or marching back that rule in any way?
SWAN: Well I'm very much in favour of the current rule.
CRABB: We said we'd get back to income tax and now's the time. You're a former Treasurer with an experience of watching economic circumstances turn against you in office; what's your opinion of the decision of the legislative body to install a seven-year program of tax cuts?
SWAN: I think they're putting an economic time-bomb in the system. It's the old right-wing ratchet. What they do is they give big tax cuts over time, and then in a few years’ time they turn around and say "oh, we can't afford to fund health and education". It's a way of shrinking the state and driving greater wealth concentration in modern advanced economies. That is precisely what has happened in the United States. We cannot go down that American road.
CRABB: In 2007, when you were campaigning as Shadow Treasurer at the time, with Kevin Rudd who was the leader of the ALP, you were faced with an announcement of $34 billion in tax cuts by Mr Howard and Mr Costello. You decided to nearly replicate those cuts, and then economic circumstances changed. Down the track, did you regret making that decision?
SWAN: I think, at the time, the tax cuts worked reasonably well. But we took the unfairness out of the tax cuts at the top end. But we're in favour of—
CRABB: But they built in a kind of structural deficit that you struggled with.
SWAN: Well we did, but we struggled more with the impact of the Global Financial Crisis on revenue, which tanked revenue for a decade. But those tax cuts were then used to stimulate the economy at the time, along with the other measures that we took. But the fact is that we are in favour of reward for work. If people are working a bit of overtime, to get a bit more money in their hand. We're always in favour of giving working people a fair go in the wage system. What we're not in favour of is this largesse at the top, in the company system and the personal income tax system.
CRABB: So, I get the feeling that as Labor President, which has usually been a kind of statutory role, you're going to be more of an activist President. Is that your intention?
SWAN: When I announced that I wasn't running for Parliament and I was getting out of Parliament, I said I wasn't getting out of politics. I love this country and I want to see it remain a country where there's a fair go, where, when we create prosperity, we spread opportunity. And we can see that slipping away, particularly through the aggressive trickledown policies that we're getting from the conservatives who have taken over the Liberal Party. And that's going to keep me motivated and I'm going to be very active on it.
CRABB: Ok, let's look at a couple of the things you've floated in recent speeches. Late last year you said that governments should consider raising company taxes case by case, for companies who pay their executives too much.
SWAN: Well we certainly need to do something about executive pay. If you look at what's going on, where basically the top end of town, and those on the highest incomes, are basically gorging themselves. Look at the revelations in the banking Royal Commission. Essentially, what drove all of that bad behaviour, unethical behaviour, was the reward and incentive systems in the pay structure. So executive pay in Australia now is back to the levels it reached prior to the Global Financial Crisis. So we need to see some of our corporate rules change, which ensure that executive pay is brought under control. That's very important, because the example that it sets for the rest of the workforce is shocking.
CRABB: Sure, but seriously? A bespoke company tax rate individually for big companies—
SWAN: No, no. I was saying there are things that can be done.
CRABB: Right, but you proposed that as a "thing".
SWAN: Well it should be done by the boards. But if we don't do that there might be other things we can do.
CRABB: You're talking about company tax; that's a government decision, not a board decision. Do you think that companies that overpay their execs should have a higher rate of tax?
SWAN: If they don't do something about it, we've got to have all of those options on the table. Because it is ripping our society apart, this sort of inequality.
CRABB: You've also advocated for the installation of workers and union representatives on corporate boards across Australia, and the Reserve Bank Board.
SWAN: That's right.
CRABB: That'd need to be enforced by legislation?
SWAN: Well some of it would be, absolutely.
CRABB: Well you were Treasurer for six years and you didn't appoint anyone from the unions to the Reserve Bank Board.
SWAN: I've learned from my period as Treasurer and one of the lessons I've learned is that if you suppress the voice of labour, and if you get to the point that we've now gotten to – that there's a shrinking share of GDP going to working people – that's bad for the economy. We've got to reinforce the voice of labour – not just through trade unions, but trade unions are an important part of that. Our society, particularly at its upper levels, suffers from a blindness of affluence. Too many people and business leaders in our community, don't mix with working people. We need to hear the voices of working people on the ABC Board, on the Reserve Bank Board, and yes, I do regret I didn't put a worker on the Reserve Bank Board.
CRABB: Are people entitled to be a bit sceptical that your "Bernie Swanders" new incarnation is not the same Wayne Swan that campaigned as an economic conservative and cut welfare to single parents?
SWAN: I didn't campaign as an economic conservative; I'll make that point—
CRABB: Well your running mate did!
SWAN: He did. But if you go back to my first speech in the Parliament, in 1993, I talked about trickledown economics and the impacts it was having in America. And you know, we're back there now, and it's far worse.
CRABB: Yeah but, as Treasurer, you didn't increase Newstart, you took benefits off working single parents. I mean...
SWAN: We took a massive series of steps to make this country much fairer. I could take you through the increase in the age pension, the tripling of the tax-free threshold, all of the steps we took in the Global Financial Crisis to keep people in work. We made Australia a much fairer place. But there's a long way to go, because international capital is trying to make it a lot less fair.
CRABB: Wayne Swan, we'll be watching your term with great interest. Thank you for joining us today.
SWAN: Thank you.
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Authorised by Noah Carroll ALP Canberra