WAYNE SWAN MP
MEMBER FOR LILLEY
ABC RN DRIVE
TUESDAY, 26 JUNE 2018
SUBJECT: income tax cuts.
PATRICIA KARVELAS: Bill Shorten has been under fire today after confirming that Labor would repeal tax cuts for businesses with a turnover between $10 million and $50 million. Those cuts were legislated with the support of the crossbench of the Senate. The decision wasn't taken to Shadow Cabinet and appears to have surprised many of Bill Shorten's colleagues. Wayne Swan is the Federal President of the ALP; Wayne Swan, welcome to RN Drive.
WAYNE SWAN, MEMBER FOR LILLEY: Good to be with you.
KARVELAS: 14,000 medium-sized businesses with a million workers will face a business tax rise under Labor now. Is that wise?
SWAN: Well we've always opposed these tax cuts for big business; they're incredibly expensive and we've always said that we supported tax cuts for small business, which we're doing. And I don't think there's anything new or any surprise in any of that.
KARVELAS: Well that's not true, because I've spoken to some of your colleagues, and they're all surprised. You'd been weighing up your position on whether you'd repeal it. That's new.
SWAN: Well that's not true.
KARVELAS: It is true.
SWAN: Well it's not. There's been a discussion going on about whether we'd exempt $2 million to $10 million. That was the discussion. There was always a very firm proposition that we would be doing this. There's nothing new about that whatsoever.
KARVELAS: I can tell you that your colleagues don't agree with that proposition. Many of your colleagues do think that that was up for discussion – whether you would repeal those tax cuts.
SWAN: What's been up for discussion is the threshold of $2 million or $10 million. I don't participate in many of those discussions and I was acutely aware of that because it's been in the papers. So I don't think there's any news about that.
KARVELAS: It's been reported Shadow Cabinet was still in the process of finalising its position on these tax cuts. Why did Bill Shorten jump the gun?
SWAN: Well, I don't think he jumped the gun at all. He simply put out the public position that we've had; that we're in favour of tax cuts for small business and we were simply talking about the level, given what the government had done. And that has been in the media, Patricia. There's nothing new about that, seriously.
KARVELAS: I've interviewed countless ministers and ALP people and consistently asked if they'd repeal the tax cuts for businesses up to $50 million and they've said they haven't come to a conclusion yet. So now there's a conclusion?
SWAN: There is a conclusion, which has been well known, that we were looking at small business, and the level was between $2 million and $10 million. And as I've said, that's been out there in the public.
KARVELAS: Bill Shorten chose to announce this without a decision of Shadow Cabinet. Isn't that odd?
SWAN: Well I think this has been a decision of Shadow Cabinet, to give tax relief to small business. That's been our position, and what's being discussed is the level.
KARVELAS: The latest National Accounts show GDP growth was better than expected. Some economists have credited the tax cut with playing a significant role; why would you risk that growth to wind back these cuts?
SWAN: Anyone who's writing that – that is just laughable to argue that one GDP figure you can attribute this tax cut to. If you look at the Treasury modelling about the tax cuts in general, the job growth that they're predicting coming from them is minuscule. What we've seen is some recovery in the economy, induced largely by international factors, and that is what's in the GDP figures. Anyone who's an economist at the moment, who is attributing job growth to the tax cuts, which are relatively recent, is simply kidding themselves and they're kidding the public.
KARVELAS: To be clear, the cut was for businesses with a turnover of up to $50 million. That's not profit; these are businesses which might potentially struggle without the cut.
SWAN: We can have a long discussion about tax cuts and their impact on investment and jobs. But the truth is there's a very low expectation in both the Treasury and in the business community that there'll be any immediate impact on jobs. That's why the Business Council won't, in the public, commit to any levels of achievement flowing from the tax cuts. The truth is that the tax cuts in the US that have flowed through there have been taken largely in share buybacks and they've not necessarily produced the job growth that many have claimed. And it's simply absurd to claim, given the short timeframe here, that that's been the impact of the tax cuts.
KARVELAS: On Friday, Anthony Albanese encouraged Labor to engage constructively with business, large and small. Is this a rebuke to that position?
SWAN: Well it's got nothing to do with that position at all.
KARVELAS: Well is this an example of working constructively with small- and medium-sized business.
SWAN: We've made our position clear. We will be supporting tax cuts for small business. What's being discussed is the level. We do have a constructive dialogue across the board with the business community. There are many in the business community, very senior people in the business community, who don't believe the rhetoric the government is putting forth about a direct link between jobs and growth, and don't support, necessarily, tax cuts as the sole solution to growth in this country. Plenty of people very sceptical about that as there are plenty of credible economists around the place who have that view as well.
KARVELAS: So you're going to the election saying that you'll repeal the tax cut for any business at least over $10 million. I mean, you'll clarify between $2 [million] and $10 [million].
SWAN: Well as you said before, it's roughly 14,000 businesses under $10 [million].
KARVELAS: So 14,000 businesses will have to pay more tax. Is that a risky proposition?
SWAN: Well, what is the correct policy here? Let's start there. Our position here has not been driven by solely political considerations. It's what's good for the long-term health of the economy; it's what's going to drive investment in our economy. And what is predominantly driving investment in our economy is consumption.
KARVELAS: How is making businesses who have a turnover of up to $50 million pay more tax good for the economy?
SWAN: Because it's all part of everyone meeting their responsibility. You could equally ask the question, "how is a massive tax cut of $17 billion going to banks going to drive jobs in the economy when the banking sector is shedding jobs at the moment? There is a complex equation here about the balance between levels of taxation, levels of investment, employment growth and consumption. And the big problem in our economy is extremely weak consumption. And we've put forward a constructive plan to tax fairly, to invest fairly, and to drive jobs and growth. And that's what we'll be discussing as we go through to the election. The truth is, we said that we would be supporting tax cuts for small business. The proposition on the table has been $2 million or $10 million and that's where the Party has been.
KARVELAS: You said you think it's the right policy, but do you concede that it's politically risky?
SWAN: No, I don't actually concede that it's politically risky. The problem that we've got in Australia is, particularly our large corporates have not been paying the 30-cent rate. In fact, the average rate paid by large corporates has been 24 cents in the dollar. And that's the most generous number you can put forward. There are other estimates much lower than that. And we have been busy about trying to fix up the tax system and some of these large loopholes which have led to massive evasion from corporate Australia. And we are absolutely determined that we see investment in the drivers of growth. Investment in infrastructure. Investment in education. Fixing up our infrastructure. They're very important parts of the economic equation which drives jobs and growth.
KARVELAS: Wayne Swan, thank you so much for your time.
SWAN: Good to be with you.
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Authorised by Noah Carroll ALP Canberra