Transcript - Sky News AM Agenda (1)




SUBJECTS: the Turnbull government’s trickledown income tax cut; Labor Party Presidency.

KIERAN GILBERT: Welcome back to the program. With me now is the former Treasurer Wayne Swan and newly elected President of the ALP. Congratulations on the election win.

WAYNE SWAN, MEMBER FOR LILLEY: Thank you very much.

GILBERT: I'll get to that in a moment and your thoughts on the future for the ALP, but in the short term I want to ask you about this central debate which is dominating politics right now, on tax. You've been arguing for some time that Labor needs to focus on fairness – arguments resonating with the leadership of your party right now. 

SWAN: Absolutely. And the economic interests of working people.

GILBERT: But in terms of the aspiration argument, this was a potent message during the Howard years – targeting aspirational voters, the "Howard battlers" as they were called – the Turnbull Government's seeking to revive that right now. What do you say to workers over $120,000 per annum? And those earning just under that, you know, they should be taxed less.

SWAN: Our proposals are all about aspiration. Aspiration for low- and middle-income earners who work hard and are the people who make our country great. The problem with this tax package is that 60 per cent of the benefit goes to the top 20 per cent of income earners. So this set of proposals, which over time will make Australia more unequal, will make Australia less fair, won't provide the reward for effort for the great bulk of people who go to work and make our country great.

GILBERT: Isn't this what this is all about? By removing a tax rate, effectively, that you're dealing with bracket creep and provide that reward for effort when people start earning more money?

SWAN: Essentially, they are going to make our tax system far more unequal. The truth is that they're saying there will be, in six or seven years' time, the same marginal tax rate for someone on $40,000 a year as there is for someone on $200,000 a year. That is a recipe for greater inequality in Australia. It's a recipe for huge cuts in health and education. And it doesn't give the reward for effort to the people who are on low and middle incomes who do the great bulk of the wealth creation in our country. 

GILBERT: Doesn't it provide incentive to people to earn more, though—

SWAN: We're all for incentive—

GILBERT: —if they're going to get more dollars in their pockets?

SWAN: Why can't we give more incentive, like the Labor tax package does, to those people under $125,000 a year, which is what our proposal does? And that is where the great bulk of the workforce in this country are. That is where the families are who are bringing up the next generation of young Australians – the workers of tomorrow – they're the people who need more incentive in our tax system to work hard and to get a fairer reward.

But under the Liberals, they say that the biggest incentives need to go to those at the top, because what they believe in is trickledown economics – if you give greater incentive to the wealthy and to high-income earners that somehow that all magically trickles down and the country is better off. Meanwhile, back at the ranch, people on low and middle incomes have got the lowest wage increases in recorded history, are experiencing wage suppression, and now the Liberals come along and say, "our priority in terms of tax cuts, is to give it to the top 20 per cent of the income distribution." That's classic trickledown economics and it's a classic recipe for greater inequality.

GILBERT: Their argument, though, is that when the full phase, the final phase, is introduced in seven years, at that point, you're going to have school principals, senior police and so on, who are going into that top bracket anyway. They will be benefiting from these tax reductions. Why not have it across the board?

SWAN: Well, because it's a recipe for inequality, it makes the tax system far more unfair, and what it does is reduce the capacity to give decent tax cuts to the majority of the workforce whilst creating the situation where there are further cuts to health and education because they're basically cutting away at the tax base.

GILBERT: In an economic sense, doesn't it make sense to have a competitive system?

SWAN: Well trickledown economics doesn't make sense. Greater inequality doesn't make sense. Because greater inequality in Australia – giving more to the people at the top, hollowing out the middle class, and creating armies of working poor – is a handbrake on growth and it poisons our society.

GILBERT: With the wage growth, are you hopeful that, with the economy improving and with the labour market proving resilient, that that will start to tick up?

SWAN: If you look at the economic data, and there's some data that came out from Westpac this week, about consumption, the truth is, the people whose wages are being suppressed – and are not yet even getting the decent tax cut from this government – they're the great drivers of the economy. And if you put a lid on their consumption by attacking their penalty rates and by not giving them decent incentive in the tax system, what you get is a weaker economy.

GILBERT: Does this argument on tax fit in with your view of where the ALP needs to be, as the newly elected President of the Australian Labor Party? 

SWAN: Too right it does. Because Nick Greiner said on the weekend that the next election is a fight for the central character of the country – I happen to agree with him on that. There's a very clear choice – a prosperous, fair Australia, with a fair tax system under Labor, and under the Liberals what you get is the rich are getting richer, the middle class is getting hollowed out, and they're all about creating vast armies of working poor for people on low wages.

GILBERT: So you want to focus on the big picture and the ideological battle, which is, no doubt, a very stark contrast between the two major parties at this election – more than I think any in recent memory. But beyond that, are there other things the party needs to deal with in terms of growing your membership, trying to make the party more modern and attractive?

SWAN: We've got to build the party to create a fairer Australia. To defeat inequality. That's precisely what I've been saying to party members around the country. The fact is that the Liberals have been captured by the radical right. The Liberal Party's been Trumpified, and it's now in the hands of the people who believe in extreme trickledown economics. Huge tax cuts for large corporations and huge tax cuts for people on $200,000 a year and over. That's their economic recipe. That's the Trumpification of the Liberal Party of Australia.

GILBERT: Is the party unified right now? Because internally we've had criticisms from some of your caucus colleagues about the strength, the influence of groups like the CFMEU, for example. Elements of the left, as well, are still worried about offshore processing and Labor's position on that. How do you manage those sensitivities at Conference later in the year?

SWAN: We're a passionate party. We care about the future of the country. We want a country that is prosperous and is fair. And as part of that, we will have very spirited debates. But there's just such a clear contrast between the Labor Party on the centre-left of politics, and the way in which the Liberal Party has now been captured by the radical right – the Tea Partiers if you like – people who believe in extreme trickledown economics.

GILBERT: Are you concerned about the influence of the CFMEU over Bill Shorten?

SWAN: Not at all! Look, they're the propaganda lines that the government runs in the Parliament. Who runs the Liberal Party? The plutocrats. Very large companies that are getting the tax cuts from this government. Follow the money trail.

GILBERT: Mr Swan, good to see you, we appreciate it. Thanks very much. 



Authorised by Noah Carroll ALP Canberra