01 Feb 2017

SUBJECT/S: Company tax cuts; Prime Minister’s political donations.

PETER VAN ONSELEN: Joining me live from Melbourne is the Shadow Minister for Employment and Workplace Relations, Brendan O’ Connor. Thanks very much for being here.


VAN ONSELEN:  What did you think of the Prime Minister’s speech in the area that pertains directly to your portfolio responsibilities? His argument you saw it reported in the papers, reiterated in the actual words of the delivery, he essentially says that the best pathway to more jobs and better jobs is to support his company tax cuts.

O’CONNOR: Well I don’t support the arguments put forward by the Prime Minister. I mean he even claims that after 20 years there might be a $700 wind fall for people. I mean, the fact that you would take $50 billion, use that as tax cuts for the big end of town and then hope to get some dividend in two decades is not the recipe for success that we need in this country.

And further to that, where is he going to afford it? I mean it’s really just taking the money out. He likes to talk about the reforms of the past but for example when Keating cut the company tax rate, he broadened the tax base by introducing the Fringe Benefits Tax etc. There is no real sort of general reform happening here. There is no effort to find the money elsewhere-

VAN ONSELEN: Okay. Let me ask you this-

O’CONNOR: Just finally can I say it’s not going to lead to jobs growth. There is no correlation and there’s no evidence that it would.

VAN ONSELEN: Well that last point is the one I take a little bit of issue with, with my next question. I mean I accept what you saying about there being no integrated approach here, like what Paul Keating did. And I accept what you’re saying about it leaving a black hole potentially in the budget, particularly if the growth he talks about doesn’t follow. But as a simple principle, surely you would agree that lower taxes including lower company taxes is more likely to spur greater company investment in this country. The issue then is the debate about whether it’s affordable and how beneficial and whether it’s worth pursuing.

O’CONNOR: Well, firstly, no I don’t accept as a given that if you just reduce tax you are going to see a correlation in employment growth. I don’t think that’s a given and I’m happy to explain why. I think it’s possible that if particularly if you’re giving the tax cuts to larger enterprises, that money may end up going into the hands of richer shareholders who of course spend less of their income than low paid workers or middle class and working class people which means there might be less money spent on the economy as a result the economy may slow, may become increasingly anaemic as it is now but even more so. And therefore I don’t think it’s the case and in fact the whole trickle-down economics theory that’s been employed by conservative governments over the last 40 years I think have been exposed to be often wrong. I think they were wrong in 1980 when the Reagan administration sought to do it by racking up huge deficits.

It’s not to say that you can’t cut corporate taxes which can actually stimulate the economy. I think though you have to be more targeted. For example, instant asset tax write-off we support, jobs tax cut announcement that Bill made yesterday, which actually has a target that if you actually increase employment in your business you get tax cuts. I think there needs to be a closer association between the tax cuts and employment, particularly at a time when we’re fiscally under pressure and we cannot afford $50,000 million, much of which is-

VAN ONSELEN: But on that Brendan O’Connor, even if some of it did in quantum therefore doesn’t make it worth doing, I’m not disputing that I mean I think that’s a debate worth having. I also think the debate about whether it’s affordable right now is a debate worth having. But surely the principle that lower company taxes generates greater business investment in this country is just a no brainer? As it was when the Keating Government was dropping company taxes, just as Peter Costello did before that, but there’s been such a long break ever since for anything really meaningful in this space.

O’CONNOR: If you use that argument to an extreme, of course you’re saying it would be best that no one paid any tax. Of course that doesn’t work -


O’CONNOR: It has to be a balancing - a tipping point – when it’s actually a deficit for the country. Now, I’m not suggesting there won’t be occasions in the future that you can’t look at that. And in fact we do support tax cuts for small businesses because we do think we can see the immediate benefit there. We have attached also our own proposed tax cuts for small businesses if they show additional employment growth. I think that’s a reasonably thing to do in a climate where deficit-

VAN ONSELEN: Are you open Brendan O’Connor, sorry to jump in, but -


VAN ONSELEN: Are you open to extending the range of what constitutes a small business to get that tax cut that Labor is already stipulating? There was some questions in that direction to Bill Shorten at the National Press Club yesterday.

O’CONNOR: I think that’s something that can always be under review. I think it’s true to say the definition of small business that Treasury has used - of a $2 million turnover - has been there for some time. But again we have to be able to afford it.

And remember this, if we’re extending tax cuts to predominantly larger businesses, because $48.5 billion will go to the larger businesses not small businesses then we are taking it out of education, we are taking it out of health and we will be taking it out of services, which of course will also have employment consequences if you take money from those social services.

But more importantly I think Peter if I can just say this, because it’s coming down to this argument now, we’re better placed to put tax payers’ money. I would argue its more compelling in the current economic climate and in a globalised knowledge based economy, to invest in education and skills. I think you’re going to get a better return over a longer period for your country, for business, if we have the most skilled and educated workforce.

I’m afraid to say that so far we’re going backwards in terms of educational outcomes. And I don’t subscribe to the Prime Minister’s view that it’s not about the money – of course it’s about how you do things but it’s also about investing to provide every child an opportunity. And beyond that the vocational sector needs a complete re-enlivening because it’s let too many people down over the course of their working life as well as young apprentices. I know they’re very broad-

VAN ONSELEN: What about industrial relations reform?

O’CONNOR: If you want to talk about the success story of Australia, for 22 of the last 25 years that’s been based on collective bargaining. There was an attempt to strip that back, which I think was very unfair and ultimately less productive system - WorkChoices. We believe that collective bargaining is the right vehicle. You can always look at the way in which you can change that, but I think at the heart of it involving workers in workplaces to deal with employers directly or often with unions leads to better productive outcomes and better workplaces generally.

I know that the other side of the parliament like to discredit unions at every opportunity, but I think the reality is when you bring people together, metaphorically around the table, whether it’s to deal with a national challenge or to deal with workplace reform, you are always better placed in terms of better outcomes.

And I think the Government has got to stop this unmitigated attack on all organisations of employees, which is about to start in the New Year. I think in the beginning of the year again we’re going to have another round of attacking unions. I think people are a bit over that.

I think what the people would expect more from the Government now, Peter, is the Prime Minister showing leadership and saying not only to business but to unions, lets deal with some of the structural challenges together. But when you attack one side and you only support the other you lead to this very shrill political atmosphere.

And I should just - I’m not sure if you’re going to touch upon the point. One of the points I wanted to make about the speech, Peter, beyond the hollowness of it and the fact he’s just reiterating old statements, was the fact that how hypocritical the Prime Minister was in not disclosing his donations. It even appears now that he managed to make the donation on the last day before the election in order to hide his donations for another 12 months. That is remarkable given he said in the same breath he believes that we should be moving to real time disclosure. I mean, you can lead the way and say “this is my donation”. I found that, quite frankly, breathtaking.

VAN ONSELEN: Yes, you’re not going to get a disagreement from me on that one, Brendan O’Connor. I was taking about that to David Speers, Kristina Keneally and Sam Maiden. We were all in lock step that he can donate to whoever he wants to, but it’s bizarre politicking apart from anything else that he wouldn’t want to get that one behind him.

We’ll leave it there. We appreciate you taking the time to join us on Newsday. Thanks so much for your company.

O’CONNOR: Thanks very much, Peter.

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