TUESDAY 2 JULY 2019
SUBJECTS: Tax Cut; Budget; Religious Freedoms
STEPHEN JONES MP, SHADOW ASSISTANT TREASURER: This afternoon the Reserve Bank is expected to lower the cash rate once more. Many expect this to see interest rates at record lows. This is not an endorsement of the Morrison Government's economic management. It's an acknowledgement that the Australian economy is in trouble. It's going to affect everyone but it will particularly affect pensioners where the gap between what the Government says that they are going to earn with their savings and the gap that they can actually get is going to increase. Pensioners are going to be worse off because the Government has stubbornly stuck to an unrealistic dreaming right now. In normal times, a Government would have enough room in its budget to do something about this but because the Government has proposed to bake in unaffordable tax cuts well into the future, the last lot kicking off in 2024-25, it has less room to move to provide relief to pensioners. It's another reason why Labor is deeply sceptical about the Government's ability to manage the budget, the economy and why we should be very concerned about these proposed tax cuts. Whether its pensioners, whether its pressure on the National Disability Insurance Scheme, pressure on health budgets, pressure on the Pharmaceutical Benefits Scheme, the Government has to come clean and say what will be the impact of these unaffordable tax cuts.
JOURNALIST: Is it fair to say that a cut that doesn't come into effect till 2024-25 leave some no room to move? I mean if the markets going to falter if there's no conflict in the market if people are going to be affected by this it’s not going to happen until 2024-25?
JONES: This is an argument in favour of Labor's position. Bring forward Stage One and Two. So we get some fiscal stimulus now and get the economy moving. That's what people are worried about, they are worried about the condition of the economy now not tax cuts in 2025. But the condition of the economy now, let's get some fiscal stimulus into the economy now and deal with 2024-25 tax cuts much closer to the event. A prudent Government will do exactly that but when they bake in these long-term tax cuts for the highest income earners not due to kick in until 2024-25 that leaves them, frankly, less flexibility to deal with the implications of another rate cut and the impact that's going to have on deeming rates and pensioners who are already struggling.
JOURNALIST: Does another right cut signal that the Australian economy is in serious threat of going into recession?
JONES: Well, the Reserve Bank Governor has signalled that they are very concerned about sluggish growth, sluggish wage growth, pressure on household spending and nothing on the horizon which is going to turn this around. So they've got the Reserve Bank Governor with his foot on the accelerator. You've got the Prime Minister with his foot on the brake. This is not a recipe for sound economic management.
JOURNALIST: Just on another matter and we heard from one of your colleagues that it might be a worthwhile manoeuvre to have union bosses removed if they're not up to scratch or if they don't perform. What do you make of that suggestion?
JONES: Look let's just face it. Let's just deal with the matter before us at the moment. John Setka by his own admission has got some issues with his private life. They are completely at odds with the values of the Labor Party and Anthony Albanese has signalled his intention to act upon that, I'm not aware of any others. Let's just deal with the matter that's before us at the moment.
JOURNALIST: Just briefly back on tax cuts. I just want to absolutely clarify with you that 2024-25 cut you can obviously make a model argument against it. Is it really fair to say that baking in that tax cut poses a risk to the economy?
JONES: Well, it clearly is a problem to the budget. Let's just focus on this for a moment: over one year the cost, the estimated cost of Stage Three is about $nine billion dollars. Over the medium term $90 billion. The pharmaceutical benefits scheme we pay somewhere between $10 and $11 billion a year. So this Stage Three tax cut is roughly equivalent to the amount of money that we are spending on subsidising medicines. This Stage Three tax cut is roughly the equivalent of what we're spending on subsidising medicines through the federal budget. It is going to put pressure on our budget. It is going to lead any future Government to have to make tough decisions about what they cut. So the Prime Minister should come clean now and say what are the future cuts to health, to education, to pensions, to the National Disability Insurance Scheme, you are factoring in because of these long-term tax cuts.
JOURNALIST: I guess in the inverse, if an interest rate cut is pass today is bringing forward Stage Two to enough? Should we do more to perhaps try and kick start the economy?
JONES: We should bring forward Stage Two, but we do need to do more we need to look at what infrastructure projects that we can bring forward which will boost economic growth particularly in places like Central Queensland, in Tasmania and in parts of Western Australia, some big infrastructure projects are needed to bring forward economic growth in some of those regional economies. So we need to do much more The Reserve Bank Governor has made this quite clear in his view. We are at the limits of what monetary policy can do. It’s up to the Government to act.
JOURNALIST: Okay briefly as well. Obviously up for debate this week too is the Religious Freedom Bill the Prime Minister said, he doesn't want to make it a partisan issue, is Labor prepared to look at strengthening religious protections?
JONES: Look this shouldn't be a partisan issue. And I think if you look across the parliament, you'll find as many different views as there are parliamentarians. It's exactly the sort of issue that we should reach across the aisle and find a sensible durable solution on. I don't think it's going to be as easy as Scott Morrison seems to suggest. I think there are some really tricky issues here that we should work through in a bipartisan fashion.