ABC 24 NEWS BREAKFAST
1 JULY 2011
SUBJECTS: Productivity, tax reform and carbon tax
Michael Rowland:
Head of the Federal Treasury, Martin Parkinson is calling for a fresh wave of economic reforms.
Beverley O'Connor:
He's warning Australians will have to work harder if they want to maintain their living standards. Assistant Treasurer Bill Shorten is in Melbourne for the economic and social outlook forum where Mr Parkinson himself spoke last night and he's in the studio with us. Many thanks for your time. Would you agree with him that the political debate has been sidetracked?
Bill Shorten:
Well, we are determined to get our price on carbon. I think the contribution of the opposition is a distraction in that it is just relentlessly negative. I think that Australians shouldn't be afraid of the future. We're on the fringe of the fastest growing economic region in the world. Our farms are the best in the world. Our mining companies are doing well. Our services sector is as good as anywhere in the world, so I am upbeat about the future, but of course as the Treasury Secretary said last night, we need to keep relentlessly focusing on productivity.
Michael Rowland:
There has been bit of a backlash from our viewers this morning, a bit put out by this call for them to work harder. A lot of them, as you well know, are working very hard simply to make ends meet on a day by day basis. Do you think that message isn't going to play too well with the broader public?
Bill Shorten:
Well, I think that when we talk about productivity it is not just a question of someone running faster on the spot to keep up. I don't think Australians are lazy at all. I think Australians are very hard working. If you look at the history of productivity over the last few decades, we had a spurt in the 1990s which was very good, but really in the long sleep of the Howard Government, the productivity fell off. Productivity doesn't just mean working more physically harder or working longer hours. What I think it means and what I believe the Treasury Secretary was getting at we need to look at the intersection of a range of factors, the investment of capital, the take up of new technology, how do we do what we do and get more out what we do for the same amount of effort.
Beverly O'Connor:
Are we being then lulled into a false sense of security. There are people working incredibly hard. The people in WA in the mining boom are working very hard and they're benefiting from but there's is this other part of the economy which is not keeping pace perhaps because distraction of the mining boom, is not developing properly and will be left caught short if we don't pay attention to that side of the economy.
Bill Shorten:
I think if you are a teacher or public servant or someone working in tourism or the financial services you do work as hard as someone working in mining...
Beverly O'Connor:
They do work as hard but the structure of it...
Bill Shorten:
You are quite right though to identify that this mining boom is different to previous mining booms. There's no doubt that the dirt we dig up, the coal, the iron ore is worth more than it ever has ever been overseas.
What we are seeing with the increased values of our minerals we're also seeing a very high dollar. If you've got a very high Australian dollar that's great if you're going to lie on a beach in Bali or you're going overseas further, but the problem is that if you are a manufacturing company in Melbourne or Sydney and you're making components which someone else could import much more cheaply because your dollar is more expensive, then it becomes a lot more problematic.
If you're running a tourism operation in Queensland and it is costing foreign tourists more to stay each night in Australia, that's a problem. That's why the Gillard Government want to share the prosperity of the mining boom. Let's be clear about this mining tax, there are some who say we should take it all off the companies.
I think that's not a smart economic idea in any fashion, but then you've got the coalition who say the mining tax is bad. Our view is these are finite resources, the minerals, and if we've got an uneven economy, what we should do is take a fraction of the big profits and make sure we can pass on the company tax reductions to all those other businesses, better superannuation, people don't have enough to retire on, we want to spread the prosperity of the mining boom.
Michael Rowland:
You mentioned the carbon price. Why is the Prime Minister all of a sudden playing semantics when it comes to describing what is going to happen before the emissions trading scheme comes in.
Bill Shorten:
Well just to go back to an earlier question that was asked where the Treasury Secretary says some of the political debate is getting in the way of reform. Can I say quibbling over what the Prime Minister has, said in my opinion, is a distraction. What she has said consistently she wants a price on carbon. We've got to decouple economic growth from reliance on high carbon pollution. What we're going to do is in the short-term, three to five years, have a tax on carbon, but that is a short-term measure. We ultimately want to have a traded system whereby people are encouraged to reduce their pollution and they can trade their carbon pollution amongst each other to encourage a more efficient, non-carbon polluting industry.
Michael Rowland:
It will be a default tax but a default carbon tax for the next three years?
Bill Shorten:
For the next three years, that's right. You would think if you listen to the Opposition it was like a Henry Lawson poem we're all going to be ruined. The reality is that we will announce the price and compensation mechanism soon. I don't have any doubt about that. We have also made it clear that for millions of Australian households there will be compensation. Let's be clear for every dollar raised by this carbon tax over the next three years goes ploughed back into household compensation, into supporting industry, it is all going back.
Beverley O'Connor:
But that very point in itself, does that not distract you from reforming other parts of the economy? The fact that you are under pressure and constant pressure by the Coalition to make sure that no-one is worse off, do you then get the opportunity for reforming in parts?
Bill Shorten:
Well we are committed reforming and reducing the level of carbon pollution...
Beverley O'Connor:
Other than carbon pollution...
Bill Shorten:
Yes that's right, we are. Carbon pollution, reducing that is important. We all know if you live near a busy roadway you get worried about what the kids are breathing. We all know that creating new industries creates jobs. It is remarkable that in Germany they have three times the size of our solar industry yet they've got less sun. You've got to have some positive signals to say we're interested in alternative energy.
Beyond that, this Government's got on with a big load of work since 2007. Income taxes have been reduced remarkably. If you earn $50,000 you need every dollar there's no question. The tax you're paying now this year will be $1,750 less than what you were paying then. This Government consistently since 2007 is raising less tax as a proportion of the economy than our predecessors. It may come as a surprise for viewers, there is a myth about taxation.
The Liberal Government under John Howard, the Commonwealth Government charges more taxes as a proportion of the economy than we needed to fight World War II.
Michael Rowland:
The latest whispers to emerge from the negotiations is that the Hazelwood Power Station, Australia's dirtiest coal-fired power station will close, will be bought out under a deal. Can you confirm that?
Bill Shorten:
I am just not involved in that level of the negotiations and the detail, rather than say something I don't know I just have to say I don't know.
Beverly O'Connor:
But how do you feel as a former union man how do you think the worker around that one and some of the others might feel about losing that industry that's been such a big part of the community?
Bill Shorten:
Well lets be clear. Coal still has a role going into the future. Power generation still has a role going into the future. I did organise in the metal trades down in the Latrobe Valley in the 90s and I tell will you nothing that's coming along with the discussion about reducing carbon pollution will be as devastating at privatisation of the SCC was and thousands and thousands of jobs went.
I just don't know the detail about Hazelwood but when we have a discussion about job losses I see some of the crocodile tears of Liberal MPs who have discovered men in overalls working. I saw what happened in privatisation. Go and ask anyone in the valley, that was what wiped out jobs.
Beverly O'Connor:
Bill Shorten, thanks for coming in.
