Q&A: Labor’s Chris Bowen accuses Treasurer of budget hoax

Chris Bowen has ramped up his attack on Scott Morrison in a heated edition of the ABC’s flagship program.

Federal Labor treasury spokesman Chris Bowen on Q&A.

Taxes, wages, and super — the battlelines for the next federal election were drawn on a fiery post-Budget episode of Q&A.

Cybersecurity Minister Angus Taylor fought off suggestions that the government’s seven-year tax plan to wipe out bracket creep would result in inequality between middle and high income earners.

He said voters, and commentators, should not confuse the average and marginal tax rates in Treasurer Scott Morrison’s Budget cornerstone policy.

“People are confusing two different things. One is the marginal tax rate. What do I get if I earn another dollar? That’s critical to drive incentives,” he said, “We want marginal tax rates which encourage people to get out there and have a crack.

“The average tax rate which is what matters for equity … That’s why the nurse will be paying only 10 per cent tax and the doctor on $200,000 is paying 30 per cent tax.”

Shadow treasurer Chris Bowen said that the Government’s tax plan was a “hoax” that a future Coalition Government could abandon if economic conditions changed.

“What’s going to happen is, if the Liberal Party won the 2018 election and the 2021 election and was in office in 2024 ... they’ll say the world economy has turned down, we can’t afford it anymore, we have to take it back,” he said.

“This is on the never, never. This is a hoax in many senses.”

But the real sparks flew when The Australian’s contributing economics editor Judith Sloan was interrupted by Australia Institute chief Ben Oquist during a debate about how progressive Australia’s tax system really was.

“I haven’t had much of a go ... I guess because I’m a woman,” Ms Sloan said.

Mr Oquist went on to say that 13 per cent of Australians were in the top tax bracket. Ms Sloan disagreed.

“You’re talking through your hat. There are only 4 per cent in the top marginal tax rate. I don’t know where you get your figures from. Under the new plan it will be 6 per cent in the top marginal tax rate,” she said.

“Then you can say it’s great and more progressive than the current arrangement. So you should be giving it the big tick.”

Judith Sloan says @BenOquist has ignored fiscal drag & we should commend long-term thinking. @AngusTaylorMP agrees #QandA pic.twitter.com/xtNVCbjvho

— ABC Q&A (@QandA) May 14, 2018

SUPER

The shadow treasurer was forced on the defensive when a university student, who works two jobs and has started a small shares portfolio, asked why he was being targeted by Labor’s dividend imputation policy.

“We’re keeping dividend imputation. Dividend imputation is saying to people the companies pay tax. When you get your dividends from the company you own shares in, we won’t tax you on those shares because the company has already paid tax,” he said.

“Fair enough. It was a Labor invention and an important one.”

But Mr Bowen said the policy was necessary as the Budget could no longer take the strain of a $6 billion refund policy.

“We’re the only country in the world which does this, that has fully refundable imputation,” he said.

“That’s not sustainable anymore. It’s not fair.”

Mr Taylor, representing the Government, said that the “nannas” and low-income earners would ultimately pay if Labor taxes self-funded retirees’ dividends.

“There are lots of older people in my electorate who essentially on very little income they rely on $3000 or $4000 of these franking credits and they’ve been to their accountants and financial planners in the last 6-8 weeks and have realised what Labor is going to do to them,” he said.

“This is a bad policy and a big mistake ... The numbers don’t add up. The nannas will pay for this. There’s no doubt about it.”

Bank of Melbourne chairwoman Elizabeth Proust said voters were left confused and worried by constant changes to superannuation rules by both the Coalition and Labor.

“I probably should declare I’m a not yet self-funded retiree ... the constant changing to pensions and imputation means people almost despair of being able to plan for a reasonable and secure retirement,” she said.

Ms Sloan said high income earners paying income tax would be let off Labor’s proposed changes but self-funded retirees just above the ceiling for the pension would suffer.

“That’s great, because those struggling self-funded retirees are just a bit above the aged pension entitlement and miss out,” she said

“So you’re happy for a worker to take a $10,000 income per annum cut, that’s fine by you is it? But if you’re rich you keep it? Keep the benefit? That’s a really weird Labor policy.”

.@Bowenchris says they have the courage to take tax reform to the voters. @AngusTaylorMP says tax reform changes behaviour #QandA pic.twitter.com/IcxkfOzxY1

— ABC Q&A (@QandA) May 14, 2018

WAGES

Budget predictions of a 3.75 per cent wage increase in four years’ time were labelled “pretty heroic”.

Mr Taylor said the answer to increasing wages growth was to pass the Government’s long-promised tax cuts to big businesses and its sweep of personal income tax cuts to spurn on the economy and employment growth.

“The biggest downside risk to wages, the wages forecast in the Budget is not getting these tax reforms through,” he said.

We need to give the incentives there for businesses to invest, to employ more people, for people to work hard. And that will yield rising wages.”

“I have no doubt whatsoever that the job market is tight. I’m seeing it on the ground. I think the conditions are there for increases in real wages.”

Mr Bowen said wages growth would still be at the mercy of the labour market under an ALP government but that their policy to stop penalty rate cuts would ease the pressures of low wages growth.

“Wages will always be primarily a factor of the labour market but we have been looking at things like we would reverse the penalty rates cut,” he said.

“And we have been saying a lot about wages theft and we have been engaged in a very deep consultation process with business and unions across the board about sensible changes that could be made.”

Ms Proust was not convinced by the wage growth predictions.

“They’re Treasury figures but are pretty heroic,” she said.

“I’d like to think that in three or four years time that will be the level of wage growth we’re seeing but we’re not seeing it now ... (if the figures are wrong) we won’t be in surplus a year earlier.”

Mr Oquist said low wages growth had been the direct result of a “generation” of politicians, businesspeople and economists who had worked together to workers’ pay-packets from increasing.

“The reality is we put in place structures to keep them down,” he said.

“We need new structures and new rules that will allow wages to grow faster because without it we won’t meet the government forecasts and it is total hypocrisy of the Government to forecast 3.5 per cent wages growth but demand the public sector only have 2 per cent.”

“They could start by eliminating that cap in the public sector. That would help them get to the 3.5 per cent they say they’ve want us to get to.”