Interview with Patricia Karvelas, RN Breakfast
7 March 2023
PATRICIA KARVELAS: Reserve Bank of Australia, the RBA is tipped to deliver its 10th consecutive interest rate hike later today. The cumulative effects of the rises means the average borrower with a $500,000 loan is around $1,000 a month worse off, and the picture is equally grim for renters. Jane Hume is the Shadow Minister for Finance and our guest this morning Jane Hume, welcome.
JANE HUME: Good morning PK.
PATRICIA KARVELAS: In the last quarter, we've seen consumer confidence drop, real wage growth slower than expected, GDP growth lower than expected. If the RBA raises rates again, are you worried that we could face a recession? We keep getting told we'll avoid it but is this something that becomes a bigger risk?
JANE HUME: Well, we're certainly told that the cost of living is the number one issue of threat facing Australians right now. We know that prior to the election obviously Anthony Albanese promised that Australians would be better off under a Labor government. They promised that you would feel a change of government in your hip pockets and they certainly are but probably for all the wrong reasons. Higher grocery prices, higher energy prices, higher mortgage repayments and while we know that the last week's National Accounts show that the economy is slowing, it's getting tougher for hardworking Australian families to make ends meet, those savings ratios have decreased quite dramatically now so we know that people are dipping into their buffer in order to make ends meet and that's having flow on effects. You know, we heard from lifeline for instance, yesterday saying that there's record activity now on their website, asking for help and support. They're searching for financial issues, and homelessness. In fact, those searches went up by 49%, just between August and January this year and there's also increased demand on on our charities and particularly on food distribution who are telling us at the cost of living committee, that they're now seeing people under mortgage stress that are coming in seeking help from food donations, or people with incomes or even dual incomes, families seeking support for the first time. So this is a genuine concern, and the government does need to address it. It needs to do that through its sensible budget management to make sure that the RBA doesn't have to do all the heavy lifting on interest rates.
PATRICIA KARVELAS: Well let's go to sensible budget management because it introduced or it announced a measure last week to deal with the fact that the budget obviously is you know there's more things that people want of the budget then we can afford and that's the superannuation change. You've come out and said you'll repeal it. Why repeal a measure that's about making the budget more responsible?
JANE HUME: Well, the fact that they have asked retirees to pay for budget errors on their behalf, they have those increased spending demands. Wouldn't you suggest that the best way to manage a budget would rather be than asking retirees to pay more, simply controlling those spending urges potentially reprioritising some of that enormous election wishlist that the Labor government came to government with. They came to government with an additional $8 billion of spending promised. They in fact spend an additional 23 billion and that was just the last budget that is adding to inflation that is causing the RBA to have to do all the work to bring inflation down. So I would suggest that rather than going after retirees who have relied on a superannuation system, who have put voluntary savings away because they trusted in the system, and they trusted Anthony Albanese and Jim Chalmers when they said there would be no changes to super, that there would be no changes to tax. Perhaps the Albanese government could consider changing its attitude towards its budget spending rather than increasing taxes.
PATRICIA KARVELAS: So some of that spending that you're talking about. Let's talk about one of the measures which is about building homes for some of the most vulnerable women. Do you think that it should curtail that, rather than dealing with people who have more than $3 million in their superannuation accounts?
JANE HUME: Well, for that, we'll just dispel the myth that this superannuation policy is one that only affects the top point 5% of Australians because that is not the case. In fact, it was revealed yesterday that within the next 30 years, it would, in fact, be in the top 10% of the population. Now today, the top 10% of earners in Australia earn more than $131,000. That's not an enormous amount of money.
PATRICIA KARVELAS: I think that's right, but that's 30 years away.
JANE HUME: And that's exactly the point of superannuation is that you should put money away for long periods of time and you are compensated because it has been quarantined away from you compulsorily, compulsorily. The government says it will take your money away from you, and it will lock it up for 30 years and in exchange, you get a tax concessional rate, that's the contract. They have reneged on that contract, not just 0.5% of income earners, but for 10% in 30 years. So anybody that's in their 30s today, may very much be affected by this policy by the time that they retire. I think that's cause for great concern. More importantly, this is a broken promise and they have gone back on their word.
PATRICIA KARVELAS: They can be punished at the ballot box can't they?
JANE HUME: They can be but you know, as well as I PK, but this policy will be waved through the Senate and by the Greens and at the next election, no matter who wins there will still be a Senate that is dominated by Greens who will make this very difficult to repeal. So while we will commit to doing our best to repeal this legislation, because it is poor policy, it is not indexed, it doesn't deal with unrealised capital gains in a traditional way. In fact, it changes the tax system entirely. We will repeal this because it's poor policy, but it will be a very difficult thing to do.
PATRICIA KARVELAS: But in 2016, your government went further in terms of superannuation taxation and at that stage there was big defense of that, was that poor policy?
JANE HUME: That policy was specifically to sustain the superannuation system, it allowed us to then put more money into the superannuation system, so that people could say for instance, women could make catch up contributions if they're taking time out of the workforce, self employed people could put money into superannuation liability. Also the people that were downsizing their homes and people were downsizing their homes could then put that money into super, but we encouraged people to put more money into super on a voluntary basis to sustain the superannuation system. Jim Chalmers and Anthony Albanese are taking money from retirees to help sustain the budget. This is not about super, this is about the budget. They've simply found what they've considered to be low hanging fruit, but it's a very ill considered policy. The fact that it’s not indexed, the fact that unrealised capital gains are treated entirely differently than they ever have been before. The fact that it doesn't consider people on defined benefit schemes rather than defined contribution schemes. This is a giant mess that the Labor Party have got themselves into. They cannot explain a way out of it and now we've found it's going to hit one in 10 Australian earners.
PATRICIA KARVELAS: Let's talk about this idea of indexation. I mean when you were in power, the income threshold for people to pay the division 293 tax from 300,000 down to 250, that wasn't indexed. That catches a lot of young people.
JANE HUME: And neither is income tax indexed. We're not talking about income taxes here and 293 is a form of income tax. In fact, it's a way of making the superannuation system progressive because the flat tax rate on Superannuation is 15%. That's the contract. That's the deal for putting money away and locking it up for potentially 30 or 40 years. What Jim Chalmers can't explain is how this system is going to work. Now that you're making a 30% superannuation tax for some portion of the population and yet 15 for others logistically that's very hard to manage. I don't think that they thought this policy through before it was announced. It was simply a way to bring our national conversation in inverted commas on superannuation to an end.
PATRICIA KARVELAS: Okay, I just want to move to a couple of other issues before I let you go. The other big key issue that's going to dominate this week is the referendum machinery act. It will be debated this week. If the opposition still says it wants more concessions from the government, they've agreed to fund a pamphlet, and they've already given you a yes or no pamphlet. What more do you want?
JANE HUME: Well, this is really important to understand PK, because we want people to understand that this is not simply a bill about a referendum on a voice to Parliament. It's a bill about referendums into the future. So when the Coalition looked at it, we said well, if this were a referendum about say making Australia a Republic or putting more parliamentarians in Parliament House, what would Australia expect from their referendum? They would expect a pamphlet with a yes and a no case, that's been the case since 1912. They would also expect an official yes campaign and official no campaign and they would expect those to be appropriately funded. Now, why is that important? Because the other things that this bill will do is make this referendum look and feel like an election. And elections now have things like donation laws, they have foreign donation laws and have foreign interference laws as well and in an age of disinformation and the highest level of foreign interference in our history, we believe it is fundamentally important that the government takes the lead and provides clear information to Australians and a strong referendum process that Australians can rely upon and contrast.
PATRICIA KARVELAS: Okay so, when you say appropriately funded, this is what I want to really nail down if you could help me, what does that look like? What's a yes or no appropriate funding?
JANE HUME: Funding campaigns is not about giving them money for promotional materials or advertising or to actually campaign. It's to ensure that both sides of the debate can establish themselves to ensure they comply with, for instance, the disclosure regimes, the regulatory regimes that are imposed upon elections so that they can have appropriate cyber security measures in place and this is really important. The cybersecurity measures should not be underestimated. The Director General of ASIO told us only two weeks ago that we are seeing the highest level of foreign interference in Australia's history. So these are very simple and practical steps that put a structure around a referendum process that help our regulators, that help our security agencies to manage this referendum. We know that there's been foreign influence in other countries, for instance, you know, in Canada, their intelligence agencies said that they had uncovered plots to interfere in their 2021 election, in order to create a minority Government. Now a referendum shouldn't cause disruption and division. We want to make sure that the process is as robust as possible.
PATRICIA KARVELAS: And you're prepared to vote it down. If you're not, if you don't get a yes or no campaign set up?
JANE HUME: Well on these grounds alone, I think that it's a good enough reason to have a very formal structure around your campaigns, and at least a nominated official yes and a no campaign as conduits for that cyber security, for our agency to make sure that they can do the regulatory and compliance job that they need to do. This is the best way to have a robust referendum and let's face it all Australians deserve a successful referendum, no matter what the question is.
PATRICIA KARVELAS: We're out of time, but thank you so much for joining us.
JANE HUME: Great to be with you.