Interview with Patricia Karvelas, RN Breakfast

24 August 2023

PATRICIA KARVELAS: The Intergenerational Report raises some big questions about how Australia will increase its productivity and fund the demands of its future population. So far, the government has rolled out any significant tax reform in response to the report. So what options does that leave? Jane Hume is the Shadow Minister for Finance and she's with me in the Melbourne studio. Jane Hume, welcome.

JANE HUME: Good morning, Patricia.

PATRICIA KARVELAS: I'll take you back to your comments earlier this week. You said the report would be a Trojan Horse for higher taxes. But in fact, when I ask the ministers responsible today it was Katy Gallagher. The language that they use is modest and and smaller reform that they're not talking about big taxation changes. So what's the evidence for that?

JANE HUME: Well, a year ago they weren't talking about any taxation reform. In fact, when Labor came to government, they said there were going to be no changes to taxes at all. Except for multinational tax avoidance. Well, we've already seen that promise was very quickly broken and essentially what they've been doing throughout that 12 months, is putting the frog in the boiling water and boiling it slowly. Getting us ready for more taxes and higher taxes. They've done it by taking away the guardrails, for instance, that we had on a tax to GDP ratio. They said that that was arbitrary, but in fact, that was a really important measure to make sure that we don't overtax, overburden, the population, the working population, with higher taxes. That's now been removed. The IGR has said that there's going to be increased pressures on the budget in the future and it seems that the government is simply shrug the shoulders, you know, raised the white flag and said up, there's going to be more spending. So therefore, we're going to need high taxes. They've been warming us up for this for some time. Rather than saying, 'well, if there's going to be these pressures on the budget, what are we going to do to reform areas like the NDIS areas like aged care, areas like health?'.

PATRICIA KARVELAS: So you want all the reform on the spending side?

JANE HUME: Well, there should be reform on the spending side. Otherwise, the government simply isn't doing its job. And in fact, when we were in government, we had some reforms on the table around the NDIS, which were blocked by the government. Now that they're in government, and they've realised that the NDIS does need reform that it's growing exponentially, at 14% a year, they've said 'we're going to reform it, it's now going to grow at 8%'. Well, first and foremost, 8% is an enormous growth rate. In itself. But more importantly, there just simply is a policy measure to back that up. The IGR has said that there are going to be these pressures on the budget, but there's nothing new here. We knew that those pressures were going to be there because the last budget said it. Indeed, the last IGR said it.

PATRICIA KARVELAS: Yeah, well that's the point of an IGR. It gives you sort of the idea of what the country looks like into the future. Your Nationals colleague joined me earlier this week, David Littleproud. And he told me we do need to have a mature conversation on tax and everything should be on the table. You can't carve things out. Is that right?

JANE HUME: But when Labor say that tax reform needs to occur, what they essentially mean is higher taxes.

PATRICIA KARVELAS: Well I've asked them specifically and that's not what they said.

JANE HUME: What have they said, that it just needs to be reformed. But they haven't spoken about spending reform. That's the job of a government is to work with the limit that they have, you know, work within the envelope. That's doing their job.

PATRICIA KARVELAS: I'm going to return you to David Littleproud's comments about a mature conversation on tax everything being on the table should everything be on the table?

JANE HUME: A mature conversation about tax should be about a lower, simpler and fairer tax system. It's not about raising taxes, which seems to be the one modus operandi of the Government.

PATRICIA KARVELAS: So you disagree with David Littleproud that the GST shouldn't be looked at?

JANE HUME: Well, lower, simpler, fairer taxes should always be considered and I think David Littleproud would agree with me on that one.

PATRICIA KARVELAS: Okay. But there are economists, others have proposed for instance, an increase to the GST or broadening of the GST. Is that something that should be considered?

JANE HUME: Well, if that's something that the government wants to consider, I think that that would be worthy of their consideration. Let's face it, they've got wall to wall, Labor Governments, on mainland Australia. If they're going to be able to negotiate tax reform, that would be terrific, but that's not what they're saying.

PATRICIA KARVELAS: No it's not, so I'm asking for an alternative.

JANE HUME: They're talking about raising taxes. Getting us ready for higher taxes so that they can progress their spending agenda. We want to see control on the spending side of the ledger. That is fundamentally important. That's the job of a good government.

PATRICIA KARVELAS: Isn't the job of a good government to look at both sides?

JANE HUME: Well, wouldn't it be a good idea to make sure rather than shrugging shoulders, waving the white flag and saying spending's out of control? How about getting it under control? How about coming to the table as Peter Dutton said, you know, he said, if you've got a good idea on how to reform the NDIS, how to reform aged care, the Opposition will help the government progress that. We would be very happy to do that. But unfortunately, Labor have said that they don't want to do that. They'd much rather talk about removing those guardrails of tax to GDP ratios. In fact, the IGR in fact, they've said that they want to increase that by around half a percent. And they say, 'oh, that's nothing half a percent, it's not really a big deal'. Well, on a tax to GDP ratio, in fact, half a percent is tens of billions of dollars.

PATRICIA KARVELAS: If you look at the history though of tax, the government's pointed out that it was the Howard Government followed then by the 2013 Abbott Government that have actually raised the most tax revenue over the last 30 years. So that doesn't stack up does it?

JANE HUME: But staying within that tax to GDP ratio has been-

PATRICIA KARVELAS: But they were high taxing governments weren't they?

JANE HUME: You're talking, hang on, you're talking about in dollar terms as opposed to percentage terms. Keeping within those guardrails of tax to GDP ratios has made sure that we maintain an efficient economy. One that encourages aspiration, one that encourages investment. We've grown the pie rather than simply slicing it up in a different way.

PATRICIA KARVELAS: The report that will be released later today, but we've obviously heard a lot about it, shows that climate change alone could cost hundreds of billions of dollars over the coming decades just from lower economic output. Are you alarmed by that?

JANE HUME: I haven't read that report, I did see something about climate change potentially threatening a triple A credit rating and obviously, that is something that we would be concerned about because a triple A credit rating is very important in order to maintain a healthy economy. We've had a strong record Coalition and very strong record on making sure that we won't retain that triple A credit rating, which we did throughout COVID too if you remember rightly, despite the entire economy shutting down. So I think that, you know, related to the economic impact of climate change is probably another reason why for the Albanese government to, you know, act like an adult and have that conversation about nuclear energy, which they have already said is off the table. I think that Labor's path to decarbonise the Australian economy isn't working and the government doesn't know what to do. This is something that we have put forward that we think is a way forward to decarbonise the economy in an efficient way and we'd like to keep that conversation going.

PATRICIA KARVELAS: But even if your proposal and the policy settings were to change, the delay of getting these small reactors up and running in our country is way into the future, isn't it?

JANE HUME: Well, that's exactly why in the short to medium term, the solution is more gas. Just this week, we saw that AEMO's 10 year outlook says that we're going to need more gas in the market. More gas in the market to support our energy needs.

PATRICIA KARVELAS: But that doesn't fundamentally deal with climate change does it?

JANE HUME: It's about the transition as you know Patricia, to net zero. Gas is the most important transition fuel. Over the long term, a different pathway to decarbonise the economy as required and nuclear must be considered as part of that. Not only due to energy prices and reliability, but because it's a way to tackle emission reduction challenges that other nations are looking at, you know, I think more than 32 nations are currently looking at modern nuclear technology. Zero emissions nuclear produces absolutely no greenhouse gas emissions during its operation. It provides 24/7 baseload power. It can ramp up and down to accommodate the intermittent the variable nature of renewable sources. Other countries are doing this, why wouldn't we?

PATRICIA KARVELAS: Just want to take you to some other issues before I let you go Jane Hume. The Opposition said it would determine whether it would support the government's changes to the Petroleum Resources Rent Tax, the PRRT for those who are now familiar with it. Once the legislation has been released, it now has been business once this passed. Will you wave it through?

JANE HUME: Well, I have to admit I haven't looked at that legislation yet myself. I've been this week in Port Augusta and Alice Springs and only just got back last night. What I will say is it will go through our normal party processes. It's something that we are open to and we know that the industry itself is open to. We would say though, that this is interfering in a gas market again, again. After already putting in price caps after already putting in a safeguard mechanism. This is the sort of the third and final blow on a market that we really need to encourage more investment and more supply.

PATRICIA KARVELAS: But business wants it passed.

JANE HUME: Business want it passed, because I think, and they're begging they're saying please let this be the last thing. In the meantime, this is just the existing operators. What we want to see is new investment in gas as that transition fuel as we move to a net zero future.

PATRICIA KARVELAS: Okay. I'm trying to read what you're telling me. They do want it passed. Do you accept that and will you provide support for it?

JANE HUME: Well I can't tell you that until I've looked at the legislation myself and it's gone through our party room processes, but I will say that of course, we are open to looking at it. On the understanding though that we need more investment in gas. This is going to turn investors away. So what is the solution to getting more investment in gas in order to make that transition to a net zero future.

PATRICIA KARVELAS: Jane Hume just before I let you go next week, the government will announce it said a date for the Voice to Parliament referendum. You know you're a well known victory and moderate in the Opposition. Will you actively campaign against the Voice for the next six weeks?

JANE HUME: Look, I have honestly agonised over our position on the Voice in the lead up to all of this and I can safely say that I am a firm believer in No, for the right reasons. My my head wanted to vote Yes, my heart went about Yes, but my gut says this is a bad law. This is a bad question. And it will lead to poor outcomes. We want-

PATRICIA KARVELAS: Sorry I must pick you up on that poor outcomes for who?

JANE HUME: Yeah, this we don't think that this is the right way to close the gap efficiently because it is going to throw grit in the wheels of government for decades to come. Government already moves at a glacial, glacial pace. We think that a Voice to Parliament as it has been imagined is going to make this much worse.

PATRICIA KARVELAS: Unless I've been asleep and look, I'm awake a lot. Make it worse? I haven't heard that argument, that it will make it worse. The outcomes for Aboriginal people will be worse.

JANE HUME: No. I'm sorry. The outcomes for Australians will be worse, because the Voice to Parliament is going to throw grit in the wheels of the operations of government for years to come.

PATRICIA KARVELAS: So for Aboriginal people which is the purpose of the reform?.

JANE HUME: We all want to see better outcomes for Aboriginal people-

PATRICIA KARVELAS: Do you accept-

JANE HUME: Hang on, hang on, we always said that.

PATRICIA KARVELAS: Well no I'm just talking about whether it will lead to it or not.

JANE HUME: Well hang on. We all want to see better outcomes. We want to see the gap closed on mortality rates, on health, on education. Of course we want to see that. But this is not the only way to get there. Our concern is that this is a question that once you change the Constitution, you can't unchange it. You can't unchange it. It's too great a risk. There are other ways to get there. We wanted to see those other ways implemented.

PATRICIA KARVELAS: So you think the outcomes- You think the outcomes will be worse for other Australians. But for Aboriginal Australians and Torres Strait Islanders, do you think that outcomes could be positive if the voice passes?

JANE HUME: The Constitution is there for all Australians.

PATRICIA KARVELAS: Yeah but on that question.

JANE HUME: Hang on. The Constitution is there for all Australians. All Australians want to see better outcomes for Aboriginal Australians. We all want to see Aboriginal Australians recognised in the Constitution. Unfortunately, the Voice to Parliament is not the way to get there. We don't think that the Voice to Parliament is the way to get there. I'm very sorry it got to this stage. To be honest, we were working in the last government towards a consensus approach to recognising Aboriginal Australians in the Constitution. Anthony Albanese when he came to government politicised this, and unfortunately has said he doesn't need the Coalition support. That is a real shame because we could have made great strides towards reconciliation. But this question is all wrong.

PATRICIA KARVELAS: Thanks for joining us this morning.

JANE HUME: Great to be with you PK.

PATRICIA KARVELAS: That's the Shadow Finance Minister Jane Hume and you're listening to ABC RN Breakfast.