Interview with Tom Connell, Afternoon Agenda

9 February 2024

TOM CONNELL: Let's return that story on the Treasury advice. In fact, let's go to what the coalition is going to do next on stage three, the coalition, of course, supporting the changes to Stage Three tax cuts. The question is, do they actually think this change is a good one? It's something the Coalition has been reluctant to talk about so far. I spoke a short time ago with the Shadow Finance Minister, Jane Hume.

TOM CONNELL: But have you also made the decision because it's the right one? Are you willing to say whether you think it's also the right call from Labor?

JANE HUME: Well, we know that there are other options available and we know that because Treasury told us that.

TOM CONNELL: So what you're saying is they should have gone other options to help lower and middle income earners, and kept stage three as is?

JANE HUME: Well stage three had a purpose and it was part let's not forget of our personal income tax plan that was stage one, stage two, and stage three. Now that personal income tax plan was very carefully calibrated, it was very carefully timed, these changes have been junked, and they've junked them, because they want to theoretically, address the cost of living.

TOM CONNELL: So you think it's not the right call, but you've just kind of been wedged in supporting it? That's what it sounds like.

JANE HUME: Well, we're never gonna stand in the way of lower taxes and we know that people who are doing at tough will appreciate that little bit of extra money. But when I say a little bit, I mean, little bit. I mean, let's not forget the tax cuts won't come in until July 1st.

TOM CONNELL: They weren’t going to anyway.

JANE HUME: That's right. But they were never supposed to be cost of living relief. They were an efficiency measure. They were getting rid of bracket creep. They were adding productivity and fueling growth. That wasn't, they weren't cost of living relief. So what other cost of living relief measures could have been considered? And why wasn't Treasury tasked with looking more broadly beyond just changes to stage three tax cuts?

TOM CONNELL: As to where you go from here, Peter Dutton has spoken and Angus Taylor as well, about putting back the missing parts of stage three, if you like, in some form. If it were in full, it'd be 9 billion a year, it's a fair bit of money and Peter Dutton went to actually went to how he might pay for this. You mentioned government waste, and he singled out the number of public servants. Would you detail specifically any such cuts before the election that you were going to make?

JANE HUME: Well, I certainly would say that the fact that there have been 10,000 additional public servants put on just in the last 18 months alone would be mind blowing to the average Australian. I don't think that the average Australian would say that they feel like they're 10,000 public servants better off in terms of the service they receive.

TOM CONNELL: They’ve replaced a lot of outsourcing haven’t they?

JANE HUME: Well, has it made any difference to the service that they're getting? Has it been a cost saving or has it in fact added to the bloated size of government? So I think that that is actually one thing to consider and you're right, Peter Dutton was saying that there are ways that we can make savings, we believe that this government has spent an additional two thousand and eight billion dollars to what the Coalition would have spent.

TOM CONNELL: $208 billion, yes, that's a 10 year window, not the last couple of years, but just on that element.

JANE HUME: No, sorry, they've spent $208 billion more. They've projected $208 billion more than the Coalition said that they would spend at the last budget. Now that is an enormous.

TOM CONNELL: That's a long window.

JANE HUME: So there are lots of decisions in there where there's a bit of fat.

TOM CONNELLL: So on those decisions, or the fat. Will you be really upfront and tell people early, what you're cutting? Is that a lesson that you've learned from 2013?

JANE HUME: Well, we have to, in the charter of budget honesty, and indeed, going into an election, everything is costed, and everything is explicit and that's really important that level of transparency.

TOM CONNELL: But it wouldn't be a last minute, two days before the election, by the way, here's how we pay for everything.

JANE HUME: Well, that would be something that would have massive implications, I would imagine, at the ballot box. So we'll be very careful about the tax plan that we put together, it will be a full package and I can assure you and anybody who's watching that they will be lower, simpler, fairer taxes, because that's the creed that we stand by, it will be fully costed, and it will guarantee essential service.

TOM CONNELL: Where is the fat though, do you think? Beyond the Public Service?

JANE HUME: Well, I think that you just spoke about it. Beyond the public service, there are an awful lot of subsidies that are being spent and, you know, priorities that we wouldn't agree with.

TOM CONNELL: What sort of subsidies?

JANE HUME: Well here we go, this is, you know, one of the reasons why the cost of living is increasing for so many Australians is because energy prices have gone through the roof. So, you know, I think that you have to reconsider, what the implications are, what is it the government is spending.

TOM CONNELL: So you wouldn't be doing any new subsidies, for example?

JANE HUME: In the energy sector in order to create the priorities that they have, in order to implement the priorities that they have, if they're genuine about reducing the cost of living pressures.

TOM CONNELL: Renewable subsidies you're talking about there?

JANE HUME: Let's have a look at that. I mean, you know, what is it that the government is spending in order to implement its priorities on renewable targets? And what is it that's costing the average Australian household?

TOM CONNELL: The other thing that Peter Dutton has alluded to is major tax reform? Is everything on the table? So you know, even though you don't have plans on investment property, you want to look at how everything's working, how much the government is spending, or forgoing or whatever it might be, GST.

TOM CONNELL: So two weeks ago, Tom, we knew what our tax plan was because it was the plan that we took to the last election and that we stood by, unlike Anthony Albanese, and Jim Chalmers, who back flipped, who changed their mind, who lied to the Australian people.

TOM CONNELL: I’ve got a bit on that. But going beyond that?

JANE HUME: I understand that but what you're asking for is a tax plan that's been developed in 14 days, stage one, stage two and stage three, were well timed, they were well calibrated, we will go back now, knowing that that has been junked, knowing that it has been distorted because of the changes that have been made and we will come back to you with a tax plan.

TOM CONNELL: It's just income tax. It’s not a holistic tax reform, just income tax.

JANE HUME: Well, you wouldn't only consider one tax in a tax package, you would consider all sorts of things.

TOM CONNELL: So that change has made you go, let’s look at everything while we're there?

JANE HUME: I'm not going to, I'm not going to say everything that we're going to consider.

TOM CONNELL: All on the table?

JANE HUME: But I will say it will be lower, simpler, fairer, it will be a tax package, not simply a reinstatement of stage three rules that exist, because that can't happen. It can't happen because the timing has gone and the timing was important. It can't happen. Because now the lower brackets have changed and the lower brackets were really important to maintain that progressivity. So we have to go back and do the work, you can push me really hard to say what's in and what's out there. But I simply can’t do that because it would be irresponsible.

TOM CONNELL: I think I'm just trying to clarify what you're saying then, what the previous missing elements of stage three wouldn't go back exactly as is because of other changes?

JANE HUME: Well, they've now essentially changed the tax brackets at the lower end and that changes the calibration of the personal income tax plan. But the personal income tax plan was really important. It was done to get rid of bracket creep and it was done to inject growth and productivity back into the economy and that's something that has been essentially overlooked.

TOM CONNELL: So you’re saying that essentially, because of the 16 to 19% change, you would recalibrate the rest of stage three?

JANE HUME: You would have to consider recalibrating the rest of stage three because it doesn't work the same way anymore. You've changed the tax system fundamentally. So of course, the package that we will take, we'll take that into consideration.

TOM CONNELL: Will it apply a bit more to the top end versus the bottom because the bottom has had more help?

JANE HUME: Again, 14 days and you're asking me to explain a tax package. Firstly, clearly, it cannot be developed without the resources of Treasury.

TOM CONNELL: But we're always here when you need to reveal what is happening.

JANE HUME: But what I can say is what we've heard from Treasury today at the Cost of Living Committee is that Treasury have been working on these changes to Stage Three tax cuts for a very long time. It wasn't just from December the 11th and they've been pushing up the advice to government to change them for a very long time. Why didn't the Prime Minister and the Treasurer say to Treasury, do you know what we were serious about this commitment not to change stage three. Don't show me that advice. Find me another solution. We know that the advice that they sent up eventually was only one option. They won't show us the other option. The Prime Minister said all the information is publicly available, nonsense. There are more documents out there and that was admitted as much today and yet we haven't seen those other documents. So there are certainly plenty of questions to ask because either, either, Prime Minister Anthony Albanese and Jim Chalmers weren't at all serious about ever sticking with stage three, or they've been pushed around by Treasury and have succumbed to the will of the Public Service rather than standing up to them rather than standing up for you.

TOM CONNELL: Jane Hume, got to leave it there, thank you.

JANE HUME: Good to be with you Tom.