Topics: Polls, Government narrative, Budget, Panama Papers, tax policy, paid parental leave.

E&OE…

RAF EPSTEIN

Joining me in the studio for Fight Club is Tim Watts, the Labor Member for the seat of Gellibrand. Tim thanks for coming into the studio.

TIM WATTS

I am lathered up and ready, Raf.

EPSTEIN

I am not sure I want that mental image…Scott Ryan is a Liberal Senator in the seat of Victoria, he is also the Minister in the realms of education, part of Malcolm Turnbull’s Government. Scott, thank you for coming in as well.

MINISTER RYAN

I won’t horrify the listeners with the thought of me being lathered up and ready.

EPSTEIN

No, no don’t do that.  Tim is allowed to, he is looking fitter than both of us. Look, let’s start with where the Government is at in a general sense. The Queensland LNP MP, Michelle Landry is voicing what many are thinking about the Prime Minister.

(Excerpt of Michelle Landry MP interview)

So in one grab, Scott Ryan, your MP is raising the prospect of losing, saying the Prime Minister is whishy-washy, and you have a Courier Mail cover – which is her state, Brisbane – time to deliver, not to dither. Are people nervous, worried, inside the Government?

RYAN

Raf I have been here when the polls have been very different, good and bad, there was one poll yesterday and I have always said the next election would be very tight. I remember Campbell Newman once won 78 out of 89 seats and three years later was turfed out of office.

EPSTEIN

Polls are one thing, going through a number of ideas – GST, tax cuts, state income tax – does it risk embedding the perception that Malcolm Turnbull is good at talking and poor at acting?

RYAN

I will let others judge that, that is not up to me to judge. But I have said before that the idea that you can get a group of experts in the room, and make decisions on public policy and drop them on the public and hope that they accept their legitimacy – that is gone. That is not going to happen anymore. And what Malcolm Turnbull is committed to is to undertake this tax debate publically. And we have explained why we are not going to undertake GST change, we have explained that we don’t think it is good for the economy and we don’t think it is good for taxpayers. We don’t think there is a payoff for all of the pain. We are concerned about fairness and equity, as the Prime Minister said. We are not going to follow Labor’s negative gearing policy which is actually going to stop investment in a whole range of things, not just established housing. And we have been doing this publically and I think that is an important way to generate consent. Now, in three of four weeks’ time on May the 3rd there will be a budget, and on that day the Government’s plan will be very clearly laid out. And we will know by the end of that week whether there will be an election in August/September, or an election in July because the Senate has to make a decision on a couple of pieces of legislation. That is when the Government’s plan will become apparent.

EPSTEIN

Are you worried about the relationship between the Treasurer and the Prime Minister? Because a lot of frontbenchers, Cabinet Ministers are willing to tell journalists that they are.

RYAN

I don’t know if it is a lot.

EPSTEIN

Enough to keep the stories going.

RYAN

I know both of them, and I want my Prime Minister and Treasurer – they have slightly different roles. The Prime Minister’s job is to take an overview of the national interest and the Government, and the Treasurer’s job is to look after the nation’s finances and the economy.

EPSTEIN

Didn’t tell him the date of his own budget though, did he?

RYAN

No, that is actually untrue. There was a discussion around it, and as the Treasurer said in the end those are decisions for the Prime Minister and there had been discussions about it and there had been consultation.

EPSTEIN

Was there consultation…

RYAN

Absolutely.

EPSTEIN

…if the Treasurer is saying at 9.30am May 10, and then at 10am the PM is saying May 3rd.

RYAN

The only issue might have been the timing of the announcement may not have been passed on.

EPSTEIN

It is his budget.

RYAN

Hang on, the Treasurer clarified it, and the Prime Minister clarified it, there had been discussions in the days leading up to it about changing it in order to make sure the Senate dealt with these important pieces of legislation. It can either vote for them and let them through the legislation that has been in place since the Coalition was in office before, or it can refuse to and there is a constitutional mechanism to do that and that involves the people making a decision at an election.

EPSTEIN

Look, 1300 222 774, maybe my line of questioning is bang on, maybe it is completely wrong and I don’t have a clue. 1300 222 774. Tim Watts before we get into what we can and cannot do as Governments and Oppositions, clearly Bill Shorten was warned a few months ago about Anthony Albanese, any tension there? That is the story in the Daily Telegraph.

WATTS

I am very happy to report that we are a happy ship of campers in the Labor Party. One of the things that has been the best kind of surprise for me since being elected after the 2013 election which was a difficult election for Labor…

EPSTEIN

You came in 2013.

WATTS

…I came in in 2013 and I have to say that I had fairly low expectations of our levels of unity. But the leadership that Bill Shorten has provided, has really brought everyone together. It is an inclusive leadership that brings people into his inner circle.

EPSTEIN

But even your own polling is not flash. The UMR polling, they are the people doing your tracking polling for you now, they have Bill Shorten as “an underachiever” “average” “bland” “inadequate” and “Don’t trust” – they are the words coming out of focus groups. So he doesn’t set the Labor Party faithful on fire does he?

WATTS

The Bill Shorten that I have seen has provided the kind of collaborative leadership that I think delivers really good Government these days. They might be skills that are underrated in the public mind at the moment, but it is the kind of leadership that  is the chairman of the board style leadership. Bill gets the best out of the people sitting around the Cabinet table on the Labor side. We are a united front, we have…

(Interrupted)

EPSTEIN

Not worried about…I mean he is not really as popular as Malcolm Turnbull, even if the Coalition is not popular.

WATTS

I can say that one particular area of distinction between us and the Government is that the relationship between Bill Shorten and Chris Bowen is air-tight. They are on the same page, prosecuting a very aggressive alternative agenda to the Government, giving people a real choice. The relationship between Scott Morrison and Malcolm Turnbull, I mean you could relate it to the relationship between Black Adder and Baldrick at the moment – you know one of them coming up with a cunning plan and the other one sort of desperately trying to work out what the genius in this is by the time they do the interview in the afternoons. So that is not the story on the Labor side.

EPSTEIN

Quick question to both of you and Scott might feel the need to reply or not, how important is the leader’s personality just in simple voter decision, they walk into the polling booth how important is character Scott Ryan?

RYAN

I think it is very important, I think people want to know that the Government and their Leader are predictable, and there is stability. And that was the greatest strength of John Howard in many ways. He was respected even if he was disagreed with and that people on most issues on most days knew where John Howard would land on most times. Under the previous Labor government it was completely unpredictable. We had surprises on the carbon tax, mining tax, on a whole range of things. And, I think with Malcolm Turnbull the community has faith that here is someone who gives very serious thought to the country’s very serious challenges. They are not easy to solve, this is the point. And so, Labor’s approach in promising silver bullets, or just whack a tax up here and that will pay for schools for ten years – people don’t instinctively believe that because that is what Labor did last time. They promised these ten-year revenue streams and we are in this budget situation precisely because they did not come true.

EPSTEIN

We will get onto revenue and those issues in a moment. Tim, character – how crucial is it in the ballot box?

WATTS

It is very important but there are two distinct models of leadership that we are seeing at the moment. On the Government side we are seeing the Malcolm show, it is all about Malcolm and it has always been about Malcolm. Seizing the Prime Ministership is the end for Malcolm, that was the main goal. On the other side it is the difference between a team of champions and a champion team.

EPSTEIN

When you say it is just about Malcolm do you think, when you say that, do voters genuinely think that someone like Bill Shorten and Malcolm Turnbull is only concerned with power, or do voters think our political leaders actually have the nation’s interest at hear?

WATTS

All I can say is that there was a leader in Australian politics some time ago that he would never lead a political party who wasn’t as committed to climate change as he was. And that leader is now gone.

EPSTEIN

Okay, that is not quite an answer to the question, but that is okay. I do want to talk about, they are two of the biggest stories we have had in a very long time. Last week Fairfax had the Unaoil story – which is essentially a global bribery factory, people offering their services to the oil industry to bribe countries around the world – this week we have had the Panama Papers. I just wanted to see if either of these two big stories might produce change. The Panama Papers reveal that there is a, two brothers who effectively have a big say in Wilson’s Security, Wilson’s Security have got half a billion dollars’ worth – that is $500 million – worth of Australian Government contracts in defence, immigration – they are running Mannus and Nauru at the moment – those two brothers were convicted of bribery, through the Panama Papers, it is not immediately obvious they have a big say in security. Would either of you in Government make it tougher for people to get Government contracts? Would either of you be demanding the defence department uncover that sort of link? I’ll start with you Scott, would you want to look at the way contracts are (inaudible).

RYAN

As I understand it, the officials have said that they did do everything legally required, included uncovering ownership. And what we have seen released is, as you said, something that isn’t immediately apparent. So, on an issue like that, if we are to make a decision that the owners of companies and the eventual beneficial owners through trusts and other holding companies are relevant character tests – for example that used to be the case with TV licences, I think – fit and proper person, then I think we have to look at and I am quite happy to look at how we change the law to make sure there is complete disclosure of that…

(Interrupted)

EPSTEIN

I don’t want you to make policy on the run, but should governments be at least trying to make sure that that doesn’t happen?

RYAN

I think what we have seen in Australia over many years, and on both sides, is that there have been attempts to do that. We have some of the very strict tax avoidance laws and it is a constant challenge to keep ahead of the curve. We have laws that were introduced and Australia was relatively early with them in the region, against bribery. Then, we have got to be careful…

(Interrupted)

EPSTEIN

Very few convictions on bribery.

RYAN

We have got to be careful to not mix up enforcement with the law. And by that I mean, is it an enforcement issue, has it been prioritised and like everyone our law enforcement agencies have limited resources, do we need to provide extra resources or do they need to prioritise, or is it a problem with a loop-hole in the law? To be fair one of the distinctions between the Panama Papers, and what was released in The Age last week with Unaoil was one was clearly illegal, whereas one may not be entirely ethical but the question of its legality I do not think has been resolved.

EPSTEIN

That is what is difficult isn’t it. Tim Watts, should government be stopping half a billion dollars in defence contracts going to people who are ultimately a bit dodgy?

WATTS

Yeah, the details of this are obviously something that lawyers and people closer to the facts are going to have to form a view on. I would just pick up on what Scott was saying there, I think we are seeing a global challenge to almost the social licence of multinational corporations. We have seen it with the Luxemburg links, Panama Papers and the Unaoil scandal. And in that context I think there is an obligation on Government, on our public institutions to really crack down hard on the bad eggs. Because Business plays are extremely important role in our society in generating growth and wealth for all Australians and if there is a context where there is that sort of (indistinct) of doubt and suspicion cast over all multinational corporations, all businesses, that is a real problem for us as a society. In terms of increasing resources for anti-corruption work, I think that is a valuable thing to look at.

RYAN

I might add, in my sector – vocational education – there has clearly been unethical but legal behaviour under the laws that were put in place in 2012. I think we have to be careful when we talk about social licence, it needs to be clear that there are the lines in my sector –and the Prime Minister made an important speech today to Westpac  that  actually spoke to them very frankly about the ethics in the banking sector–  and social licence is that it cannot be amorphous for social licence that too often means throw out a few goodies that get you a bit of good press and therefore that will be deemed social licence. What we are talking about is this behaviour that allows you to sleep at night, are you treating your fellow citizen with fairness, and that goes to things like vocational education and banking. There has got to be clear guidelines and clear expectations as well as clear laws, not amorphous concepts that sometimes this is used to describe.

WATTS

Now, I think that is true, but I think it is important that the public have confidence that our existing laws…

(Interrupted)

EPSTEIN

I want to get onto the existing laws around multinationals in a moment. Scott Ryan is with me, he is the Minister for Vocational Education and Skills, Tim Watts is the Member for Gellibrand, he is the ALP member part of Bill Shorten’s team.

1300 222 774 is the phone number, you’re welcome to ask your own questions, you might want to comment on the polls where you think the Government is going or if there is something in particular you want them to do.

Tim Watts, can I start with you – the multinational proposals you have go further than changes the Government put in that began at the start of the year. There are even people in Treasury that have said at Senate Estimates that they think what you will do with multinationals will actually, they will dampen economic activity. Which Joe Hockey said at the time basically means jobs going offshore. If Treasury thinks it is going to have an impact on economic activity, shouldn’t that give people cause for thought?

WATTS

Look, it is one consideration, right. I take a different view, I think that economic activity is driven by tax treatment particularly, but more broadly by a range of factors in the economy, our skills, business confidence, a whole range of broader macro considerations. What we have said, and what Andrew Leigh the Shadow Assistant Treasurer has proposed is more than 12 months ago we introduced two Private Member’s Bills, one dealing with complex aspects of the treatment of debt within companies, and cross-border intra-company debt tax treatment, and another dealing with…

(Interrupted)

EPSTEIN

And no one understands what that exactly means…

WATTS

I could explain it to you Raf but we would still be going in ten minutes.

EPSTEIN

Yep, yep.

WATTS

And the other part dealing with transparency with dealing with reporting on a nation by nation basis. And we go back to the same social licence there because there is a good law there about reporting on a national basis  but the fine for non-compliance is $5000 and as Andrew Leigh is very fond of saying perhaps peculiarly fond of the saying, the fine for streaking at the MCG is a greater fine than a fine for not complying with those tax transparency requirements. So there is significantly more that we could do to bolster public confidence that these laws are being implemented and being enforced, and we are going back to Parliament for an extra sitting in the near future and apparently there is time on the calendar, there is nothing booked in, so we could debate this Private Member’s Bill when we get back.

EPSTEIN

You could, I think Scott Ryan’s Chamber might be busy with the ABCC legislation. Are you doing enough?

RYAN

Hopefully I won’t have to go through the night like we did last time.

EPSTEIN

Are you doing enough with multinationals, because I bet if I explained what the current situation is and how much those big companies are getting away with, most listeners would say the Government isn’t doing enough.

RYAN

This is an important area to maintain trust in the tax system, on that I agree with Tim. But, when Treasury say it is going to dampen economic activity, Tim shouldn’t run away from that, because most taxes do, in fact virtually all taxes do. So if Labor wants to make the point that this revenue trade-off is better and will dampen economic activity, then he should be honest than rather just say: I reckon it won’t. But the important thing around multinational taxes is that it is a constant evolution. Now there are more people in the ATO’s tax division now than when the Coalition came to office. We passed laws that will see an increase in collection of revenue., But it is important to note that Labor is using this partly to say that this is the way we can solve the budget deficit. It is not going to come close to that.

EPSTEIN

It might help.

RYAN

Every little bit helps, because it is substantial what we are dealing with. It is more important to maintain trust in the tax system. We have passed rules, passed laws which Labor voted against on (indistinct) capitalisation. And every step is important, but it will be a constant evolving battle.

EPSTEIN

We will get back to Tim Watts and Scott Ryan after we get some road details with Chris Miller. Hi Chris.

(Traffic update)

EPSTEIN

Tim Watts and Scott Ryan are with us, Vincent is in Brunswick. Vincent, what did you want to say?

CALLER

Just a question for both of the politicians, your Liberal guest earlier when referring to the police having limited (inaudible) limited resources like everybody else to do their job, surely we should be having a conversation about what kind of society we want to live in, rather than just keep simply saying: we are a low tax government, we do not believe in taxing individuals. We do need revenue and we keep getting told that it is not a revenue problem, but I think it is, and I just wonder when politicians will have the conviction to actually have that debate honestly with the Australian public.

EPSTEIN

Can I just try and clarify that, are you saying both sides need to propose more ways of bringing in more revenue?

CALLER

Both sides will always say that they don’t believe in increased taxes because it is a political death (inaudible). But I think there needs to be a debate because we obviously do not have the revenue and we do need to look at how we increase taxes if we do want to live in a cohesive society.

EPSTEIN

Okay Scott Ryan, I’ll start with you. More revenue?

RYAN

Labor are going to increase taxes. I didn’t come into politics to increase taxes. I am happy to have the debate, I believe it should be free and open. But I didn’t come into politics to increase taxes. I think that some parts of our tax system, particularly on salary and income earners are punitive. I think there is a lot of waste in government, and the first discussion we should have is where should we re-prioritise our resources? I have made the observation about police that every agency in government has limited resources, and that doesn’t matter what the tax level is, there is always a limit. So, I appreciate you have a difference but I came into politics with a different set of values and I am happy to have the debate.

EPSTEIN

Isn’t the biggest problem for your side of politics that you’re actually getting your biggest increase in revenue from something like bracket creep? Even though wages growth is slow, the biggest increase you’ve got in the budget is from people’s income tax.

RYAN

Well bracket creep has always been a driver of increased government revenue. Always.

EPSTEIN

That’s why you’re trying to offer it to the states maybe. Tim Watts you need to talk about more revenue.

WATTS

Well we’ve identified a hundred billion dollars’ worth of measures to consolidate the fiscal position in Australia, and they’re measure ranging from cigarette excise, measures to, changes to capital gains tax treatment to changes to superannuation concessions for very high income earners – a wide range of measures, and we’ve been upfront with the Australian people about our agenda and how we’re going to fund things like the biggest investment in needs-based school education in two generations.

EPSTEIN

Can I just ask you both about waste- one of the things that irked me the most is both Joe Hockey and Tony Abbott in opposition were saying one of the big ways they could square the circle was by cracking down on government waste. And I heard Bill Shorten just the other day saying when he was – once he’d finished going through his policies, ‘oh and of course we’re going to crackdown on waste.’ When are politicians going to stop citing that? Because it seems to me that you always say it in opposition, yet in government it appears to be far, far more difficult to actually wring any money out of that sponge.

RYAN

Well I don’t think it’s actually that. I think it’s when you’re in opposition you highlight the waste and when you’re in government you try and deal with it. I don’t think anyone in any organisation can’t identify where money is wasted and I’m sure you could do it here at the ABC. And so in government you deal with it.

EPSTEIN

But it’s often the politician’s get-out clause, when people say ‘oh okay well you’ve got that much coming in, you need to fill the gap.’ We just say waste, and waste never seems to fill that gap.

WATTS

Well Raf on that front Bill may have been talking about waste, but we are also talking about the most substantive, alternative agenda that an opposition has proposed on the fiscal side in living memory.

(Interrupted)

RYAN

I don’t think it’s quite like that.

WATTS

So while it was very easy for Tony Abbott and Joe Hockey

EPSTEIN

Quite sensibly (inaudible)

WATTS

Oh it’s much better. Tony Abbott and…

EPSTEIN

(Interrupts) It should not be as detailed.

WATTS

Tony Abbott and Joe Hockey to you know, say that they were going to save waste, and solve the world and get us out of this ‘budget emergency’ that they really talked up, you know we’ve actually provided a substantive…

(Interrupted)

RYAN

Just to correct that, I mean some of the things that you announced prior to the last election as Labor policy, to make savings, you have voted against in this Parliament, and the budget is worse because of that.

EPSTEIN

That’s around education.

WATTS

They were savings as part of a package when we were in government and the circumstances have changed and the savings were to fund specific initiatives that have now been abolished.

EPSTEIN

Quick policy question, Christian Porter the Social Services Minister today, Scott Ryan, on ABC radio was saying that the government will not pursue the ‘double-dipping’ policy, so the government’s position was that if you were getting from the federal scheme, you would not be getting it from your employer as well. That that has been put on pause, does that mean that you will pursue it if you win the election?

RYAN

Well firstly, like Christian I don’t use the term, I’ve never used the term and I won’t use the term.

WATTS

Do you want to prefer rort? Scott Morrison called rort.

RYAN

Well I won’t use that sort of language and I don’t agree with it, I’ll be honest about that.

EPSTEIN

But just policy direction, are you going to pursue it?

RYAN

Policy-wise, what Christian said was that it’s not going to be legislated in this Parliament before the election; he was asked

(Interrupted)

EPSTEIN

That’s because it won’t get through the Senate.

RYAN

Well and also the Parliament’s only coming back for a short period, and that while it was meant to take effect from July 1 I think he was clarifying that for the purposes of advice from Centrelink, but he also said there is an equity issue here. And let’s not forget that that money was not being used for savings, that money was being directed to childcare.

EPSTEIN

Will it be a policy pursuit if you win the election?

RYAN

I understand it is, but from the interview I heard this morning with Christian, but honestly, that will become clear in the budget.

EPSTEIN

Okay well…

(Interrupted)

WATTS

The policy is to punish eighty thousand working Mums.

RYAN

Put the money into childcare.

EPSTEIN

We will see, we will see what happens. John is in North Melbourne. John, what did you want to say?

CALLER

Hi, Senator Ryan said that discussing tax topics we have been over the last few months and knocking them off the table, is a very good way to generate consent. There was a Poll last week which showed that there was consent, that 97 per cent of people don’t want company tax cuts, they would prefer the money to be spent more on education…

(Interrupted)

EPSTEIN

Ok John look you raise a great point, company tax cut coming in the budget, Scott Ryan, this appears to be – that’s the leak.

RYAN

Only 27 days to wait. Only 27 sleeps until you find out what’s in the budget, Raf.

EPSTEIN

We’re not on a glide toward lower company tax?

RYAN

Only 27 sleeps to wait to the budget.

WATTS

It’ll be the latest surprise under the Turnbull government.

EPSTEIN

Not a great environment to give a company tax cut. Just given all the big stories around Panama and…

(Interrupted)

RYAN

Not all public policies are in the first instance popular. But sometimes, good policy can be unpopular and our job as a government if we propose such a measure is to convince people of that.

EPSTEIN

Are you going to have enough time to convince people?

RYAN

I think that we’re still 12, 13 weeks from a potential election.

EPSTEIN

You can’t fatten a pig on market day, that was John Howard’s maxim, wasn’t it?

RYAN

And look I think that what we’ve seen is an honest and open approach from the government. We’ve explained all these things publically; it hasn’t been done in secret.

WATTS

I smell another cunning plan, Raf.

EPSTEIN

Maybe. Does Scott Morrison sleep over much at Point Piper? Don’t suppose he needs to because he lives in Sydney as well.

RYAN

No he lives in Cronulla, doesn’t he? Down south. He’s got his own beach.

EPSTEIN

Yeah he’s got his own beach. Scott Ryan, Tim Watts, thank you.

RYAN

Thanks Raf.

(ENDS)