Chris Bowen says Labor sticking to tax policies despite political attacks

Extract from The Guardian

Labor party

Shadow treasurer says there will be no change on negative gearing or dividend imputation
• Chris Bowen: Liberals will run a scare campaign, but their age of tax entitlement must end

Katharine Murphy Political editor

@murpharoo

Thu 31 Jan 2019 04.00 AEDT Last modified on Thu 31 Jan 2019 06.20 AEDT

Chris Bowen says this is the negative gearing policy Labor will take to the election. Photograph: Joel Carrett/AAP

Chris Bowen has declared Labor has no intention of changing its position on negative gearing or dividend imputation despite an intensifying, negative campaign from the Morrison government and some news outlets, and some signs of a voter backlash.
The shadow treasurer also insists the negative gearing changes Labor has proposed since 2016 will take effect in the first term of a Shorten government, and not be deferred despite the recent softening in the housing market – a development that increases the political risks of the change.
In an interview with Guardian Australia, Bowen refused to say when he would specify the start date of the negative gearing changes, which abolish concessions for new investors buying existing properties, saying only the announcement would be made “soon”.

But he was clear the changes would “absolutely” take effect in the first term of a Shorten government in the event Labor wins the contest expected in May, and not be deferred into a second term. “First term, sure, absolutely. The only question is when in the first term.”
Bowen said there was a view in the property sector that rather than deferring the change because of the housing slowdown, the policy should be introduced sooner rather than later “because certainty is king”.

He says he’s listening to that feedback, but his principle consideration is optimising the legislative timing. “The main thing we think about [with sequencing] is when is the election, when would we bring down a budget, what is the legislative timetable.

“Obviously I talk to the sector a lot about what they think is happening, what the implications are. There are plenty of people in the sector who say if you are going to make this change, get on with it, because certainty is king. I weigh all that up but it’s mainly about legislative timetable.
“We developed these policies to last for 20 or 30 years. It can’t be changed every year in relation to movements in the market. Yes, the property market has softened somewhat in key markets, of course it has. But it’s still a lot higher than it was five years ago. Take a market, and they are all more expensive than they were five years ago with the possible exception of Perth.
“I’ll announce a start date soon, but that’s the only detail that’s a moving part. We’ll stick to the policy.”

MPs from both sides of politics report that a voter backlash against a separate, controversial tax change – Labor’s proposal to end cash rebates for excess imputation credits – is gathering pace in the community.
Labor has already amended that policy once, exempting pensioners and grandfathering self-managed super funds with at least one pensioner or benefit recipient after opposition MPs became nervous about the electoral impact.
But Bowen insists there will be no more adjustments to that policy between now and the election. “This is the policy we will take to the election, it’s the right policy.
“While there is not one skerrick of complacency in the Labor party about the election, nor are we concerned about the Liberal party scare campaign.
“They ran this in the Batman byelection. We won the Batman byelection with a swing to us. They ran it hard in the five byelections, particularly in Longman, and there was a 10% swing against them in Bribie Island, the retirement capital of Longman.
“People respect that we’ve had the guts to put this policy out, I’m not saying unanimously, there are people annoyed about losing it, but there are a whole bunch of other cohorts saying, I get it, this is unsustainable, I’ll claim it for as long as it is there, but it is unsustainable.”
The government has used the summer break to ramp up political attacks against Labor’s tax measures. In his first major economic speech of the year, Scott Morrison contended a change of government would imperil the recent pick up in the economy.
The treasurer, Josh Frydenberg, has been duelling with Bowen on social media throughout January about the impact of Labor’s measures, and this week declared the shadow treasurer was “arrogantly” dead batting the backlash among self-funded retirees to dividend imputation policy.
Bowen shrugs off the intensifying rhetoric. He says firstly Labor’s policies are an offering that need to be considered as a whole, and there is also an imperative to repair the budget to safeguard against a possible external economic shock.
“We need bigger budget surpluses as a bigger buffer. The fiscal cupboard is a lot barer than it has been in the past,” he says.
“When there is a downturn, it makes sense to have a bigger buffer. This government has very thin surpluses as far as the eye can see. It is actually the case that we need to get back to structural surplus more quickly to enable more flexibility going forward.
“You also need to take our policies as whole. The government wants to cherry pick them.
“Labor has bigger tax cuts for every Australian earning less than $125,000. That has an impact. People who are stretched will spend that. It’s an expansion. The education money is an expansion. The preschool money is an expansion.
“To the degree that our policies impact on higher net worth individuals, it will have less impact on their spending.
“The economic theory of balanced budget expansion comes into play here. It’s a well-established economic theory. The policies are designed and calibrated to fit together.”
Bowen also claims an upside in the intensifying government campaign against the tax measures. “Every time they do that, they do two things.

“They underline the lack of vision on their own side, and they increase the moral authority of our mandate, if we get it.”