WEBVTT - Beer, gas and capital gains tax

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<v Speaker 1>I'm Daniel James and you're listening to seven AM in Canberra.

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<v Speaker 1>A fight both major parties have tried to avoid is back.

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<v Speaker 1>The Senate is examining the capital gains tax discount, the

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<v Speaker 1>Howard era change that slash tax on asset profits and

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<v Speaker 1>helped turn housing into a national obsession. It's long being

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<v Speaker 1>considered untouchable, especially after Labour's bruising twenty nineteen defeat, But

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<v Speaker 1>with house prices entrenched, inequality rising, and the budget and distrain,

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<v Speaker 1>pressure is building on the government to do something. Today,

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<v Speaker 1>Economist and executive director of the Australian Institute Richard Dennis

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<v Speaker 1>on why the tax concession exists, the vested interests resisting change,

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<v Speaker 1>and whether the politics around it are finally shifting. It's Saturday,

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<v Speaker 1>February twenty eight Richard, Thanks for joining us. Right now

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<v Speaker 1>the Senate is running an inquiry into capital gains tax discount.

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<v Speaker 1>What exactly are they examining and why is it back

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<v Speaker 1>on the agenda now?

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<v Speaker 2>So in Australia we have this sort of bizarre situation

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<v Speaker 2>that if you work full time and earn one hundred

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<v Speaker 2>thousand dollars, we charge you tax. But if you earn

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<v Speaker 2>one hundred thousand dollars from Capital Gain. If you get

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<v Speaker 2>one hundred thousand bucks for not working, we'll give you

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<v Speaker 2>a fifty percent discount on the amount of tax you

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<v Speaker 2>have to pay. It's truly remarkable, incredibly inequitable, and Peter

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<v Speaker 2>Costello and John Howard introduced it get this, amongst other things.

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<v Speaker 2>They said it would help stimulate investment in housing and

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<v Speaker 2>drive house prices down, and of course the absolute opposite

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<v Speaker 2>has happened and house prices have grown spectacularly since. So Yes,

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<v Speaker 2>the Senate is having an inquiry into these incredibly inequitable

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<v Speaker 2>and ineffective tax breaks. And luckily, you know, after years

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<v Speaker 2>of pressure, decades of pressure from some of us, the

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<v Speaker 2>government are making noises like, yeah, maybe it's time to

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<v Speaker 2>fix this.

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<v Speaker 3>Let me make a declaration of the state.

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<v Speaker 4>Perhaps one of the.

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<v Speaker 3>Few people you have soon in public life have spent

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<v Speaker 3>thirty years working for the trade unions, another twenty six

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<v Speaker 3>years working for Lindsay Fox, one of the richest people

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<v Speaker 3>in Australia, one of the great entrepreneurs.

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<v Speaker 1>A number of people have appeared before the inquiry this

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<v Speaker 1>past week. One of them was Bill Kelty, the former

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<v Speaker 1>labor heavyweight and veteran trade unions. What did he have

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<v Speaker 1>to say, Well.

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<v Speaker 2>I think you know Kelty and former RBA governor Bernie

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<v Speaker 2>Fraser and former Secretary of Treasury Ken Henry. You know,

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<v Speaker 2>they're all out there. Who exactly because this is obvious,

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<v Speaker 2>you know, it's frustrated. I'm an economist, apologies for that.

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<v Speaker 2>It's often the disconnect in Australia between what economists think

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<v Speaker 2>and what non economist politicians say is good for the economy.

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<v Speaker 2>The disconnect is, you know, it's a cabin So it's

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<v Speaker 2>really quite straightforward from an economic point of view that

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<v Speaker 2>this fifty percent capital gains tax discount gives people an

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<v Speaker 2>incentive to bid up the prices of housing assets in

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<v Speaker 2>a way that helps helps nobody accept them in the

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<v Speaker 2>short term.

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<v Speaker 3>What would you be surprised? The capital gainstick discount favors

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<v Speaker 3>people have got capital, then people likely to get capital,

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<v Speaker 3>those who are older and recruit capital. Therefore, there should

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<v Speaker 3>be nothing absolutely surprising about it.

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<v Speaker 2>But of course Bill Shorten in twenty nineteen proposed changes,

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<v Speaker 2>and everyone likes to pretend that. In twenty nineteen Bill Shorten,

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<v Speaker 2>you know, got punished for proposing a progressive tax agender.

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<v Speaker 2>But what the top secret data held on the Australian

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<v Speaker 2>Electoral Commission website tells us is that Labour's vote went

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<v Speaker 2>up in the highest income electorates in the country. So, unfortunately,

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<v Speaker 2>Wealth and Power in Australia are very good at telling

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<v Speaker 2>us scary stories about you better not have a go

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<v Speaker 2>at Wealth and Power. Ever, I'll hate you for that.

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<v Speaker 2>My prediction is that after Labor does something on capital

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<v Speaker 2>gains tax, it'll be so popular that the Liberals will

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<v Speaker 2>actually end up supporting it. Remember with the Stage three

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<v Speaker 2>tax cuts, the Liberals were like, you can't break a promise,

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<v Speaker 2>you can't break a promise, And within twenty four hours

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<v Speaker 2>of Labour saying oh we've had a second look, we're

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<v Speaker 2>going to fix this, the Liberals came out and said, yeah,

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<v Speaker 2>fair point.

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<v Speaker 1>We don't really want to.

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<v Speaker 2>Go to an election opposing that.

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<v Speaker 3>Increase the capital gains tax produced a discount, but you

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<v Speaker 3>don't address a reform.

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<v Speaker 1>What does he do. One thing Bill Kelty also said

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<v Speaker 1>was that scrapping the discount alone wouldn't fix the underlying

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<v Speaker 1>problem of inequality. Things.

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<v Speaker 3>If I can't pay the bills next week, I'm a

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<v Speaker 3>young person has to go to the second VIEWA say,

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<v Speaker 3>do you feel better because the government has actually reduced

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<v Speaker 3>a couple of games discount? I said, what makes no

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<v Speaker 3>difference to me. I still can't pay the bills.

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<v Speaker 1>So what would scrapping the discount achieve in your analysis?

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<v Speaker 2>Oh, look, it achieve a lot of things. It will

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<v Speaker 2>collect a lot of revenue, and how you spend that

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<v Speaker 2>revenue really matters. Look, I'm not quite sure what he

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<v Speaker 2>means by that. The capital gains tax concession is an

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<v Speaker 2>enormous incentive for people to use housing assets as a

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<v Speaker 2>speculative low tax vehicle. I think removing those concessions will

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<v Speaker 2>have quite a significant impact on housing affordability going forward

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<v Speaker 2>and on equity going forward.

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<v Speaker 1>To the point of political pressure, like you said. Bernie

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<v Speaker 1>Fraser also appeared before the committee.

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<v Speaker 5>That case can be made for doing away with the

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<v Speaker 5>discount on the gains capital game stakes are bolishing it

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<v Speaker 5>all together, and.

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<v Speaker 1>He told the inquiry he'd abolige to discount outright, but

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<v Speaker 1>described a cartel of vested interests blocking reform. Who is

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<v Speaker 1>that cartel? And how does that stop change?

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<v Speaker 2>Stay classy Australia. Yeah, Look, unfortunately so many things in

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<v Speaker 2>Australia are off limits it's.

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<v Speaker 5>This cartel which comprises existing homeowners, property developers, and not

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<v Speaker 5>least lots of politicians who like to see house prices

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<v Speaker 5>rise and go on rising.

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<v Speaker 2>What happens in Australia. I don't hate political parties, but

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<v Speaker 2>when you have two parties where what the leader says

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<v Speaker 2>or what the party are increase sticks and sticks hard,

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<v Speaker 2>it's very easy for powerful groups to take things off

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<v Speaker 2>the agenda because you only have to convince two people.

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<v Speaker 2>Let's not have this fight. Come on, we can all

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<v Speaker 2>be grown up, you know, labor and liberal. You can

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<v Speaker 2>have a nice big fight about industrial relations. You can

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<v Speaker 2>even have a nice big fight about the company tax

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<v Speaker 2>rate or something if you want. But how about we

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<v Speaker 2>put taxing gas over here in the too hard basket.

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<v Speaker 2>How about we put gambling reform over here? How about

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<v Speaker 2>and for years we did this with same sex marriage, right,

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<v Speaker 2>everyone knew most people supported it, Everyone knew that most

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<v Speaker 2>people in Parliament supported it. But if the leaders of

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<v Speaker 2>both parties agree to call it a drawer and just

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<v Speaker 2>not talk about it, then it doesn't happen. And I

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<v Speaker 2>think Australia is kind of uniquely vulnerable to this because

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<v Speaker 2>this historic two party system with this uniquely binding party

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<v Speaker 2>caucus vote culture in Australia just meant that running dead

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<v Speaker 2>on an issue was easy to achieve if you could

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<v Speaker 2>get two groups to agree not to talk about it.

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<v Speaker 1>So do you think Labour's actually going to change this

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<v Speaker 1>when it comes to capital gains or will they merely

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<v Speaker 1>say that they've had an inquiry to look at it,

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<v Speaker 1>or they're just got to think around the edges. What's

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<v Speaker 1>your feeling on that, Richard.

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<v Speaker 2>My feeling is they will do something that's not based

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<v Speaker 2>on any insider speculation. It's just a combination of things.

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<v Speaker 2>The case for it is so strong, It's always been

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<v Speaker 2>so strong. You know, the Australians has been banging on

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<v Speaker 2>about this, you know nearly twenty years now that in

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<v Speaker 2>one week you can see Bernie Fraser, Bill Kelty, Matt

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<v Speaker 2>Coben at the you know, the CBA boss is out

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<v Speaker 2>saying it right, So it's a real everyone's now. Oh yeah, yeah.

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<v Speaker 2>I've always supported that. I've always supported that. So these

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<v Speaker 2>people look powerful by being right, They look powerful by

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<v Speaker 2>being on the side of power. They wouldn't all be

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<v Speaker 2>out there saying they think something should happen if they

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<v Speaker 2>thought there was no chance it's going to happen, So

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<v Speaker 2>I think it's I think lots of people want to

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<v Speaker 2>do it for lots of reasons. It to solve a

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<v Speaker 2>big economic problem, it'll help solve or reduce inequality in Australia,

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<v Speaker 2>and it's the right thing to do. And we've just

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<v Speaker 2>put it off for a long time because that's what

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<v Speaker 2>we do in Australia. We put off things that powerful

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<v Speaker 2>people don't want to do.

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<v Speaker 1>Coming up, Albanezi stumped over beer and gas.

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<v Speaker 4>This one has come in from Andrew. He says, please

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<v Speaker 4>get Albo to explain how we live in a country

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<v Speaker 4>with some of the best natural resources in the world,

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<v Speaker 4>but the average person pays more in tax to have

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<v Speaker 4>a beer than the billion dollar mining companies get taxed,

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<v Speaker 4>bleeding our resources dryer. How do you respond to that, Well.

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<v Speaker 1>Two things.

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<v Speaker 3>One is that the mining companies do pay taxes.

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<v Speaker 1>And if we pivot to the political landscape more broadly,

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<v Speaker 1>you say, there are two questions you get all the time.

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<v Speaker 1>One is whether the till should form a part and

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<v Speaker 1>the other is why Australia gives so much of its

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<v Speaker 1>gas away. Why are those questions linked?

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<v Speaker 2>I guess I already hinted at that. It's because when

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<v Speaker 2>there's two leaders of two parties that can between them

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<v Speaker 2>keep something off the agenda, and keeping something off the

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<v Speaker 2>agenda is different from persuading everyone.

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<v Speaker 1>It's not a problem.

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<v Speaker 2>Keeping things off the agenda is easy, just don't talk

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<v Speaker 2>about it. So when neither major party want to talk

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<v Speaker 2>about something is very hard in Australia to make people

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<v Speaker 2>care about it. And for whatever reason, both major parties

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<v Speaker 2>have for decades just gone along with the idea that

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<v Speaker 2>we should literally give more than half the gas we

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<v Speaker 2>export away for free. That's not what they do in Norway,

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<v Speaker 2>that's not what they do in Qatar, it's not what

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<v Speaker 2>they do in Saudi Arabia, but it is what we

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<v Speaker 2>do in Australia. And when both major parties decided that

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<v Speaker 2>they didn't want to have a row with the gas industry,

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<v Speaker 2>and in turn I didn't want to have a row

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<v Speaker 2>with each other about that issue, it just wasn't talked about.

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<v Speaker 2>It is being talked about now.

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<v Speaker 1>Great. How do we live in a country that exports

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<v Speaker 1>one of the biggest gas exporters in.

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<v Speaker 3>The world and we're getting more tax from beer.

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<v Speaker 1>Than pot.

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<v Speaker 2>People are appalled to learn that, you know, beer drinkers

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<v Speaker 2>pay more beer excise than we collect in petroleum resource

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<v Speaker 2>for intact. Appalling, It is appalling. But here's the thing,

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<v Speaker 2>it's not news. This is where I think independence and

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<v Speaker 2>minor parties have got a really important role to play,

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<v Speaker 2>and a growing role because even though they might not

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<v Speaker 2>have votes in the Parliament today that can force Labor

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<v Speaker 2>to do anything, the fact that this question now won't

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<v Speaker 2>go away because so many voices that can't be co opted,

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<v Speaker 2>so many voices that can't be silenced by party discipline

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<v Speaker 2>or a promotion to cabinets or a job after parliament

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<v Speaker 2>if you do the Resources minister's job. Well, there are

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<v Speaker 2>so many independents in Parliament now saying hang on, I

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<v Speaker 2>call bullshit, like I keep hearing we can't afford to

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<v Speaker 2>spend more on mental health and it turns out we're

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<v Speaker 2>giving half our gas away for free and getting more

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<v Speaker 2>tax from beer. This is an outrage now that you

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<v Speaker 2>know one nation is saying that Greens are saying that

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<v Speaker 2>David Pocock's saying that a bunch of independence in former

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<v Speaker 2>Liberal seats are saying that it just gets harder and

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<v Speaker 2>harder for the Labor and Liberal Party to go. Yeah,

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<v Speaker 2>but we're still not going to talk about it, are we.

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<v Speaker 1>So the tails strength is in their independence.

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<v Speaker 2>I think so, And you know they should do what

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<v Speaker 2>they want to do. They want to form a party,

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<v Speaker 2>they should. I just think it's a bad idea because

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<v Speaker 2>the word independence is a good word. Clearly it's bringing

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<v Speaker 2>a lot of growing market share if you want to

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<v Speaker 2>use that terminology to them, voters are responding to it.

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<v Speaker 2>One thing is to do something absurd and say will

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<v Speaker 2>have the Independence Party. Well that's a contradiction in terms,

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<v Speaker 2>so it's not a thing all. The other thing is

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<v Speaker 2>just stop using the word that defines you. I'm independent.

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<v Speaker 2>You might not agree with everything I say, but I

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<v Speaker 2>can just tell you what I think. They could abandon

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<v Speaker 2>the word independent. They could abandon that independence of thought

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<v Speaker 2>and say no, no, I'd rather form a package deal. That's fine.

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<v Speaker 2>If they want to do that, they should, but by definition,

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<v Speaker 2>giving up the thing that makes them different, giving up

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<v Speaker 2>the thing that voters are currently responding to, to look

0:13:32.760 --> 0:13:35.600
<v Speaker 2>more like the Labor Party and more like the Liberal party.

0:13:35.960 --> 0:13:39.360
<v Speaker 1>So probably there are there liberal and Labor MPs. You

0:13:39.360 --> 0:13:42.920
<v Speaker 1>think it's crazy, we don't taxt gas properly, but they

0:13:42.960 --> 0:13:46.400
<v Speaker 1>can't say it until the whole party agrees. Look, there are.

0:13:46.320 --> 0:13:52.720
<v Speaker 2>Dozens of MPs in the major parties that think it

0:13:52.800 --> 0:13:56.600
<v Speaker 2>is not just ridiculous but one of the low points

0:13:56.600 --> 0:13:59.480
<v Speaker 2>in our democracy that we can't even haven't even met

0:13:59.520 --> 0:14:00.560
<v Speaker 2>able to talk about it.

0:14:01.640 --> 0:14:03.319
<v Speaker 1>That's how good.

0:14:03.480 --> 0:14:07.000
<v Speaker 2>The fossil fuel industry, mainly the gas industry, have been

0:14:07.760 --> 0:14:12.319
<v Speaker 2>in buying silence, and that's what this is. It's the

0:14:12.320 --> 0:14:16.120
<v Speaker 2>buying of silence. So yeah, no, Look, I don't think

0:14:16.160 --> 0:14:19.840
<v Speaker 2>you'll find many people that will stand up and try

0:14:19.880 --> 0:14:22.240
<v Speaker 2>to defend the status quo, and when they do, it's

0:14:22.280 --> 0:14:25.080
<v Speaker 2>such a half asked defense. I mean, there was a

0:14:25.120 --> 0:14:29.040
<v Speaker 2>really good interview that Conrad from Punter's Politics did with

0:14:30.200 --> 0:14:33.840
<v Speaker 2>Tanya Plibasec, really long interview that she gave him, and

0:14:33.920 --> 0:14:36.120
<v Speaker 2>he pushed it pretty hard on it. Come on, come on,

0:14:36.240 --> 0:14:38.320
<v Speaker 2>surely you and she's like, oh, of course, I want

0:14:38.360 --> 0:14:41.680
<v Speaker 2>to collect more tax from them, but we just kind

0:14:41.720 --> 0:14:45.080
<v Speaker 2>of can't. It's like, yes, we can.

0:14:45.480 --> 0:14:48.040
<v Speaker 6>You know, the resources that are underneath our soil and

0:14:48.080 --> 0:14:50.080
<v Speaker 6>in our oceans belong to every Australian and we should

0:14:50.240 --> 0:14:51.400
<v Speaker 6>be getting a fair return on them.

0:14:51.400 --> 0:14:52.920
<v Speaker 1>I've collected done make a policy.

0:14:54.080 --> 0:14:56.760
<v Speaker 6>Well, I agree with that and we you know, we

0:14:56.840 --> 0:14:58.240
<v Speaker 6>tried to do it, and we tried to do it

0:14:58.240 --> 0:15:00.520
<v Speaker 6>at at a higher rate. We eventually had to compromise

0:15:00.600 --> 0:15:02.360
<v Speaker 6>and do it at a lower rate, and even that

0:15:03.000 --> 0:15:04.920
<v Speaker 6>once we left government was reversed.

0:15:05.320 --> 0:15:08.360
<v Speaker 1>So are we stuck in this cycle, Richard, until we

0:15:08.440 --> 0:15:11.520
<v Speaker 1>get a massive increasive independence in the parliament, or that

0:15:11.600 --> 0:15:14.840
<v Speaker 1>we have permanent minority government. I mean, is the status

0:15:14.920 --> 0:15:18.240
<v Speaker 1>quoe likely to change it? Or are we stuck in

0:15:18.240 --> 0:15:19.520
<v Speaker 1>this cycle forevermore?

0:15:20.480 --> 0:15:20.760
<v Speaker 5>No?

0:15:20.760 --> 0:15:24.400
<v Speaker 2>No, I'll make a joke at my spence. I might

0:15:24.400 --> 0:15:28.080
<v Speaker 2>be a bit centrist here. There's a middle path, Daniel.

0:15:28.400 --> 0:15:31.000
<v Speaker 2>The Liberal Party got a warning in twenty nineteen when

0:15:31.120 --> 0:15:33.800
<v Speaker 2>Zalie Stegel took the once safe seat of Wringer off

0:15:33.840 --> 0:15:37.280
<v Speaker 2>Tony Abbott. The Liberal Party in twenty nineteen could have thought, oh,

0:15:37.320 --> 0:15:40.040
<v Speaker 2>that's risky, we should change direction, but they chose not to.

0:15:40.480 --> 0:15:43.160
<v Speaker 2>In twenty twenty two, the Liberal Party lost six more

0:15:43.240 --> 0:15:47.360
<v Speaker 2>seats safe seats to independence, and they could have in

0:15:47.400 --> 0:15:49.920
<v Speaker 2>twenty twenty two when well, that's risky, maybe we should

0:15:49.960 --> 0:15:54.120
<v Speaker 2>change direction. And then in twenty twenty five it happened again,

0:15:55.000 --> 0:15:59.080
<v Speaker 2>and this still won't change direction. What's interesting to me

0:15:59.320 --> 0:16:03.720
<v Speaker 2>is well be smarter than that. Now, Labor did well

0:16:03.720 --> 0:16:06.600
<v Speaker 2>at the last election, obviously won a lot of seats,

0:16:06.600 --> 0:16:09.760
<v Speaker 2>but off a very low primary vote. Well, guess what

0:16:09.840 --> 0:16:12.800
<v Speaker 2>at the next election, they've kind of got their liberal moment.

0:16:13.440 --> 0:16:16.320
<v Speaker 2>So you framed the question as you know, is it

0:16:16.400 --> 0:16:19.160
<v Speaker 2>all or nothing? Just because the liberals were too dumb

0:16:19.240 --> 0:16:22.600
<v Speaker 2>to listen doesn't mean Labor's too dumb to listen. But

0:16:22.640 --> 0:16:25.160
<v Speaker 2>if Labor are too dumb to listen, then yep, that's

0:16:25.200 --> 0:16:27.240
<v Speaker 2>what's going to happen. They're going to lose. They're going

0:16:27.320 --> 0:16:31.680
<v Speaker 2>to lose more seats as more people go. That's just crazy.

0:16:32.800 --> 0:16:35.000
<v Speaker 1>Richie will let you go and get your coffee. Thanks

0:16:35.000 --> 0:16:48.840
<v Speaker 1>so much for your time. Thank you. Seven am is

0:16:48.840 --> 0:16:52.680
<v Speaker 1>an early show from Solstice Spinia. It's made by Attigus Basto,

0:16:53.280 --> 0:16:59.680
<v Speaker 1>Ariel Richards, Chris Dangate, Crystal Color, Nicole Johnston, Travis Evans,

0:17:00.120 --> 0:17:04.960
<v Speaker 1>Zoltan Veecio and me Daniel James. A theme music is

0:17:04.960 --> 0:17:08.560
<v Speaker 1>by nev Beckley and Josh Hogan of Bonvalode Bordier. Thanks

0:17:08.560 --> 0:17:11.320
<v Speaker 1>for listening to seven Am. Have a great weekend.