21 February 2014
Transcript - #2014002, 2014

Interview with Emma Alberici, ABC Lateline, Friday Forum

SUBJECTS: G20

ALBERICI:

As the world's leading political figures in banking and finance descend on Sydney for this weekend's G20 meeting, the Australian Government is caught between a need to take the lead on difficult decisions to lift global growth and a looming Senate election in WA that means the Government will need to tread carefully when it comes to discussions about lifting taxes and reigning in spending. With me in the studio for our political forum tonight are Steve Ciobo, Parliamentary Secretary to the Treasurer, and Matt Thistlethwaite, Shadow Parliamentary Secretary for Foreign Affairs and Immigration.

Welcome to you both.

Steve Ciobo, Joe Hockey wants a mature debate about the retirement age so let's have it.

CIOBO:

Sure, yep.

ALBERICI:

Given we are in an aging population, is it still appropriate that we take the aged pension when we're 67?

CIOBO:

The issue that the Treasurer was raising is indeed an issue that's being faced by developed countries across the world is how we make sure that our finances are sustainable. That reality is that Australia, like many countries around the world, faces a situation where we have a mountain load of debt. Unfortunately that was bequeathed to us by the former Labor Government but we are saying we need to have a serious conversation about what we can do to make sure the nation's finances are sustainable in the long-term and although Bill Shorten is out there being alarmist, we're trying to say to people this isn't something to be alarmist about, let's not play politics with it. Let's have a rational adult conversation about what we can reasonably afford.

ALBERICI:

Matt Thistlethwaite, does Steve Ciobo have a point? Is current spending unsustainable in perpetuity?

THISTLETHWAITE:

There's been no maturity at all from this Government on the sustainability of the budget going forward. We've been talking about this inter-generational problem for the last 20 years. But the Howard Government opposed increasing superannuation from nine to 12 per cent. We're again seeing it from Joe Hockey. They're opposing the increase from nine to 12 per cent. Other reforms to make superannuation more sustainable, removing the tax concession on high end contributions and reforms such as the mining tax which improve the sustainability of the Budget moving forward all opposed by the Opposition. All opposed by the Opposition.

ALBERICI:

Pardon the interruption but the mining tax was well and good when we were seeing windfalls from the commodity boom, prices were high, demand was high, neither of those things are applying now. We're seeing into the future the big miners are telling us demand is tapering off, prices are coming down dramatically. Those windfall profits the mining tax was predicated on isn't there anymore.

THISTLETHWAITE:

It is a profits-based tax and in that respect it is more efficient for our economy. There's the carbon price, revenue from that will be gone if that's removed. There's the superannuation tax concessions as I mentioned, the fringe benefits tax changes, Labor intended to implement, opposed by the Opposition, even the changes to corporate profit shifting Labor tried to introduce in Government, opposed by Joe Hockey. So if you want to talk about maturity, all they've brought to this debate over the last six years is immaturity.

ALBERICI:

Steve Ciobo?

CIOBO:

Well if you didn't know anything about Australian politics and didn't know anything about the situation Australia faces then you'd take on face value what Matt has said and think that all seems sound.

THISTLETHWAITE:

It is.

CIOBO:

Let's look at the mining tax.

CIOBO:

It's not actually Matt. The mining tax had something like $15 billion worth of expenditure associated with it that your Government introduced - $15 billion worth of expenditure and raised something like $325 million.

THISTLETHWAITE:

It was so clear to the Australian public it was a profits-based tax and the profits would go up and down…

CIOBO:

No, no, look, you had your shot, you had your shot. So let me… you had your shot so let me say my piece.

THISTLETHWAITE:

The whole scheme, you're attempting to remove the whole scheme. The whole architecture and that sustainability into the future is being removed by your government.

ALBERICI:

He is making the point that you committed yourself to spending when the revenue just wasn't there to cover it.

THISTLETHWAITE:

As I said it was a profits-based tax.

ALBERICI:

We'll let Steve Ciobo continue.

CIOBO:

Having had two bites of the cherry, let me continue. $15 billion of expenditure associated with it, raised $325 million so by axing the mining tax Emma, the Coalition is saving the nation money. In addition, Labor introduced the world's biggest carbon tax, never forget off the back of a lie, said they wouldn't do it and they did it. That made us less competitive and we're now in a situation we're trying to get Australia back on track to be more competitive and one of the ways we have do that is by having cheaper energy costs.

We've seen the consequence of having high labour costs, high-energy costs and high capital costs in this country and we are determined to make sure that we improve the situation.

The final key platform is this. We have now around $15 to $20 billion of savings initiatives we've put on the table have gone through the Lower House and incidentally billions of dollars of that are Labor's own announced savings measures. They're currently in the Senate and the extraordinarily thing is the Labor Party is opposing them including opposing them including their previously announced savings range of measures. So that's the reason why I think anyone with any idea of context recognises that whilst what Matt says sounds great on the surface, it does want take much of a scratch to underscore that in fact it doesn't really exist and those are false claims.

ALBERICI:

Matt Thistlethwaite, the OECD has suggested ways Australia can grow its economy by reducing its comparatively high company tax rate, it's on average almost double the average company tax rate, and also from raising more revenue from the GST. What do you think of those suggestions?

THISTLETHWAITE:

Well Labor attempted to reduce the company tax rate in office. When we were in Government, we bought a proposal to reduce the company tax rate by one per cent. It was opposed by the Opposition who vote with the Greens in the Senate to stop it so Labor's been introducing a number of measures when in Government to improve the sustainability of the Budget moving forward and lot of those were based on the intergenerational report and the problems that we're going to have as a nation as the population ages. They've all been opposed by this Government in Opposition.

ALBERICI:

What about the elephant in the room - the GST? There's more than one leading economic voice in the world saying Australia's consumption tax is too low.

THISTLETHWAITE:

We don't believe in an increase in the GST because it hurts low to middle income families proportionately greater than other income earners and that was the philosophy of Labor, ensuring that where sections of the economy were profitable that they paid their fair share of tax, not slugging low income earners of the necessities of life - like food and other things like that and hurting them at the expense of large multi-national corporations that had the capacity to pay more.

ALBERICI:

Steve Ciobo, what sort of influence does your Government expect to have on the G20 meeting this weekend? You say the agenda is about trying to lift global growth beyond the ambition of the IMF so beyond the 3.75 per cent they're expecting in the next 12 months. Presumably the other 19 countries would also like to lift global growth. It's about how you do it. How much influence do you expect to have?

CIOBO:

The Treasurer's made it clear, we're unapologetic about wanting to go for growth. This has been a key platform the Prime Minister outlined in his speech at Davos for us as a Coalition Government, this weekend is about trying to get the runs on the board and I think that the success will really be in showing if we're able to get a global commitment to increasing the growth aspiration we have for all countries. Now, it's one thing to have the aspiration and a separate thing to look at how that can be implemented and that going to be part of what focuses our minds over the forthcoming less than 12 months now, the forthcoming 10 months remaining of our presidency. If we do that successfully, and we've got reason to be optimistic about us being able to do that, then what that actually means is we can get better fiscal consolidation on an international basis. We can go for growth and have increased growth and the consequence of that and a very positive and material sense is improved employment prospects not only in Australia but globally.

ALBERICI:

It's not what you say, it's what you do isn't. How are you going to suggest to these disparate 19 countries, developing and developed, what is going to be the way you cut through, this is the way you lift growth? Of course everybody want to lift growth.

CIOBO:

That is the challenge that faces us but the communiqué's already in place. We've got discussions that are taking place and have been for months between officials and get concentrated this weekend at the G20.

ALBERICI:

Talk to us about infrastructure. What's the story there that you're trying to tell?

CIOBO:

Basically, with infrastructure we know the productive infrastructure is one of the best ways that Governments to help to get the economy moving. It is one of the key ways we can boost productivity and one of the key ways we're able to increase global growth. One of the challenges we have, and it's not again it's not confined to Australia but globally, is that lot of countries are in a fiscal situation where they can't afford to pay for infrastructure.

So a key focus we have over this weekend and indeed we have an infrastructure round table this afternoon, was to work out ways we can improve for example common documentation to enable companies and there to be public-private partnerships to build the infrastructure the world needs without having to go through different requirements across multiple jurisdictions all of which takes time, adds money and has a big compliance headache associated with it.

So we can set the agenda in that respect and the consequence of improved capital flowing into infrastructure projects and therefore improved infrastructure is better growth, better productivity and more important prospects.

ALBERICI:

Matt Thistlethwaite, has the Government got the priorities for the G20 meeting right?

THISTLETHWAITE:

Well, Labor supports going for growth. In fact in Government that's the Labor story. When the GFC hit, it was Labor that acted to quickly and decisively boost demand in our economy and in doing so we continued that growth stretch and we saved - we created about 800,000 jobs in our economy.

CIOBO:

The unemployment rate was up.

THISTLETHWAITE:

Australia has a very good story to tell internationally compared to other nations when it comes to this sort of thing. I must take issue with Steve's comments about infrastructure. Labor in Government massively increased the nation's investment in infrastructure. The investment in rail, particularly freight rail, was 10 times that of the Howard Government. We introduced a process of an independent body that assessed our infrastructure needs and ranked them on the basis of which projects were best for producing productivity outcomes in our economy. One of the first things this Government's done when they came to office was undermine the independence of Infrastructure Australia and remove that requirement for Infrastructure Australia to publish, publicly, their studies and their evidence about productivity improving infrastructure. Now, that's not the way to talk about infrastructure investment producing growth in our economy. It is undermining it.

ALBERICI:

Steve Ciobo, one thing that won't be discussed at the meeting this weekend is climate change. Mr Abbott says the agenda should concentrate on the issues that we've already discussed rather than be, in his words, cluttered up with every worthy and important cause. But given the huge costs involved in tackling the issue, shouldn't it be discussed at a meeting of the world's Finance Ministers?

CIOBO:

Emma, the reality is there's always a range of important and worthy issues that need to be discussed. I think though you can sort of strive for too much, over reach and as a consequence nothing happens so we've been very calculated in terms of what we want to focus on. We want to focus on improving the pipeline of projects able to be funded in terms of infrastructure. We want to focus on better macro-economic coordination, we want to focus on better regulation, not more regulation but better regulation and ideally less regulation. If we focus on those things then we know that the consequence will be as I said, stronger world economic growth, better employment prospects.

ALBERICI:

Are we meant to take something away from your lack of focus on climate change in terms of your commitment to the issue?

CIOBO:

You know there would be a range of issues that are not going to be raised this weekend. I know that certain groups and individuals might like to focus on one or two and say, "Why aren't you talking about that issue?" There's a raft of issues that won't beef discussed.

ALBERICI:

The IMF head last night, Christine Lagarde, said she hoped the Abbott Government wasn't going to lose Australia's role as a pioneer in the issue of tackling climate change. Does she have any reason to be concerned?

CIOBO:

I've got good news for Christine Lagarde. We have a direct action plan that's going to reduce our emissions by five per cent based on our modeling that we've seen.

So Australia is going to be a very important contributor to reducing global CO2 emissions and do it in a way that provides incentives and not the world' biggest carbon tax we saw under Labor which incidentally, Emma, even under Labor's own modelling, would have seen an increase in the amount of CO2 emissions.

ALBERICI:

Matt Thistlethwaite, there may be an early report card on the new Government in the form of fresh elections in WA. In fact you've spent most of your political life as a senator. How will the impending election campaign impact the narrative and indeed the substance of the Budget, do you think?

THISTLETHWAITE:

I think it will have a big impact. A big issue in WA is education. The Barnett Government's cut $183 million from the education Budget over there and Tony Abbott didn't have the wherewithal to stand up to the Barnett Government and say it's not on, "I want you to make the investment in education that Labor was proposing through our education reforms", and the public in WA are deeply upset about that.

You've got one of their MPs today, Rob Johnson, the member for Hilaries, coming out and saying that the Premier should resign. That's - if ever an indictment on a Government in WA, it's one of your own MPs coming out and saying, "It's time for the Premier to go".

These are the issues the Western Australian public are going to have to tackle and I think it's going to be a difficult election but one that Labor is looking forward to fighting on those issues such as education and health.

CIOBO:

Emma, sorry but I'm scratching my head that Matt would talk about education in the context of WA when under the former Labor Government you actually axed funding to Queensland, WA and the Northern Territory.

THISTLETHWAITE:

It's just not true.

CIOBO:

It is true.

THISTLETHWAITE:

It is not true. It is your political spin and not true at all.

CIOBO:

Under your agreement you ripped I think from memory $1.2 billion out.

THISTLETHWAITE:

The Gonski reforms were more money from the federal budget, from the Federal Government went into education matched by the States on a needs-based funding model

CIOBO:

Did you have a funding agreement for Queensland and WA?

THISTLETHWAITE:

They wouldn't sign up to the reforms because Tony Abbott had said, "Don't".

ALBERICI:

We're running out of time.

CIOBO:

That's precisely the point - no agreement.

ALBERICI:

Just a final a final comeback from you, Steve Ciobo on the issue of the WA election. Will that change the framing of the Budget? Because you don't want to be scaring people and then lose votes in WA.

CIOBO:

We're not interested in scaring anybody. We're interested in having a mature conversation to say to people finances need to be sustainable. Under Labor we went from no debt to over $450 billion of debt with a debt pathway of $667 billion. I'm not interested in scaring anyone but we do want to have a mature conversation. When it comes to framing this Budget and the Western Australian Senate election our message is straightforward. If Western Australians do not want the carbon tax and mining tax positively anti-Western Australian taxes than they should support a Coalition candidate or candidate that will help remove the blockage the Greens and Labor are causing in the Senate.

ALBERICI:

Well we have to leave it there unfortunately. Gentlemen, thanks so much.

THISTLETHWAITE:

Thanks, Emma.

CIOBO:

Thanks, Emma.