13 November 2014
Transcript - #2014036, 2014

Interview with Waleed Aly, ABC Radio National

PRESENTER, WALEED ALY:

One of the people who is going to be responsible for trying to negotiate with that Senate as it unfolds is Steve Ciobo as the Parliamentary Secretary to the Treasurer. He is there for the G20 at the moment in Brisbane. We're going to talk to him about that. Steve Ciobo, while I do have you here, is this going to make your job of trying to get anything through that Senate harder?

CIOBO:

Well, Waleed, good afternoon to you. Look, the Senate's interesting. It's a bit of a potpourri of different views and crossbench senators and others. Look, we engage in good faith with anybody who is mature and reasonable and willing to have a discussion that puts the national interest first ahead of their own personal interest.

We as a government are focused on serving the people of Australia by implementing policies that we took to the last election and that are consistent with the national interest.

So, whether Jacqui Lambie is in the Palmer Party or out of the Palmer Party, whatever is happening to the Palmer Party, we will sit down and discuss and negotiate with the crossbench as well as the opposition. Unfortunately, up until this point, Waleed, the opposition have got themselves out of the equation for most of the major discussions and they have been deemed to be irrelevant thus far. We'd welcome the Labor Party coming back to the table.

ALY:

Good luck with what's going on in the Palmer United Party as well because now there is many, It looks like there will be even more nodes that you'll have to wrangle. I don't know how you'll do it, but that's your problem and not mine.

Let's talk about the G20 because you were there today to welcome Christine Lagarde, I understand, the International Monetary Fund Managing Director, welcoming her-

CIOBO:

Yes I was.

ALY:

To Brisbane. She's made comments suggesting Australia should raise more revenue from the GST. You've called for a mature debate about this. Although, I've noticed whenever I come to ask direct questions to members of the government about it, they say, well, I don't want to get involved or pre-empt anything, which seems it's hard to have a mature debate in those circumstances. Did you talk to her specifically about that proposal?

CIOBO:

No, Waleed, we didn't get into the nuts and bolts of Australia's taxation reform agenda during the meet and greet at the airport. It was merely a meet and greet at the airport, just to say welcome to Australia, to outline our pleasure of being able to be hosts of this year's leaders' summit as President of the G20. We also met with the Deputy Prime Minister and Minister for Finance from Korea.

We had a cordial conversation that builds on conversations that I've had previously with Christine Lagarde in Washington and at other finance track meetings earlier this year. No, we didn't get into GST reform though.

ALY:

Seems like the case is mounting, though, for the GST to be increased one way or another. I've noted over the weekend, Josh Frydenberg said this is for states to make this argument and it's for business to make this argument. Why isn't it for you to make this argument?

CIOBO:

As a government, we've outlined that we intend to have a tax white paper put in place. What we've outlined is our intention to start a policy discussion process that says what is going to be in the long-term interest of Australia.

We know, for example, that more than 120 taxes I think from memory are at a state level, of which only about 10 or 20 raise 80% of the revenue. And the balance of the taxes raise a very small amount. Clearly, there are a lot of inefficient taxes. What we've outlined is that there is scope we believe for a more efficient taxation base.

Let me stress this point very clearly. As a government, we are committed to simpler, more efficient taxation and lower levels of taxation. We have no interest in increasing the aggregate amount of taxation that Australians pay. We're committed to simpler, lower taxes. That's precisely the reason why we abolished the mining tax and abolished the carbon tax.

ALY:

No, but you haven't mentioned the GST once in all of that. I just find it intriguing that you want to start this debate there.

CIOBO:

Well, Waleed, there is 100 and something taxes I said, and I didn't realize my response-

ALY:

No, but the question was specifically about the GST, that's the one that wasn't mentioned.

CIOBO:

I'm not really sure the point you're making, but the key I'm raising is that we want to have a discussion in relation to tax reform. The GST is simply one tax out of all the various taxes that exist. Now if people want to argue that they believe that an increase in the GST is the way forward, well, let them argue that point. If others want to say no, under no circumstances should the GST be increased, well that's perfectly acceptable too and let them raise that point of view.

ALY:

The G20 has been thrown into a wildly different context, hasn't it, because of this colossal agreement that was announced yesterday between the United States and China on reducing carbon emissions.

I'm interested in the government's response on this because a lot of questions have been asked about whether climate change will form a core element of the G20 talks. The government's response seems to be no, because this is really an economic forum. The United States, U.S. State Department senior spokesperson there said that there will be a focus on economic issues, and climate change is part of that. Why is the Australian government's position seem to be pointing in a different direction to the American government's on this?

CIOBO:

I don't think that's the case. What's taking place and the focus of discussions this year. I mean, let's be clear about the leaders' summit that's happening this weekend. The leaders' summit really builds upon the work that's been taking place throughout the year. We had our first meeting of finance ministers in Sydney back in February. It was at that meeting that we outlined an aspiration and got a commitment from countries around the world through the G20 to grow global growth by 2% as an aspiration.

Over the past nine or so months, every country has been putting their shoulder to the wheel, developing new ideas, approaches from a policy perspective about what we can do to make sure that we enhance global growth.

So this weekend is in many respects a penultimate opportunity to discuss what has been discussed all year. Now the climate change announcement that has just recently been made between the United States and China is of course globally a very important development, but it doesn't in any way, shape or form, detract from the exceptionally important work that's been taking place all year under our presidency of the G20.

ALY:

I'm not saying it detracts from it, but it must fundamentally frame the conversations that we're having mustn't it? If you want to come up with a framework for global growth and you have the two biggest economies in the world agreeing that they are going to curb carbon emissions, then surely you can only sensibly discuss global growth in the context of needing to reduce those carbon emissions. Otherwise, you have a plan that doesn't marry up with the other obligation of reducing those emissions that's just been agreed upon.

CIOBO:

Well our discussion about achieving the 2% global growth, additional global growth target has seen countries nominate something like 1000 initiatives. Out of those 1000 initiatives, about 7 or 800 were brand new initiatives. The IMF has done the modeling in relation to what those reforms mean and what it will add to global growth. We are exceptionally confident that as a consequence of the thousand or so reforms that have been put forward by countries, we will achieve an additional 2% of global growth.

Now that means Waleed that we are talking about an extra $2 trillion dollars or thereabouts of global value. We are also talking about tens of millions of new jobs for people around the world. Now is climate change a part of that? Of course it's a part of that. Let's not also pretend that it's the be all and end all of most of those thousand or so reforms put forward.

ALY:

No, I'm saying it's the context in which those reforms must now take place. Because if we're committing to reducing our emissions and when I say we, I really mean the U.S. and China and then the world will ultimately follow. If we're committing to that, any economic plan that we have to do has to bear that in mind. If you separate these conversations, it seems to me it becomes incoherent.

CIOBO:

I think that's part of the broad tapestry of politics. In my view, when you try to pick at any one particular thread, you betray the fact that it is a tapestry. I think in some respects, you and I are on the same page. Of course, all of these things are interwoven and of course the government has outlined our direct action policy, we took that to the last election, we remain committed to reducing our CO2 emissions by 5% on 2000 levels by the year 2020.

That's still in place, but that notwithstanding, we are rolling out an economic action strategy here in Australia that we know will boost productivity and boost Australia's growth.

In fact, in many respects, there's a marriage between the economic action strategy the Abbott government is pursuing with great vigor and what has been achieved in terms of the global ambition by the G20 member states about what we want to achieve on a global basis.

ALY:

Right. But even if you take, for example, our targets, we have no emissions reduction targets beyond 2020 at this point. They are to be formulated. Surely, whatever those targets end up being would change in quite dramatic ways what our economic strategy is to grow and still meet those targets wouldn't it? It seems an odd thing to cleave off.

CIOBO:

Well, it's not that it's cleaved off. I do think that you correctly identify that this is part of the policy challenge that not only Australia faces but all governments face. That is that how do we secure additional growth, be it domestic or be it international, but do so in a way that is consistent with what we're trying to achieve in terms of limiting CO2 outputs.

ALY:

Except we won't see exactly what it is that we're trying to achieve here and we're kind of saying we don't want it on the agenda here and not-

CIOBO:

Waleed, I don't think you're being fair. I'll tell you why I don't think you're being fair. Because we've indicated that we're going to reduce CO2 emissions in Australia by 5% on the year 2000 levels by the year 2020. You're saying what's happening post-2020?

Again, the government has always made it clear that he will consider our post-2020 emissions reduction targets in the lead up to next year's Paris conference. We've always said that. We're not hiding anything. In fact, we're being entirely consistent with what our position has been, which is-

ALY:

I'm not-

CIOBO:

In Paris next year, that will inform our targets post-2020.

ALY:

I'm not saying you're hiding it. I'm just saying, it threatens to render a lot of the conversations that happen now kind of a bit redundant.

CIOBO:

I think you're being way too pessimistic. What it does is provides context for the discussions that will take place in Paris next year. I think to suggest that because in the last several days, an announcement has been made between China and the USA that that in some way means that we've got to go back to square one on the drawing board of determinations about aspirations for an additional 2% global growth is-

ALY:

Oh, I'm not suggesting that.

CIOBO:

In that context, then my point to you is simply thus. That this year, we've done a lot of work and countries around the world to grow global growth by an additional 2%, trillions of dollars of extra value around the world, tens of millions of additional jobs. We're going to deliver on that commitment in Australia. We are delivering it through our infrastructure strategy that we've got and our economic action plan.

But in addition to that, we are committed to a 5% reduction on year 2000 levels by the year 2020 when it comes to CO2 emissions. Furthermore, we are taking this new agreement, the one you're referring to, into the context of discussions that will take place in Paris next year to inform our post-2020 target.

ALY:

On the growth strategy, how exactly are we going to achieve? This is a significant target, 2% above what is currently being forecast, so above trend. How are we going to achieve this when we have wages, for example, being low, as low as they've been in a very long time, which takes money out of the economy and means that there is not a lot of spending that's going to go on.

We have government trying its best to remove government spending from the economy in order to cut its way to a surplus. We have interest rates low, but yet business not really being terribly active and stimulated. How are we going to stimulate this?

CIOBO:

Well let me just pull you up on one quick thing. You said we have wages that are low. That's not the case. I think you're referring to wages growth, but wages growth is an entirely different kettle of fish to the level of wages. But more importantly, this is exactly the challenge that we as a government are facing. We need to try to stimulate economic growth, and we need to do that in a context where we have to, we have to, go down the pathway of consolidating Australia's fiscal position. Now we've been-

ALY:

That means taking out public money doesn't it?

CIOBO:

Well what it means is spending less, because unfortunately we inherited a situation where the Labor Party forced Australia to borrow a billion dollars a month. We are borrowing a billion dollars a month just to pay the interest on the debt that Labor left behind.

ALY:

I understand that concern.

CIOBO:

We can't continue. We can't continue down the path of just spending. So yes, we do need to tighten our belt. So how do we achieve growth in that context? We do it by quality spending. We do it by investment in productive infrastructure. That's precisely the reason why, as the Prime Minister has said, we want to grow productive infrastructure, we want to reduce red tape, we want to lower compliance burdens. By doing these things, we achieve global growth in a context of fiscal consolidation.

ALY:

Does it mean investing in renewable energy?

CIOBO:

Well we continue to invest in renewable energy. That will be part of the broad tapestry of the Australian economy. Never lose sight of the fact that 70% of the Australian economy is services-based, 70% is services-based. So, is renewable energy a part of it? Of course it is. Is it a big part of it? No it's not.

ALY:

It's a shrinking part of it is the point.

CIOBO:

No it's not, no that's incorrect because renewable energy was always set to be a 20% target. The fact that aggregate energy demand has declined means that some of those parameters have changed.

Waleed, I've spoken, I've spent a lot of time talking to the renewable energy lobby, having conversations with them. Now a lot of them tell me that they foresee in the very near future that there will be homes right across Australia where people are not connected to the electricity grid. They'll have solar panels on their roofs, they'll have very good batteries, probably lithium ion batteries. They will be able to generate and store energy, so much so that they probably will not even need to be on the grid.

So, in the same way, we've seen massive disruption across marketplaces in a whole array of other industries. I predict we're going to see exactly the same thing in relation to the energy industry too.

ALY:

Steve Ciobo, thank you very much for giving us some time. Enjoy the party while you're up there. It's always good fun I'm sure. Maybe even as much fun as talking to us?

CIOBO:

I'm not sure I'd call it a party, but look, this is a really important weekend, and if I can just say one thing really quickly. Today, with the Treasurer, we inspected the teams that are building up the G20 and we have extraordinary Australian men and women, literally thousands of them devoted to this weekend. We really want to secure a great outcome.

ALY:

Well make sure they are invited to the party too and they get some of the quality caviar alright? Appreciate it, thanks for coming in. Steve Ciobo, Parliamentary Secretary to the Treasurer.