Andrew Leigh

TRANSCRIPT - SKY AM AGENDA
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
8 April 2013

TOPICS:                                Prime Minister’s visit to China, Australia-China trade relations, Tony Abbott’s comparison of Australia and Cyprus, the NBN, the Budget.



David Lipson:                     Hello and welcome to the program, I’m David Lipson. Pledging a new level of relations between Australia and China; that’s the message from the new Chinese President, Xi Jinping after a forty-five minute meeting with the Prime Minister, Julia Gillard yesterday.

[CLIP JULIA GILLARD]

Julia Gillard:                        You can take it from the nature of the discussions today that there is a great deal of confidence about the state of the relationship now, and optimism for the future. When words are being used about taking the relationship to a new level, I think that that is indicating a spirit of optimism about how we can grow this relationship.

David Lipson:                     Today, the Prime Minister will formalise a deal that will allow exporters to trade directly the Australian dollar with the Yuan. There’s also a big trade push with plans to set up a major trade fair along the lines of the G’Day USA campaign in the United States, a very successful campaign, and following in the footsteps of that.

[CLIP CRAIG EMERSON]

Craig Emerson:                  It is very important because just as we have G’Day USA, we’ll have G’Day China and that’s about bringing the best of Australia to the hustle and bustle of Shanghai. This is the most populous country on Earth, it’s an increasingly wealthy country, fabulously large middle classes, so we’re going to bring the best of Australia to the hustle and bustle of Shanghai. It’s a very exciting time.

David Lipson:                     Laura Jayes is covering the Prime Minister’s trip to China and she filed this report for AM Agenda

[CLIP LAURA JAYES]

Laura Jayes:                        This is Julia Gillard’s second visit to China and so far it is being judged as a success. So far, so good. Julia Gillard is pretty confident on the world stage and by all accounts her meeting with Xi Jinping went pretty well. They spoke for forty five minutes about the situation in North Korea but also Australia’s important relationship with China as expected. But, there was other things as well and Julia Gillard sought out and went out of her way to really reassure the President, Xi Jinping that Australia is a friendly place for China to invest. There’s also talk of a free trade agreement. Now this has been in the works since about 2005, so talked about for a good eight years. Now there was an indication, and this is a priority in the Asian Century White Paper, that you get the feeling it might still be a few years off. Now, more immediately, the Government has sought to really capture that Chinese dollar, the tourist dollar here in China with the growing middle class. 70 million Chinese travelled overseas in 2011, and spent about $70 billion dollars. Comparing that to 625,000 Chinese tourists that went Down Under last year, well Australia is only capturing a small portion of that. That’s why the Government is committing to spending about $2 million to throw a big party to really showcase Australia’s best. It worked so well with G’Day USA in the States, it only makes sense to replicate it here in China. Laura Jayes, Sky News, Shanghai

David Lipson:                     Well joining me now on AM Agenda is the Parliamentary Secretary to the Prime Minister, Andrew Leigh and the Shadow Disabilities Minister, Senator Mitch Fifield. Good morning to both of you gentlemen. First to you Andrew Leigh, Xi Jinping’s comments about a new level of ties between Australia and China: are there any risks in those new level of ties, for example, with our relationship with the United States?

Andrew Leigh: David, I think it’s a reality that Australia’s economic integration with China has been growing apace. I remember when I was first involved in politics working for the late Shadow Trade Minister Senator Peter Cook in the late 1990s China was important but very much second fiddle to Japan and that has just transformed as the economic relationship has blossomed. I was in Beijing last year for an Australia-China forum talking about the engagement. It is really important, I can understand that some Chinese would have been a little rattled by some of the scare-mongering over foreign investments that say people like Barnaby Joyce were engaging in last year, and part of this is just reassuring China that Australia’s doors are open for business, that we are keen on having a relationship that spans foreign investment, trade, huge tourist flows there: two thirds of a million Chinese tourists coming to Australia, and that ensures that Australia gains as much as we can in this the  Asian Century.

David Lipson:                     So that won’t put off America?

Andrew Leigh: I certainly think America has a deep commercial relationship with China as well. That will obviously co-exist with robust discussion around for example around human rights – we have disagreements with China over issues such as Tibet for example – but we’re able to be firm friends to be frank about where we disagree, but also to find those many areas of commonality, the Australian architects that are helping to design projects in China, the Chinese students coming to study in Australia, both enriching each other’s countries.

David Lipson:                     Mitch Fifield, it was a very positive message from Xi Jinping, the leader of our most important trading partner and it’s been backed by action as well, as I mentioned, the trade fair and the currency deal too. Do you support those elements and indeed the language coming from China?

Mitch Fifield:                      look, we support the Prime Minister’s visit to China. It’s important for Australian Prime Ministers to be frequent visitors to China and we hope that the mission is a success and the outcomes are achieved. But look, it’s well and good to go to China, to say the right things, but a nation like China looks for certainty in its trading partners and that certainty was damaged in relation to Australia as an investment destination by the mining tax, by the xenophobia that we’ve heard from this government in relation to 457 visas. Now that has not helped Australia’s reputation as a safe and predictable place for foreign investment. On the other side of things China looks to its trading partners from whom it imports to also be reliable and what Minister Ludwig did in relation to live cattle exports to another of our trading partners could only have caused concern in China. Look, it’s good to talk to talk and we wish the Prime Minister well on her venture in China but you’ve got to have the policies that back up that certainty that our trading partners are looking for.

David Lipson:                     what about another round of free-trade talks as we’ve heard Laura Jayes saying there. There’s been talk about this for quite a few years already – more than half a decade. Is a free-trade deal, Andrew Leigh, with the Chinese automatically a good thing when you consider that they can produce goods much cheaper than we can?

Andrew Leigh: Well I’m an economist David, and it’s almost a hallmark of entry to our profession that you have to believe that free trade raises incomes, and I think empirically the evidence bears that out very strongly. Australia is better off for being engaged to the world not only because we buy things at cheaper prices but also because we get the innovation and the know-how from engaging with other countries. Practically, how to bring down those trade barriers? Well I tend to be a supporter of multilateral agreements where you can, but increasingly the World Trade Organisation has stultified. The Trans-Pacific Partnership which is a smaller sub-set of countries trying to strike a trade deal, looks more promising but hasn’t yet delivered the goods so then you begin to look at these bilateral relationships. They’re not ideal but if that’s the best we can do to bring down trade barriers to allow our exporters better access into Chinese markets then that’s something we may have to look at.

David Lipson:                     has there been a failure of this Government and of the previous Rudd Government as well that there has been talk for so long about a free trade deal and we haven’t got, really, anywhere?

Andrew Leigh: These negotiations are progressing but they progress on a number of fronts. There’s typically an enormous number of things that need to be nailed down in a bilateral deal. Bilateral deals, David, tend to be more complicated that the multilateral deals: countries are more tempted to put new things on the table when they’re dealing one-on-one than they are when they’re sitting around the table with 180 odd countries. So sometimes you get too many issues on the agenda and that becomes difficult to resolve. I’d be keenest, I think, to see China playing part of a really strong push to bring down trade barriers to the WTO. World-wide benefits of that are in the hundreds of billions of dollars. It’s good we didn’t see a big increase in tariffs during the GFC as some had feared. It would be better yet if we could bring down those tariffs further.

David Lipson:                     Mitch Fifield, what’s the Coalition’s position on a free trade deal with China?

Mitch Fifield:                      look, unlike the Labor Party, we’ve always been strongly supportive of bilateral free trade agreements. The ALP in government have always had preference for working through multilateral agreements and particularly under Kevin Rudd. But we take a much more pragmatic approach – if you can get a good economic outcome for Australia, whether it be a multilateral or a bilateral agreement, then you should pursue that. And if multilateral negotiations aren’t travelling too well, then the real opportunity is there in the form of bilateral trade agreements. And the way that you get those is by intensive, constant negotiation and discussion and probably Australia has suffered from a lack of that by having Craig Emerson as the Trade Minister because as you would know, David, whenever Dr Emerson isn’t on Sky, he is on another network. He is doing a doorstop somewhere else. He is almost never focussed on or talking about his trade portfolio. He is always focussed on and talking about domestic Australian politics, and more than that, he is almost always talking about internal Australian Labor Party politics in the media. So, I think it would be a real boost to Australia’s negotiating position in bilateral FTAs if Dr Emerson did less media, spoke less about domestic politics, spoke less about internal Labor party matters and focussed on his day job.

Andrew Leigh: David I should just say something on that, I mean, Craig Emerson is a very strong advocate for Australia in the world and I reject the sort of nasty attacks on Minister Emerson who has travelled extensively to the Middle East and America…

Mitch Fifield:                      (indistinguishable)

Andrew Leigh: …to Asia, he’s been as strong advocate of Australia’s interested around the world. He is deeply committed to an open Australia, engaged in the councils of the world. I think that’s exactly the sort of Trade Minister we need following very much in the traditions of people like Bob McMullan and Peter Cook.

David Lipson:                     ok we’ve got to take a quick break on AM Agenda but we will be back very shortly after this commercial break.

BREAK

David Lipson:                     Well, in china, Julia Gillard couldn’t escape he superannuation debate that was going on back here in Australia. She was asked about comments made by the Opposition Leader Tony Abbott where he compared the government’s superannuation changes to Cyprus and what the government is doing there. That resulted in Julia Gillard lashing out at the opposition leader as an economic simpleton. Let’s take a look and his response…

[CLIP JULIA GILLARD & TONY ABBOTT]

Julia Gillard:                        you know the kind of economic simpleton talk…

Tony Abbott:                     the Prime Minister shouldn’t use an overseas trip to make domestic political comments. I think that the extreme language of the Prime Minister is unworthy of that great office

David Lipson:                     Mitch Fifield and Andrew Leigh are still with me here on AM Agenda. First to you Mitch Fifield, that comparison with Cyprus, that’s overblown isn’t it?

Mitch Fifield:                      look, Tony Abbott wasn’t saying there was a direct parallel between Australia and the Labour Party’s policy in Cyprus. He was saying there were “shades of”. You know, clearly, this Government is on a hunt for revenue and they’re looking to gouge some of the retirement savings of Australians who have worked hard and put money aside. That was the point that he was making. And I defy anyone to say this Government is on anything other than a hunt for revenue to compensate for the fact that they continue to spend more money than they bring in in taxes. Despite the fact that their revenues have been increasing year on year.

David Lipson:                     but even “shades of Cyprus”, I mean, their two dramatically different economies, Australia and Cyprus.

Mitch Fifield:                      yeah, they’re different. But as I say, Tony wasn’t doing a direct analogy. He was just saying there were “echoes of”, “shades of”, “a hint of”, “a touch of”… you know I think the Prime Minister needs to take a big, deep breath. It was certainly a very strong and inappropriate response to refer to Mr Abbott as a simpleton. I don’t think anyone who leads a major Australian political party is a simpleton. Tony Abbott has an economics degree and I’m sure he’ll continue to be attacked by this Prime Minister and this Government whenever he points out the fact that this Government is living beyond its means, that it is entirely unpredictable when it comes to policy, and that it thinks nothing of gouging money from people’s superannuation and if re-elected we know that this government would continue the gouging.

David Lipson:                     Andrew Leigh was that appropriate? That sort of commentary from overseas, from a place like China?

Andrew Leigh: I think it was a response to a question about domestic politics, David, and it seemed perfectly accurate. I mean, the sort of doomsday cult mantra we get from the Opposition, talking the Australian economy down, constantly exaggerating any difficulty for the Australian economy, isn’t in the national interest. We saw again in the Telegraph today, Andrew Robb suggesting that Labor hadn’t saved Australia from the GFC. Well, against Andrew Robb I give you Nobel Laureate Joseph Stiglitz, who has said very firmly that it was Labor’s intervention to prop up an ailing economy in 2008/09 which saved those hundreds of thousands of jobs. And every one of those jobs is a life not blighted by a spell of unemployment. A spell of that sort-of deep sense of powerlessness and hopelessness that comes from looking for work and being unable to find it. That’s the difference between the major parties; we chose to save jobs when the GFC hit. The opposition are still walking around pretending as though the GFC didn’t happen. Pretending as though somehow Australia could have skated through without taking on any debt. I don’t know any sensible economist who backs that proposition.

David Lipson:                     Australia has indeed taken on a lot of debt…

Andrew Leigh: Not a lot, I would disagree with that…

David Lipson:                     well the deficit has, you know, the promise of surplus I should rephrase, has been thrown out and replaced with the likelihood of a deficit this year. And yesterday, Penny Wong the Finance Minister on Sky News, well she refused to confirm that Labor wouldn’t deliver a surplus in the years ahead, she said that the fiscal strategy would be transparent to all, so does this mean we’re going to have a deficit not just this year but in the forward estimates as well?

Andrew Leigh: We’ve been very clear that we will balance the budget over the economic cycle, but that is also something that needs to be balanced and taken in the context of what’s happening to revenues. We’ve seen this sort of ‘perfect storm’ with commodity prices coming off a little, but the Australian dollar still staying high. And that means we get this double whammy on prices, resource companies returning lower profits because the commodity prices are down but still challenges for other firms who are export oriented as a result of the high Australian dollar. That makes it difficult for government revenues which is why government revenues are well down on their average from the last decade. You know, if we had the Howard Government’s tax to GDP share, we’d be comfortably in surplusIf they’d had ours, many of Peter Costello’s budgets would have been in deficit. That’s just a simple economic fact.

David Lipson:                     Mitch Fifield, a response?

Mitch Fifield:                      yeah, look David, we’ve got to nail once and for all this idea that the budget is in deficit because of revenue write-downs. There are some simple facts here. This Government is bringing in $70 billion a year more in revenue than in the last year of the Howard Government. Even this financial year to date, revenues were projected to be up 5% on the previous financial year. The problem is that this Government, even though revenues are up, is spending $100 billion a year more than in the last year of the Howard Government. So it is completely untrue to say that revenues are down, revenues are up, $70 billion up on the last year of the Howard Government. The problem is that spending is up by even more. The reason why this budget is in deficit, and every single Labor budget has been in deficit is because they are spending more than they are bringing in in revenue, despite the fact that revenue is up on the period of the Howard Government. That is the truth. When this Government says revenue write downs, what they are talking about is a reduction in the forecast of revenue. Now, a revenue forecast is not a reduction in revenue.

David Lipson:                     the Coalition also has some big spending promises: a more generous paid-parental leave scheme, it’s on board with the NDIS, some pretty expensive commitments. One of the savings that the Coalition has identified is in the NBN and we may be seeing a Coalition policy sooner rather than later as Tony Abbott said yesterday. There’s a suggestion today though, Mitch Fifield, that the Coalition’s estimates of the Government’s NBN could cost in the end $90 billion dollars. That’s well more than double what was suggested. That’s an extraordinary figure. How does the Coalition figure that?

Mitch Fifield:                      well, there are some reports and some analysis that’s been done that indicate that this Government’s NBN program could cost double what the Government initially said it would cost. Now that’s not a huge surprise to us because this Government never produced a business case for the NBN, they didn’t do a cost benefit analysis, it was essentially back of the envelope stuff with Stephen Conroy deciding that the fast broadband network would be a new telecom or for those old enough to remember, a new PMG.

David Lipson:                     I’ve got to interrupt as I’ve got to give Andrew Leigh an opportunity to respond, we’ve just got about 30 seconds left

Andrew Leigh: The NBN will come in on budget. $37.4 billion dollars and completed by 2021. That’s because this is a very large infrastructure project, the largest in Australia’s history in fact, of this kind. And the alternative to not doing the NBN is the Coalition’s suggestion: that every household should have to pay $5000 to connect from the node to the home by fibre.

David Lipson:                     ok I’m going to have to interrupt you as well. Andrew Leigh, Mitch Fifield, we are out of time thanks for joining us on AM Agenda, the latest news is coming up next.