Monday's Breaking Politics - Fairfax Media

Returning to an important theme, I spoke to Fairfax Media's Tim Lester about carbon policy, arguing that the ALP has a mandate to champion an emissions trading scheme. We also discussed today's Deloitte Access Economics report and the Coalition's proposed commission of audit which, I am concerned, will try and balance the budget off the backs of the poorest. Watch the video or read the transcript below.

Breaking Politics with Tim Lester – Fairfax Media


TIM LESTER: Labor's shadow ministry meets today as questions emerge about how united the opposition is in the position put by new leader Bill Shorten, that is that it will oppose the repeal of the Carbon Tax. Two names have been mentioned as likely dissenters - Mark Bishop, that's the senator and Nick Champion in the lower house. We're joined each week on Breaking Politics on a Monday by Andrew Leigh. Welcome in Labor member for Fraser in the ACT, and now Shadow Assistant Treasurer. Congratulations on the role.


LESTER: On to the question of Carbon. Do you believe there is a split now emerging in Labor ranks on whether to try to hold the line on the Carbon Tax or not?

LEIGH: Well Tim, there's always going to be some diversity of opinion in any sensible political party but we have a strong policy that we took to the 2007, 2010, 2013 elections and for which I believe we have a mandate. And that's that a price on carbon pollution is the cheapest and most effective way of combating carbon pollution. We just had the hottest Australian summer on record, and the hottest Australian winter on record. We know that we get more extreme weather events as a result of climate change so we can't be playing politics with this. We need to identify the most effective strategy and fight hard for that.

LESTER: Okay, the pressure has just begun on Labor really. There is a long and very brutal political game, you would think, being played here to put pressure on the Opposition to buckle and to give in to what looks like the demand of the last election. Are you sure Labor can hold out through all of the turbulence it's likely to face on this issue over the next year or so?

LEIGH: Well you're right to refer to it as a political game Tim because the Coalition has put up repeal legislation for the carbon price which will then be replaced with - well we don't know, because they haven't shown us the legislation for Direct Action. We know why that is. If we go to a member Mr Abbott's cabinet, Malcolm Turnbull has said very clearly that direct action is a policy whose chief virtue is that it can be easily dismantled. It's more expensive on households. When we brought in a carbon price, we cut taxes on workers, we raised taxes on polluters. Mr Abbott thinks the best way to fight climate change is to raise taxes on workers and cut taxes on polluters. That makes no economic sense whatsoever, and I think if 2010 taught us anything, it's that maintaining our policy integrity on the issue of climate change is absolutely vital.

LESTER: Now I mentioned two names out of 86 because they're mentioned in the morning press and The Australian, Mark Bishop and Nick Champion. Do you think that dissent to Labor's position is that small in the 86-member caucus, or might it be much bigger?

LEIGH: Well, we have a strong policy position on this Tim. It's in our party platform. It's in what we took to the last election and I think my colleagues are fundamentally united around the view that putting a price on carbon pollution is the most sensible way of dealing with climate change, and united also in the notion that Mr Abbott's ‘soil magic’ Direct Action plan just won't work. It will cost households too much.

LESTER: Labor could not back down on this?

LEIGH: I believe that this is the right policy for us to be pursuing. It's the policy that we have held continuously for the best part of a decade, and it's a policy which is shared by every serious scientist and economist, not just in Australia but around the world. You're seeing countries now moving to price carbon. China will likely move from its emissions trading pilots in big cities to a nationwide emissions trading scheme by 2020.

LESTER: Okay, all of that said, you would expect some discussion on this in the shadow ministry today.

LEIGH: Sensible parties have discussions about important issues Tim. But, would you really want Australia - the country with the highest per capita emissions of any developed nation to be running in the opposite direction from the rest of the world on how to deal with climate change? To be taking the ostrich approach, sticking our heads in the sand and saying that maybe if we don't do anything, it will be alright. Direct Action can't solve this problem; carbon price is solving it already.

LESTER: Deloitte Access Economics says that achieving a sustainable surplus for government is becoming a herculean task, given rising costs faced in a few very big cost areas. Are they right?

LEIGH: Balancing a budget is always tough Tim. You saw in the last budget for the first time, as I understand it in Australian history, a drop in real spending.* Now that was tough. We had to make hard decisions such as phasing out the baby bonus, tough decisions around getting rid of the dependent spouse tax offset, and changing the structure of fringe benefits tax. We got attacked by the Coalition on all of those things, but they allowed us together to reduce total spending without, I think, hurting the most disadvantaged. The Coalition now want a commission of audit which is going to be balancing the budget off the backs of the poorest, which is going to probably be recommending harsh cuts on social services following in from the Coalition's planned policy of ripping superannuation money away from three million of the lowest income earners in Australia. You don't have to do that if you keep the mining tax Tim. But they went to the election promising that Clive Palmer and Gina Rinehart would get a tax cut through the abolition of the mining tax and so they're putting mining billionaires ahead of battlers.

LESTER: You think that the audit will be that brutal?

LEIGH: Certainly the indication that we get from say, the Queensland Commission of Audit is that this is really a ‘commission of cuts’ hitting the most disadvantaged. If you want to boost productivity, then you want to look at why you would be paying millionaire families $75,000 to have a child and why you'd get rid of a mining tax that was the central recommendation of the Henry Tax Review. Good economic policy isn't three word slogans and populist politics, it is the hard work of listening to experts and implementing good reforms, and I just don't think the evidence is that you'll get that out of the commission of audit the Coalition's proposing.

LESTER: A large news survey suggests that 27% of Australians believe that government can almost always be trusted. That was 48% four years ago. There has been a remarkable drop in trust of our Federal Government if this survey is right. Why?

LEIGH: Trust in politicians is an issue I'm pretty passionate about Tim. I wrote a book in 2002 called The Prince's New Clothes - Why Australians Distrust their Politicians. I co-edited it with David Burchell.

LESTER: Seems they trusted us more than, than they do now.

LEIGH: It does, it does and look let's be clear, even then our publisher thought the problem was so bad that they put a picture of one dog sniffing another dog's backside on the cover. So if things are declining still, then that's a real concern. Frankly it's more of a concern for my side of politics than for the conservatives. Theirs is a party that can live with a distrust of politics because they don't believe that government has a powerful role to play in making a difference in the lives of Australians. I do. That's why it's a Labor government that brought in place DisabilityCare, a Labor government that's worked to transform Australian schools. So trust in politics is a Labor issue and it's one that I want to work to try and redress.

LESTER: It's also Labor's problem isn't it? Because that slump in trust from 2009 to 2013 has happened under a Labor government with Labor promises about the carbon price and other commitments, budget surplus, at issue. So Labor has to shoulder a fair bit of the blame doesn't it?

LEIGH: Well we had a minority parliament and we had the most negative opposition leader in Australian history, and an opposition leader who is relentlessly negative rather than focusing on ways of finding consensus and building a better Australia…

LESTER: So it’s Tony Abbott’s fault?

LEIGH: I think Mr Abbott does bear a fair degree of responsibility for it, and as an economist, let me give you some empirical evidence for that. Look at the consumer confidence numbers broken out by party. As soon as Mr Abbott becomes leader, confidence in the economy - which is surely not a partisan issue - starts to tank. The partisan gap that opens up under Mr Abbott is bigger than under any other opposition leader. So, he did a very good job of attacking government as a whole, but I think we now need to work on rebuilding. That's why I think Labor in opposition shouldn't follow the negativity playbook that Mr Abbott set down. We need to be an opposition of ideas, as well as holding the Government to account.

LESTER: Andrew Leigh, great to have you back at Breaking Politics. Thanks for coming in.

LEIGH: Thank you Tim.

* Andrew should have said ‘nominal spending’. In 2012-13, real government spending fell 3%, and nominal spending fell 1%.

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