Broken promises and diplomatic futures - RN Drive, 18 November

Although Parliament isn't sitting this week, there has been so much happening in federal politics that Waleed Aly invited myself and Josh Frydenberg onto his Drive program to talk through it all. Here's the transcript:





SUBJECT/S: ABC cuts; visiting Chinese and Indian leaders; renewable energy

WALEED ALY: There’s so much international stuff going on in Australia, the Indian Prime Minister Narendra Modi stole the show again today, I think he might have a habit of doing that. He and Tony Abbott got together and they sprung a surprise, they promised to crank-up their economic relationship. There was talk of a free trade deal that could be finalised within a year, also military cooperation, not a bad result for Australia you might think on the economic front, particularly when you factor in the deal with China that was signed yesterday, or at least the statement of intent. There’s potential here there, but there might be possible shortfalls as well. Joining me as sparring partners are Josh Frydenburg, Parliamentary Secretary to the Prime Minister, and Shadow Assistant Treasurer Andrew Leigh. Gents welcome, thanks for coming back in.



ALY: I am just overflowing with the number of important people that have touched down in Australia recently. What do both of you think of the fact that Kim Kardashian has just arrived?

FRYDENBERG: She’s playing second billing to Brad Pitt and Angelina Jolie because they’ve also been in town. But in term of Australia’s long term interests, this has been a historic few days Waleed.

ALY: What a seamless segue Josh! That’s very well done, I’m impressed.

FRYDENBERG: It has been. I mean you think that not just the G20 leaders have been here but also the leaders of the major international organisations like the United Nations, like the ILO, like the WTO, like the Financial Stability Board, like the IMF and the OECD and World Bank. It’s just been an array of leaders who’ve been in Brisbane and many who have gone onto make state trips including Modi and Xi Jinping.

ALY: Who got to Tassie, I think we should say. I think we should acknowledge that which means he’s covered every state and territory in the country doesn’t it?

FRYDENBERG: I think it is and that’s his fifth visit to Australia so very interesting. Actually Waleed, his father was, or his grandfather I think it was, was Party Chief of the Guangdong Province and came to Australia 35 years ago where he signed a deal with Neville Wran as a sister city relationship in New South Wales. So that’s an interesting historic fact too.

LEIGH: Waleed, it’s great having him in town. And I think it’s a moment for Australia that we’ll look back on and recognise because never before have so many world leaders been in the country. You know, it’s great for me now to recognise that all sides of politics think it was a good thing having the G20 in Australia. What I really appreciated too was hearing in the Parliament from particularly Xi Jinping and Narendra Modi. I met Narendra Modi back in 2000 when I spent a month travelling around India. He was then General Secretary of the BJP and I managed to spend half an hour chatting with him about his vision for India, little knowing that 14 years later he’d be in the top job.

ALY: Indeed, but when he was then connected to the BJP so closely, the BJP is a very controversial party we should say. I mean that’s part of their history, it’s a nationalist party effectively. How did you see his relationship with that party and that sort of nationalist brand of politics?

LEIGH: Well he’s very much on the RSS/Hindutva wing of the BJP and what I think is best about Narendra Modi is what he was able to do with getting the economy going in Gujarat. I think India is at its best when it’s a tolerant, vibrant, multicultural country which governs for all religions, recognising that India has a huge number of Muslims as well as also being the world’s largest Hindu nation. There’s a great sense in India of the understanding of the history of the place and I hope Modi will reach back to that proud history as well as looking forward to how to get economic growth cranking. India is now just half the GDP per capita of China and the growth potential for India is vast, the number of people that can be pulled of out of poverty with the right set of reforms creates huge potential.

FRYDENBERG: Well, they have huge advantages over China too India because of the demographic balance. The median age in India is 29 compared to around 37 in China and this is the first visit by an Indian PM to Australia since 1986 when Rajeev Ghandi came. Prime Minister Singh boycotted CHOGM when it was held in Perth in 2011 because of Labor’s reversal of the decision to export uranium to India. So I think that this is a historic visit. The fact is our trade relationship with India is just one tenth of what it is with China and we are really excited by the opportunity to export more resources, more agriculture, and to be a part of their infrastructure building. This is a great visit and great potential.

ALY: Let’s pick up the trade aspect with India because we’ve see a lot of free trade agreements over the past year or so – Korea, Japan, China now, although it’s not complete really is it, it’s a statement of intent but we assume the formalities are to follow. Tony Abbot was speaking today about striking an agreement with India and this is what he said: “If all goes to plan, and no one if I may say so, has ever made the Indian bureaucracy perform as Prime Minister Modi did in Gujarat. By the end of next year, we will have a free trade deal with what is potentially the world’s largest market. And I want to make this declaration here in this Parliament. There are two can-do Prime Minister’s in this chamber today and we will make it happen.” There you go, a little partisan barb at the end there, Josh Frydenburg, wasn’t there?

FRYDENBERG: Not at all, look Tony Abbot was ridiculed when he said earlier this year after taking such a significant delegation to China that he was trying to complete an FTA with China by the end of the year, given that negotiations started in 2005 and here we were after six years after Labor and no deal was concluded. But he’s now done it. And it’s a fantastic deal. It’s a deal which every other Western national would dream of having with China. Greater access for agriculture, greater access for services, the removal of the coking coal tariffs as well as reduction in thermal coal tariffs and the likes there, this is a great agreement. And he’s also got those agreements thanks to the hard work of Andrew Robb with Japan and Korea. So him setting himself a target now with India I think is really important and nobody will underestimate Tony Abbott and Narendra Modi’s determination to get this done.

ALY: Well what about the hard work though of Kevin Rudd and Julia Gillard and going right back to John Howard. I mean the China agreement was a ten year agreement, that’s how long it took.

FRYDENBERG: Well, talking to Andrew Robb when he picked this up, coming to office, we were a long way off. Labor had shown itself unable to conclude this deal. I mean they had six years, it has to be said. And as well with Korea and with Japanese agreements we have been prepared to horse trade and I think we’ve got a great deal as a result. So we’ve actually got it whereas Labor had promised to try and get a deal done.

ALY: Alright, Andrew I’ve got to let you respond to that?

LEIGH: I’ll be confident that we’ve got a deal that’s in the interests of Australians when I see it Waleed. I’m a strong free-trader as you’d expect both because I’m an economist and because the Labor party has supported opening up markets going right back to Gough Whitlam’s tariff cuts in 1973. But on the China free trade agreement we haven’t seen the agreement yet, what we’ve got is photo ops and selective leaks. We need to sure out of that agreement that Australians are getting a good deal, that Chinese firms don’t have rights in Australia which are better than rights Australians have and that on net, it is generating jobs because an agreement which opens up to labour importation without labour market testing is, I think, at odds with the great migration system that we have at the moment which allows migrants to come in, but places that test on firms bringing in migrants: is there an Australian worker who could do the job.

ALY: I wanted to say, Josh, there is that point about the detail we don’t have and it’s a fairly significant one. There are those things to do with wages and working conditions, in particular Chinese labour coming into Australia. Stuff is starting to trickle out. I know Barnaby Joyce has just admitted that food prices will probably go up as a result of the free trade agreement with China in Australia for Australians. When do we actually get to see that detail?

FRYDENBERG: I actually think there’s a lot of detail that’s already out there. I mean I just mentioned a couple on the resources, the fact that we’re lifting the quotas for wool, the fact that we’re eliminating tariffs for beef, for dairy. It’s actually a better deal than New Zealand got because New Zealand’s tariff free exports into China were actually capped.

ALY: But they’re the headlines, they’re not the details.

FRYDENBERG: Well actually there is a detail about the years in which this agreement is being phased in. I note that Kevin Rudd himself did an interview last night with the BBC where he congratulated Tony Abbott and Xi Jinping on this deal and in his words said that this was a win-win and in his words he says it’s easy to run a fear campaign against free trade agreements.

ALY: I saw that interview and he also noted his hard work on it which you seemed to have dispensed with, so you are not clearly accepting everything he has to say about it. But one of the aspects of that interview I thought was interesting was when the BBC said specifically well were you allowing greater Chinese investment into Australia without any sort of scrutiny, these are the kinds of detail I think don’t yet really understand because they haven’t really come out. And when Barnaby Joyce comes out and says food prices are going to go up as a result of this, for a government that in opposition ran very hard on the cost of living for basic things like food and electricity, it’s a fairly startling claim.

FRYDENBERG: Well actually on investment, what we have done is put China on the same level as Japan and Korea and the United States with a billion dollars’ worth of investment from normal companies without getting Foreign Investment Review Board approval. Where it’s a state-owned enterprise, if they’re investing a dollar in Australia then that has to get review board approval, and when they’re investing in sensitive sectors like communications, like defence, then they also need Foreign Investment Review Board approval. When it comes to agriculture, we have said that we’re going to put a $15 million dollar cap on agriculture investment before you require further approval and when it comes to agribusiness, it’s a $53 million dollar gap. So there is that level of detail Waleed and in terms of allowing Chinese workers to come in, we’ve been very clear that on projects above $150 million dollars it would have to be proved that that work could not be done by Australians. And it would also mean that the Chinese workers who came in for a particular project would have to face the same Australian employment conditions and wages.

ALY: So below $150 million dollars as a project the 457 visa…

FRYDENBERG: You can’t bring them in.

ALY: At all?

FRYDENBERG: Well, the 457 operates as it does but we’re talking here about other workers who come in on major projects above $150 million dollars.

ALY: Ok, and you said nothing about the prices yet.

FRYDENBERG: Well I think what Barnaby’s talking about here is that if you export more of your food then it’s like gas I suppose. There’s going to be greater demand from overseas and therefore you either build out supply or prices do go up. But I think we can actually build out supply. One of the things that Xi Jinping referred to in his speech was about the development of Northern Australia. So if we can make that the food-bowl of Asia after water falls in Australia above the tropic of Capricorn, if we can create the dams, if we can irrigate the north, then I think Australia can produce more food, meet those markets, earn more export income without, say, major increases in price.

ALY: Josh Frydenburg and Andrew Leigh are my guests as they often are here on RN Drive, Waleed Aly with you. Before I move on from the G20 and the rash of international visitors we have had over the past few days, Andrew, just a final word from you on the fact that I note the French President barely got a mention. And it seems intriguing doesn’t it? Who would’ve thought not so long ago that it was even possible that the Chinese and the Indian leader would be the rock-stars of a visit when you have people like the French President in town?

LEIGH: It is fascinating Waleed and I think France has a really important role to play in some of these big debates whether we’re talking about climate, or about getting European growth going again. But the French economy has just been underperforming consistently over the last couple of decades and I think that has somewhat affected its standing in the globe. I was in Paris recently talking to various people about that frustration about some of the sense of malaise that has fallen over French politics at the moment.

FRYDENBERG: It has to be said also that this is the first ever visit to Australia by a French President.

ALY: And we didn’t care. Don’t you reckon that’s remarkable?

FRYDENBERG: Well I think we do care. He’s actually making a state visit and I actually had the privilege of meeting him at the airport in Sydney earlier today.

ALY: Well you care, you have to care. You know just generally, I don’t think there was the same kind of buzz about it.

FRYDENBERG: Well that’s probably right because we’re talking about new free trade agreements potentially with India and certainly with China. China is playing a greater and greater role strategically in the world and I think that’s why they count. But this is also the first time that a Brazilian President, Waleed, and an Italian Prime Minister have come to Australia.

ALY: It really is. It was remarkable to watch. Let’s move onto other issues. Perhaps issues that, I don’t know if they’re very comfortable for you or not Josh speaking to us on this program, but ABC cuts. This is something that came up last night in Q&A and seemed to steal a lot of the headlines. Communications Minister Malcolm Turnbull confirmed, I think, rather than reveal, that the funding cut will be a five per cent cut that’s worth about $50 million dollars a year to the ABC for the next five or so years. I mean, any way you cut this, whatever you say about it and whatever you want to say about everyone having to do their share, this is a pretty massive broken promise isn’t it?

FRYDENBERG: When we were elected, our fundamental promise was to fix the budget mess and therefore we….

ALY: Are you going to core and non-core territory here?

FRYDENBERG: That’s your language and it’s been used as we know previously.

ALY: So fundamental and non-fundamental?

FRYDENBERG: No I’m just saying we’ve got a priority here to fix the budget mess and as you referred to, there are cuts right across the board. Now for me the ABC’s a vital institution, I think it plays an important role. But as Malcolm Turnbull said, these are modest cuts and in his experience working with media organisations, running businesses, finding five per cent can actually be done without affecting programming and this threat to Peppa Pig or to Lateline is really unfortunate because back-office consolidation, administrative changes can produce the sort of savings that are coming the way of the ABC.

ALY: Only if you refuse to invest anything in the future of the organisation. So only if you don’t want to do any development of online delivery, whether it be television content or radio content. So basically what you’re asking the ABC to do is to cut its back-staff and be frozen. I mean, that’s an extraordinary thing to ask isn’t it?

LEIGH: Waleed, this is something where Mark Scott has been absolutely clear that it is simply not possible to quarantine programming. So Australians are going to be losing programs that they love. They’re going to be losing ABC staff, we’ve got hundreds of ABC staff who are likely to lose their jobs. Everyone working at the ABC is now heading into Christmas not knowing whether they have a job or not. The thing that really gets my goat is that the Prime Minister made this a clear promise before the election. He said no cuts to the ABC. He looked down a publically-funded SBS camera and said the ABC and SBS budgets won’t be cut and then he went ahead and cut them anyway. And this 5 per cent budget cut is going to mean that Australians won’t be able to hear Australian stories in their local communities. So we know that the local editions of 7:30 are at risk and that matters as we go into state elections where those programs are absolutely vital platforms for political reporting. The ABC is a great national institution. Let’s face it, it’s held in better esteem than Josh or myself. To cut the ABC in such a flagrant breach of promise is I think utterly outrageous. Not only for what it does to for the individuals, but for it does for us as a nation to continue telling our stories. Josh can’t use the excuse that this is something they discovered after the election. The Charter of Budget Honesty clearly laid out the state of the books before the Coalition came to office. And the Prime Minister has absolutely broken this promise as he’s broken so many other promises since he’s come into office. He said no cuts to health, no cuts to education, no cuts to the ABC or the SBS. He’s gone ahead and broken all of those promises. Australians are going to be outraged by this one.

ALY: I do have a follow-up but I’m sensing that Josh is very, very eager to respond to what he is hearing here. Josh?

FRYDENBERG: I mean a couple of points. Firstly, Labor didn’t go into the last election saying that they would support the temporary deficit levy that they found themselves, in the Senate, supporting. That’s our temporary deficit levy.

ALY: But they didn’t say they wouldn’t though. I mean there’s a difference isn’t there when you say “There will be no cuts to X” and then you go and cut X?

FRYDENBERG: Well the reality is we are facing a growing debt burden. We’ve seen falling revenues particularly as the iron ore price has fallen some 30 per cent in the last five months. This structural deficit requires action. Now we’ve got $28 billion dollars’ worth of savings that are stuck in the Senate, including $5 billion dollars’ worth of savings that Labor committed to at the last election but are refusing to implement now, including tax breaks for the top 20 companies. So we must take corrective action to our spending commitments across the board and that’s why the ABC and the SBS which receive over a billion dollars a year in taxpayers’ money are not going to be immune. It’s as simple as that Waleed, in a perfect world these cuts wouldn’t come, but we have to make them considering the overall budgetary position.

ALY: Sorry, so because you can’t get a co-payment through you have to cut ABC jobs, is that it?

FRYDENBERG: No, no, because we’ve inherited debt levels rising to $667 billion dollars, that is why.

LEIGH: It’s because they’ve cut back on the revenue base Waleed. They’ve gotten rid of the carbon price, they’ve gotten rid of sensible savings on taxing multinationals and people with more than $2 million dollars in the superannuation accounts. The decisions made by the Abbott Government have blown a hole in the budget and they’re taking it out on ABC listeners, taking one dollar in twenty out of a great national institution in a flagrant breach of a pre-election promise. I mean this is a Prime Minister who has broken more promises than Pinocchio. He has gone over the top in breaking promises and this one is going to have people going out into the streets. 

FRYDENBERG: I was just saying it’s fine for Andrew to keep saying he’s against our spending cuts, but he’s got to put up his own alternative. Otherwise, this deficit which is rising all the time is going to have to be met by taxes.

LEIGH: I’m very happy to do that. So let’s get rid of the unfair parental leave scheme. $20 billion dollars so millionaire-mums can be paid $50,000 to have a baby.

FRYDENBERG: That does have a revenue-stream attached to it though, Andrew Leigh, we have to acknowledge that. We’re talking about the structural deficit.

LEIGH: It’s a clear spending program which is out of step with the values of Australia. We have a fair parental leave scheme, we don’t need an unfair one.

ALY: I want to hit pause there because I’ve got to go to headlines but I don’t want you to go away because I’m enjoying this too much and I want to talk about renewable energy. So can you hang on for just a second?

LEIGH: Absolutely.

ALY: Oh good, I love it. If you’d said no…

FRYDENBERG: Unity ticket.

ALY: On this and absolutely nothing else. Andrew Leigh and Josh Frydenburg are my guests. We must go to the news desk though and get some headlines right now because Colin Denovan is waiting for us.

[News break]

ALY: Waleed Aly with you for drive and wonderful still to have the company of Andrew Leigh and Josh Frydenburg because they’ve decided to do a bit of overtime, unpaid of course. Everyone’s got to do their bit guys so that’s the way it’s going to work. We’ve got to take a cut, you’ve got to take a cut. Let’s talk renewable energy. Because what we haven’t spoken about actually with the whole G20 is climate change. Even though there was a lot of focus on the fact that the Australian Government didn’t want to talk about climate change as much the other countries of the world, renewable energy though specifically, the Renewable Energy Target, the fact there is no agreement on this, the fact that Labor has now walked away from the negotiation when the world is clearly moving in the direction that means renewable energy is going to become a much more competitive industry. Don’t we have to put this behind us now and recognise that there is an economic imperative to invest in this seriously? Josh, let’s start with you.

FRYDENBERG: I’m very supportive of the Renewable Energy Target and we were very disappointed that Labor walked away from negotiations that we were entering into in good faith and we wanted to see the continuation of the 20 per cent renewable energy target. But our point was consumption with energy consumption falling here in Australia, we wanted it to be a real 20 per cent target. So I think renewable energy is absolutely vital, we want to sign up to the Renewable Energy Target. We’ve just got a $2.5 billion dollars’ worth of direct action programs through the Senate, that’s exciting. Sure, the agreement between China and the US is a significant agreement, we welcome that. But we also point out that China will continue to increase its emission over the next sixteen years and after the recent congressional elections in the United States, Barack Obama is not going to get a national ETS or a national carbon tax…

ALY: But he said he doesn’t need to though, that’s the point.

FRYDENBERG: He said he’s going to scale-up direct action type programs.

ALY: No, no it’s not direct action at all actually. He’s just going to set a bar and regulation in place and leave states to sort it out. They might come out with their own ETS systems but it won’t be direct action.

FRYDENBERG: No, they have a whole lot of direct action plans in terms of building efficiencies, in terms of cleaning up coal-fired power stations, in terms of landfill and the like. So they actually have at the state level and the national level a whole range of different initiatives which we are also pursuing here in Australia.

ALY: Right, also including carbon pricing. But if I come back to the Renewable Energy Target, one thing I’ve not quite understood at this point, Josh Frydenburg, is why the need to change the legislation to reduce the target in absolute terms even if not in percentage terms. Surely if we’re tracking to do better than 20 per cent and that is the way of the future for energy, why wouldn’t we just embrace that? Why would you want to go the parliament and change it?

FRYDENBERG: Well actually renewable energy is more costly as we know than some other forms of energy, particularly when we possess such large amount of coal, but we have committed to a 20 per cent proportion of energy production coming from renewable energy so price is relevant here and we made a commitment during the Howard years, he was the one who introduced the RET and we want to continue it. We just want it to be a real 20 target and we just can’t understand, Waleed, why Labor – and the timing is very cynical – on the eve of the G20 summit they walked away from these negotiations when we entered them in good faith.

ALY: Alright, final word to you, Andrew Leigh.

LEIGH: It’s a great question Waleed, let me answer it simply. I have an old-fashioned idea that Tony Abbott should keep the promises to the Australian people that he made before the election.

ALY: Like not introducing a carbon tax?

LEIGH: Well, we were castigated uphill and down dale for that. Tony Abbott said that he would be someone who kept his promises. This another instance in which he is breaking his promise to the Australian people.

FRYDENBERG: As Waleed just said, you didn’t tell the Australian people you were going to introduce a carbon tax. It was deeply unpopular. You got the lowest vote in one hundred years in the last election for the Labor party. We’ve now implemented our commitments and our mandates and we’ve got our Direct Action through the Senate. You should come on board and be open with the Australian people.

ALY: Guys I’ll take back control here if I can. He’s acknowledged that they got punished at the last election, we’ll see what happens at the next one. Gents, I’ve got promises to because I’ve got about a million people to speak to before the seven o’clock news and I have a sneaky feeling I might have to break one or two if this keeps going. So thank you very much, it’s always a joy and thanks for doing some overtime with us tonight.

FRYDENBERG: Thanks Waleed, thanks Andrew.

LEIGH: Thanks Josh, thanks Waleed.



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