FAIRFAX BREAKING POLITICS
MONDAY, 16 MARCH 2015
SUBJECT/S: Abbott Government’s attacks on pensions; higher education cuts; Asian Infrastructure Development Bank
CHRIS HAMMER: We're joined by Andrew Leigh, Labor Member for Fraser and also the Shadow Assistant Treasurer, and Andrew Laming, Liberal Member for Bowman in Queensland. Good morning gentlemen. Now I really have to start, Andrew Laming, with you after your comments on this program last week where you raised objections to the Government's policy on indexing pensions. You said that there were missiles, Exocets and torpedoes lined up at the policy from within the Government itself. Now, on the weekend Scott Morrison has suggested some sort of compromise with a review body to be set up. What's your reaction to that?
ANDREW LAMING, MEMBER FOR BOWMAN: Well the military ordinance is still there but it has not moved. There’s positive signs, we are seeing movement and I think that's what was wanted – not just by backbenchers. The nation wants to see a reasonable compromise supported by the crossbench in a way that pensioners can support. So what we've seen in the last week is an indication that pensions will be looked after by a separate and more apolitical body, and secondly reviewed according to economic circumstances. Both of them seem fairly reasonable but for the moment, pensioners will be asking the question: have our pensions been cut already? The answer is no. Are they automatically going to go from a high to a low level of indexation? Not necessarily. But that's about as far as we've got in the last week.
HAMMER: So the ordinance is still there, it hasn't actually been put away, it's been put on hold, has it?
LAMING: As I said, nothing has changed there but of course it doesn't go away until we get a satisfactory resolution. It’s not just the backbenchers, not just the crossbenchers but obviously the nation is looking at the issue too.
HAMMER: Ok Andrew Leigh, this proposal that Scott Morrison has put forward to have a pension review body, what do you make of it?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: The status quo at the moment is we've got a triple lock on pension indexation. It goes up by the better of consumer price index, the pensioner cost of living index, or wages. I'm not sure why we need a compromise on that. This is a Government that certainly didn't seek a compromise when they gave a billion dollars back to multinationals, they just did it. But now they’re saying to millions of Australian pensioners that they should see their pensions de-linked from productivity growth in Australia. That's deeply unfair and the Government should simply scrap their unfair policy of effectively breaking an election promise and cutting pensions relative to where they otherwise would have been.
HAMMER: This proposed review body wouldn't have the power, as I understand it, to change the indexation or select the indexation – it could only make recommendations. Senator Nick Xenophon says it’s all bark but no bite, is he right, do you think?
LEIGH: It'll be a toothless kitty cat and let's face it, who would you expect to be appointed to a body like this given the Government's track record? It will probably be people from the big end of town, who not only don't live on the pension, but don't know anyone who lives on the pension.
HAMMER: Andrew Laming, if the Government is not obliged to take the recommendations from this body, it is a fairly toothless tiger isn't it?
LAMING: That is the circumstance normally, isn't it? That you make recommendations but of course it's actually very rare that these are utterly binding so I don't have a problem with that. You've also got to be pretty brave Government to not follow the recommendations of a body that you've established.
HAMMER: What happens if the body comes out and says pensions are inadequate? Because that's what, of course, a lot of welfare groups over the years have found, that they said the pension should be substantially higher than indexation?
LAMING: We're getting down now into the minutia but ultimately we'd all agree we'd like pensions to be high. The job of the body isn't to discuss whether they'd be high, the body is to discuss the potential changes in indexation on a three-yearly bass and they'd be looking at specific and relevant circumstances. But this is well beyond what's been discussed and well beyond what's been proposed, and well beyond what crossbench Senators are considering this week.
HAMMER: And well beyond the next election?
LAMING: This is all beyond the next election, we're talking 2017–18. That's been part of the issue: pensioners think that their pensions are on the chopping block now even though we've made it very clear that's not the case. Let's go back a step. It was John Howard who upped the indexation by linking it to productivity. We'd love to have kept it there but we've had a tiny issue of six years of Labor Government in between, which has made it extraordinarily difficult to retain.
HAMMER: OK, Andrew Leigh, what do you think of Andrew Laming's position on the pensions, given he was so critical last week?
LEIGH: I certainly give credit to Andrew for speaking out, it's a difficult thing to do in politics. But the case that Labor is making is a simple one: Tony Abbott should keep his election promises. When he said ‘no changes to pensions’, he should actually follow through on that. The pension is well targeted in Australia and when we raised it we took a million Australians out of poverty in 2009. If the Coalition's proposal goes ahead and pensions get linked to prices rather than wages, then the estimates are that they'll fall from 28 per cent of average weekly earnings just down to 16 per cent and that would effectively throw millions of people into poverty.
HAMMER: Let's move on now to an issue that's set to be one of the dominant issues of the week, and that's the Government's proposals to change higher education. Andrew Leigh can I ask you: Christopher Pyne has linked these changes with funding of 27 research institutes and something like 1700 jobs. What do you think about that linkage?
LEIGH: The Government's approach to negotiation seems to be: “nice country here, be a shame if something happened to it”. I think that's an irresponsible way for a Government to behave. We've seen cuts to CSIRO, one in five CSIRO scientists losing their jobs. I've spoken to people in CSIRO involved in eucalypt research who say now that we're cutting back on this, who in the world do we expect to do it? We're seeing a loss of medical researchers and effectively a dumbing down of Australia's research base as a result of cuts to the CSIRO. But in addition, the threat over NCRIS is already leading to people leaving the sector.
HAMMER: Andrew Laming, what do you think of this linking – trying to get this legislation through the Senate. University fee deregulation is at the heart of what's being perceived by the sector as the threat to cut research funding.
LAMING: I think we need to revisit the framing of this debate. It is stunning to me that people have forgotten that it was John Howard who set NCRIS up and gave it five-year funding periods.
HAMMER: So why would you cut your own program?
LAMING: Because the previous Government cut the funding cycles to two years and made no guarantee of its survival. This is one of a range of various measures that Andrew will remember were not provided with ongoing funding to try and make the budget deficit look smaller. It has fallen to us to find a way to continue NCRIS, it's not the other way around. We're not moving it from certain funding to conditional; we're actually saving it from being defunded under Labor and have found a way to do it using these reforms. It's a very subtle difference but it completely flips the debate.
HAMMER: So you're quite happy that this program will be cut, one set up by the Howard Government, if this legislation about fees in universities doesn't pass the Senate?
LAMING: I was very distressed that Labor cut it to two years, as a medical researcher myself being told I have a two -year period of funding. Nowhere else does that insecurity exist in research and now we've found a way for it to get passed. I'm sorry if it's controversial legislation but it's the right legislation for tertiary education and it saves NCRIS.
HAMMER: So you're quite comfortable with on one hand saying we want Australian universities to be the best in the world, and then to threaten to cut this funding. You've had the Group of Eight universities onside saying: yes we support university deregulation, and in the next moment taking out full-page ads in newspapers saying: hang on don't touch this.
LAMING: I can only say for a third time they're putting their hand out saying: can you please fund NCRIS the way the Labor Party wouldn't? We've found a way to save NCRIS through these tertiary education reforms and that's a completely different matter.
HAMMER: Andrew Leigh – what do you think of the linkage, and the argument that Andrew Laming has made saying without these reforms there's no money, Labor has left the cupboard bare, we can't find this funding unless these other policies go through?
LEIGH: If we'd been in office now, NCRIS would have been assured continued funding. What we wouldn't have been doing is saying to Australia's best scientists that the only way you get continued funding is if we're able to cut funding from universities. Because don't forget, at the very heart of the Government's higher education package is a one-fifth cut to the per student contribution and that's what is motivating all of this. It's not a desire to greatly free up universities or give them more opportunities. It's a desire to cut university funding. Ultimately that comes back to bite you because it's the sort of investment we make in research – whether it is medical research, research into mining, research into agriculture, a whole host of research areas – that ultimately lays the foundations for future prosperity. Without a great scientific and innovation sector it's going to be much harder to answer that big question: where do the jobs of the future come from? This Government is lacking an answer to that question because it is cutting back on science and innovation at exactly the time when we want to be encouraging those great scientists.
LAMING: Let me have a crack at that question then. Obviously the one-fifth change is simply one-fifth of the burden off the taxpayer who doesn't go to university and the one-fifth goes onto a HECS debt. I know there's a lot of talk about a hundred thousand dollar degrees, I've got one which would cost $100 000 already if I did it today. But with that degree, I’d earn on average $100 000 a year more than a person without that degree. It is utterly irrational not to take up that degree even with that increase in debt because we know the return is over a million dollars more over a life cycle. That's why a degree, even under these changes, is fantastic value and I'm yet to meet one student nationwide who will not take up a place at university for that $100 000 degree because they don't like the HECS debt. If there is one, I'd like to meet them.
LEIGH: I'd be happy to introduce you to one of those students, Andrew. A woman I was speaking to at the University of Canberra recently was deeply concerned about these changes. When Bill Shorten visited there she was saying that as one of the relatively few Indigenous students on campus, she was worried about the impact that this would have not just on her ability to continue at university but on other members of her family taking up university study. We want to boost the number of people who are going to university because let's face it if you're just finishing high school now you're the kind of person who is going to be in the labour market until 2060 or 2070. That means that we need to give you the sort of flexible, adaptable skills that allow you to participate effectively in that labour market, you want to be expanding university rather than raising prices in a way that, as Bruce Chapman has noted, may well cut off demand.
HAMMER: OK a final topic. There's a story in The Australian today that suggests the Government is about to reverse its decision and sign up to a China-led $50 billion Asian Infrastructure Development Bank. Andrew Leigh to you first, this I guess fits into your portfolio responsibilities, do you welcome this move?
LEIGH: Bill Shorten and Chris Bowen have been clear that in principle, Labor believes that Australia ought to be engaged in this process. Naturally, it's important that we get an appropriate set of rules around transparency, environmental, social and labour standards. But it’s clear that the Asian region needs more investment and the Asian Infrastructure Investment Bank may well be an important vehicle for boosting investment in the region.
HAMMER: Andrew Laming, if the report is right, the Government is reversing its position, what's your reaction to that?
LAMING: I've been a long-time supporter, conditional on seeing more detail of this proposal. I know that there have been reservations about not knowing a lot of the detail. As the detail comes clear – and it's not an issue that's come to Party Room – then every member will make their own decision. My view has been that we need to be at the table and part of that process and not allowing geopolitical concerns to prevent us from being part of financial arrangements that exist in this part of the world.
HAMMER: Do you think Cabinet got those geopolitical calculations wrong then?
LAMING: I don't know what Cabinet decided, I wasn't part of those negotiations.
HAMMER: They decided that they didn't want to sign up to the bank.
LAMING: Well that may be what's come out of some description of what that meeting entailed but in reality it's not one that's come to the party room. I'd expect there'd be varying views, I've only expressed my own which is that I would be a supporter conditional on seeing the details of us being involved.
HAMMER: And you'd expect it to come to the party room?
LAMING: I would expect so, yes.
LEIGH: One of the problems with this, Chris, is the division and disunity in Cabinet has really only now been crystallised after the British have signed on. That's the new information that has come to light and would leave us now – in the event that we were to sign on – well down the list of countries engaged in the process of setting up the bank.
HAMMER: OK, Andrew Leigh, Andrew Laming, thanks for your time today.