Last night, I spoke with Radio National Drive presenter Waleed Aly and the Liberal's Josh Frydenberg for a discussion about the unfairnes of the budget, the Abbott Government's guttered science policy and the future of Peppa Pig on our ABC. Here's the full transcript:
E&OE TRANSCRIPT, RADIO INTERVIEW
ABC RN DRIVE WITH WALEED ALY
WEDNESDAY, 28 MAY 2014
SUBJECT / S: Federal Budget and Inequality; Age Pension; Superannuation; Incoherent science policy and cuts to the CSIRO; Higher education; Cuts to the ABC.
WALEED ALY: It's a fortnight since Joe Hockey delivered his first budget. One key measure of that, the debt levy has passed the House of Representatives. It will also pass the Senate because Labor has confirmed it will not oppose that levy. Other budget measures though has continued criticism, even from the Liberal Party's own backbench. One backbencher in particular has criticised cuts to science funding and just the way that the whole science policy has been structured at the moment. So let's discuss budget debate, I'm delighted to welcome back to the program, Josh Frydenberg, Parliamentary Secretary to the Prime Minister and his sparring partner, Shadow Assistant Treasurer, Andrew Leigh. Gentlemen, welcome back.
JOSH FRYDENBERG: Nice to be with you.
ALY: I want to start with the public perception of the budget gents. Seven out of ten voters don't believe that the burden of cuts is being spread evenly and fairly across the population according to the latest polling. Josh, who do you blame? Do you blame the people or do you blame yourself for your sales job?
FRYDENBERG: Look, I do think we've got a good narrative to sell and I understand there's a bit of confusion out there, especially about funding for hospitals, funding for schools, and a bit about the pensions. So we've got to clarify the message between now and the time that legislation is dealt with in the Senate. But I do think we've got a very good message Waleed, and that is, we are paying back $300 billion of Labor's debt over the next ten years. We're taken the budget deficit from $49.9 billion today to just $2.8 billion by 2017-18. Currently the interest bill is a billion dollars a month to Australian taxpayers and we're going to reduce that by $16 billion over the next ten years.
We're also spending a record amount on infrastructure, particularly roads. We're spending more money on education. We're deregulating the higher education space, allowing our universities to compete, and to become the best in the world. We're putting money into a medical research future fund and of course, we're trying to boost workforce participation by getting over 50s into the workforce, off welfare, by getting young people off welfare into the workforce or into some form of training and trying to keep women in the workforce after having children.
ALY: I've let you have a fair narrative there. You've said those things before to me I think. And yet, seven out of ten voters don't seem to be buying it. Not necessarily because they don't disagree with the content of all that you've said, but because it's a question of how you go about it. You can pay back debt, you can cut the deficit, you can do all of that but you could do fairly or you can do it unfairly. And, seven out of ten reckon you are doing it unfairly.
FRYDENBERG: But there are carve outs. So for example, with the co-payments on Medicare, there are carve outs for concessional card holders and there's 8.6 million concession card holders in Australia. When you look at the pensions, we're not changing the pension age till 2035. And in fact, the pension will go up twice every year. So, that's a significant change. With changes to higher education, even my colleague here Andrew Leigh, has supported changes to deregulate that space –
ALY: We'll come to what was colourfully discussed in Parliament today –
FRYDENBERG: There was. I think we can sell our message is what I am saying to you.
ALY: Okay, you have a lot of selling to do. Andrew Leigh, I'll pick up just one point there and that is about the pensions, because, I'm not sure if you saw. John Hewson wrote a really interesting piece I thought, I think on the ABC's Drum website, where he was saying that politics is become something that is not driven by substantive policy debate, that scare campaigns win. Now, John Hewson of course, is a man who has I suppose a lot of reason to hate scare campaigns, given his political experiences as leader of the opposition, but his point here, I suppose, comes back to Labor a bit, on questions like pensions for example, doesn't it? Because the way that Labor has been talking about this misrepresents this as something that is going to hurt pensioners now.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Waleed, the point that we've been making is that this is a budget which changes the rate at which pensions increase. Pensions had previously increased with wages, and now they'll increase with prices which will mean they'll tend to rise at a slower rate. We've said that we don't think it's fair to ask bricklayers, cleaners and checkouts workers to work until they’re 70. And all this in a broad context of a budget which doesn't cut the deficit. The deficit now might be smaller than it was in Joe Hockey's last budget update, but it's bigger than it was when the Government took over.
ALY: Just on the pension question then, are you saying that it is fair somehow to ask manual labourers to work through the 67 but not through to 70 by 2035?
LEIGH: Well, in the context of our increase in the pension to 67, we also put in place the biggest boost to the pension. The increase to 70 I think is particularly unfair in a budget which gives $40 million in additional tax breaks to people putting more than $150,000 a year in superannuation. For them, it's a new age of entitlement, but for those at the bottom, they miss out.
But I do need, Waleed, to respond to a couple of the points that Josh made because this is a budget which not only breaks promises on health, education, ABC, cutting more public service jobs than they said they would, not only a budget which increases the deficit relative to the way the books were when the Government took over, but also a budget that fails the fair-go test. And I think that's why so many Australians are in these surveys but also in my street corner meetings and when I'm out and about in the community, are shocked by this budget. I was in Devonport, talking to people at a youth and family centre and they're worried about the rise in mental illness that could occur for 20-somethings that are told they have to wait six months before they can receive unemployment benefits. They are worried about how those people will feed, clothe and house themselves.
And the analysis from NATSEM very clearly says that the burden of this budget falls disproportionately on the most vulnerable. So, for example, in the last year of the budget period, 2017-18, a couple with children in the bottom fifth of the income distribution is seven per cent worse off, a couple with children in the top fifth of the income distribution is a third of a percentage point better off.
ALY: But that's always going to be the case when you're working off a lower base than a higher base, isn't it?
LEIGH: What do you mean by that Waleed?
ALY: Well, I mean if you're on a very low income, then any hit that you take to that is going to be much bigger in percentage terms than if you're on a much higher income. So, to get the same sort of percentage hit on higher income earners it's going to have to be a massive hit.
LEIGH: But this is a budget which is actually transferring resources from the bottom to the top. So, the top are better off, as a result of measures such as the superannuation measure, such as a parental leave system which gives $50,000 to millionaires when they have a child. And those at the bottom are worse off because of the very heavy cuts on family benefits, because of the changes to youth assistance and unemployment benefits. If you are a single parent in the bottom fifth of the income distribution, you're 11 per cent worse off. You lose more than one dollar in ten as a result of this budget. But those at the top of the distribution, well for them, there's a small and temporary income tax levy and a part from that, there's just a whole range of changes in taxation that disproportionately benefit those at the top.
ALY: Josh Frydenberg, superannuation is the really big one there. I interviewed Tony Shepherd earlier in the week, the man who headed up the commission of the audit and even he said, no, this superannuation thing should be looked at. That's exactly what should happen, the tax concessions for the higher income earners, getting their super, should actually be closed. Those concessions shouldn't be available. Why? I actually can't understand why the Coalition didn't do it, why they didn't look at that when saying that there is this enormous deficit and a lot of debt to deal with.
FRYDENBERG: Well, the last government actually whacked on eight billion dollars’ worth of new taxes on superannuation, so self-funded retirees superannuants have actually been hit quite hard in recent years. But we want to encourage people to save and if we can encourage more people to save, then that means less people on a pension over time and less of a burden on the taxpayer.
ALY: But, we're talking about high income earners. They'll have lots of super any way. So, whether or not they are being taxed, this is super being used so that they don't get taxed at the moment –
FRYDENBERG: Look, we did say before the last election, that we wouldn't make any unexpected negative or adverse changes to superannuation. Now, you're going to quickly come back at me and say, well you said this about general tax Josh and you've introduced a couple of new taxes.
ALY: Well argued, I should say Josh, well argued.
FRYDENBERG: [Laugh] I feel like I'm interviewing myself. But Waleed, I mean, look, the point is we have added an extra burden on higher income earners through this temporary budget repair levy. And it has to remembered that the top 2.3 per cent are responsible for 26 per cent of the revenue, so there is quite a lot of heavy lifting that is done at the top end.
ALY: Well, of course they are, cause they are earning the most money and so, they'll pay a big percentage of the revenue. The question is whether or not they are being hit in a way that actually means they are doing any heavy lifting, comparative to those earning less.
FRYDENBERG: Well actually, if you look at our marginal tax rates, they are pretty high compared to other countries. If you go to New Zealand, they are in the thirties, whereas here, you're getting close to 50.
ALY: So they're already doing enough but people in the lower end aren't. Is that the take home message?
FRYDENBERG: No well what we are trying to do is to change this culture of entitlement and to try to streamline various policies, programs, processes which can create more efficient government and if we can get somebody off welfare into work whose under 30, that's a good outcome for everyone. If we can encourage them to get into training or work for the dole which is actually going to equip them for the workforce and that's a good thing. And you know probably one thing that we need to keep explaining to the public about this Budget is that there are carve outs, there is a very good safety net, the pension will continue to go up, people who are concession card holders will get some relief with this new Medicare co-payment.
These are the sort of changes with higher education for the first time we're putting money into people who are undertaking a diploma or going to TAFE or for the first time we're giving a HECS type loan who are undertaking apprenticeships. I mean these are very positive changes that I think will have a long term benefit for the Australian economy, will help build job creation that will actually reduce government spending overtime. It’s not just the Coalition, Waleed, who are saying we need to reduce government spending it was the independent Commission of Audit who said that, it was –
ALY: Well they were also not asked to look at tax, where they? And so they've had a look that was skewed.
FRYDENBERG: No. No. Their principle message if you look in their report is that the spending of government has to slow and has to be reduced and that is what the International Monetary Fund have said and that is also what the independent Parliamentary Budget Office said just this week.
ALY: That's the voice of Josh Frydenberg, he's the Parliamentary Secretary to the Prime Minister. Shadow Assistant Treasurer Andrew Leigh also joins us. You’re with Waleed Aly on RN Drive. Andrew, you will have noted that Tony Abbott threw you a bouquet in Parliament today. I'm sure you didn't miss it but for those of you who did missed it, this is what it sounded like:
ABBOTT: In support for a deregulated university system let me quote "market based fees will also help to improve our higher education system but making universities even more responsive to student needs and educational outcomes". Well who was this wise man? Who was this guru, this sage, this seer, this prophet? None other than Labor's Assistant Treasurer.
ALY: Oh Andrew Leigh, prophet! That's high praise.
LEIGH: It is indeed. In fact I'm having much more luck getting my past writings up through Government questions than through Opposition ones.
ALY: Have you noticed an increase in royalties at all as a result of it?
LEIGH: Well I did after the fact that it appears the government's strategy this week is to quote my work. I did start question time today by strolling over to the Prime Minister and giving him an annotated copy of my last book Battlers and Billionaires and suggesting appropriate chapters that he might draw on for his Dorothy Dixers and that Kevin Andrews and Joe Hockey might draw upon.
But the fact of the government's higher education reforms is that they are in an absolute shambles and not only the sector is up in arms but current students and previous students. Never before have I seen a set of higher education – so called – reforms which have got graduates outraged. But it’s because the real interest rate on HECS now means that if you work in a low paid community sector job your HECS debt can start to balloon. If you’re a women who takes time off work in order to have child, then that debt just gets bigger and bigger. That was never envisaged in the HECS system and that is a real problem.
ALY: Just on that, is it fair to say that your objection is to those sort of details, or are you opposed to the whole idea of university deregulation of fees, particularly given what has been quoted of your earlier work?
LEIGH: I think the government's package on higher education reform is just botched. I think it's been thrown together at the last minute and with very little consultation with the sector. Normally you've got a range of Vice-Chancellors who are willing to speak out but even some of those who were initially supportive are backing away and saying 'no way this isn't going to work for us'.
ALY: Sure. But are you philosophically supportive? Would you work constructively with the government to make it a package that would be more in line with the way you approach the issue?
LEIGH: I cannot see this package as being salvageable Waleed.
ALY: How would you deregulate university fees then?
LEIGH: Look, I simply don't think you want to go down that path in the way this government has. I mean this –
FRYDENBERG: Would you go down this path Andrew?
LEIGH: No. I mean this is an Education Minister who puts politics first and policy second. Who enjoys nothing more than a political scrum that takes him back to his student politics days. But it really is student politics writ-large. It’s not sensible long term reform and it worries me that you've got a government that's putting at risk higher education, cutting back on the CSIRO at the same time. They don't have a Science Minister, so maybe I shouldn't be surprised.
ALY: Let me pick up on that one because I know what you’re about to say there Andrew Leigh. That is Denis Jensen's criticisms saying that the decision to pull scientific funding but investing more in medical research, these are his words, "quite frankly incoherent". Josh Frydenberg is there a problem here in the lack of a science minister meaning that you get this kind of incoherent policy response?
FRYDENBERG: Not at all. I think you know this investment in medical research is to Australia's strength and we'll see $20 billion protected by the Future Fund and the interest of this money reinvested in an area where we have made great leaps and strides.
ALY: But his point is that at the same time you are taking money out of the process that generates the researchers and so that's what incoherent about this.
FRYDENBERG: Well I don't think that's right because if you’re talking about the process of universities I believe that actually we are going to free up our best universities to obviously charge in a way that they think the market will meet that will allow them to reinvest in their infrastructure, in their teaching and provide a better education for their students. It is quite ironic that not only does Andrew philosophically support our position on deregulation but he went to a university, or he taught at a university at the ANU which is part of a group of 8 and they have been supportive of our policies and also he went to an American university like I did which was allowed to have a deregulated fee structure.
If you look around the world, and the Times university world ranking showed this, that Australia does not have one university in the world's top 30. We only have 5 in the top 100 and in nearly every other field of endeavour we're in the world's best and among our universities unfortunately were not. So that's what we're trying to achieve.
ALY: I'll get Andrew Leigh to respond to that in a moment very quickly. But before I do I just want, this is a direct Yes/No question. If the Medicare co-payment that's meant to fund this research doesn't get through Parliament, and it looks like it will struggle, do you drop the medical research fund?
FRYDENBERG: That's a question for Peter Dutton –
ALY: Which he didn't answer when he was asked it. Which is why I am asking you.
FRYDENBERG: I assume his thinking is lets cross that bridge when we come to it.
ALY: Okay. Andrew Leigh a quick response to what you've just heard from Josh Frydenberg about your university experience.
LEIGH: Certainly the couple of hundred students who gathered at ANU last week to protest against this move weren't singing from Josh's hymn sheet. I do worry that it is not just the lack of a Science Minister, it’s not just Dennis Jensen's comments. It’s the lack of a sense of respect for researchers more broadly. The CSIRO brought us the Hendra virus vaccine and Wi-Fi but they've shut two CSIRO centres in my electorate in north Canberra today. The investment in medical research is all well and good if it goes ahead – and from what Josh is saying it looks like it probably won’t – but it is coming in many cases at the expense of other areas of research. It’s a government that is more comfortable with medical research than it is with social science research and research in the humanities. It think that is partly because those researchers sometimes have a political dimension that which can differ from that of the government.
ALY: Yep. Us humanity academics are all ‘pinko’ lefties, isn't that what it’s all about.
LEIGH: I think there is a little bit of that and if you look at the judges in the PM's writing prize, there is more than a hint of that coming through.
FRYDENBERG: Come on.
ALY: This is a conversation for another day. I do want to ask very quickly before we wrap up and go to the news desk, Josh Frydenburg what have you got against Peppa Pig? What is the problem with Peppa Pig?
FRYDENBERG: Well as you know, Waleed I am soon to be a father and I will be wanting to turn onto the ABC for the best of children's programs more often than I currently do, so I hope you continue. Well Mark Scott needs to get his priorities right.
ALY: Oh I see, I see.
LEIGH: My three little boys love Peppa Pig Waleed, and I'm deeply worried that Tony Abbott is about to send her to the abattoir.
ALY: Well Peppa Pig is the second greatest voice in the world behind our news reader, who we'll hear from in just a second. Gentlemen, thank you very much I appreciate your time.