RADIO NATIONAL DRIVE
TUESDAY, 29 SEPTEMBER 2015
SUBJECT/S: No change in Liberal policies; Australian economy; Share market jitters.
JONATHAN GREEN: Joining me now is the new Assistant Minister for Productivity, Dr Peter Hendy. He played a crucial role in the Turnbull leadership ascension. Joining me also is Dr Andrew Leigh, the Shadow Assistant Treasurer and author of a new book 'The Luck of Politics'. Welcome to you both.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks Jonathan, and congratulations Peter.
PETER HENDY, ASSISTANT MINISTER FOR PRODUCTIVITY: Good evening.
GREEN: We'll come to the markets in a moment but let's get to the former Prime Minister first. Tony Abbott gave his first in-depth radio interview today to, of course, Ray Hadley on 2GB, the broadcaster of choice. He urged Liberal voters to keep supporting the party, even if through – to quote him – 'gritted teeth'. Peter Hendy, is Tony Abbott going quietly?
HENDY: I think he's got a right to make statements; you were just talking about free speech before. The events of the past few weeks were quite traumatic for Tony, obviously, and he will feel very bruised about it. I was, in some way, on the receiving end of a similar thing back in 2008 because I was Chief of Staff to the Leader of the Liberal Party at that time which was Brendan Nelson. He was beaten by a particular guy named Malcolm Turnbull and –
GREEN: He was not best pleased!
HENDY: – and look in that situation it is very traumatic. I was very close to Brendan and for my part I just kept out of the media and went away. In fact, I got a job overseas – I went and worked in the Middle East. Tony has a right to make his statements and the big thing he said today was for Liberal supporters across the country to continue to support the party. I thank him for that.
GREEN: Well he also had an interesting take on the timing of that leadership spill:
TONY ABBOTT: One of the reasons why the ballot had to be brought on the week it was brought on by the proponents of a ballot was a strong result in Canning - which is what we were going to get - would have put paid to this notion that somehow I was unelectable because of the polls.
GREEN: Peter Hendy, Tony Abbott says he was done in by a – to quote him again – 'backroom cabal'. Would that be the group of Turnbull supporters that gathered at your home the night before the spill? And was that Canning poll result, the potential to do what Tony Abbott just suggested there, was that top of mind?
HENDY: I think it was actually a different set of thought processes, to be honest. I'm not going to go into those but the bottom line was that a decision was made on the Monday. A decision was made by Malcolm Turnbull that he would resign and challenge. That's actually what was decided. He decided that because he felt that he could win a ballot, and that's what happened later in the evening.
GREEN: Would a good result in Canning have been ‘all over red rover’ for Malcolm Turnbull?
HENDY: Look, ask me any question about history and 'what ifs'. The fact is that it happened on the Monday and we won the by-election on the Saturday.
GREEN: Andrew Leigh, there are lessons in all of this. When someone loses their job as the Prime Minister, there are precedents for what follows next. What might we learn about this current situation from the Kevin Rudd experience, do you think?
LEIGH: Jonathan, I'm still getting my head around the fact that Peter Hendy supported Brendan Nelson over Malcolm Turnbull, who was then beaten by Tony Abbott, only to have Peter Hendy support Malcolm Turnbull over Tony Abbott. But I think it does illustrate that voters were looking for a change, and looking for a change not just in personality but also in policy substance. People expect more on climate change; Australia has been a terrible laggard there recently. There's been a big drop in our renewables investment in recent years, there's been the Government's war on wind, and a lack of the leadership that we previously had in the climate space. People, I think, are going to be concerned when they see that as Tony Abbott has pointed out, there's exactly the same climate change policy. And then Malcolm Turnbull speaks a lot about small-l Liberal issues but when it comes to same sex marriage, he has this odd proposal for a plebiscite which I have to confess, I still don't quite understand. I think the idea is that if the Australian people vote for same sex marriage in the plebiscite, then Cory Bernardi will have to vote for it in the Parliament. But I'm not sure anyone has actually explained that to Cory Bernardi. And if that's not the case, then there's no point in having a plebiscite.
GREEN: A plebiscite is a pretty simple concept. Peter Hendy, Tony Abbott is telling people to vote Liberal at the next election but then he undermines Malcolm Turnbull's argument for that. Malcolm Turnbull's argument is that things are a bit different now but Tony Abbott repeatedly states that nothing has changed. He's subtly doing Turnbull in, isn't he?
HENDY: Looking to the future, I think that the new leadership team is going to provide a stronger government. It has enthused a lot of the population, I can tell you that. In my electorate, people are thanking me and other Liberals for participating in a change in the Prime Minister. We are energised; we've now got an Assistant Minister for Productivity; we've not got an Assistant Minister for Innovation; we're talking about tax reform and competition policy. We're on the front foot and we're providing what the Australian people want, which is a Government that is getting on with the task and meeting the challenges of the 21st century.
GREEN: But we keep coming back to Tony Abbott and this is how he sees that policy proposition:
TONY ABBOTT: If you listen to the Prime Minister and the Treasurer, they're even using exactly the same phrases that Joe Hockey and I were using just a fortnight ago.
GREEN: So Peter Hendy, nothing has changed?
HENDY: Well a lot has changed. I was just explaining that we're looking at a reform agenda for taxation, competition policy and innovation policy. We've appointed an Innovation Minister, we've appointed an Assistant Minister for Productivity, and we've created a Minister specifically for Cities and the Built Environment. That wasn't the case before. We've got a revived team and we're getting on with the policies that, I think, people will be very happy to see rolled out over the course of the next year or so.
GREEN: Andrew Leigh, you would prefer it if Tony Abbott was right, would you not? If nothing had changed? As Peter suggests, a fair bit is beginning to shift and there are all sorts of signs that fairly fundamental change is afoot. That's not going to be good for the Opposition.
LEIGH: Jonathan, I'm an Australian first and a partisan second. If we can get better leadership out of Malcolm Turnbull then that's a good thing. But I am concerned that, for example, on the tax reform process we've had a stalling of the white paper which has had 800 submissions, 20 people in Treasury working on it, millions of dollars put in by Government and outside groups.
GREEN: What makes you think that has stalled?
LEIGH: There were certainly some reports last week that the entire process was in jeopardy.
GREEN: They were very quickly scotched by the Prime Minister.
LEIGH: I don't know if they were scotched, Jonathan. It's unclear what the status of the white paper is.
HENDY: They certainly were.
LEIGH: It's unclear what has happened to the work that has gone into that white paper.
GREEN: Can you give us clarity on that, Peter Hendy?
HENDY: Absolutely. You're exactly right Jonathan; you're obviously more attuned to the media cycle than others. The fact is the Prime Minister and the Treasurer have made it absolutely clear in any number of interviews in recent days that the story about scotching or putting on hold the tax reform process is absolutely silly. I can tell you firsthand that it's absolutely silly.
GREEN: And yet the Treasurer insists that we don't have a revenue issue. He's not talking a big game on tax.
HENDY: What we're doing is looking at reforming taxation. I can tell you that, point blank. That's what the Prime Minister has said publicly, and the Treasurer.
LEIGH: That's terrific, because the process is due to report soon. If that's coming out on schedule, then that will be most welcome. But certainly too we have these retrograde statements on penalty rates. We've had Andrew Nikolic coming out today, we've had statements by a range of Liberals including Josh Frydenberg over the weekend, saying that penalty rates should be cut. You've got the slowest wages growth since we began recording the figures, and I suspect that Peter, in his heart of hearts as a former ACCI head and somebody who has spoken a lot about industrial relations, probably would like to see penalty rates cut too. I don't think that's the right measure for an Australia where inequality is as high as it has been in three quarters of a century.
GREEN: Has there been a bit of ill-discipline around some of that, Peter Hendy? I mean, that's out of Josh Frydenberg's bailiwick.
HENDY: What Josh was reflecting was a simple fact of life, which was that recently, a few weeks back, the Productivity Commission, which was commissioned by the Government to do a review of the industrial relations system, produced an interim report. One of the issues it was looking at and was reporting on was that they had received hundreds of submissions that Sunday penalty rates were a big problem for the hospitality industry across Australia and particularly in rural and regional Australia. They were reporting that, and Josh was reflecting the fact that the Productivity Commission had noted that in its report. The Productivity Commission is still examining that issue and we await their final report. I'll be very interested to see what they come up with as a final recommendation.
GREEN: Do you take as much heed of what the Productivity Commission says, for example, on Free Trade Agreements? I just threw that one in there, for what it's worth.
HENDY: Yes, that's a beauty. I don't agree with everything that the Productivity Commission says, I'll say that Jonathan. My guess is that probably Andrew doesn't either.
LEIGH: On trade agreements? I think giving a formal role to the Productivity Commission is very important. They've got a review of intellectual property on foot at the moment and I've called for that to report before the Trans Pacific Partnership is settled. Because I do worry – and I suspect that Peter shares some of this – that back in the old days trade agreements were about bringing down trade barriers. These days trade agreements seem to be about trying to have different intellectual property protection to what most economists would argue for.
GREEN: Let's not open that particular can of worms because we could be here all night. Drs Peter Hendy and Andrew Leigh are with us on our pollie panel. Let's look at the economy because today has been a pretty red-spattered day on the ASX. It's down about 3.9 per cent, $50 billion in value has been shed. The Treasurer today was saying there are lots of headwinds. Andrew Leigh, should we start getting toey? I mean, growth was negligible in the last quarter; how well-placed are we?
LEIGH: Jonathan, you've got to say that if you look around the developed world, things could be worse. But they could also be a lot better. Unemployment is now higher than it was in the Global Financial Crisis; our annual growth figures have been downgraded each quarter since the Abbott-Turnbull Government's first Budget came down; consumer confidence is down and debt is well up on where it was at the point at which the Government took over, measured by the Pre-Election Fiscal and Economic Outlook. And of course, now the share market is down as well. So you've got a whole lot of numbers that should be going up that are going down, and numbers that should be going down that are going up. That's why Labor has been talking a lot about innovation, and it's why you saw Bill Shorten, Chris Bowen, Ed Husic and Jason Clare last week laying out some ideas such as a start-up year for university students and new entrepreneurial visa classes. This builds on the ideas of coding in schools and innovation that Bill outlined in his Budget Reply speech. We do think we need to be investing in the jobs of the future in order to spur growth in the economy.
GREEN: And yet, Peter Hendy, when we see results today like those in the market, we realise that with so much of that based on things entirely out of our control, the Australian economy is just very difficult to manage given its vulnerability to that kind of external pressure.
HENDY: That's right. Another way of putting it is that it's a stark reminder of the challenges we face being a country in the international context. There are a lot of jitters about China – that's a fact. A lot of the share market reaction is based on views about the growth rates going forward for China. Look, there's also an unsettling atmosphere in the United States. The Federal Reserve is trying to decide whether to increase interest rates in the near term and that's making markets jittery as well. So there's a bit of a flow-on from those particular things, but the fundamentals of the Australian economy are good. We are growing and the fact is that my job, in terms of this new role as Assistant Minister for Productivity, is to help the Prime Minister in his endeavours to get productivity up. Since we came into Government we've got productivity into positive figures. It was negative during the six years of the former Government but we've now got it positive. It's below the long-term trend rate of the last 40 years but our job is to get it up higher so that we can deal with all the issues you're raising.
GREEN: I get the feeling you might dispute that productivity figure, Andrew Leigh?
HENDY: I could dispute a lot of the numbers he gave too but I'll leave it alone.
LEIGH: You want to take productivity averaged over a year or so, rather than quarterly figures. My recollection is that it was starting to track up in the post-GFC years. But Peter is completely right to be focused on long-term productivity. The Labor perspective on this is that you spur productivity by making sure that our schools are working better, which means needs-based schools funding; by making sure that all kids who have the talent to go to university can get a spot, rather than by making university too expensive; by making sure our vocational system is working as well as it can be, rather than by smashing TAFE; and by making sure that we've got the infrastructure of the 21st century, through the National Broadband Network.
GREEN: I'm tempted to ask you how you'd pay for all that, but that would be unkind and in any event, we're out of time. But with that market and the trouble we've seen today, we can be reassured that it will probably be entirely reversed tomorrow so that will be some sort of consolation. Thank you to both of you. Dr Peter Hendy is the new Assistant Minister for Productivity and Dr Andrew Leigh is the Shadow Assistant Treasurer.
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