Andrew Leigh

TRANSCRIPT – SHOWDOWN WITH PETER VAN ONSELEN
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
7 May 2013

TOPICS:                                Carbon pricing, revenue write downs, cut in interest rates, Liberal Party conscience vote for equal marriage, the federal Budget

Peter van Onselen:         Welcome back you’re watching Showdown. I’ve been speaking to Peter Reith, joining us out of Melbourne as well as Senator Cory Bernardi, joining us out of South Australia, we’re now also joined by Dr Andrew Leigh the Parliamentary Secretary to the Prime Minister, who joins us out of Canberra. Mr Leigh thanks for your company, or Dr Leigh I should say, don’t want to down grade you before we get the interview started.

Andrew Leigh: Now worries at all, good to see you Peter.

Peter van Onselen:         Can I, I just want to start by going back to you, Senator Cory Bernardi if I can. On your blog today you’ve had a bit of a crack at the style of the government that is being run by David Cameron over there in the in the UK. You’ve called it a soft-left policy agenda led by a man who’s most notable commitment has been to make the once proud Conservative Party more green than Labour, but what intrigued me was the next line; you said a few years ago there were a number in the Liberal Party here who actually thought this was the best path for us to adopt. Who was that?

Cory Bernardi:                   Well Peter you know we had an extensive debate about the emissions trading scheme and supporting Labor’s policy. I was not one of those who subscribed to that I warned about the dangers for the Liberal Party about going down that path, and I think the proof is in the pudding. If you look in the United Kingdom’s experience, David Cameron I think won an election, but he was forced into coalition when he should never have been because the Labour party was so bad over there, and here, because we actually took a principled stand about was in the national interest, Tony Abbott came within a whisker of becoming Prime Minister at the last election, and I think, you know, the rest is history. The caravan that…

Peter van Onselen:         But Senator how does this work? You were at the vanguard of having a problem with Malcolm Turnbull and the Liberal Party more broadly pushing to support the ETS ahead of Copenhagen. You were at the vanguard of opposing that. Yet the people that were all around Malcolm Turnbull are now the same people that are the senior people around Tony Abbott. Now I know the Liberal Party’s a broad church, but is that at least a little bit surprising?

Cory Bernardi:                   Oh I don’t think so. I think you know, Tony Abbott will always choose the team that he wants around him. He’s got an experienced team. You know quite frankly, I think we’ve got a good policy agenda to take into the next election, but one of the points I want to make is that you know, aping the Labor Party is a recipe for disaster. We are, you know, a centre-right party. We should be espousing the principles that have built the Liberal party over many , many decades and that’s about supporting families, about supporting small business, about lower taxation and you know, the maximum level of freedom that we can have in an orderly society. And I think we need to limit the growth and size of government and we certainly need to stop the government from borrowing you know, tens of billions of dollars every single year because they can’t control their spending.

Peter van Onselen:         Andrew Leigh, can I just bring you in and ask you about the levy that was announced by the Prime Minister in relation to paying for the NDIS. Now as an economist, you are someone who as I understand it, when the levy was originally rejected by the Prime Minister, had some strong economic reasoning why that kind of specific allocation of levies to pay for specific government spending was not a good idea. Yet now that is the path that now the Government is going down.

Andrew Leigh: Well Peter the big change in the revenues is just the striking difference between this year and last. So compared to the last budget, revenues for this budget are projected to be coming in seventeen billion dollars smaller. Now for those who don’t carry billions of dollars in your bank account, the way of thinking about that is that’s one full one full per cent of GDP. It’s a massive write down and I’m sure there hasn’t been a bigger write down in the history of the Commonwealth and that’s led the Government to be making a set of announcements, including the levy that you pointed to, in order to make those books balance. Now, it’s got to be clear, this is not a decision of the Government that has caused this revenue write down; with the same set of taxes, we are bringing seventeen billion dollars less revenue, and that’s a challenge for us and of course-

Peter van Onselen:         can I ask you this though, because isn’t one of the issues here that during the Costello years they underestimated revenue, during the Swan years, you have, or the Government has overestimated revenue. Now my understanding is that there is a range that is put by Treasury to the Government for the various estimates and Costello had a penchant for always taking the bottom of that range and hence he was always discovering that there was extra revenue left in the kitty when the good times rolled on. Wayne Swan when he’s presented with that range goes for the higher end on the estimates for the Budget and therefore, unsurprisingly, when we’re not in such good times there’s a massive underestimation there. Isn’t that why it’s bad policy to turn around and spend the money before it’s come into the kitty when you know that firstly, you’re on the higher side of the range that you select, and secondly you know from historical evidence that there has been a constant inaccuracy in these numbers anyway?

Andrew Leigh: Peter I’ve spent time as a secondi in Treasury, spent six months there, I’ve certainly never heard of what you’re talking about either for Peter Costello or for Wayne Swan. I’ve never heard of people suggesting that the forecast on revenue were anything but the best guess from the ‘boffins’. The problem is that when you’re forecasting revenue, you’re taking a growth forecast and then you’re also trying to extrapolate from that what company profits will look like. We’ve got something of the moment of the perfect storm at the moment in the combination of drop off in commodity prices, but the dollar staying high because of the strong appetite for Australian bonds, and then of course this unique situation of real growth outpacing nominal growth. All of that is pretty unusual and that’s led to this big revenue write down.  We’re still an economy which is doing extraordinarily well by international standards, strong growth, half the unemployment rate of Europe…

Peter van Onselen:         There’s obviously worries though, with the Reserve Bank dropping interest rates today though, I mean that might be a good thing for home owners, but at the end of the day, it is a sign of softness isn’t it?

Andrew Leigh: Well it is a far cry from those days where you would hear people say that interest rates would always be lower under a Coalition Government, isn’t it, Peter? Certainly this is welcome news for homeowners and as the Reserve Bank has said in its statement, it’s weighed up a set of factors, it’s looked at some of the domestic strengths but also the international challenges, the pressure that the high Australian dollar’s put on the economy and overall decided that a quarter point cut would be appropriate.

Peter van Onselen:         Peter Reith can I bring you in and ask you, you were a Shadow Treasurer once upon a time yourself. You were also a senior minister, Minister for Workplace Relations, and if I understand correctly a member of the Expenditure Review Committee for the Howard Government for some time as well, how do you see this debate about the idea that well, revenue is just, you know, underperforming expectations so therefore there’s nothing untoward in what’s happened.

Peter Reith:                        I think quite frankly Andrew, I think what you have to say is laughable. Uh, I mean, look sure there are ups and downs in numbers, but I mean there’s just been one blunder after another under Labor, I mean the mining tax, the carbon tax, you’ve fixed it to Europe. You know, the figure there is three dollars, it’s twenty three…

Andrew Leigh: What has that got to do with any of this?

Peter Reith:                        Well it’s all coming mate, it’s all adding to the problems, fiscal policies that you’ve got. Look the wasting…

Andrew Leigh: It’s all part of the vibe. It’s all part of the thing.

Peter Reith:                        It’s not, it’s the wastage. Uh the fact is you haven’t been, you know, you were running the line a minute ago “oh the dollar’s high”, well mate I’ve got news for you; the dollar was high a year ago when the last Budget was done.  I mean if that’s such a big factor why wasn’t that put in? Why are you still using you know, last year’s arguments? Now the fact is that a government that had been a lot more prudent than you have, instead of, you know, giving people this nonsense about how great the economy is, you know, the RBA has cut it back again today, record lows and you can’t even acknowledge the fact that there are big slices of the Australian economy that got real problems and we’ve got a turning down on the mining industry. Now, you know, a bit of realism, you know, inserted into the decision making on the Budget would’ve avoided a fair chunk of the problems that you’ve got. And on top of that, you know, you’re still in a mode where you think you can just go on spending and, of course, those days are gone.

Peter van Onselen:         Andrew Leigh your response?

Andrew Leigh: Well certainly what we’re doing is taking the best advice of Treasury, I reject what Peter has said there entirely…

(Peter Reith:                      You’ve got to stop blaming everybody else Andrew)

Andrew Leigh: …in terms of decisions the Government has made. The decision on pricing carbon for example is in accord with what every sensible economist would advocate. I mean, you’ll have the shonks and shysters telling you that direct action and soil magic can somehow deal with climate change, but this is the economically responsible thing to do, to put a price on carbon pollution. And what you’ve got to realise is that internationally, Australia’s position is strong: ten per cent government debt is extremely low by international standards, but we have…

Peter van Onselen:         Can I, can I ask you about that, sorry to interrupt you. It is low and I don’t disagree with that, but it is also true isn’t it that it has risen at a sharp rate comparable to a lot of countries that started with a lot higher debt and have now obviously ended up with even higher debt. In this country it remains low but it’s only low because we started with no debt. The scale of the increase has been pretty significant.

Andrew Leigh: Well I mean when you put in place stimulus spending you backed quickly. The alternative is to lose hundreds of thousands of jobs. Everyone that tells you we should not have taken on debt in the global financial crisis is saying that they wish unemployment had been driven up to double-digits, as it has been in Europe, because that’s the alternative…

Peter van Onselen:         But couldn’t we have just dumped interest rates? Couldn’t we have used monetary instead of fiscal policy?

Andrew Leigh: Well we did both as you recall Peter, I mean we put in place monetary policy which has an impact on sectors of the economy that are borrowing. But then of course, that’s only a portion of the economy, and as OECD, IMF, were advising at the time, as most countries did, you then want to inject some fiscal policy at the same time, both through house hold payments which have a quick effect and through infrastructure spending which has a larger multiplier. All of what we did in the down turn was text book. The result was to save hundreds of thousands of jobs and to put Australia in a debt position which is low by international standards.

Peter Reith:                        Yeah but you’re just running over the facts here because, look  I don’t disagree with half of what you say, but you know, the other half you don’t get it right. I mean, Malcolm Turnbull, when he was Leader of the Opposition got up in the Parliament and said, “well, we understand why you’ve done what you’ve done so far, but cranking up even more stimulus we think is going too far”. Now, you don’t have an answer to that because there isn’t an answer to it, and Malcolm Turnbull was proved to be absolutely right and this was just another poor judgement call by your Treasurer, you know, thinking that just spending more money, you know, was somehow the answer and unfortunately it’s not. It’s the same with Gonski as well I might say, you know, just spending is the way to fix problems when, a lot of problems aren’t just fixed by spending more money.

Peter van Onselen:         Alright gentlemen, time out, we’re going to take a commercial break. When we comeback we’ll continue the debate including, I’d like to see the thoughts of Senator Cory Bernardi in relation to the issue of whether or not the Liberal Party should have a conscience vote on gay marriage after the next election. Back in a moment.

COMMERCIAL BREAK

Welcome back. You’re watching Showdown where I’m joined out of Melbourne by former Howard Government minister Peter Reith, out of South Australia by Liberal Senator Cory Bernardi and out of Canberra by the Parliamentary Secretary to the Prime Minister Dr Andrew Leigh. We’re going to move on to other subjects, but first if I can Andrew Leigh, can I just ask you Andrew Leigh, we’ve just had the Victorian Budget today; how is it that with revenue write downs they can forecast surpluses going forward over the next three years as well as deliver one in the current financial year, yet with write downs also at a federal level, we’re not in a position where we’ve got that kind of forecasting.

Andrew Leigh: Well we’re relying on more volatile tax bases at the federal level is one straightforward answer, Peter. Company tax revenues are much more volatile than GST revenues, so it makes it easier to project at a state level. But I do think that this is a good reason why Victoria should be signing on to the Gonski Reviews. I think it certainly signals that it’s about time that kids in low income schools in Victoria got a fair deal.

Peter van Onselen:         But isn’t just the case though that there might be volatile tax mixes at the federal level compared to the state level, but isn’t it just a case of fiscal conservatism at the end of the day if they are as volatile as you say. Don’t imprint spending into them before you actually know the return is. Be much more moderate and then be surprised on the upside?

Andrew Leigh: Peter, you sound like what you’re saying is that we should have made savings of $160 billion dollars over our last five Budgets, which is precisely what we’ve done. You sound like you might be saying we ought to put in place a levy to cover most of the cost of the DisabilityCare Australia and putting in place some targeted saves around family tax benefit. All these are things we’ve done and you’ll see more savings measures being announced in the coming days. As you say, that’s the prudent response when you get a revenue write down. But it’s not to sell off the family silver, it is not to trash DisabilityCare Australia, a system depended on by 410,000 people with disabilities and their carers. That I think isn’t the Australian way…

Peter van Onselen:         … but the thing is Andrew, I’ve got to take you to task a little bit on this because yes there are volatile taxes at a federal level but the states are reliant on GST revenue and in the case of Victoria there’s been a $7 billion write down on GST revenue into Victoria. Yet despite that, they’re still projecting surpluses.

Andrew Leigh: Well, Victoria has made some pretty savage cuts, Peter, and I think if you speak to nurses, police officers, fire fighters in Victoria, they might have a different complexion on the …

Peter van Onselen:         …so are you saying that if Labor was delivering the Budget you wouldn’t have made the savage cuts and therefore you’d be in deficit?

Andrew Leigh: Labor is always going to make targeted savings measures. We are going to make sure that we impose whatever cost there is on those who can best bear it. Tony Abbott by contrast is committed to giving tax cuts first to big miners and big polluters and then to handing out $75,000 cheques to some of the most affluent households in Australia through his gold-plated paid parental leave scheme which seems neither of your other two guests can defend…

Peter van Onselen:         …alright we’re not going there. Peter Reith’s had plenty of time on that one. Let me just go to you Senator Cory Bernadi, entirely different subject now…

Cory Bernadi:                     Well, can I just answer some of those things that Andrew raised, I mean, he’s boasting about $160 billion worth of savings. He’s not talking about the massive tax increases that he’s already foisted upon the economy. He’s not talking about the $300 billion worth of debt that they’ve racked up over the last six years. This is an outrageous sleight of hand and a nonsense. They have completely mismanaged their spending. Revenues are up and they just have no idea how to control their spend thrift ways and there’s nothing to show for it. This is the great problem we’ve got: nothing to show for it.

Peter van Onselen:         Alright we’ll take that as a comment as a certain other person in television often says. Let me ask you Cory Bernadi, as I said, on an entirely different subject, the issue of a conscience vote for gay marriage is something that an increasing number of Liberals are coming out and saying they’re in favour of after the next election. Tony Abbott has said that he’ll take that to the Party Room. The Liberal Party does have a proud tradition of providing conscience votes on certain issues. I know where you stand on the issue of gay marriage, but where do you stand on the issue of whether or not it should be a conscience vote for individual Liberal MPs?

Cory Bernadi:                     Well I’ll make the point that we have a tradition of conscience votes where we have no official Party position. Our Party position is that we support the existing definition of marriage as being between a man and a woman. We’ve supported that, you know, since the foundation of the Liberal Party quite frankly. Now, we also, I make the point, have the freedom for every single member of the front bench, or the back bench to vote according to their conscience if they don’t like the Party position. Now, I don’t detect any appetite quite frankly, amongst the general public or amongst the Party room to change our position right now. There might be one or two murmurings, but you know, quite frankly it’s not a mainstream issue. People are more concerned about the cost of living, about, you know, how this government is borrowing money and mortgaging the future of their kids.

Peter van Onselen:         so you don’t think it should be a conscience vote as simple as that? You’re of the view it should stay a Party vote?

Cory Bernadi:                     I absolutely support the existing Party policy.

Peter van Onselen:         And can I ask you on that, because when you were just talking about it, you made the point that, you know, that marriage should be between a man and a woman as something that’s been Liberal Party policy since, you know, the founding of the Liberal Party basically. Does that mean for you personally, if the Party room goes the other way and decides to make it a conscience vote issue, is that something you have a major problem with? Or would you just accept that that’s the Party Room position and it’s a change of policy for the Liberal Party, albeit one which is a complete change from the historical direction of the Party until now?

Cory Bernadi:                     Well the Party Room decision would be the binding decision. Ultimately I would still vote according to my own conscience on that particular matter. But I think there would be widespread electoral issues attached to the Liberal Party taking that position. Now, I have no evidence for that, I’m just supposing it. But look, let me say this Peter, it is not a mainstream issue. No one out there is talking about this in any significant sense. They’re worried about the cost of living and the mortgaging of their children’s future by this spend thrift government. That is what people are worried about. They want to see a change in government. They want to see a radical change in approach and some more responsibility attached to what their government does.

Peter van Onselen:         Peter Reith I think they will see a change of government and I know you agree with me on that. What’s your view on whether the Liberal Party should make the gay marriage issue a conscience vote irrespective of what your view is on the actual matter of gay marriage itself?

Peter Reith:                        I think Tony’s on the right track on this one. What he said is that after the election he’ll raise the issue in the shadow cabinet and then take the shadow cabinet view to the Party room and I think that’s the right process. And if he sticks to that and if he consults with the organisation as well I don’t think he’ll get into too much trouble.

Peter van Onselen:         But what’s your personal view? Do you think that, do you agree with Senator Cory Bernadi that it’s a Party position and it’s not something that is necessarily of the style of issue that should be a conscience vote or do you disagree with that?

Peter Reith:                        I must say I’m pretty relaxed about this issue and if they have a conscience vote I’d be quite happy with that myself. But I think, the main thing from the politics is that, you know, it’s got to handled sensitively by Tony and you know, give everybody a fair shake of what they’ve got to say about it so I think that’s the key thing. I think it probably will go through in the next term, but you know, time will tell.

Peter van Onselen:         Alright, we’re almost out of time, but Andrew Leigh before we go, I haven’t asked you about the cuts, or the cuts to increases if you want to put it that way, in terms of family payments that have been talked about by the Labor Party today. It strikes me that for a Party that is unashamedly a party of you know, people in lower socio-economic circumstances that they are the people impacted heavily by these removed increases. Why go down that path rather than finding other cuts, for example even to the SchoolKids Bonus which isn’t so targeted to low income earners only.

Andrew Leigh: Well Peter, the SchoolKids Bonus goes to people receiving Family Tax Benefit Part A so you’re talking about the same group of people. Look, I would ideally like to have seen these increases to the Family Tax Benefit Part A go ahead but in the current budgetary circumstances that’s simply not feasible. But we are putting in place a range of measures to assist that group, for example, the increase in superannuation contributions which Tony Abbott will rip away. Two thirds of those three million low income earners are women. Tony Abbott by contrast has said today that he thinks his gold-plated paid parental leave is good because it pays women of calibre more to have babies. Presumably what he means by that is that nurses, that child care workers, that cleaners are not women of calibre. I think that’s pretty troubling.

Peter van Onselen:         And I’ll have to interrupt you because we are way out of time but I know that Paul Murray live will be discussing exactly that issue after the commercial break. Peter Reith, Senator Cory Bernadi and Dr Andrew Leigh, thank you one and all for your company on this edition of Showdown. Thank you for your company in watching and I will see you again for Contrarians on Friday.