Breaking Politics - Monday, 14 April

In my usual media spot on Mondays with the Liberal's Andrew Laming and Breaking Politics host, Chris Hammer, topics up for debate were the spectre of raising the pension age to 70 and flagged federal budget cuts to the CSIRO. Here's the full transcript:


SUBJECT/S: Joe Hockey’s budget and cuts; Age Pension, CSIRO, the ABC and SBS; Superannuation and inequality; Unfair PPL Scheme, Trade and Foreign investment

CHRIS HAMMER: Well the budget is now less than a month away and Treasurer, Joe Hockey, is talking tough. His given the clearest signal yet that he intends to raise the pension age to 70, but perhaps not in this term of government. Joining me to discuss that and other matters, budgetary and otherwise, I'm joined by Andrew Leigh, the Federal Labor member for Fraser here in the ACT, and Andrew Laming, the Liberal member for Bowman in Queensland. Good morning. Andrew Laming, let me start with you. Should the pension age be raised to 70?

ANDREW LAMING: Well, obviously the pension age is already changing from 65 to 67 over the next decade and Andrew Leigh has long made that very important point that with longevity in Australia that period between retirement and expected length of life only continues to increase. So this is a debate that brave politicians will continue to have. I think that the pace at which it's increasing, a couple of years per decade, is thoroughly reasonable and of course we've also got the life expectancy figures to back those calculations.

HAMMER: Whatever the merits of the policy though, this isn't going to be a quick fix for the budget, is it, because we're looking at so many years into the future?

LAMING: That's correct. So, already these increases through to 2023 are continuing at a trajectory on from that date, obviously only helps the budget in the 2020s. It doesn't help the budget right now.

HAMMER: Andrew Leigh, raising the pension to 70, is it a good idea, an inevitable idea?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Well it was an idea ruled out Chris the day before the election by the Prime Minister who said 'no changes to pensions'.

HAMMER: But I think he was referring to this term of government. If he goes to the next election saying ‘this is what we intend to do’, well that would be fine, wouldn't it?

LEIGH: He certainly didn't make that clear in his unequivocal statement the day before the election Chris. But the impact of this is that a scheme which was set up to avoid poverty among the elderly is now looking at being changed in a way that would increase poverty among the elderly. Andrew is right when he says that average life expectancy is rising but the other fact to bear in mind is that workers in manual jobs like check-out operators and cleaners find it tough to work till 70 and workers in those occupations will die on average six years younger than the most affluent Australians. So on life expectancy, there's a big gap between most and least affluent and I'm really scared about what this broken promise will do to the most vulnerable Australians.

HAMMER: Andrew Laming, isn't that a good point? I mean both you gentlemen, will be able to, if you wish, to retire well before you're 70 because you had access to a good parliamentary pension scheme. I can do the same. I'm a professional. I’ll have access to superannuation. Isn't there a basic inequality here that it's a poor manual worker with a bad back who's forced to work till his 70?

LAMING: That demographic remains the challenge. Andrew Leigh is quite right that lumberjacks, fishmongers and people who work on checkouts may well have a different life-expectancy, but they always have. The whole point is that everyone is living longer including those cohorts and we have to have this discussion and we certainly don’t want to end up like parts of southern Europe where people in their mid-fifties are going onto state-sponsored pensions for life. We need to be moving with the times, moving with life expectancy, but that doesn't mean I support sudden and short notice changes now. It's all about planning for the future and the population knowing exactly when the pension ages do change at least a decade in advance.

HAMMER: Andrew Leigh, if it's going to be more restrictive for manual workers, people who rely on the pension, should a government Labor or Coalition, also look at pulling back some of the generous concessions that are given to wealthier superannuation dependents?

LEIGH: We certainly thought so when we were in government Chris. We put in place a fairly modest measure targeted at people with super balances over $2 million. They're people who get government assistance in the form of a tax break bigger than the aged pension. And we said we thought they should pay a slightly higher rate of tax. That's one of the measures that Joe Hockey scrapped upon coming to office, one of the 55 measures that he scrapped. And as best I can tell, the scrapping of all those measures all benefited the most affluent more than the most disadvantaged. Joe Hockey has doubled the deficit since he has come into office, adding $68 billion to the four-year deficit and now he's saying that he wants to break a promise on pensioners so that they should feel the budget pain. That doesn't strike me as fair or reasonable Chris.

HAMMER: Andrew Laming, in the run up to the election, in the week or two before the election, the Prime Minister repeatedly made a series of promises; they'd be no cuts to education, no cuts to health, no changes to pensions and no changes to the GST, no cuts to the ABC or SBS. Is it more important to keep those election promises or is it more important to address the problems with the budget?

LAMING: Well certainly Australian's are learning that if there is one person who is going to keep their election promises, it's Tony Abbott. So those commitments were indeed made, but that doesn't mean pre-budget that all sorts of speculation about every sector of the economy having to tighten its belt. I don't think anybody should be immune from thinking that the excesses we saw under Labor come at a price. They come at a price that has to be brokered and solved by their successors, and that’s the LNP coalition government. So of course there are tough decisions and all you can ask, I think, if you're treasurer is that the pain is evenly and fairly distributed and that's the discussion we are having at the moment. There are pre-election commitments, and after that I think it’s absolutely appropriate that every authority, every department, every service is looking for ways to deliver their services or products as efficiently as possible. We've been hearing from the ABC, we've been hearing from CSIRO, that's all the standard pre-budget speculation. In the end Joe Hockey has a very tough job to do and it's not Joe Hockey's fault. It was our predecessor government that put us in this situation in the first place.

HAMMER: Well you say, that if anyone's going to keep their election promise it's Tony Abbott. So you can guarantee no cuts to the ABC or SBS?

LAMING: Well we certainly made those commitments before the election and we'll just have to see what comes out in the budget. But I think it's absolutely appropriate. I’ve said this before, if you're a pensioner, if you're a health care card holder, if you sense that you think you are under threat during the budget it is utterly appropriate that Australian's all over the country speak about the services that they really care about they don't want touched. That’s part of democracy and I encourage it between now and early May.

LEIGH: Let's not pretend that Mr Abbott hasn't already broken promises Chris. He's broken his promise on delivering the NBN. He's broken his promise that no public servants would lose their jobs involuntarily. He's broken his promise that no one would made worse off with this superannuation changes by raising super taxes on the lower paid. And now we're looking at further broken promises. We've already seen the literal decimation of CSIRO. People would complain to the minister - if we had a science minister. And, now it looks as though there's going to be cuts to the ABC, SBS, and elderly Australians, perhaps throwing them back into poverty. All so we can pay for a $75,000 parental leave scheme for millionaires. This is a very strange set of priorities.

HAMMER: Okay, well let me ask you this question. If the budget needs repairing, where would you make spending cuts? I know you'll nominate the PPL scheme, because you've done that the past several weeks. We'll accept that as a given. Where else would you target for spending cuts?

LEIGH: Well, the Prime Minister has of course ruled out getting rid of his gold-plated, diamond-encrusted parental leave scheme, even though the Commission of Audit says he should throw it out the window. You'd look at some of those 55 tax measures Chris that the Coalition threw out the window when they came into office. They were measures like making sure that multinationals pay their fair share of tax. We know that there's an instrument that allows multinationals to shift debt overseas, costing the taxpayer about three-quarters of a billion dollars. If the Coalition hadn't left that loophole open then we'd be able to build a new hospital in Australia. We know that making superannuation taxes fairer; seeing a fairer rate of tax on people with super balances over $2 million would be a way of making sure that all Australians contributed. But that's one that the Government has ruled out. They want all the pain to fall on the lowest income Australians but all the gains are coming to the most affluent Australians through things like scrapping the mining tax and putting in place paid parental leave.

HAMMER: Andrew Laming, the Prime Minister spent last week in North-East Asia, by all accounts a very successful trip lining up new trade deals with those three countries in north east Asia; a big push to gain access for Australian agricultural produce. Does it make sense to be cutting back CSIRO Australia's premier agricultural resource institution at a time when we are trying to boost our exports to North-East Asia?

LAMING: Well, I think the big picture here is how do we boost our agricultural exports most effectively and that's certainly by embarking on these successful bilateral agreements that we've seen in the pipeline for six or eight years. I certainly saw very little progress under the former Labor Government then along comes Tony Abbott. I don’t think he's lucky. I think you've seen a change in the approach to these agreements with more to come that's going make far more, far more difference to our total exports to these larger economies than some of these other issues that you're raising. At the moment though we have a really important sale job to regional Australia. They need to be convinced of the benefits of these arrangements and I think we've seen reflected this week very, very positive and glowing reports of the trip itself. But I don’t underestimate the task we’ll have convincing regional Australia that these trade agreements are beneficial overall. As always, there is something in it for both sides we need to convince Australians and regional Australians in particular that we are going to be $40 billion better off over the next two decades with these agreements.

HAMMER: The question was: does it make sense to cut the CSIRO at this time?

LAMING: Well, the CSIRO like every other agency needs to be looking at its health, its energy, its environment, its IT, its divisions, and ask how it can operate more effectively. In the end it's one of the few areas of research in this country that isn't open to competition and to a merit-based grants process. So we have to be astutely aware of that and make sure that CSIRO is absolutely precise in its research priorities. So if CSIRO is doing that internally with its board of 10 I'd be delighted that there doing that, and responding because the last thing we want is CSIRO operating in isolation to the rest of our research agenda funded through ARC and MHARC. It's a good thing they're considering it and it's a good thing they're planning for it. I mean what actually happens is a matter for Joe Hockey at the budget.

HAMMER: Andrew Leigh?

LEIGH: Andrew Laming, like me, is a great fan of science research and I think we have to remember that CSIRO is the organisation that brought us wi-fi. They’re a great Australian institution but they've lost more than 1 in 10, literally decimated and now they are looking at a one-fifth cut in their budget, in the upcoming budget I'm really concerned about that impact that has on Australia's long-term prosperity Chris, which I think will ultimately flow from investment in skills and infrastructure. You don't cut your way to prosperity.

HAMMER: Okay, now we mentioned the trade deals with north east Asia. Are you comfortable if Chinese state-owned enterprises are governed by the same investment rules as private enterprise companies from China and indeed from other free trade partners like Japan and the United States?

LEIGH: I think our current Foreign Investment Review Board guidelines are appropriate which scrutinise the first dollar of foreign investment. When he was Opposition Leader Mr Abbott went further than that. He was against nationalisation and so he said he was therefore strongly opposed to foreign nationalised entities owning Australian business. This is a complete backflip from that position, suggesting that actually China's state owned enterprises should have a better deal in foreign investment scrutiny. As one commentator mentioned on the weekend of Mr Abbott's free trade deals, anyone can sell their house tomorrow if they don't care what the price is and who they sell it to. We need to make sure that Australia is getting the best deal in its free trade arrangements, rather than just signing on the bottom line in order to get the photo opportunity.

HAMMER: Andrew Lamming, are you concerned on relaxing foreign investment rules for Chinese state owned enterprises because I know a lot of your Coalition colleagues are.

LAMING: I don’t have any concerns with state owned enterprises approaching Australia as long as it runs through the foreign investment review. I'm very confident that the review process is effective. I don’t want to see any foreign capital refused by Australia, so long as it is fairly assessed. We have 2.5% of the world’s capital, I don't want to be saying ‘no’ to the other 97%. I know that some state owned entities operate in a highly commercialised environment already. I’m only concerned if that state ownership can confer some unfair advantage to it, or if it is accessing something of significant national security interest. That is what FIRB is there for, they can do that job and I need to convince some of my regional colleagues of that. In the end if an Australian citizen or entity wants to put their property on the market, they don't deserve to be told that the only buyer in town is the one they cannot sell to, unless there is a very good reason of national significance.

HAMMER: You say you are happy as long as it goes through the third process. But that's the issue that the Government is considering, relaxing those restrictions so the Chinese state-owned enterprises may be able to invest perhaps up to a billion dollars without going through the third process provided they are not buying agricultural land.

LAMING: That’s right. There are two thresholds. There is the threshold which you can invest without going to FIRB, but I’m happy so long as significant acquisitions run through that investment review process and I’m very, very open minded to any international entity that wishes to put in a bid to purchase an Australian company for instance or a pastoral lease, to do that. I'm open minded to it and I think the rest of Australia should be as well.

HAMMER: Andrew Leigh, there is a limit for agricultural land purchases which is a concern for people in the bush. But that aside, are you quite happy for state owned enterprises to essentially be on an equal playing field with other enterprises?

LEIGH: Chris, I think the government has to make a pretty strong case for changing the rules, particularly as they went to he election saying they were going to tighten the rules in the opposite direction. I mean Mr Abbott has gone from attacking Chinese state enterprises in his 2012 trip to saying they should get better status than they have now in his 2014 trip. I love Andrew Laming's confidence that our Prime Minister is a man who never breaks a promise, but really the facts seem to say otherwise.

HAMMER: Ok gentleman, thanks for joining us this morning.

LEIGH: Thanks Chris. Thanks Andrew.

LAMING: Thanks Chris.


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.