ABC MELBOURNE DRIVE
WEDNESDAY, 30 JANUARY 2019
SUBJECTS: The Coalition’s policy paralysis on energy, dividend imputation reform, Labor’s plan to level the playing field for first home buyers, Liberals being challenged by former Liberals.
RAF EPSTEIN: Joining us from Brisbane is Senator Bridget McKenzie. She's the Deputy Leader of the Nationals and she is the Minister for Regional Services for Local Governance and Decentralisation - she fits it all on her card somehow. She's in Brisbane. Senator, welcome.
SENATOR BRIDGET MCKENZIE: Great to be with you, Raf. You forgot the most important one - I'm senator for our great state of Victoria.
EPSTEIN: I did too. Sorry. Andrew Leigh joins us. He is the ALP Member for Fenner in the ACT – half of Canberra, I think. He is the Shadow Assistant Treasurer and right now a very big thank you to the Pulse FM community radio station in Geelong. That is where Andrew Leigh is. There is a seat or two, especially the Liberal Sarah Henderson’s seat, that I'm sure Labor's keen to pick up. Andrew, thanks for joining us.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Great to be with you, Raf. And it’s been great to be in Geelong with Libby Coker, our Labor candidate for Corangamite.
EPSTEIN: Just say the name as many times as possible.
LEIGH: Libby Coker, Libby Coker, Libby Coker. Thanks again.
MCKENZIE: Raf, come on. Seriously.
EPSTEIN: Do you want me to mention Sarah Henderson, Sarah Henderson, Sarah Henderson?
MCKENZIE: Thank you, Raf, for that third party endorsement of our fabulous Liberal Candidate for Corangamite.
EPSTEIN: Oh sorry, I didn’t, I didn't. Um. Power problems last week here in Victoria, Bridget McKenzie, in your home state. Five years on, we still don't have an emissions policy for the energy industry in the next decade from your government. You're blaming the State Government's emphasis on renewables. Whose fault were the blackouts on Friday?
MCKENZIE: Well, I think it was absolutely outrageous, like you said in your intro – 200,000 households and businesses were blacked out last week as AEMO tried to juggle effectively our national energy grid. It is an incredibly intricate process. It is the State Government's fault. We've seen what happened in South Australia. We saw what Daniel Andrews has done in taxing Hazelwood out of the grid and indeed failing-
EPSTEIN: Sorry, taxing Hazelwood out of the grid how?
MCKENZIE: Yes, by upping their taxes by 300 per cent they were forced to close-
EPSTEIN: Can I just address the Hazelwood issue? The royalty difference for Hazelwood was $20 million. They were looking at costs of a billion dollars. The idea that a $20 million dollar increase was more important than about $400 million of WorkSafe notices and about $700 million worth of remediation, that doesn't really make sense, does it?
MCKENZIE: Well, Raf, the point is that Labor has continually backed variable generation rather than the reliable energy-
EPSTEIN: Sorry, can I take you back to Hazelwood. Can you tell me why it's taxing Hazelwood out of the grid if it was a $20 million annual cost and they were looking at something like a billion dollars going forward - why is that taxing Hazelwood out of the grid?
MCKENZIE: [PAUSE] Well, that is my understanding of one of the reasons why Hazelwood scheduled their closure earlier than planned.
EPSTEIN: Do you think a power company like energy shut down because $20 million was more of a concern than a billion dollars
MCKENZIE: I can only go on what I'm told, Raf, and that was what I was actually - my understanding of why they closed down earlier than they had scheduled. I think it's actually atrocious that in a first world country in the 21st century we've got rolling blackouts and that we're actually seeing businesses losing upwards of $100 thousand of stock, having to lay off workers whilst they build up that stock again, etcetera. So this has implications not just that we all had a hot night, but actual businesses and workers were severely impacted by the Victorian Government's decisions to back variable power generation without backup. And it's going to cost Victorians dearly.
EPSTEIN: Andrew Leigh, what are you going to do to make sure the lights stay on? What's your policy going to do to help Victoria?
LEIGH: Well, Raf, we need to make sure that we're supporting renewables and that we're making a smooth transition with these coal fired power stations closing down. And the fact is, as you pointed out in your intro, that the blackouts were caused by coal fired power stations that have gone beyond their useful life. Three quarters of Australia's coal fired power stations are in that category. The closures came from Yallourn, built in the 1960s, Liddel in New South Wales, built in the 1970s, and Loy Yang A, built in the 1980s. When things got really hot - as the Energy Market Operator put it – ‘they’re like old cars’ and they failed to keep on operating.
EPSTEIN: Isn’t the lack of investment because we've gotten a lack of an agreement?
EPSTEIN: If the major parties could agree, people would be more confident about investing.
LEIGH: That's right, and each time the Coalition has come forward with an energy plan, Labor has said ‘look, we're willing to back plans that are sensible, that have the support of business’. We were willing to work with the government on the National Energy Guarantee, which their own modelling said would bring down household power bills by hundreds of dollars. But the hard right of the Liberal Party is consistently attacked this. So what we've said is that a federal Labor government would boost renewables through support for better home battery installations, taking that up to a million home battery installations. We’d support the workforce through a clean energy transition fund and a just transitional authority, making sure that coal fired power stations need to give at least three years notice of closure and that the jobs are available in neighbouring power stations. We’d double the Clean Energy Finance Corporation’s investment in solar and wind and put in place an energy productivity authority. We've been working very carefully with this-
MCKENZIE: Is that going to keep the lights on?
LEIGH: One of the big issues for business is energy prices right now. It's a message I was hearing from the Geelong Chamber of Commerce today.
EPSTEIN: Bridget McKenzie’s question, Andrew Leigh – is that going to keep the lights on?
LEIGH: Absolutely. We need to make sure that we have a clear bipartisan energy policy and it's a real concern to me that while Labor has been willing to work with the Coalition on policies which are backed by business, they just simply can't get a good energy policy through their party room. So right now their policy seems to be to have no policy and that means we’ve seen emissions increasing, but we've also seen energy prices going up. It’s the worst of all worlds.
EPSTEIN: I will give you a chance to respond, Bridget. I know you want to respond to that, but you've got a caller who's upset with you, so maybe we'll hear from John in Box Hill and you can respond both to our caller and any of the pertinent points you felt Andrew was making that you’d like to respond to. John’s in Box Hill. Go for it, John.
CALLER: I'm not party partisan, as it happens. Like, I'm not ideologically left or right. I’m probably pretty centre. I only got to say that the absolute nonsense, absolute pernicious nonsense that Bridget has just been crapping on about, about the, about the blackout. You know-
EPSTEIN: Which bit, which bit that she said particularly offends you, John?
CALLER: She said the reason for the blackout, it's the fault of the state government etc etc etc. You know - it's beyond, it’s scientific fact that it’s-
EPSTEIN: John, sorry - I've lost you there. I was going to ask you if you had a specific question. But Bridget McKenzie, you can respond both to John and Andrew Leigh.
MCKENZIE: Yeah, thanks. Thanks, Raf. Look, we've been doing a lot to get Australian’s prices down and I know that Geelong’s a great heart of manufacturing and high energy intensive industry and Andrew would have heard a lot from businesses in that local community today about the need to get power prices down. And I - we've got a range of measures that really came out that ACCC review into energy pricing that we commissioned last year. You know, having a price safety net to stop the big power companies ripping off customers, stopping the price gouging and instead of backing our divestment powers that we're seeking from parliament to actually really take a big stick to these big power companies, the ALP and Labor under Bill are siding with Bill - with big power companies against the Australian consumer and trying to get those prices down, so that we can actually reduce emissions and keep our economy strong.
EPSTEIN: Can I ask you Bridget McKenzie I'm sure Andrew Leigh will want to put his oar in, but let me ask you this question - the rash of independents. Kerryn Phelps’ victory in Malcolm Turnbull's seat in Wentworth, you've now got Zali Steggall who's specifically campaigning on climate change and we've got Oliver Yates who we'll hear from after six o'clock on this show campaigning against Josh Frydenberg. They are all or they would describe themselves as small l liberals campaigning on climate change. Is that going to cost you? I noticed in that second answer you gave us there it was all about prices and there was nothing there about emissions and climate change. Is that going to be the reason you're going to lose seats at the election? Climate change?
MCKENZIE: Well I hope not, Raf, because at the end of the day the Coalition Government has been taking strong measures to reach our emissions targets. I'm not a climate change denier and I've been very public about that. In fact, our party rooms - both the National Party and the Liberal Party - have been champions of good environmental policy. But what we're not going to do is choose environmental policy and climate change policies that destroy our industries and mean that people lose their jobs. We can get the balance right. I believe that we can get the balance right-
EPSTEIN: You still don’t have an emissions policy?
MCKENZIE: Keeping our economy strong, keeping our economy strong, Raf, and also reaching the emission targets which we very proudly delivered as part of the Paris conversation and we're on track, as a recent report actually said, to deliver on those-
EPSTEIN: That’s not true. You’re not on track.
MCKENZIE: I think we can walk-
EPSTEIN: - the economy, can I just pick it up there, Bridget McKenzie-
MCKENZIE: - and chew gum-
EPSTEIN: The electricity emissions are doing okay. There is nothing in the government figures to show that you're meeting your Paris targets. It's going the other way. They were the figures in December from your own department.
MCKENZIE: Well, our emissions per capita in this country are going-
EPSTEIN: Can you answer the question, Senator? Can you answer the question - you just said that you were going to meet your Paris targets. The government figures released in December show that on an economy wide basis, our emissions are going in the wrong direction. So when you said we were going to meet our Paris targets, has that changed since December, the departmental figures?
MCKENZIE: No, it hasn't. We have - but we have just commissioned, another report has been handed down that actually says we are going to meet our emissions targets as we planned-
EPSTEIN: Economy wide emission targets?
MCKENZIE: - Without taking a wrecking ball to our-
EPSTEIN: Can I just clarify, is there a government report that says we're going to meet our economy wide emissions targets?
MCKENZIE: My understanding is yes, the Australian emissions projections 2018 report says that we will beat our 2020 emission reduction target-
EPSTEIN: No, Paris is about 2030. Paris is about 2030.
MCKENZIE: - with the 26 below. So if we're meeting our 2020 report, our target-
EPSTEIN: I didn't ask you about that-
MCKEZNIE: Then we’re actually on track-
EPSTEIN: I’m asking out about the Paris agreement, it’s actually the end of the next decade. Is there a government report-
MCKENZIE: Raf, Raf.
EPSTEIN: Can I ask the question again, because you haven't answered it - is there a government report that shows we're going to meet our Paris targets for 2030? I'm not aware of one. I don't know if there is one.
MCKENZIE: Our Paris targets for 2030 are based on the emission targets that we've already set ourselves that go to the 2020 target. So we don't - it's a progression, Raf, as you would appreciate over a decade. We just don't pluck numbers out of the air. We set a target for 2020. We build on that for our 2030 emission targets and we're on track to delivering that.
EPSTEIN: Is there a government report that says we're going to meet our Paris targets in 2030, yes or no?
MCKENZIE: There is a government report that says we're meeting our emissions targets for 2020 and that our 2030 target is actually based on those emission targets that we set and we're building progressively towards that.
EPSTEIN: Ok. I'm sure the senator will want to have a lot to say about Labor's economic proposals. The government is very concerned about what they say is $200 billion worth of new taxes from Labor. I'll get to Andrew Leigh and Bridget McKenzie - I need to pause and get some traffic details with Gabriel.
EPSTEIN: Senator Bridget McKenzie is the Deputy Leader of the Nationals. She is the Victorian’s Nationals Senator. She's the Minister for Regional Services For Local Government and Decentralisation. Also with us is Andrew Leigh. He's the ALP MP for Fenner, around Canberra, and the Shadow Assistant Treasurer. Andrew Leigh, let's talk Labor's tax plans. There's a whole lot of retirees who rely on a refund on their dividends. Are you worried that you’ll upset enough of them it might actually cost you an election?
LEIGH: Raf, I think it's important to recognize that Australia is the only country in the world that provides refunds for dividend imputation. You've got to think about what would happen if everybody was in the situation of people who were getting those refunds. We would then be taxing companies, they would be returning money to shareholders as dividends and we would credit those individuals back all of that tax. So effectively, our companies would pay no tax. Now if that's a ridiculous situation if everybody did it, you have to ask yourself whether it's fair to allow a subgroup of Australians to do it-
EPSTEIN: Excuse me, Andrew Leigh, but that’s a that's a philosophical discussion that's worth having, but it's been there what for close to 20 years. There are a lot of people who rely on that. They've set up their affairs because of that. Are you worried that you'll upset enough people that it could actually be electorally a problem for you?
LEIGH: I think you have to do in government what is right. You've got to focus on whether or not it is fiscally sustainable for us to be giving away now $5 billion a year, going up to $8 billion a year, in refundable credits. If this is such a good idea, why does no one else in the world do things this way? Why is Australia unique in the world in providing these sort of credits? Now if you're a pensioner - full pensioner or part pensioner - you're unaffected by Labor's policy and the modelling that I've seen suggests they don't-
EPSTEIN: $5 billion. If you'll end up taking back $5 billion, that suggests you’re going to have a significant impact on a significant number of people.
LEIGH: But you've got to have a look at the income distribution of this and the benefits are going very largely to those with significant amounts in their superannuation accounts. Half of it's going to people with more than two and a half million dollars in their superannuation accounts. And that, I don't think, is either fair or sustainable. We're talking about an amount which in a couple of years will be equivalent to Australia's spending on public schools. This isn't something which we ought to be doing at a time when the Coalition has massively increased Australia's debt levels. Government debt has more than doubled under the Coalition. We've seen a real blowout in government debt and their answer is to-
EPSTEIN: I'm happy to get onto government debt, but I want to ask Bridget McKenzie. The dividend imputation, the change Bridget McKenzie – do people bring that up with you much?
MCKENZIE: A lot, Raf. I’m in Brisbane at the moment, I've been up and down the coast here where they have significant self-funded retirees populations who are doing, you know, they've worked really hard their life, their whole life and have put away their money and are not a drain on the social services budget and that's a good thing. That's a very good thing. We've estimated there's over 900,000 Australians that will be affected by this change mooted by Labor and 45 per cent of them are 65 years or older. We want more self-funded retirees in this country, not less. And I think it's appalling that Labor's targeting this group. The recent research done by RMIT says that it's actually going to be older women who are going to be severely impacted by this particular policy of Labor’s.
EPSTEIN: Would you concede, Bridget McKenzie, that the most of the money goes to people who can afford to not get it?
MCKENZIE: Well, Raf, I think your opening remarks were correct. People have worked for 40 plus years and made provisions for their retirement through that time based on the laws as they stand.
EPSTEIN: But would you concede that the money - it's a question that's about how wealthy are the people who receive the money. I realize there are some people who aren't wealthy.
MCKENZIE: Well, 96-
EPSTEIN: But does most of the money go to people who can afford to no longer receive it?
MCKENZIE: Well, 96 per cent of the individuals impacted have a taxable income of less than $87,000 and I don't think that's wealthy by any notion or any Australian will consider if you're earning less than $87,000 taxable income a year, you’re a wealthy Australian. Well, you know, we have a pension system, we have a welfare system for those who haven't been able to provide for a comfortable retirement and particularly as we see we're going to see a doubling in people over 65 over the next 40 years. Having more self-funded retirees is important and we've heard in inquiries up on - up in Queensland today, public enquires from the House of Reps I think in Townsville, that some older Australians are going to see a 20 to 40 per cent decrease in their income. Now that has significant impacts on people's ability to support themselves, their children and their families.
EPSTEIN: Andrew Leigh, I'm sure you might want to address that, but if I can just cover off on another change that you did take to the last election around negative gearing. You're clearly unwilling at the moment to say when the negative gearing on new investment properties will come in. Why are you so reluctant to say when that change would happen if you were to win the election?
LEIGH: Raf, let me answer that question just after I've responded to Bridget there. Bridget's referring to taxable income, which as an ABC Fact Check just today said, ‘using the taxable income of individuals tells us little about the overall financial position of those affected’. That's because while people may have low taxable income because their superannuation isn't taxable, they can have very high wealth. And 80 per cent of the benefits, as I've said, flow to the top fifth of retirees. 92 per cent of taxpayers are not affected under this change-
EPSTEIN: Can I pick you up there, Andrew. 80 per cent go to the top fifth. How do we know that? I read that RMIT ABC Fact Check - my impression of it, yes Stuart Robert got pinged for saying something misleading, but do we know for sure that most of the money goes to the wealthiest people? I thought it was a little hard to determine.
LEIGH: We've got good analysis on this and it’s come through from independent organizations like the Grattan Institute and the Parliamentary Budget Office. We've put in place the pensioner guarantee, to make sure that any full or part pensioners aren't affected. We've carved out charities from this policy, Raf, and we're making sure that we do budget repair that is fair so we can invest in schools and hospitals and extend early childhood not just to four year-olds-
EPSTEIN: Let’s not get onto childcare. The timing of it, how, when you do that change - why are you so unclear or unwilling to reveal the timing of the negative gearing change?
LEIGH: Well, we still don't have a date for the election-
EPSTEIN: Well, you could say very easily after the election or you could say the budget after the election. You can give people an idea, couldn't you?
LEIGH: Before the 2016 election, where as you said we took the same policy, we announced the implementation date. We’ll do that again before this election. But people should be in no doubt if you get an investment property right now, you're not affected by those changes. Not affected by the capital gains tax changes, not affected by the negative gearing changes. But going forward, if you'd like the benefits of negative gearing, then you need to be buying a new built home - adding to the housing stock and benefiting everyone. We've had careful analysis on this. It’s got support from people like Joe Hockey and Jeff Kennett from the other side of the political fence. A plethora of economists have said that our negative gearing and capital gains tax system just isn't sustainable and isn't fair.
EPSTEIN: Can I just ask you both to try to keep this answer brief. It's probably the testier end of what you're willing to answer, Bridget McKenzie, but are you satisfied or do you think Josh Frydenberg, the Treasurer, and Greg Hunt, the Health Minister - they're both likely to face independent challenges that are strong challengers. Bridget McKenzie, do you think they'll both keep their seats?
MCKENZIE: Absolutely. I've been on the ground in their local communities with both of them over recent years. They're very connected to their communities and they fight passionately for them as local members aside from their ministerial roles, which both of them have delivered significantly for the nation.
EPSTEIN: Andrew Leigh, Labor will probably run dead in both Kooyong and Greg Hunt’s seat of Flinders, but do you think they'll lose their seats to independents?
LEIGH: I think they want to be watching their local seats pretty closely. I know Jana Stewart in Kooyong’s a strong Labor candidate. She’ll be out there making a terrific case for why the people of Kooyong would be better served by a Labor candidate. I'm sure that those independents will be making much the same case. People don't want climate change deniers and climate change blockers representing them at a time when we have these record hot temperatures and the government has no energy policy and is in hock to the climate change denying wing of the party room.
EPSTEIN: I'm going to leave it there. I'm sure, Bridget McKenzie could deliver a response, but I'm going to leave it there.
MCKENZIE: Thanks, Raf.
LEIGH: Thank you, Raf. Thanks Bridget.
Authorised by Noah Carroll ALP Canberra.
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