MTR with Steve Vizard

Subjects: jobs, Qantas, two-speed economy, industry assistance, Australia Network, leadership.

Transcript, E&OE

17 February 2012

STEVE VIZARD: Well, it’s been an interesting week for Prime Minister Julia Gillard in the wake of the Four Corners report. But, still, Labor’s recorded some significant wins. The means test on the private health insurance rebate passed. The Government’s also effectively managed to scrap the Australian Building and Construction Commission. ACT Clubs have agreed in principle to run the trial of mandatory pre-commitment technology for poker machines. The trade surplus continues to go through the roof. But, despite an unexpected drop in unemployment figures yesterday, the country’s been rocked by news of 1000s of job losses: Qantas announcing yesterday 500 positions are going; Caltex workers in Victoria on edge after the oil company announced it might shut two refineries, in Sydney and in Brisbane. Then there’s the Alcoa position and the jobs at risk there, and the car manufacturing industry — and all of this with the rising Australian dollar. On the blower now, Trade Minister Craig Emerson joins me. Craig, thanks for your time.

CRAIG EMERSON: Good morning, Steve.

VIZARD: I want to start with Qantas, if I may. The Qantas situation’s almost a case study in Australia’s two-speed economy. On the very day the Treasurer gleefully celebrates our low unemployment figures, Qantas is laying off substantial numbers of its workforce, announcing miserable profits, and says it’s struggling to remain competitive internationally. In a free market world, as you propose, how do you say an industry like Qantas should remain internationally competitive?

EMERSON: It is a tough international market for national airlines; there’s no doubt about that. And Qantas needs to compete with airlines with lower wage costs — that’s a very important consideration. But do we want to enter into a race to the bottom of a low-skill, low-wage economy? I don’t think so. So, Qantas is coming to terms with these international pressures. A number of the big national carriers no longer exist or have merged, but Qantas is saying that it would keep its maintenance facilities here in Australia. But, yes, there is pressure on jobs. And the Australian dollar, more generally Steve, is putting pressure on what’s called our traded sectors: that is, our exporters and our import-competing businesses. But as you also point out, the unemployment rate for Australia is 5.1 per cent — same as for Victoria, actually. Compare that with the United States, where they’re celebrating 8½ per cent, down from 10 per cent; and in some countries in Europe more than 20 per cent.

VIZARD: But much of that, though, Craig is a result of this two-speed economy. You’ve taken great satisfaction in Australia’s latest trade figures, which are fantastic — a great surplus; good exports. But at the heart, they simply confirm that we’re running a two-speed economy, with the gap ever increasing between mining-driven enterprises on the one hand and the rest of the economy.  But even Paul Howes from the AWU said if we don’t intervene, then we’re running the economy for the benefit of a few mining industry companies and bankers. Take out the mining industry; we’ve got problems, haven’t we?

EMERSON: I’ll answer that in two parts. It’s not as if nothing good is happening in the non-mining part of the economy, but it’s not making headlines because it’s good news, Steve. Woolworths are putting on 10,000 people this year — 10,000! Leighton is expanding. Xstrata is putting on thousands of people. BHP has got 1,000 jobs currently advertised in Queensland. So, it’s not as if all that is happening is jobs are being lost. If that was happening, the unemployment rate would be going up, and it’s not going up. But there is a legitimate point and that is, you described it as the two speed economy. Julia Gillard describes it as the patchwork economy. And this Government is working hard to share the benefits of the mining boom. And one important way of doing that, Steve, is through the mining tax, because we’re using those proceeds to cut the company tax rate for those businesses that aren’t in the fast lane; to give small business tax breaks. And that’s for all the small businesses that don’t get the benefits of the mining boom. And we’ve got an Opposition that says, though, it’s not interested in cutting the company tax rate for those not in the fast lane; it’s not interested in supporting small business. It would repeal the mining tax and give the proceeds back to BHP, Rio, Gina Rinehart and Clive Palmer. That’s the sort of policy choice that’s going on.

VIZARD: I want to talk about specifically those sectors, those industries, outside the mining industry that you as a Trade Minister and as someone who’s strategising about the future of Australia see as the future industries of Australia. When the mining boom finishes, as it will, or when it flattens out, as it will, what do you say are the specific sectors that Australia should now be internationally competitive in?

EMERSON: Well, it’s probably not well-known, but the service economy — all the service industries including cafes and financial services and tourism and education services — actually employ 80 per cent of the private sector workforce in Australia and contribute 75 per cent of our national economic output each year. So we’ve got a very big services sector and it has a bright future in this, the Asian Region, in the Asian Century. And, in fact, I took a delegation of 100 businesses to China to look at ways in which our services businesses can look at more business in China. And some of those are not what you might call conventional services. For example, an architectural firm built the Water Cube for the Beijing Olympic pool, and they are doing really good business in China. There’s another guy who describes himself as a “brickie” and he designs kitchens and they actually do manufacture them in China but then they sell them all around the world. It’s these sorts of businesses that I think have a bright future, not only in China — we’ve got rapidly-growing Indonesia; we’ve got rapidly-growing India. And we are absolutely committed through this Asian Century White Paper exercise, Steve, to ensure that Australia is in the right place at the right time, in the Asian Region in the Asian Century.

And if I can add one other by way of example: agriculture. People are writing agriculture off as old economy. I don’t know if you remember the weightless economy: “we’ve got to get out of mining; we’ve got to get out of agriculture”. That was around the year 2000. Well, there’s going to be another two billion people on earth, taking it to nine billion in the next 30 years, and they all need to be fed. Already one billion go to bed each night hungry. Now here’s a fantastic opportunity for our rural producers, a real decentralisation driven by the market. And that means selling more food and high-quality food, again into the fastest growing region on earth — that’s our own region: the Asian region.

VIZARD: I want to talk to you about subsidies and handouts. There’s been a fairly damning piece — the Secretary of Treasury so this is no mean person. The Secretary of Treasury has slammed — well has slammed as much as a bureaucrat will, in bureaucratese - the ad hoc and Federal Government handouts to industries. Not just this Government; excessive government handouts to industries, particularly targeting the automotive industries, saying essentially we are propping up old and internationally competitive industries. Do you agree with Treasury?

EMERSON: No, I don’t. Again, I think the automotive industry has a bright future here in Australia. It’s very important in Victoria, as you know Steve. And, yes, we are co-investing with the automotive industry. But I’ve had a look at the effective rates of assistance to the automotive industry, from really the early period of the Hawke Government right through to now. And it has fallen away very, very substantially, such that there is continuing support but it is a small proportion of the support that was actually provided during the Hawke years. Bob actually set about reducing tariffs, as you know, but for people to compare now with then and assert that there’s more industry assistance now than there was when Bob Hawke came to office, it’s just completely wrong. It’s just completely wrong. But what we are doing is making sure that any industry assistance supports the future, not the past. And we believe the automotive industry has a good future. Again, policy choices: the Coalition, which says it’s the manufacturing workers’ friend, would take half a billion dollars of support away from the automotive industry, putting at risk 46,000 jobs.

VIZARD: I want to talk a bit of politics, if I may. We’ve seen that, well, for starts we’ve seen that the Prime Minister has said that you can’t take notes in Cabinet. This just seems a ludicrous sort of determination. You’ve got senior Ministers, people who are running our country, who want to take notes of their thoughts, of things they want to discuss with their departments — like any businessman would; like any person who’s managing big business would do — and has been banned from taking notes. This is just ludicrous, isn’t it? Or have we got it wrong?

EMERSON: I’m extremely constrained here, because there’s a golden rule that I apply to myself: and that is I don’t talk about discussions that go on in the Cabinet room. But I would point out that since even before Federation it has been the case that there are official note-takers. They do a good job in all of that. But I do feel very constrained. It is not an accurate representation that you can’t take notes under any circumstances. But I just find myself in a difficult position talking about it, because in doing so I would be talking about what goes on in the Cabinet room, and I’m just not in a position to do that.

VIZARD: It does go to the question of management, though. I mean if we’re getting constraints that are put on politicians about how they can effectively do their jobs, then that’s just not on.

EMERSON: Well, I don’t agree. And the Cabinet is doing, I think, a very good job. Yes, I would say that as a Cabinet Minister. But, of course, you’ve just in your introduction talked about the sorts of reforms we’re getting through: the removal of the Australian Building and Construction Commission; that means-testing of the private health insurance rebate. These are all sorts of discussions that occur in that Cabinet. And we’ve already talked about the mining tax: that has passed through the House of Representatives and it’s now in the Senate, and hopefully in the next few weeks that will pass there. So we do have the sharing fairly of the benefits of the mining boom, which was the very subject of which we started our conversation. So the Cabinet’s doing good work. We’ve got education reforms that we’re unveiling. Some of those have already been announced, working to ensure, as I said again earlier Steve, that we have a high-skill, high-wage economy. And that means that we need to invest more and smarter in vocational education. They’re the sorts of reforms we’re implementing.

VIZARD: Can I ask you about this, what seems to be bungled Australian Network … the Australian television network tender. We read today — we sort of knew already but it’s been affirmed by one of the … at Senate Estimates yesterday — that Kevin Rudd never actually received recommendations from that tender, and he was stripped of his responsibilities because it was a change of portfolio; effectively a change of the tender process. How should the Australian public make sense of that, when at the same time we’ve got the Craig Thomson affair lingering and the Government’s saying ‘we’re not going to interfere’? How do they make sense of these … one tender process which we now know there was clear interference in, and another where the Government says ‘we’re not going to intervene’. How do we make sense of that?

EMERSON: Well, in fact, what happened in that Australian Network tender is that sensitive information was leaked, and the tender process was then abandoned. And that was on the advice of our legal advisers, that that had compromised the tender process. When you get that sort of advice, Steve, I think you can’t just ignore it. And that would be the alternative: just to ignore it and bat on. We had that advice, and so that’s the decision that the Cabinet took. So I hope that that explains the situation there. In relation to Craig Thomson, we have had the Coalition saying ‘how dare the Prime Minister interfere in the investigation that’s being undertaken by Fair Work Australia’ — which she has not done; which she has not done — and then, in the same breath, saying ‘why won’t the Prime Minister contact Fair Work Australia and instruct them to complete the investigation?’. In other words, the Prime Minister is condemned for interfering — which she has not done — and is condemned for not interfering, which she will not do. She will not interfere. So I think a little bit of scrutiny needs to be put on the Coalition’s arguments here, too, because in the Parliament, that’s what happens. They say one thing in one breath and a complete contradiction in the other breath. And I just urge that there be a bit of scrutiny placed on those contradictions.

VIZARD: Let me ask you about what Barrie Cassidy has just said. Barrie Cassidy has said: ‘Rudd is campaigning; he’s talking to journalists. I know the names of some of those he’s spoken to. I know where he’s said it: in his office on a Parliamentary sitting day. I know what he’s said: he told them a challenge would happen. He told them he was prepared to lose the first ballot; go to the backbench. And in one conversation, he laughed about the prospect of Gillard stumbling again’. That’s from a very respected journalist: Barrie Cassidy. Does that trouble you?

EMERSON: Barrie Cassidy, therefore, knows more than I do. And my position on all of this is that I came into politics, Steve, I think with most people, to make a difference. And what the Australian people want to hear from us is the policies that we’re implementing to make a difference, to make for a stronger economy and a fairer country. That’s what I’m concentrating on and, yes, there is this speculation going on through the media. I’m not saying it’s a media fabrication. What I’m saying is that I won’t be diverted from my task; the Prime Minister Julia Gillard won’t be diverted from her task by this. We are doing good work. We are making sure that we share the benefits of the mining boom for working Australians; produce high-quality jobs, better jobs, and more jobs. That’s our focus; that’s what I’m going to continue to concentrate on.

VIZARD: Really appreciate your time today, Craig. Good on you.

EMERSON: Thanks very much Steve.

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