Sky News AM Agenda

Subjects: Syria, Australian economy, mining tax, childcare costs.

Transcript, E&OE

9 June 2012

CHRIS KENNY: Lots of good economic news around this week: an interest rate cut that's already flowed through to homeowners; good news on the jobs front as well with 40,000 new full-time jobs created; and also strong economic growth of over 4 per cent. Yet the Government is not getting any credit. The Government's doing very, very badly in the polls and there's the sense that the voters are very grumpy with the Government.

So we'll talk today about why that is the case, and we're going to cross now to Canberra with Trade Minister Craig Emerson. And Craig, thanks for joining us today.

We'll come to the economy in a moment. But I first wanted to go to this breaking story from Syria: terrible news of another massacre uncovered there; UN monitors going into the village of Qubayr, where at least 78 people have been massacred. What more can Australia do with the international community on this issue? We seem to be standing back, as an international community that is, not imposing sanctions, not doing anything to stop this bloodshed.

CRAIG EMERSON: We are imposing sanctions, Chris, and we're very keen to strengthen those sanctions. We need to be realistic in Australia in terms of the effect that our sanctions will have on the al-Assad regime, but that won't stop us from applying tougher sanctions still. It's the second massacre. It's absolutely disgraceful behaviour and I understand that UN observers were fired upon as well. So we're working with the United Nations; we're working with the Arab League who have been pretty strong on this. But, you know, we have to get involved obviously in coordinated decision-making. Australia can't solve this problem from this distance on its own.

KENNY: Obviously …

EMERSON: And I know Bob Carr, Bob Carr on Tuesday for example is talking to the Saudi Foreign Minister — because as I say the Arab League itself has been very, very strong on this.

KENNY: Yeah, obviously, Australia can't do anything on its own. And as you say, there are some sanctions — ineffective sanctions. There are a lot of calls for stronger sanctions as you mentioned. Now the critical countries blocking that are China and Russia. You've just, as it happens, been to China and Russia; do you think there's any way we can put more pressure on them to allow stronger sanctions through the United Nations Security Council?

EMERSON: Well I'm sure that pressure is being applied on a daily basis from large countries such as the United States. We cannot, yet again, stand by and see this senseless brutal killing go on. The UN I have to say sadly, tragically, has had a history of doing that — going back to Rwanda, the massacres in 1990. There was a far more decisive response in relation to Libya, of course, and their regime was changed there.

Our position is that al-Assad must go, but that security apparatus, Chris, in Syria is a brutal one. It's an effective killing machine, so these things need to be done very, very carefully. Because it's easy to come up with ideas, but if it just means mass bloodshed, then that itself hasn't achieved the desired results.

KENNY: Yeah, it's a terrible situation. Let's hope that the United Nations can — can coalesce around some stronger action.

I want to go the economy now, Mr Emerson. And as I mentioned you're just back from overseas: France I understand, China, Russia, Japan, Malaysia. No doubt all those countries were in awe of Australia's economic performance …

EMERSON: They are.

KENNY: … yet you get back here and voters are unhappy. How do you explain our grumpiness?

EMERSON: I think that there are probably two considerations here. One is, according to economists and I'm one of those, that the period of the early part of the 2000s was one of a bubble, a housing price bubble funded by easy money — that is, easy money around the world, including wholesale funding. And so house prices in Australia increased very sharply and people felt that as a result of that they had greatly increased wealth. Now house prices are not rising and that's a more realistic situation than the bubble that was created before the global financial crisis — which in fact internationally led to the global financial crisis — so people don't feel that they've got that wealth tied up in housing.

Then, of course, you have that superannuation returns, similarly, from the global economic situation haven't been what people would want. So there's probably a sense that their wealth hasn't grown as they would like. But you're right: the economic figures are very, very strong.

We do have an Opposition that's absolutely determined to talk the economy down. I note even Tony Abbott had in his speech to this Minerals Council that there's no real case for further investment in Australia, the case for further investment can't be readily made. So when you've got an Opposition dedicated to talking the economy down that affects the sentiment too.

And that's something that Governor Stevens referred to, or alluded to, and that is that this kind of talking the economy down is not helping with consumer sentiment, and I think that's a realistic assessment.

KENNY: We'll go to some of that politicking from during the week now just to refresh everyone's memory. First, here's Wayne Swan, what he thought about the national accounts figures.

[Excerpt of interview]

WAYNE SWAN: Well I think the country should have a bounce in its step today. What a great day for Australia, and what a stunning set of figures. I think these figures send the loudest possible message to the world.

[End excerpt]

KENNY: But of course they didn't send the right kind of message to Tony Abbott. Here's what he had to say.

[Excerpt of interview]

TONY ABBOTT: Wayne Swan does not live in the same world that we inhabit. He's running around, patting himself on the back, calling himself the world's greatest treasurer. What I see people are saying is 'shops closing down, my job under pressure, my wages under pressure, my costs going up'.

[End excerpt]

KENNY: And the good economic numbers also presented a bit of a problem for Joe Hockey to find a way to criticise them.

[Excerpt of interview]

JOE HOCKEY: Well, no, the numbers are the numbers. I totally accept it: the numbers are the numbers. Imagine how well our country could do if we had a good government. Imagine how well we could do!

The scariest thing in Australia is Wayne Swan.

[End excerpt]

KENNY: Well, Craig Emerson, as you say, you say that the Opposition is being too negative, but isn't the key point here that the economic growth, that all the good times, are not being shared around the country. You've got Western Australia and Queensland really booming, yet the south-east corner of the country, where most of the population is, is really not doing that well. Growth is certainly well below 3 per cent across those states.

EMERSON: Well, we do have a two-speed economy or, as we call it, a patchwork economy. I point out that this is not new in Australian historic experience. But perhaps the difference in the speeds, Chris, is pretty noticeable — and that's exactly why we're implementing from 1 July a profits-based mining tax to share the benefits of the mining boom so that it's not just those directly engaged in mining …

KENNY: But that was going to fund the company tax rate cut for the rest of the country. It's not going to do that …

EMERSON: Yeah, blocked by the Coalition.

KENNY: … anymore.

EMERSON: Yeah, well, you know the reason for that. You know the reason for that, and that is Tony Abbott blocked that legislation. And there's actually an understandable reason he blocked it: because he wants to increase company tax by one and a half percentage points to pay for his gold-plated paid parental leave scheme. We couldn't get that legislation through.

What we did instead is increase family payments — that's another way of spreading the benefits of the mining boom, Chris. And, again, Mr Abbott said he's against the Schoolkids Bonus. He didn't think that there should be increases in family payments. But I notice that the retailers actually said that was a good move, because it would boost retail spending, retail sales and therefore jobs in those parts of the country that aren't in the mining fast lane.

KENNY: You're right to say that the Opposition was going to block and promised to block that mining tax package…

EMERSON: Repeatedly.

KENNY: … but, of course, of course the Greens, your government partners, the Greens were going to block it as well. So you were unable to get your reform agenda through because you can't get your partners, the Greens, on board.

EMERSON: Nice attempt to exonerate the party that, it says, is the party of low taxation; it's actually the party that … the Liberal Party …

KENNY: I don't want to exonerate anyone. I want to share the blame around …

EMERSON: The Liberal Party …

KENNY: … but the Greens obviously wouldn't back you up either.

EMERSON: Can I get a word in? The Liberal Party is the highest-taxing government in Australia's history. From 2001 to 2007, tax as a share of GDP was higher than at any time since, and at any time before. It is actually this Labor Government again that is proving itself as a low-taxing government. It is true that the Greens said that they would block that legislation, too. They have always actually said that they're for higher taxes; it's just the hypocrisy of the Liberal Party which says it's for low taxes but its record and is current behaviour and its future plans all prove that it is actually a high-taxing party. So there's a great gulf between what they say and what they do. That's not a surprise.

But the trash talking of the economy is having a negative effect. Mr Abbott's saying there's no case that can be readily made for new investment in this country, when investment is hitting a 50-year high. And even his own frontbenchers and backbenchers are investing heavily in mining shares. Yet he says from 1 July, when the mining tax comes in and the carbon price comes in, the sky will fall in. So he's the Chicken Little of Australia politics, and his own backbench and frontbench can't get enough of mining shares in this country. So, again, it's not what they say; it's what they do.

KENNY: There's no doubt that the mining boom and mining investment is really what's really propping up the country and also giving us great prospects for the future. Why, then, has your own Government been so keen to talk up this class warfare against the miners? You've had the Treasurer and the Prime Minister really attacking the Australian mining magnates when they really should be getting on-board, shouldn't they, and encouraging and associating themselves with this good news economic story.

EMERSON: We have a difference of opinion with Gina Rinehart and Clive Palmer in particular. They are staunch opponents of the idea of spreading the benefits of the mining boom. They are staunch opponents of the mining tax. We believe it's essential to spread the benefits of the mining boom. Tony Abbott believes that they pay too much tax already — can you believe it? — that they pay too much tax already. And he said that if he becomes Prime Minister, he'll rescind that mining tax, give the money back to Gina Rinehart and Clive Palmer.

We have a different policy position. But in respect of BHP, Rio, Xstrata, all those major companies, we've come to an accommodation on a profits-based mining tax, just as we did 25 years ago in a Petroleum Resource Rent Tax which shared the benefits of petroleum development in this country. It's been a stable tax, Chris. It's been associated with record investment in coal seam gas and offshore gas developments in this country — a very sensible proposition. So is the mining tax.

Mr Abbott said he'd repeal it because these people — that is Gina Rinehart and Clive Palmer — according to Tony Abbott are struggling to make ends meet and deserve to have the money back.

That means removing small business tax breaks; it means that increases in superannuation for working Australians cannot be funded if Mr Abbott becomes the Prime Minister of this country. It means that the Schoolkids Bonus cannot be funded and he'll repeal it. That's the choice that the people have.

KENNY: Just very quickly before I let you go, Mr Emerson …


KENNY: … is that Tony Abbott some weeks ago suggested that we should be looking at using more of the Childcare Rebate to fund the nannies. He was mocked by the Government for that. Now it looks like your Government's going to investigate going down that path. Is that a sensible move?

EMERSON: I saw reports of that. What we will do is to continue to hold the discussions, as in the forum that the Prime Minister and Kate Ellis had on childcare this week. We recognise, Chris, that childcare costs are a very substantial part of the cost of living. We've increased the Childcare Rebate from 30 per cent to 50 per cent. If there are more measures that we can sensibly adopt, we will look at those. I'm not going to speculate about the details of them. But I can confirm that we are very aware of childcare costs and that's why we have substantially reduced childcare — sorry, increased childcare — benefits through the Childcare Rebate from 30 to 50 per cent.

KENNY: All right Mr …

EMERSON: If there's more we can do, we'll have a look at it.

KENNY: Craig Emerson thanks very much. Appreciate your time.

EMERSON: Righto. Thanks Chris.

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