The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Chris Bowen

Chris Bowen

Minister for Financial Services, Superannuation and Corporate Law

9 June 2009 - 14 September 2010

Transcript of 13/05/2010

Interview with Fran Kelly

ABC Radio National Breakfast

Thursday, 13 May 2010

SUBJECTS: Budget, Budget Reply, Resources Super Profits Tax, class action against banks, unfair contract terms

FRAN KELLY:

It's 8.14 and joining me in the Parliament House studio this morning: Financial Services Minister, Chris Bowen, and the Opposition Manager of Business, Christopher Pyne. Good morning to you both.

CHRIS BOWEN:

Morning, Fran.

CHRISTOPHER PYNE:

Morning, Fran.

KELLY:

Christopher Pyne, let's start with you because the big news later today will be Tony Abbott's Budget in Reply speech, when he gets to his feet in the House and delivers his Budget Reply. Can we expect a political uppercut?

PYNE:

Well, I think what you could expect, Fran, is that Tony will outline why people should be voting for the Liberal Party at the next election rather than the Labor Party. I think he'll explain why the Labor Party doesn't deserve to be re-elected, that the waste and mismanagement of the Government precludes them from winning a second term. I think he'll announce that we'll be making some tough decisions about spending because at least one party that's in this Parliament needs to be fiscally conservative genuinely, in both word and deed. The problem with the Budget and the problem with this Government over the last three years is that basically you can't believe what they say from one minute to the next.

KELLY:

Well, if Tony Abbott's going to be the lead, you'll have to be putting some detail out there. I mean, he'll –

PYNE:

We will.

KELLY:

For instance, the Opposition's not going to support the mining tax. He's going to have to say which of those programs that it funds will be cut or how he's going to fund them. So we'll be seeing real programs, real line by line programs that are going to be knocked out?

PYNE:

We're not going to announce our own Budget tonight. That's not the job of the Opposition. It's the job of the Government to have a Budget and it's the job of a Government to sell their Budget, which they're not doing a very good job of this week. But our job tonight is to outline why you can trust the Coalition to deliver serious fiscal responsibility rather than the Government, and he will be announcing specific measures, which I think people, will resonate with the public that we are in a serious crisis situation with this Government. The mining tax, which they are putting on the resources sector, has the capacity to do enormous damage to our economy. 

KELLY:

Okay. I'll come to the real Budget, not the Budget Reply, in just a second, but just finally this: you've been integrally involved in the attack on the Government's school building program. There's a lot of money not spent there. Is that an area where you think you can trim back some money?

PYNE:

We have said that what we will do with Round Three of the Building the Education Revolution is give the money that's still left directly to the schools for them to manage so that they can get value for money in the same way we did investing in our schools.

KELLY:

Okay.

PYNE:

Now, if there are any savings that can be made out of that, we'll have to wait and see.

KELLY:

Okay. Well, Chris Bowen's sitting waiting patiently but really, Christopher Pyne, a pretty ferocious attack on this Budget. The Budget reveals that the Australian economy is the best performing economy in the western world.

PYNE:

But Fran –

KELLY:

You're joking, saying it's a failure, wouldn't you?

PYNE:

But Fran, you can't believe what this Government says in this Budget, like you can't believe what they've said in the last three years.

KELLY:

It's not just the Government saying it. It's Treasury giving us the forecasts.

PYNE:

Let me just give you one example, Fran. They've said, on the one hand, that the mining tax will have no impact on the resources sector in terms of investment. This Budget is predicated on a 20 per cent increase in investment in the mining sector every year for the next three years, and yet they're putting a new tax on the mining sector. And in the paper this morning, Treasury is saying that a slowdown in the mining sector would not be a bad thing for the national economy. Now, either it's going to grow by 20 per cent a year for the next three years or it's going to slow down, but it can't be doing both at the same time.

KELLY:

Chris Bowen?

BOWEN:

Well, Fran, when you hear an Opposition reduced to attacking the modelling, reduced to attacking the Treasury modellers, you know that they've lost the argument on the Budget. And that's particularly the case with this Opposition because they've got form, because last year they said our forecasts and projections were too optimistic; now they're saying they're too pessimistic. They're saying this year, again, they're too optimistic. I mean, these are conservative forecasts done by the experts in the Treasury and are broadly in line, Fran, with the private sector forecasts on all those issues.

I mean, the Opposition attack is all over the place. They seem to think the terms of trade is a function of domestic activity. The terms of trade is a function of international activity and international demand. They've completely confused that. So Fran, when you hear Joe Hockey and Christopher Pyne reduced to saying the Treasury modelling's got it wrong, you know that that means they are reduced to accepting that the Government has returned the Budget to surplus three years ahead of schedule and ahead of any other major advanced economy, and the debt and deficit campaign is now exposed for the fraud that it always was.

KELLY:

Is your Achilles' heel, though, economic management? I know that the Prime Minister made it perfectly clear yesterday that this election, he'll be going, talking about, this a contest of responsible economic management. Is your pitch on that fatally flawed due to the mess of the home insulation program?

BOWEN:

Not at all.

KELLY:

Why not?

BOWEN:

We are more than happy to run this campaign on economic management as the Government who steered the economy through the global financial crisis and as the best performing major advanced economy in the world. I mean, as opposed to an Opposition which is all over the place and doesn't have a coherent economic narrative. Fran, if we were, two years ago, predicting that the Australian economy would do as well as it has done, there would be people questioning us and frankly, questioning our grip on reality. Now, the Australian economy, through the early and decisive action, the stimulus that we took, has been the envy of the world through what has been the most difficult economic circumstances in 75 years. And the Opposition, in their quiet and honest moments, would recognise that, but of course they won't publicly.

KELLY:

It's not just the Opposition having a go at you. I mean, the mining tax, the mining companies will of course speak out about. No one wants a new tax. But Rio's chief, Tom Albanese, yesterday, overnight, speaking to a world mining conference, really criticised, heavily criticised your proposed profits tax and says it's a worst case scenario.

BOWEN:

Well, you're always going to expect that, Fran, and we expected that when we went down this road. We knew that the campaign would be ferocious. I mean, how could it not be? You've got an industry which has a very strong view – a very well resourced industry, by the way, and we knew that – and, you know, these people who say that we're not prepared to take on tough constituencies. I mean, we've just taken on the best resourced and toughest constituency in the country because we think it's in the national interest –

KELLY:

You haven't won it yet, though.

BOWEN:

– and we knew that. This is an argument which has got a long way to go, but it's a good argument to have because it's putting the national interest first. It's also, by the way, putting the mining industry on a much more efficient and equitable tax treatment, which many of them have been calling for for as long as I can remember.

 

KELLY:

Alright. Now, we argued a lot about that last week, so we will move on. This week, this Budget week, started horrifically for the Government because another poll showing they're now neck and neck with the Coalition. Christopher Pyne, how confident are you about winning this election?

PYNE:

This election could be won by the Opposition, but obviously we start as very much the underdogs because no Government has lost after one term in 78 years.

KELLY:

Tony Abbott said yesterday he thinks you can win this election.

PYNE:

Well, if we win the election it will be a remarkable feat, it will be a record breaking feat. And we obviously are the underdogs, the Government is clearly the favourites. But what has changed over the last five months is the people have stopped believing Kevin Rudd because he's had more roles than Michael Caine, Fran. One minute he's a fiscal conservative, the next minute he's a profligate spender, one minute he's a liberal democrat, the next he's a Christian socialist. Last night on The 7.30 Report, he had his angry eyes on. I mean, Kevin Rudd is playing out the role of Prime Minister; he's not actually up to the job of being Prime Minister and the Australian public have worked that out.

KELLY:

Chris Bowen, is Kevin Rudd your weak link? Is it the Prime Minister? The polls seem to be showing the Prime Minister's approval rate has just plummeted.

BOWEN:

Well, absolutely not. Look, this election's going to be tough. We always said it was going to be tough. I've said on this program several times it's going to be tight. I don't think there is a favourite, I think it's going to be tight. The Prime Minister's preferred Prime Minister against Tony Abbott by, I think, 15 points. That is a solid –

KELLY:

And falling fast.

BOWEN:

That's about the standard. That's, I think, what John Howard had ahead of Mark Latham about the same point in the cycle. So I don't think we need to get –

PYNE:

Prime Ministers are always ahead of the Opposition.

BOWEN:

Well, that's not actually right, Chris.

KELLY:

I wonder, though, if you thought you'd be going into an election with the timing being such that you will be slapping a mining profits tax on the two big resource states, Queensland and WA, which happen to be the two states where you need to win seats or hold seats to win Government. Did anyone think that through?

BOWEN:

Well, Fran, again, you can't make decisions based on these things with that sort of timeframe in mind. If you've got a recommendation from an independent tax review to say the taxation of mining isn't working, it's broken, it's the most inefficient tax in the country, it's not fair, then you don't say, ‘Oh well, that's all true but we're going to put it in the too-hard basket because that's what Governments do in election years.' You say, ‘Okay, this is going to be a tough, difficult conversation with the mining industry and the Australian people, but we're up for it.' That's what you say and that's what we've done.

KELLY:

Okay. We're almost out of time. Chris Bowen, just briefly from you, we just heard about the class action against the banks. I'm wondering if you're supporting that?

BOWEN:

Well, we don't support one side or another in a court case, Fran. When I was Consumer Affairs Minister, we introduced unfair contract laws, which Craig Emerson has taken up with gusto, and they apply to banks and I think they're part of the reason we've seen some changes in bank pricing practices. But this is a court case and Governments don't weigh into court cases one way or another. 

KELLY:

Okay. Christopher Pyne, I imagine you've been watching with interest in your spare time the change of government in the UK. Generational change, both leaders, the Liberal Democrat and the Conservative leader, 43 years old. Could you ever see yourself in coalition with say, Bob Brown? That's the equivalent.

PYNE:

[laughs] Fran, I think the coalition in the UK is going to be difficult to manage. I've got no doubt about that. I mean, it's the first coalition Government since World War II and there are very firm differences between the Conservatives and the Liberal Democrats. The Liberal Democrats are probably more like the old Australian Democrats, they're more sort of Don Chipp-type people than they are Greens, though, and I think that will be easier to manage. But it's very courageous of both Nick Clegg and David Cameron to go into coalition but, you know, it's important for Britain that they get this right. It's very important for Britain and for the western world that Britain is strong again.

KELLY:

Courageous. Christopher Pyne and Chris Bowen, thanks very much for joining us.