The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Bill Shorten

Bill Shorten

Minister for Financial Services & Superannuation

14 September 2010 - 1 July 2013

Transcript of 13/02/2012

NO.001

Interview with Neil Mitchell

3AW

13 February 2012

SUBJECTS: Alcoa, banks, Qantas announcement

NEIL MITCHELL:

I said at the beginning of the program, banks, bank profits, interest rates and also jobs are very much the issue of the week. The ALCOA talks continue today. There is - well Qantas has confirmed they'll have an announcement on Thursday, half yearly profit, whether that involves jobs offshore is not clear. The rumours are that it may and the union is certainly concerned that that will mean fewer maintenance jobs in Victoria - in Melbourne by Qantas, the company is not confirming that.

In our Canberra studio is the Minister for Financial Services Superannuation, Employment and Workplace Relations, Bill Shorten. Good morning.

BILL SHORTEN:

Good morning Neil.

NEIL MITCHELL:

I read in the paper you've got a mortgage with ANZ. Are you going to stay with them?

BILL SHORTEN:

Oh yeah at this stage I am, yes.

NEIL MITCHELL:

See people are saying that's significant. The Government's been criticising saying, you know, vote with your feet. Is it relevant where you and the other ministers have your mortgages?

BILL SHORTEN:

I think the genuine issue here is that people feel frustrated that they can't easily move accounts and they feel they have to stay where they are. So I think there is concern in the community. The community is more sophisticated than I think some of the public debate gives it credit.

On one hand, just as those of us who are paying mortgages would like lower mortgage rates, there are people like my mum and many others who have got deposits and they are happy when the deposit rate is higher and when the mortgage rates stay static well then the chances are banks are competing for more deposits.

That's one point I think people do get.

NEIL MITCHELL:

Haven't you made it easier to shift banks though?

BILL SHORTEN:

Yeah we have.

NEIL MITCHELL:

But it's still too hard is it?

BILL SHORTEN:

Well I think it's pretty culturally ingrained and as I was saying, the community - but they also get - they don't want the Government setting the interest rates. They like to have a process at arm's length from politics. So they get these things - also people are used to banking with one organisation and it's a big thing to change banks.

So all these themes are out there, deposit rates versus mortgage rates, it's a big thing to change your bank and it's also the case that people don't want governments running banks. On the other hand they see big bank profits, they also are battling to make ends meet and they also get concerned when they see jobs going offshore.

So I think people have got a love-hate relationship with our banks. What's important is therefore the Government puts in place mechanisms to improve competition, which we have. I think it's been seen as a trade-off - you either have stable banks or competitive banks. The truth of the matter is the Government has not only helped create an environment where banks are stable, along with the banks themselves and Australian taxpayers, but we are seeing increased competition.

I think the Government is on the right track though to be raising the issue of competition and that's why - you know the newspaper will always say, where do you hold your mortgage account, but I've also through my kids set up accounts with smaller banks, community banks. Because I think they are a genuine and interesting alternative.

NEIL MITCHELL:

What about - just to look at the profits. The Age reported on Saturday 2007, the big four made $16.6 billion profit after tax. Then they go through the global financial crisis. The end of last year it's $24 billion dollars. Now is that reasonable? Isn't that increase out of whack?

BILL SHORTEN:

When you look at some of the decisions banks make, you draw breath and say well gee whizz they're doing well, why can't they share some of that love with their consumers. Again, like all arguments there's two sides to it. The banks would say they're representing their shareholders and they say that, and that's got to be their key priority.

They also would say that with superannuation being a universal feature for people in the workforce now quite often superannuation funds will have holdings in banks. So the banks say that when they go well that lifts returns both directly for their shareholders and indirectly for superannuants.

NEIL MITCHELL:

But where's the truth here? Do we have to as consumers be screwed to keep the banks stable, which is in our long-term benefit? Is that the only way?

BILL SHORTEN:

No I do not believe that it's necessary for consumers to get done over to have profitable and stable banks. I've said there's two sides to that argument. I'm just reflecting that there is an argument for what the banks do. I have to do that because otherwise the Financial Review will just say I'm some sort of left wing radical.

NEIL MITCHELL:

I think they're saying that anyway today.

BILL SHORTEN:

Well it just shows you can't believe everything you read. But having said that, I do think that the banks need to have a longer term view about their people strategies. I wrote in the Australian newspaper last week that whilst it's - you want to cut your costs as a bank. What that means when you cut costs is that people lose their jobs, jobs are sent offshore.

I get we live in a borderless world and the internet means that you can do things all around the world and that's a good thing. But what I also do believe is that banks go through cycles. Do you remember when they were shutting down all the country branches and they said that was the way of the future. Then they've come back and said we want to have a retail distribution network.

What I do believe as a student of history, is that at some point in the not too distant future banks will not be talking about shedding people. They'll say there's a skill shortage, they'll say that we need to be more than just a retail distribution network and that they'll increase. It would be good to smooth some of the cycles of the peaks and troughs of hiring people and getting rid of people.

NEIL MITCHELL:

Just in a broader sense, how concerned are you about jobs going offshore? I mean it's not just banks, I mean there's a suggestion made to me by one - well one of the - some of the unions certainly have this belief, that there could be jobs going in Qantas this week.

BILL SHORTEN:

We live in a global world. Some industries rise, some will fall. I used to look after the, or work with the rope workers at Kinnears in Footscray and we don't make a lot of rope in Australia anymore. So some jobs go. What I do think though is that when you take the long-term, as opposed to the short-term view of the national interest, you've got to be careful of the skills you get rid of.

I'll wait and hear what Qantas has to say, but Qantas is one of the largest employers of our skilled engineers in Australia. Qantas has got a lot of problems in terms of its profitability on its international routes. It's an end-line destination whereas some of its competitor airlines are more in the middle of routes from one end to the other like in the Middle East or in Asia.

So Qantas has got some real challenges. The dollar is high and by the same token if you cut too much you then lose skills that are never coming back. And there will be a time when we'll need skilled engineers. So again Qantas shouldn't be a charity, but I don't think anyone thinks it's run like a charity. They're going to announce its review on Thursday. It's a matter of thinking of the long-term rather than the short-term. It's a matter of educating shareholders not to just look for the quarterly return but to look for the longer picture.

NEIL MITCHELL:

Okay. What is the review there - you said they're announcing a review on Thursday. Do you know - have they told the Government what it is?

BILL SHORTEN:

Ah - they had generalised discussions I think - I'll leave it to Qantas to make their announcement and they've just flagged that they'll have a review.

NEIL MITCHELL:

What - a review of jobs?

BILL SHORTEN:

I think they've got their half yearly report coming out and they'll review their operations and their costs. What I would say here is that on one hand, Qantas is very good at employing Australians. They're a massive employer of Australians. On the other hand, it is a matter of taking the long-term view not the short-term.

Now there'd be people at Qantas who'd say one, what would the Government know, we run the airline and so to that extent they're the technical managers. And the other thing they'd say is in the long-term it's very difficult, competition internationally so they have to make hard decisions.

What I also know is that we've got skilled engineers in Australia and in Melbourne and in Avalon and Tullamarine and these skills aren't coming back once you get rid of them and we do need to maintain in my opinion a skilled aviation workforce.

NEIL MITCHELL:

I've just been told by a source off air, in fact they've just phoned through a message that there will be jobs, under the review, it's likely jobs could go in Melbourne and a Frankfurt base closing. Are you aware of that?

BILL SHORTEN:

I don't know anything about Frankfurt. I do know that Qantas is moving to newer aeroplanes which require less maintenance. If you've got a series of new cars which don't require to go to the mechanics as often you probably don't need as many mechanics for fixing, compared to your older fleet which may require more regular checkups.

Again though, and business is very sensitive to any critique. I've seen it with banking and you know the newspapers say, oh the Government is criticising banks. How dare they? Well the Government says that we should, industry should take a longer term view about keeping jobs in Australia. I do think that.

The best form of job security is to have a highly skilled workforce - that's why the Gillard Government is spending more money than has ever been spent before on skills. If the young ones come out of school and TAFE have got skills and they're going to be relearning and retraining the whole of their life, they'll find it easier to cope as jobs come and go.

There is structural adjustment in the economy. The mining sector is rising, the health sector, the aging services, they're all rising. Other areas like manufacturing and retail are doing it harder. Some of this is inevitable economics. It happens. We've got opportunities in this country for the next 10 and 20 years. Australians are living longer, which is good. It means that what it means to retire has been redefined. We've got potentially in the next 40 years 3 billion customers in Asia, we're going to join the middle class which is good. We can sell them things. I just want to make sure that we don't lose too many of our skills along the way.

NEIL MITCHELL:

I'm just - sorry I'm just being told by this source, this is coming in as we're talking - that there could be a deal with Malaysian Airlines with Qantas and senior managers have been asked to sign a confidentiality agreement. The last time that happened you know what, there was a shutdown. I'm not saying there's going to be a shutdown for a moment. But the confidentiality agreements are out there. Are you aware of that?

BILL SHORTEN:

No I'm not aware of confidentiality agreements. I'll make my own enquiries offline down the line of what you're saying though. The observation is, companies have got to be profitable. I understand that. But I also - as I said earlier, I'm a student in history. In the 1930s we got rid of a lot of our shipping in Australia. Then in World War Two we didn't have enough skilled seafarers.

Now, I'm not saying that that's the immediate parallel now. But sometimes in our rush to gain - to make short-term profits - we can forget our long-term needs and I think it is important, even if some big business don't like it. The Government remind us about the long term, as well as the short term.

NEIL MITCHELL:

Now we talk about the Fin Review. It's suggesting that you're blaming managers. Are you? The relationship between worker and employer, how much is that - well, that has changed over the few years. But are you saying the managers need to loosen up or be more…

BILL SHORTEN:

No. As usual, it's going to happen sometimes in the media. The heading doesn't reflect the - the heading's more sexy than the words. And if you actually read the next three pages of what I said, my point is that not that managers are bad or that workers are good, but the success or failure of enterprises has as much to do with the relationships in that workplace as they do with some sort of over arching political debate in Canberra.

And that if you've got good leadership a business will always do better than with bad leadership. It's the same with football clubs. It's the same with all organisations and my point to the Financial Review, which didn't emerge in the heading, but to be fair is definitely in the text of it, is that we spend a lot of our time worrying about the traffic lights and not enough time worrying about the skill of the driver.

NEIL MITCHELL:

I'll take some calls for Bill Shorten, a quick one. John, yes John. Go ahead.

CALLER JOHN:

Yes. Look, there's been a gradual decline in industry closing, jobs going overseas. Where is this going to end up? When our natural minerals run out in this country, we won't have that extra money. We won't have the mining industry supporting this country like it has in the past. Where is this going to end up? I've got a feeling we're going to end up like - in another - I don't care about my life. I care about my children, my grandchildren. I mean, will they have to go to China to get a job? Will they have to go to Taiwan to get a job? Because there is just so much industry closing down again, and again and again.

NEIL MITCHELL:

All right. Bill Shorten, where's it going?

BILL SHORTEN:

I agree John. People in the street, in my electorate, stop me and say exactly the same thing. The mining boom is great. But it's having some consequences which are bad for other parts of Australia as well. Certainly, dragging in a lot of investment and it's employing another hundred thousand people, which is great.

But what it's doing is it's pumping up the value of our dollar, which means that when we make things in Australia or we offer education services in Australia or domestic tourism in Australia, people from overseas, if they want to buy our services or visit here or buy our manufactured goods, have to pay more. So it's leading to an uneven economy.

That is why the Gillard Government has got in place a mining tax, which will share some of that product - share some of that prosperity. What we're doing with the mining tax is it's allowing us to increase super. It's allowing us to give a tax cut to all small businesses in Australia, so that way everyone gets some benefit out of the mining boom, which is currently quite unevenly distributed.

NEIL MITCHELL:

But why are we talking about taxes? I mean surely in this environment we don't need something like a carbon tax?

BILL SHORTEN:

Well, let's go to John's question first, because people say, you know, the politicians never answer the talkback caller's call.

NEIL MITCHELL:

Yeah.

BILL SHORTEN:

So one is the mining tax. I will come to carbon though Neil.

The next thing we're doing is, we're spending more money on skills. Now good news doesn't sell newspapers. But we are spending more money on skills. You know, there's - we've pledged to have another hundred and thirty thousand apprentices' positions created. There's something like three hundred thousand people starting apprenticeships and trainees this year - or last year, I should say.

You know, in 1960 50,000 kids were completing university in Australia. In 2010 it's 1.2 million. The best thing we can do for our kids and grandkids is to help them with the skills. But the other thing we can do is actually stick up for Australian jobs. Now people say that whenever you talk about off shoring, they say oh, Shorten doesn't know how the world works. Or when we stick up for the car industry, like the Prime Minister is vis-a-vis Tony Abbott, who isn't. It's oh, they don't understand. They're just old fashioned.

NEIL MITCHELL:

Yeah.

BILL SHORTEN:

I know we need to keep certain skills in this country. We can't just be a nation who serves café latte to our rich tourists when they come here, although that's part of it.

NEIL MITCHELL:

Okay, now carbon tax. Surely, the uncertainty it's creating is not the time. You shouldn't be introducing it now.

BILL SHORTEN:

Well the price we're setting on carbon, it's a 40 year plan. It's not a one year sort of plan. The reality is that by putting a price on carbon, which is one of the inputs into carbon pollution, which is one of the inputs into the production process, we'll start to become more efficient in how we use our carbon. It will encourage greater energy efficiency.

NEIL MITCHELL:

But it's frightening business. It's frightening. People can't make sense of it.

BILL SHORTEN:

I do get that some people are getting frightened of it. That's why in March to June when you see the actual concrete measures roll out, people will realise that - even its critics will realise it's more a mosquito bite than anything worse than that and I don't even accept it's that.

NEIL MITCHELL:

Thank you very much for your - you had a go at the media three times this interview. Have you fallen out - you used to love the media.

BILL SHORTEN:

No, no. I still like the individual journalists. But I - you know, fair's fair. When you're a member of parliament you can either just simply read everything that's said and say oh, that's - you know, just say nothing, or you can stand up for what you think.

NEIL MITCHELL:

I'm all in favour of that. Thanks for talking to us.

BILL SHORTEN:

Cheers, Neil.

NEIL MITCHELL:

Bill Shorten, the Minister for Financial Services, Superannuation, Employment and Workplace Relations and on the basis of what he said, and I wasn't aware of that, he has said there have been talks - informal talks, I think was the word - between the Government and Qantas about what's happening. We'll go back to Qantas and see whether they are changing their statement to us or whether they're willing to say anything further. I wasn't aware. Bill Shorten has just said, talks at some level have been held.