The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of David Bradbury

David Bradbury

Parliamentary Secretary to the Treasurer

14 September 2010 - 5 March 2012

Transcript of 09/02/2012

NO.004

Interview

Sky News AM Agenda

9 February 2012

SUBJECTS: Alcoa, manufacturing, surplus

HOST:

Good morning and welcome to the program. The future of manufacturing in Australia is dominating much of the parliamentary debate in this first sitting week of 2012.

Also in the program this morning the NBN and the Government's announced contracts for two satellites to service regional and remote Australia under the National Broadband network. My guest later in the program: Shadow Communications Minister Malcolm Turnbull. First though, I'm joined by Shadow Minister for Small Business Bruce Billson and the Parliamentary Secretary to the Treasurer, David Bradbury.

Gentlemen, good morning to you.

BRADBURY:

Good morning

BILLSON:

Good morning

HOST:

As I mentioned, manufacturing is the focus of much of the debate at the moment. First to you, David.  Heather Ridout this morning, soon to be an RBA board member, said while the carbon tax wasn't a factor in the review being launched by Alcoa it is an issue, obvious issue, for the aluminium industry. That's true isn't it? So, the company might not have wanted to anger the Government, say "carbon tax not an issue", but it has to be on its radar surely?

BRADBURY:

Look I think there are a lot of people who are further away from Alcoa than the people at Alcoa who are commenting on what occurred there but you have to go to the company statement, you've got to have a look at what they said. And they said this review has been prompted by two things and I don't think this should surprise any of us. Firstly for a reduction of prices for their product on global markets and secondly by the impact of what is an incredibly strong Australian dollar. Now what we're seeing not just as far as the aluminium sector's concerned but right across our economy is the impact of this very strong Australian dollar, which on the one hand is a good thing because it is a reflection of the underpinning strength of our economy, but on the other there's no question that that presents challenges for a range of industries.

But I would make this point, as part of our clean energy package, we have a very significant program of assistance for the aluminium sector – $3.5 billion – now those changes in respect of prices which are impacting on aluminium companies not only in Australia but all around the world and in Australia, the high Aussie dollar, those factors are driving huge pressures as it is, but with our assistance program we see opportunity to assist companies such as Alcoa to make sure they drive further innovation, more productivity and improve their competitiveness. So what we have is a plan to assist those companies to make the transition that we need to make to confront the challenges we face.

HOST:

Ok, let's go to Bruce Billson on both of those fronts. David says there is suitable compensation for aluminium, particularly, trade exposed industries like it, and if you look at the Alcoa chief's comments yesterday, he did not say that the carbon tax was an issue in this review of its Victoria smelter.

BILLSON:

No, what he said was what activated the review, which some of the issues David has touched on, he has come out quite clearly and said of course after July 1 a tough situation gets harder. I mean, I don't think you can sort of quarantine a conversation about the future of any business by ignoring key impacts on its survival. Heather Ridout's right, manufacturing needs to be world class every day and some of the reasons David's touched on, currency issues, competitiveness issues, Chinese imports and the like, it's a tough environment, but you don't make it worse, you don't make a difficult environment even harder by imposing the world's largest carbon tax. So the company's quite clearly said and its reaffirmed in the media this morning, things are tough now, we're uncertain about our future, but after July 1 it gets even harder and Heather Ridout's point is right and for manufacturers and in fact anybody in business to hear the Government saying the carbon tax will have no impact when everyone you talk to, everyone at the coal face, everyone planning their business future and everyone wondering what the cost of their inputs will be and how they are going to compete with competitors and imports from offshore, they all say the carbon tax just adds to costs. Costs make us less competitive, why would you impose the world's largest carbon tax, in a climate, which as David's touched on, is challenging anyway, why make it even harder? And that's the point Heather Ridout's making and she's absolutely right.

HOST:

Ok, the Prime Minister said that the Coalition yesterday, that their approach was disgusting and it was fear mongering, when the jobs hadn't even been announced yet. The job losses.

BILLSON: 

(Laughs) The truth and the Prime Minister are distant relations when it comes to anything to do with the Carbon Tax. Tony Abbott did not make the statements that are being verballed by Labor and we know about their dark art of media management, just look at Australia Day. What Tony Abbott said was here's a review, here's a company under pressure, but the pressures get even greater because of a carbon tax, the world's largest carbon tax, an act of economic self harm, and as Terry McCrann said, one of the dumbest things that have ever been done to this citizenry in Australia's history, is absolutely right. This is not the time to introduce the world's largest carbon tax when there are so many challenges facing small business, manufacturing, the economy more generally and for the Government to try and say it's not a factor is just – disbelief on people's faces is the reaction to it.

HOST:

Well David, let me say to you though that the points that Bruce is making this morning and that Mr Abbott will make later today and throughout the day will be done every single time we see another round of job cuts and tragically, for many, there have been 45,000 jobs lost in the manufacturing industry, thousands more in the financial sector as well – this is going to be a gift, a political gift. Obviously, as I said it's tragic for the people concerned but for the Coalition, this is a day-in-day-out argument against the carbon tax.

BRADBURY:

Let me make a couple of points. What Mr Abbott did yesterday was despicable, because what he sought to do was to prey upon the uncertainty –

BILLSON:

[Inaudible]

BRADBURY:

No, Bruce, I let you have a go, let me have a go. What he did yesterday was he sought to prey upon the uncertainty that those workers and their families and the communities around the Alcoa plant are facing, and he sought to do that for the same reason that he does everything that motivates him and that is to put the Liberal Party's political interests ahead of the rest of the country.

Now, the point I want to make about the so-called commitment of the Coalition to the manufacturing industries, and they talk about the pressures we face in the manufacturing sector and they are real, but they didn't begin the day we came to Government. They've been happening for a very long period of time and they don't have a record that suggests they are prepared to do anything to support jobs. Let's have a look at what they've done now and what they're committed to doing in Opposition. When it comes to going around for the photo opportunities at every factory floor on an anti-carbon tax crusade, Mr Abbott's there but when it comes to putting your money where your mouth is, he's missing in action. Whether it's voting to support the Steel Transformation Plan, where he said ‘no', or whether it's voting to support the automotive industry, where he says ‘no', whether it's voting to support our assistance plan - $3.5 billion for the aluminium industry, he says ‘no'. Now when it comes to actually doing something for the manufacturing sector, all we ever hear from Mr Abbott is ‘no'. But when we put forward a plan that is trying to assist these sectors, important sectors of the Australian economy in which lots of Australians are employed, to begin to make the transition that they will need to undertake to ensure they have a secure future. What they need to do is drive innovation and greater competitiveness, and we want to work with industry to try and minimise those job losses where they are threatened.

HOST:

Okay, Bruce on the car industry [inaudible] they both reflect the same point that the Coalition, when you have to, you're not putting your money where your mouth is when it comes to the car industry.

BILLSON:

That's garbage.

HOST:

There's $500 million in the Automotive Transformation Fund.

BILLSON:

There's a billion dollar commitment. A billion dollars…

HOST:

Theirs is $1.5 billion, what about that point five?

BILLSON:

Well we could talk about the 1.4 extra billion they were getting photo opportunities for, going around the countryside getting great media , saying aren't we clever, aren't we clever. Just to pull it out, just to pull it out. So you get the media opportunity, you use that manufacturing sector to advance your political interests, there's no certainty as to whether this commitment by Government actually sticks because we know we can't trust them at their word and the car industry, the car industry have had $1.4 billion by the Gillard Government.

BRADBURY:

[Inaudible]

BILLSON:

You had a pretty good crack, now let me have a go. So there's the big promise about support, the car industry makes decisions about its future based on these empty, vacuous promises when the money's just pulled out. Contrast that to the Howard Government approach and the commitment we have made about a billion dollars of support for the car industry, around the same quantum of money that was there before the Government changed, when Toyota, for instance, were manufacturing nearly 160,000 units, exporting much of it, and what's happening now? Toyota, a plant in my city in Melbourne is down to about 56,000. So what the car industry valued under the Howard Government's approach was long-term, clear commitments that we delivered. They know we have never broken a promise to the car industry. If we say we're going to do something we do it and they can plan with certainty. Not like this crowd, and then you've just heard David talking about the harm reduction cash they're spraying around to certain industries because of the carnage the carbon tax is going to provide. Now he's saying that's support for industry – no that's trying to help them drown more slowly after this carbon tax, after he's saying competitiveness matters [inaudible].

BRADBURY:

It's about trying to innovate, trying to become a better business, a better sector.

BILLSON:

So this is a difficult environment, the Government's making it worse by an act of economic self-harm.

HOST:

I reckon –

BILLSON:

It should be abandoned if anyone wants a future in the manufacturing industry in the longer term.

BRADBURY:

So you want to rip up $1.5 billion –

HOST:

Okay, no, no, no, that's, in the manufacturing debate I think you've both had a fair crack at that.

BILLSON:

I think that's a fair summation.

HOST:

I'll probably get a review from a few viewers via email as to who got more time but I think that was a fair timing so let's call it a day there. Let's move on to the surplus. The Government says it's determined, and will deliver a surplus next financial year. Isn't that – I've spoken to a number of economists who believe that any such commitment is irresponsible economically because you don't know what's going to happen out of Europe. Isn't the Coalition actually taking the right approach – we need to see the numbers before we can make a commitment on it.

BRADBURY:

Look, we are determined, and I think the Treasurer makes the point as clearly as anyone, and that is if you want to be a Keynesian through the tough times then you've got to be a Keynesian on the way out of the difficult times, and that's the approach that we are taking. If you want to pump prime the economy, spend that stimulus to keep the economy going through times such as the global financial crisis, then responsible economic managers will seek to pull back on the spending and to return the Budget to surplus at the earliest possible opportunity. The minute you return the Budget to surplus, you start to have the opportunity to pay down debt and to restore the nation's balance sheet. Now what we've seen from the Opposition –

HOST:

Why would you cut at a time when there's a slowdown internationally?

BRADBURY:

Well that depends on how you target the measures. The Opposition on the one hand want to jump up at every opportunity, they want to talk about all of the Government waste and mismanagement – just putting aside all of the waste and mismanagement that occurred under the previous regime – but they want to say that at every opportunity. They want to say that they have the capacity to deliver $70 billion worth of cuts. The $70 billion black hole that we heard so much about, and I saw Joe Hockey out there yesterday having a bit of a Frank Sinatra moment – you know, regrets, he's had a few – he didn't mean to mention the $70 billion figure, it was a mistake. Not that the number was a mistake but it was a mistake to mention the $70 billion figure. They are still committed to making $70 billion worth of cuts but they've got no guarantee that they'll return the Budget to surplus.

HOST:

Okay, let's hear from Bruce, you're response to that. Has the Coalition been messy on this? The frontbench, Mr Robb, Mr Hockey, there's been a bit of confusion as to when the surplus will be, if, delivered.

BILLSON:

Well, there's one thing the Australian public's not confused about, that the Coalition's delivered surpluses. We know what they look like, we know Labor can talk about surpluses, they're critical of them in Opposition, hanging them out as some kind of dream in Government. That's the record and people know –

BRADBURY:

[Inaudible]

BILLSON:

Well I remember last time you were there you said the Budget was in surplus and then when the election was actually had it was $10.4 billion in deficit.

BRADBURY:

Well you can go back to the last Budget John Howard delivered, they were in deficit too.

HOST:

Let's hear Bruce out.

BILLSON:

You've got some notorious form on this and since coming to Government every Budget projection that they've offered has been blown out of the water. In fact, the Commonwealth expenditure was $272 billion when this Government was elected, it's now $360 billion. There's a $50 billion structural deficit, that is where the Government spends more money that they've locked into the future above our certain and reliable revenue streams. So they're creating a real Budget that's a house of cards. What we said at the 2010 election, we mapped out the plan, which the Government criticised, an then they went and took some of our savings measures [inaudible] would bring the Budget back to surplus. We want to see what the figures are because the Government's Budgets don't last half a year. You've seen the changes with Mid-Year Economic Outlook, you don't know what you're going to get. We've got the runs on the board, we've done it before we'll do it again and that's what the country needs.

HOST:

Bruce Billson, David Bradbury, good to see you both.