SUBJECTS: Immigration, government advertising, G20 talks, global economy, Chinese currency, Fringe Benefits Tax.
DAVID LIPSON:
How much is this going to cost Australia?
CHRIS BOWEN:
Well, firstly, David, this is a very important development of course. It's a big step forward. For a long time we've said we'd need a proper regional solution which involved permanent resettlement not a staging post towards resettlement in Australia. So this is important in terms of saving lives and getting a fairer and more orderly system. Now about costs, we've said a couple of things. Clearly this will have a cost. It will also have an impact in terms of slowing the flow of boats to Australia which has cost impacts at the other end. Those issues will all be dealt with by the Finance Minister and I and we'll be doing what we've said we'd do which is to offset all expenditure and make sure that these things occur in a budget-neutral way and that's what we'll be doing.
LIPSON:
The Prime Minister is talking about improving PNG's schools, hospitals, law and order not to mention the major increase in capacity for housing asylum seekers. What is this going to cost in the short-term? Are we talking billions of dollars?
BOWEN:
Well, there will be up-front costs, David, but this is a very important initiative. Now I'm not going to outline those costs today. Obviously there has been very extensive discussions between the two governments over the past three weeks. But we will provide fiscal updates and as the Prime Minister said and as we've shown is our approach in recent days over the last week, when we make a major policy initiative, we ensure it's done in a fiscally responsible budget-neutral way by making difficult spending decisions and savings decisions to offset any other spending decisions. That's the approach we've taken; it's the approach we continue to take.
LIPSON:
Does that mean that the funds are going to come largely from the aid budget?
BOWEN:
Well, David, you're asking me to make detailed policy announcements which I'm not doing this morning in relation to this. As I said it's the important policy development obviously. There's been a lot of progress made on this over the last period of weeks. It's been a big step forward to get this done three weeks into the Prime Minister's term is a major achievement. It was important to do it because people are drowning far too often. We're losing far too many lives. This needed to happen and the Finance Minister and I will make the appropriate announcements about spending and savings implications in due course.
LIPSON:
There'll also be government advertising this weekend, taxpayer-funded to sell these changes. Can you give us an idea of that cost and also whether that's appropriate in the frame of the fact that the election's going to be held very soon and these ads wouldn't have been allowed in the official campaign?
BOWEN:
Well, David, in my experience it's very important that everybody understands new policy settings in the immigration area. It's very important because you've got communities in Australia, disparate communities of places that are source countries to Australia like Iran and Sri Lanka and Afghanistan where those communities of people who are resident in Australia, then communicate to people in those other countries and tell them - look the policy has changed in Australia. The law has changed. Please don't come by boat because you'll get resettled to Papua New Guinea. It's very important that people in Australia understand the new policy settings and it's very important that people down the chain of supply of boats understand it as well so in my experience it's important that there's advertising in Australia, advertising in Indonesia, advertising in Malaysia, advertising in Sri Lanka, Iran and Afghanistan.
When you're going to do something like this, you have to do it properly. You have to make sure that everybody understands the new policies because we know this. People smugglers will lie about this, they will spin their own version of it and they will try and convince people that it's still a good idea to spend money to come to Australia by boat. And if there's no alternative voice out there, if we're not telling them the truth while they're spinning their lies, then people will be duped into coming by boat.
LIPSON:
Why did Julia Gillard and you as her Immigration Minister resist this sort of hard-line stance for so long? If this sort of action had been taken earlier, could lives have been saved?
BOWEN:
I don't accept the premise of that question, David. You'll recall a thing called the Malaysia Agreement. The Malaysia Agreement was widely criticised as being too harsh and too hard-line. Why? Because it involved permanent or indefinite resettlement in other countries. No guarantee of a visa in Australia. This was the point. We said this is quite different to the Opposition's Nauru option. Because Nauru is a staging post to resettlement in Australia. So we for the first time proposed something different which was resettlement in Malaysia while waiting for processing and potential resettlement in other countries. This Papua New Guinea proposal is...
LIPSON:
But that was two years ago.
BOWEN:
And then it got, obviously the history of that is then well known, the High Court changed the law, the Liberal Party and the Green Party combined to stop that being implemented. So I think this development by the Prime Minister is a very good and welcome one. It will help save lives. We could have, you're right, to this degree, we could've two years ago implemented the Malaysia Agreement which would have had a big impact then but the Liberal Party and the Green Party combined forces in the Parliament to stop that. Therefore, this model which does not require their support, is the appropriate response at this time.
LIPSON:
Well, you're in Moscow of course for the G20 meeting of finance ministers. You've already met with on the sidelines, Singapore, Indonesia, Germany, Korea, the Chancellor of the Exchequer and the US Treasury Secretary as well. What's the sentiment that you have gauged in regards the global economy?
BOWEN:
Well, I think the sentiment from my colleagues both in the individual meetings and in the sessions we've had is that I'm reinforced in the view that I've been expressing and that the Prime Minister has been expressing that there are head-winds in the world economy which need careful management. There are challenges. If you look at Europe, it continues in a sustained recession. Growth coming off the boil in China, deliberately so and for good reasons but coming off the boil and that has an impact on us. And also the emerging economies, the so-called Brics: Brazil, Russia, India and also China and others which we expected to be the engine room of growth to drive world growth, them coming off the boil as well. And them being very concerned about some of the instability in world financial markets as a result of these signs that the United States will be moving away from quantitative easing and unconventional monetary policy. So there's a lot of concern about the instability and some rather anaemic growth patterns in some parts of the world which the Prime Minister and I have been expressing in recent weeks and which is being reinforced through this G20 meeting.
LIPSON:
How's all of that going to impact directly on Australia?
BOWEN:
Well, we've already said for example, our terms of trade have come down since May. You've seen iron ore, coal and gold prices come down. Now that has an impact on our national income in nominal terms. Look, Australia's economy is - remains strong and resilient but it would be less than honest with the Australian people not to say that there are challenges in the world economy. It has certainly come a long way in the last few years but there's still a long way to go before it could return to what we would regard as very healthy growth rates and growth rates which would be something that we could all be comfortable with.
This is an unstable recovery and I do think we're going to continue to see challenges around the world.
LIPSON:
And has there been any progress on convincing China to further free up its currency?
BOWEN:
Well, there's been a development even today, David, with some liberalisation of Chinese lending practices, introduction of more market practices into China, that's something which I think is welcome. Obviously there's been an ongoing debate about how the Chinese currency is regulated and set and there are strong views around the world about that. I don't engage in megaphone diplomacy with the Chinese with all due respect to you through this program. We'll make our views to them just as they do to us on issues from time to time directly and that is appropriate. Obviously how the Chinese currency is regulated does have a big impact around the world. And that's something that will be subject of continuing discussion.
LIPSON:
And have you had a chance to discuss Australia's upcoming presidency of the G20?
BOWEN:
Absolutely. That has been a key theme of these meetings. Australia of course takes over the presidency of the G20 next year. It's a key role, an important role. It means that the Prime Minister and the Treasurer chair some very important meetings and it means we set the agenda. And I've been talking to international colleagues about us setting the agenda. Of course while Russia's the chair we won't interfere with that. They're doing a very good at chair but it's appropriate that we're thinking about the sorts of things that we would put on the agenda when we chair next year.
Obviously growth, continuing growth and stability is the key. But there's been some good work done that we'd be seeking to continue but I've been talking to my fellow finance ministers about that work and about setting the agenda in a collaborative way.
LIPSON:
Just finally, on your changes to Fringe Benefits Tax. The Opposition says it won't support these changes in Opposition nor in Government. The South Australian Premier has also expressed concerns that these changes could smash the car industry in his state. Are you surprised at the backlash here?
BOWEN:
Well, David, let's go back to first principles here. It's very important we constantly repeat what we're doing here. All we're doing is saying that if a deduction is claimed for work purposes for a car, all we're doing is seeking a little bit of evidence that the car is used for work purposes. So we're seeking evidence that that happens for three months and that will then get you a deduction for a five-year period. It's a very non-onerous requirement. We are concerned, I'm concerned as Treasurer to make sure that taxpayers' money is spent wisely. And when we've got the situation where we're paying for initiatives like going to a floating carbon price which provides cost of living relief and relief to business, then we do have to make decisions about paying for that. And the return to surplus over the cycle doesn't come easily. It doesn't come without tough decisions.
The Opposition's approach here is highly irresponsible. They beat their chest and we hear a lot of rhetoric about returning to surplus and tough decisions and Joe Hockey makes tough speeches in London. But when it comes to a policy initiative which simply says if you're claiming that a car is provided for work purposes, we just require a little bit of evidence of that just like you'd need to give evidence for almost every other tax deduction in our system. They say oh no, that reform is far too hard. Well, they just added $2 billion to their already substantial budget shortfall. Their budget black-hole. They'd need to find another $2 billion now in some other form of cuts. I think it just shows that they're not up to the job. They're full of rhetoric, they're full of bluster when it comes to a return to surplus. But they're not up for making tough decisions about the budget.
LIPSON:
Treasurer, Chris Bowen, we'll have to leave it there.