SUBJECTS: Hearts & Minds, Labor Party reform, the Budget, car manufacturing subsidies
FRAN KELLY:
Treasurer, welcome to Breakfast.
CHRIS BOWEN:
Thanks Fran, good morning.
KELLY:
Bob Carr says there's so many books written about what's wrong with Labor it's become a genre, like vampire fiction. Why have you decided to add a book to that list?
BOWEN:
Well I haven't because this is a positive book which says that Labor has a bright future, that Australia needs Labor; that our project isn't over, that we still have work to do. But that we do need to modernise, that if we want to grow, we want to be strong, we need to be an inclusive party, an open party, a party welcoming to people from all walks of life. And we do need to be very crisp in what we believe in, in our explanation of what we believe and I make the case that we have something unique to provide to Australia because we believe in economic growth, we believe that lifts people out of poverty and we believe in opportunity.
We believe in opening up opportunities to people so they can grow to be everything they have the potential to be. And I think that's something that the Liberal Party doesn't bring to the table, and the Greens Party doesn't bring to the table. I think because of our experiences, our learned knowledge, we bring that to the table. But I do make the point, organisationally that our structures haven't changed in a long time. Many of them are still based on the 1950s and at the very least 1970s and the world has changed. Australia has changed, society has changed and we need to modernise as well if we're to grow and be strong. And I think if we are to do that, we can turn that into quite a significant advantage over our rivals.
KELLY:
I'll come to the structure in a moment, but just to stick with what you say, you need to be crisp in what you believe in. Since 1996 I think the criticism of Labor has been it doesn't stand for anything, it doesn't know what it stands for, searching for a narrative. Can you give us the crisp definition or is it that growth and opportunity you just talked about?
BOWEN:
I think it is the growth and the opportunity. I think it is saying that we believe in economic growth which the Greens to our left don't. But we believe very much in government intervention to provide opportunities. So that if you're an indigenous child from the outback or you're the son of a merchant banker from Sydney's North Shore or the daughter of a single parent from Melbourne's western suburbs that you have the opportunity to grow and be everything you have the potential to be. And that is what, to me, government intervention is all about, to achieve that, and I think we need…
KELLY:
It's funny because the Liberal Party has the same essence but says the answer to that is not government intervention but to get government off the back.
BOWEN:
Yeah but you can't say you believe in the individual and then say but if you happen to be an individual who's born on the wrong side of the tracks then the Government shouldn't intervene to give you some assistance.
I'll give you one example just to put it in the current context. I mean the schools funding reform, Better Schools, it's all about more funding for disadvantage schools. It's about giving every child the same level of funding with loadings for people with particular disadvantages. Now Tony Abbott says the system's not broken but I think it is, I think it is broken. And I think that's just one current example to put that philosophical debate in the context of the current political debate.
KELLY:
Now you're right on the money it would seem because on the question of Labor Party reform, you propose in print in this book what Kevin Rudd announced just last week, that the Labor leader be elected by 50/50 split between rank and file members of the party and the Caucus. Did you give him that idea?
BOWEN:
We talked about it obviously.
KELLY:
So yes you did.
BOWEN:
He's believed in this reform himself and then promoted it himself and of course we'd tossed around in terms of conversations how it could be done. And what I put in the book was my idea and I'm very pleased that he has gone with something very similar to that as his proposal.
It is a reform that I strongly support. It's the big one, frankly. I proposed, I think, seven reforms in the book, this is the big and I think the most important one which for the reasons that he has outlined and I argue for in the book, do go to opening up the party, giving ordinary party members a say in one of our most important decisions and providing a spirit of inclusiveness within our party membership.
KELLY:
Inclusiveness is a big theme of your book and you've mentioned it before, you need to modernise the party, it needs to reflect Australia today, you want other interest groups to have a vote, more than the unions. At the moment you have to be a union delegate to be at the conference to have a vote. Why would other groups be interested do you think to have a vote at Labor's national conference?
BOWEN:
Well look again Fran, this is one idea. The point I'm making is that we shouldn't, in my view, cut our union links. The Labor Party was formed but trade unions.
KELLY:
But certainly are you talking about diluting them?
BOWEN:
Building on them, building on them. I would put it in those terms. I do think we want to be a party which is open to people who have small businesses, welcoming of people with small businesses, welcoming of people who work in the business world, welcoming of people from all walks of life.
Now that doesn't mean to my way of thinking, cutting our union links. It does mean things like more rank and file representation at our national conference, it does mean things like moving away from the rule that you should be a union member to join the Labor Party, a rule which is hardly ever enforced these days anyway.
KELLY:
Some of these ideas though that you are proposing here. Some of them were defeated at the last national conference. Is the problem that those who hold power in the Labor Party don't want to give it up? And under the current structure that's the end of it.
BOWEN:
Well reform's never easy and not all of these things are going to happen overnight and I think, as I say, Kevin through his leadership, has provided the big one, the one that's really important and a big call for him to do before the election – but I think he's shown that leadership and it's a very good thing. But I do think this a conversation that the party needs to have.
Now organisational reform will never be easy. Gough Whitlam didn't find it easy in the '60s but it was important for Labor's return to office, in terms of modernising and showing that we were in touch with the views of Australians. I do think that all political parties frankly should be going through this process. I think that if we do it we can actually have an advantage and I think it would actually have a pretty big impact on the body of politic in Australia and I think other political parties might be forced to follow.
KELLY:
Treasurer, if I could turn to your portfolio now. You've replaced Wayne Swan as Treasurer. Wayne Swan was lauded overseas for his work of steering Australia through the GFC. He's world's best Finance Minister. Yet the Swan-Gillard Government never really got the credit at home for its work on the economy. Have you figured out why?
BOWEN:
Well I think when people come to write about the Government, as I've done in the book for example, the economic growth achievement is the substantial one, and Wayne Swan and Kevin Rudd and Julia Gillard all deserve credit for that. To grow our economy by 13 per cent when the rest of the world has contracted over that time, to create almost a million jobs, and to do so all with low government debt by world proportions, is a major achievement.
KELLY:
Yet you ask the Australian public in the polls and they think the Coalition's best to handle the economy.
BOWEN:
Sure and that's a challenge for us. It's a challenge that I'll be embracing in the lead up to the election, obviously. Exposing not only the flaws in the Opposition's argument which are many, which are many, but also highlighting both our record but also building on our record.
What Labor governments do is manage transitions and our economy is in a transition at the moment. We're in a transition away from the mining investment boom and that will take careful economic management. And that's what Kevin Rudd and I've been working on and that's what I think is our key difference in the lead up to the election. Our economic record, yes, but not just running on our record, also running on our plans for dealing with this change and you saw if you like the first instalment of that yesterday with the Prime Minister's National Press Club address.
KELLY:
Alright, let's talk about your plans because you said and I'm quoting you here, you are sticking to the budget strategy of the Gillard Government. So the Rudd-Bowen economic plan is the same as the Gillard-Swan economic plan, a surplus in 2015/16?
BOWEN:
Well that's the fiscal plan, Fran. That's one part of the economic plan, of course. But yes, we are sticking to the fiscal strategy of returning the Budget to balance in 2015-16, that's right, we think that's the right balance. To race back to surplus now would be a hammer blow to economic activity, that wouldn't be sensible.
KELLY:
What about to push that out, should it come to that?
BOWEN:
And that's not our plan either. We think that with all the evidence in front of us. The right fiscal strategy is to return the Budget to surplus and to balance in '15/16 and a surplus beyond that. Now obviously that is not without its challenges and obviously you respond to circumstances as they emerge but that is our strategy.
KELLY:
The challenges are coming. There's plenty written about that. Have you as Treasurer had any new revenue estimates? Are there fresh signs that the revenue estimates are soft?
BOWEN:
I have been as transparent about this as I can be and said that terms of trade reductions are having an impact on our economy, on our government revenue, they're down substantially. Even since Budget, we've seen iron ore, gold and both types of coal calm down. So that does have an impact and that will need to be managed. Against that you've had the Australian dollar fall which is good for government revenue, so all this will need to be calibrated as we go and there will be updates provided in the normal way.
KELLY:
A fair bit of calibrating I would think. So far Kevin Rudd has flagged moving to a floating carbon price a year early, restoring funding to universities, lifting the Newstart unemployment benefit, just those initiatives alone should they come to fruition, would cost around $5 billion, at least. Do you see your role as being the brake man for Kevin Rudd?
BOWEN:
No, not at all. There's a lot of speculation around about what a new Prime Minister would do, what a new Treasurer, what a new Government would do.
KELLY:
Well, there's a few hints being handed out.
BOWEN:
Of course, there's a lot of speculation and Kevin's made it clear that there's a Cabinet process and that process is underway and that includes the Expenditure Review Committee, which is myself, Penny Wong, other key senior ministers, David Bradbury and other senior ministers. That's a process which is well established through the Government's life and that's the process that we we'll apply. And we have made it clear that offsets will apply to new spending measures. That's a necessary part of your fiscal strategy, returning to balance, that's how it gets achieved.
KELLY:
That's a lot of offsets. Yesterday Kevin Rudd didn't rule out, again didn't rule out moving more quickly from the $24 a tonne fixed carbon price to the floating European price, which is around $6.50 a tonne. Have you asked your Treasury officials to crunch those numbers to see exactly how much that would cost?
BOWEN:
Well Fran, as the Prime Minister has made very clear, there's a Cabinet process and a Cabinet process has hanging off it a whole other range of bureaucratic processes. I'm not going to provide an update or a running commentary on those as they go. This is a very fine program, it's not the Cabinet table, and that's where I have my say and provide my updates.
KELLY:
Well what about a matter that is very much now. that Holden has put into the news, it wants an extra $265 million to stay making cars in this country. That's almost double what you've already, they've already been offered by state and federal government. This looks and sounds like industrial blackmail. What's your response to that?
BOWEN:
Well I heard the Industry Minister, Kim Carr, talking about this yesterday and he said that wasn't a figure that he'd seen in his work on this project. Obviously he's in close contact with Holden. Car manufacturing is important to us. I know that car manufacturing won't exist in Australia if the Liberal Party proceeds with their plans to slash industry support.
I understand industry support for car manufacturing is controversial. I come, as is clear from the book, from a generally free market approach to these matters, so I do understand the arguments, but I also do understand that with the high levels of subsidy and protection for car manufacturing around the world, that you do need to make steps to ensure that car manufacturing, which has important flow on effects through our economy, provides a whole range of other jobs, not just the jobs directly in the car factories, is important.
KELLY:
But you already subsidise, the government already subsidise, is Holden asking too, going too far for asking for more? Would you even consider more?
BOWEN:
Well we'll keep talking to Holden about their challenges and about their needs, I'm not going to again with all due respect, conduct that process through this radio program, that will be a conversation which Kim Carr, on behalf of the Government undertakes and of course a whole of government rigours and processes will apply to any request from any manufacturer for that sort of assistance.
KELLY:
Chris Bowen, thank you very much for joining us on Breakfast.
BOWEN:
Always great to see you Fran, thanks