18 November 2013

Sky News, AM Agenda

Note
SUBJECTS:  Labor's reckless approach to the debt ceiling; Virgin Australia capital injection; and Sri Lanka.

This is a transcript of the Parliamentary Secretary to the Treasurer's interview on Sky News, AM Agenda. The main topics discussed were the debt ceiling, the Virgin capital injection and Sri Lanka.

GILBERT:

You've heard what Bill Shorten had to say, he wants Joe Hockey to be up front, provide the Mid-Year Economic Update and then they'll talk turkey when it comes to raising the debt ceiling to $500 billion. Why don't you do that?

CIOBO:

You know there's nothing upfront about Labor's position on this Kieran. The reality is the Labor Party knows, on their own figures, that debt is going peak at around $370 billion. We have the tabled Treasury Minute which came from the Australian Office of Financial Management, which shows you need a buffer of $40-60 billion. So just on those basic facts, Labor already knows that debt is $370 plus a buffer of $60 is $430 billion. Now Labor's approach on this is to try to say "we're reasonable people, we just want to see the Liberal Party's numbers." But that's not what it is about. What Labor wants to do is kick the can down the road, exactly the same as what the Tea Party was doing in the United States, saying 'let's kick the can down the road. We'll re-visit it again in 12 months or 24 months.' We don't want to do that, it's not our approach.

GILBERT:

Ok, let's go to Andrew on this. I want to put the same question to you, as an economist, that I put to the Opposition Leader. And that is if Martin Parkinson, the head of Treasury, endorses the view put by Mr Ciobo and Mr Hockey, surely you have to listen to that?

LEIGH:

Kieran this about transparency. It's about knowing which of the decisions of the Government is blowing out the debt. The implications for example are going soft on multi-nationals profit shifting, taking $700 million out of revenue. The implications of their big tax cuts to Gina Rinehart and Clive Palmer, again which will blow out the debt. Fundamentally Kieran we have Joe Hockey, who came into Parliament and said he would like a No-Doc loan for $500 trillion and Parliament came back and said 'well said, if you're not giving any documentation we'll give you $400 billion, $400 billion which will give you a $30 billion buffer when debt peaks in three years’ time.

GILBERT:

Steve Ciobo, we're talking about three years down the track.

CIOBO:

But hang on, I want to know why it is that Andrew is ignoring this Treasury Minute that was tabled by the Member for Lilley. You can see there's $370 billion right? And this minute says you need $40-$60 billion so there's $430 billion. Why are you pretending that doesn't exist?

GILBERT:

But this is in 2016

LEIGH:

This is in 2016 and you have a $30 billion buffer.

CIOBO:

No you don't have $30 billion because this minute, which was tabled by the Member for Lilley, indicates you need a $60 billion buffer. So there's $430 billion. And the reason why Kieran is exactly as I said, we don't want to kick the can down the road. Now I understand Labor's...

GILBERT:

Why do we need a debt ceiling at all though? I've spoke to a number of economists on this program, including the formal Liberal leader John Hewson, I know Chris Richardson has argued we don't need the debt limit, the Budget provides the appropriation bills and authorises the spending of money. Why do we have this artificial ceiling?

CIOBO:

I'll tell you why I believe in a debt ceiling. And the reason I believe in it is I don't trust frankly politicians of all different colours to be able to restrain their spending. And we've seen that, for example, in the United States, and in a number of countries in Europe where debt to GDP levels have exceeded 100 per cent of GDP. I think a debt ceiling is a logical thing to do, it's a nice physical barrier so to speak to Governments unnecessarily increasing debt, purely because they think there's votes in it and they can continue with largesse out there in the community. The key point I would make about the difference between our approach and Labor's approach Kieran is this: as a Government, ours is a debt limit, not a debt target. Labor reached their debt ceiling every single time because it was effectively treated as a debt target. We need $500 billion, not as a target, but because we need to be able to manoeuvre around where our peak debt levels are going to go...

GILBERT:

Are you worried Andrew Leigh that we're heading down the US path of this becoming a political football?

LEIGH:

Not at all Kieran. I mean it's very clear that with a $400 billion debt cap there's no risk of Government default whatsoever, plenty to pay the bills...

GILBERT:

The politics of this is the point.

LEIGH:

But the fundamental point here Kieran is that we don't want Joe Hockey to trash the 2013/14 Budget and then blame it on the Labor Party. What he's clearly intending to do, for example, by giving $9 billion to the Reserve Bank of Australia is to load as many expenses as he can into 2013/14 and then like a coach that has taken over during a quarter of a way into the season, blame his predecessor when it comes to final time.

GILBERT:

But why shouldn't he?

LEIGH:

Well he is the Treasurer of Australia and he is responsible for his decisions...

GILBERT:

But to this point the debt is Labor debt isn't it?

LEIGH:

Well the debt that has been taken on is jobs debt. It's debt we took on to save 200,000 jobs in the Global Financial Crisis...

GILBERT:

Alright I want to move on, I don't want to go over that again, I think we've discussed that issue fair enough today. I want to ask you about Alan Joyce and his concerns about the $350 million capital injection into Virgin Australia. He's worried about predatory State owned airlines, again seeking to undercut Qantas. This is in the Financial Review this morning. Steve Ciobo what do you make of the comments by the Qantas chief?

CIOBO:

Well look, I understand Qantas' frustration. I guess to some extent Qantas feels that they're hamstrung because they have to effectively keep all their operations domestic in terms of capital raising, they don't have the opportunity for significant amounts of foreign investment and that contrasts with Virgin. But the reality is that it's a competitive market place. I'm sure Qantas will advance arguments about why they would like an easing up on foreign investment restrictions into their airline, but by the same token...

GILBERT:

Is this what this is about in its entirety, or are they asking you to provide a crackdown on Virgin Australia and the fact it is recognised as an Australian carrier?

CIOBO:

Well look, you would need to ask Alan Joyce that question. I just, as an observer of the process, as someone who’s watching what's taking place, it seems to me in basic terms that Qantas says 'well we want more access to capital and we'd like foreign investment restrictions lifted under the Qantas Sale Act...

GILBERT:

Do you think they should be able to do that?

CIOBO:

I'm not going to get into that, that will be a decision that will be taken, if that was to come up as a proposal, we'll see in due course. I am not going to comment on any specifics in terms of foreign investment obviously.

GILBERT:

Any thoughts on this?

LEIGH:

Well you can understand why Steve is nervous around the issue of foreign investment given the huge fissure that's arising in the Coalition on Graincorp. Look I'm an open markets guy, I share Steve's broad perspective that politicians shouldn't be too concerned if Australia firms are raising capital offshore or onshore. But I do this, like the issue of the Graincorp acquisition is going to be a major issue for the Coalition, now that you've got Barnaby Joyce about to become the Leader of The Nationals within a couple of years, that's really going to drive a fissure through the Parliament. I don't know if people notice this Kieran but the current leader of The Nationals, Warren Truss, walked out of Parliament part way through Barnaby Joyce's maiden speech, just at the point where Barnaby started talking about he could be great leadership material.

GILBERT:

Ok let's move on. Well this is a serious issue to conclude with, I want to get Steve Ciobo's thoughts particularly on this, it's quite a contrast from Tony Abbott on the message of human rights in Sri Lanka to that of David Cameron, a fellow conservative. What did you think of the way David Cameron handled it?

CIOBO:

I'm not going to comment on particular comments made by David Cameron other than to say this: Australia's approach with Sri Lanka is to recognise it is an important Commonwealth friend, cousin, whatever phrase you want to use. Obviously Sri Lanka is emerging from decades of war, there's been a lot of progress made thus far, there's still obviously a lot more progress to be made. No one is going to pretend that there is a clean slate, indeed basically any country around the world of course has got to some extent various soiling’s on their slate.....

GILBERT:

Bill Shorten pointed out a comment Tony Abbott made on torture, that difficult things happen in difficult circumstances, or words to that effect.

CIOBO:

Terrible things do happen in war time, I think what's important is what the attitude is emerging from it. There's a number of inquiries that are taking place as I understand within Sri Lanka now, there's the Lessons Learned and Reconciliation Commission that's taking place. Clearly Sri Lanka is focused on trying to right past wrongs and I think that's to be welcomed.

GILBERT:

We've only got about 30 seconds left, but the point Tony Abbott and Steve Ciobo is making that is essentially better to be constructive and respectful rather than to lecture fellow Commonwealth countries like Sri Lanka. What's your opinion on this?

LEIGH:

Kieran I think whenever we're overseas we convey Australian values to our audience. And I think it is vital that as Australians we are absolute that we do not accept torture, even in difficult circumstances. I think David Cameron conveyed not just a message to Sri Lanka, but also to the broader world about the values Britain stands for and I was sorry not to see Mr Abbott doing that. It's so ironic isn't it after the comments he was making about the importance of human rights in Malaysia in the immigration debate that now he seems perfectly happy to give boats to the Sri Lankan military.

GILBERT:

Thanks gents.