7 July 2015

Interview with Greg Jennett, ABC Capital Hill


SUBJECTS: Economy, superannuation, China stock market, political donations


… has been through some wild fluctuations even manipulations over the last few days, it does not appear to be feeding any additional slow down into the Chinese economy but that is the risk that Australia is watching very closely. We spoke to the Acting Treasurer, Bruce Billson, about that and other economic policy matters from Sydney a short time ago.


Well, Bruce Billson, the world is commentating and watching on volatility in Greece and yet we are also seeing it much closer to home in China. How closely are you monitoring these wild fluctuations on Chinese markets for their potential impact on our economy?


Well very closely Greg. We are monitoring the situation, as you mentioned, both in Greece and in China.

Different circumstances with different implications for our economy but in both cases developments and moving parts that we are closely monitoring - our regulatory agencies, the Treasury portfolios - we are all closely examining what is happening to see how this may play out and if there are any implications for our economy.


What are the risks from China if this wild fluctuation, as we say, on their markets has some busting effect and further slows the economy there?


Well at this stage the Chinese authorities have acted quite decisively to intervene in what was initially, many thought, excessive exuberance in the equities market in China.

And then when people were reflecting on that level of activity, quite a correction.

So Chinese authorities have acted, that has abated the moving parts and seen some restoration of calm and more predictable market conditions.

At this stage we are carefully monitoring whether that intervention is durable and whether there will be any further action taken, but we are fortunate in our economy to have many strengths in our economy – good institutions, good strength in key aspects of our own economy and that is why we are keeping a close eye on those developments to see if any ramifications emerge here.


But can Australia's own safeguards and mechanisms domestically actually insulate against a real economy slowdown in China?


That is a broader issue about the overall state of the Chinese economy.

We have seen the growth rate in China come off slightly but it is still very significant off a much larger economy than where higher growth rates existed some years earlier.

So there is still quite a degree of momentum and buoyancy in the Chinese economy. What we are seeing is very much around the share market and what seems to be an influx of retail investors moving into the share market.

Some concern by Chinese authorities that there was too much momentum and too much exuberance there and they have acted to deal with it.

Our focus here is to make sure our economy is strong, implement our own economic action strategy, make sure that we are engaged in durable economic relationships with China so there is a demand and an appetite for our resources, our energy, our fresh food, our services.

That is the focus of the trade agreement and there is still ongoing demand for those key things that we export into the Chinese market.


So does anything that you are seeing in China, including a further softening in the iron ore price that Australia is receiving – does any of this give you pause to reflect on the budget forecasts and assumptions?


Well no the budget forecasts have been calibrated to be quite conservative.

You have had much to say about that as people have about those policy settings. So, at this stage there is no need for us to take any adjusting action in that regard.
Our role, and what we are doing, is monitoring developments very closely, making sure that in a domestic sense we have strength in our economy, our institutions are functioning well, we have got our best people working to make sure, day in day out, that we have as much opportunity and potential in our economy. And there will be international headwinds from time to time- that is why it is crucial we stay the course to repair our budget, to focus on our economic strengths and to implement our economic action strategy.

That is what we have control and influence over and that it why we are so focussed on that task.


Ok, let us go to some domestic policy now. The Productivity Commission has handed over a report that floats the idea of raising the age, the preservation age for super, the age at which people can access their money. Are you attracted to the idea of lifting it to 65?


No, and we have made it absolutely clear that we will not be implementing any unexpected adverse changes to superannuation.

The Coalition has made it absolutely clear that people preparing for their retirement should have predictability and certainty.

It is Labor that wants to keep mucking around and tinkering with superannuation.

It is Labor that sees people's retirement nest egg as a 'break glass in case of' budget challenge option.

That is not what superannuation is about. That is why the Coalition is committed to predictability, to certainty, to making sure the accessibility rules that are currently in place and the general incentives that are there for people to provide for their own retirement can be relied upon into the future.

We make that clear time and time again.


But are ruling this out forever? Are you ruling out any move forever or only this term?


Well we have made it clear. No Greg, we have made it absolutely clear that we have no plans for any changes, made it absolutely clear there will be no adverse unexpected changes in this term and we have got no plans to change that beyond that time.

The work of the Productivity Commission, work they instigated on their own behalf, will be useful input as we proceed with the Tax White Paper process.

The question is when will Labor stop talking about tinkering with superannuation as if it is somehow the budget repair pot of honey that can be reached into by Canberra whenever they have got a budget problem.


Well you talk about a pot of honey and yet the Productivity Commission itself is saying that if you did make some changes there is up to seven billion dollars a year in public sector savings that could be derived from this. Why won't you go there?


Well read on the report Greg, would be my advice.

It makes that point and then points to some of the changes that the Government has already put in place, not being factored into those calculations and the number that you are referring to is the number at 2055.

So there is work that we are doing to repair the budget- you have seen that we are improving the deficit by a half a percent of GDP through this budget. We will continue with that work.

Coming up with a further change that may deliver a relatively modest variation in the budget forecast in 2055 is hardly the kind of certainty and predictability the voters are looking for and it is certainly not consistent with our policy commitments.


And just finally, because this has cut home for you in recent times around the Four Corners reporting on political donations we have a suggestion coming forward from Joel Fitzgibbon on the Labor side that we do away with donations and go towards a full public funding model.

Your thoughts on that?


No I think where we have got it at the moment talks about transparency, disclosure arrangements, whatever the arrangement needs to be it needs to be fair and consistent.

It needs to be reliable, disclosure requirements need to be met.

I know that has been my approach to be fully compliant with all requirements to make sure we are transparent in our fundraising and that is what it should be into the future.

If Joel is proposing some other strategy, again it sounds a bit like a thought bubble, un-costed.

I think the real issue for Labor are the rivers of gold that come out of the union movement and the extraordinary strangle hold those rivers of gold giver the union movement over the Labor Party.

It is as if the Labor Party is a fully owned subsidiary of the union movement because they are so dependent on the union movement for funding of their election campaigns, they are activists and also, it seems, their Members and Senators.


Alright, Bruce Billson, we will leave it there. Thank you.