SUBJECTS: Economy, Cost of Living, Carbon Trading Scheme, Alexander Downer, Belinda Neal
STEVE PRICE:
Chris Bowen’s with us now, thanks for standing in for Anthony Albanese; appreciate it very much.
CHRIS BOWEN:
Pleasure Steve, sorry I could hear you, but you couldn’t hear me.
STEVE PRICE:
Well we can put a man on the moon, but we can’t put a call to air.
CHRIS BOWEN:
I’ll have to put a complaint in to Steve Conroy.
STEVE PRICE:
Exactly. There’s a poll in The Australian newspaper this morning saying that as a nation we’ve lost our confidence; I’m sure you’ve seen it. Biggest percentage of people fearing their lives are about to get worse has doubled – biggest jump ever. And even Labor voters, I think 34%, think things are going to get worse. Are we looking at a 90’s type recession?
CHRIS BOWEN:
Well look I think what we’re seeing Steve is across the world, consumer confidence falling. Naturally enough we’re seeing turbulence in financial markets, we’re seeing petrol prices going through the roof, hitting $2.50 in Europe, for example, per litre. And people’s confidence, naturally, is responding to that saying the world is a very uncertain place at the moment and we’re not sure we’re it’s going to go over the next six months to a year.
STEVE PRICE:
Joe is that a reasonable point to make? I mean, could you argue that this set of figures, that this mood, wouldn’t be exactly the same given that it is driven by global circumstance? I mean, if you were here, if you were still in Government, you’d still be suffering from oil prices and the sub-prime collapse.
JOE HOCKEY:
Oh you’re right Steve. We would’ve been, there’s no doubt about that. The difference is that Kevin Rudd created huge expectations before the election and immediately after the election he said we have a crisis and he started talking down the economy. And he started from day one saying that they had to have a ‘shock and awe’ budget that was going to take a sledge hammer to this ‘crisis of inflation’, as he called it. And low and behold they didn’t do it, they didn’t do it and you know what Steve? The financial markets in particular look at this mob as if they don’t know what they’re doing. But obviously you can’t stop the global tide at the moment, it is challenging.
STEVE PRICE:
Chris, did you raise expectations too high, do you think?
CHRIS BOWEN:
No I don’t think so. We said that we recognise that there were cost of living pressures and we would do what we can to improve competition, improve competitive outcomes and put downward pressure.
We always said – the Prime Minister, the Treasurer and I always made it clear - that certainly we couldn’t guarantee that particular prices would come down and that the biggest impact on petrol prices, for example, is world oil prices and that we’re in a global market. That we would do what we can to ensure that Australia’s competitive markets were working properly. But I mean, Joe’s being disingenuous when he says the Budget didn’t go far enough. We’ve got the Reserve Bank saying at last we have fiscal policy working the same way as monetary policy and putting downward pressure on interest rates. Joe’s saying we shouldn’t be talking about the problems in the Australian economy, engaging in ostrich economics and saying ‘well if you just don’t talk about it, it’ll all go away’. Well we have a different approach, there are real challenges, real issues, but we’re dealing with them.
STEVE PRICE:
Joe?
JOE HOCKEY:
Look, Chris can put whatever spin he wants on it. The bottom line is that they were talking about the crisis of inflation, egging the Reserve Bank on to increase interest rates. The last increase unquestionably was influenced by the pressure of the Government talking up the threat of inflation. Look, you know what a crisis of inflation is? It’s when it gets to (inaudible) levels or even if it gets to six, seven, eight percent, but fair dinkum – talking of a crisis at 4.2 percent inflation means that you are talking up a problem in order to try and deliver a Budget that, you know, increases taxes by $20 billion. Which is exactly what they did.
STEVE PRICE:
Both of you have been supportive of the tax cuts that kicked in yesterday. Without those….
JOE HOCKEY:
They’re our tax cuts Steve!
STEVE PRICE:
That’s why I make the point. But, to both of you the average working family out there that everybody likes to talk about, if they hadn’t had that tax cut yesterday Chris Bowen, they’d be in even more strife than they are now given what’s happened to them with food, grocery and petrol prices.
CHRIS BOWEN:
Absolutely, and that’s why we’re so committed to them, that’s why some people are saying you shouldn’t do it and us holding the line and saying ‘no, we will do it, we’ll have the tax cuts.’ We targeted the tax cuts at lower and middle income earners, we’ve added the education rebate and increased the childcare rebate, all effective from yesterday, because it does provide some relief. Not a magic bullet, but it does provide some relief to the cost of living pressures and that’s why we’re so committed to them, even though some people say that we shouldn’t be.
STEVE PRICE:
Do you accept the $30 a week worse off figure that has now almost been accepted by everybody, that since the election families now, even with those tax cuts, are $30 a week worse off?
CHRIS BOWEN:
Well depending on people’s circumstances; how much they have to drive, how many kids they have et cetera. But there’s significant relief from yesterday, if you’ve got a couple of kids in child care or at school then you are significantly better off in terms of your tax, from yesterday onwards, because of the tax cuts.
STEVE PRICE:
Joe Hockey the ABC Learning Centres jacking up their rates by, in some cases – I had a call yesterday from Goulburn – 19%, that’s just milking the public purse isn’t it? Jacking your rates up knowing the childcare rebate’s increased.
JOE HOCKEY:
Well in part, but also there are a whole lot of community and council run child care centres that are increasing their rates. I mean, look Steve, we were warning before the election that there were dark clouds on the horizon…
STEVE PRICE:
You weren’t warning that loudly.
JOE HOCKEY:
Well, my word we were, we were.
STEVE PRICE:
No you weren’t.
JOE HOCKEY:
John Howard…
STEVE PRICE:
You weren’t suggesting we would be in the economic situation we’re in right now.
JOE HOCKEY:
We were warning… Steve, John Howard uttered the words ‘dark clouds on the horizon’ on numerous occasions before election day. That’s one of the reasons why we committed to the tax cuts and then five days later the Labor party copied them.
STEVE PRICE:
Chris, do you reckon they had such a great crystal ball?
CHRIS BOWEN:
Well, no. John Howard said Australian working families had never been better off.
JOE HOCKEY:
Well… dig it out. Dig it out. Dig out the, dig out… I mean I’m happy to, you know, want to get back sit and dig it out, but if you dig out the words John Howard…
CHRIS BOWEN:
Well I was having a go Joe and I let you have a go. John Howard said Australian working families had never been better off. Now, everybody has said for some time that there’s global turbulence and that the world economy is in a very strange place. We’ve got China and India booming, United States and Europe tanking and we’re in the middle. And that’s going to have an impact, that’s going to flow through and that’s why we’ve go to get the balance right. That’s what we’ve done with a tough Budget.
JOE HOCKEY:
Tough Budget!
CHRIS BOWEN:
Well is it too tough Joe, or not tough enough? Make up your mind.
JOE HOCKEY:
Well mate, mate, come on.
CHRIS BOWEN:
You can’t walk both sides of the street Joe. You can’t be all things to all people.
JOE HOCKEY:
Is a tough Budget increasing spending? Is a tough Budget increasing spending? ‘Cause that’s what you’re doing.
CHRIS BOWEN:
Well we’ve reduced spending as a proportion of GDP to the lowest level since 1989, lower than you ever got it Joe, lower than you ever got it.
You had government spending out of control. We had to take tough decisions. I sat around the ERC table late into the night making those tough decisions, decision the previous Government never got around to making.
STEVE PRICE:
Joe did you really, seriously, during the election campaign last year, think that we’d be looking at petrol prices of unleaded fuel up around $1.75/$1.80 a litre.
JOE HOCKEY:
No, I don’t think anyone saw it getting to that level. Particularly…. It’s almost a perfect storm in international markets. I mean you’ve got petrol going through the roof and yet you’ve got the US – if it isn’t in recession it’s certainly heading towards recession, with Europe not far behind – and you’ve got the international credit crisis, which quite frankly Steve, people saw coming the international credit crisis. I mean there’s not great science to it, it’s been coming for a while; since certainly October last year. And the fact of the matter is – when you are running a trillion dollar economy experience matters.
Now the Australian people made a decision last November that was a decision that they made, we accept that, we move on. The bottom line is – how do you handle it now? And you don’t handle it by talking down the economy, you have to have this quiet confidence that we can see through the rough seas. And I don’t think this mob are up to it, but Australian’s have formed their view at the ballot box.
STEVE PRICE:
As you would. Chris Bowen, the Carbon Trading Scheme is obviously central now to where you go over the next two years. Is the Government looking at a range of family benefits to offset hikes in petrol and utility prices?
CHRIS BOWEN:
We’ve made it clear that the increase in revenue Steve, from the Carbon Trading Scheme to the Government, will be used to compensate people who are worse off as a result. So we will be using all sorts of mechanisms to ensure that people doing it tough aren’t as badly affected as they otherwise might be.
STEVE PRICE:
So have you settled on how you’ll do that yet?
CHRIS BOWEN:
There’s a process we’re going through. There’ll be a paper out in about a fortnight which will have the green paper, it’ll be the Scheme’s design and there’s a process we’re going through. This should’ve happened a long time ago Steve. This should’ve happened five or six years ago. It’s complex scheme, would’ve been better if it was up and running by now – we’ve been in office six months and we’ve made great progress.
STEVE PRICE:
The Oz is predicting today that if you earn over $100 000 then you will be excluded from those offsets, those family benefits that would flow to you as a result of prices increasing under Carbon Trading – are you looking at that sort of means tested level?
CHRIS BOWEN:
I can’t go into the detail at this stage Steve. There’s going to be a green paper out very shortly, there’ll be options in that green paper, it will then be followed up by further work and consultation. So I can’t give you a running commentary on what the Cabinet may or may not be talking about…
STEVE PRICE:
Joe, is a $100 000 a fair trigger point?
JOE HOCKEY:
Well this is the debate Steve. I mean, if you believe Chris, no one’s going to be worse off…
CHRIS BOWEN:
I didn’t say that.
JOE HOCKEY:
And prices are going to go up for everyone, but no one’s going to be worse off. I mean this is one of the challenges. He says it should’ve happened five/ six years ago. What countries in the world have an emissions trading scheme up and running right across the economy now Chris? What country in the world?
CHRIS BOWEN:
We are way behind, we are way behind.
JOE HOCKEY:
What country in the world?
CHRIS BOWEN:
You were recommended…you sat around in the Ministry and the Cabinet. It was recommended to you in 2003 and you did nothing.
JOE HOCKEY:
What country in the world has an emissions trading scheme now, not six years ago, now.
CHRIS BOWEN:
Well there’s a place called Europe which has got an emissions trading scheme…
JOE HOCKEY:
Across the whole economy.
CHRIS BOWEN:
Well it’s got an emissions trading scheme and they’ve had it up and running and we should’ve had ours up and running. The United States, certain regions, are moving towards it. We could’ve led the world, we could’ve been world leaders instead we’re playing catch up.
JOE HOCKEY:
Yeah. No it’s great to be world leaders when Australians will have to pay 20, 30, 40 percent more for their energy. We are a net exporter of energy, a net exporter of energy…
CHRIS BOWEN:
So you’re confirming you don’t support emissions trading?
JOE HOCKEY:
We are a net exporter…. Well, you know what? I’ve got a real problem with the timing. I mean, 2010, if we are not in the same position as any of our comparable trading partners or we’re not in a similar position to some of the other developed world countries, I mean we’re going to be well ahead of any of the second-tier countries…
STEVE PRICE:
But aren’t you simply using that timing argument to suit your purposes politically because you know there’s an election in 2010?
JOE HOCKEY:
Well hang on. They want to introduce it before the election in 2010.
STEVE PRICE:
Yeah, I understand that.
JOE HOCKEY:
Well great if they want to do it.
STEVE PRICE:
Are you going to bag it until then knowing that it’s politically advantageous?
JOE HOCKEY:
Well, no, no. I’m…. we actually believe in doing what’s right for the nation Steve. I’m mean, you know, the question is do you want to be ahead of the rest of the world on this, so that Australians are paying a far higher price for everything and it’s having negligible impact on global warming.
STEVE PRICE:
Chris Bowen, will you do it regardless of electoral timing?
CHRIS BOWEN:
We are doing it because it’s the right thing to do for the long-term future of Australia and the world.
JOE HOCKEY:
Of course it is! We agree!
CHRIS BOWEN:
We have the highest green house gas emissions in the OECD, double the OECD average. We have to do something. Now you can fiddle around, you can say ‘oh well, let’s just put it off, let’s just put it on the never, never.’ We’re not going to take that approach. We know it’s difficult, we know it’s controversial. We have to take tough decisions – it will be up and running in 2010. We know it would be easier to say well ‘lets do it after next election, let’s be sneaky and tricky and mean…’
JOE HOCKEY:
Nah…
CHRIS BOWEN:
We’re not doing that, we’re going to do it. It’s complex, it’s difficult, but it’s the right thing to do and that’s why you get into politics, to make the tough decisions.
JOE HOCKEY:
Oh, yeah…
CHRIS BOWEN:
You can be cynical Joe…
JOE HOCKEY:
Oh well I am cynical about this because mate I’ve been there, right? And I know exactly what the situation is.
CHRIS BOWEN:
And you did nothing. You did nothing. You didn’t sign Kyoto, you didn’t introduce emissions trading, you ignored it.
JOE HOCKEY:
We spent $500 million on clear coal technology, which you guys are banking on as the basis for helping to address greenhouse emissions in Australia and let me tell you – the technology is 10, 20, 30 years away, from having any impact. I mean, quite seriously, this is a big debate. It is about the future of the country. We supported an emissions trading system, but I’ll tell you what Steve, if you get it wrong it is going to punish a generation of Australians in a way that we haven’t seen before and that’s why it needs proper scrutiny. Not the sort of rushed timetable that Kevin Rudd’s setting. But look, if he wants to take a poison pill before the next election, so be it.
STEVE PRICE:
Alexander Downer’s decided he’s going to quit Joe. If you stand at an election which is only seven months ago, doesn’t your electorate deserve you to stay there a bit longer than that?
JOE HOCKEY:
Look, my, you know, I’ve always had a problem with bi-elections.
STEVE PRICE:
Well you yourself have said you were not available to become Premier of NSW, because you didn’t want to have a bi-election in North Sydney. That’s what you said.
JOE HOCKEY:
(Laughs) No Steve I did not say I wasn’t available (Laughs)
STEVE PRICE:
You sort of said that.
CHRIS BOWEN:
Maybe he is available…
JOE HOCKEY:
(Still laughing) What an interpretation! Ten out of ten to you.
STEVE PRICE:
We got him there Chris.
JOE HOCKEY:
Yeah… but, no, let me tell you – I don’t believe in bi-elections personally, but, you know, the fact that the Labor party supports Alexander Downer becoming an envoy to the United Nations, especially to address a lot of very pressing issues in Cyprus, indicates that there’s recognition that this is actually in the national interest…
STEVE PRICE:
Well I find that a bit unbelievable, given what Kevin Rudd – as opposition foreign affairs spokesmen – used to say about Alexander Downer and the Australian Wheat Board. Called him a crook basically.
JOE HOCKEY:
Well… Yeah, he did basically. He didn’t hold back, but at the same time…
STEVE PRICE:
So now he says it’s ok you can go and fix Cyprus.
JOE HOCKEY:
(Laughs) Well maybe that says a lot about Kevin Rudd’s view of Cyprus. (More laughs)
STEVE PRICE:
Chris Bowen, your colleague Belinda Neal, should she go and front the police over Iguana, rather than give a written statement?
CHRIS BOWEN:
Oh Steve, I think the Prime Minister’s made it very clear overnight what he expects. He expects full co-operation. And he’s made it very clear in the past, and other people have recognised the role that he’s played, that he expects full co-operation with the police on this matter.
STEVE PRICE:
Here’s what Brendan Nelson said overnight:
BRENDAN NELSON:
…and if she’s not prepared to do that, he should remove her from his Government.
STEVE PRICE:
I guess you’d agree with that would you Joe?
JOE HOCKEY:
Well of course I would. I mean, look, Kevin Rudd’s set new standards and so far Morris Iemma’s got higher standards in relation to this accountability than Kevin Rudd. Morris Iemma forced Della Bosca to make an explanation to Parliament and Kevin Rudd refused to do that. Three days later, eventually, Belinda Neal gave an explanation to Parliament and yesterday Morris Iemma was out of the blocks saying that Della Bosca had to front the police and so far Kevin Rudd hasn’t done the same Belinda Neal. It’s kind of extraordinary isn’t it when Morris Iemma has higher standards of accountability from his own members that Kevin Rudd.
CHRIS BOWEN:
We’re seeing a bit of convenient argument here. Barry O’Farrell says Kevin Rudd’s handled it better than Morris Iemma. Joe Hockey says…
JOE HOCKEY:
No, no, no! When did he say that? When did he say that?
CHRIS BOWEN:
He said Kevin Rudd set a higher standard.
JOE HOCKEY:
When? When? When?
CHRIS BOWEN:
Well, we can get out the dates…
JOE HOCKEY:
Yeah, it was about four weeks ago.
CHRIS BOWEN:
Well, it was during this issue, so you can’t run the arguments to suit yourselves. I think both Morris Iemma and Kevin Rudd have made it very clear overnight what they expect and I would expect that to be acted upon.
STEVE PRICE:
I appreciate you filling in for Anthony Albanese today Chris, appreciate it very much, thank you.
CHRIS BOWEN:
It’s been a pleasure.
STEVE PRICE:
Chris Bowen there, who is the Assistant Treasurer and Joe Hockey thanks for going into those studios in Brisbane for us, appreciate it very much.
JOE HOCKEY:
Anytime Steve, go the Blues!
STEVE PRICE:
Yeah thank you, good on you. Joe Hockey there in Brisbane.