SUBJECTS: Stern Hu, G8, minimum wage decision, unemployment, superannuation, APRA superannuation return reporting, financial system review, GroceryChoice
BILL WOODS:
Good morning and welcome to the program Chris Bowen.
CHRIS BOWEN:
Good morning, Bill. Good to be with you.
BILL WOODS:
Likewise. I know you have a very broad coverage in your portfolio, so the question of China seems to be a very obvious one looming, and I understand you can't comment on the finer details of the case, you won't be privy to all of those, but the fact that Simon Crean's access was restricted, as a government that must be very frustrating. How do you feel about it?
BOWEN:
Well, this is a concerning case. When any Australian is incarcerated overseas, it's very concerning. We are dealing with it very seriously. Minister Crean has made those representations. It is important to note that the Chinese Government have complied with the consular agreement which has been in place for a long time and there is a process in place for dealing with these matters which we are following. We're dealing with it very seriously and making the appropriate representations, very strongly.
WOODS:
What about the broader issues in terms of our relations with China? Does this create problems here? Is this something we have to look a little more closely at?
BOWEN:
Well, as I say, it is obviously concerning when any Australian citizen is incarcerated. The relationship with China is an important one. The Chinese Government will be very aware that it is not good for business certainty, if there's a regular pattern of foreign business people being incarcerated, but it is important that we deal with it appropriately and sensitively while dealing with it strenuously. Mr Turnbull, for example, has chosen to make political mileage out of this, which is very disappointing. He has shown habitual bad judgment, habitual rashness in rushing to make political points out of what is a very sensitive and very delicate matter with the Chinese Government.
WOODS:
He has called for more government action, but on a corporate level, for Australian businesses - and this is more in your relation to your portfolio, Minister, that it must be a worry. There must be alarm bells out for a lot of Australian businesses both large and small who want to gain a foothold in China or are already working on that.
BOWEN:
Well, look, as I say, this works both ways. It is a concern for Australians and other foreign business people working in China that this could happen. It should also be a concern for the Chinese Government. If foreign businesses feel that the degree of uncertainty is high, it will change the way that foreign businesses around the world approach business in China and approach the placement of executives in China. So this is a concern, I think, in both instances. The process needs to play out. It's important that the Chinese Government complies with the consular agreement, which we have been doing, and it is important that we comply with the consular agreement, which they have been doing. It's important, of course, that we comply with the consular agreement and make the representations at a senior and serious level.
WOODS:
Australian businesses do go to independent advisory companies for these sorts of things. They employ so-called ‘Sinologists' to advise them on how to deal with the Chinese. As a government, what can we do to help Australian businesses prepare and make them aware of the potential pitfalls of the way they deal with the sensitivity involved?
BOWEN:
Obviously we would look at that and look at any lessons to be learned out of this case as we go forward and what support needs to be given to Australian businesses working in China. I'm sure that governments around the world will be doing the same thing. We need to constantly monitor these things and ensure that we're giving whatever appropriate government support can be given to businesses that are doing the right thing and expanding our trade horizons in the world's fastest-growing economy.
WOODS:
Even our close mates like the United States still like to move the goalposts by raising tariffs here and there in various markets. So China - there is a perception, perhaps, in the broader voting populace, even if you don't have any business links there, that they might bully us a little bit in issues like this. How do we manage that situation? That is certainly a Government matter.
BOWEN:
Look, not at all. The relationship with China is an important one. It's important that friends tell each other what we think. That we tell China what we're thinking and they tell us what they're thinking. So you don't have a relationship that is one-way – that you have a relationship that is built on mutual trust and understanding and a very frank exchange of views when it's appropriate and that's certainly the approach that the Prime Minister has taken. He's raised the issue of human rights with in China and raised other issues with the Chinese Government in a way which makes it clear that we're friends, but we're friends that tell each other what we think and what's on our mind at any particular time.
WOODS:
I have to wonder what was on Kevin Rudd's mind when he was overheard, at least, we're not sure that he was aware that it was being listened in – that comment that he made about Copenhagen and what appeared to be a pessimistic view. As a minister in the Government, how do you feel about what was said by Kevin Rudd?
BOWEN:
I think that the Prime Minister has also said publicly that Copenhagen is going to be a difficult conference to reach a resolution. There's 150 days left until the Copenhagen Conference, and the Prime Minister was doing what he's done privately, which is reminding world leaders of the importance to give our negotiators a proper mandate. The importance of actually reaching an agreement at Copenhagen, and, look, this is not unusual, whenever you have an international conference; you're going to get argy-bargy. There's going to be times when it's looking more pessimistic than optimistic. There's going to be times when it's looking like an agreement might be difficult. At the end of the day there's often brinkmanship and ‘five minute to midnight' types of negotiations.
WOODS:
Well, diplomatic language is obviously important. I understand from experts, particularly with ETS, the leading nations, so-called, need to, at least diplomatically, show some leadership and say some positive things about the fact that we can come to an agreement. Was that a slip-up by Kevin Rudd in those circumstances? Because other countries like China, for example, could take that as a way out of any agreement in the future.
BOWEN:
No, not at all. It is a realistic assessment that there is still a lot of work to do. I don't think that the Prime Minister should be glossing over, that there's a lot of work to do, that there's still some way to go before we reach an agreement, and that our negotiators around the world need to be given broad mandates. The Prime Minister was making that point to his colleague. He's made that point privately and publicly.
WOODS:
Chris Bowen, thank you for now. Please stay with us.
When we return, the panel will join us…Welcome back to ‘Meet the Press'.
Our guest this week is Minister Chris Bowen. Welcome to our panel, Jessica Irvine from the 'Sydney Morning Herald' and Radio 2UE's John Stanley. Thank you for joining us.
Australia's latest unemployment figures are further evidence of the global financial crisis eating into our own economy with more than 20,000 Australians losing their jobs in the last month alone.
JOHN STANLEY:
Mr Bowen, the figures this week were better than expected. Based on what you know as we head into this year, is it likely that the jobless rate will be lower than Treasury estimates - that the public deficit could be better than expected? And is there potential scope for winding back some of the stimulus if, indeed, the economy is going better than you expect over the next year?
BOWEN:
You'll remember that when we launched our Budget estimates on unemployment and the Budget deficit, a number of commentators said that we were too optimistic, that we'd come in higher than that. Now a number of commentators say we were too pessimistic, that things were coming better than that. We stick to the estimates. We update the estimates when we update the Budget in the mid-year forecast or when another update is necessary and so we stick with the Budget estimates at that time. On the question about fiscal stimulus there's still a long way to go yet. The President of the World Bank, Bob Zoellick, recently said that it is important that governments don't withdraw stimulus too early, that we remain vigilant, and that there are still a number of bumps to come in the world economy which are going to affect Australia as well, so we need to stick with the strategy we've embarked on, and which all the evidence is, is working.
STANLEY:
Is there some flexibility there if, indeed, things do end up going better than expected and you need to tweak it a bit?
BOWEN:
Of course we respond to circumstances but you have to look at circumstances over a medium and long-term. You don't respond to monthly figures. You need to look at the trends and you need to stick to the strategy and then respond and then reassess as new data comes to light over a substantial period of time.
JESSICA IRVINE:
Those bumps on the road that you mentioned - that's had a very real impact on people's retirement savings, and you've just got responsibility for Australia's superannuation system. I wonder - what are your views on the adequacy of the current system? And in particular, ministers have struggled with the idea of the compulsory superannuation guarantee at 9%. Do you think that's adequate?
BOWEN:
The first point to make is that superannuation has served us all very well. Yes, returns are down at the moment. Yes, returns are negative, which causes a lot of difficulty for a lot of people, but we do again need to take a long-term view. Over 35 years, the returns for superannuation are 4% higher than inflation and we're all much better off individually and as a nation. Our superannuation savings have played an important role in helping Australia through this economic crisis over the last few months - the last year in particular. Now, in relation to adequacy, we're working with the Henry Review. Obviously higher post-retirement incomes are better than lower post-retirement incomes but there's a trade-off with pre-retirement incomes and we need to strike that balance and we're working closely with the Henry Review to make sure that we're considering all the options as we go forward in terms of setting Australia up.
IRVINE:
So, that's on the table, is it? Raising the superannuation guarantee levy?
BOWEN:
We've said that we're working with the Henry Review and the Harmer Review on all aspects of post-retirement income and that remains the case.
STANLEY:
Would you like to see it high?
BOWEN:
Obviously in an ideal world, the higher the post -retirement income you have, the better. I've said that previously.
STANLEY:
With a guaranteed levy.
BOWEN:
And the higher guarantee levy would lead to higher post-retirement incomes, but there is a trade-off with pre-retirement incomes which we need to be very careful about calibrating and we'll continue to work closely through that process.
STANLEY:
In your previous portfolios, you championed the notion of a website Grocery Choice which many people, I believe, would have been a very effective tool in keeping prices down. You certainly believed it. The new minister, Craig Emerson, decided not to go ahead just a few days before it came in. The view is that it was knocked off because of the power of the big grocers, Coles and Woolworths. Do you still believe it could have worked?
BOWEN:
Look, I think it's hard to argue with more transparency. Everybody agrees with that – with more information. The thing about that particular website is that it's a very good concept. It's one that proved very difficult to implement when you look at the fact that there are well over 2,000 supermarkets across the country, each holding 20,000 items. So it is a hard thing to deliver. Now, Minister Emerson has said that he would like to see a website and is working towards a website and he has a process in place to do that and I'm sure that we'd all welcome that if that is successful.
STANLEY:
Some commentators, including myself, believe that it may have gone ahead if you had remained the minister.
BOWEN:
A new minister brings a new set of eyes to problems. That's the case with portfolios I've inherited, that's the case with Craig. Craig is a very competent minister and a very smart man, who will bring a lot of expertise to that portfolio.
STANLEY:
Are you disappointed that he knocked it off, though?
BOWEN:
Look, as I say, every minister has a slightly different approach. It was a difficult thing to implement. When you actually got down to tic tacs and you actually got down to the process of putting it together, it was something which was difficult, but Craig is committed to following it through and trying to get a website up and running.
IRVINE:
And yet in your new portfolio, you're also proposing a new website for superannuation companies, or a league table of their performance. Is it possible that's going to go the same way?
BOWEN:
That is an APRA proposal and it's something which APRA is implementing. Look, again, more transparency is difficult to argue with. That's something that I think Australians will welcome. It is important that the information is accurate. It's something that Jeremy Cooper is looking at to make sure that the information is as accurate as it can be going forward. I've asked him to look at that to make sure that there's an accurate reflection of returns. People will make their own decisions. There's a lot of information already out there about superannuation returns through private sector providers. This is one mechanism that APRA has in place to provide more information. Again, that's probably a good thing.
WOODS:
There was fairly ready criticism this week of the Fair Pay Commission - the decision not to increase the minimum wage - but the Commission retaliated with claims that the wage freeze would reduce pressure on employers and, of course, preserve more jobs in this climate.
IRVINE:
Minister, it seems that there's a very confusing message for the 1.3 million people on the minimum wage. In economic good times, you can't have a pay rise because it will fuel inflation. In economic bad times, you can't have one because it is too expensive for employers. When is a good time to raise the minimum wage and do you expect there'll be a bigger increase next year because of this year's decision?
BOWEN:
We certainly don't think that the Fair Pay Commission got the balance right. It is a balancing act. In any economic circumstance, as you say, but we think that a considered rise would have been appropriate this round. We think that Australia's lowest-paid workers did deserve a modest, but considered pay rise and we're disappointed that that is not happening. But we do have in place substantial stimulus payments to them, and of course we do have interest rate reductions as a result of Reserve Bank decisions which have helped lower-paid workers as well as the rest of the economy through. So we'll continue to make representations next year to the new organisation which will now consider this under our post-WorkChoices model as opposed to the Fair Pay Commission and we'll make those representations – we'll argue the case. At the end of the day, there will always be an independent umpire deciding these things. Government will make representations as appropriate.
STANLEY:
The six economists who came up this week with a plan for overhauling the financial system - a lot of focus on the plan for a people's bank that was buried within it - but your Government has never been averse to having inquiries. They want another inquiry into the financial system. What would be wrong with doing that, particularly after the global financial crisis where so many of the things that we've done in the past have been shown to be wanting?
BOWEN:
Well, I think it's important to note that Australia's financial system is getting through the financial crisis better than, effectively, any other financial system in the world and we need to always remember that. But, yes, there are issues around competition – they've been well-noted - but we still have four of the now eight top banks in the world that are AA-rated. We haven't had to rescue a financial institution, which almost every other developed country in the world has had to do. So there's a lot going for the Australian financial system so we wouldn't rule out a review at an appropriate time, but at this point in the cycle, we're just focused on getting us through the global financial crisis and working with the strengths of the Australian financial system which has stood us in good stead.
WOODS:
We've covered a lot of ground there and we appreciate your time, Minister. Thank you for joining us.
BOWEN:
Always a pleasure, Bill.