SUBJECTS: Nielsen poll, climate change, tax reforms, the concept of happiness
RICHARD GLOVER:
Chris, thank you very much for joining us.
CHRIS BOWEN:
Pleasure, Richard.
GLOVER:
Now, Mr Rudd plummets in the polls: his approval rating falling 14 per cent in three weeks, the most dramatic drop for a PM in a decade. Why has it happened and has Mr Rudd permanently damaged his brand, as some have argued in the last day or so? Hugh Mackay.
HUGH MACKAY:
I think this is not sudden. It looks sudden in the polls, but I think the unravelling of the Rudd brand began in the second half of '08 when all of the euphoria that surrounded the '07 election began to evaporate, particularly because of a lack of action in the area of climate change. People were expecting to be really geared up to take part in this war on warming that was going to happen; nothing happened there.
And in those early months of the new Government, when there were some wonderfully potent symbols of the new order – things like ratification of Kyoto, the apology, even the 2020 summit – about six or nine months into the life of that Government, people were starting to say, 'Well, it's all talk, it's all symbol and is there substance?' And even the 'Kevin '07' stuff, and then the realisation that the spin doctors were out in force and that, you know, the statement that a politician will be 'on message' was given new meaning. Daily slogans were repeated.
All of that, I think, started to undermine their position. By the second half of '08, I was fairly sure we were looking at a one term Government because the level of scepticism was just getting a bit intense. Then, of course, we had the global financial crisis and the threat to Australia, which was an enormous boost to the stocks of this Government and this Prime Minister.
GLOVER:
Because people felt they did act and act successfully?
MACKAY:
Partly that, and partly that any crisis helps a Government, whether it's terrorism or potentially an environmental issue or an economic issue. All of these things are very good for an incumbent Government because worried, anxious electorates don't ever want to change the Government.
So I think there was all this, so the GFC really, really made up for what had gone before. But now that that's passed and people say, 'Well, we didn't even have a recession and perhaps it was the mining industry that saved us, not the cash splash, et cetera', or a bit of both. So we seem to be back into this situation of scepticism at quite a deep level.
GLOVER:
And a belief that he's not courageous enough, that unlike Mr Howard he's not willing to – you know, whatever you think of Mr Howard, that he seemed to –
MACKAY:
An uncertainty about what he stands for, and a big symbol of that is the environment, the fact that the ETS was shelved. Even opponents of the ETS, or people who were genuinely bewildered about what that meant, the shelving of it said there's something about the depth or lack of depth of the Prime Minister's conviction. So I think what we're looking at, it's not hostility; I think it's just plain disappointment.
And you might argue – you may see a similar thing in the US with Obama – you might argue that the greater the euphoria surrounding an election, the more quickly the disappointment is [inaudible].
GLOVER:
Inevitably.
Chris Bowen, you must have ants in your pants in your desire to protect the, defend the boss against all these [inaudible]. Let me put it this way: he's a man without courage, that seems to be what's being said by some, particularly over things like the ETS.
BOWEN:
Well, obviously I reject that, and when you're engaging in reform – and I know we'll get to it a bit later in relation to the economy and tax health reform – I mean, there's a big reform agenda and that does take courage. I think what we're seeing, Richard, is a return to normalcy, and the return to normalcy is that most elections are contested and contestable, and this far out from an election you would not normally be able to say conclusively that one side has it won, and that's the case on this occasion.
GLOVER:
But 14 points in three weeks; that's pretty dramatic, isn't it?
BOWEN:
Well, it's particularly true of first terms – and I do agree with Hugh on this – that first term Governments dealing with expectations, particularly when they've been out of office for a long time, face difficulties. Now, many people think there's a historical rule in Australia that first term Governments aren't defeated. I don't accept that. It's a historical accident that it hasn't happened for a long time, but many first term Governments have come close. It's easy to forget now just how, frankly, fraught John Howard's first term was and he ended up losing the popular vote and came very close to losing office the first time around.
We expect this to be a very tight election because first term elections often are and as I say, I think we're seeing a return to normalcy. I will say I think the Prime Minister, on the latest figures I saw, I think he's 15 points in front as preferred Prime Minister, and that's still a good, solid rating. I think that says a lot about what the Australian people think about Kevin Rudd and the contest with Tony Abbott, and the risk that entails.
GLOVER:
How can you call something the great moral issue of our time and then shelve it?
BOWEN:
Well, I think it was a recognition of reality, that we tried to put it through the Senate and even if we wanted to get it going by 2011, with an election later this year and with all the uncertainty that that would create and the necessary way of getting the legislation through the Parliament, it just wasn't realistic anymore.
GLOVER:
Sorry, you've got other issues you can't get through the Senate. You're sticking on with them. What's different about this one?
BOWEN:
Well, because this is such a major change, a major reform and you couldn't, for example, hold an election, realistically, and then put it through the Parliament late this year or early next year and give people a long enough lead time for it to be up and running in 2011. The time to do that was last year when we tried to get it through the Senate. So look, we've kept our targets in relation to emissions and we've said that we'll continue to argue vigorously internationally and domestically for what we think is the right approach. But we've just accepted the reality that it's not going to happen by 2011.
GLOVER:
You spent the afternoon in the caucus meeting. People must have been pretty upset with the figures, though. What was the atmosphere like in there?
BOWEN:
Oh no, look, MPs who have been around for a long time know that elections are contestable, particularly marginal seat MPs. They know that the types of, you know, opinion poll ratings that we were seeing were unusual in Australian history and unusual for them to be sustained for so long. So they're realists. They know just how tough every election is and I think most hardheads who've been around for a while would find that unsurprising, that we're going into a tough, tight election.
GLOVER:
Heather Ridout, it is a large drop in a short time. Why do you think it's happened?
HEATHER RIDOUT:
Look, I think it's a combination of things, Richard. You had six interest rate rises in seven meetings of the Reserve Bank; you've got petrol prices rising; you've got tobacco prices rising at least two dollars a packet and three million Australians smoke; you've got, you know, the child care places decision; you've got the asylum seekers change of policy. And all of that happened at a time when the insulation debacle was still sort of playing itself out. The questions about the Building the Education Revolution program, that whole issue, and then you had the back down on the CPRS.
Now, the former list of issues would have dented a normal Prime Minister who was, you know, regarded as a pretty solid guy, but Kevin Rudd was regarded as something special. And he does these interviews outside church on Sunday and you know, so I think to me, from a business point of view, I mean, we've got this target sitting out there for 2020. Well, unless we get some action from Government soon to give business some help in putting in place some programs, the targets will start to be negotiable because they won't be able to be achieved and the pressure, the cost to society will be too high.
GLOVER:
Obviously, Heather, he was worried about going into an election campaign when Mr Abbott would use this line of a 'great big tax' again and again and again. Should he have been fearful about that or is the cost greater in dumping it?
RIDOUT:
Look, I think from a business perspective, you know, the whole collapse of the bipartisanship was a catastrophe at the end of last year, because that really, I mean, there was a big pressure on business to get behind the thing, and we negotiated really hard. Our group, the BCA, were right there and we supported the passage of the bill, having had negotiations with Malcolm as well as with the Prime Minister and Penny Wong. And then you had the debacle of that undergraduate conference in Copenhagen, which really showed that the world can't do something together for future generations.
You had those two really big events, and you know, you knew things were in some sort of hiatus, but a policy vacuum is not a breathing space and what I think we need to see from the Government is what they're going to do. Now, in tomorrow night's Budget – they had $700 million in the Budget last year for the Climate Change Action Fund and that was to fund partnerships between business and Government around co-generation, around technology investments, trying to give energy industry support in terms of understanding what they've got to do and how they're going to do things – we've got to get started. And, you know, the prospect of just regulating our way through and putting dead weight costs on the business community as a way of being seen to do something, that's a really big risk and I'm quite worried about it.
GLOVER:
There's nothing you hate more than uncertainty, is there?
RIDOUT:
Well, they do hate uncertainty. You know, we're having this issue in the mining industry that there are a lot of investments now that are sitting there, and people don't know what's going to happen, and we still have both parties with this negative five per cent target, which means taking out one in 20, one in five emissions on a business as usual basis which could mean the Government will have to go and buy the permits internationally, which would be massively expensive for the economy.
GLOVER:
You mentioned the mining industry. Let's move onto that because Xstrata Coal today said they were going to stop exploring in this particular area of Queensland because of the uncertainty around this. They're obviously gearing up to a big campaign against the tax and today's polls suggest that it hasn't been quite the ratings winner that Mr Rudd thought it would be. Australians are kind of even stevens over whether they agree with this new Super Profit Tax on mining. Do you think it's a fair thing, Heather?
RIDOUT:
Well, the Government have taken on a very, very well resourced sector [inaudible] but the issue with the Henry Review recommendations around this issue, in the current system of taxing relies on these royalties, which are really inefficient taxes. And if you're a small, marginal mine, whether you make a profit or not, if you produce a tonne of anything you're going to have to pay a tax.
GLOVER:
Currently you're taxed on –
RIDOUT:
On a production basis.
GLOVER:
So a tonne of coal, you pay the Government [inaudible].
RIDOUT:
And if you're a marginal mine, it's hardly profitable, you know, you're stuck with it. And so there's something like 50-plus of those royalties. So they're sitting out there as a really sort of bad form of doing business.
There's also the discussion that the mining industry, you know, they're paying a lot of company tax, have been getting very high prices and what's called supernormal profits. So the idea of this Super Profits Tax, which is called a rent tax in economics, is that you don't pay tax on the normal profit which is after you take into account the cost of your assets returns and your assets. And then you pay, you receive 60 per cent of the supernormal profit less your company tax. So that is the concept behind this and that would make more entrepreneurial mining activities more viable. They can also, if they spend a million on exploration, they get $300,000 back as a rebate. I mean, there's a lot of sweeteners in this.
GLOVER:
But the miners say the problem is that super profits are defined against the ten-year cost of, rate on Government bonds. And they say if you're investing in something as risky as mining, you want to get more for your money than the bond rate.
RIDOUT:
Absolutely right, and you certainly will. I mean, most of these mines, some of them, you know, 50 per cent-plus. But the big issue the miners need to do with the Government – and Henry advocated it – was that they sit down, they have a big discussion about what the base is and what that uplift factor is, whether it's the bond rate or whether it's more of the petroleum rent tax as a higher one. We've got one in there that Gorgon and others have been subject to but they don't have some of these other benefits, see. Have a debate about that and have a debate, very importantly, about the transition of existing projects into the scheme because the last thing Australia wants is to be, you know, accused of having a sovereign risk problem. So I think all those issues are there to be hammered out with these well resourced companies.
GLOVER:
Chris Bowen, is there real room for negotiation, both on the rate and on this business of applying it to existing mines?
BOWEN:
Well, the rate we've announced, that we've said we'll have transitional discussions with them about the transition and that would apply to existing projects of course, and the way that's handled. There's already in the package a very well considered approach to dealing with existing projects.
But Richard, this is a difficult reform, of course it is, but it's a worthwhile reform for some of the reasons that Heather outlined: in terms of the improved efficiency of the tax treatment and putting this on a much more sustainable footing for the Australian people.
GLOVER:
Mr Rudd, in arguing his case, shouldn't have made the point that a lot of the profits go overseas because there's been foreign investment in Australia, which is what we've built the economy on.
BOWEN:
Sure. But what he was doing was, I think, responding to some of the hysterical commentary and pointing out that, you know, some of the hysterical commentary about the effect on people's superannuation balances. I mean, superannuation funds have dealt with that very comprehensively today and rebutted that. But he was just pointing out the proportion of profits which go overseas. I don't think he was making a point over and above that.
But look, you asked a question about this reform and reform is, as Machiavelli said, the hardest thing that any politician can attempt to do because the people who will lose will be very vocal and the winners, whether they be the recipients of the corporate tax reduction or the recipients of the improved superannuation treatment, are more evenly spread and less vocal, but we knew that. We didn't expect this to be easy. We didn't expect it to be necessarily super popular but we knew it was a worthwhile reform and that's why I think at the end of the day, we'll get through, because the reform is so important. It speaks for itself.
GLOVER:
You've already got people like Xstrata announcing today that they're going to cancel, I think it's $30 million worth of exploration in a certain area of Queensland because of all the uncertainty of the tax. Is this costing real jobs already, isn't it?
BOWEN:
Well, as Heather pointed out, this is actually a good package for exploration and we are more than happy, and we have been, sitting down with the mining companies, the vast majority of whom want to be constructive. There's something like 80 companies we're in discussions with. There's a few that are more vocal than others, but many mining companies see the benefit of this and are not making the sort of outlandish claims that others have made.
GLOVER:
Hugh Mackay, I think the Prime Minister probably expected the public opinion to be more on his side about this. You know, 'Rapacious miners, it's our minerals, we deserve a share of it'. Yet it doesn't seem to have played that way in today's poll. It's fairly even stevens. Why do you think that is?
MACKAY:
I think you can't separate this question from the previous question we were discussing. If a Prime Minister and the Government are absolutely riding high in public esteem and strongly bonded with the electorate, this kind of thing would get enormous, probably overwhelming, support, particularly if they got Heather to explain it.
GLOVER:
[laughs]
MACKAY:
I haven't actually heard it as well explained by any of the politicians.
GLOVER:
No.
RIDOUT:
Well, I did spend 18 months [inaudible].
MACKAY:
I mean, that's part of the problem, that people are just confused by it and don't understand it in the terms that we heard it here a few minutes ago. But if you haven't got a Prime Minister who's riding high, if you've got a Prime Minister who, as we've seen, is plummeting at the moment, then this is not a great moment to introduce something that is going to be very confusing, in the same way as the ETS was very confusing. Even when some political leaders tried to explain it, the community at large didn't really get it and probably this moment don't really get this either.
That's one of the reasons why we're seeing a roughly 50-50 split. The other reason is that it comes with, inextricably linked with the package of a Prime Minister whose credibility is a bit on trial at the moment.
GLOVER:
Okay. It is 5.53 on the Political Forum. We have Heather Ridout, the CEO of the Australian Industry Group and part of the Henry Tax Review panel; Hugh Mackay, the social researcher and author; and Chris Bowen, who's the Member for Prospect and also the Minister for Financial Services. He's in our Canberra studio.
[Traffic report]
Now, a conference on happiness sees a speech by Hugh Mackay, in which he sings the praises of sadness – that was pretty game, I thought – saying that the tougher emotions sometimes have more to teach us than the positive, happy ones. Do you believe in the pursuit of happiness or do you think it's the wrong thing to aim for in life? Hugh, you better start us off. You were the one who was like Daniel in the lion's den last week. What did you mean by saying you were sponsored by sadness?
MACKAY:
Well, because you can't have happiness without sadness. I mean, there's a register of human emotions, and I think to privilege one of them and say out of this whole register there's one we should aim for is very weird and it's a bit of a, it's seductive, but it's a bit of a hoax, whatever emotion it was. I mean, if you said, 'Well, we must try to make sure every day we experience some disappointment', you'd be crazy.
GLOVER:
There's a whole, now, science called happiness studies, which is based on the idea that happiness is the main thing to achieve and Government policy should indeed, there should be an index of happiness, Government policy should be designed to maximise it.
MACKAY:
It's become an industry and I think it's become an industry as a direct response to the fact that we're living through a very anxious time in human history, especially in western history. We do have an epidemic of depression and a lot of people are destabilised and anxious by the rate of change, technology revolution, economic upheaval and environmental terrorist and other threats, of course. So you can see why this might spawn an industry of people saying, 'No, no, look, just think positive, there's always a silver lining'.
I think this is outrageous, and nothing makes me crankier than people talking about the positive emotions and the negative emotions, as though disappointment and sadness and a sense of failure or loss or something, as though these are negative. These are the great teachers. It's very easy to be happy, very easy to experience a bit of bliss or joy or triumph. That doesn't teach you, really, anything much. It's a great feeling, of course. I enjoy being happy. We all enjoy being happy. But we only know what it is because life is actually a slog. There's a lot of tedium. There are disappointments, and the idea that we should try and, for example, protect our kids from the full register of human emotion is a terrible thing to do to our kids.
GLOVER:
That they never feel sadness or they never feel that they've failed at something.
MACKAY:
Yeah, failure. I mean, failure is a word that's out of our vocabulary. You can't talk about failure, but why not? You know, how much do we learn? All of us in this room, I'm sure, have failed and learned an enormous amount from that experience. So I'm on a campaign to say can we please get rid of the pursuit of happiness. Could we please pursue wholeness? Could we please pursue the whole experience of being human and sure, learn how to deal with these various emotions but not try and manufacture the ones that feel nice.
GLOVER:
Privilege one over the other. Now, poor old Chris Bowen, there he is in the middle of trying to tinker with the Budget facts and figures and I'm asking him to be a philosopher. But still, Chris?
BOWEN:
Let me just consult my Treasury briefing about this.
GLOVER:
[laughs] Do you agree with Hugh?
BOWEN:
I think by and large I do. I wouldn't necessarily put it in the same terms, but I can certainly see where he's coming from and I think you need to have a holistic view of happiness. I often look back on the words of Ralph Waldo Emerson, who I think got this right. He said, 'To laugh often and much; to win the respect of intelligent people and the affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to know that even one life has breathed easier because you have lived. This is to have succeeded.' That's something I quoted in my maiden speech in Parliament and I think that about gets it right. It's about the whole box and dice, the whole experience, and that's success and happiness.
So I think I do agree with Hugh, although I put it in slightly different words. I think that we do need to get the most out of the bad times and learn from them, and they strengthen us. That is a holistic view which makes the most of it.
GLOVER:
Heather?
RIDOUT:
I wouldn't like to live in Khalil Gibran's world, where you don't cry all your tears or laugh all your laughter. I'd hate to live in the cracks like that. I'm a bit with you; I don't want to be sad for the sake of being sad, but I do think it's important to feel all those things. And I'm a wellbeing girl, I think wellbeing's got a balance of emotions.
GLOVER:
But how do you define wellbeing?
RIDOUT:
Being able to deal with happiness, being able to deal with sadness but [inaudible] don't get in some silly place where you think happiness is the only thing that matters. I mean, the Dalai Lama says the meaning of life is happiness and usefulness, and that's always appealed to me because I can't be useful if I'm not happy and I can't be happy if I'm not useful, so to me is sort of what it's all about.
GLOVER:
But he's right, that you often learn the most from things that are quite difficult.
RIDOUT:
Oh, indeed, exactly. You learn from work, you learn from your failures much more than you learn from your successes. As a mother, you learn from the problems you have with kids more than you learn from how wonderful they did, you know, in the latest test. And if you bet on the racehorses, you know, which I do from time to time, I hate my failures much more than I enjoy my winnings.
GLOVER:
[laughs] But, you know, the Treasurer will enjoy the tax on the gambling, I'm sure.
RIDOUT:
He will.
GLOVER:
Chris Bowen, good luck for tomorrow. We'll see if you can do all those things in that Ralph Emerson quote with the Budget tomorrow.
BOWEN:
[laughs]
GLOVER:
Thank you very much for your time this afternoon.
BOWEN:
Thanks, Richard.