Interview with Jon Faine

774 ABC Melbourne

Debate Julia Gillard

Wednesday, 21 November 2007

8. 35 am

SUBJECTS: Election, economic management, risk of Labor to the economy, climate change, street crime, policy costings, economic conservatism, health spending

FAINE:

…here at Federation Square and we are told that Julia Gillard is just a moment away, stuck in traffic as you heard from (inaudible) a moment ago. It is not a case of the empty chair, but we are told Julia Gillard will be here within just a few moments.

Peter Costello, thank you for joining us.

TREASURER:

Great to be with you Jon.

FAINE:

(inaudible) with me this morning. The Prime Minister, again and again in this last week of the campaign has said that if you change the government, you change the nation. That suggests that if the polls are right, there is a mood for change and people want the nation to change. In fact, they are even eager for it.

TREASURER:

I think the point that the Prime Minister would make and I would make too, is that Australia has come a long way since Labor was last in office. We have balanced our budgets, we have repaid $96 billion of debt…

FAINE:

By selling off a whole lot of assets the taxpayer (inaudible).

TREASURER:

Not so, Jon. We have balanced our budget, our surpluses…

FAINE:

Well no, you have sold assets. Are you denying you have sold assets?

TREASURER:

…our surpluses have paid off $96 billion worth of debt. We have also engaged in some privatisation, that is true.

FAINE:

Yes.

TREASURER:

…as Labor in fact did, you will recall, with the Commonwealth Bank and Qantas. The difference between us of course, was that Labor sold off the assets and spent the proceeds and ran up debt. What we did is we were able to pay off debt, we have invested for the future with our Future Fund and we are now saving, the Australian taxpayer is saving $9 billion a year in interest payments.

FAINE:

And Kevin Rudd says he is an economic conservative and he will run the economy pretty much the same way.

TREASURER:

Yes and when did Kevin first say he was an economic conservative? He has been in Parliament since 1998, when did he first become an economic conservative?

FAINE:

Well he started saying it once he was Leader. He wasn’t going to say it when he was Shadow (inaudible).

TREASURER:

Why not, Jon? Why not? If…

FAINE:

Well the same reason you don’t disagree with things the Prime Minister says, he doesn’t disagree with his leader either.

TREASURER:

Hang on, if you were an economic conservative, you would support balancing the Budget and paying off debt and reforming the tax system. You wouldn’t just wait until 2007 after you had been in Parliament for nine years to have this sudden discovery. If he really were a genuine economic conservative, he wouldn’t have been voting against balancing the Budget. He wouldn’t have been voting against paying off debt. He wouldn’t have been voting against improving the tax system. He wouldn’t have been voting against all of the things that he has spent his political life voting against, until such time as his advertising agency told him, you better become an economic conservative because otherwise people won’t trust you. And the point I would make is this…

FAINE:

You particularly criticise the Labor Party for being poll driven or focus group driven, you have got to confess that that is what your side does too.

TREASURER:

Well the point I would make is this: that Kevin will say those things now but look at his voting record. Look at his voting record, he was never engaged in any of the big economic debates in our country. And this is what worries me. At a time when you have got a lot of instability on world financial markets; at a time when you have got world record oil prices; at a time when we are still in the middle of a great drought; when economic management is going to be more important than ever before, to take a risk on an untried team with bad policy really puts at risk your job, your mortgage, your business.

FAINE:

If you say then that he is a recent convert to that economic conservatism, then what does that say about the Liberal Party being recent converts to the perils of global warming and climate change? Recent converts of the cause of reconciliation and better health outcomes for Indigenous Australians. Recent converts for some of the other issues that you have just discovered after 11 years in office, you haven’t attended to with the Prime Minister during your tenure there.

TREASURER:

Well Jon, happy to go through all of these bit by bit. First of all, let me come to climate change. And I might get the chance to debate Julia sometime, but I will take the chance to debate you, actually Jon.

FAINE:

I am afraid I have to play that role in the meantime.

TREASURER:

Because it was supposed to be a debate with Julia and she is not here.

FAINE:

She is on her way and I can see her minders are standing there over near the Flinders Street clocks and expecting her to come around through the traffic any minute. In the meantime, we will just keep going.

TREASURER:

In the interim, let me say on climate change, the Government has put in place an emissions trading scheme which will be the most extensive in the world…

FAINE:

Yep.

TREASURER:

…in the world. We have set up the Low Emissions Technology Demonstration Fund which will fund low emissions technologies to produce renewable energy. And in fact, I announced the biggest such project which is going to take place here in Victoria. A solar generating electricity plant in Mildura which we are funding with money from the Low Emissions Technology Demonstration Fund. We have got our $10 billion plan to revitalise the Murray-Darling Basin, and we asked the Victorian Government to assist in relation to that, and of course, we have our rebates for solar hot water and solar electricity for individuals. Now, this is a very comprehensive – very, very comprehensive plan in relation to climate change. We have also put in place, as you know, a proposal for forestation which will assist countries in the region against denuding the forests and in fact encouraging them to do so. So…

FAINE:

But the argument I am asking you to address is the recent convert argument. You say they are recent converts to economic conservatism and they say you are…

TREASURER:

This is all in place, Jon.

FAINE:

…(inaudible) pretty much…

TREASURER:

This is all in place. These are things that have been done. These are things that are actually being worked on now. The Low Emissions Technology Demonstration Fund is actually allocating money as we speak.

FAINE:

Yes, yes…

TREASURER:

As we speak.

FAINE:

Two days ago, the United Nations delivered a further report, a further report and just if you can resist the temptation Peter Costello, there is a woman unfurling a banner for you there, we will come to you later madam, if get the chance. Thank you very much. Just the other day, the United Nations handed down a report on climate change saying the issue is urgent and that further work needs to be done by governments around the world. I asked Kevin Rudd this question the other day, I haven’t had a chance to ask the Prime Minister but I am asking you. Does that not mean that any government that is elected on Saturday needs to revise its targets and rethink global warming in the light of the latest report from the United Nations?

TREASURER:

I think Australia has to play its part and Australia has had an active programme and we do have an active programme. And I will tell you what I think is also important, is that we have to engage the whole world, including the big emitters in relation to this. This is very, very important. Australia has 0. 3 of 1 per cent of the globe’s population.

FAINE:

Yes.

TREASURER:

Now if we do our part, that will affect 0. 3 of 1 per cent.

FAINE:

Well we pollute out of proportion to our numbers.

TREASURER:

Right? Well …

FAINE:

That is (inaudible) power stations.

TREASURER:

… we are nothing like a major global emitter. The major global emitters are…

FAINE:

Out of proportion…

TREASURER:

China and the US. Let me tell you this, Jon. If we closed every coal-fired power station in Australia tomorrow, within nine months China would have increased its capacity and replaced every single one of them. So every nine months…

FAINE:

(inaudible) but we have to have clean…

TREASURER:

Every nine months…

FAINE:

…don’t we?

TREASURER:

Every nine months, China produces the equivalent of Australia’s whole capacity in relation to coal. Every nine months. So, if we closed tomorrow, in nine months’ time China would have replaced it and nine months after that it would have doubled it and nine months after that it would have tripled it. Now the point that we have made in relation to this all of the way through, is you do have to have an agreement which brings in the major emitters of the world.

FAINE:

Yes.

TREASURER:

China and the United States. Now there is a chance to renew that, there is going to be a conference in Bali in a week or two. I have already discussed this with my Indonesian counterpart, we got an agreement in Sydney at the APEC meeting for the first time.

FAINE:

Are you prepared to go to that if the Liberal Party wins the election and John Howard loses his seat?

TREASURER:

My counterpart in Indonesia has invited me to go and I would love to go.

FAINE:

As Prime Minister?

TREASURER:

Well, what, in two weeks’ time, two or three weeks’ time?

FAINE:

You could be.

TREASURER:

No, I think in two or three weeks’ time Jon, I will be Treasurer or something else, but I don’t think I…

FAINE:

You might be Prime Minister, the Liberal Party can win the election, John Howard can lose his seat and you go to Kyoto as Prime Minister. You must have contemplated that?

TREASURER:

You asked me, am I prepared to go to Bali. I have been invited by my Indonesian counterpart as Finance Minister and if I get the opportunity, of course. But can I say this, you have got to bring these major emitters in…

FAINE:

Yes.

TREASURER:

…and if you don’t, then you don’t have a global agreement and you are not going to make global inroads.

FAINE:

All right, it is 17 minutes to nine. Julia Gillard doing a bit of a Tony Abbott to us here this morning, I must say. She promised to be here at half past eight, at half past eight we were told that she was just a few minutes away. It is now, what is it, it is 13 minutes since we were told she was a few minutes away and no explanation as to her absence even though we were assured that the Deputy Leader of the Labor Party Julia Gillard would be here and would debate Peter Costello in person here at Federation Square this morning. I can see her minders, they are standing over there near the station under umbrellas and there is no movement there. Peter Costello, in the meantime I will keep asking you questions.

I was driving along Dandenong Road the other day and I saw a big billboard saying, elect Peter Costello, he will make the streets safer. That is a state issue, not a federal issue. Why are you campaigning on a state issue?

TREASURER:

Well we have found that the state services are lacking in so many areas that people do expect the Commonwealth to step in. You know – now water is one. Water is traditionally has traditionally never been a Commonwealth responsibility but we are stepping in in relation to water because people want some practical solutions. Roads – here in Victoria the Commonwealth Government is proposing to build a number of roads. They were traditionally state responsibilities.

FAINE:

Jointly funded by the Commonwealth. You have always had a role in roads…

TREASURER:

In national highways. . .

FAINE:

(inaudible).

TREASURER:

Thirdly, you know, what I find in relation to my constituents is they are worried about street crime, they don’t think enough has been invested in relation to it…

FAINE:

Yes, but if they write to your office about street crime, you say that is the State Government’s responsibility.

TREASURER:

We do, and we write to the State Government and when the State Government does nothing about it, what do you want us to do? What we…

FAINE:

What we say is not one of your…

TREASURER:

Well Jon…

FAINE:

…responsibilities.

TREASURER:

…what we have actually done is we have set up a National Crime Prevention Programme. And the National Crime Prevention Programme does make available to local communities funding in particular areas. Now the area in which I have made a pledge to my constituents is to, out of that, fund cameras in the areas of Chapel Street, Prahran and South Yarra, where there is a lot of street crime. This can actually be done in a way which will allow for police to actually get real-time footage if there is crime that is actually going on. In addition to that, it provides a record which can be used for evidentiary purposes so that in relation to evidentiary purposes prosecutions can be brought. Now if the State Government…

FAINE:

But it is not like it is your responsibility. It’s simply not an issue…

TREASURER:

Absolutely.

FAINE:

…for a Commonwealth Government.

TREASURER:

If the State Government had funded these cameras it wouldn’t be an issue. But what do you do, Jon? If the State Government won’t fund those cameras, you can either sit back and say well people will have to deal with street crime or you can step in as I have, as the Commonwealth Government has, and you can actually do something practical about it. And doing something practical about street crime, burning, vandalism, graffiti is something that I think Australians will really welcome. People in my electorate are very, very happy that something at last is being done down in Chapel Street, South Yarra…

FAINE:

A quarter to nine…

TREASURER:

…and it has been very important for me to be engaged in helping people with the quality of their life.

FAINE:

A quarter to nine on 774 ABC Melbourne. Jon Faine at Federation Square. Julia Gillard good morning.

GILLARD:

Good morning, Jon.

FAINE:

You gave Tony Abbott a drubbing for being late at the Press Club lunch and you agreed to be here to debate Peter Costello for half and hour at half past eight this morning, you have just arrived.

GILLARD:

And I left in plenty of time, Jon. But I…

FAINE:

You are avoiding a debate.

GILLARD:

…am here Jon. And obviously that…

FAINE:

Avoiding a debate, and now I have had to spend 15 minutes with Peter…

GILLARD:

Do you want me to answer your question or do you want to talk over the top of me?

FAINE:

Were you avoiding the debate?

GILLARD:

I left in plenty of time, Jon, let me explain to you, with the rain, all of the access roads from Melbourne’s west are just carparks. You know you are in trouble when the time for the traffic is telling you, you are 70 minutes from Point Cook Road to Kings Way, that’s obviously an extraordinary circumstance. I do these drives in to town very regularly and…

FAINE:

(inaudible) leave enough time…

GILLARD:

And I did leave enough time and it has taken about three times longer than it would normally take, Jon. Obviously with the rain, the weather, all the rest of it, the traffic is choccered up.

FAINE:

I don’t want to waste time but if you are avoiding debate, that would be a great shame to (inaudible).

GILLARD:

Well I am certainly not avoiding debate, Jon. I am here, I would have loved to have been here at 8. 30 am…

FAINE:

Okay, let’s move on.

GILLARD:

But obviously it is a very important promise from Labor to actually make a difference to the bridge and a difference to the ring road if you live in Melbourne’s west, let me tell you.

FAINE:

Let’s move on. You both have one thing in common, you both want John Howard to lose his seat on Saturday. I think that pretty much can be said. Peter Costello?

TREASURER:

Well Jon, I know you are trying to entertain the crowd and be humorous but I actually think that it is very important that on Saturday we have a government which is focussed on Australia’s economic future. I think it is very important that we have a tried team which has a record, rather than a risk which Julia and Swan and Rudd would represent and I think it is very important that we actually continue with good policy. Now, we had a report this morning on the…

FAINE:

We will just get a response from Julia, (inaudible).

TREASURER:

Well Jon, hang on, well that wasn’t my fault Jon…

FAINE:

I totally agree but I do want to…

TREASURER:

Just let me make one last point because I think it is important. You would have read in the paper today that the Treasury estimates are that Labor will have a shortfall of $12 billion…

FAINE:

Yes.

TREASURER:

…because of the fact that its policies will lead to less employment and higher inflation.

FAINE:

Okay.

TREASURER:

This puts at risk all of their programmes.

FAINE:

Julia Gillard, economic credentials, economic credibility. You have got no runs on the board, have you?

GILLARD:

Well look, the claim Peter has just made is a silly and desperate claim from a government that is increasingly desperate. We have obviously given…

TREASURER:

But it is right, you don’t have…

GILLARD:

No and it is a Treasury report about unwinding all industrial relations reforms back to 1993. That is, before the set of law reforms that Labor brought in which we obviously support because we brought them in. So it would be very, very silly wouldn’t it, to put together a report that winds back three Labor reforms when we are the Labor Party and we support those reforms.

FAINE:

How did you…

GILLARD:

On the question of economic conservatism, Jon…

FAINE:

Yes.

GILLARD:

…we have clearly given people very significant pledges about keeping the Budget in surplus over the economic cycle, about preserving the independence of the Reserve Bank, about not increasing taxation as a percentage of GDP. More of our policies are in for costing right now than Coalition policies, despite them having the benefit of 1300 Department of Finance officials before the caretaker period to get theirs right. We rely on 90 staff and we have got more policies in for costing now than they do, that is how we intend to govern…

TREASURER:

Well that is not right either.

GILLARD:

…with a prudent fiscal approach.

TREASURER:

You ought to ask Wayne, because…

GILLARD:

I brought the statistics with me, actually. I have got them written down. Do you want to go through them?

TREASURER:

Yes, I do.

GILLARD:

Okay. We have got 81 policies…

TREASURER:

No I don’t want Wayne’s statistics…

GILLARD:

…in for costing. You have got…

TREASURER:

Can I say…

GILLARD:

…42.

TREASURER:

Can I just say…

GILLARD:

We have got $19. 4 billion in for costing, you’ve got $11. 2.

TREASURER:

…what you have to do, is you have to go to the website. And when you actually go to the website you can actually download them. That is not a Treasury book.

GILLARD:

No it is not. It is my…

TREASURER:

You see, that is an ALP minder’s book.

GILLARD:

It is my notes, it is actually my book and it is my notes…

TREASURER:

If you go to the website…

GILLARD:

…and it’s what we have put in for costing. 81 policies…

TREASURER:

…you will find that you have not put in the $3 billion worth of savings which Kevin Rudd claims…

GILLARD:

How many savings have you put in?

TREASURER:

In March of this year, he said he had $3 billion of savings. He has not put that $3 billion of savings in. It has not been costed.

GILLARD:

How many dollars of savings have you put in?

TREASURER:

Nor did he actually put in his policies as was required on Thursday. On Thursday ….

GILLARD:

How many dollars of savings did you put in? The answer to that is zero.

TREASURER:

Hang on Julia, no – just let me finish the point – nor had he put in all of the policies on Thursday, which was the cut-off date. At 5 o’clock on Thursday he had not put in ….

GILLARD:

And neither had you.

TREASURER:

No, I am sorry, Julia, you’ve got to be honest, Julia, we had put in all of our policies on Thursday. They were listed in the website. All you’ve got to do is go the Finance website and they are all there.

GILLARD:

Right, savings?

TREASURER:

They include all of the savings. At the end of the day what it shows is that the Coalition will have another four surplus budgets with one per cent of GDP, which would make 14 surplus budgets under our administration of 10 that have already been delivered. Now, this can be compared, Julia, with when you were last in Government, not only was the Budget $10 billion in deficit, but there was $96 billion of debt and I don’t think in those last three or four budgets, you produced any balanced budgets…

GILLARD:

(inaudible)

TREASURER:

Although Kim Beazley did claim as I recall in 1996 that the Budget was in surplus when it was $10 billion in deficit.

GILLARD:

Let’s go through, let’s go through the accurate information which is we have 81 policies submitted for costing, you have 42. We have $19. 4 billion of policies submitted for costing, you have $11. 2. We have $3. 6 billion…

TREASURER:

Yes, that’s because we’ve only made $11. 2.

GILLARD:

We’ve got $3. 6 billion of savings already ….

TREASURER:

…because we’ve got $11. 2…

GILLARD:

And we’ve got $6. 6 billion in there, $6. 6 in total of which $3. 6 has been ticked off and let’s talk about the playing field we come off here. You know as a Government prior to the caretaker period, you get the benefit of all of the Department of Finance and all of Treasury and the rest of the public service to help you tick off your policies. We don’t so we’ve done a remarkable job and it shows the prudence ….

FAINE:

Eight minutes to nine. Eight minutes to nine. Can I just come back to, Peter Costello in a moment, I’ll come back to you in a moment. I do want to move on to other things than just the economy. You are a recent convert though, final question on the economy Julia Gillard, a recent convert to economic conservatisim.

GILLARD:

How on earth do you say that Jon? You point to a statement I’ve made as a Member of Parliament which is not consistent with Australia being an open, competitive economy making its way in the world. You point to one.

FAINE:

Your transition has been from the Socialist Left of the Labor Party to now telling us you’re an economic conservative.

GILLARD:

And I have been in Parliament since 1998, Jon. You read every word I’ve ever said in Parliament and you point to one statement that I’ve ever made which is inconsistent with believing that Australia needs a strong economy, an open economy. We need to be competitive, we need to make our way in the world. I’ve always believed that. I also believe you can actually in the context of doing that treat working families decently and that’s the difference between me and the man sitting next to me.

FAINE:

Seven minutes to nine. Peter Costello, on the front page of the Financial Review today your colleague Tony Abbott says there is a $30 billion reserve fund off the Budget that he would like to invest in health to solve problems in the future. How can you three days before an election find a $30 billion reserve fund that no-one’s ever been prepared to dip into before?

TREASURER:

That is not accurate, Jon.

GILLARD:

Tony Abbott?

FAINE:

Tony Abbot’s not accurate or the Fin Review’s not accurate?

TREASURER:

The Fin Review.

FAINE:

In what way is it not accurate?

TREASURER:

The contingency reserve provides a fund for the renewal of the Australian Health Care Agreement, which over a five year period would be $42 billion indexed for inflation plus real per capita increases, that’s population increases. So in fact…

FAINE:

This is a $30 billion rabbit he’s pulled out of his hat in the last days of the campaign.

TREASURER:

No, no, no, in fact Jon, as I said, the contingency reserve would have $42 billion indexed for inflation and growth, which is the Commonwealth’s funding to keep the hospitals going. If you didn’t actually have that in the Budget, then you wouldn’t have the hospitals going. It’s not an increase. It’s a maintenance of the situation adjusted for inflation and adjusted for population. That $30 billion figure is not right. In fact the next five year Health Care Agreement would be considerably more than $30billion because the current one is $42 billion.

GILLARD:

Well this, Jon, really I mean shows how tissue-thin all of these claims to experience and competence are. We’re talking about a Health Minister that when he was once asked how Government would finance its (inaudible) health policy and I quote, ‘Peter will provide. He always does’. Now do we think that that’s a competent standard for a Health Minister to have no idea where the money for Australia’s health system is coming from? How much money is there and how much can be prudently used? By contrast of course, Nicola Roxon, is not only generating our health policy, she understands something about Commonwealth financing and she would never respond to a question like that, she would give a full explanation.

FAINE:

Five minutes to nine.

GILLARD:

They would suggest they’re the experienced ones, well Tony Abbott, very big hole in that argument, absolutely no idea about how the Commonwealth Budget works.

TREASURER:

I’m sorry Julia, but I don’t think you have an idea of how a Commonwealth Budget works.

GILLARD:

Well, I think I do. I’m working on the Expenditure Review Committee looking for savings and we’ve got ‘em in.

TREASURER:

What Expenditure Review Committee is that?

GILLARD:

The Labor Expenditure Review Committee. I can’t remember being invited to yours, Peter, but I’m happy to come.

TREASURER:

And how many Budgets have you brought down?

GILLARD:

Well, Peter, by definition I’ve brought down the same number that you brought down before you were Treasurer.

TREASURER:

You know you were saying before that Tony Abbott expects Peter to provide. Let me tell you who expects Peter to provide – Wayne Swan and Kevin Rudd. Because if it hadn’t been for Peter, let me say, the Budget would be in deficit, we’d paying $9billion in interest.

FAINE:

Four minutes to nine. Julia Gillard, I’ve just got another question…

GILLARD:

… question, that is a ridiculous argument though because the argument you are effectively putting to the Australian people is don’t ever change the government because by definition, the people who are in government are the only people experienced to be in government. If that argument, if that argument had prevailed in 1996, then a man like you who had never been in business, who had never run a big economy before would never have become Treasurer.

TREASURER:

Can I say to you, Julia, if we hadn’t had changed the Government in 1996 the Budget wouldn’t be balanced. We would have $96 billion in debt. We would be paying $9billion in interest…

GILLARD:

Had you ever brought a budget down before you brought your first budget down? No, of course you didn’t.

TREASURER:

You know what? You weren’t claiming, and Labor wasn’t claiming you were economic conservatives in 1996. You were actually saying that if we balance the budget, this would put the economy into recession. That’s what you were saying. Now you said earlier on…

GILLARD:

We were claiming our economic reforms from the Hawke/Keating period including opening this economy up to the world, something that the Fraser/Howard Government lacked the courage to do…

TREASURER:

…I just want to finish one point…

FAINE:

I want you each to ask each other a question. We’ve got three minutes to ask and answer the question. Julia Gillard, you were late. Peter Costello, you can go first. A question for Julia Gillard and the answer has to be less than a minute.

TREASURER:

When was the first occasion you ever described yourself as an economic conservative? What year?

GILLARD:

I don’t recall the first time I would have used those two words but throughout my time in Parliament, I’ve always stood for an open, modern competitive economy but one that also offered decency to working families.

FAINE:

Your question to Peter Costello, Julia Gillard.

GILLARD:

On what date will you become Prime Minister?

TREASURER:

Julia, can I say the agreement that John Howard has explained to the Australian people…

GILLARD:

What’s his agreement with you?

TREASURER:

It&rs