Interview with Chris Uhlmann

ABC AM Programme

Tuesday, 19 June 2007

8.10 am

SUBJECTS: Broadband, Rudds lack of knowledge on productivity, household wealth

Uhlmann: 

Peter Costello, good morning.

TREASURER:

Thank you Chris.

Uhlmann: 

To the broadband issue first.  Why were the 40 electorates which the Government identified as needing broadband information kits as a matter or urgency all Coalition held?

TREASURER:

It doesn’t matter because the Coalition plan for broadband goes to 150 electorates.  You could have pulled out any one of that 150 because it goes to all of them.  So if you ask for material on one or two or 10 or 40 or 80 or 150 the answer is always the same – they get broadband.

Uhlmann: 

So just a happy accident that all 40 that you picked out of the hat happened to be Coalition held and many of them marginal?

TREASURER:

It just doesn’t matter.  It’s a nice diversion tactic to say after you are delivering broadband to 150 electorates, and there are 150 in Australia, somehow you did maps that showed that somebody was getting an advantage.  But when you look at the program nobody gets an advantage because everyone gets broadband.  So it doesn’t matter if you’ve got maps of 10 or 40 or 100, everyone gets it.

Uhlmann: 

Why shouldn’t people be cynical about politics when they see things like this?

TREASURER:

I don’t think there’s any reason to be cynical about this.  Here you have a proposal which will cost the taxpayer nothing in terms of fibre to the node which will roll out to 99 per cent of Australia, which will get the most competitive prices, which will ensure that people even in extremely remote conditions get access to broadband.  And we’ll do it at competitive prices. I think it’s win-win all round.

Uhlmann: 

Now to another issue, Labor has consistently criticised the Government over one aspect of its economic performance and that’s productivity growth.  Isn’t the core of Labor’s argument unassailable, that there has been a clear downtrend in productivity since the late 1990s?

TREASURER:

Here’s the interesting fact Chris. You asked Kevin Rudd a question about productivity on your programme which he got wrong, right?  He comes off his programme and he instructs his advisers to write an explanation for him and I’ve got this explanation here, it’s quite a long explanation actually.  It goes for 10 pages from his advisers, Tim Dixon, John O’Mahony and Ankit Kumar.  Unfortunately for Mr Rudd, this explanation says that yes, you were wrong, yes you didn’t understand, yes the Government was right, but here’s the rub.  It says: ‘you can continue using these wrong statistics’, this is what they say, ‘because even though they’re now out of date they have not yet been updated by the Treasury’- that appears on page four as you can see.  Continue using false figures even though they are now inaccurate because they suit your argument, because to use the right figures would not actually help your argument.

Uhlmann: 

But you know Treasurer that these figures are volatile and that’s what this paper says, that if you use year-to-year figures or quarter-to-quarter figures you’re going to get a lot of bouncing around.  People who look at these figures look over five year averages and it does show that there’s been a clear downward trend, doesn’t it since the 1990s in productivity and that does matter to the Australian economy.

TREASURER:

Well you see you can even read Mr Rudd’s advisers saying and you know, the one thing I’ll say for them is that they’ve got a much better understanding than Mr Rudd because they say in this document that the fact that we’re in drought has held back GDP and the fact that we’ve gone through a huge investment cycle means that you have a lag time.  They actually have an understanding that one of the reasons why GDP was lower was this huge investment cycle and it was the drought, but if you look at the last two quarters of productivity there’s been a huge surge so what do the advisers say about that?  They say, ‘forget that Kevin, don’t talk about that Kevin, you know, because that was in the Budget papers, you can still keep making a false claim.’  I think Mr Rudd has egg on his face Chris.

Uhlmann: 

But the long term trend is down…

TREASURER:

No, no, no.

UHLMANN:

…and that can’t be a good thing because the long term trend is 3.3 per cent five years from 93 to 94, 2.1 five years from 98 to 99 and it looks like it’s trending down in the Budget papers to 1.75 or 1.5, that’s not a good trajectory is it?

TREASURER:

1.75 is the figure we use for the long term run in Australia, that’s what we use in our IGR.  Now, you have productivity cycles, and it’s true, we had a very strong productivity cycle in the mid to late 1990s.  We will have another strong productivity cycle, you will see, once all the increased investments start working out in production, if it rains and the drought turns.  But if you want evidence over the last six months, you’ve had two per cent in six months.  Now, you’re quite right, you don’t annualise  and nor can you say well that will be a five year trend but you can say this.  Mr Rudd wasn’t honest, that he was caught and that his own advisers have now belled the cat.

Uhlmann: 

Now Treasurer, do people actually care about these opaque macroeconomic figures?  Don’t people care about their household budgets and doesn’t all the evidence show us that at a household level Australians are feeling the pinch and they wonder if you understand that every time you stand up in public and say we’ve never had it so good, these are great economic times, people think, well it’s not showing up in my pocket or in my household?

TREASURER:

I don’t get up and say that Chris, what I say is this:  more Australians in work than ever before, unemployment is at a 30 year low and real wages have increased.  Now they are facts and they are unassailable facts.

Uhlmann: 

Do you understand the pressure on households?

TREASURER:

Having said that, does that mean that everybody is living in wealth and affluence?  Of course not, but I can tell you this, that the Australian Bureau of Statistics reported last week that the people who have got a larger proportion of the growing wealth in Australia since 1998 are the 20 per cent of the lowest income households.  Now that doesn’t mean the 20 per cent lowest income households are now the top 20 per cent, no they are still the 20 per cent lowest, but they have a larger share of the growing national income than they did back in 1998 which is something for economic development being shared around in Australia.

Uhlmann: 

Peter Costello, thank you.