TRANSCRIPT

THE HON PETER COSTELLO MP
Treasurer

Interview with Michael Duffy

Counterpoint, Radio National

Monday, 23 August 2004

4.05 pm

SUBJECTS: Politics; University; Industrial Relations; Poverty; Republic; Immigration; Religion; Free Trade Agreement

DUFFY:

Peter Costello, welcome to Counterpoint.

TREASURER:

Good afternoon Michael, good to be with you.

DUFFY:

Let’s start at Monash University back in the 1970s. Where were you on the political spectrum then, when you were a student politician?

TREASURER:

Oh, I would have been considered a shocking right-winger, not because I was Right by today’s standards but because the university at that stage was run essentially by Communist students, it was the end of the Vietnam era, the various factions of the Communist Party were in full control of the student movement and anyone who was an anti-Communist as I was, was a shocking right-winger.

DUFFY:

Were there many of you around then?

TREASURER:

Very few.

DUFFY:

So it was kind of tough was it?

TREASURER:

Well, I was at Monash University. Monash had been the centre of the Vietnam era protest, Albert Langer. The most celebrated event was that they had been collecting money for the Viet Cong. You might recall that at a time when Australian troops were actually fighting in Vietnam and that was considered scandalous behaviour. I think it was. And they were in full control, the Student Union was a completely left wing dominated student union and being a non-Communist as I was, I think I was the first non-Communist to ever be elected the President of the Student Union.

DUFFY:

Congratulations. Were you the member of any political party?

TREASURER:

No, in fact the campus was so left-wing that in those days anyone who wasn’t Left was considered, and when I say left I mean Communist, was considered beyond the pale and so it was really Liberal, Labor, everybody else against the Communists. And so I was part of a student group which was anti-Communist and it had some DLP types, some Liberals, some right wing Labor types, a lot of Jewish students were involved because the AUS at that stage was very pro-PLO and so it was the Left versus the anti-Left.

DUFFY:

Was religion an important sense of strength for you in your solitary endeavours?

TREASURER:

Well, faith has always meant a lot to me personally. In those days and today. I don’t really see it in political terms though. I am not one of those people that says that there is a necessary connection between faith and a particular political position. I think you can have faith and have different political positions, and plainly people do, but I think faith is an important source of personal inspiration and it always has been for me. Yes.

DUFFY:

When you entered Parliament in 1990 you were probably best known to the public at that point for your role in the Dollar Sweets industrial relations case some years earlier. Can you tell us a bit about that?

TREASURER:

Well, it was a bad time I think in Australian politics. We used to have a thing called the Accord. And under the Accord, the Government of the day, which was the Hawke Labor Government, would sit down with the organised Trade Union Movement and they would basically decide what wages would be paid. And for quite a period of that time their object was to try and contain wages.

In fact, Keating’s great boast used to be how he had depressed real wages. But centralised wage fixation meant that you would have a national wage case, it would decide how much everybodys wage would go up and all awards were varied accordingly. Now, a very left wing union started a campaign for I think it was a 36 hour week and that was contrary to centralised wage fixation, so they weren’t supposed to be doing it, and there was a small Melbourne company which decided to stand up against them. And there was an arson attack and bashings, and the phone wires were cut and the company was threatened with extinction. Now what it was doing was thoroughly in accordance with centralised wage fixation but nobody would help them. The Arbitration Commission would mouth its usual formula, you know, cease industrial action but it kept on going. And they couldn’t get help from the State Government, and they couldn’t get any help from Federal Government.

And so I think from memory the stoppages lasted something like 150, 160 days, something like that, about half a year. And I was just a young and foolish lawyer and I said well this can’t be right in a system or a society which runs by law. It can’t be right that you get bashed when you are actually observing wage fixing guidelines or your business is held to ransom. And I encouraged them to go to the Supreme Courts and get injunctions – and, which they got.

And the thing that the Trade Union Movement really objected to, as did the Hawke Labor Government, is they believed then, they still do as far as I know, that courts have no role in industrial disputes. That it is something quite different, an industrial dispute. The ordinary rules of law and order shouldn’t apply. And so the company was pilloried for seeking to uphold the law and order of the civil society.

DUFFY:

Did you win?

TREASURER:

Yes, well, they got injunctions and the picket more or less ceased immediately. And eventually they went on to get compensation and it was the first big test of the powers of civil courts in industrial disputes. Now interestingly enough a lot of the argument in that case subsequently was adopted by the Hawke Government itself when they took on the pilots. Remember the pilots dispute? And then of course the next really big test of these powers came during the waterfront dispute. Although it was a small company and what should have been a small dispute, because of the involvement of civil litigation it became quite a cause celebre.

DUFFY:

Now moving into Parliament now, a lot of people say anyway that the Labor Party and the Liberal Parties are becoming closer and closer in terms of what they believe. Do you think there are still some big ideas or values separating them?

TREASURER:

Oh, I think there are deep differences. I don’t agree with this proposition that, you know, they all think the same and it is really just Team A versus Team B and you can join up with either. I think there are deep philosophic differences, and where they come into play would be industrial relations would be an absolutely touchstone issue. If you believe in unionism, you believe in union power, you will support the Labor Party. If you believe in conscientious objection, voluntary association, freedom of contract, you will support the Liberal Party. I think it is one of the great cleavages in Australian politics and so, you get, the most ferocious argument in my experience are over things like industrial relations. And I am trying to be as objective as I can. You shouldn’t be surprised by this because the Labor Party was formed by trade unions and the trade unions still have a very significant role in membership and funding. And so for example on unfair dismissal laws which this Government has been trying to relax, I think they have been rejected in the Senate something like 42 times, and that is an absolutely ideological difference between the Parties. Now there are others of course but that is the most obvious.

DUFFY:

You’re listening to Counterpoint on Radio National. I am Michael Duffy and I am having what the papers would call a wide-ranging interview with the Federal Treasurer, Peter Costello. In your Maiden Speech you said the principal causes of poverty in Australia are family breakdown and unemployment. Now I would like to ask you about each of those in turn. Family breakdown – is there much that a Government can do about that?

TREASURER:

I said to you earlier that I have faith, Christian faith, and it is a source of individual inspiration and I think that religious commitment or values comes from individual belief. I do not actually believe that a society can make people good, that you can pass whatever laws you like saying that marriages should not breakdown but they will. I am not sure that the state can do much in relation to individual relationships. In fact I am very suspicious of the state trying to do a lot in relation to individual relationships. Now what the state can do is it can create an economy where people can find work and low interest rates to keep pressure of their mortgages and it can provide counselling services but the idea that the state can somehow make marriages work I am very pessimistic about that and indeed very, very suspicious. To me it’s social engineering. I think the government can make aspirational statements and it should but can a government prevent marriage breakdown? I would like to know how.

DUFFY:

Does the decline of religion sadden you?

TREASURER:

Yes. I think that is one of the reasons why you, why there is more marriage breakdown. Now, people think that is a controversial statement, and we all know that subscribing to religious faith doesn’t make you good necessarily, but it does seem to be a connection around the world actually between religious commitment and marriage commitment, not just in our society incidentally. In fact in more religious societies, now take Islamic societies, marriage breakdown is even lower still. So, for whatever reason there does seem to be a connection. Now having said that, I have got to be very careful to say that there are intensely religious people whose marriages break up obviously, but overall there does seem to be a statistical connection. So does the decline of religion matter? I think it does in many respects. I think it is changing the moral consensus, once upon a time an appeal to the churches or to established religion would get a head nod, in our society it wouldn’t today, I don’t think, and it is all very well if you have got something better to replace it with, but I am not sure that our society has found that yet.

DUFFY:

Another cause of poverty that you nominated was unemployment, and Australia seems to have a particular problem with the large number of long-term unemployed. Why is it proving so difficult to do anything about this?

TREASURER:

Before I go into that, I should just say, how does family breakdown create poverty? Well, the income that used to sustain one household after a family breakdown has to sustain two, and you know, it is two sets of rent and two sets of electricity and two sets of water bills and all the rest, and anybody who has ever had to deal with the Child Support Agency knows that once the Child Support Agency takes a large slab out of someone’s income, it can be a cause of financial hardship. The other way in which it can create trouble, and I am not saying in every circumstance it does, is quite often the kids won’t get on with the stepfather who maybe comes into the house, and I think it can also be a source of dislocation for the kids and that is why I said that family breakdown can have very direct economic consequences. Unemployment obviously has very direct economic consequences on families, and you are right, there are areas of stubborn unemployment where it can even be passed down the generations, and where unemployment is passed down the generations, it is a significant cause of poverty. Now, in our society we have Jobsearch Allowances, Newstart Allowances to help people who are out of work, but they will never amount to a full wage and that is why unemployment by and large reduces people’s living standards.

DUFFY:

In retrospect, changing the subject a bit here, do you think the Government has always got it right regarding the detention of illegal immigrants, I am thinking in particular of the detention of children?

TREASURER:

Well, I would look forward to a situation where there are no children in detention and I think that has got to be the aim of policy, bear in mind if you had no unauthorised arrivals you would have no children in detention, and if you didn’t have such a long and cumbersome legal process where people who have not been assessed as refugees or assessed not to be refugees go through the courts at the very long periods, you wouldn’t have children in detention. I think we have also had some success with these alternative arrangements, whereby maybe the children and the mother can be in a nearby place in the community, we started that in, I think it is currently operating in Port Augusta. So the ultimate aim, I think should be, for no children in detention, and I think I am right in saying there are very few at the moment, I think there is something like two on mainland Australia. Now one of the reasons why it is now so low of course is that the number of unauthorised arrivals in Australia is so low and if you didn’t have any unauthorised arrivals, you wouldn’t have any children in detention. You would have possibly compliance activities, that is people who have come here on visas and outstayed their visas and they might be picked up, but when people talk about children in detention, they are mostly focusing on unauthorised arrivals.

DUFFY:

Your Government has almost doubled the level of immigration since you came in and an enormous amount of the heat that used to go to that issue has just suddenly disappeared, have you any thoughts on why that has occurred?

TREASURER:

Well, immigration seems to be something that now cuts across Party lines. If you asked me who the foremost opponent of immigration is in Australia, I would probably say Bob Carr. One of the great supporters of increased immigration as far as I can tell is Premier Bracks. So, it doesn’t seem to be something that is based on Party lines anymore but cuts across party lines. There are people in the Liberal Party who support larger immigration programs and people who support smaller ones. I actually think that as the population of Australia ages, as we have skilled shortages, that Australia is going to have to have a larger skilled immigration program. We at the moment have shortages in all sorts of skills, that is we haven’t got enough people to actually fill the jobs that are going, it is a problem for us and immigration could be one of the ways of answering that. So, and I make, I will also make the point that successful economies, generally speaking, have larger populations, because you get economies of scale, so I think one of the reasons the heat has gone out of immigration is it cuts across all sorts of party lines, the other of course, the most obvious is that unemployment is now low. I think hostility to immigration was much higher when unemployment was ten or eleven per cent, you can understand why because it was thought that people were coming in and taking the jobs of those that were already here. When we move in to a situation where unemployment is at 22 year lows and we may actually have shortages, then people who are coming in are actually filling holes and vacancies in the workforce. It much harder to be aggrieved by that don’t you think?

DUFFY:

Would it worry you a lot if Australia became a republic with a directly elected President?

TREASURER:

Well, I think it would lead to conflict because you would then have a Prime Minister who enjoys his or her position on the basis of a majority in the House of Representatives, and a President who enjoyed his or her position on the basis of a majority of the popular vote, and the President in my view would have a wider mandate, and I think depending on who won that election would very actively want to be involved in policy and determination, that is what worries me. I also think by the way, the idea that somehow you can have a popular election and altruistic citizens will just wonder in off the street and win these elections, let me tell you, a popular election in Australia will be a very expensive business. And people who want to run for popular election, nation-wide, will need very expensive fund-raising capacity. And the idea that some disinterested citizen will just wander in with no money and sweep a popular ballot and thereafter decide to let the Prime Minister of the day account to Parliament in the way that we’re used to, I think is not realistic. That is why I think we will become a republic and I think that the symbols of Australia at the moment are fraying, but if you want to renew those symbols but have a Westminster system, I don’t think you would support a directly election President.

DUFFY:

And do you think you will be able to persuade enough voters of that at some point?

TREASURER:

I think the public will persuade itself actually. I think, one of the difficulties of the vice-regal role at the moment is that under our system the vice-regal role, the Governor or the Governor-General is the Queen’s representative. Now, a lot of the magic and myth has been stripped away from that office and I think that has provided it much harder for Governors and Governors-General to maintain the kind of vice-regal status that they need and you know, you have just got to look at what has happened to a few Governors and Governors-General recently to know, it is a very hard office to fulfil now. You are expected to be vice-regal without any of the mythology that once surrounded the office, and the press of course are only too willing to investigate all of your peccadilloes and there is no vice-regal shield of protection any more, you are more or less at the mercy of the political, the head of government, at the mercy of political factors, and I think that has made life very difficult for the vice-regal role actually. You would have to think that if you were a prominent Australian and you were approached to do the job, you would have to think very seriously about it these days, I would think.

DUFFY:

Like running the ABC. One last question, we are almost out of time, but it is a big one, are there any important reforms that you hoped when you came in eight years ago, that you would be able to achieve that remain undone?

TREASURER:

Yes, the labour market I think still, we have made progress but I think that the blocking of many of our legislative proposals in the Senate has meant that we haven’t made nearly as much progress as I would have liked on unfair dismissal, on flexibility and award wages and conditions, I think the labour market is the great economic key that could unlock the purse of productivity for Australia in the years which lie ahead. Now, there are plenty of other things that I would want to do in the next five or ten years, but you asked me what would I have expected to have occurred by now after eight years of Government which hasn’t, that has been the area of great frustration I think.

DUFFY:

Can you see any way that the Senate might eventually be got around or got through?

TREASURER:

Well, it would have to take the re-election of a Coalition Government and it would have to take an improvement of its position in the Senate. That is going to be the key here and the first is hard enough and the second is even harder, so we have got make sure that we perform well in the next election if we are going to unlock that key because I am sure a change of Government will not only halt progress but it will be a reversal to the bad old days. That is we may not be standing still, we may be in active reversal if there were a change of Government.

DUFFY:

I will just sneak in one last question here, what are the big challenges for Australia in the next couple of years, say the next 20 years?

TREASURER:

The ageing of the population, absolutely critical to everything we are going to do, health, pharmacy, work, skills, aged care, that is the big paradigm that is changing. Secondly our position in the region, particularly with the emergence of China as a world power, thirdly, the utilisation of the resources that we have, particularly the water resource which we haven’t got right yet, and just maintaining a position in an incredibly competitive world with centralisation going on, keeping Australia up to date and in the game is going to be a big challenge.

DUFFY:

Will a Free Trade Agreement with China be a good idea?

TREASURER:

Eventually, yes, but to have a free trade agreement with China, China has got to be a full market economy, now it is rapidly moving in that direction, but who can tell. The Chinese have this wonderful phrase, they call their system Socialism with Chinese Characteristics. When we hear the system being described as a market economy, then you will know that things have completed the process in China.

DUFFY:

I thank you very much Peter Costello.

TREASURER:

A great pleasure to be with you, thanks.