Doorstop Interview

Monday, 29 October 2007

10 am

SUBJECTS: Water, Kyoto, election, economic management, Labor’s tax ‘analysis’

TREASURER:

Can I say something about water first of all.The Australian Government has a $2 billion Water Fund which is directed to projects which will improve the use and the recycling of water throughout our country.I noticed that Mr Rudd announced on the weekend tax credits for desalination.Let me put it in context: these tax credits of $100 million would be completely outweighed by dividend stripping out of State water authorities.For example over the last five years here in Victoria $653 million has been taken out in dividends from water authorities.So to say that you will offer $100 million when $653 million is being stripped out is hardy to undo even the dividend policy of a State water authority.The best thing you could do if you wanted more investment in urban water is to get the State water authorities and State Governments to stop taking dividends out, using these water authorities for revenue generating purposes rather than leaving the profits in there for reinvestment.And if you could get a proper and sensible administration in relation to these water authorities you would have hundreds of millions, if not billions, additionally available for water investment in Australia.

JOURNALIST:

Are you concerned about Malcolm Turnbull and the comments over Kyoto showing that there is a schism in Cabinet over Kyoto?

TREASURER:

No.There is no schism.The Cabinet’s position is that we will meet our Kyoto target but we want to be more ambitious in the next round of negotiations, in particular to bring in the world’s largest emitters – China and the United States.The weakness of Kyoto is it doesn’t cover the world’s big emitters.So Australia will continue to meet its goal but it doesn’t believe that the current Kyoto agreement will give the necessary change on a global basis because you don’t have the big players in it.And it is our policy to get the big players in it.We had an important step forward at APEC in Sydney where we got an in-principle agreement from China and the United States and we can build on that for the future.

JOURNALIST:

I think Rudd is saying that he, Labor could go ahead with another, a revised Kyoto ratification even if China and the US don’t become involved.But would you argue that it is pointless without their involvement?

TREASURER:

You see, Australia has what, I think 0.2 per cent of the globe’s population, something like that.Now, you are talking about Australia, a country of 20 million people in a global population of 6 billion.If we play our part that is good, but if countries like China with over a billion people or the United States with a third of a billion people aren’t part of the global agreement then what ever Australia does will be completely dwarfed and outweighed by the big emitters.Whatever we do, the big emitters will be deciding what global emissions amount to.And that is why you can’t really make meaningful progress without having the big emitters in it.

Now to date, China and the United States have not come into any of the international agreements.We had a breakthrough in Sydney at the APEC meeting where they agreed in-principle.We believe that properly handled, the post-Kyoto agreement which is 2012, if it brings the big emitters in can really do something meaningful.

JOURNALIST:

Given the large lead that Labor still has in the opinion polls, how do you turn things around (inaudible)?

TREASURER:

Well I think over the next three or four weeks, I want to talk about our plans for a better and a stronger Australia.Our plan to make the tax system more competitive.Our plan to build technical education.Our plan to share the benefits of prosperity with self-funded retirees and pensioners.Plans that we have for an Educational Endowment for first-class facilities in world-class universities.These are all important things for Australia’s future and it is those future plans that I think the Australian public, when they hear about them, will be voting on.And they want to know that they will have a government which can manage the economy and make these plans come to fruition.

JOURNALIST:

Do you think the campaign has got bogged down a little bit in past negativities and things the Government hasn’t achieved perhaps, the Prime Minister’s past record?

TREASURER:

Well you know, I think Mr Rudd is trying to scoot through a campaign without scrutiny.He hasn’t had any significant political experience, he doesn’t want to be scrutinised, he wants to try and get through an election campaign without having the kind of scrutiny that people require before they are eligible to take a senior role in the Government of the country.Mr Rudd would be the most inexperienced candidate for the Prime Ministership that we have had, he is seeking to avoid scrutiny because he wants to skate through to election day without people actually figuring out what he is about.

JOURNALIST:

You don’t think the Prime Minister needs to change his tactics by not fixating on the past?

TREASURER:

Well I am not a commentator on this election, I am a participant.And I will be participating and talking about the things that are important to the Australian people and the plans we have to make this country, one of the best countries in the world, even better.

JOURNALIST:

What are your thoughts on the looming debate with Wayne Swan?

TREASURER:

Oh well look, I think it is an opportunity to put scrutiny on the economic policies of both parties.I think people know what we stand for.We stand for balanced budgets, low debt, we stand for more jobs.Our record is out there, it can be judged.Mr Swan has suddenly announced that he is an economic conservative.But I lay down this challenge.Go through the speeches of Wayne Swan over the last 10 years.Find out how many times he told the Parliament he was an economic conservative before his PR firm told him to start using that phraseology in the course of this campaign.

JOURNALIST:

Would you like to say anything about the NATSEM figures?It is saying, reporting that Australian families would be $15 better off under a Labor Government.

TREASURER:

The information that Labor gave to selected journalists last night without calling a press conference and without submitting themselves to any questioning, illustrates the principal of ‘garbage in, garbage out’.What that analysis did is that instead of comparing the two tax policies, it compared tax and education announcements of the Labor Party and tax, excluding welfare announcements, of the Liberal Party.That analysis deliberately excluded the Coalition’s announcement which will make 2 million pensioners better off, 250,000 self-funded retirees better off, 700,000 disability support pensioners better off.And in order to try and make it look like low income earners could do better under Labor, they excluded $4 billion of benefits to pensioners.It is the most bodgy analysis you could have done.So we will exclude the payments to pensioners, self-funded retirees, carers and disability pensioners and then try and say that low income earners would be better off under the Labor Party.Well of course if you exclude the benefits for low income earners from the comparison, of course you will get the desired result.Garbage in, garbage out.

JOURNALIST:

Any predictions based on things after, I am aware that you know, you countered that argument once before, with, after 2010 Australian families would be $600 a year worse off.But wouldn’t anything, any predictions after 2010-11 whether it be Coalition or the Opposition be relevant considering they are based on just aspirational goals?

TREASURER:

There are two incontrovertible facts.Labor’s tax policy will lead to higher taxes for middle income earners after 2010-11.And that is why nothing that was modelled by NATSEM went to that point.They just instructed them not to do that.The second point is what they were trying to show was that low income earners would somehow be better off under the Labor Party and in order to do that excluded all of the benefits to aged pensioners, self-funded retirees, disability pensioners and carers.Now of course if you deliberately exclude benefits for low income earners you can show any conclusion you like.But it is bodgy.Garbage in, garbage out.If you want to exclude benefits for low income earners and then say, oh, low income earners aren’t getting as much as they should have been doing, you have come to your conclusion and therefore changed your inputs.Garbage in, garbage out.It’s the most obvious thing.Okay, thanks.