BARRIE CASSIDY, PRESENTER: Back to domestic politics and our studio guest is Finance Minister Lindsay Tanner.
Morning, welcome.
LINDSAY TANNER, FINANCE MINISTER: Good morning Barrie.
BARRIE CASSIDY: The Times editorial this morning refers to Gordon Brown's reshuffle as a suicide pact. How would describe Kevin Rudd's?
LINDSAY TANNER: Oh I think Kevin's is just changing the line-up amongst a range of talented people caused by the resignation of one minister Barrie. There's really no comparison between the two circumstances.
In the UK you've got the economy in much greater trouble, a Government that's 12 years old and, of course, a systematic crisis coming from the MPs' entitlements issues. So I wouldn't compare the two.
BARRIE CASSIDY: Now John Faulkner goes into defence. As Finance Minister do you welcome the fact that a hard nut with almost an obsession in the Senate Estimates for defence matters and defence expenditure in particular, do you welcome that such an operator is now running defence?
LINDSAY TANNER: I do welcome that. We've got a very big agenda for savings and efficiency improvements in defence and John will be ideally placed to push that through.
That's a key element in finding the money to invest for the future in new generation submarines, fighters, all of those things that are going to be crucial to Australia's longer term defence needs.
So John is the ideal person; a tough nut who'll push that agenda through.
BARRIE CASSIDY: So with Joel Fitzgibbon out and with John Faulkner coming in, is that a net benefit to the Government?
LINDSAY TANNER: Oh look I wouldn't necessarily say that because I think that would be unfair to Joel. Joel was very committed to this. He's crafted this strategy. He was the driving force behind the White Paper.
So every politician is different. Everybody has got different strengths and weaknesses. But I don't think you should underplay Joel's achievements. It's very unfortunate the way that he's departed but he's actually been a really major player in developing the Government's approach on these things.
And what John Faulkner will be doing is in a sense implementing and batting through those very ambitious objectives.
BARRIE CASSIDY: What did he do wrong?
LINDSAY TANNER: Oh failed to dot his Is and cross his Ts basically. I think that what you've got to do is make sure as a minister that you are absolutely rigourous on all of these detailed things in regard to your own personal circumstances and unfortunately he missed that in a couple of incidences and the end result is he's no longer a minister. It's a lesson for all of us.
Obvious question is 'so are you saying that Fitzgibbon really did nothing wrong? Do you condone lying to journalists and only revealing information when you are found out?
BARRIE CASSIDY: Well the Budget was handed down just under four weeks ago. Already there is more optimism around because of that positive growth figure. Surely then that optimism by itself will lead to a more positive outcome than those predicted in the Budget?
Do you regret going into such debt given that China is holding up the economy, not the stimulus payments?
LINDSAY TANNER: Well certainly the confidence that I think has been engendered by not only developments around the world but also the Government's willingness to step up to the plate and to invest in infrastructure, to stimulate the economy, has been a factor in those positive numbers, but we're by no means out of the woods yet. We've got a very, very long, hard haul in front of us.
And I note today that the Liberal Party's credibility on debt and deficit has been completely blown away by Joe Hockey who's admitted that if they were elected they would continue with the stimulus package the Government has put in place.
I welcome that, but I note that they now have the same policy as the Government on these things.
BARRIE CASSIDY: But if we go back to the growth figure, and you accept the general point that when you get a confidence boost then generally that translates into more activity?
LINDSAY TANNER: Look generally that will have an impact, but we live in a very fragile economic environment, both nationally and internationally, so I wouldn't want to overstate that.
It's a very positive thing. It's very welcome for Australia that we've got a quarter of positive growth, but it's a pretty anaemic quarter. It's certainly better than negative growth as we had in the previous quarter. We wouldn't want to overstate it.
We've got a big challenge in front of us. We still expect unemployment to rise over the course of the next six or 12 months and we don't want to get...
BARRIE CASSIDY: But to what extent though? You were predicting 8.5 per cent. Chris Richardson from Access Economics is now saying that 7.5 per cent might be the peak.
LINDSAY TANNER: Well we're not revising our estimates. And Chris has something of a habit of calling the extremes. He's always out there in either direction. He's a highly respected economist but that doesn't necessarily mean he's right.
We'll be a bit more cautious in making that kind of call. We have revisions of the estimates for these things that normally are put forward in the mid-year economic and fiscal outlook papers towards the latter part of the year. I'd expect that's what we'll do as just part of the normal routine.
BARRIE CASSIDY: Well given that Australia is in better shape in terms of both growth figures and debt when compared with other OECD countries, could it be argued the Government didn't need to spend quite as much, to build up quite as much debt; that in a sense it would have been better to take a slightly harder hit now and make it easier on yourself down the track? Good question, let's see if he get's an answer.
LINDSAY TANNER: I don't believe so Barrie. And in fact it's, for those who are advocating that position I think they are drawing conclusions from this one quarter's figures that really are difficult to substantiate.
Australia's endured a lost decade of productivity growth. Australia's endured a lost decade of infrastructure investment. Australia's endured a lost decade of skills development. Australia's endured a lost decade of savings growth. Australia has endured a lost decade of export development.
What Ross Garnaut has called "the great complacency" has finished. It's now over and now the hard work begins.
And on everybody's lips in the economic debate now should be one word - productivity. That's what we're committed to doing. That's why 70 per cent of our stimulus packages are about investing in infrastructure, investing in skills, ensuring that we can return to a high productivity economy.
That's what the broadband proposals are about. That's what new port, rail and road infrastructure proposals are about. That's got to be the objective for our economy, and we don't back away from those investments because that's what'll drive the prosperity for Australia's future.
BARRIE CASSIDY: Well you say the hard work begins. You told "The Fin Review" in an interview that the country could not continue living beyond its needs and must brace for tougher times. Are you talking to your colleagues there or to the country?
Er perhaps you can explain how pink bats and $900 random payments will build infrastructure and reverse this so called 'lost decade' during which apprentiships doubled.
LINDSAY TANNER: (Laughs) Well everybody. I think everybody has to go through an adjustment process. It's well under way.
You can see it with state governments Barrie. We've had a decade or so of comfort; a decade when the money's been rolling in from China and other Asian nations, when every time governments have turned around there's been a huge pile of extra revenue there they can draw on. They've been able to have surplus budgets and do lots of nice things for their electors.
Well that circumstance is over, it's gone. We've now got normality where tough decisions are made every year, all the time. Hard choices have to be made. That's the environment we're now in. That's the environment the States are in. That's the environment Australia is in.
And in that environment we have got to invest in productivity because we've had a very ordinary performance in this country for the past five, six, seven years on productivity and that's really where the long term game is for Australia.
BARRIE CASSIDY: But if the good times are over, the hard times are now upon us, what does that mean to the average Australian? What will it mean to their daily lives?
Yes and there is one level of government which banked the rivers of cash, paid down debt and is now bailing out the State Labor Governments that failed - the Australian Government of Howard and Costello.
LINDSAY TANNER: Well I don't think I can project that kind of detail from where we sit now. It just means that the kind of largesse that you've seen, for example, in some of John Howard's infamous election campaign commitments in 2004, 2007. You're not going to see much of that in the foreseeable future.
We've got to get the Budget back into surplus...
BARRIE CASSIDY: You mean in terms of middle class welfare and some of those handouts?
LINDSAY TANNER: Oh look there's all kinds of different things - government grants, there's a whole range of things where the money has flowed freely in recent years because there's been lots of money around.
Well there is not going to be lots of money around now and that means that our Government, state governments and future governments they may or may not replace the existing governments are going to face tough choices.
Now that in some respects is an opportunity as well as a challenge because we have coasted in this country for the past decade on productivity. We have coasted. Because of the strength of this revenue surge, the Howard government was able to sit back and say, how good is this? All we have to do is hand out money, we don't have to do very much.
Well the Rudd Government is not going to coast. We aren't coasting. We are going to put our shoulders to the wheel to invest for that productivity for the future because that's the only sustainable long term source of economic growth.
BARRIE CASSIDY: Okay given that in your seat of Melbourne you constantly face a real contest with the Greens, how did you feel when The Greens won a State seat in the WA election, in a by-election; the first time The Greens had beaten Labor anywhere on primary votes?
LINDSAY TANNER: Obviously that added to the nervousness, but this is not a new threat for me. I wasn't that far off losing my seat to the Greens in 2001 and came within about 4.5 per cent of losing it to the Greens in 2007. So this is not a new threat.
There were local factors involved in the Fremantle by-election - the choice of candidate for the Labor Party, the fact the Liberals didn't stand a candidate, a by-election, certain local issues. All of those things magnified the performance of the Greens but nonetheless it is a real issue.
But ultimately I believe that Labor voters will understand the difference between shouting from the sidelines, being pure and shouting from a megaphone to the general population, versus actually getting in there and doing the tough things and in some cases making the compromises in order to achieve outcomes.
There's many areas of government that I would suggest to the people in my electorate we have done good things and that I've made a contribution. If there were a Green member for Melbourne they wouldn't be making a contribution to those good things. They'd be on the sidelines.
BARRIE CASSIDY: But as you said, it's 4.5 per cent. That's marginal. Climate change will be a big issue. Kevin Rudd has already put back the start up date by 12 months. That plays into their hands.
LINDSAY TANNER: Look I don't believe so because at the same time we also indicated a willingness to accept a 25 per cent reduction of emissions against the 2000 level at the Copenhagen conference.
And one point people have missed is that that's actually tougher than it looks because of course emissions now are higher than they were in 2000. So...
BARRIE CASSIDY: If you go to 25 per cent.
LINDSAY TANNER: Well that's right but even, whether it's the 5 to 15 per cent unilateral proposition, or whether it's the ultimate 25 per cent proposition, all those targets are tougher than they look because although they're measured against 2000 emissions, to put them into effect, the difference you're making is against 2009 emissions or 2010 emissions, which are significantly higher.
So we have got I think a balanced approach to climate change which does maximise Australia's commitment and which is broadly comparable with the European Union and with the Obama administration's position, but which at the same time minimises the economic disruption in the short term. And I'm happy to stand up for that in the public debate.
BARRIE CASSIDY: And what would give climate change an even sharper edge would be if you had a double dissolution election.
LINDSAY TANNER: Well the last thing I want to see Barrie is an election. I've said that consistently. We are in the middle of the fight of our lives on the Australian economy. Things are extremely delicate, extremely challenging. Confidence is very fragile. It's still very low compared with where it was 18 months or so ago. It has improved a bit. The quarter's growth figures were very positive. We've stabilised the financial system but there's an awful lot of stuff to be done.
Elections disrupt this. The last thing we want to see is an election come in the middle of that incredibly challenging fight. If it is forced upon us, so be it. But we're committed to getting our legislation through and to governing and to solving the problems we're presented with.
BARRIE CASSIDY: The unions, too, some of them anyway almost uniquely in Victoria have periodically thrown their support behind The Greens; the ETU (Electrical Trades Union) is one example. That too would add to the degree of difficulty in your seat, wouldn't it?
LINDSAY TANNER: To a degree but there was a fair amount of that in the last election and I still managed to hold my seat with some degree of comfort.
There's, I think it's very odd that unions would do that. I'm a former union person myself and I've been accustomed over the years when I was a union official to taking the rough with the smooth, because the key thing about having Labor governments is that in overall aggregate terms you produce good outcomes. You don't satisfy everybody on everything; you can't produce the ideal outcome every time you deal with an issue; but in overall terms you produce good outcomes for working people and on the ideals that Labor people support.
Now if you go off down a side track with the Greens then you marginalise yourself. You end up just there with the megaphone, shouting at the world but not achieving anything.
BARRIE CASSIDY: But given that they have done that in the past, how do you feel about Julia Gillard's approach at the ACTU (Australian Council of Trade Unions) Congress?
LINDSAY TANNER: Julia was expressing the Government's view and we've got a very difficult issue to deal with there, but we've got a report from Murray Wilcox which does set out a pathway forward...
BARRIE CASSIDY: But it was the Government's view with a bit of extra provocation, wasn't it?
LINDSAY TANNER: Oh look I don't necessarily that that that's a fair assessment Barrie. She was stating plainly the position the Government takes and pointing out that there have been some recent developments which make it pretty difficult for the Government to be retreating from a position that was set out prior to the election.
So I don't think there was anything provocative about it. It was simply plain speaking and one thing that I think people in the trade union movement do value irrespective of whether they agree or disagree is plain speaking is better than soft soaping.
BARRIE CASSIDY: And the building unions claim that they're separated out, that they're treated differently to everybody else. Is that something that they've earned over the years by their behaviour?
LINDSAY TANNER: It's not unknown in Australian industrial relations history for there to be special arrangements for particular sectors. We had a coal industry tribunal for many, many years for example.
Ultimately we've got to weigh up the Wilcox Report, the recommendations there about how to reform the arrangements that currently apply. We are committed to getting rid of the Australian Building and Construction Commission and replacing it with a specialist division of Fair Work Australia that deals particularly with the construction sector. The issue of precisely what powers and what approaches that may be involved there is one that's still under consideration based on the Wilcox Report and that's where we'll proceed.
And yeah we'll take input from the union movement, but not only them. And we'll ultimately make a decision that's in the interests of the Australian economy and the Australian people.
BARRIE CASSIDY: Thanks for your time this morning.
LINDSAY TANNER: Thank you very much, Barrie.
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