SKY NEWS PM AGENDA
WEDNESDAY, 8 JUNE 2016
SUBJECT/S: Labor’s 10 year economic plan, Foreign investment, Murray Goulburn crisis, Liberal MP’s paying electorate allowance to Parakeelia.
DAVID SPEERS: We are live at the Brisbane Broncos leagues club in Brisbane, ahead of the People's Forum with Bill Shorten tonight. Now we may not have a debate here tonight with the Prime Minister opting not to take part, but we have a debate for you right now, that I’m sure will be even more interesting. Arthur Sinodinos, the Cabinet Secretary and Joel Fitzgibbon, the Shadow Agriculture Minister join us. Gentlemen a very good afternoon and thank you for being with us. A lot of things to talk about this afternoon, and I want to start with Labor's 10-year plan that was announced today Joel Fitzgibbon. Now Labor is admitting that over the next 4 years anyway, it will have bigger deficits and therefore bigger debt, before eventually returning to surplus at the same time as the government would and I think it’s in 5 years from now. It seems to me to be a bit of a gamble. Do you think that Australians like the idea of bigger deficits and debt?
JOEL FITZGIBBON: No I don't think so David because I think that people understand the risk of taking a sledgehammer to what is already a not too fast growing economy. We need to get the budget back to surplus, that's for sure. But we are in no rush to do it. When you consider that we really need to be investing in our people to get the economy growing faster, and that of course means investing in Gonski, school education and training.
SPEERS: And that means spending money, the problem is a lot of the economists are saying – a bunch of them have come out today and said - this could only put our triple A credit rating in greater danger.
FITZGIBBON: No David. Labor has the proud record of preserving and protecting our triple A credit rating. That is one of our key objectives but you’ve got to recall also that the reason that we spend a little bit more - or save a little bit more - whatever combination that you want to take, then the Government over the next four years they are relying on two things. One, the retrospective nature of their superannuation changes, and two, and very importantly, all the savings they would receive, if they were able to get Tony Abbott's 2014 budget changes cuts through the Senate. Now we don't know who’s going to win this election, but we can be pretty sure that no one will have control of the Senate. And those unpopular cuts in the 2014 budget are no more likely to get through the Senate this year than they were in 2014. So those savings are not real.
SPEERS: Well, Arthur Sinodinos, that is not a bad point, is it because things like your cuts to Newstart for young job seekers, there’s not much chance of you getting things like this through, unless you win a majority in the Senate of course. It does put a question mark over your own budget numbers.
ARTHUR SINODINOS, CABINET SECRETARY: We'll David we’re seeking a mandate at this election to be able to implement the measures we put to this election, and that includes the savings measures you mentioned and others –
SPEERS: That doesn't mean the Senators will pass them. They will ignore your mandate, we know that.
SINODINOS: Well look, we are working on the basis of being able to get a mandate which means if possible also being able to maximise our vote in the Senate and it would be great to get a majority in the Senate. The only outcome on which I will speculate is one where we keep arguing through this campaign for the merits of our proposals. If Labor are saying they are not going to accept those $18 billion of savings, then they are starting $18 billion behind. That is the reality of the matter including $5 billion of savings in there that they themselves had voted for or had proposed in government. Let's get real here – they are starting $18 billion behind the eight ball. We’re seeking a mandate for those savings in this election and by the way, I don't accept the premise that what was released today by the Opposition was some sort of a plan. It was not a plan it was essentially just bringing togethe r various promises they’ve made in the campaign, trying to ape our six-point plan by having six points of their own and calling it a plan. That is not a plan for the future of this country.
SPEERS: Okay. Let me just come back to this, Joel Fitzgibbon. Because the economists are worried about what this will do, what Labor has announced too, will do to our triple A credit rating. What happens if interest rates suddenly go up, the global economy doesn’t pick up, if the iron ore price doesn’t do what you hope it will do. Is now the time really to be building up more debt over the next 4 years?
FITZGIBBON: We’re not talking about building up more debt, David. I remind you –
SPEERS: Well, you are, you are.
FITZGIBBON: No, no, well I remind you –
SPEERS: You’re not cutting debt. You're increasing debt and even faster than the Government.
FITZGIBBON: The first point I should make is the net debt has increased by $100 billion since this mob took the Treasury benches. We’re not talking about creating more debt –
SPEERS: And you want to make it worse.
FITZGIBBON: No, we we’re not talking about creating more debt. We’ve got a 10-year plan to return the budget to surplus. Now they are not returning the budget to surplus in the next four years either.
SPEERS: I wanted to focus of 4 years because we all know that the 10-year forecasts are never right. As I say whether it's interest rates, global economy, iron ore prices, things change. So over four years, which is what the budget is, you are building up more debt.
FITZGIBBON: Well Arthur is budgeting for a budget deficit in the next four years. We can have an argument about variables, you say what happens if interest rates change, what if the dollar moves in another direction, what if growth slows? But all these assumptions are of course variable and we are doing what we believe we need to do to grow the economy over the course of the next four years. Now, if you grow the economy, receipts go up, expenses go down, because more people are working, they’re not on unemployment benefits and of course you have all sorts of stimulus effects in the economy.
SPEERS: But how are you growing the economy?
FITZGIBBON: We are growing the economy by not taking the sledgehammer Tony Abbott tried to take to it in 2014. You don't grow an economy by cutting everything back, and you don't grow an economy by not investing in the key component to a growing economy, and that is our people. And I don't know if Arthur read the document today, I suspect he did not –
SINODINOS: I read every page; I highlighted it, added up the number of photos because there were more photos than in this document –
FITZGIBBON: We talk a lot about investing in –
SINODINOS: You're on a different page to Chris Bowen. You're on a different page to Chris Bowen, Joel. You really are.
FITZGIBBON: That’s not true Arthur –
SINODINOS: He is saying more debt and deficit over the next four years under Labor's proposals and he seems quite relaxed and by a magic pudding approach, year five he gets a surplus the same year that we do.
FITZGIBBON: No Arthur, it's you that’s got the magic pudding approach because you are relying on savings you will never get through the Senate Arthur and of course your retrospective superannuation changes.
SPEERS: Let me ask you Arthur Sinodinos, if you for some reason don't get these savings through the Senate, and you haven’t been able to so far, what will you do? What will the Government do? And will we push out the return to surplus even further?
SINODINOS: Well I’ll tell you what I’m doing for the next 3 weeks; I'm going to be arguing the case about why we need our budget plan to be accepted in full. I’m not speculating on any other outcome but working hard to get the outcome I have just talked about, because I feel very strongly about our budget plan including the company tax cuts and the impact that will have on growth. We are the only, the coalition are the only people in the election who have an integrated growth plan, along with a Harper competition policies and a whole series of other things we’re doing on infrastructure –
SPEERS: Given for the last six years, both sides have politics have their budget forecasts seriously wrong and the deficit keeps getting worse. Arthur Sinodinos why bake in a ten year company tax cut plan? Surely it's better to see how things go over the next 3 years, 4 years rather than legislating a 10-year company tax cut?
SINODINOS: Because that’s what provides the growth impetus and companies need certainty about that direction cos it takes times for them to draw up their investment plans, it takes time for them to change their capital equipment and all the rest of it. They think forward. You go and ask any business-
SPEERS: A big risk to the budget, though –
SINODINOS: You ask the larger businesses about the need for certainty. That's what we are trying to provide here. We’re the only ones –
SPEERS: I'm sure they will love the certainty.
SINODINOS: A plan –
SPEERS: No doubt but you’ve got to admit, it is a risk to the budget though to bake in a 10-year spending plan, or tax cut plan whatever you want to call it. It's baked in and with we know the cost – $48 billion.
SINODINOS: Well go and look at the budget papers where it shows the plan coming into force, at a time we are getting the budget into surplus. Those 10 year projections –
SPEERS: And that’s my question, what if that doesn't happen? What if – like we’ve seen for the last six or eight years that doesn’t happen? Great if we do get back into surplus, but recent history tells us that we won't. What happens then is my question? We’re still baked into this 10-year tax cut plan –
SINODINOS: My view David is that if the public vote for our plan growth will be stronger, productivity will be higher, and we'll be in a better position to withstand external shocks and maintain the integrity of our budget bottom line. It’s Labor that is putting these things at risk and if Saul Eslake, John Daley and Stephen Anthony who are calling out Labor about the potential risk to our ratings over what they want to do with their four year gamble on debt and deficit.
SPEERS: Let's move on from that. You're both adamant this time you'll be right on your forecast. Let's talk about foreign investment. This hasn't had a lot of attention today Joel Fitzgibbon, but Labor has announced that it does want to relax some of the rules around foreign investment in farmland, in agribusiness, in other businesses as well particularly on farmland at the moment the level of scrutiny for the Foreign Investment Review Board to have a look at things is a $15 million investment. You want to take it back to $50 million. Why?
FITZGIBBON: We want to be internationally competitive David. Arthur will agree - I’m just so keen to hear from him - but we need an enormous investment in agriculture, in particular, to meet our future aspirations. We’ve always relied on foreign investment and we will continue to do so. The competition for global capital is very intense and we want to make sure that when people look at Australia considering investing here that they are not burdened or scared away by ridiculous red tape and compliance. Barnaby Joyce's decision to reduce the FIRB screening threshold to $15 million was simply a dog whistle and shame on Malcolm Turnbull for not calling him out on this issue. We want to attract investment, we want to be discerning about investment, we want to make sure that we get the right investment in the right way but Barnaby Joyce in an attempt to shore up some of his base – is pretending he is fighting foreign investment, scaring away foreign investment, when we need it so desperately.
SPEERS: Ok, dog whistle, that’s pretty strong language Arthur Sinodinos your response, why do we need a $15 million threshold for foreign investment scrutiny.
SINODINOS: Two points, first of all the context, when we came into government in 2013, we made a commitment because there were concerns about levels of ownership of land and all the rest of it, that the first thing to do was to develop land registers and the like, to have accurate information on who what and the second thing was to indicate that there would be appropriate scrutiny of investments in land, and agriculture and agribusinesses, in a way that would calm the potential fears and actually encourage people to support foreign investment. The whole point of having – you can make Joel's argument about having an FIRB at all – but the reason we have and FIRB is to assure the public we are looking at foreign investment and ensuring it's not contrary to the national interest, and that actually promotes confidence in foreign investment and actually encourages more foreign investment into the count ry, because people know what the rules are. You want to get away from the ad hock approach so other countries have –
SPEERS: Well hang on surely, if you didn’t, if there is less foreign investment scrutiny, less red tape that’s going to attract more foreign investment to be clear.
SINODINOS: My point is this David, based on my experience, having worked in the Treasury and elsewhere, other countries which have had laxity in this area, what happens is there's suddenly a political crisis over a particular foreign investment, you get an overreaction and that actually discourages foreign investment. We have a known system, a credible system around the world which I think promotes certainty about how proposals are looked at and actually encourages foreign investment. And while I’m at it, if Labor is so worried about foreign investment, why do they keep lambasting foreign investors and saying they'll be the beneficiaries of our company tax cut, an if there's something wrong with that. This walking of both sides of the street but Labor in so many policy areas is actually in itself something which creates sovereign risk about our country.
FITZGIBBON: David, Arthur is a sensible guy. It must be so hard for him to say all of that. We too want to build public confidence in foreign investment, that’s why we were first to promise a foreign investment register. They reluctantly came to it but guess what, they have announced now that their register – that should have allowed everyone in Australia with the click of a mouse to see who is buying what, where and how – it's a secret! They are not releasing the foreign register, it's a secret. The important point here is that –
SPEERS: But what about that last point that Arthur Sinodinos makes that you've been bagging the Government's company tax cut for putting some money into the pockets of foreign investors. What is wrong with that? We want to attract them.
FITZGIBBON: We want to attract them but we don’t want to repatriate all of our hard earned money here to overseas investors –
SINODINOS: But that’s what happens when foreign investors come here, they want to take –
FITZGIBBON: Arthur –
SINODINOS: Some money out –
FITZGIBBON: Arthur –
SINODINOS: They want to have a return otherwise why would they come? This is what I don’t understand –
FITZGIBBON: You can’t seriously be comparing tax cuts to foreign multinationals with foreign investment. They are two separate things. And look, here is the important point – you know that any government owned business in a foreign country is scrutinised if they are investing one dollar. You also know that any important issue, say if S Kidman and Co properties – was a bit of an iconic issue – were worth only $5 million, they would come to the attention of the Treasurer. The Treasurer looks at anything he believes could be controversial and could be subject to the national interest. These thresholds aren't all that important. One dollar, $5, $500 million, $5 billion, the Treasurer would look at all these issues if he believes there is a potential concern but lowering the threshold just causes a backlog of applications, red tape and compliance.
SPEERS: A couple of quick ones before we go, the dairy farmers Joel Fitzgibbon, I see you're still expressing concern about the package the Government announced a week or two ago, the loans. If that's not enough, what is Labor going to do?
FITZGIBBON: Well I begin David by expressing my support and sympathy for all those farmers and people more generally who have been affected by the heavy rains and the floods. On the dairy crisis there is a key point here. Not one cent – after what must be six weeks now – not one cent of government assistance has gone to these dairy farmers. Barnaby Joyce, a month after the event, made a big announcement, which he of course embellished but not one cent of assistance is making its way to the farmers yet. What I don't understand is why Barnaby Joyce won't support me in my call for the Murray Goulburn board to give back some of their $40 million in retained profits to the farmers. It’s a co-operative David. The profit is theirs, they need the money now and in addition the –
SPEERS: But they are a private company.
FITZGIBBON: No, the private company –
SPEERS: It’s up to them what a company does with its profits isn’t it?
FITZGIBBON: Is an entity, no no – well they are co-operative, they are owned by their farmers. The private entity is the fundraising vehicle they used and here’s a second point, they have the capacity as the Board - it's in their prospectus for their fundraising – they have the capacity to redirect some of the money from their Collins and Pitt Street investors back to the farmers today. That would put cash immediately into the pockets of the farmers. It would reduce the debt they now have to Murray Goulburn because as you know the price reduction was applied retrospectively, and even better because Fonterra's prices are linked to Murray Goulburn’s, Fonterra prices would rise and Fonterra suppliers would benefit from this move. This of course is a no-brainer but for some reason, the Government will not back my call.
SPEERS: Oh look we’ve nearly run out of time but I just wanted one more issue. Arthus Sinodinos there’s a story in Fairfax today a company called Parakeelia – I’ve never heard of it you may have – where Liberal MPs according to this report are paying the company, using some of their taxpayer funded office allowance – $2,500 a year, into this company Parakeelia which on its Board of Directors is the Liberal Party’s President and the Liberal Party’s Federal Director and I don't know what is going on with this company and why is taxpayers' money going to it Arthur Sinodinos?
SINODINOS: I think those questions are best directed to the organisation. Both sides of politics as I understand it have companies which run data registers and the like but it's the sort of thing I think you should follow up with the organisation.
SPEERS: Have you heard of the company, though?
SINODINOS: Yeah, yeah, I have heard of it, yep.
SPEERS: Do you direct any taxpayer money to it yourself?
SINODINOS: I don't know whether it's taxpayer money, but money is provided to them, yes.
SPEERS: From your office allowance?
SINODINOS: Well, you can do it from your own pocket I mean –
SPEERS: No I'm asking about the taxpayer funded office allowance that Members of Parliament get.
SINODINOS: Yes, I understand what you’re talking about you can do it either way I suppose. But –
SPEERS: I'm asking what you've done. Have you used your allowance?
SINODINOS: Well, I’d have to check. But I think would have, yes.
SINODINOS: I beg your pardon?
SINODINOS: Well that would be used to provide information on which we gather on electors and the like and we use it to try and do our electorate business.
SPEERS: That's a legitimate use of taxpayer allowance?
SINODINOS: I'm not quite sure what you're getting at there.
SPEERS: I’m just wondering if it's a legitimate use of taxpayer funds. I don't know anything about it.
SINODINOS: Yes, I believe it is, yes.
SPEERS: Alright. Arthur Sinodinos, Joel Fitzgibbon, thank you both very much for joining us this afternoon. Look forward to catching up again.