SUBJECT/S: DCNS leaks; Murray Goulburn profit; Bill Shorten’s speech at the Press Club; superannuation policy.

DAVID SPEERS:  You're watching PM Agenda. Time to bring in our guest this afternoon: Joel Fitzgibbon is Labor's Shadow Agriculture Minister and he is also a former Defence Minister.  Thank you for joining us this afternoon.


SPEERS: I want to ask you about this DCNS leak, this is the French company that are going to be building our submarines, our next fleet of submarines, a $50 billion contract.  The leak relates to the submarines they are building for India, a different submarine as Chris Pyne points out, he is really downplaying the significance of this for Australia.  Does it worry you that this has happened?

FITZGIBBON:  It is a big story and a real concern. Submarine capability is of critical importance, every bit as important, if not more important, than our jet-fighters.  And there are a number of important points here:  we need to get the best deal in terms of the cost; we need to maximise Australian industry participation; that’s all good – they are important. But what really matters, is the product you get out at the other end. 

SPEERS:  Especially when you are paying $50 billion.

FITZGIBBON:  And our competitor advantage in this, is our relationship with the Americans and the capability, the information and intelligence that they share with us.  Because it is not just the submarines; it is the information that comes with it, the combat systems, the integration of those.  Now, we can’t afford to have that relationship undermined in any way.  And you can be pretty sure the phones between Canberra and Washington are running pretty hot today.

SPEERS:  This is a really good point, because we are expecting the Americans to share their combat system in these new submarines – that is what is going to make them worthwhile. Does this risk that?  If the Americans think that: hang on, we don’t want that secret information getting out there.

FITZGIBBON:  Tony Abbott was not without his faults, I think that most people would agree, but what he did do is demonstrate a deep interest in Defence and National Security.  And I think he understood very, very well, as did his Defence Minister, David Johnston in my view, very very well the importance of the US relationship and the competitive edge it brings to both of us really, because it is important for the Americans that our capability is maximised as well.  I have no doubt that is why Abbott had a preference for the Japanese bid.

SPEERS:  Because the Americans wanted that bid?

FITZGIBBON:  Well it was the relationship, the relationship between America and Japan they are a trusted partner and on that basis they would have felt a lot more comfortable about the systems integration et cetera.  This is something I don’t think Malcolm Turnbull or Christopher Pyne understand very well at all.  In fact I think Malcolm has been completely out of his depth on the submarine bid and let’s hope that the whole thing doesn’t end in tears.

SPEERS: Do you think that this makes in hindsight, the Japanese bid look preferable?

FITZGIBBON: I don’t want to make any judgement about which bid was preferable, as the reality is I don’t have the information available to me to make that judgement but I think it does underscore the premium we secure in maintaining that relationship with the United States and the real fear here is, the United States can downgrade our relationship without us even knowing it.

SPEERS: They wouldn’t give us any information?

FITZGIBBON: . Well you don’t know what you don’t know. And that relationship has always been at the highest level, it needs to be maintained at the highest level, and anything that jeopardises the high level of that relationship is a real concern for Australia.

SPEERS: Let me turn to your patch.  We have been talking a lot about the dairy farmers and Murray Goulburn in particular, with a lot of farmers high and dry after the milk price was cut and backdated. They have just announced, Murray Goulburn just announced today their profit - $40 million.  What is your reaction to that?

FITZGIBBON:  And with a smile on their faces – collectively – talking up the entity; the reality is here that we have most of those Murray Goulburn farmers now on unemployment benefits.  Facing all sorts of challenges.  This saga is now more than 4 months old.  Murray Goulburn has the capability, or the capacity, to help those farmers .But rather than do so – they are sitting on money which actually belongs to the farmers because this is a co-operative.  They are also showing a preference for the Collins Street investors who took out units in the company in their fundraising venture.  The Board has the capacity to change that profit-sharing mechanism to send more money back to the farmers and in doing so, the capacity to reduce their debt.

SPEERS: They could share this around- the $40 million?

FITZGIBBON:  They could both share the $40 million and the dividend payments that go to the investors be transferred with more weight given to the farmers.

SPEERS: How much are the dividend payments to investors? Do you know?

FITZGIBBON:  They announced the dividend return on that today – I don’t know what the number is.

SPEERS: That is on top of the $40 million?

FITZGIBBON:  The important thing to remember is, a third goes to unit-holders and two thirds goes to farmers.  Now they could give all of it to the farmers, now the unit-holders might scream but the fact is the unit-holders will never get their money back if there are no farmers.  And the way things are going, Murray Goulburn is going to lose its milk suppliers.  Now that will be a crisis for Murray Goulburn.  Now the bigger question in all of this is: what is the Government doing?  It announced a package throughout the campaign, the election campaign, which proved completely useless.  For some reason Barnaby Joyce nor Malcolm Turnbull have not been prepared to utter a word of criticism of Murray Goulburn.  I have  called upon, I think rightly, the resignation of the Chair and the Board; I mean their CEO has gone, their CFO has gone, but for some reason they are digging in .  But worse, the Chair has not shown any contrition or given any apology for the Board’s action.  Indeed, he has basically said he would do it all again.  That he wouldn’t do anything differently. 

SPEERS: Well the Prime Minister and Barnaby Joyce did bring them in for talks, a week or so ago. 

FITZGIBBON: Without an outcome.

SPEERS:  Tomorrow they are holding a symposium, where Murray Goulburn will be there, and some of the big supermarket chains, Coles, Woolworths and other groups as well.  I guess bringing them all around the table?

FITZGIBBON:  For a talk-fest. Who believes, what dairy farmer in Victoria or Tasmania or elsewhere, believes that any outcome is going to flow from that talk-fest tomorrow.  And even if there were to be an outcome, it is not going to happen in a week or a month’s time – it will be in one or two years.  I put a whole range of policy issues that could be tackled, including the strengthening of collective bargaining provisions, consumer and competition et cetera, but none of that happens overnight.   The only entity that can be fixed and fixed quickly is Murray Goulburn.  Yet the Prime Minister and Barnaby Joyce finally dragged them to Canberra last week – they were meant to come to Canberra for a bit of a Pic fact.  We saw no outcome

SPEERS:  How do you know they won’t, behind closed doors tomorrow, give them that message and say c’mon guys?

FITZGIBBON:  When Parliament returns, I will be interested to put some questions forward as to when the Government and Barnaby Joyce first knew of what was going on at Murray Goulburn and what he did about it, and what communications he had with them and I would be very happy to see some evidence that at some point he has muscled up to them and told them to do the right thing.  The look on Barnaby Joyce’s face in facing the cameras last week after that meeting suggest he has not done so and I don’t understand why.

SPEERS:  Let me just go to Bill Shorten’s speech at the Press Club today finally.  He has announced the areas he wants the Government to agree with him on when it comes to fixing the Budget, but on superannuation he has offered what he says is a compromise here, I said a little earlier, there is a bit of a sting in the tail here with Labor saying we will not backdate this cap on how much you can put into super after tax to 2007.

FITZGIBBON:  That puts Labor alongside just about everyone in the community and every financial services expert  that no-one wants retrospectivity. We are saying to them we are all up for reform, in fact it wasn’t that long ago you will recall, that Malcolm Turnbull was saying no reform was necessary , then they came up with our own reform because we were pushing our credentials very hard.  Then they discovered this retrospective nature, there is a golden rule that runs through tax policy generally that you don’t do things retrospectively.

SPEERS:  But is it retrospective- I know this debate has been had – but is it retrospective?  It is not taking away from, like if you’ve put in more than 500 grand already since 2007 you are not going to lose that.

FITZGIBBON: It is changing the rules after the event, and I have heard the experts from either side attempt to argue their cases and you can argue it all day , but the fact is they are changing the goalposts midgame.  There is no doubt about that.

SPEERS:  If you starting that this year- you could put another 5 grand in now .

FITZGIBBON:  But why do it this way?  What really matters here is superannuation is about providing adequate retirement income.  That is what we are about.  It is not about allowing high wealth individuals to keep putting money away at a reduced concessional rate .  The policy has got to make sure that superannuation policy is sustainable.  We agree on those things.  And of course we have got to make sure it is adequate for the lower end.  Now why can’t Malcolm Turnbull just say – you are right we don’t have to apply things retrospectively to achieve our common goals.  Now Bill Shorten has extended the hand of cooperation today, Malcolm Turnbull should take it.

SPEERS: Joel Fitzgibbon good to talk you and thank you for joining us this afternoon.

FITZGIBBON:  Thank you

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