Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Disclaimer: The Parliamentary Library does not warrant or accept liability for the accuracy or usefulness of the transcripts.These are copied directly from the broadcaster's website.
Meet The Press -

View in ParlView

MEET THE PRESS

22 APRIL 2012

INTERVIEWS WITH SHADOW CLIMATE CHANGE SPOKESMAN GREG HUNT AND ANU'S PROFESSOR WARWICK MCKIBBIN

PAUL BONGIORNO, PRESENTER: Hello and welcome to Meet the Press. The Opposition has seized on
explosive allegations against Speaker Peter Slipper as further evidence of the minority Gillard
Government's tenuous hold on power. The latest manoeuvres come as Tony Abbott, unable to stop the
Carbon Tax, has ramped up his campaign to repeal it. Even Anzac biscuits were enlisted as a prop
for his relentless drive in factories and workplaces around the nation.

TONY ABBOTT, OPPOSITION LEADER (WEDNESDAY): In common with every manufacturing operation in
Australia, this business is going to be hit by

the toxic tax.

Undeterred, the Government gave the green light to its $10 billion Clean Energy Finance Fund.

WAYNE SWAN, TREASURER (TUESDAY): A first-class, first-world economy in the future can only be
powered by clean energy.

JILLIAN BROADBENT, RESERVE BANK BOARD MEMBER (TUESDAY): We are as everyone would be aware, a late
starter in the path to our transition to clean energy

CHRISTINE MILNE, GREENS LEADER (TUESDAY): Whilst 10 billion sounds like a big figure if you look at
the amount that we are subsidising fossil fuels, they're getting as much more or less in one year
as we are giving to the renewable energy over five.

PAUL BONGIORNO: It's a slush fund, says the Opposition and should be deferred till after next
year's election. The Liberals' Greg Hunt is a guest. And later, surpluses and interest rates -
economist and former Reserve Bank Board member, Warwick McKibbin.

PROF WARWICK MCKIBBIN (THURSDAY): The bank should be left to do its job and it has done a very good
job.

PAUL BONGIORNO: But first, here's Hermione Kitson with what's making news this Sunday, April 22.

HERMIONE KITSON, REPORTING: Thanks Paul, good morning. Peter Slipper has arrived back in Australia
to face allegations of sexual harassment and misuse of Government cab charges. The Speaker is
facing claims he made unwanted advances to staffer James Ashby and only hired him for sexual
purposes. Mr Slipper answered the accusations briefly in LA yesterday.

PETER SLIPPER, SPEAKER OF THE HOUSE (SATURDAY): All allegations are denied.

HERMIONE KITSON: Independent Andrew Wilkie and Opposition leader Tony Abbott have called for Mr
Slipper to step aside while the matters are investigated.

TONY ABBOTT, OPPOSITION LEADER (SATURDAY): These are very

serious allegations indeed.

HERMIONE KITSON, REPORTING: This morning, the Government was giving Peter Slipper the benefit of
the doubt.

WAYNE SWAN, DEPUTY LEADER (TODAY): It's important to keep this in perspective. They're just
allegations in legal proceedings - serious allegations - but they should be allowed to run their
normal course.

HERMIONE KITSON, REPORTING: Mr Slipper could face a parliamentary vote to force him out of the job.
And in other news, a man's been killed in a shooting in western Sydney. Police were called to the
suburb of Riverwood just after midnight and found a man with gunshot wounds. Another man's been
arrested. And a man in his 20s is in a serious but stable condition in hospital after a shooting in
Melbourne's north overnight. And those are the top stories this morning, Paul.

PAUL BONGIORNO: Thanks Hermione, and welcome back to the program, Greg Hunt. Well, in the Slipper
developments, the Opposition is calling for the Speaker to step aside. Whatever happened to the
presumption of innocence?

GREG HUNT, SHADOW CLIMATE ACTION MINISTER: There is a presumption of innocence. But these are
deeply serious allegations, allegations of sexual harassment during the course of his office as
Speaker, allegations of procuring a staff member for improper purposes, during the course of his
term as Speaker. And allegations of potentially criminal fraud. So the standard which this
Government has set in terms of the military, with the commodore of ADFA, the Defence Force Academy,
is that where there are serious allegations with a foundation, then somebody should step aside. At
the moment, the Prime Minister says there's one rule for the military but a different rule for
Julia Gillard's pet.

PAUL BONGIORNO: In this case of course, it's not within the Prime Minister's power to force Peter
Slipper to step aside - only a vote of the Parliament could do that?

GREG HUNT: Of course it's within the Prime Minister's power. She knows that, we know that, the
Australian people know that. All she has to do is withdraw confidence. Can you imagine - the
Speaker of Australia introducing and standing next to the German Chancellor, the Secretary-General
of the United Nations, the President of China. This is Australia's face and the face of the
Parliament. And whilst these allegations - which are deeply serious - are unresolved, the Speaker
should stand aside. And if Peter Slipper will not stand aside, the Prime Minister should finally
exercise some decency and stand him aside.

PAUL BONGIORNO: I'm advised this morning, that the only mechanism that could get the speaker to
stand aside would be a dissent from his ruling. Are you suggesting that the Prime Minister should
engineer a way in which a ruling could be dissented from?

GREG HUNT: The simple thing that the Prime Minister could do is say to the Speaker "we will not
provide confidence to your role" and she should do it now. And then the Speaker will have no
choice.

PAUL BONGIORNO: If she doesn't do it, will the Opposition step in?

GREG HUNT: We'll reserve our position. But right now at this moment, at this time, it is within the
Prime Minister's gift and it is certainly the Prime Minister's responsibility to stand up and to
stand for standards in this Parliament. Let's be clear -they've set one rule for the military. Even
Craig Thomson stood aside as chair of the House Economics Committee. There is no doubt and no
question that the Prime Minister should act. She should do the right thing, the decent thing and to
ensure that the Speaker steps aside and to have an election at the earliest possible time because
Australians demand clean and stable Government.

PAUL BONGIORNO: So you are calling for an election sooner rather than later?

GREG HUNT: It is time for an election. The Australian people are sick and tired of a Government
built on rotten foundations.

PAUL BONGIORNO: If your wishes came through and there was an election within the next three to six
months, there would need to be another election within 18 months for the Senate - because only the
House of Representatives at this time could go out?

GREG HUNT: Right now, this Government is addled to the core. It's neither competent -

PAUL BONGIORNO: So you're calling for two elections?

GREG HUNT: No. We want an election at the earliest possible time. In the meantime, the Prime
Minister should stand the speaker aside. If he will not do the right thing.

PAUL BONGIORNO: Time for a break. When we return with the dot-com panel, we ask - can the Coalition
afford to repeal the Carbon Tax? And the gang on The Project kept tabs on Tony Abbott's anti-Carbon
Tax crusade....

(vision from The Project)

Segment 2

PAUL BONGIORNO, PRESENTER: You are on Meet the Press with Opposition Climate Change Spokesman, Greg
Hunt. And welcome to the panel, Malcolm Farr, from news.com.au and Sophie Black from crikey.com.au.
On Wednesday, Shadow Treasurer Joe Hockey lay down tough markers for small-spending Government.

JOE HOCKEY, SHADOW TREASURER (WEDNESDAY): So obviously, the age of entitlement is coming to an end
because Governments are running out of money. And the debt is now crippling governments. Welfare
represents around one third of the Australian federal budget - it's an enormous cost burden.

PAUL BONGIORNO: So where does this leave Tony Abbott's message that he can scrap the Carbon Tax but
keep the pension rises, the Family Tax benefits and other benefits that it would pay for?

TONY ABBOTT, OPPOSITION LEADER (APRIL 2): They shouldn't assume that all of the goodies, in
inverted commas, paid for by the Carbon Tax, will all go.

SOPHIE BLACK, CRIKEY.COM.AU: Greg Hunt, how can you afford to rescind this Carbon Tax and still pay
for all of these promises?

GREG HUNT: We will have tax cuts without a Carbon Tax and the reason is very simple. It's about
implementing the same practices we had when we were in Government. What you've seen is 10 out of 12
surpluses from the previous Coalition Government and nine out of nine deficits from the current and
immediate past Labor Government. There are two different cultures here - savings on one hand,
expenditure on the other. Let me give you an example - in the next few weeks, $1 billion in cash
will be given to the biggest brown coal electricity producers in Australia. That's because the
Carbon Tax is such a mess, that they are taxing and giving $1 billion to the biggest electricity
brown coal producers in Australia.

SOPHIE BLACK: But we are still so sketchy on details. We are talking of pulling out $27 billion
worth of revenue that the Carbon Tax could generate and we're still not any clearer on how you will
cost these promises?

GREG HUNT: We are potentially two budgets away from a federal election. We would like it obviously,
as early as possible - we think the Australian people would want clean and stable Government now
but there are potentially two budgets - so you can only base your final projections on the
available figures. But let's be clear. We have been going through, line by line, program by
program, a path and a process of identifying savings which can be made. In my own portfolio for
example, we would merge the two departments of Climate and Environment with real and genuine
savings. That's up-front and clear. We have seen the waste of the Home Insulation Program, the
Green Loans Program, the Green Start Program. There has been manifest waste across a variety of
fronts and we're up-front about the sorts of savings we'd make.

MALCOLM FARR: OK, but you must at least be able to make the broad commitment that once you get rid
of carbon pricing, electricity prices will come down. Can you say that?

GREG HUNT: Well, there should be no excuse and we will make sure there's no -

MALCOLM FARR: No, no, no, can you say they will come down?

GREG HUNT: There should be no excuse for the retailers failing to pass on the reduction as a result
of the Carbon Tax being removed and we will make sure that the ACCC has a mandate. So the amount of
Carbon Tax added to the electricity bill should come straight off it.

MALCOLM FARR: So this Government has an excuse as well then? You know, electricity prices are going
up outside its ken? I'm not talking of the carbon pricing situation.

GREG HUNT: Well, this Government has lots of excuses.

MALCOLM FARR: - Valid ones.

GREG HUNT: What we've seen according to the latest figure is that electricity prices have gone up,
according to KPMG in this city alone of Melbourne, 74% over a five-year period on the retail front.
On top of that, adding a Carbon Tax makes no sense. What we are saying is we will remove the Carbon
Tax and that amount will come off the electricity bill.

SOPHIE BLACK: How will your direct action plan go to addressing these problems of aging
infrastructure which are already contributing largely, to these electricity price increases?

GREG HUNT: The best thing to do to ensure we have a modern electricity system is try to reduce the
costs within that system. So what can occur is investment, there can be relatively lower prices.
But if you are adding massive prices, then what we are seeing in Victoria as well as in other
states is an impairment of the value and assets of the producers. Therefore, they are not able to
invest and therefore, we have a system which is frozen.

PAUL BONGIORNO: The Government of course, is pushing ahead with the Carbon Tax. A key component is
the Clean Energy Finance Corporation which was unveiled on Tuesday in some detail. Now, the
business leader Jillian Broadbent rejected you calling it a 'slush fund' - here she is.

JILLIAN BROADBENT, RESERVE BANK BOARD MEMBER (TUESDAY): We're trying to select projects that are
viable and can repay the capital and service the debt. But it's more a matter of creating real
options for the Australian economy and energy generation rather than picking winners.

MALCOLM FARR: Mr Hunt, Jillian Broadbent's CV - it's quite spectacular, isn't it? Reserve Bank
board member since '98, on the board of a major retailer. Is she the sort of woman who would come
up with and endorse a slush fund?

GREG HUNT: Look, I accept and have great respect for individuals who put themselves forward. Our
issues with the Government and the terms of reference that they have given the Clean Energy Finance
Corporation are such that not even Warren Buffet could make it work. The way to think of it is this
- they have said that they will borrow $10 billion in the taxpayers' name, to invest in speculative
ventures which the private-sector has rejected. So these are the projects that the private sector
has rejected as unproven, unviable or unlikely ever to be successful.

SOPHIE BLACK: How are the direct incentive schemes different to that though?

GREG HUNT: Completely different, because we are looking for the lowest cost means of reducing
emissions. The Government is finding the -

PAUL BONGIORNO: It's $10 billion worth of taxpayers' funds though, isn't it?

GREG HUNT: We are talking about a situation in the first year of 300 million, then 500 million,
then 750 million, over not just the first but the first three years. The Government is looking at
$2 billion next year and $2 billion the year after and $2 billion on and on for the first five
years. They are finding the least economic projects, the least successful projects - because the
market won't invest in them. You only need to look at the United States, the collapse of Solyndra,
the collapse of Ener1, the collapse of the Beacon Energy Project and

just recently, Solar Trust of America - with a $2 billion energy department loan guarantee, using a
very similar system to the one which the Government has just adopted here.

MALCOLM FARR: Does the Federal Government have the right to spend a fair bit of dough explaining
the carbon pricing to the punters?

GREG HUNT: They have already spent $30 million - that includes giving $93,000 to the ACTU. They're
just about to spend $10 million more, according to the Auditor General, including $670,000 for
what's described in this paper which has just been released, which was previously secret, for ad
hoc discretionary grants to favoured friends over the next 10 weeks. So there's a simple message -
the Government should axe the $10 million of taxpayer funding for partisan political advertising
for the Carbon Tax today.

MALCOLM FARR: These are grants to people helping them adjust to carbon pricing or what?

GREG HUNT: No, these are grants to favoured friends such as ACTU, to be shovelled out the door in
the next 10 weeks. And then there's another $10 million of taxpayer funding for public advertising
to be paid for by mums and dads who are watching this program - the Prime Minister should axe it
right now.

PAUL BONGIORNO: So they shouldn't follow the example of the Howard Government after the GST or
after the WorkChoices?

GREG HUNT: This is our watch and our time right now and I'm telling you of the standards we're
setting. This is partisan political advertising.

PAUL BONGIORNO: And will follow?

GREG HUNT: And we will - we committed to $50,000 on advertising. These ads should be axed and ruled
out today.

PAUL BONGIORNO: Thank you very much for being with us today, Greg Hunt. Coming up - leading
Commission Warwick McKibbin. Cartoonist Kudelka in 'The Australian' honed in on the Prime
Minister's Afghanistan drawdown announcement: "Mission accomplished." "Let's go with something a
touch more equivocal."

Segment 3

PAUL BONGIORNO: You're on Meet the Press. The Prime Minister on Thursday caused a stir when it was
widely reported that she was heavying the independent Reserve Bank to cut interest rates. She
nuanced that message during the day.

JULIA GILLARD, PRIME MINISTER (THURSDAY): It's the right time to be returning the budget to surplus
- that'll give us a buffer.... It gives the Reserve Bank more room to move, should it choose to do
so. But, of course, the decision to act lies in the hands of the independent Reserve Bank.

PAUL BONGIORNO: And it's welcome to the program, director of the ANU Research School of Economics
and former Reserve Bank board member, Professor Warwick McKibbin. Well, you were already on the
record as saying it's not necessary for us to go into a surplus in this

budget. Other economists are saying that the Government is taking a big risk and could damage the
economy by rushing to surplus. What do you make of that analysis?

WARWICK MCKIBBIN, ANU COLLEGE OF BUSINESS (CANBERRA): Well, I think that's right. What matters for
the economy is the stock of debt. And the budget deficit is one way to reduce or increase the stock
of debt. But the speed at which you cut the debt, really depends on the state of the economy. A
promise three years ago to cut by next financial year clearly at the time, if it was the correct
decision, is not the correct decision now because so many things have changed.

PAUL BONGIORNO: But what are the risks, then? What could happen if the Government resolutely goes
ahead?

WARWICK MCKIBBIN: Well, it depends if it's cutting spending, there will be spending taken out of
the economy. If it raising taxes, that will impact on the sectors that are being taxed. It's the
quality of the spending and taxes which is where the focus should be. There are some spending
programs which presumably, are quite wasteful and that won't impact on the economy if they're cut.
There are some taxes which can cause enormous damage if you reduce the incentive for people to
work. So the composition is actually more important than the scale, which is lost in the debate so
far.

MALCOLM FARR: Professor, is the Commonwealth borrowing so massive globally, that they are affecting
the price of money, of loans, as Tony Abbott suggests?

WARWICK MCKIBBIN: No, in Australia the stock of debt will probably peak at around 25% of GDP.
Compare that to most of the industrial countries - over 100% of GDP is now the scale of their debt
problems. We are tiny in global markets. When we borrow, we might have a very small increase in
interest rates. When we cut the budget, you might have a small decrease - it's something you would
hardly notice. The issue here is not the borrowing costs - it's if you slow the economy by
withdrawing Government, the hope is by the Government, that the Reserve Bank will see the slowing
economy and therefore, will cut interest rates quite significantly in order to put demand back into
the system. That's the hope. My concern is that the timing is not right. This Government has
promised big budget cuts over the last several budgets and hasn't delivered. So the bank won't be
acting on what it's promised - the bank will be looking to see what's done. Therefore, interest
rates will move gradually, if in fact, the Government is cutting as severely as they're saying they
were going to cut.

MALCOLM FARR: I was going to Tony Abbott's political point that it's the Commonwealth's fault that
interest rates aren't moving more quickly, because it's increasing the size of the cost of money
globally. That's simply not true, from what you just said?

WARWICK MCKIBBIN: That's not true - where the Government is pushing up interest rates is that if
there's too much demand in the economy, the Reserve Bank has to raise interest rates to slow down
demand, so that we don't get inflation. So there is a direct link between the scale of the
Government spending and the level of interest rates. But it's not coming through borrowing and
lending and financial markets - it's coming through the direct impact on demand in the economy.

SOPHIE BLACK: So Professor, what do you make of Julia Gillard's suggestion this week that the
surplus gives the RBA plenty of room to cut cash rates? Aren't they set to cut rates regardless?

WARWICK MCKIBBIN: Well, I think the bank will cut 25 basis points at the next meeting because the
economy is showing weakness and I think the bank has enough room to manoeuvre. It also has to
unfortunately deal with the politics of the current debate. There's a lot of pressure being placed
on the bank externally and internally, I imagine as well, from other board members. So the bank has
room to cut and they probably will cut. What the banks does though, is it doesn't look at the state
of the economy today. It looks as where they think the economy will be over the next several years
and how that will drive inflation. Their decision is not really what the latest data says - it's
what the data implies about future forecast. And that's why it's quite dangerous to be speculating
that the banks should move if the Government changes policy because the bank is independent and I
think the bank's independence is the reason we've done so well over the last decade or so.

MALCOLM FARR: You've been critical of the make-up of the Reserve Bank Board - and remembering of
course that you were a member of that board until recently. One suggestion you've had is that the
Treasury Secretary not be on the Board. What's a consequence of the Treasury Secretary being there
during these deliberations? What's the problem with that?

WARWICK MCKIBBIN: I think the problem is the Secretary of the Treasury should be sitting in the
room and be giving a briefing to the Board. But in the decision-making process, there's a potential
for a conflict of interest. Now, I did not see a conflict of interest from the Secretary of the
Treasury in the entire time I was there. That's because we had very good people in that role. But
if you have the wrong person in that position, and they are driving a political agenda, that is one
out of nine votes and that actually can be a very influential impact. So I think it just looks bad
to have a potential conflict of interest. I also think it's problematic to have so many
representatives of the business community out-numbering the experts on the Board. We need, as with
most decision-making bodies, a degree of expertise in the room. I would like to see a few more
experts - not necessarily academics - but people who understand the broader economy and the big
forces at work overseas and in Australia. This is a fundamentally important stage in our economy.
The emergence of China and India is having profound effects. We need some expertise - which we get
from the staff members of the bank - but we need people in a position to understand what is
happening in the Australian economy at the moment.

PAUL BONGIORNO: Are you saying there that if the Board was composed in a way that you've suggested,
that maybe they would have taken more notice, for example, of what manufacturers and indeed, the
manufacturing unions are calling for - namely, more cuts in interest rates?

WARWICK MCKIBBIN: Well again, the question is what's happening with interest, what's happening
manufacturing. If you go back to 1990, manufacturing was 15% of domestic output. Today, it's about
8%. There's a trend-line from 20 years ago to today. That's a trend in the global economy that all
countries are facing. China, India, Brazil - as these economies emerge and start producing very
low-cost manufacturing, the rest of the industrial countries will be losing their manufacturing
sector. It's inevitable - it's nothing to do with China buying our resources. It's the fundamental
structural shift. Now we're lucky in fact, that China is buying our resources, because that gives
us money to spend on adapting to this new world order. We're not doing a good job at that,
unfortunately. If we didn't have the resources, we would still have manufacturing declining. Our
costs rising on the input side, we can't compete with the cheap labour, we can't compete with cheap
energy. Manufacturing really

doesn't have a very - the type of manufacturing we're doing now doesn't have a very rosy future, as
far as I can see. And therefore, we need to deal with that head-on. I think people misunderstand
the structural shock and they're misinterpreting it as if it's an aggregate demand management
problem that Reserve Bank can fix by changing interest rates. You can cut interest rates by 200
basis points and manufacturing would be in exactly the same problem - you may delay the demise by
six months.

PAUL BONGIORNO: If anyone was in any doubt, that these issues are very complex, I think this
morning you've shown just how complex they are. I guess it won't stop the politicians trying to
make them very simple, will it?

WARWICK MCKIBBIN: That's the problem.

PAUL BONGIORNO: Thank you very much for being with us, Professor Warwick McKibbin. And thanks to
our panel, Malcolm Farr and Sophie Black.