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Meet The Press -

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MEET THE PRESS

26 July 2009

INTERVIEWS WITH MINISTER FOR FINANCE AND DEREGULATION LINDSAY TANNER AND NATIONAL SECRETARY OF THE
AUSTRALIAN MANUFACTURING WORKERS' UNION DAVE OLIVER.

DISCUSSIONS ABOUT THE ECONOMY AND EMPLOYMENT, THE EMISSIONS TRADING SCHEME.

'MEET THE PRESS' PRESENTER DEBORAH KNIGHT: Good morning. Welcome to 'Meet the Press'. The tide
could finally be turning on the global financial storm, with one of Australia's leading economists
predicting the worst of the crisis is over. Access Economics says employment will continue to fall,
with tens of thousands of jobs to go over the next 12 months, but a big bounce in retail sales
shows our economy is strong and consumer confidence is soaring - Australians helping to spend the
country out of recession.

FEDERAL TREASURER WAYNE SWAN: (Tuesday) Economic stimulus is what is supporting this economy,
making us one of the strongest, advanced economies in the world.

SHADOW TREASURER JOE HOCKEY: (Tuesday) Well, the massive amount of money the Government has spent
will be a sugar-hit to the Australian economy, but sooner or later you need long-term nourishment
that is going to fuel jobs.

DEBORAH KNIGHT: The Minister for Finance, Lindsay Tanner, is our guest. Later, yet another union
unleashes its fury on the Federal Government. The National Secretary of the Australian
Manufacturing Workers Union, Dave Oliver joins us with the panel.

But first, what's making news in the nation's papers, this Sunday, July 26. Sydney's 'Sun-Herald'
leads with 'Beggars can't be choosers'. Employment Minister Mark Arbib's message to the jobless Gen
Y: "Stop being so picky." 'Plot to hit Turnbull' is the headline in the 'Sunday Telegraph'. The
paper claims the Labor party has hatched a plan to 'do a Maxine McKew' on Malcolm Turnbull in the
next election, in a bid to unseat the Opposition Leader. The 'Age' reports a 'buy local' push is
gaining momentum. A new poll released by the unions shows the public strongly supports the
Government buying Australian, even if it adds to the cost of goods and services. And 'Asbestos in
hundreds of schools' is the headline in Brisbane's 'Sunday Mail'. Experts have been called in to
Queensland schools more than 100 times over the past 2.5 years after damage to buildings dislodged
asbestos materials.

Australia's economy has seen a recent run of positive news, but the Government is far from
celebrating, with Kevin Rudd making some gloomy predictions. Good morning and welcome to the
program, Lindsay Tanner.

MINISTER FOR FINANCE AND DEREGULATION LINDSAY TANNER: Morning, Deborah.

DEBORAH KNIGHT: Well, it was a very pessimistic way to start your Saturday morning, reading the
Prime Minister's very long and dire outlook for the Australian economy - two full pages in the Fair
fax papers warning us to brace for high unemployment, rising interest rates and severe budget cuts.
Did you manage to get through the full 6,000 grim words?

LINDSAY TANNER: I certainly did, Deborah. I think 'realistic' is a better way of describing it.
We've been in an unprecedented global economic crisis and we're only part of the way through.
Although there are some good signs, as your introduction indicated, that we may weather the storm a
little bit better than some expected, it's way too early to make that prediction. We've got a lot
of tough going ahead of us.

DEBORAH KNIGHT: According to the Prime Minister in the piece yesterday, it seems our recovery from
the economic crisis could be worse than the crisis itself?

LINDSAY TANNER: Well, it's not so much he's suggesting that the recovery will be worse; it's just
that we have got some big challenges ahead of us. Unemployment tends to lag these things so that
you get the drop in economic activity, companies often try and hold on to workers as long as they
can, but once you get into a serious downturn, then you see unemployment starting to rise
significantly. We're just at that stage now. And of course the budget discipline we have to put in
place to cover off on the huge drop in revenue we've suffered, which we had to cover with temporary
borrowing in a short term, is a challenge we just can't ignore. It's a challenge we have to meet.
So that will be tough, there's no doubt about that, but we don't have much choice but to face up to
it.

DEBORAH KNIGHT: Why is the Prime Minister interfering on the issue of interest rates? He said that
interest rates will rise. I thought it was up to the Government to be independent of the Reserve
Bank on interest rates?

LINDSAY TANNER: If you read the article, all he's done is refer to the fact most economists are
indicating that in their view interest rate also rise, and we know from experience that when times
are strong, when the economy is ticking over very strongly, interest rates tend to be higher and
when the economy is in the doldrums, as it has been over the past six or nine months, interest
rates are lower. The fact we have interest rates literally at record lows means that realistically
the economists that the Prime Minister has referred to are basing their projections just on
history.

DEBORAH KNIGHT: And Kevin Rudd is warning us to accept difficult and unpopular budget cuts. What
areas will be targeted?

LINDSAY TANNER: We'll be looking at the budget across the board. We've made some substantial
savings, both last year and this year. Some issues are still up for debate. We still have one or
two things to get through the Senate, so we'll just have to really be disciplined. We've imposed
the restraint on ourselves. Once things get back to normal, we won't increase government spending
beyond 2% in real terms each year. We're expecting the budget to get back to surplus in five or six
years, and then we can start paying down the debt. It's really important we stick to that.

DEBORAH KNIGHT: Surely it's only fair to give voters some detail on which areas you're specifically
looking to target?

LINDSAY TANNER: They'll get that detail with next year's budget of course. What we're preparing for
so some very serious and troubling decisions we have to make, that's been the circumstance we've
been in ever since we've been in office for various reasons, because we inherited a budget that was
very flabby, that was a budget put together in boom times, when the previous government was sitting
back, relaxed, comfortable, complacent, spending money all over the place and we've had to take
plenty of tough decisions already, but there's a lot more tough decisions to come.

DEBORAH KNIGHT: Access Economics this week credited the Government's stimulus package with really
helping the economy, helping Australians to spend our way out of recession. If we're looking toward
more tough times, should you be considering another round of stimulus?

LINDSAY TANNER: We've never ruled out further action, but the stimulus proposals that we've got in
place now are part the way through hitting the economy. The cash payments have all gone, and
they've done a very, very important job in keeping particularly retail and overall activity ticking
along, but now you're starting to see the bigger part of our spending, about 70% of it, which is
building things - infrastructure, new school buildings, insulation in homes, new road, rail and
port projects. That's all starting to flow. So there's a lot of the existing stimulus stuff to
come. We believe that'll be really important, particularly in the second half of this year, and
into next year, in keeping the economy ticking over at a vaguely reasonable pace when everything in
the world is pushing down on us very, very strongly.

DEBORAH KNIGHT: The big problem with spending is debt and Access Economics's Chris Richardson says
it is a major problem.

ACCESS ECONOMICS'S CHRIS RICHARDSON: (Tuesday) Australia's federal budget has a big deficit. It
does need to be repaired at some stage. That will take difficult decisions. It'll take money out of
people's pockets one way or another. So there are certainly some longer-term challenges still
there.

DEBORAH KNIGHT: It is a major challenge. Should Government consider reining in some of this
spending?

LINDSAY TANNER: We don't believe so, because it's there to perform a function and it's there to
keep the economy ticking over when otherwise it would be going into very, very deep recession. It's
also temporary spending. It's short term in the sense that the money is projected to go out the
door only over a couple of years. Where the bigger challenge lies is to rein in ongoing spending
that just gets spent year in, year out. And Chris Richardson is right - we have to rein spending
in, we have to get the budget into surplus as quickly as we can, but not at the expense of jobs or
the overall economy. We believe we have the balance right. We have a big challenge to meet with
debt, but we will meet the challenge. Our primary objective, though, is to sustain jobs, to keep
people in employment, keep businesses open.

DEBORAH KNIGHT: Lindsay Tanner, time for a break. When we return with the panel, will the
Government really negotiate over climate change? It's the issue that's caused temperatures to rise
in the Coalition this week. A confidential email from Wilson Tuckey was leaked to the media,
expressing his frustration at Malcolm Turnbull changing the party's position on an emissions
trading scheme. The veteran maverick labelled his leader "arrogant and inexperienced".

FEDERAL MEMBER FOR O'CONNOR WILSON TUCKEY: (Onscreen text) "The issue of the arrogance and
inexperience of our leader on the issue of the emissions trading scheme has to be addressed. There
are no amendments to the ETS that will make it work."

WILSON TUCKEY: (Clip) Western Australia wants me to stick with what I promised and I'm not going to
have our leader telling my constituents to the contrary when it's not the view of our party.

JOE HOCKEY: Every family has an uncle who goes a little wild at a family wedding. Well, Wilson is
still a member of the family and he'll still be invited to Christmas dinner.

DEBORAH KNIGHT: You're on Meet the Press, with Finance Minister Lindsay Tanner. Welcome to our
panel: Jessica Irvine from the 'Sydney Morning Herald' and the 'Daily Telegraph's Malcolm Farr. The
Government turned up the political heat this week over its controversial Carbon Pollution Reduction
Scheme. The Prime Minister enlisted former Liberal and environment minister Robert Hill to chair a
trust for its emissions trading scheme. Kevin Rudd calls it 'bipartisanship'. The Opposition says
it's a political stunt.

JOE HOCKEY: (Tuesday) The fact that the Prime Minister is paying former Liberals to give him advice
on global warming says that the Prime Minister really is prepared to listen to former Liberals but
not to the current Liberals.

THE 'DAILY TELEGRAPH'S MALCOLM FARR: Minister, if the Carbon Pollution Reduction Bill gets knocked
off on August 13, doesn't it make sense for the Government to have a chat with the Opposition
before reintroducing a form of the bill? Or are you determined to create an excuse for an early
election?

LINDSAY TANNER: Malcolm, we'd be happy to have a chat with the Opposition now, but we haven't seen
any concrete proposals yet. All we've seen from Malcolm Turnbull is a wish list. We're happy to
negotiate around specific amendments. We've always made that plain. And that applies to the other
parties in the Senate as well. But the Liberals are thrashing around in complete disarray. Wilson
Tuckey might be a colourful maverick, but on this issue he speaks for a big proportion of the
Liberal and National parties. They don't believe that climate change is real. They have a different
view from the population and the Government, and Malcolm Turnbull is trying to paper over those
cracks.

MALCOLM FARR: But the leadership of the Opposition, certainly of the Liberal Party believes that
there should be form of ETS. Why don't you take advantage of that willingness to create some form
of carbon trading?

LINDSAY TANNER: We're certainly happy to do that. You're right, they went to the election in 2007
promising to have an emissions trading scheme, but we have seen them thrashing around, delaying,
obfuscating, trying to avoid the issue for months because of the divisions in their own ranks.
We're happy to consider specific amendments. Malcolm Turnbull has just floated a few slogans, a bit
of a wish list. We'd like to see specific propositions that we can contemplate. We can consider
whether or not to agree to them or put counter propositions.

THE 'SYDNEY MORNING HERALD'S JESSICA IRVINE: Lindsay, is it possible that, in the meantime, between
proposing an ETS, you've become more worried about the economy? Because certainly, any mining
company you talk to will tell you there will be job losses as a result of the ETS. What's
Treasury's take on how many jobs will be lost as a result?

LINDSAY TANNER: Jessica, we did delay the proposed start date for a year and made some other
modifications because of the fact that we're in the middle of a giant economic downturn
internationally. That's, of course, threatening the economic well-being of Australia and lots of
other companies. One of the things I discovered in this debate, and many others too, is that people
bring their worst-case scenarios to the table. I think it's very significant that you've seen
contrast drawn in the media between statements being made by companies in this debate on the one
hand and the formal advice they give to their investors and the stock exchange on the other, which
is a great deal more sober and considered than some of the statements being made about jobs and
about companies going broke.

JESSICA IRVINE: But there will be jobs lost? No-one is disagreeing on that?

LINDSAY TANNER: I think you're going to see movement across the economy as a result of these
changes. In net terms, I believe it won't be negative for jobs, because you're going to see
different companies doing different things. For example, you will see major electricity providers
shifting their activity to renewable energy. If you want to generate solar power, you've got to
employ people to do that, for example. If you want to have wind farms, you've got to employ people
to do that. So you'll see movements, you'll see structural change, but I don't believe it will be
negative for jobs overall.

MALCOLM FARR: Mr Tanner, you might remember about 10 years ago when the then Employment Minister
Tony Abbott accused some young people of being "job snobs" and he was savaged by your side of
politics, perhaps even by yourself, and welfare organisations who said the problem was that there
weren't jobs there, not that people were being picky. Now you have your senior colleague Mark Arbib
saying to young people that "beggars can't be choosers". Are you going to have a quiet word with
him and tell him that that's not the way to approach these things?

LINDSAY TANNER: I'm afraid I don't remember what I may have said or not said 10 years ago, Malcolm,
but I don't recall being heavily involved in that discussion. I haven't seen Mark Arbib's comments.
But from what I've seen reported of them, they sound like a statement of practical reality. That's
the truth whether we're in the middle of a serious downturn, as we currently are, or in wider
circumstances. It's just the nature of life. We don't always end up where we would like to end up.
Things happen in ways we don't anticipate. So it is important we have aspirations but also
important they're realistic and we accept the fact that life is uncertain. That's my impression
about what he said.

DEBORAH KNIGHT: So do you think that Gen Y is being too picky?

LINDSAY TANNER: Look, I'm not in a position to know. One of the things that annoys me in public
debate a lot is that people tend to generalise about generations. I'm a baby boomer - I get
lambasted for having had it easy and all of this kind of stuff. But, of course, the average living
standards today in Australia are getting towards double what they were when I was a kid. People
forget that. I don't like generalising about generations. I think that if you look at the average
25-year-old now you will see all kinds of different attitudes, all kinds of different people,
different circumstances.

JESSICA IRVINE: Now the words you used a moment ago were, "We're in the middle of a serious economy
downturn." Bill Evans from Westpac said we won't get a recession. We're going to sail through with
positive growth. Once and for all, are we in recession?

LINDSAY TANNER: We are certainly in a global recession. I've avoided debating whether or not we are
in technical recession in Australia. Thus far we have not had the formal statistics showing that.
But one way or another we are in a serious economic downturn. We are projecting 0.5% growth. In
other words, the economy will be going slightly backwards across the forthcoming year. Time will
tell whether that projection proves to be correct. But there's no doubt we're in a very serious
downturn.

MALCOLM FARR: And on jobs and job protection, isn't there a case during the serious downturn, which
you say will continue and continue to affect employment, isn't there a case for looking after jobs
by preferred tendering?

LINDSAY TANNER: Malcolm, price discrimination against imports would threaten our international
trade obligations. It would cost the Government more. And in practice, the vast bulk of the things
we import are things that actually aren't manufactured in Australia, like photocopiers and fighter
jets. It's a bit like me helping my 15-year-old daughter with her homework. If I do it for her,
it's a waste of my time and it doesn't do anything for her education. So we've got to be in a
position where we help to build capacity. So there are lots of things we can do to make it easier
for Australian companies to compete genuinely. But if we tilt the playing field artificially in
their favour, that does them no benefits in the longer term and a return to protectionism would be
a disaster for Australia's economy in the wider sense. That's something we are absolutely committed
to avoiding.

JESSICA IRVINE: Are you surprised that we're having this debate again after decades in which we
liberalised trade markets and we all decided that we could buy things cheaper if we buy them from
the people that can produce them most efficiently. Has this caught you unawares that most
Australians are now wanting protection from manufacturing, say?

LINDSAY TANNER: No, it hasn't, you'll see pressures of this kind all around the world. It's just
human nature, just natural that people will want to look after their own backyard. I think it's
often difficult to get the contrary point of view through. But Australia is a trading nation. We've
had a decade of complacency. We've had years of boom and what we've seen is our productivity
performance deteriorate, our export performance deteriorate. We cannot afford to wind the clock
back to the 1970s, go for the easy, simplistic options when what we have to do is lift or
productivity performance, lift our game with exports. There are many options around. There are many
proposals, including some of the proposals put by people in the union movement that are worthy of
being pursued in this regard. It's about building our muscle, not a lazy, relaxed, "Let's try to
make sure we don't have to compete with anybody." Let's strengthen the Australian economy in our
capacity to compete. That's where we will get the jobs from.

DEBORAH KNIGHT: Lindsay Tanner, thank you for joining us on 'Meet the Press.

LINDSAY TANNER: Thank you very much, Deb.

DEBORAH KNIGHT: After the break, the latest figures suggest employment may not rise as high as
expected but is the Government doing enough to protect Australian jobs? Dave Oliver from the
Australian Manufacturing Workers Union joins us. And our cartoon of the week goes to Nicholson in
the Australian who took inspiration from TV hit 'MasterChef' to cook up a jibe at Opposition
infighting over the emissions trading scheme.

DEBORAH KNIGHT: The Labor Party prides itself on looking out for Australian workers but is it doing
enough to save local industry and ensure we remain a country that makes things? A survey by the
Manufacturer's Union found that more than 63% of Australians think that the Government should be
doing more to protect Australian jobs. More than 85% want the Government to buy Australian, protect
jobs from overseas competition and pump more money into local industry. And 6 out of 10 people
believe that they or someone close to them will be made redundant over the next 12 months.

The National Secretary of the Australian Manufacturing Workers Union, Dave Oliver is our guest.
Welcome to the program.

NATIONAL SECRETARY OF THE AUSTRALIAN MANUFACTURING WORKERS' UNION DAVE OLIVER: Good morning.

DEBORAH KNIGHT: It is a popular notion to employ Australians over overseas workers, but Lindsay
Tanner is right, isn't he? It is proven that it doesn't actually achieve that?

DAVE OLIVER: Well, I have the utmost respect for Lindsay Tanner but our job is to represent the
interests of the 1.3 million workers we have in the manufacturing sector. That's why we've come
together to form a manufacturing alliance with the AWU to campaign for real policies that can
secure jobs in the manufacturing industry, regardless of which Government is in of the day. But we
accept that this Government is providing a better environment for us to operate in, but we want
clear, sound policies that can actually position the manufacturing industry to get through this
current crisis and beyond that. And the most simplest thing they can do to date is in particular
regards to the spend on the infrastructure - the projects they're putting up - is about maximising
local content, to get the best bang for buck. Because after all, the Government's agenda, the Prime
Minister's agenda about the stimulus packages is about jobs. So the best way of maximising jobs is
to have a focus on maximising local content.

JESSICA IRVINE: But can you explain for us, if the Government doesn't simply go for the cheapest
option to build their infrastructure and goes for a local option, presumably something of higher
cost, how doesn't that just feed into a higher cost for taxpayers and higher taxes?

DAVE OLIVER: Well, if you look at the cost factor of it. If you purely just base it on the cost of
the particular goods or services being tendered out and not take a holistic approach on the overall
cost to the community - because the difference between awarding a contract or a tender to a
particular company may mean that company may continue operating or closing, which means we've got a
choice. We can keep people employed, keep revenue coming in by taxation on one hand, or we see
further unemployment, which is an extra burden on the economy, in respect of unemployment benefits
and other related services. So for us, it shouldn't just be based on the cost of the service. It's
got to be a holistic approach and those considerations taken into account.

JESSICA IRVINE: Aren't Australian workers better off in jobs that are good in the long-term
interests of the economy and not kept in jobs that are being artificially supported?

DAVE OLIVER: Absolutely. We don't support the notion that if the Government is supporting industry,
it means that it's being artificially supported. If you look at the automotive industry, for
example, the Australian automotive industry has fared exceptionally well compare to what is
happening around the rest of the world. And that would not have occurred had it not been for the
Government's $6.2 billion stimulus package to support that industry. So it's all about support.
It's no different to what governments around the world have been doing for many years and with the
previous government we had 11 years of neglect and saw hundreds of thousands of jobs disappear. In
the last 12 months we have lost 76,000 jobs out of the manufacturing sector and as the polling has
shown today, the Government has a responsibility to provide policy, and assist those industries to
maintain employment.

MALCOLM FARR: You and your new best friend the Australian Workers Union are going to take this
issue to the ALP National Conference here in Sydney towards the end of the week, which will see for
the first time in yonks a bloc vote by the industrial wing of the party. What's the possibility for
that bloc vote being used on other issues and in fact seeing the industrial wing call the shots at
the conference?

DAVE OLIVER: Well, as you said Malcolm, the AMW and AW have come together and formed this alliance
which gives a strong, powerful voice to the quarter of a million members that we collectively
represent and a strong voice in forums such as the ALP National Conference and we will vote
collectively on a proposition that's about providing policies to secure manufacturing jobs in the
industry. On this occasion we're coming together to put the interests of our members over and above
the factional interests of the Labor Party.

MALCOLM FARR: And you won't go and use that power on other issues as well?

DAVE OLIVER: Well, at this point we're focusing on the interests of the manufacturing workers and
we don't want to speculate on what's coming down the pipe.

MALCOLM FARR: But you'd be tempted, wouldn't you?

DAVE OLIVER: Well, again, it's about the immediate concern that both ourselves and the AWU have, is
about jobs. 76,000 jobs lost out of the manufacturing sector. We want to take the opportunity at
the national conference next week to call for good, sound policy to secure jobs in the industry,
beyond the economic crisis and even well beyond the national conference. It doesn't stop there.

DEBORAH KNIGHT: Are you happy with the direction the Rudd Government is taking the economy?

DAVE OLIVER: Well, we have been happy they've taken an approach about injecting the stimulus
packages. We think they can go further. The best bang for buck is maximising local content. You
maximise local content, you're maximising opportunities for local employment. It's all about jobs.
We often think, well, what would it have been like under John Howard? There'd be further
deregulation. So the Government is heading down the right path but we think more needs to be done.

DEBORAH KNIGHT: And do you think that Kevin Rudd, with the amount of jobs that will be lost that
he's predicting, that stimulus is the way to go?

DAVE OLIVER: Absolutely. We think now is not the time to take off the accelerator. They need to
continue down that path, and don't be spooked by Malcolm's debt truck that's out there. Look at the
debt around the rest of the world.

DEBORAH KNIGHT: Thanks for joining us this morning.

DAVE OLIVER: Thank you.

DEBORAH KNIGHT: And thank you to our panel, Jessica Irvine and Malcolm Farr. A transcript of the
programme will be on the website shortly. And if you have any questions you'd like to ask the
guests, you can e-mail us at meetthepress@networkten.com.au. I'm Deborah Knight. Thanks for your
company. Enjoy your day.