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Early Agenda -

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AM Agenda

21 October 2010

ASHLEIGH GILLON: Joining me on our panel of politicians this morning the Leader of the House and
Infrastructure Minister, Anthony Albanese, good morning to you.

ANTHONY ALBANESE: Good morning.

ASHLEIGH GILLON: And Shadow Minister for Immigration, Scott Morrison, good morning to you.

SCOTT MORRISON: Good morning, Ashleigh.

ASHLEIGH GILLON: Anthony Albanese, I want to start with you. Can you just clarify this? Has the
government broken its deal with the mining companies when it comes to the issue of how state
royalties are handled?

ANTHONY ALBANESE: No, we haven't. We said that we would provide compensation in terms of existing
and scheduled royalties increases, we will do that. We have a process whereby through the committee
with Don Argus, Martin Ferguson, there's a process of consultation that consultation is continuing.

ASHLEIGH GILLON: But under the Heads of Agreement that Julia Gillard signed there's no limit on
those royalty refunds?

ANTHONY ALBANESE: No, that consultation is continuing, we made it clear that existing and scheduled
royalties issues would be covered off and that is common sense tells you that's, that should be the
case. If you gave a, if you have a system whereby states could increase to whatever they like then
get automatic compensation that would not really be a tenable situation or the Commonwealth.

ASHLEIGH GILLON: Then why do you think the mining companies are under the impression that you were
going to compensate them for future hikes?

ANTHONY ALBANESE: Well, let's actually wait and see where the mining companies are. They're
participating in this process, we've approached this with consultation through Don Argus, let's let
the process take its course rather trying to get ahead of ourselves and second guess. I know The
AUS in the Australian kind of way is excited about this but let's just let it take its course.

ASHLEIGH GILLON: So, you don't think the mining tax is on shaky ground? There's no way that you
think these mining companies will walk away from this deal?

ANTHONY ALBANESE: Look, there's a process taking place and second guessing ...

ASHLEIGH GILLON: That's not the question though, is this on shaky ...

ANTHONY ALBANESE: ...well, second ...

ASHLEIGH GILLON: ... ground now?

ANTHONY ALBANESE: ... second guessing what people will do is not appropriate. What we have is an
agreement in place, we have a process of consultation through Don Argus, Martin Ferguson, let them
continue their work.

ASHLEIGH GILLON: Scott Morrison, does the Coalition think the mining companies actually deserve to
have those state royalties compensated by the federal government going forward?

SCOTT MORRISON: I think this issue goes to the heart of the creditability of this government. Prior
to this election the deal with these three mining companies, and these aren't inexperienced mining
companies they don't sign up to things lightly on the eve of an election given how much was at
stake for them and the fact that these matters have now been raised, I think, shows huge doubt on
the legitimacy of what this government represented the Australian people on this matter before the
election, particularly the Prime Minister who made this one of her three big items, I mean, we're
not talking about the other one today necessarily but immigration and border protection was
another. But, this was a massive issue which they claimed as an unprecedented negotiated outcome by
this new Prime Minister and today it's in tatters. And it's the same as what they said on carbon
tax, not expanding detention networks. We're seeing a litany of things unravelling on the other
side of the election which were all there before the election and it's become a complete house of
cards.

ASHLEIGH GILLON: Back to my question though and the crux of this issue, which is: does the
Coalition support the mining companies and think that they deserve to be compensated for any future
hikes in state royalties?

SCOTT MORRISON: Well, we don't support the tax. We don't support the tax ...

ASHLEIGH GILLON: But the tax is in place now and the mining companies ...

SCOTT MORRISON: So, no ...

ASHLEIGH GILLON: ... signed up to that so ...

SCOTT MORRISON: ... the tax isn't in place now and we don't support the tax and we won't be
supporting the tax. And we said that before the election that our position was 'no tax'. The
government's position was we've struck this big deal and everything's going to be okay with the
mining sector and today that appears to be in ruins just like the government's promises on a carbon
tax, on border protection and whole series of other matters where they led the Australian people to
believe one thing before the election and patently obvious now. Now, the outcomes of this: what
does it mean for the budget? What does it mean for the guarantees and the minister, I'm sure
Anthony will be able to say what this means out of the regional packages that were going to be
funded by this. I mean this thing is falling apart.

ASHLEIGH GILLON: At the next election if this mining tax is ...

ANTHONY ALBANESE: Hyperbole doesn't, you know ...

SCOTT MORRISON: How are you going to fund all of that if this deals falls apart and you can't get
this tax through?

ANTHONY ALBANESE: Who says it's falling apart?

SCOTT MORRISON: How are you going to get this tax through?

ANTHONY ALBANESE: Who says it's falling apart?

SCOTT MORRISON: The mining companies today.

ASHLEIGH GILLON: So, Scott Morrison let's just clarify ...

SCOTT MORRISON: The mining companies today.

ANTHONY ALBANESE: (inaudible)

ASHLEIGH GILLON: We know that Tony Abbott's thing was 'dump the tax' before the election but if
this mining tax is in place and the Coalition perhaps wins the next election you would still dump
it and it would still just go off the radar even though the government's already collecting
revenue?

SCOTT MORRISON: The Coalition isn't getting ahead of itself. What we have at the moment is a
proposal from the government to introduce a tax, that's the bill that's coming up, we're opposed to
that bill.

ASHLEIGH GILLON: Anthony Albanese, can you just clarify that the Coalition has also been arguing
that you might have been in a rush to get this done before the election and that's where a mistake
could have been made. Was there anything actually written down to signify your position on this?

ANTHONY ALBANESE: Look, I wasn't a party to the negotiations so, you know, I can't comment on that.
What I can say is that we've made our position very clear which is about existing and scheduled
increases to royalties. Common sense tells you that's the case and that's why Scott, despite the
hyperbole, Scott can't say ...

SCOTT MORRISON: The mining companies (inaudible).

ANTHONY ALBANESE: ... Scott can't say that's it's a good idea that we just say any future increase
into the never never ...

SCOTT MORRISON: Well, that's not the point.

ANTHONY ALBANESE: ... we would provide compensation for it. Scott ...

SCOTT MORRISON: That's not the point, Anthony ...

ANTHONY ALBANESE: ... knows that that is not ...

SCOTT MORRISON: ... it's not a

ANTHONY ALBANESE: ... not a practical or sensible position in terms of a government fiscal policy.

ASHLEIGH GILLON: It is fair to ask your opinion on that Scott Morrison. Whether you think it is
fair for the mining companies to be compensating off into the future ...

ANTHONY ALBANESE: I think he's given his answer.

SCOTT MORRISON: No, no, I'll speak for myself Anthony. The issue is what deal was done with the
mining companies? What deal did you broker on the eve of an election in a state of panic to try and
sure up the creditability of a new Prime Minister who was going to an election? What over the top
promises were made and agreed to and now on the other side when you see the realities of this the
government seems to be walking away from the deal because of all the consequences they clearly know
...

ANTHONY ALBANESE: (Inaudible) we're not walking away from anything ...

SCOTT MORRISON: You guys did the deal ...

ANTHONY ALBANESE: ... and you can't say ...

SCOTT MORRISON: You've got to live with it ...

ANTHONY ALBANESE: you can't say what your position is ...

SCOTT MORRISON: Well ...

ANTHONY ALBANESE: ... because ...

SCOTT MORRISON: We're opposed to the tax.

ANTHONY ALBANESE: ... because you can't say what your position is on the specific question being
asked here ...

SCOTT MORRISON: It's your deal.

ANTHONY ALBANESE: ... on the specific questions ...

SCOTT MORRISON: It's your deal. Why do I have to respond to your deal?

ANTHONY ALBANESE: ... because you know that our position is sensible on it.

ASHLEIGH GILLON: Minister, it doesn't seem, it doesn't seem to make sense that at this stage so
many months after that deal was signed that now this debate is happening? Why wasn't this written
down in the first place?

ANTHONY ALBANESE: Well, well, let's be clear here. The AUS have a front page story everyday ...

ASHLEIGH GILLON: Well, it's not just The Australian; it's the three mining companies.

ANTHONY ALBANESE: ... every day ...

SCOTT MORRISON: It's the media's fault.

ANTHONY ALBANESE: ..and today's, today's is about this issue, tomorrow it will be something else.

ASHLEIGH GILLON: No, but the mining companies ...

ANTHONY ALBANESE: Tomorrow it will be something else.

ASHLEIGH GILLON: ...the ones that have a gripe on this ...

ANTHONY ALBANESE: Tomorrow it will be something else.

ASHLEIGH GILLON: ... so what it will all be solved tonight, Minister?

SCOTT MORRISON: I know that's how the New South Wales runs politics but you've got an issue to
respond to today.

ANTHONY ALBANESE: The mining companies let me tell you I've been meeting with the mining companies
as well over a range of issues with my infrastructure hat on, all I can say is the relationship
that I have with them is very constructive.

ASHLEIGH GILLON: So, you think this is all going to be solved by tomorrow then?

ANTHONY ALBANESE: Well, well, we'll wait and see we have a process.

ASHLEIGH GILLON: But you're (inaudible) ...

SCOTT MORRISON: Nothing to see here; move on, that's the government's position.

ANTHONY ALBANESE: We have a process, Don Argus a pretty senior guy, not a Labor Party paparazzi ...

SCOTT MORRISON: Who said he was?

ANTHONY ALBANESE: Don Argus chairing a process of consultation along with Martin Ferguson with the
industry.

ASHLEIGH GILLON: So, you sound very confident that this is going to be sorted out and the mining
tax will go ahead.

ANTHONY ALBANESE: Well, we're very confident about it. We think that this is a good tax. It's is
parsing strange that the mining companies themselves say that they are in a position to pay more
tax to contribute more for what they take out of Australian assets owned by Australians and Scott
Morrison and the Liberals say no we don't want you pay what you say you can.

ASHLEIGH GILLON: Let's talk about what Australians have to pay on their mortgages that's a nice
seguey for us. Joe Hockey has been calling on the Treasurer to stand up to the retail banks who are
threatening to have independent interest rate rises. Scott Morrison, what does the Coalition
actually want Wayne Swan to do when it comes to crunch? What measures do you want him to take?

SCOTT MORRISON: There are a couple of issues. The Reserve Bank minutes say two very important
things. The first one is that bank funding costs haven't changed. The second one is their interest
rate margins are higher today than they were before the GFC. There is going to be a pipeline of all
sorts of regulatory agendas coming down internationally, as I'm sure Anthony knows as well, and
this is about the nature of the relationship between the government and the banks. The banks are
special creatures. They are too big to fail and we can't have the situation where it's all upside
for the banks and down side for the tax payer, I mean, we want banks to see themselves more as
yield stocks rather than growth stocks and so it's important that in the relationship between the
banks and the government there is a clear understanding of their need for them to be conservative
because their conservative nature in the past and regulatory they had through the GFC was critical
to us surviving this crisis. So, it is a matter of the relationship and as Joe said this morning
the banks are playing the government for mugs.

ASHLEIGH GILLON: So, you're just saying that you allege the banks don't respect Wayne Swan enough
so they're going to raise interest rates independently?

SCOTT MORRISON: They do, I mean every Australian mortgage holder knows that and what we're exposing
in what we're saying today ...

ASHLEIGH GILLON: Because they don't respect Wayne Swan.

SCOTT MORRISON: ... they don't respect the government. They see a government in crisis; they see a
government that has done everything that they've asked of them. Now, the banks have had a willing
advocate in the government and that's fair enough but this has to be a two way street and the banks
cannot just continue to go along the process of bumping up their profits by putting up interest
rates above what the Reserve Bank says and just have Wayne Swan just go this is terrible.

ASHLEIGH GILLON: Okay, but apart from the relationship ...

SCOTT MORRISON: The relationship's very important

ASHLEIGH GILLON: ... which is quite a wishy washy concept ...

SCOTT MORRISON: No, it's very important because when we were in government that relationship was
critical when we abolished things like the BAD and FID taxes ...

ASHLEIGH GILLON: Right, what about a concrete discussion though?

SCOTT MORRISON: There was an understanding; there was an understanding between the banks and the
government that this was a two-way street. This is a one-way street for the banks with this
government ...

ASHLEIGH GILLON: So, you're ...

SCOTT MORRISON: ... they get the guarantees, they get the support, they get the advocacy ...

ASHLEIGH GILLON: So, you're not nominating any other concrete measures ...

SCOTT MORRISON: No.

ASHLEIGH GILLON: ...you want Wayne Swan to do ...

SCOTT MORRISON: ... we're saying

ASHLEIGH GILLON: ... apart from improve his relationship?

SCOTT MORRISON: Yeah, well that's a very big part of it. Now, if you think the relationship's great
Anthony ...

ASHLEIGH GILLON: No, but ...

SCOTT MORRISON: ... by all means ...

ASHLEIGH GILLON: Scott ...

SCOTT MORRISON: ... make the case.

ASHLEIGH GILLON: ... can I just clarify this. There's no other measure you're calling for him to do
apart from being on better terms with the banks?

SCOTT MORRISON: No, there will be a series of regulatory agendas which will come out of the
international sphere, right?

ASHLEIGH GILLON: Right ...

SCOTT MORRISON: There's going to be a lot ...

ASHLEIGH GILLON: ... and what does that mean to general ...

SCOTT MORRISON: ... there's going to be a lot of regulation coming down the pipes and so ...

ASHLEIGH GILLON: What does that mean to us sitting on the (inaudible) listening to you,
international regulations?

SCOTT MORRISON: Banks are going to have to sit there and look the government in the eye and go
which of this is going to work for us and which of it isn't and what we're saying is the
government, I think, has to take a very tough view with the banks on those matters ...

ASHLEIGH GILLON: So, what's an example of that?

SCOTT MORRISON: ... and we need to look at the banks and look at their behaviour and performance
and if the banks are going to want to try and turn themselves into mining stocks rather than
banking stocks then I think the government would and should be warning that they will be pursuing a
much, much tougher regulatory environment.

ASHLEIGH GILLON: What is a concrete example of one thing that Wayne Swan could do to make the banks
keep the interest rates ...

SCOTT MORRISON: Well, I've just outlined a regulatory environment which is broad and wide, there's
an infinite number of measures that could be introduced over the next two or three years which are
coming out of international forums and will continue and the government has to decide which ones
they're going to pursue. Now ...

ASHLEIGH GILLON: Let's get Anthony Albanese ...

SCOTT MORRISON: ... they've got to front up to the table.

ASHLEIGH GILLON: ... take on this. Funding costs have been flat as the RBA minutes say. Is this
because the government has, is weak and has; the Treasurer is weak and doesn't have a good
relationship with the banks?

ANTHONY ALBANESE: Well, you know, Scott's suggestion that Wayne should, you know, not go out, I
don't know what he's really saying, there's nothing practical there at all expect a broad sweeping
statement about re-regulation of the banks. I mean two weeks ago we woke up to front pages on The
AUS day after day about us intimidating the business sector. We had a bad relationship and we were
out there getting stuck into them and business feared the government because we were too hard on
them. Today, Scott's suggestion is that Wayne Swan's in some sort of Kum Bah Yah relationship with
the banks and it's all too cosy. But, there's, it is bizarre, frankly, that you have a Liberal
Party Shadow Treasurer, essentially hinting and Scott's hinting at it as well, nothing specific as
usual from the Opposition but hinting at re-regulation of the finance sector. Now, we moved beyond
re-regulat ... the full regulation of the banking sector. We moved to a model which had appropriate
regulation that served us well in terms of the global financial crisis. I might say an area in
which there was bipartisan support, it's not clear to me what Joe Hockey is on about apart from
getting a headline, a headline which is easier to do.

ASHLEIGH GILLON: So is there anything that Wayne Swan can do to make the banks keep their interest
rates in line with the movements from the central banks?

ANTHONY ALBANESE: Well, one of the things that he has been doing is making clear, contrary to what
Scott said, he has made it clear what the government's position is ...

ASHLEIGH GILLON: Yes, so apart from that ...

ANTHONY ALBANESE: ... that there shouldn't be any gauging of profits.

ASHLEIGH GILLON: ... those messages is there any actual concrete measures that he can take?

ANTHONY ALBANESE: Well, what we shouldn't do, what we shouldn't do is pretend that we're going to
move away from a market economy that's what Joe Hockey's suggesting. We in the government support a
market based economy, we're unapologetic about that, it served us well

ASHLEIGH GILLON: Okay (inaudible).

SCOTT MORRISON: If I can make a point on that, Ashleigh?

ANTHONY ALBANESE: ... we support appropriate regulation not over regulation and we've had a range
of measures in place that allow consumers, for example, to be able to swap banks.

ASHLEIGH GILLON: Okay, look I'm sure that the Coalition will be taking this up in Parliament in
Question time today. We do need to go to ...

ANTHONY ALBANESE: I don't think so I think they'll be running from it actually.

ASHLEIGH GILLON: ... break so we'll come back, we'll come back with both of our panelists in a
couple of minutes, stay with us.

Welcome back to AM Agenda Anthony Albanese and Scott Morrison are with me this morning. I want to
get your take on John Howard's book, it's coming out next week. I know probably neither of you have
read it but we're looking forward to some extracts this weekend. Today there is a tiny one
suggesting that John Howard's going to be claiming some of the credit at least for convincing
Malcolm Turnbull to stay on politics. Scott Morrison, how present is John Howard in the Liberal
Party at the moment?

SCOTT MORRISON: Well John said when he left Parliament that he wasn't going to be one of those
Prime Ministers who would constantly intervene in the debate and he doesn't do that. John always
there on the end of the phone when any of us wish to talk to him and get advice, i certainly do
from time to time and I know others of my colleagues do. He is a very good source of advice,
enormous experience and he had good advice for Malcolm on this occasion and I'm glad Malcolm took
it up.

ASHLEIGH GILLON: The book is called Lazarus Rising, do you think that Malcolm Turnbull could have
his own Howard-esque come back and have his eye on the Liberal leadership again at some stage?

SCOTT MORRISON: I'll let others commentate on that but John Howard's story within Australian
politics, I think, is almost without peer, certainly within the Liberal Party and, you know, the
greatest Prime Minister since Menzies more generally so it will be a good read and I'm looking
forward to, you know, turning the pages and I think he'll be on programs next week and giving a few
speeches as well so I look forward to that.

ASHLEIGH GILLON: We are going to be interviewing John Howard here on Sky News, of course, David
Speers will be doing that. You did sidestep my question quite nicely though then. If anyone was
going to make that sort of political come back like John Howard it would be Malcolm Turnbull
wouldn't it?

SCOTT MORRISON: Oh look, politics is a very sort of uncertain business but I think right, the
Liberal Party is going through a purple patch at the moment in terms of the stability of our
leadership, it really is, I mean, there is just unanimous and wide spread support right across the
party ranks, not just within the Parliamentary Party and there is a stability on our side of
politics which was exemplified in the campaign and that continues on. I mean it's the government
that's falling apart; we see that every day we've talked about that. The Coalition remains solid
and strong and Malcolm's added to that strength in an area of communications.

ASHLEIGH GILLON: A patch, describing it as a patch suggests it might not go on for too long.

SCOTT MORRISON: Oh look I'm honest. Last term we had some really difficult years when the Labor
Party was in opposition, as Anthony knows, because Anthony and I share one thing in common we came
in at an election where the government had gone into opposition and you go through some tough
years. Now, we're not planning to spend as much time in opposition as Anthony did and I think our
stability and getting our act together so quickly, Tony has a lot to take credit for that and it
continues.

ASHLEIGH GILLON: Minister, will you be picking up the book when the book does hit the shelves next
week?

ANTHONY ALBANESE: It's not at the top of my agenda next week, Ashleigh. I have a range of ready to
get through but what's pretty clear is that Scott evaded the question again about Malcolm's
leadership ambitions, of course he wants to come back ...

SCOTT MORRISON: You guys are going to talk about leadership, seriously?

ANTHONY ALBANESE: ... of course Malcolm Turnbull wants to come back and what we see even in the way
that questions are being allocated in Question Time, we've been sitting there ...

SCOTT MORRISON: What Kevin coming on the program ...

ANTHONY ALBANESE: ... wondering in terms of ...

SCOTT MORRISON: ... is he coming on soon?

ANTHONY ALBANESE: ... wondering in terms, in terms of where the attacks are coming from, it's all
about their internal (inaudible)

SCOTT MORRISON: That's right Anthony, You keep believing it,

ANTHONY ALBANESE: we've seen that this week.

SCOTT MORRISON: ... you keep believing it.

ASHLEIGH GILLON: On that note ...

ANTHONY ALBANESE: We've seen that this week.

ASHLEIGH GILLON: ... we are going to wrap up, Minister thank you for your time, Scott Morrison
thank you for coming in as well, I'm sure we'll see you again soon.

ANTHONY ALBANESE: Good to be with you.

ASHLEIGH GILLON: ... Scott Morrison

SCOTT MORRISON: Thanks, Ash.

ASHLEIGH GILLON: ... thank you for coming in as well; I'm sure we'll see you again soon.

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