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Need to re-engage silent majority -

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EMMA ALBERICI, PRESENTER: Mark Carnegie has invested in everything from pubs, airlines, the media, manufacturing and medical research but he's not your average investment banker and venture capitalist. He recently called for higher taxes on the rich and tonight he's delivered a lecture suggesting the Government bring back compulsory national service.

Mark Carnegie presented the inaugural Di Gribble argument for the Wheeler Centre in honour of the late publishing legend.

He joins us now from Melbourne to discuss his proposals.

Mark Carnegie, welcome to Lateline.


EMMA ALBERICI: Under your proposal, what sort of work would qualify as compulsory national service?

MARK CARNEGIE: Well, the one thing that's very important to establish at the beginning is I called for non-military national service so the answer is what you use with the collective body of engaged Australian citizens, what you use that for, to my mind there are a myriad of things and what I was asked by the Wheeler Centre to do was start an argument about the repair of social capital, what we're going to do to get the vast and silent majority of Australians re-engaged with the democracy rather than dis-engaged and complaining about the status of political debate.

There are really four things that you can do, broad headings, with the collective wisdom of Australians. The first thing is you can encourage people essentially through a volunteering boot camp, doing a week to re-engage in volunteering organisations because the level of participation in those Australian organisations which have been so important to us has gone down over the last 20 or 30 years. I think re-engaging is the first one.

The second thing is we have an aging population, there is clearly an opportunity for old and young wisdom transfer.

The third thing is that you'll be able to find some way to actually get constructive and engaged democracy, there's a guy in Stamford talking about citizens' forums and better, closer to the coalface allocation of Government money.

The fourth thing is to basically take something out of the venture capital business which is the idea of kick-starter where people are allowed to pitch ideas for Government money directly to other citizens with people helping them to determine what are good and practical ideas and what are not.

EMMA ALBERICI: So at what age and for how long would people participate in such schemes?

MARK CARNEGIE: So to my mind there are three different categories of people. There is the young, be it school age or university age, where some part of the curriculum can be involved in some sort of civic obligation.

There there's the old, people who are in retirement who are in a position to be able to dedicate some amount of time to being involved in civic service. For them, to my mind, and I was floating an idea to start an argument, was a week a year for both of those categories and then for working people really a week every several years and it's a matter because those are the most expensive people from the Government's Budget point of view to have an argument to see the extent of that.

EMMA ALBERICI: How would you enforce such a thing? How would you organise it, police it?

MARK CARNEGIE: To my mind f you are willing to acknowledge that it's worth trying then the truth is I'd far prefer to go with what they call in the venture capital business the lean start-up model. We go out there, try 10 or 20 simultaneous, separate experiments and do what they call split testing which is try this, try that, try the other thing, see what works and what doesn't.

You I start thing on an absolute shoe-string in the new technology world. You don't have to sit there and wave the cumbersome axe of Government with hundreds of millions of dollars to work out what's going to work and what's not.

EMMA ALBERICI: So what's wrong with the Australian culture such that you believe, in your words, "we need to rebuild the country's social capital."

MARK CARNEGIE: To my mind, the point is Australia has one of the great societies. It's under pressure because people are time poor, they're money poor, they're carrying HECS debts, they're doing all sorts of different things and so what is collectively in the individual interest is being focused on building your own individual capital. It's not that anything is wrong on an individual level other than what's rational for the individual is to focus on the individual and what's rational for the society is to get everyone to act collectively.

EMMA ALBERICI: You've actually described civic service tonight as our means of defence. What did you mean by that?

MARK CARNEGIE: What I was saying was the enemy that we face at the moment is growing inequality, growing divisiveness, growing disengagement, getting people through some universal program to get re-engaged is going to defend us against what's happening in America where you see the society just absolutely sheering because the rich and the poor are just getting further and further and further apart.

EMMA ALBERICI: Have you discussed your ideas and suggestions with the Prime Minister or anyone else in Government?

MARK CARNEGIE: No, I just discussed it with 300 people and as I felt like somebody over in Iraq, I was getting attacked from every side. But the interesting thing was through all of the attacks what everybody agreed was something needed to be done.

EMMA ALBERICI: Would there need to be a degree of compulsion in your scheme?

MARK CARNEGIE: What everybody wants to do is distinguish between a degree of universality, that is the idea that, as I say, when you're called you come. That's what it is to be an Australian. That there aren't just rights as a citizen, there are also obligations and compulsion.

Everybody likes the idea of universality but then they squib it, they don't want the compulsion. You can't have everybody who's got a passport feeling like they've got obligations and, as well as rights, if you don't have some level of compulsion but, as you can imagine, I walked into a firestorm over that.

EMMA ALBERICI: Well in your speech you made a parallel with John F Kennedy's wildly successful, in your description, "peace corps of the 1960s" but that was students who were sent to poor countries around the world to help in their development. What you're suggesting is entirely different to that.

MARK CARNEGIE: No, what I was saying was - by the way, there are people who suggest that as the individual thing and certainly the idea of international volunteering, there's people out there sitting there and suggesting that. They're suggesting that as a way to clear their HECS debt, all of those things. What I was trying to do was create an argument, start some things. To my mind the point is that's just one of the different ways. The problem about that is I don't want the burden to only fall on 20-year-olds. We've got an aging population to my mind we need to have everybody engaged.

EMMA ALBERICI: Some of our audience tonight might say, "Look at this rich guy telling us we should all be working for free." Other would say, "It's a bit like the Treasurer telling us the age of entitlement is over and we should all be working until we're 70." What do you say to those people?

MARK CARNEGIE: I think it's really, really interesting question. If you're willing to buy the argument that something needs to be done are you going to say, to my mind, for the disadvantaged, are you willing to concede the point that something needs to be done if what we need do is pay the disadvantaged something for their time? Would that get over your problem?

To my mind the point is let's start an argument. That was what I was asked to do in Di's honour. If you tell me you like my idea provided poor people get paid for it, the answer is we're beginning to have a constructive argument of the type that I used to have with Di.

EMMA ALBERICI: The days of leaders asking for sacrifice from their people are over, aren't they?

MARK CARNEGIE: I think you can't make a democracy work without understanding that in any partnership there are rights and obligations on all the parties. There isn't just some giant ATM machine where everybody can go and take as much as they want.

You know my views on the fact that a more equal society is a better society not just for the poor, also for the rich, but we need more than that. We need civic engagement.

EMMA ALBERICI: Would you classify work for the dole as a kind of civic engagement?

MARK CARNEGIE: No, to my mind these are cleat completely different things. To my mind that is something completely tangential to this point. This is about engagement as a citizen, this isn't about dealing with the disadvantaged in the community.

EMMA ALBERICI: What do you think of the government's policy of denying young people under 30 access to the dole for six months?

MARK CARNEGIE: I think there are all sorts of complexities around how you deal with a budgetary pressure that's out there in the world at the moment and in Australia in particular but if you ask me I think that our young end up getting a worse deal than they should and our old, as a result of the five per cent real compounding increase in medical research - medical expense per capita, are getting a disproportionately good deal and therefore I think that the burden is of economically difficult circumstances is falling disproportionately on the young.

EMMA ALBERICI: As we saw at the top of the program, the government's temporary tax of per cent on people earning more than $180,000 will soon be law. You proposed something similar back in 2011, I think it was. Does the Abbott Government's so-called deficit levy go far enough, do you think?

MARK CARNEGIE: I think in aggregate the questions in the different directions are a matter of balance. To my mind the answer is we are putting too much burden on the poor in overall budgetary policy that we've got at the moment. The poor and also the young, and we need to do something about that and if you sit there and say, "Hey, Mark, you don't want to hit the poor and you don't want to hit the young, in the end you've only got one group of people left and that's the rich," so the answer is I think more to come to make a better society.

EMMA ALBERICI: So does it follow that you think the deficit levy shouldn't have been temporary and perhaps should have been higher?

MARK CARNEGIE: To my mind, they saw the forward estimates, they determined what they are at the
moment. Did I support the idea? Yes, I did. To my mind, the question about whether it continues or not is a question for the future.

EMMA ALBERICI: Now the country's 3,000 biggest companies will be asked to pay an extra 1.5 per cent in tax but instead of using that money to pay down the country's debt, it will be used to fund Tony Abbott's paid parental leave scheme, the adjusted and more generous one. Is that the best use of that money to your mind, three to five billion dollars a year?

MARK CARNEGIE: I don't think it's really my position to judge but what I'm fascinated by is a whole lot of really, really thoughtful working women who would be beneficiaries of that actually don't think it is so to my mind it's far better for you to ask your contemporaries than me about that.

EMMA ALBERICI: Well, I guess those 3,000 business people you'd know a lot of them and this is also, this paid parental leave scheme, is being sold to the public as a productivity and participation measure. Is that how you and your colleagues in the business community see it?

MARK CARNEGIE: Remember, I'm in the small business not the big business. I'm not trying to duck this but the answer is there are a whole series of people who say reducing tax on companies is going to improve productivity. I don't buy that argument. I think the 1.5 per cent is completely acceptable but from an economic point of view do you I think this sequestration that we're seeing in this Budget is rational economics? No I don't. I think more thoughtful, comprehensive tax policy and simpler tax policy is going to be better in the medium term.

EMMA ALBERICI: Again with the Medicare co-payment, it's not going to pay down the debt, instead it's going into a research fund. Do you think the Government's Budget was consistent with its narrative about the state of the country's finances?

My problem about this particular thing is I'm a big beneficiary of this because essentially what's happening is somebody's putting the ball on the T and letting me swing as an investor in medical venture capital technology so in that particular thing I'd be saying to support it is self-interest and to reject it is not what I should do for my investors. So I'm going to properly duck that one, I'm sorry.

EMMA ALBERICI: Well on that note, we'll leave it there and I'll thank you very much for joining us this evening. We appreciate it.

MARK CARNEGIE: Thanks very much Emma.