Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Transcript of doorstop: Monday 2 February 2009: working together; economic stimulus; bank deposit guarantee; tax cuts, insolvency laws; executive remuneration; accelerated depreciation for energy efficient buildings; biocarbon; Ruddbank; deficit; interest rates.



Download PDFDownload PDF

Mon, 2nd February 2009

TURNBULL DOORSTOP - WORKING TOGETHER, ECONOMIC STIMULUS, BANK DEPOSIT GUARANTEE, TAX CUTS, INSOLVENCY LAWS, EXECUTIVE REMUNERATION...

The Hon Malcolm Turnbull MP Leader of the Opposition

Subjects - working together, economic stimulus, bank deposit guarantee, tax cuts, insolvency laws, executive remuneration, accelerated depreciation for energy efficient buildings, biocarbon, Ruddbank, deficit, interest rates

E&OE

MALCOLM TURNBULL:

Shortly after I became the Leader of the Opposition I extended the hand of cooperation to Mr Rudd and said that we should sit down together and see if we can agree on measures to address our economic challenges and work cooperatively. Now I see that Mr Rudd has said that one of his New Year’s resolutions is that we should all work together in 2009, and I make that offer to him again. We should be working together. We seek the opportunity to sit down with the Government and see if we can bring all of our talents together and come up with measures that will be good for the Australian economy. And, above all, good for jobs. The three top priorities this year are jobs, jobs, jobs.

So we should be seeking to work together in the national interest. And we have the example of President Obama who has sought to do just that. He has gone down to the Congress as the President of the United States and sat down with his Republican opponents and sought to seek agreement, to find common ground on an economic stimulus package.

Now there’s a lot to talk about. We have, despite our offer being rejected by Mr Rudd, we have put forward a series of concrete proposals which are designed to create jobs, to strengthen our economy. You’ll recall that last year we proposed there be a deposit guarantee at $100,000. Mr Rudd didn’t discuss that with us and of course he didn’t discuss it with the Reserve Bank either. But he went for an unlimited guarantee and we saw that created enormous hardship, enormous damage and dislocation in our economy and in our community. Hundreds of thousands of people have had their savings in cash management trusts and mortgage funds frozen. We had the Reserve Bank governor pleading with the Government to put a cap on that and the lower the better. Well Mr Rudd finally relented and put a cap of $1 million on it, but most people think that is too high and the dislocation is continuing.

You’ll recall we proposed that the Government should enter the residential mortgage-backed securities market and the Government did take up that suggestion. So I suppose that is one thing where there has been Government support for a proposal of ours.

As far as tax cuts are concerned, we haven’t sough to reinvent the wheel on tax cuts. We have proposed that the tax cuts which are already legislated for to commence on the first of July

this year be brought forward. We proposed they be brought forward to the first of January. Well that’s no longer possible, but that is precisely what we proposed. And as far as the cost of it is concerned, it’s very easy to work that out from the Budget papers.

We have proposed that the laws on insolvency, on bankruptcy should be changed so that there is a greater emphasis on preserving jobs and rehabilitating and reconstructing companies rather than putting them into fire sale. We have had no response from the Government on that.

We have proposed that the law should be changed so that shareholders have the final say on executive remuneration. There is a lot of concern about company executives being paid a lot of money and the clear answer for that is for those packages to be put to the vote. We have had no response from the Government on that.

We have proposed that there be a tax break, an accelerated depreciation for businesses and individuals that invest in green refits, energy efficiency measures, water efficiency measures in their buildings, in buildings around Australia. Good for the environment, clearly very good for jobs because somebody has got to do the work. The Government has made no response to that either.

And of course we have announced a whole Green Carbon Initiative which would create thousands of jobs around Australia. We’ve had no effective response from the Government on that either.

So there’s plenty to talk about. We have a lot of ideas. The Prime Minister has the advantage of having all of the latest government financial information. If he is prepared to share that we can sit down and work constructively together.

QUESTION:

Mr Turnbull are you a radical, right-wing, free marketeer who would gladly sit on the fence while people lose their jobs?

MALCOLM TURNBULL:

Well as you can see we’ve been making constructive proposals and all of them involve the Government doing things. Over the holidays a lot of people read fiction. I spent much of the time writing a speech about climate policy and biocarbon. But a lot of people spend their time reading fiction. It sounds like Mr Rudd spent his holidays writing fiction. His remarks about regulation are truly bizarre.

I mean let’s face it - the Australian banking system has stood up very well. We didn’t have a sub-prime crisis in Australia, our banks are solid, they’re probably the most secure in the developed world, in any comparable country. Why is that? Who put the regulatory system in place? It was the Coalition. It was the Liberal Party in government and the National Party. So really from what I have read of his essay it sounds like a feat of imagination and much less of economics or political science.

QUESTION:

In the spirit of bipartisanship Mr Turnbull, do you concede now that a deficit is inevitable given the reduced tax revenues?

MALCOLM TURNBULL:

I don’t think there’s any doubt that a deficit is inevitable given the reduced tax revenues. But the one thing that is not inevitable is that a Labor government will get out of a deficit. The sad fact of history is that Labor governments once they go into deficit tend to stay there. And it is only Coalition governments, Liberal governments that will take the country out of deficit.

Now the critical thing is the quality of the spending and the decisions that take you into deficit, and the plans you have or the strategy you have to get out of it. Now we have seen already Mr Rudd make a number of very bad economic decisions. We saw the unlimited bank deposit guarantee, widely conceded now to have been a blunder.

We’ve seen his cash splash just before Christmas - remember part of that deficit we will have at the moment, a contributor to that deficit is the cash splash before December, and it is now widely conceded or widely agreed that it was not an effective economic stimulus. Although, no doubt, the recipients of the payments very much appreciated them and in almost all cases I’m sure put them to good use.

And finally of course we have this bizarre proposal of Mr Rudd’s, the Ruddbank which is designed not to save jobs, not to protect one job, not to protect superannuation funds or not to protect people’s savings, not to protect homes. It’s designed to prop up commercial property values for the benefit of the four big banks.

QUESTION:

A few weeks ago Mr Turnbull you said that a deficit could and should be avoided. Did you not foresee how bad things would get?

MALCOLM TURNBULL:

Well Mr Swan told us yesterday the budget was short $50 billion in tax revenues and today Mr Rudd told us it was $115 billion short on tax revenues. So in terms of the fiscal position the news is changing every day.

QUESTION:

The figure of $115 billion, they were able to give us that today but they’re not able to say today what the deficit is likely to be. Do you think they should have been able to answer that question today?

MALCOLM TURNBULL:

I think they should have been able to give us an indication of what their economic stimulus is and I think we all know the reason for the $115 billion coming out today was because the Government can’t make up its mind as to what it wants to do. Look, they are confused. A few days ago Mr Swan was saying tax cuts should play no part in a fiscal stimulus. That contradicted Mr Crean, Mr Tanner and Dr Emerson. He backed away from that a couple of days later.

Mr Rudd seems to be flipping from being an economic conservative to a born again socialist. He doesn’t know what he is. He doesn’t know what political stamp he wants to put on himself. He spent all of 2007 and a lot of money trying to persuade people that in economic terms he was just a younger version of John Howard, not a cigarette paper’s difference between them. And now he is back to being a socialist again.

QUESTION:

What stamp do you put on yourself sir?

MALCOLM TURNBULL:

I believe in free markets, I believe in the Australian people, I believe the prosperity, the security, the economic strength of this country is built by thousands and thousands of Australian businesses and hard-working Australians, and it is government that should work hard to enable them to do their best.

Here’s a difference between Mr Rudd’s activities in the last week and mine: Mr Rudd has been sitting down with the big four banks trying to work out how to put $30 billion of your money at risk in order to prop up their balance sheets and hold up the price of commercial property in move that is being increasingly denounced in the business and financial community. I was out at Parramatta in Sydney’s west listening to small and medium businesses, talking about jobs and what they think the Government should do and could do to help them stay in business, and help them keep their employees on the payroll. So we’re focused on jobs, jobs, jobs.

QUESTION:

Should there be more or less regulation domestically and internationally?

MALCOLM TURNBULL:

Well there should always be more good regulation and less bad regulation. A lot of regulation can be very counterproductive. So it isn’t a simple regulation good or regulation bad. And this is part of the problem I think of Mr Rudd’s analysis of the financial crisis - I don’t think he understands its origins or indeed what the right solutions are. The critical thing is getting regulation right. Bad regulations can actually exacerbate and indeed cover up problems in

businesses, in banks, in financial systems. So it’s a question of getting regulation right. You’ll recall in the United States for example, there was a huge increase in corporate regulation following the 2001 stock market slump. The Sarbanes-Oxley - you may recall was the sort of headline title of most of the new federal legislation - well that doesn’t seem to have been of much effect. So it’s just critical to make sure that the regulation is effective; that’s what you need.

QUESTION:

Mr Turnbull, can I just pin you down on...

MALCOLM TURNBULL:

Phil, you pin me down...

QUESTION:

You’ve been talking about tax cuts now for some weeks, you and Julie Bishop. You just said today bring forward the tax cuts…

MALCOLM TURNBULL:

Well we said that last year, actually.

QUESTION:

Anything more specific?

MALCOLM TURNBULL:

Well that’s pretty specific.

QUESTION:

You’re flirted with business tax on radio this morning. Have you anything else concrete in mind re taxes in addition to what’s already in the Budget?

MALCOLM TURNBULL:

We will look at what the Government produces and then we’ll respond accordingly.

QUESTION:

But you want Kevin Rudd to invite you down. Surely you must have some ideas in your head if he invited you down this afternoon?

MALCOLM TURNBULL:

We’ve made a number of concrete proposals on tax. We’ve proposed that the tax cuts which are already legislated for to start on 1 July 2009 be brought forward. We proposed that to the beginning of this year, to January 1. We all know what they are; that’s very straightforward. They would clearly have a very positive impact on the economy, on jobs, on the whole system. And we know what they’re going to cost; that’s very straightforward. That was a straightforward, very workable, feasible strategy. The second proposal, concrete proposal we’ve made on tax, which would cost about half a billion dollars over four years and then result in higher tax receipts in later years, is to double the depreciation for energy efficiency and water efficiency measures in buildings, so-called green refits.

QUESTION:

That won’t have any short-term stimulus effects, will it, or even medium-term?

MALCOLM TURNBULL:

Well, Phil, with great respect you are completely wrong, because if you provide accelerated depreciation and an incentive for people to invest in more efficient buildings, more efficient water systems, more efficient lighting systems, they’ve got to hire a contractor to the work. And so immediately people are put to work. So that’s the type of policy that will get you an immediate pay-off in economic activity and in employment.

QUESTION:

Mr Turnbull, is the prospect of a recession, is a recession inevitable in Australia, and are there any steps you should suggest to head it off?

MALCOLM TURNBULL:

Well I wouldn’t say it’s inevitable. Clearly the economic prospects are looking less promising now, but I wouldn’t say it’s inevitable at all. As far as what should the Government be doing, the Government should be making sure that every element of its policy is effective. You see, the problem with the cash splash before Christmas is that it turns out, so all the evidence is to date, that it was an ineffective use of $9 billion. That’s a lot of money. We will have a deficit this year certainly, and that $9 billion that’s been spent will be a big contributor to that deficit. So the question is: with every element of government policy, is this going to be effective to promote jobs, to promote economic activity.

Equally the Ruddbank will not add one job - it’s got nothing to do with jobs. It is simply designed to support the banks, or support commercial property values, so that the banks can avoid taking write-downs on some of their loans. It is $30 billion being put to work to benefit the very top end of the big end of town. Now we would say, if you’re going to put $30 billion at risk, it should be done in a way that benefits the whole economy, and in particular benefits small and medium enterprises, which are the businesses that are feeling in hardest of course in a situation like this.

QUESTION:

Mr Turnbull, do you have any advice for the Reserve Bank, and what’s the significance of interest rates possibly reaching forty-five year lows?

MALCOLM TURNBULL:

Well, it’s not for me to give advice to the Reserve Bank, everyone else has done that. I don’t think anyone doubts that rates are going to come down again. Look, as interest rates come down that obviously has a very beneficial impact on the economy at a time like this, and it’ll be a very positive development.

QUESTION:

Mr Turnbull, are you saying that Mr Rudd is focusing too much on the financial stability of the Australian banks?

MALCOLM TURNBULL:

No, I’m not suggesting that at all. I think he seems to be focusing much more on politics and spin. He came out today for the big press conference and really had very little to say. He wasn’t very flattering about me; he spent a lot of time talking about me. I think he should be focused on substance. Now what is his attitude to reforming insolvency laws so that businesses are not put into fire sales and jobs can be preserved? What is his attitude to doubling or accelerating the depreciation for green refits creating jobs? What is his attitude to bringing forward the July 2009 tax cuts to January 1? What is his attitude to a biocarbon initiative that will create thousands of jobs in regional Australia? These are all positive proposals that we have made, all of which will create jobs, all of which are good for the economy, and we have had no response, nothing, from Mr Rudd at all. Thanks a lot.