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Transcript of doorstop: Saturday 31 January 2009: Kevin Rudd's socialism essay; tax cuts; jobs for Australia.

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Sat, 31st January 2009


The Hon Malcolm Turnbull MP Leader of the Opposition



It was interesting to read this morning that over the summer while we were putting together practical policies that will create jobs and provide an effective response to climate change, the Prime Minister has been writing a 7,000 word treatise about political ideology in which he appears to be abandoning his claim to be an economic conservative and instead seems to be channelling Gough Whitlam - high taxes, big government and socialism.

That’s not the only difference between us and Mr Rudd. While he’s been putting billions of dollars of tax payers money at risk to prop up commercial property prices and support the profits of the big four banks, we’ve been out talking to small and medium businesses.

I was out at Parramatta yesterday meeting with small and medium businesses hearing what they believe governments can do to help them stay in business and keep their employees on the payroll. And you know what they said? They wanted the Government to create fewer obstacles for them. They wanted the Government to pay its bills on time, to pay them on 30 days instead of stringing small and medium businesses out. They wanted to see less red tape. They wanted it to be easier to tender for government contracts and be able to do it online and they wanted to get rid of inefficient and unnecessary taxes.

In other words they wanted more freedom to do their work because the prosperity of Australia, the jobs of Australians depend on the energy and enterprise of thousands of Australian businesses and Australian businesses small, medium and large. It is amazing that at this point Mr Rudd is seeking to go back to the failed days of big government, Gough Whitlam. Older Australians like myself will shudder at the thought that today Kevin Rudd is channelling the Whitlam era in his latest treatise.


So you don’t think there is a need for more government intervention, more regulation to deal with the global financial crisis?


There’s always a need to improve regulation, always, in good times and bad in fact. But you’ve got to get it right, you’ve got to make sure that the regulations are effective. Let’s not forget this; in Australia we didn’t have a sub-prime crisis. In America they had 16 per cent of

all of their mortgages were sub-prime lent to people; mortgages made out to people whose prospects of repayment were very poor.

That category of high risk lending is less than one per cent in Australia. Why is that? It’s because the Australian financial system was well regulated. Who regulated it? The Coalition during 11 and a half years of good economic management. The only reason Mr Rudd can throw so much cash around is because he inherited a government that had paid off all the Labor Party’s debts. It had paid off the debt from years of Labor mismanagement and visions of big government and heavy regulation.

It was effective Coalition Liberal economic management that put Mr Rudd in the position where he could spend the money that he’s been spending now. But he’s starting to get to the end of it and before long you’ll see him taking us further and further into debt.


Well the Government’s working on a new stimulus package this weekend to be unveiled next week, what should be in that?


There needs to be tax cuts. We need to take the pressure, as much pressure as we can off business. That’s what the people at Parramatta were telling me yesterday and they know because they’re at the coalface.

Mr Rudd likes to talk to the big end of town, he likes to talk to the big banks and he’s worked out a plan to put your taxes at work to prop up their profits. I’m concerned about the engine room of the Australian economy and that is small and medium business, and what they want to see is a lower tax burden to give them the incentive to invest and to hire, to keep their employees on the payroll and they want to see less red tape, they want government to pay its bills on time. They want government to enable them to do their best. And that’s the big difference between us and Mr Rudd.

We believe government’s role is to enable each and every Australian to do their best. Mr Rudd, it is now very clear, believes that government’s role is to tell us, to direct us as to what is best.


You mentioned that small business wouldn’t want (inaudible) would have on the economy as a whole?


Regulation is important in every economy. We have a regulated economy let’s face it. The regulations in the Australian financial sector, which were put in place under the Coalition,

have proven to be very effective, that’s why we haven’t had a sub-prime crisis in Australia. That’s why our banks are better capitalised, sounder than any banks I can think of in any comparable developed country.

So our regulatory system has worked well. Of course it should be improved in the light of developments and we should do that all the time. We should always be prepared to improve regulation. But we’ve got to remember that regulation can also work against business and that is what the small and medium businesses at Parramatta were telling us yesterday.

They are concerned about heavy regulations, duplicating regulations, expenses that government imposes on them and makes it harder for them to do their work, which is creating jobs and creating the prosperous nation that we all are so proud to live in.


Mr Turnbull as part of this stimulus package you’d like to see tax cuts, but the Business Council are saying that that’s not the way to go and the IMF has sort of like flagged that as well. So why are you so insistent that tax cuts are the way to go?


Well the Business Council’s message was a little contradictory; they seem to be in favour of some tax cuts and not others. As far as the IMF is concerned, again you’ve seen some mixed signals, there’s nothing in their reports which are opposed to cuts in tax, in fact their Deputy Managing Director only a week ago made the point that I’ve been making for some time which is that one-off payments, one-off sugar hits or cash splashes in a climate like this are unlikely to be spent - people will either save them or use them to pay down debt - whereas increases in permanent income or tax incentives, such as the incentives we’ve proposed to encourage green refits of buildings for greater energy efficiency, those are more likely to result in spending and investment.

You see only this week we proposed to double the rate of depreciation for investments which improve the energy efficiency or the water efficiency of buildings. That is a tax break that will create jobs, it’s good for the environment too I should add, but clearly it creates jobs because you can’t take advantage of it unless you hire somebody to do the work. So that’s a good example of how a tax break, a tax cut if you like will create employment.


But is now the time to be talking tax breaks when Ken Henry is conducting his review into the taxation system which may not be released until the end of the year?


Well you can’t hold off economic policy and waiting for reviews, you know, to come in a year later. Decisions have to be taken. We believe the Government should bring forward the

tax cuts due in July. They should do that. That will provide a real stimulus and a real incentive. The cash splash of December now seems to be widely acknowledged was not effective as an economic stimulus that was $9 billion handed out.

Now I’m sure that everyone who received it appreciated it and the vast majority of Australians used the money wisely. But it was not an effective stimulus. It was not an effective economic stimulus. It didn’t do the job that Mr Rudd hoped it would do. And now we see his incredible proposal to put billions of dollars, up to $30 billion of Australian tax payers money at risk in order to prop up commercial property prices for the benefit of the big four banks. It isn’t even his idea. It was a proposal brought to him by the National Australia Bank.

Thanks a lot.