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Transcript of doorstop interview: Canberra: 5 February 2008.

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The Hon Dr Brendan Nelson MP

Leader of the Opposition

Tue, 5th February 2008




Today is a really tough day for every Australian that has a credit card, a car loan, a home mortgage or a business loan.

The rate rise today from the Reserve Bank of Australia, along with the rate rise that we had early in January, means that

now the average Australian family with an average mortgage is paying an extra $70 a month on their mortgage under the

Rudd Government.

It’s very important that we understand that Mr Rudd was elected to take responsibility for this, not to complain about it.

It’s very important that Mr Rudd and Mr Swan don’t engage in what they describe as the blame-game [inaudible]. The

argument from Mr Swan, in particular, that in some way that it is someone else’s fault simply doesn’t carry any water.

Mr Rudd and Mr Swan inherited an economy in first-rate condition. Australians enjoyed home mortgage interest rates

that were more than five percentage points lower than under the previous Labor government. They inherited an economy

in which almost all Australians who want a job were able to get a job and also where inflation averaged the mid-point of

the two to three percent band that had been set for the Reserve Bank of Australia.

One of the other things that’s very important is that Mr Swan, in particular, has been talking up the issue of inflation. He’s

used every opportunity to talk about inflation pressures. We even had the spectacle of the Foreign Minister in New York

telling a large US audience, including potential investors in Australia, about alleged inflationary pressures in this country.

It’s very important that Australians appreciate that inflation was kept under control, unlike under the previous Labor

government, through the period of the Howard years, and the blame that Mr Swan and Mr Rudd are trying to assign to

the previous government simply won’t carry any water with the average Australian.


Are you saying inflation is not a problem, firstly, and how could you credibly argue that somehow this is the Rudd

Government’s fault, the present interest rate rise, when it’s been there two months?


Well, we all are aware of what the inflationary pressures are, Michelle, and we know that inflation was kept between the

two to three percent band set for it for the Reserve Bank of Australia under the previous government. It averaged the

mid-point of two-and-a-half percent through the term of the previous government. There are both international and

domestic pressures on inflation but the important issue for Mr Rudd and Mr Swan is to take responsibility for it, not to

complain about it and certainly not to blame others for the pressures that may or may not be in the Australian economy at

the moment.


But Dr Nelson, the last inflation figures were for the December quarter, you can’t blame the Rudd Government for them.


Well, it’s very important that we appreciate there are international and domestic pressures on inflation and Mr Rudd has

been elected to take responsibility for these things. And I would also say that, in relation to the five-point-plan that he

presented to the business audience in Perth two weeks ago, the most important threat to inflation at the moment which

he has not covered is that of winding back workplace relations laws to essentially the early 1990s. The one thing that

Australia cannot afford at the moment is to see that we have unions getting control of government policy in Australia. We

can’t afford inflationary wage pressures in one sector of the economy driving wage pressures in other parts of it. It’s



But Dr Nelson, didn’t you say that WorkChoices was dead?


WorkChoices, as I announced before Christmas, is dead as a policy. I have also made it clear that workplace flexibility is

extremely important and that individuals should have the opportunity, if they wish to do so, without in any way being

advantaged, to negotiate arrangements with their employers. And it’s also very important that small businesses have

exemptions from unfair dismissal provisions as the foundation for our policies in terms of going forward. It will be

absolutely devastating for inflation in our country if we have unions getting their way and, particularly, driving policies for

Mr Rudd and Mr Swan which lead to inflationary pressures in one sector of the economy, driving it into another. If, for

example, we had the kind of wage outcomes that we’re getting in the mining sector on the basis of productivity and

individual agreements actually being pressured into the manufacturing sector, for example, it would be devastating for

the Australian economy and, in particular, for inflation.


Dr Nelson, the statement by Glenn Stevens doesn’t mention wages, it doesn’t talk about the Rudd Government, it talks

about a build-up in inflation, hinting it’s been building.


Well, in fact, the Reserve has also warned in the past about the consequences of rolling back workplace relations

arrangements in Australia and the impact that that would have on inflationary pressures. I mean, the fact is at the

moment that we have global and we have some domestic pressures that are putting pressure on inflation in Australia. Mr

Rudd and Mr Swan have a responsibility to address it. One of the things that’s most important in addressing it is to see

that we keep control of wage pressures and that we don’t have outcomes in wages that are not reflected in productivity

and what happens in individual workplaces. The unions are back in town. We just had them in Canberra, as you know,

for a three-day period. They spent more than $30 million getting Mr Rudd elected and they will certainly come calling

wanting their policy outcomes in terms of what the Government [inaudible].


Dr Nelson, about individual flexibility, I assume you want to retain AWAs because they existed before WorkChoices, but

would you retain an AWA with what safety net, Labor’s new [inaudible] safety net or the pre-WorkChoices safety net or

the WorkChoices safety net?


Well, as I’ve said, I mean, the basic principle is that every Australian should be free to be in a union, be represented by a

union but, equally, to negotiate individual arrangements if that’s what they choose, without in any way being

disadvantaged. We were in the process of formulating policy - that’s one of the things that we’ll be discussing over the

next couple of days - and when the policy principles are further defined and shaped and we’re in a position to announce

them, we most certainly will.


Dr Nelson, you were in the Coalition Cabinet and in charge of education and schools, did you ignore 22 warnings from

the Reserve Bank in relation to inflation?


This is absolute nonsense. In fact, one of the great furphies that Mr Rudd and Mr Swan are seeking to promulgate onto

Australians - at a time when the average Australian sitting around a kitchen table trying to work out how they’re going to

meet the next mortgage payment or the car loan payment, or the average small business person is struggling with

increased interest rates in their overdraft - what Mr Rudd and Mr Swan are trying to do is to in some way suggest that

there was some ignorance given to any warnings, allegedly, that have come from the Reserve Bank. I certainly would

like to know the detail of these particular warnings from Mr Swan and Mr Rudd. And further to that, over the last 11-and-a-half years there has been an 85 percent real increase in investment in training in this country. There was a 13 percent

real investment in higher education. Many of you would recall that the Labor Party in Opposition was opposed to the

establishment of Australian Technical Colleges, opposed to the rationalisation of national training programs, opposed to

the ideas that we would shorten apprenticeship training, opposed to the idea that you could train to be a carpenter in the

ACT and automatically cut a piece of wood in New South Wales. All of the things that were and are and remain so

necessary for dealing with skills issues in this country were essentially opposed by the Labor Party in Opposition and

now they’re trying to lecture Australians about a skills shortage.


Dr Nelson, tomorrow in the Party Room, will you argue that your Party should vote for the sorry motion the Prime Minister

is going to put forward and will you advocate for a free vote so that everyone can have their say?


Well, as you’ve heard from Mr Rudd, he expects to have a discussion with me some time in the next 24 hours. That will,

in part, inform the discussion that I will have with my colleagues in relation to this issue.


Does that mean you’ll delay it by a day since it’s a two-day meeting?


No, I won’t. Look, it’s very important, this is a very important issue. It’s one issue upon which Australians have a variety

of views and my colleagues will have the opportunity to discuss it in our Party Room and I will address them and, on the

basis of what Mr Rudd has said, I can only assume that it will be partly informed by the conversation that we have.


Will you meet tonight?


Well, that’s entirely up to Mr Rudd.


Will you allow a free vote?


These decisions will be made in the Party Room.


What’s your position on that?


Well, that’s a matter that I will discuss with my colleagues.


But what is your own preference, a free vote or not?


Michelle, I will discuss that issue with my colleagues before I discuss it with anybody else.


Dr Nelson, do you think that inflation is a serious problem for the economy right now?


Inflationary pressures, as advised by the RBA and the Treasury, are issues for the Australian economy, are important

issues to be managed but we need to keep this in perspective and that is, for much of the last decade under the previous

government inflation with an independent Reserve Bank was kept under control. The thing that most threatens inflation at

the moment beyond the international pressures that we’ve got in terms of energy, oil, food demand and increases in food

prices, the most significant threat is actually a wages explosion and a wages spiral and break-out. And even today I

noticed that the Australian Chamber of Commerce and Industry and Commonwealth Bank latest business survey has

found that we’ve got wages and even today I noticed that the Australian Chamber of Commerce and Industry and

Commonwealth Bank latest business survey has found that we’ve got wages and non-wages, we’ve labour and non-labour pressures, wage pressures, that are coming in the investment and business sector which are amongst the highest

in 14 years.


But if it is an issue right now, doesn’t the previous government have to take at least some responsibility for the fact that it

is an issue right now?


Well we take responsibility for the fact that Mr Rudd was delivered an economy in absolutely first rate condition. He was

delivered an economy with $60 billion invested in the future, where there was no commonwealth debt, where we had

record low unemployment, we’re coming off more than a decade of inflation averaging two and a half per cent, where

interest rates were at every time for the average Australian lower than they were under the previous Labor government. I

mean everyone just ought to take a reality check on this.

Just have a think about the economy that was inherited by the previous government from the previous Labor

government. The fact of it is at the moment that we know that inflation is something that’s been identified by both

Treasury and by the Reserve Bank, it’s something that Mr Swan and Mr Rudd have a responsibility to manage and I

certainly don’t accept that it’s in some way the responsibility of the previous government.


Who should people blame for today’s rate rise?


I think, look, it’s obvious that the rate rise today is a decision that’s been made by the Reserve Bank of Australia, it’s

given its reasons for that rate rise and I’m not going to comment.


Dr Nelson are you amenable to next weeks apology canvass covering injustice to Indigenous Australians across 220

years, not just that to the stolen generation?


Oh well as I say we’re waiting to find out preciously what’s being proposed before I’ll comment further on that.

In relation to the Mitsubishi, what appears to be at least the decision by Mitsubishi which is not yet been announced, but

at least we’ve had reports that Mitsubishi will be ceasing production of the 380 in Adelaide. The thing that’s most

important here is that the 920 or so employees and their families are dealt with sensitively and fairly. If there is going to

be closure, that they should receive all of the entitlements which they have accrued through their employment at

Mitsubishi. I would expect that the Government, that’s the Australian Government and the South Australian Government,

will both work cooperatively and be generous in their support of these families and making sure that they are able to

transition to other jobs in South Australia. Fortunately as a result, in no small way of the efforts of the previous

government, unemployment in South Australia at the moment is running at just under five per cent and we would also

encourage the consideration of some sort of structural adjustment package for the state of South Australia.

So thanks very much everybody, much appreciated.