Shadow Finance Minister, Andrew Robb. Mr Robb, thanks for your company.

 

Good morning Peter. Looks like the gang of four up there to me.

 

Different gang of four but let me go straight to this Deputy Speaker issue with Alex Somlyay. Who’s a bigger rat? Tony Abbott for reneging on the deal with Julia Gillard or Mr Somlyay for considering going back to it?

 

Well neither, look the fact of matter is that once we had the opportunity to look at the legitimacy of the pairing arrangement that had been agreed to, on the advice of Mr Albanese and the Government itself, we discovered that it was in fact in breach of the Constitution and we’re not going to be a party to something that could put in doubt reams of legislation because of something that could be challenged constitutionally.

 

So, as a consequence we decided not to go ahead with the pairing arrangement.

Mr Somlyay has decided that the politics that were starting to surround the invitation for him to be deputy speaker was unacceptable, the way in which the Labor Party had been briefing his interest as the interest of the disaffected Liberal when that’s far from the truth.

 

 

He was pretty disaffected about not getting the Chief Whip position as far as I understand it.

 

Well, any of us who lose a position are disappointed, but you know Alex has been a long standing, highly regarded, very strong Liberal for many, many, years, has served the Party well and certainly was not going to be used by the Government, by a desperate government, as a pawn in this exercise.

Andrew, under the agreement, the parts of which you still want to stick to, that was reached between the major parties and the independents, it did say that the Deputy Speaker would be drawn from the opposing side. So if as is expected, Labor selects Harry Jenkins, there’ll be a secret ballot on the floor of Parliament on Tuesday, would you still now expect the Deputy Speaker to be drawn from the Coalition? Would you think that would be someone from the Nationals? Would it be someone from the Liberals? Would you like to see Philip Ruddock in that position?

 

Well, we will put somebody up for election, but in the end it’ll be perhaps the numbers that will determine what happens and what the Government can do with its patchwork quilt of coalition that it’s got on its side. That will determine it.

 

In the past, the government is responsible for putting up the Speaker, the government normally appoints or votes in a Deputy Speaker, and there’s usually a Deputy Speaker voted in on our side to fill in as normal with business of the day.

 

But just on that point, Mr Robb, to what extent will the Opposition try and make this a viable parliament? The signs are that the Opposition is out to really make this unworkable and bring down the Government as soon as possible.

 

No, no. I mean that’s the spin from the Labor Party and that is far from the truth. We will be very constructive but we will not be compliant. The problem with the Government is that they find it quite difficult to differentiate between those two concepts, and unless you do what they ask…

 

Well can you explain to us how you would be constructive?

 

We will be very constructive. We will look at the national interest. Our job as opposition is to keep this Government accountable. We now have a government which is, you know you’re seeing the tail wagging the dog already with the Greens dominating policy debate. We’re seeing a government with no agenda, with no strong leadership, indecisiveness.

We must be an opposition which keeps them accountable, keeps the pressure on them to get back to bread and butter issues, and not…

 

Well just on that particular point, just on that point, do you think the Parliament will therefore run its full term or not?

 

Ah, well in a sense it’s up to the Government as to, if they do the job and get back onto policy reform. So far, you know, it’s not encouraging. You’ve got a situation where they’ve done nothing but play politics. We’ve hardly seen the Prime Minister – the leadership there has gone missing absolutely. In fact, everything the Prime Minister has touched in the policy sense since she took over from Kevin Rudd has been a disaster.

 

So, you would, if they keep this up, you would assume that those independents that have supported the Government would start to lose confidence very quickly. But if the Government does act in a way which is in the national interest, if it does get its mind back on bread and butter issues, if it does do what it has been voted to do or what has been agreed with the independents and the Greens, then we will be constructive.

 

Mr Robb, we’ll move onto your policy area of Shadow Finance in a moment, but firstly I just wanted to ask you about the week after the result was announced to the election where it was reported you were sounding out colleagues about an interest in the Deputy Leadership of your party and perhaps the Shadow Treasurership as well. What was going on there and what was the underperformance of both Joe Hockey and Julie Bishop that warranted that sort of thinking?

 

Well, it’s not a question of any underperformance. The fact is Peter that within the parliament I suspect there are 150 people all of whom go to that place aspiring to contribute to the best of their ability.

 

But only one of them on the Coalition side was prepared in the aftermath of that election to genuinely sound out colleagues about that position and that was you.

 

Well, again I’m saying we all aspire to make the most of our talents and abilities and opportunities. After the election, as is the standard practice, we do have a spill of all positions, and it was quite legitimate for me to see if there was interest within my colleagues for my mix of experience and skills at this stage. I decided in the end, after speaking to some, but in particular I decided after Tony Abbott said he would prefer to keep our team stable.

Julie and Joe have the confidence of Tony Abbott, they have my confidence for that matter, but it was legitimate for me to see whether my particular mix of expertise and experience was of interest to the colleagues at this point in time.

 

But Mr Robb, is it the case that it was Joe Hockey’s job you were after as you seem to be suggesting rather than Julie Bishop’s, that you saw that that was a way of requesting your own portfolio and you’re renowned as being a straight shooter and good person to work with, have you gone to see Joe Hockey and said I think I could do your job better?

 

Well the fact is that I wouldn’t have sounded out colleagues without having the confidence that I could do the job of Deputy and potentially the job of Shadow Treasurer if it was, if that was to be. But the fact is that both of those people in my view are doing a very strong job. But that doesn’t preclude other colleagues from seeing whether their particular skills are seen as more relevant at the moment or not. So, I certainly was looking to see whether the Deputy’s position was one that I would gain support.

 

But I have strong confidence in Julie Bishop. I said to her beforehand I thought she had a very good campaign. I’ve got strong confidence and a great working relationship with Joe and I’m very happy with my responsibilities and I think I demonstrated during the campaign how effectively the three of us actually do work together.

 

One final question on this Andrew Robb, I spoke to a colleague of yours in Shadow Cabinet who told me that you had the numbers if you’d wanted to challenge Julie Bishop, but it was simply that Tony Abbott didn’t want you to. Is that your understanding?

 

Well, I don’t want to get into numbers Peter. The fact of matter is, Tony spoke to me, and said that it was his very strong wish to keep the team as it was, that he thought we worked well together, and we had with him and others we had contributed to taking the Coalition from an impending train wreck in December to winning 750,000 more votes than the Labor Party, and winning more seats than the Labor Party.

 

And he was determined that we keep the maximum pressure on Labor and on this Labor Green Government. And I said to him, he’d certainly earned the right to make that judgement and I was very comfortable staying as part of the team as I am and supporting Julie and Joe and all the others in their particular roles.

 

Mr Robb, the Treasury red and blue books that were released on Friday afternoon, the advice to the incoming Labor Government and what would have been the incoming Coalition government, quite sensationally says that the economy is going to be pushed to full capacity by this mining boom next year which means interest rates and their dollar will be pushed higher.

 

It also says that the economy is highly vulnerable to the dependence on our very high iron ore and coal export prices and that this is really a threat to our elevated housing prices. And it suggests quite sensationally that budget policy needs to be structurally tighter, which means that we need to move to a budget surplus much quicker than both sides took to the election.

 

Will you be pushing the Labor Government to tighten budget policy further, to cut spending or even push up taxes to get their deficit under control much quicker? Or will you, will an Abbott government, scaremonger if a Labor government attempts to impose some budget pain?

 

Well quite the contrary Michael. Our whole campaign was based on ending the waste, you know, the poor quality spending, the desperately poor quality spending, the horrendous waste of the Labor Government. It was structured on repaying the debt far more quickly. It was structured on stopping new taxes and stopping the boats. It was a very clear and deliberate strategy and one which we think is still highly relevant. And it has been exposed now by Treasury, the Government’s own principle economic advisers, that what we said for months before the election and what we said all through the campaign holds true. This Government is making Australia highly vulnerable to a double dip recession around the world. The other thing Michael on the…

 

But even, Mr Robb, even on the Treasury numbers and pretty much on the Coalition’s own numbers, the Government, Labor, and the Coalition would still get to basically the same budget outcome in the next three or four years. I mean Treasury’s saying that both sides, that is not good enough, and we need to move the budget, to protect the economy really from a volatile world economy, we need to move the budget to surplus much quicker. Do you accept that?

 

That’s not fully correct. One they did say also, what you haven’t mentioned, there are very big risks to our economy from potential developments around the rest of the world and that’s what we’ve been saying for months, you must restore the resilience that the Rudd/Gillard Government inherited from the Howard Government.

 

Now in terms of the bottom line, what we presented throughout the campaign demonstrated that we would take $30 billion off Labor’s $90 billion net debt within the forward estimates, within the next four years, if we had been elected. Now that would have been a most significant fiscal development and would take a lot of pressure off interest rates. Secondly, we did identify $11 billion more savings than the Government in those forward estimates. And thirdly, there is a desperate need for the Government to stop the reckless spending. We will support initiatives which stop the reckless spending but we will not support new taxes, which as the easy way, more taxes and more borrowing, as the only solution Labor seems to understand as the only alternative. And it is, as you pointed out, it is to start to get structural improvements to the fiscal budget.

 

Well just on this point about taxes, Mr Robb, the Treasury is arguing very strongly for a parliament of tax reform and tax restructuring, in particular it says we need to focus when it comes to taxation on consumption and resources. Does the Opposition agree with that?

 

We certainly agree with the need for restructuring and I think the major structural change must relate to personal income tax and the level of marginal tax rates that discourage activity in combination with how we treat lower paid workers so that you haven’t got an incentive for people not to work.

 

The whole issue of getting the under 30s back into the work force in serious numbers and to get the over 50s back into the workforce, the whole participation rate issue is fundamental to the very important productivity reforms in the years ahead.

 

But what about taxing consumption and resources?

 

Well, there will be I think if you, firstly you can do a lot of restructuring in the personal tax area that would have an immediate and significant impact. And then secondly, the more we broaden the tax base to include consumption expenditure in some way or other, but it cannot involve increases in taxation. This is the problem, Labor’s, you just saw today with the alcopops, it’s been exposed as a total tax grab…

 

But on just on that point, so you are prepared to broaden the tax base to include consumption, to include greater emphasis on consumption? You are prepared to involve yourself in more tax based broadening?

 

We are prepared to look at the total mix of taxation. That’s why we want to see, and there’s no reason it couldn’t have been provided literally nine months ago Paul, we want to see the workings that sit, and the number that sit behind, the Henry Tax Review.

 

Here, the Government’s had since last December, the biggest study into tax reform for decades and yet none of the information has been made available. When we see the details but certainly we are of the view that there is a desperate need for tax reform. But we’re not going to identify in chapter and verse until we see the scope with the reforms that they have proposed. Many of those reforms we find highly attractive.

 

Mr Robb, if we just go through a couple of the hits to the Coalition’s proposed policy settings contained in that document. First of all, it does say that either side of politics, getting to the 5 per cent by 2020 target cannot be reached without a carbon price and that direct action is far more expensive than a market based mechanism. Being the Liberal Party, being committed to market based mechanisms, do you accept there that Treasury is not going to be able to get to that target on your current policy settings?

 

Well I’ve seen no analysis by Treasury or any other part of the Government for that matter which in any way demonstrates that direct action won’t get us to 5 per cent by 2020. Two lines in a document do not provide necessarily a convincing rebuttal of the program. We’ve laid out a very comprehensive program since February and it’s about $3 billion to take through to 2020 a reduction, a 5 per cent reduction, in emissions. Now by that stage under the Government’s ETS and the Treasury’s ETS we would have seen probably $50 or $60 billion worth of taxation.

 

Now it beggars belief that our proposal is dearer than the Governments. And when you bear in mind that a carbon tax that the Prime Minister now has promised, is very much on the table, much contrary to what she said just a few weeks ago. The fact is the Prime Minister’s word can now not be trusted in any sense, the way in which she has totally thrown out all of the promises that she took to the election.

 

But in that sense if they bring in a carbon tax, we’ve got a two speed economy, we’ve got many parts of the economy not benefiting directly from the mining resource boom, if you impose a carbon tax which doubles the price of electricity, wholesale price of electricity, how that’s going to help the economy recover and be resilient in the face of any further downturn around the world I find a bit mystifying.

 

So, our view is, let’s not just take the easy way with just tax increases. Let’s look at proper restructuring and reform and productivity increases.

 

 

Mr Robb on that, in the population area, the Treasury says that even with the 175,000 population increase that the Coalition has talked about, we still get to about a 35 million population by 2050, and it calls for reforms to enable our cities to digest this population increase including congestion pricing on our clogged roads and reforms to pricing urban water which would inevitably push up domestic household water prices.

 

Do you agree with that productivity based Treasury agenda to inject more market pricing into the basic provision of infrastructure including road pricing and water?

 

Well, again, Michael, there will need to be changes across a whole raft of areas, to single out water, to single out congestion taxes, could actually miss some of the other major opportunities…

 

Well this is part of a whole raft of proposals, that’s the point, there’s a whole raft of them…

 

Well that’s been our point. In the absence of data it makes it very difficult to just put a wet finger in the air and nominate those sorts of productivity reforms that are going to make up the best mix of reforms…

 

But all serious economists agree for example on congestion pricing, on peak hour traffic on our major roads, don’t they?

 

Look, it could be that in the years ahead, in the next four to eight years, there may be, if we looked at the numbers that are available in the Henry Tax Review, all the workings that they did, the hundreds of thousands of dollars of modelling and all the rest, if we had access to that and the rest of the community had access to that, we would see where are the priority areas for productivity improvements. It could be participation rates which may take the pressure off immigration…

 

Okay can I just ask you one more question Mr Robb, in the deal with Tony Windsor, Julia Gillard agreed to another $140 million worth of protection for the ethanol industry, largely based to a small number of ethanol producers. As Finance Shadow, will you oppose that increased protection?

 

Well let’s see how they bring it in. But we are very concerned that this Government has got no real reform agenda and it depends on if they were able to identify a raft of productivity reforms it may allow you know it may allow activities in other areas. But on the face of it, this is just pork barrelling with no offsetting measures which are going to enable the country to afford it and we will look at that measure, we’ll put a very strong scrutiny on that measure I can assure you.

 

Alright Mr Robb, we are out of time, thank you very much for joining us on Australian Agenda. We will keep talking about you when you’re not here, I hope you’re not going to take that personally, but we’ll go to an ad break now, we appreciate your time this morning.

 

Thanks Peter.