Andrew Robb welcome to Breakfast.

 

Thanks very much Fran.

We’ll talk interest rates shortly after yesterday’s decision for another rate rise by the RBA, but can I just first go to the departure of Malcolm Turnbull because your stunning about face on the Emissions Trading Scheme contributed in no small way to Malcolm Turnbull’s downfall as leader. Do you have any regrets about the pressure you put on his leadership?

Fran, from the outset, that was only about policy. There was never any agenda about Malcolm Turnbull. And you’ve got to bear in mind that that decision that we were taking on an Emissions Trading Scheme was probably the biggest deliberate structural change that any of us would have confronted in our lives in Australia and it was a very major decision. And you know, in the end, I had to make a judgement, as did others, about that very significant policy decision. It was all about policy. It was not about leadership.

What does it say about modern day politics when a man with the conviction that Malcolm Turnbull has displayed on this issue in particular, but a conviction politician I think you could call him, sees no future for his skills, no room for his convictions in the party?

Well Malcolm, again as you’ve just discussed with Michelle, Malcolm’s at an age where he thinks that his prospect of leading again is not strong, certainly not in the foreseeable future or the immediate future, and he I think has decided that, you know, in his own right, what are his priorities. And I think he is, having been the leader of the party, to stay in the party, I think he would have only had the motivations and the focus if he thought he had some prospect in the foreseeable future of leading again. Now, he’s made that decision. He’s a man of enormous talents, and a man with again significant opportunities, I think both in business and in public life, outside of politics. And I think he would, appears to have made a judgement that he can hit the ground running in lots of these other pursuits whereas if he stayed in politics, he may well have been frustrated for quite some time.

Do you think the Liberal Party would ever have gone back to Malcolm Turnbull?

Well you can’t judge these things Fran. I can’t speculate on that. No one knows and you know things move so much in politics, and in life for that matter. So I think that’s an unknown.

And what about the loss of a man of enormous talents as you’ve described him, is this a serious talent drain now for the Coalition – Peter Costello, Alexander Downer, Brendan Nelson, Nick Minchin, soon to be Malcolm Turnbull?

Well it is, as again you discussed with Michelle, it’s a generation change. I mean I find it, to be honest, quite exciting. I mean after you lose an election, having been in office for eleven and a half years, one there is a sort of tiredness and fatigue factor for those that have driven a lot of that success, and many of those people have been in for nearly twenty years or more.

 

And I think what has been exciting for me is the way in which the next generation is stepping up. I mean people like Scott Morrison just arrived at the last election – but Greg Hunt and Tony Smith and Peter Dutton and Bruce Billson and others, they are the next generation. Plus we’re seeing just an outstanding field of young people coming in – Kelly O’Dwyer and Paul Fletcher and Josh Frydenberg and Dan Tehan and Alan Tudge and Sarah Henderson, amongst others. Now these are all Cabinet quality people and they’re going to inject, already have injecting, a sense of excitement, and focus, and motivation, and I do think that we are assembling a very strong future government.

 

Okay let’s shift gears now, it is twelve minutes to eight on RN Breakfast and our guest this morning is the Shadow Finance Minister, Andrew Robb. Andrew Robb you put yesterday’s rate rise from the Reserve Bank down to the Government’s stimulus package but even at four and a quarter per cent rates are still significantly lower than they were under the Howard Government when it was voted out. They’re going to have to rise from these historic lows, aren’t they?

The fact of the matter is Fran, that Australia has the highest interest rates and the fastest rising interest rates in the developed world.

Because we’ve got some of the strongest growth.

But also because some of that growth, some of that growth is because of reckless and massive spending by the Government, all of which is on borrowed money. This is the thing to remember, it is borrowed money that is fuelling that stimulus and at the moment we have, you know, the Government spending totally at odds with the Reserve Bank’s interest rate. The Government continues to spend borrowed money at massive rates, putting upward pressure on interest rates, while the Reserve Bank ups interest rates to dampen the demand.

But, but Andrew Robb…

They are totally at odds these two arms of, important arms of policy in the country. And it’s small business and homeowners who are getting it in the neck as a result of it. The Government…

Sure, sure, but every month the RBA announces a rate movement, it releases a statement explaining this decision, every month the Coalition says it’s about stimulus spending, but the RBA never mentions that. In fact this time, the Reserve Bank cites soaring commodity prices and the booming housing market.

The Reserve Bank also did cite the fact that many economies around the world are starting to wind back their stimulus packages. It did say that. And it’s very careful not to embarrass the Government, but if you look at the statement it makes that comment in the first or second paragraph for that matter, and I think it’s a very poignant comment. And the fact of matter, the Reserve Bank does not want to blatantly embarrass the Government.

 

You’d have to say the comments by the Governor over the last couple of weeks clearly state that there are parts of the economy which are overheating, and this is remarkable when there was growth of one per cent last year. And the Government could and should and must step out of the way. They must start to scale back that spending. Because at the moment, what it’s meaning is that there are interest rates of nine, ten, and eleven per cent for small business. The big banks, the Government favoured through this whole exercise are making lending very difficult for a lot of small business. It is unnecessarily risking the recovery in many parts of the economy. Sure, we’ve got the resource sector flying along but we have many other parts of the economy faces high exchange rates, difficulty getting funding, and great difficulty in getting back on their feet and structuring their business and especially the hundreds of thousands of small businesses around the country.

Okay can I just ask you finally though in terms of your debt message to voters, I mean Australians understand debt and the need for leverage, we’re heavily indebted individuals, many of us use borrowed money to buy our houses. How can you convince voters that debt is a bad thing when they see the use of it themselves for growth?

 

Well, you know, I just put it to you Fran. If a business went into the last downturn with no debt and money in the bank, they’re the businesses that have been able to maintain their staff levels and get through this downturn in best shape. It’s no different for the economy. If an economy, as Australia went into with no debt, now we’ve got a debt, we’re heading towards $153 billion net debt without counting the states, which will add hundreds of billions more dollars to that debt. It is common sense that we act prudently and when people see on top of that the massive waste and mismanagement, literally billions of dollars wasted through the insulation program and the management of the school building program, people just can’t see the sense or the prudence that should be applied at a very difficult time in the running of the economy.

 

Okay Andrew Robb thank you very much for joining us on Breakfast.

 

Thanks very much Fran.