30-November-2008
Portfolio Media Releases, Infrastructure, The Economy, Law and Order
Topics: COAG, Infrastructure spending, Government economic management, Budget deficit and Liberal Party Shadow Ministry
BARRIE CASSIDY: Andrew Robb, good morning, welcome.
ANDREW ROBB: Morning Barrie.
BARRIE CASSIDY: Is it fair enough to sell this in part at least as a response to the global financial crisis?
ANDREW ROBB: Well, I think that's grossly overstating it. It's something that's been in the planning for most of the year, as I understand it. I mean the health spend it’s a good thing, the education spend is a good thing, but I mean, the State Governments I think have had a $3 billion windfall this year in GST. This will add $15 billion over five years. So to talk about 133,000 jobs being created, it may well do, but it's over five years, and in terms of a response to this crisis, I think that's gilding the lily a bit.
BARRIE CASSIDY: But the implication, I guess, is that they've gone further than they would've otherwise gone because of the global financial crisis. They've spent new money and more new money as a result?
ANDREW ROBB: I don't know about that, Barrie. Look, Kevin Rudd has said now for two years that he will reengineer federalism. One of the big observations for me the last three or four weeks is it looked very much like business as usual. The more things change, the more they stay the same. It looked like a process very similar to what we've observed over the last decade or more, with COAG. They are grossly overstating it. The sentiments, the words are fine, the objectives are fine, it's all out in the never-never. There has been 12 months now and very little action apart from layering many, many more bureaucrats around the COAG process.
BARRIE CASSIDY: But that's not what the premiers are saying. They're saying that just because most of them are Labor.
ANDREW ROBB: Well in a sense, they take what they can get. You think back. I think in nearly every COAG meeting under John Howard, certainly the last few years, there would be lots of tantrums in the lead-up as we've seen again this time, all about infrastructure and all sorts of projects many of which weren't even discussed yesterday. An outcome and invariably a press conference with people welcoming new money, as you would. It's worthwhile. I suppose my point is one of the four planks of Kevin Rudd coming into the election, four planks of reform, COAG, reengineering federalism. There's nothing like that. This is business as usual in many respects. And yesterday I thought more than that, though, was a huge missed opportunity to do something significant with all of those governments together, to unlock the billions of dollars of cash that's locked up in private equity funds around Australia. Do something really tangible about addressing the financial meltdown that we've got and the implications that has for the real economy.
BARRIE CASSIDY: What is new about yesterday, though, is that a lot of this is funding is now tied to outcomes. That was a long time coming, surely that was overdue?
ANDREW ROBB: But again, special purpose payments for a decade now have been tied to outcomes.
BARRIE CASSIDY: Quite specific outcomes now. The premiers understand they must reach these particular benchmarks?
ANDREW ROBB: Well, again, if you look at special purpose payments as I have over the last decade, again there were outcomes expected from the money. There's no mechanism outlined as to how they will go about this, how the States will pursue it, and the consequences of not meeting these outcomes. It's years away, many of these things. So the words are fine, the words are fine. But what we're seeing as we've seen all year, a lot of talk and not really a lot of action on the ground. And money being spent. This position of this government, as is their response to the financial meltdown, is to spend. Their only instinct of Labor ...
BARRIE CASSIDY: A lot of advice to do that externally as well?
ANDREW ROBB: Yes, well. What they've forgotten about is the private sector. You know, Barrie, Infrastructure Australia, they've invited projects. They’ve got $700 billion worth of infrastructure projects. The Commonwealth Government has $7 billion in the Building Australia Fund, $7 billion, not $700 billion, to go towards these essential projects. Yet we find in our superannuation funds nearly a trillion dollars, $200 billion of cash sitting there now. That money is being invested in infrastructure projects overseas, not here. Yesterday's meeting of COAG could've sat down and removed the roadblocks to superannuation funds in Australia investing here, and cash management funds. There is a cash management fund in Australia that's currently putting the investment ruler across 65 tollways in the United States but not one here.
BARRIE CASSIDY: But superannuants after the experience they've just been through, would want to be fairly certain their money is going to be invested wisely and that these infrastructure projects there are not there just to build the country but to make a profit?
ANDREW ROBB: Absolutely. I'm not talking about mandating projects. Why are superannuation funds investing in infrastructure projects in other countries and not here? The reason is because we've got 100 years of inconsistent regulations across nine jurisdictions of government. They were all sitting there yesterday with an opportunity to address that and try and unlock tens of billions, if not hundreds of billions of dollars of private money. Labor does not think in these terms. They think of deficits and debt and government spending and taxation. They don't think about what's possible to unlock in the private sector. There's not a problem with cash there's mountains of cash out there. There's no liquidity. It's locked up. Governments can do, when they can do - they did not even address it yesterday; it was a huge lost opportunity.
BARRIE CASSIDY: Just back to COAG and the outcomes, it's not clear how much of this $15 billion will be spent in the first year. Though, Wayne Swan did say before this morning that it will be weighted in the early years. So what is the impact on the budget now? What do you think the size of the surplus would be as it stands?
ANDREW ROBB: Well, I think they're setting - I think they're setting Australians up for a deficit. Let me say this Barrie: there is no inevitability about a deficit. Absolutely no inevitability. But if you run the white flag up now, then it will lead to a deficit, it will lead to a recession. I mean, Kevin Rudd and Wayne Swan are talking Australia into a recession with all this deficit spending inevitability spending that they're talking about, and it's really irresponsible, there is so much else can be done. There is no inevitability about Australia going into deficit or into recession.
BARRIE CASSIDY: But you call that running up the white flag. Solomon Lew, who’s one of the more experienced businessmen in this country, says the government wouldn't survive unless it went into deficit and then he said they need to move now, 6 to 12 months might be too long. He doesn't see it as raising the white flag. He sees it as something they need to do.
ANDREW ROBB: We’ve got a balance sheet with no debt. So we're not paying any money like the rest of the world are paying billions of dollars in interest. We’ve got a Future Fund of $60 billion which is providing enormous liquidity for the banks. We’ve got surpluses, we’ve got the OECD, the IMF, the Treasury and the Reserve Bank all saying we're going to grow. And yet we’ve got the Prime Minister saying there is inevitability about going into deficit. He and Wayne Swan are talking Australia into a recession. It will be self-fulfilling. Now, sure, there is a role for government, but there's not enough taxpayers' dollars and there’s not enough capacity for sustainable debt by the Commonwealth, given the size of government relative to the private sector, to do all the heavy lifting. They have to do some things to unlock the literally hundreds of billions of dollars that are available in our superannuation funds, get them the incentive to invest in infrastructure in Australia. Get things moving. Now, they do not take account of the power of the private sector in addressing a lot of the problems that we may confront over the next year or so.
BARRIE CASSIDY: You say that we're growing but not growing at the same rate and that's why Colin Barnett, the Liberal Premier of Western Australia, said yesterday that in an economic downturn, governments go into deficit, it's a certainty.
ANDREW ROBB: Well, Barrie, if we are predicted to grow between 1 and 2% by all of these organisations in the last fortnight, around the world and here, if we have got a surplus, if we have no debt, there is no inevitability this year in going into deficit. If we do the things we need to do to unlock money out of the private sector, this country is in great shape compared to the rest of the world. We’ve got zero debt. United States and Japan and Germany, who Kevin Rudd talks about needing to go into deficit; well, of course they do. 50%. They’ve got 50% of GDP as government debt. They are paying tens of billions a year of taxpayers' money just to pay off their debt. We’ve got none of that. We are in a very strong…we're the envy of the world. Our balance sheet is the envy of the world. To run up the white flag at this stage and to talk about deficits will talk us into recession, is highly irresponsible, will constrain spending out there, and it will discourage investment out of the superannuation funds, out of the cash management funds in this country, and it is a really irresponsible and it does show they are out of their depth. As economic managers, they are out of their depth, and they're following Labor instinct of spend, spend, spend and run up debt. And we will have this millstone around our neck of huge debt again, which will take years and years and years and years to address.
BARRIE CASSIDY: Is there any suggestion of a reshuffle any time soon on the coalition frontbench?
ANDREW ROBB: No
BARRIE CASSIDY: What about the situation with Julie Bishop, because one story in the Australian quoted a senior coalition source as saying there's a lot of chatter about Julie Bishop in Treasury. Is she safe?
ANDREW ROBB: Barrie, you're always hearing about unnamed sources. One, Julie is one of our most talented colleagues. Secondly, in two months, I think Julie has made a very good fist of the toughest job bar the leadership. And I do think in two months that, from what I see, Julie has probably got a better grasp of the economics than her counterpart, Wayne Swan, after two years as Shadow Treasurer and one year as treasurer.
BARRIE CASSIDY: That's the problem and that's part of the allegations against her - that she is failing to land a blow on Wayne Swan, that and the fact that the plagiarism allegations have clearly hurt her and further suggestions that she lacks vision.
ANDREW ROBB: I think Julie, one, is very talented and, two, in two months…it's two months since we had the change and I know myself, I've been paddling very hard to get on top of my area. Her area's tougher again. And she has worked very hard and I think is making a very good fist of the job, and you know, I think as the team that we've got, I think we have really put some pressure, from Malcolm down, put some really serious pressure, including Julie, on the government and exposed a lot of their mismanagement of this crisis over the last few weeks. They're running around like rabbits in a spotlight, this government. And I think the exposure of that owes a lot to Malcolm and Julie and other colleagues.
BARRIE CASSIDY: So, it's not a job that you aspire to, Shadow Treasurer?
ANDREW ROBB: Barrie, I've got a job which I've got my hands full on, and I will stick with that.
BARRIE CASSIDY: Thanks for your time this morning.
ANDREW ROBB: Thanks, Barrie.
Media Contact: Stuart Eaton, 0433 298 620