ABC Insiders

Subjects: Northern Territory election, Queensland poll, mining investment, Budget surplus, education reform, Abbott's cuts.

Transcript, E&OE

26 August 2012

BARRIE CASSIDY: Now we'll go to our guest, the Minister for Trade, Craig Emerson, who joins us from our Canberra studios.

Good morning Minister, welcome.

EMERSON: Good morning Barrie. Thanks for inviting me onto a long-form interview. Labor Ministers are very comfortable with these; I think you'll find the Libs are fairly thin on the ground today.

CASSIDY: (Laughs) We'll start with a cheap shot …

EMERSON: (Laughs) That was an expensive shot!

CASSIDY: OK, we'll go to the Northern Territory election now. How big a setback is that for the Labor Party? And this is my cheap shot, because you've got a habit of losing these state and territory elections.

EMERSON: The Northern Territory election was actually fought on Northern Territory issues. If we want to speculate that that's not the case then have a look at some of the swings to Labor within Darwin. But I've always maintained that people are more than intelligent enough to separate federal from state issues.

But for those who believe that local council, state issues do bear on federal politics, also have a look at the result in Heffron in New South Wales, where there was a very strong swing to Labor.

I think the truth is outlined in your introduction and discussion: outside of Darwin these super councils were a real issue. As you might recall, Barrie, they were, too, in Queensland, and had an effect on the state polls in Queensland in the fairly recent past.

CASSIDY: But federal intervention, too, is extremely unpopular, it seems, in a lot of the Aboriginal communities?

EMERSON: Well, that may well be the case. I'm not an expert on it; I can't go through the entrails of the result. What I can say is that Paul Henderson did a fantastic job. He's a lovely man; got unemployment down from more than 7 per cent to 4 per cent, and he's getting away the world's – or the country's – second-biggest project.

So, Paul's done a really good job – invested in health and education. I pay tribute to him, and also to his mum who is a constituent of mine in Rankin and I understand does vote for me. I send her birthday cards too.

CASSIDY: Well in Queensland there was a Courier Mail poll that showed a 7 per cent improvement in Labor's primary vote at the federal level. It feels like a rogue poll – it's a big number.

EMERSON: It is a big number, but it's also backed by related polling, in terms of the impact that people feel of carbon pricing. And that polling is consistent with others, and that is that the lived experience of the carbon price is vastly different to the terrible prophesies of Mr Abbott in his mother-of-all scare campaigns.

I mean, this is the guy who said that it was going to be a wrecking ball through the economy; then a handbrake – he backed down yesterday. Next thing you know Tony Abbott will be saying it's like a Chinese burn from a boy scout.

I mean the truth is this carbon price isn't having anything like the effect that Tony Abbott has been claiming. He's been exposed for that and he can't get out of this groove of destructive negativity, and that's why you saw such an appalling performance on the 7:30 Report the other night.

We'll get on with the positive programs that we have in mind and are working on, Barrie: the reform of electricity pricing, investing in our schools and the National Disability Insurance Scheme – all opposed by the Liberals.

CASSIDY: Well, what was not positive was a decision by BHP to shelve the Olympic Dam expansion. Just how big a hit on the South Australian economy will that be?

EMERSON: Well, obviously, everyone would much, much, much prefer that that project go ahead; but there are other economic activities in South Australia including mining activities. I can reassure your viewers that Whyalla has not been wiped off the map. The economy is strong, but of course we would like that project to go ahead.

Certainly, Barrie, with 100 per cent certainty, the decision to postpone that project had nothing to do with the mining tax, as Mr Abbott sought falsely to assert. Why? Because the mining tax doesn't apply to those minerals. He either knew that and sought to mislead or he didn't know that, which is just as worrying.

CASSIDY: But is it any better to say that it was shelved because Australia's becoming a high-cost place to invest? Now a lot of business leaders have said that.

EMERSON: When you get a huge demand for labour – and that's what's happening in this country with the unemployment rate coming down – then you will see some increase in costs. But the truth of the matter is, according to private forecasters, we're not even halfway through the mining investment boom, let alone the production boom, Barrie. We've got a lot of projects still to be formally commenced, but the investment is pouring in to them and there are a hell of a lot of projects in the investment pipeline.

Investment in this country is at 40-year highs, and for the last available 12 months grew at 20 per cent. Sure, on prices we're over the peak, but we're still up high. What happens in the mining boom? The first thing is when you get a big increase in demand, prices go up; then investment goes up and then production goes up. So, what we've seen is prices come off a bit from the very high levels, but we've still got more than half the investment to go, and then we've got the production to come on-stream. So that's all very good news for Australia and for the working people of this country.

CASSIDY: So you're saying far from being over, the mining boom is not over, it's not even in decline – we're actually just halfway through it?

EMERSON: We're not even halfway through it…

CASSIDY: Well what was Martin Ferguson talking about?

EMERSON: He was talking about prices, but let me just – I'll come to that. But this is a sentiment shared on Friday by the Governor of the Reserve Bank – who knows a few things about this – and his testimony before the House of Representatives Economics Committee. What Martin was talking about is the fact that we have had the highest mineral prices in 140 years. But, as predicted in the Budget, we've gone over the top of that. They're still high, but that boom in prices is over. We haven't even seen half of the mining investment boom, and we certainly haven't seen the production boom that comes out of that mining investment.

So there's a lot of job creating work going on in this country – that's why the unemployment rate has come down; that's why we've got now interest rates at 3.5 per cent compared with 6.75 per cent, the Reserve Bank cash rate that we inherited; and the inflation rate is at 13-year lows; investment as a share of the economy at 40-year highs. I think those all are indicators of a strong economy.

CASSIDY: Paul Kelly wrote that maybe Martin Ferguson talked about the mining boom being over because he wanted to scale back expectations and get the rest of you to start taking some tough decisions?

EMERSON: I think you will find in our Budget processes we do take tough decisions. The savings that this Government has identified have been huge. More than $100 billion previously – I think $30 billion in the last Budget. I can confirm, Barrie, the Budget will be returned to surplus in 2012-13. We will make the decisions and are making the decisions to return the Budget to surplus in 2012-13, as we said we would.

CASSIDY: How can you reconfirm that when clearly the prices of commodities are falling and therefore revenue will be falling?

EMERSON: We did expect commodity prices to fall and that was in the forecasts. And there are ups and downs around the world in commodity prices, investment and productions, and other factors that affect the Budget, too – like the level of unemployment going down from 5.3 to 5.2 per cent. But I can confirm the Budget will be returned to surplus in 2012-13, as we said it would.

CASSIDY: Well that's 2012-13, but you've got some big expenditures coming up ahead of you: the disabilities; education, once you deal with the Gonski Report – big ticket items.

EMERSON: They're great investments in the country's future. Disabilities …

CASSIDY: But you've got to find the money.

EMERSON: That's right, and we will continue those surpluses in the forward estimate years. But the fact is we have to make the necessary investments, Barrie. It's just like the mining investments. Investing in people is extraordinarily important. It's a key that unlocks two doors, if you like: one to a strong economy; another to a fair society. And that's what we're doing with our investment in schools; it's what we're doing with the investment in education. You saw today the Liberals are talking about capping university places.

This is the born-to-rule mentality Barrie. The old born-to-rule is back again, saying they want to keep those who they consider to be the riff-raff out of universities when we've opened the university gates to disadvantaged young people as has never happened before – not even in the Whitlam era. And then you have this disgraceful Opposition Leader saying 'well, we've got to keep the riff-raff out of the universities, close the gates to the disadvantaged and increase HECS fees by 25 per cent'.

CASSIDY: But, again, if you're going to spend this money on education and on disabilities and so on, it's going to mean significant spending cuts.

EMERSON: Well, what it means is finding the savings that are necessary to accommodate these things. And the Prime Minister's already indicated that that's what we did for the disability insurance scheme, Barrie. We found the savings; a number of state governments said they weren't prepared to do so, and Campbell Newman up in Queensland is still sticking by his obstinacy, saying he won't find $20 million to launch the National Disability Insurance Scheme in Queensland. And what we're seeing in Queensland is just a curtain-raiser with "Can Do" Campbell's cuts as authorised by a shonky audit commission.

That's exactly what Tony Abbott has in mind for the people of Queensland, because he's already announced that he'd have an audit commission. So they are going again, dishonestly as they did at the last election, not to balance their books. And then, you know, Joe Hockey will hire some retired Mosman book-keeper to present to the Australian people that they've balanced them. If they get elected, they will have the audit commission that they promised and they will slash services and cut jobs. Just like Campbell Newman has done in Queensland after the election without telling people before the election anything like the full extent of the destruction that he was going to inflict on the people of Queensland.

That may be one of the reasons why that poll has changed so dramatically, by the way.

CASSIDY: Well, the Prime Minister – what is she saying on the Gonski report? She's saying that neither the public nor private sector will be worse off. She's saying that both will be better off in real terms. Is that right?

EMERSON: She's saying that all schools will get extra funding. That's right, they will get extra funding. Yes, it is expensive …

CASSIDY: Private and public?

EMERSON: Yes, and it is an incredibly important investment in Australia's future.

Barrie, you know that I talk about the Asian Century. Do you know that four out of the five top performing school systems are now in our region, and yet during the decade of the first decade of the 21st Century we slipped down the OECD rankings? We can't go around saying that investing in schools and reforming our school system is something that should be put off to the future because this nation can't afford it.

It can afford it, and yet you've got Tony Abbott saying 'Oh, well, look, the real injustice is the large amount of funding that the government schools get relative to the non-government schools'. Again, the born-to-rule mentality. They want to keep disadvantaged kids right where they are, in schools, and then they want to lock the gates of the universities to prevent disadvantaged kids from getting into universities. And if your viewers needed one indicator of the difference between the Coalition and Labor, that's it. The born-to-rulers want to keep disadvantaged kids in a bad spot in schools and out of our universities.

CASSIDY: OK, so you give a commitment that you're going to give more money in real terms to all of the schools, and you do that without getting a similar undertaking from the states, who have to chip in a significant amount of money?

EMERSON: Well, the states do actually invest in schools. We think that there are fundamentally important reforms that need to be done. I'm saying that there will be an increase in funding from all schools. Yes, the states will need to come in and support that. We already cooperate with states in terms of school funding, but what we need to do is make sure that every young person in this country gets a good education.

If you look at the prison population, about 75 per cent of prisoners did not make it past Year 10, Barrie. So when we look at the economic consequences of this we wouldn't be able to compete in the Asian Century. Look at the social consequences: kids ending up drug-dependent, in jails. These are the big reforms that a Labor Government is undertaking. That's why we are Labor. And that's why the Coalition is what they are – the born-to-rule brigade – because they don't believe in helping the disadvantaged liberate themselves out of disadvantage, and they don't believe that university gates should be open to the disadvantaged – only to the privileged. That's the fundamental difference.

CASSIDY: And it does mean you will have to rewrite the Gonski model?

EMERSON: The Gonski Report is a very good report, but of course we need to ensure that the Gonski recommendations can be implemented in an affordable way. That's what we're doing.

We will return the Budget to surplus in 2012 13; we will keep the Budget in surplus through the forward estimates; we will find the space to fund the Gonski recommendations, but in our own way; and, of course, we'll proceed with the National Disability Insurance Scheme.

This is a very positive agenda and it's time that Mr Abbott started turning his attention to positive programs rather than keeping kids out of universities, saying they're going to have an audit commission so they can slash services and jobs after an election. Why? Because they want to rescind the mining tax because they think the mining companies pay too much tax already. These are the priorities. These are the differences, the fundamental differences in philosophy between Labor and the Coalition.

CASSIDY: OK, we're out of time but thanks for your time this morning.

EMERSON: Thanks, Barrie.

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