Sky AM Agenda

Subjects: Australia's Security Council bid, Defence spending, Coalition's audit commissions.

Transcript, E&OE

25 September 2012

DAVID LIPSON: I'm joined now by the Trade Minister Craig Emerson.

Thanks so much for your time. We are hoping, of course, to be joined by the Shadow Attorney-General George Brandis as well, but he's been held up at the airport. He's on his way. We're assured he'll be here as quickly as possible.

So, we'll leave Defence for now. I want to start with the United Nations and the Prime Minister's illness. Is that going to affect our bid for a seat on the UN Security Council?

CRAIG EMERSON: No it won't affect the bid. And we know it's a tough race, but our strong view is the two rivals, both being European countries, would make it a bit Eurocentric - that is, the Security Council. And we think that Australia has a big perspective to bear on what is the most rapidly-evolving, dynamic region on earth, which is the Asia-Pacific. That's where we have special expertise, and we can bring that expertise to bear on the Security Council.

LIPSON: Will there be any specific benefits for Australia - tangible benefits? For example, in your portfolio of trade?

EMERSON: No, and I'm not asserting that this is about economic benefits to Australia. It's actually about peace and security. That has flow-on effects, because if you've got a peaceful, secure environment globally and in the region, then obviously that is more conducive to trade and therefore to job creation.

But we're not doing this because we've got some computable general equilibrium model and worked out how many jobs it's going to create. We're doing it because a very important part of people's lives and wellbeing is feeling safe and secure. We have the expertise of peacekeeping missions in the region and beyond. Obviously, there's the issue of the phased withdrawal of troops from Afghanistan.

So, you know, Australia has particular expertise to bring. And remember, too, that it was the Australian Government that brokered a peace deal in Cambodia after that terrible period of the Khmer Rouge.

LIPSON: But has Australia been spending too much energy, too much time, on this bid - as the Opposition Leader asserted yesterday?

EMERSON: Well, when he asserted that the PM should be in Jakarta meeting the President of Indonesia - when he in fact believed that it was in Indonesia's interest to be at the UN General Assembly, and that's exactly where he was - I think that answers that question. The allocation …

LIPSON: But that aside …

EMERSON: … I think is around $25 million. You can't enter these contests and then refuse to commit any resources or any meaningful resources. That is to enter with the objective of losing. Why would you do that?

We're in there seeking to win. But it is very tough, because we entered about four years ago and our rivals have been there for a decade, so they believed that it was worth running this race for a decade. We've come in late, but we're going to try to finish strong and get the nod.

LIPSON: Okay. We will turn to, though, the Defence announcements that Tony Abbott will be making; the speech to the RSL Club this morning. He'll unveil the direction of the Coalition's Defence policy and outline an aspirational increase of 3 per cent in spending for Defence each year. Do you support an aspirational increase to Defence spending?

EMERSON: Well, I'm not quite sure what Mr Abbott is seeking to achieve here. I suspect it's that he wants the Defence and wider community to believe that he'll spend really big on Defence, but he doesn't want any of that extra spending counted in the Budget. So, he wants the best of all worlds: call it an aspirational target but make sure that neither Treasury nor Finance can cost it; make sure that the Parliamentary Budget Office can't cost it; get a couple of friendly, retired Mosman bookkeepers to cost it, or just to ignore it altogether.

And they're not going to get away with this, David. They're not going to get away with it.

LIPSON: But do you think that aspirational pledges have any worth or … I mean …

EMERSON: Well, we did in 2007 - talked about an aspirational goal for the income tax system. And, in fact, we've done really important reforms there, like trebling the tax-free threshold, and taking nearly a million people out of the tax system.

LIPSON: So what's the difference between them?

EMERSON: Well, what I'm saying is that he wants to call it an aspiration; go around various community organisations and Defence organisations saying 'we aspire to get this to 3 per cent of GDP', without it appearing in the ledger as extra costs on top of the $70 billion black hole that the Coalition itself has admitted it has. So that's what they're trying to do: get the best of both worlds, as usual.

LIPSON: Well, the Government has already made significant cuts to Defence. In fact, when up against GDP the funding of Defence is at the lowest level since just before World War Two. Tony Abbott is alluding to funnelling some savings from perhaps cuts to bureaucracy back into frontline services. Is that something the Government would support?

EMERSON: Well, you know, they talk about bureaucrats as if they don't do any work, as if there is no service provided by people in the Department of Defence. And it's easier said than done, although I see Joe Hockey has pledged to cut 20,000 public service jobs pretty much in the … as the main event to what Campbell Newman is doing up in Queensland, where I think he's cutting 14,000. Joe's really saying 'you ain't seen nothing yet - we're going to cut 20,000'.

But I also see - and this is to be revealed today - that there may be reconsideration by Tony Abbott of whether the submarine project goes ahead in South Australia. Now, if they cut that, I think the South Australian community needs to know that that's what they're going to do. So let's see how it all unfolds.

But, yet again, you've got the Coalition struggling to find how they're going to fix this $70 billion black hole, which Tony Abbott has described as a Labor myth and Andrew Robb has said 'no, it's not a furphy: we put the figure out there'.

LIPSON: Okay, but just staying with Defence. He's also talking about unmanned aircraft - drones - patrolling our northern borders.

EMERSON: Yeah.

LIPSON: Is that something that you would like to see?

EMERSON: Well, I'm not a Defence expert, but…

LIPSON: Or any problem with it?

EMERSON: … let's not imagine that unmanned aircraft are cheap you know. I don't know - I'm speculating, I accept - that maybe they think that they can create an impression that this is an inexpensive way of patrolling our northern borders and oceans. None of this is cheap. And so what Mr Abbott needs to do is explain what he's cutting and what the extra spending is on.

And, fundamentally, David, I do come back to the point: subject these decisions to the Parliamentary Budget Office, to Treasury and Finance.

LIPSON: Just on the drones, though: ideologically, do you have a problem with weaponised drones, for example?

EMERSON: Well, I'm not the Defence Minister. And I think it would be inappropriate for me to, you know, jump into that particular arena.

I just go back to the fundamental point that if there are different policies, that's fine - but they need to be properly costed. And they can't get away with aspirations and audit commissions after an election, like Campbell Newman has done, and truly reveal the extent of the cuts that they have in mind - but they haven't got the bloody guts to tell the Australian people that that's what they're going to do - before the election.

LIPSON: Well, the Shadow Attorney-General joins us now. He's made it from the airport. Record time, George.

GEORGE BRANDIS: Another victim of Qantas.

LIPSON: George Brandis, we're talking about the Defence policy that's going to be outlined by Tony Abbott this morning. We went over the aspirational increase to funding of 3 per cent. Is there any worth in an aspirational target?

BRANDIS: Well, I think there is. I think what … I mean, Mr Abbott will speak later in the day and I'll let his words tell their own story.

But what I think Mr Abbott is seeking to do is … the Opposition is seeking to do is draw attention to the fact that one of the many victims of years of Labor waste - and the billions and billions of dollars just wasted on overpriced school halls, pink batts and all the other policy errors of the earlier days of this Government - is that now Defence is paying the price, and we have the lowest expenditure as a share of GDP on Defence since 1938.

Now, I don't think the public will be comfortable with that. There are …

LIPSON: But just on the aspiration: I mean, they may not be comfortable, but if you're not making a rock-solid promise, what good is an aspiration, an attempt to bring it back?

BRANDIS: Let me just make the general point, David. We … if we win the next election, we will see what the state of the books is that we inherit.

EMERSON: Ahh, the old audit commission trick, ehh?

BRANDIS: No, excuse me. Plenty of time, Craig.

The last time that we came into government from Opposition, we discovered that the state of the Budget had been lied about, and there can't be any absolute certainty about the state of the Budget …

EMERSON: Ah-ha.

BRANDIS: There can't be any absolute certainty about the state of the Budget when you have Labor governments who fudge the figures all the time. And the story that leads the press this morning, of course, is the fact that the Budget outcome for the last budget, the '11-'12 Budget, which we now know was 100 per cent out. It was promised a $22 billion deficit and it came in at a $44 billion deficit - an order of magnitude, an error of double.

So my point is that you cannot rely upon the credibility or the accuracy, or indeed the honesty, of this Government's budget forecast.

EMERSON: Could I quickly cut in here?

LIPSON: I'll give you a very quick response, because I need to give George some more time.

EMERSON: I know, and I accept the fairness of that. What George has foreshadowed is an audit commission. That's what John Howard did when the Coalition got in in 1996 and they cut spending on TAFE and education severely. That's exactly what Campbell Newman has done and it's a way of concealing the cuts.

In terms of expenditure on Defence, per capita we are second amongst the G7 countries and China, only behind the United States.

LIPSON: Okay, just finally. We're almost out of time. I'm sorry about that.

But George Brandis, just staying with Defence: a promise - just in 30 seconds or less - to publish another White Paper within 18 months. We're getting a White Paper next year. Why do we need another one?

BRANDIS: Well, I think that, you know, whenever a new government comes into power - and you know, this is obviously on the hypothesis that there were to be a change of government at the next election - then I think the public would expect a new government to look at Australia's strategic situation with a fresh set of eyes. And I don't think there's anything particularly controversial about a new government reassessing strategic and Defence spending priorities and sharing that with the public in the form of a White Paper.

LIPSON: George Brandis, Craig Emerson, we are out of time.

EMERSON: Thanks David.

LIPSON: Thanks for your company on AM Agenda.

BRANDIS: Thank you, David.

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