“The Nation” on Sky News

Release Date: 
13 March 2014

Topics: Employment figure; jobs, GST, Mining Tax, taxing superannuation earnings, the aged pension, DSP and Newstart allowance, paid parental leave, Tasmanian and SA elections, Labor-Greens alliance

DAVID SPEERS: 50,000 net new jobs in February, that’s a pretty strong number.

SHARON BIRD: We welcome that as good news David, there is no two ways about it. But I’ve had a view and in my area of the Illawarra as you would understand we’ve gone through quite a few tough times over recent years and so I think you have to look for the trend. You want that sustained over the longer term and as you indicated there will be concern about the announced job losses that haven’t yet rolled on.

DAVID SPEERS: But they are miniscule compared to what has happened in just one month.

SHARON BIRD: I do get a little clench of my jaw when you say that because they are people, thousands of people who are going to lose their job.

DAVID SPEERS: The point I’m making is the context – we don’t often, and the media is as much to blame as anyone, focus on the good news when jobs are created, and that is happening elsewhere in the economy.

SHARON BIRD: Understood, and I think that one of the really important tasks for the government now is to outline an ongoing jobs policy and what actually that is going to entail. How that means they get into communities going through transition and support the growth of jobs in those communities.

DAVID SPEERS: What is that plan Alan Tudge? And don’t just say the carbon tax please.

ALAN TUDGE: David, it’s not just the carbon tax. Our plan is to be open for business, to get businesses growing again, to get businesses investing again so that they are creating wealth and creating jobs. Now, this month’s employment figures were good figures, and when you combine that with the recent national accounts figures which showed that building construction is up, that retail is up, that confidence is up, some of the other figures were good, then we’ve got some hope that things are going forward in the right direction. We’ve still got more to do. The carbon tax is not insignificant – that is very important. Getting rid of the mining tax is important. Building infrastructure is important. Getting rid of some of the green and red tape is absolutely vital. Getting control of union militancy is vital. All of those things combined helps support businesses to give them confidence to invest, to create jobs, and to create wealth.

SEAN KELLY: But apart from knocking down Labor policies, what is the Coalition’s actual plan itself?

ALAN TUDGE: Well, they’re not knocking down Labor’s policies if you say, reintroducing the Australian Building and Construction Commission which can address union militancy on construction sites, if you’re getting rid of red tape and green tape so that business investment can occur more rapidly. They are real things. I’ll give you one practical thing that has already been done. Greg Hunt, the Environment Minister, has already approved $400 billion worth of investments that were in Labor’s ‘too hard’ basket over the last six years. $400 billion. Now that flows through into massive investment, massive jobs, massive wealth creation.

DAVID SPEERS: Sean, let me ask you. One of the big political problems for Labor was the size of the deficit, and the fact that it is continuing. If the economy does pick up and the jobs market in particular, that’s going to help the budget bottom line. Do you think we are seeing the seeds of improvement?

SEAN KELLY: I think we are seeing some seeds of improvement. I think the very big question is whether consumer confidence actually turns around. I’m not quite convinced yet. Sharon is absolutely right – one swallow does not a summer make and unfortunately, I think the electorate is very well alive to that. We’ve had 3 months now of consumer confidence dropping. That’s significant. That’s going to continue to act as a drag on the economy and that, of course, has been under the Coalition. You’re talking about the budget. The budget will respond to some extent to changing economic conditions but realistically, politicians on one side or the other are going to face some very difficult choices if we actually want to see a surplus budget.

DAVID SPEERS: Miranda, how do you see these jobs figures today?

MIRANDA DEVINE: Well, I think it’s interesting you’re talking about consumer confidence, because it has been low, and that’s because we’ve had a non-stop barrage of bad news on jobs. We’ve had Qantas, Toyota, Holden, SPC Ardmona and so on but meanwhile, quietly in the real economy thousands and thousands of jobs were being created.

DAVID SPEERS: In the services sector and retail, Coles and Woolies have been announcing big job gains.

MIRANDA DEVINE: Thousands of jobs there.


MIRANDA DEVINE: The important thing is that these are full time jobs, not only that they are male jobs which I think is significant because, at the risk of being politically incorrect, they are the bread-winner jobs, they are the jobs that have the most social impact out in the community.

DAVID SPEERS: Perhaps we should say it would be nice if they weren’t just males that were the breadwinners, but that is the reality.

SHARON BIRD: The point I would just make about the confidence is that a lot of that is driven by the fact that people are nervous about their jobs because they’ve heard about those large announcements of job losses and they haven’t seen a response from the government that has been about fighting for their jobs. And so that makes a broader workforce [interjections].

MIRANDA DEVINE: The response from the government to SPC Ardmona that we don’t give you any more handouts… [Interjections]

SHARON BIRD: Except from the Victorian Government. It was obviously a fairly significant thing for SPC, but this is why I’m saying Alan, that when we came into government there were two things that were driving growth problems – they were infrastructure investments and skills. If you want to actually look at ramping up those new opportunities and jumping in, I would argue the NBN was a significant driver of innovation and new jobs – where is that at the moment? All in the never-never again. [Interjections]. I go all around the country talking to business chambers in regional cities. In the period that I was the Shadow Minister for Regional Communications I didn’t find business chambers in regional cities anywhere complaining about the potential of that infrastructure to drive transformation in their communities.

MIRANDA DEVINE: The government buying jobs is why Tasmania is the basket case that it is now.

SHARON BIRD: Investing in infrastructure is investing for the long term and you have to prioritise that investment over the long term.

ALAN TUDGE: In some respects, government investment is important, particularly in big infrastructure projects. But you can’t tax your way to prosperity. [Interjections] And this is one of the fundamental differences between the Labor party and the Coalition. We believe businesses create wealth, and businesses only create wealth. Ultimately you have policies that attract business investment so that they can create wealth and they can create jobs. [Interjections] That’s the most fundamental. I know we talk about this all the time but that is why the carbon tax is actually fundamental. We heard that it had a $100 million hit on Qantas alone – one business. $100 million.


SEAN KELLY: But Alan, you yourself have just acknowledged the Qantas losses have been outweighed by the significant job creation of the last month, so you can have your cake or eat it, make your choice.

ALAN TUDGE: I don’t understand your point there.


SEAN KELLY: Secondly, if we’re going to have an argument over the economy then lets actually argue over the facts. Taxation fell proportionally under the Rudd government. That includes the carbon tax. I don’t mind having a debate over the economy. If we’re going to have a debate over the economy, we should probably all acknowledge that governments have much less of an impact on economies than people are led to believe. Government spending continues to increase. It increased at 3.5 per cent as opposed to 3.7 per cent across the life of the Howard government.

SHARON BIRD: Government spending on make work green schemes, on bloated infrastructure… [Interjections]

SEAN KELLY: You were just making a point about the level of spending. You were wrong on that. If you want to return to the quality of spending, then sure, let’s have a chat about that.

DAVID SPEERS:  Let’s return to the budget bottom line. Alan Tudge, you’ve said you can’t tax your way to prosperity and that is correct, but something needs to be done about the budget. Either taxes need to go up, or spending needs to go down. That’s self-evident. And Ken Henry has been making this point as well. On the tax side of things, why is the GST so hard, politically, to touch? I mean it’s clear that it’s more than a decade now since it was introduced. It hasn’t been increased since then. Every other country has gone up. It is a far more efficient tax than the myriad of other little taxes at the state and federal level that hold back productivity and efficiency. Why can’t we look at the GST?

ALAN TUDGE: We made a commitment that the GST would not be going up under us. But let me tackle the underlying assumption here, and Ken Henry makes this assumption too, and that is that we have a tax problem, i.e. not enough tax. When you look at the facts though, we haven’t got a tax problem; we’ve got an expenditure problem. Look at what happened over the six years of Labor. The revenues increased by $50 billion per annum


DAVID SPEERS: Let me stop you there. Rather than focusing on Labor, the Coalition have committed to things like NDIS, like a lot of the school funding that Labor promised. You’ve got these increases coming. There is a budget problem that the coalition faces.

ALAN TUDGE: My point though, is that it’s been an expenditure problem to date. Expenditure increased by $125 billion when revenue increased by $50 billion. That’s where the problem was created. So we do need to get expenditure under control. That’s why we’ve got the Commission of Audit going through, identifying wasteful expenditure right now. They’ve delivered the report to us. They are methodically going through that.


DAVID SPEERS: On the GST, apart from saying we wouldn’t touch it, what is the argument. Why? What is the reason for not looking at it?

ALAN TUDGE: We said categorically before the election that we would not change the GST. Full stop. In some respects, from the federal perspective, it is not our tax. It’s the states’ tax. The states collect all the GST revenue. [Interjections] If the state governments believe that the GST should be higher, they should be arguing for it. But we certainly won’t be arguing for it. Precisely the opposite. We promised that we would not adjust it.

DAVID SPEERS: I’m just asking why. Is this ideologically or philosophically a tax that you have an issue with? It is an efficient tax.

ALAN TUDGE: We introduced the GST under the Howard/Costello regime. It has been a good tax to date. But, I’ll just repeat again. It is set at 10 per cent per annum. All of the money goes to the states. We happen just to be the collectors of that money.

DAVID SPEERS: I know, but what is wrong with increasing it to 12 or 15 per cent? What’s wrong with that?

ALAN TUDGE: If the state governments want to make that argument, then it is up to the state governments to do so. We are not going to be making that argument. Our argument is that the GST will not go up under us.

DAVID SPEERS: Miranda, do you have a view here on the GST. It’s this politically taboo tax, but it’s pretty blindingly obvious that this tax needs to be addressed at some point.

MIRANDA DEVINE: Well, I don’t know. I think that certainly the Abbott government, if they are going to tinker with it, will do it in the next term and they will take it to the electorate like Howard did when he introduced it. But, I think it’s interesting. Today you had Tony Abbott in Adelaide and he was on the hustings for Stephen Marshall, but I think what he said, was he articulated, and he’s doing this increasingly, the philosophy of the government and that is that Australia has fundamentally changed since September. This conversation we’re having is a kind of pre-September 2013 conversation because he says we’ve gone from being a high taxing, high regulating government to a low taxing, low regulating government. [Interjections] So that means instead of endlessly talking about taxes, and what taxes we can raise, you’re talking about loosening up regulations and allowing business, as Alan just said.

ALAN TUDGE: Our aim is to cut taxes, not increase them. That’s why we’re cutting the carbon tax, that’s why we’re cutting the mining tax. That’s why we’re going to reduce the company tax. That’s why we got rid of the $1.8 billion fringe benefits tax on cars. Our aim is to cut taxes, not raise them. It is a fundamental difference between the Coalition and the Labor Party.

DAVID SPEERS: Let me ask you this – wouldn’t it be great to be able to cut the company tax rate, to be able to cut payroll tax, stamp duties, these things that hold back investment and one of the easiest ways to do that is by increasing the GST.

ALAN TUDGE: You mentioned three taxes there. One of those taxes is a commonwealth tax. We are going to cut that tax by 1.5 per cent. Payroll tax and stamp duties are both state taxes and under Coalition governments those taxes have been coming down and there are commitments made indeed by the opposition parties in Tasmania and South Australia, from my recollection, to reduce payroll tax in particular.

SHARON BIRD: [inaudible] You’ve got two million small businesses and you’ve got all the hospitality people telling us at the Daily Telegraph that they are dying because they cannot open on Sundays, because they have to pay so much money in penalty rates. Why don’t you commit to doing something about that?

ALAN TUDGE: That’s a different issue to the tax issue that we were talking about. The industrial relations regime is of course an important part of the business environment or the environment in which businesses operate. We have said that we are going to implement a number of measures; a number of moderate measures which we took to the last election. That’s as far as we’re going to go. Secondly, we’re going to undertake an inquiry through the Productivity Commission to look more broadly at what further measures could be introduced and then we will take those measures to the next election. It is steady, it is deliberate and it is no surprises.

DAVID SPEERS: Just on the GST, I suspect rather confidently that Sharon Bird you’re not about to embrace the GST, but Sean Kelly let me as you. Am I the only one at the table who thinks this [inaudible]

SEAN KELLY: I don’t love the GST. It is a regressive tax that hits poor people harder than it hits rich people. [Interjections] There are regressive taxes and there are progressive taxes. But, I tell you what, I don’t see many other options government has left. I think you are absolutely right. I think both sides are guilty of cowardice. At one point or another, either the base of the GST is going to be broadened or the rate is going to be increased.

SHARON BIRD: It’s an easy mechanism to do it. That’s why it was introduced.

SEAN KELLY: Exactly, and the problem I have with this argument that’s coming from the Coalition is that the states should make the argument.  John Howard who is widely admired in the Coalition for some good reasons, had the courage to go out and make that argument. Why doesn’t the current Coalition government have the courage to go out and make a similar argument? We are not going to be able to pay for our health and hospitals into the future through cuts. No economist in the country says that is possible. At some point we’re going to have to increase revenue drivers. How are we going to do that?

DAVID SPEERS: It might all be Liberal states and territories, apart from the ACT, after Saturday with elections. It might be an opportunity to progress this. Sharon, I’ll let you have a shot on the GST.

SHARON BIRD: I agree it’s a regressive tax but I don’t think that’s why.  As a first port of call, that’s not something we would go to. I listen to Alan’s arguments and they are taking away the Mineral Resource Rent Tax. They are taking away the carbon tax. So they are actually cutting away the revenue base at the same time that you’re saying we’ve got to address spending. [Interjections]

DAVID SPEERS: We pursued this yesterday with Bill Shorten, what is your position on the mining tax?

SHARON BIRD: We have indicated we will not support the repeal of the mining tax and going into the future we support the principle of a revenue based tax in the mining sector. I come from a mining region, and I’ll argue up hill and down dale that to actually have a tax that’s based on profit as opposed to royalties is a better structural tax to have. [Interjections] We’ll engage with the sector about how we actually put that in place, absolutely.

MIRANDA DEVINE: And the sector was quite open to that when Kevin Rudd first raised it. He then so comprehensively botched it that [Interjections]

DAVID SPEERS: If you’re not going to take the same tax to the next election, which from what you’ve said and from what Bill Shorten’s said, is pretty obvious, why are you still defending it?

SHARON BIRD: Because the Mineral Resource Rent Tax as it is, is based on that principle. The government is not proposing any sort of replacement for it. [Interjections]

DAVID SPEERS: You’re no longer saying you’ll take this tax to the next election. You’ll take a watered down version of it, presumably.

SHARON BIRD: I wouldn’t necessarily say watered down. It’s structurally going to be a different one.

DAVID SPEERS: So you’ll take an even higher tax to the next election.


DAVID SPEERS: Why are you continuing to block the repeal of this now?

SHARON BIRD: Because the Mineral Resource Rent Tax we believe has to be put in place, and we do not support its repeal because it was the basis of which the revenue was coming in. I take the point that it is a profit based tax and it’s intended to go up and down. But off that was a range of initiatives that we believe should be funded through that. So it was a package and we will continue to hold it.

ALAN TUDGE: Those initiatives cost $16 billion. They spent that money. Do you know how much the tax raised? It’s raised $400 million in total. This was a debacle, this tax. Let’s make no two bones about that David. It was a debacle and has to go.

SEAN KELLY: Alan’s right. It’s been a debacle. That’s why we should absolutely have a stronger mining tax. We shouldn’t be laughing about that prospect. Public support for a tax on mining profits has increased significantly since Kevin Rudd introduced this in 2010. Absolutely, the process was messed up probably a few times, and we ended up with a tax that didn’t have the teeth that it need to and which also probably didn’t do the job efficiently in terms of the mining companies.

ALAN TUDGE: Every single issue you raise has an answer of ‘more tax’. We want to reduce taxes, you want to increase them. It’s the fundamental difference between our parties.

DAVID SPEERS: The government’s line is that the problem is spending. We’ll take a break and we’ll look at the spending side of the budget. Where to cut, and how politically brave this government will be.

DAVID SPEERS: We’ve been talking about the budget, what to do on the taxation side, the money coming in and about the spending – the money going out. This is the point you have been making Alan Tudge; the real problem with the budget. You’ve got the draft or interim report into the Commission of Audit – well Joe Hockey does – but some of the leaks we have seen do suggest that there are some areas that the government should look at. They aren’t too politically popular though. Let’s go through some of them. The Seniors Health Card, Sam Maiden broke this during the weekend. And I must confess I wasn’t aware of this. But you can earn up to hundreds of thousands a year from your superannuation and still get the Seniors Health Card. Is that really sustainable?

ALAN TUDGE: In relation to the Seniors Health Card, we are going to index the threshold. At the moment it’s $50,000 for a single and $80,000 for a couple. It’s been that threshold for a long time.

DAVID SPEERS: That doesn’t include your superannuation income…

ALAN TUDGE: Our election commitment was to index those thresholds at CPI so that more people over time would be eligible for that card.

DAVID SPEERS: But the question is did you include the superannuation income in that.

ALAN TUDGE: Our commitment was what we took to the election. That’s what we’re going to do. No more, no less.

DAVID SPEERS: So you won’t look at superannuation income?

ALAN TUDGE: The rules are there at present and we took to the election a commitment to change a couple of those rules and that’s what we will introduce.

DAVID SPEERS:  But is it sustainable to have people earning half a million from their super?

ALAN TUDGE:  You’re focussing on one particular item out of the huge array of expenditure in the budget [interjections]… we will be going through with a fine tooth comb over every single item in the budget.

DAVID SPEERS:  This one seems to stand out to me. As a single self-funded retiree - and there are a lot of them doing it tough - that don’t draw on the pension, they deserve this health card which gives them cheap medicine and doctor visits and various other things. They deserve that.  But does someone earning hundreds of thousands from their super deserve that. Should we all have to keep paying for that? There’s going to be more and more of them as baby boomers retire.

ALAN TUDGE:  I can only repeat what I said David – we had a firm election commitment that said we were going to be changing the rules in relation to a couple of those thresholds. So that they’re indexed over time, rather than just stationary and we are going to stick religiously to that commitment.

DAVID SPEERS:  Miranda, what do you think? It’s going to become unsustainable.

MIRANDA DEVINE: Yes, I think that’s our problem. It’s the ageing population. The ‘age of entitlement is over’, is, I think, is a mantra that works, but up until the point where your base, which is older people - that vote for the Coalition - are going to be affected. But I think they could gently bring in these ideas, but certainly not this term. You would actually have to have a conversation with the electorate before an election and I think people are quite willing, they understand the parlous state the budget is in, and I think most Australians are quite patriotic and quite willing to make a sacrifice. But that argument needs to be made and you can’t just make these arbitrary decisions as happened under Labor, and especially under Kevin Rudd for the last six years.

DAVID SPEERS: Sharon what do you think on this one.

SHARON BIRD: Well I was reluctant to intervene. I think this just epitomises the exact problem we face – that there’s 900 pages sitting on Joe Hockey’s desk. We’re all trying to have a debate about it and Alan, to his defence can’t really say much to anything because it’s not his decision.

DAVID SPEERS: But this particular measure - Is it sustainable?

SHARON BIRD: Well I think the conversation you are talking about is a real challenge. And it’s off the base of the fact that some of the stuff we tried to introduce around winding back the age of entitlement - for example the top limit for the private health insurance rebate. Steps we tried to take, that the Opposition opposed.

DAVID SPEERS: Would this be one of them that should be taken as well?

SHARON BIRD: I don’t know what they’ve got proposed.  The problems that we have had in terms of ongoing sustainable payments was something that we tried to address through means testing. Now I actually think that the government needs to, having opposed means testing, come forward and let people have that conversation. Now I’m willing to have that conversation about it. But I’m not going to do it on speculation. And I really think that this is going to be an ongoing problem, in the context of a number of fairly significant election commitments. We should not be having this conversation. We should know what’s on the table. And then we could have a genuine conversation about it. But why would you debate speculative positions until you know what the government is actually looking at.

DAVID SPEERS: Well because that’s what we like to do.

SEAN KELLY: I think the Liberals are going to be much braver than we might think. I think Miranda is absolutely right to raise political concerns around the Coalition’s base. I suspect there might be a bit of a pitch battle between Tony Abbott and Joe Hockey going into budget time. And I don’t think that’s necessarily a bad thing. But I suspect that if the Coalition is being sensible, and I feel that in this area they probably will be politically, they will see that this first budget is a huge opportunity for them. That it’s their first, last and greatest chance to lay the blame at the feet of the previous government. Unfairly I would add. But nevertheless, politically, that’s the opportunity. And if they do that, then I think the Australian public will give them a great deal of leeway, and they will be able to recover that ground over the next two years.

DAVID SPEERS: Let me ask you another one. The aged pension - there is a welfare review that Kevin Andrews has announced. But it’s not going to looking at the aged pension, which just happens to be the biggest welfare expenditure and it’s only going to grow because of the ageing population as Miranda points out. Sean let me ask you, Labor, in office did put in train the gradual increase that’s going to take it to 67 up from 65, and it’s going to take a number of years to get there, which is a good way to do it. Joe Hockey has signalled that he might look at going further, to 70. We are working longer, is this something that should be looked at?

SEAN KELLY: Yep, absolutely. We’ve already increased the pension, which is sometimes overlooked by the Liberals when they talk about the spending increases under Labor. One of the significant drivers of that, in fact, was the huge increase in the aged pension that occurred under Kevin Rudd and the early years of that government. But given that increase in the aged pension, we are going to have to look at raising the retirement age. People are living much longer. People are working much longer. It’s becoming feasible.

DAVID SPEERS: Sharon, the argument Labor often runs against this is that you’ve got a lot of workers who physically toil away, and these are people often in your base… [Interjection] and working through to 70 before you access the aged pension is [inaudible]

SHARON BIRD: Well presuming that you go for the aged pension and not building on your super. And so I think partly, of the great reforms we put in place that will actually be part of addressing that is superannuation savings. Increasingly people will have that (super) and it will give them more flexibility about how they manage that part of their life. But it is true, that if you have been in a fairly physically intense sort of job, it becomes less sustainable to work for a longer time.

ALAN TUDGE: But David, I don’t see many pensioners rolling in money in my electorate or anywhere else around the country. Many of them are doing it exceptionally tough, watching every single dollar, paying their electricity bills. That’s why we’re determined to reduce those cost of living pressures, as well as maintain that pension and continue to increase that pension according to a generous indexation rate. And the other thing David, you called it a welfare payment. I always differentiate the pension from other welfare payments, because in some respects the pension came about as something that was in exchange for hard work over the 40 or so years beforehand. So it’s not like an ordinary welfare payment. And I don’t think it should be considered in the same bucket as such.

DAVID SPEERS: What about the age though. Just on the question itself – pushing it out to 70. I mean more of these workers, even the ones doing physically demanding work, are hopefully saving some superannuation - which they weren’t doing 20 or 30 years ago. So can we then increase the access age to the pension to 70?

ALAN TUDGE: Now David, as you mentioned Joe Hockey has floated some of those ideas for public discussion. But there’s still some time yet before we have people who have grown up with superannuation. It’s probably my generation that was one of the first ones who as soon as you hit the workforce, either in a part-time job, when you finished school or after University that you were earning super. So that when you retire, the chances are that you’ve got enough super to live on [interjection]. So it’s still some time yet before we get to that position, where people can go forward. I think about my mother. She’s 70 or so and still working. But she had almost no super other than the last 10 or 20 years.

DAVID SPEERS: I think yes, going to 67 is universally supported, but going to 70 might need to wait a little longer until you’ve got more people with more super.

MIRANDA DEVINE: Well look it’s an aspirational goal isn’t it? 70 is a sensible thing to do. The original age of 65 was made when people died at 75. People are living so much longer and are so much healthier and therefore need a lot more money to keep them going. So they can buy those Winnebago’s and travel around Australia.

SHARON BIRD: But we do need to have a conversation in our community about employing mature aged workers too. Because I think there’s a real problem in the workforce and we should all, as communities, whether we’re employers or workers, or politicians be having a conversation about giving mature aged workers a really fair go.

ALAN TUDGE: I agree with that.

SHARON BIRD: I think it’s something we talk about generally but that, and giving young people an entry level into the employment market without saying for every job you need to have a minimum two years’ experience. For both of those groups in the workforce, we’ve got some very real issues.


ALAN TUDGE: We’ve put in place some incentives to specifically try to address the mature age issue - where an employer will get some additional payments. I think it’s a 55 cut off – where a person above the age of 55 will get additional payments.

MIRANDA DEVINE: But there’s only so much government can do though.

ALAN TUDGE: It’s cultural change as well, which I think Sharon was alluding to.

SEAN KELLY: I think as you increase the age of retirement you actually do play a part of that cultural change. People start to get more accustomed to having older people. They stop thinking, ‘someone is about to hit 65 in a couple of years, we need to start easing them out because we’re going to have a gap in our workforce’.  And now they can think, ‘they can be here for another 7 years’. It changes the gap.

DAVID SPEERS: One of the other big social security payment areas is the Disability Support Pension. It is indexed at a more generous rate than the Newstart Allowance, the dole. And overtime the gap is going to grow wider and wider between what you get if you’re on the Disability Support Pension and what you get on Newstart. It seems to me that the government does want them to eventually get them back onto equal footing so that they’re indexed at the same rate at least. But again this isn’t politically easy to do is it?

ALAN TUDGE: We are taking a look at it from the perspective of new people going on to the DSP. The people already on it won’t be changed. We’ve got Professor Patrick McClure who is doing a review of that and he’ll be reporting to Kevin Andrews and making some recommendations as to what changes can be made prospectively to address that particular issue.

DAVID SPEERS: So it sounds to me that in most of these big spending areas, that something can be done – there’s a willingness to look at them, but we probably won’t see change in this term of parliament if it’s going to break a promise. The big changes are going to be pushed out to next term.

ALAN TUDGE: We won’t be breaking promises. It is something that the previous government did. And we won’t be doing that. There are a lot of areas where we can eliminate waste, and where we can save money.

DAVID SPEERS: But one of the big promises was getting the budget under control and indeed delivering a surplus.

ALAN TUDGE: And we are going to get the budget under control and let me just talk about a couple of those areas where we can make savings. Border protection is one of them. The budget blew out by over $10 billion on the failed border protection regime under the previous government. We are stopping the boats. There is still work to do but we’ll save huge amounts of money when that system is back in place. We’ve got something like $40 or $50 billion worth of savings which are in the parliament today, $5 billion of those savings were actually Labor’s announced budgeted  savings, but not legislated , and yet we are actually being opposed to introduce those savings by the Labor party in the Senate. They are some of the things we are doing already to try and get the budget under control. We’ve now got the Commission of Audit which is going to give us further advice. The leadership team is going through that very carefully

DAVID SPEERS: Miranda, how do you see the government approach here? Do you think they’re going to get cold feet on some of these tougher spending cuts?

MIRANDA DEVINE: Look, initially I thought so. But as Tony Abbott grows into the job it seems that he is really the tough guy. He seems to be more and more resolute. And he seems to be saying that ‘we are a government that does what it says and keeps its promises. I think that in the face of that Bill Shorten is making some mistakes by trying to be the Tony Abbott style of opposition leader; and just oppose everything. Because he is sort of becoming yesterday’s man and all the baggage of the last 6 years, which no one could argue had any merit, is attached to him.  Instead of being a new guy he’s being a conciliatory guy, I think that’s the sort of person he was as a union leader. Instead of playing to his strengths, he is just being the no no no guy. But that only worked when we had a hung parliament and an absolutely appalling government. If you have a competent government, a halfway competent government it doesn’t work.

DAVID SPEERS: If Tony Abbott is growing into the role as you suggest and you think showing a willingness to get tough. What about (and this would be a sign of him being tough on himself) the Paid Parental Leave Scheme. Now I know you’ve written favourably about it, but is that something that he should at least modify, reign in?

MIRANDA DEVINE: Yes, I think he definitely ought to be putting it off

DAVID SPEERS: It’s meant to start 2015 at the moment isn’t it?

MIRANDA DEVINE: Yes. But he’s just digging his heals in more and more. And says, ‘look I didn’t just promise this in 2013 at that election, I promised it in 2010, and it’s not a handout, it’s a reform, an economic reform’. So no one is going to change his mind, even though the attacks on it seem to be ratcheted up more and more.

DAVID SPEERS: So you think he should delay the start?

MIRANDA DEVINE: Yes. To me, it’s a luxury.

ALAN TUDGE: We made an absolute iron clad commitment David to introduce this paid parental leave scheme because it’s going to be good for the economy. It’s going to boost women’s participation, it’s going to boost women’s productivity and overall help the economy to create jobs and wealth. People forget that most other OECD countries have such a similar scheme. And indeed our own public service has such a scheme. Such that if a women is pregnant, has a baby, she will receive a replacement wage while she is on maternity leave.

MIRANDA DEVINE: Of her exact wage… $200,000 etc.

ALAN TUDGE: And that goes all the way out. And a lot of other big companies are similar. Now if it’s good enough for the public servants, if it’s good enough for a person working in a big company, why isn’t it good enough for the cleaner, the cook, the hairdresser and other people working in small business. That’s our argument. It’s fully costed. It’s fully paid and it will make a difference in terms of female participation and it will make a difference to boosting productivity.

SHARON BIRD: But to be fair, it is contrary to everything else you are saying here tonight about the principles of which government operates. Because if you want the sort of parental leave scheme you are talking about, that exists now in the public service and large companies - they have been negotiated through enterprise agreement processes. What you’re talking about is a tax, collect and spend scheme, which is taxing the large companies, many of whom already have schemes in place to provide that sort of paid parental leave. They have it system wide. So it actually isn’t a gold plated scheme.

ALAN TUDGE: I’m astounded that the Labor party are opposing this, because as you said it was often your colleagues, the union members who were trying to negotiate those exact same arrangements for the public service.

SHARON BIRD: But it’s very different being in an employment condition. It’s different to an employment based thing that you have negotiated to get an agreement.

MIRANDA DEVINE: But I think the other thing about it is its social benefit that Tony Abbott sees. And in some part that’s because it seems like a very progressive policy. But in some ways it’s also about allowing women to spend a year at home with their babies to look after them and in some ways that goes to the heart of Tony Abbott’s philosophy.

SHARON BIRD: I understand that but my problem Miranda, is if you’re going to argue that, then fully fund Gonski.

MIRANDA DEVINE: No because just pouring money into schools has been proven not to do anything to lift education standards.

SHARON BIRD: Then why did Tony Abbott say that he’s on a unity ticket before the election on Gonski.

DAVID SPEERS: The paid parental leave scheme – the Greens are probably going to force Tony Abbott to rein this in a bit. Where do you reckon this will end up?

SEAN KELLY: I think it will get through, not before the new Senate comes in, but after that. I think Tony Abbott will be able to negotiate it through. I completely agree with what Miranda was saying and with what Alan was saying – there’s no way that Tony Abbott is going to back away from this. He’s absolutely pinned his colours to the mast. I think the greatest difficulty it creates for anyone is Abbott internally, when he is trying to negotiate other difficult cuts in the budget through the caucus room. And we’ve seen this can happen on both sides of politics. After a budget, often when these legislative measures have to be passed the party room can rear up a little bit if the Prime Minister is not willing to take a little bit of water himself. I think that is the one area that will see a bit of difficulty, after budget.

DAVID SPEERS: There are two state elections happening on Saturday. Tasmanians and South Australians go to the polls. All indications are that it’s going to be a bad night for Labor and that the Liberals will get up, particularly in South Australia. The Tasmanian electoral system might complicate things a little but we shall see soon enough. Sean Kelly, is that the way you see it going and why do you think Labor is in trouble?

SEAN KELLY: Labor will lose for one really simple reason in both of those electorates – the ‘its time’ factor. It’s not to say that the governments haven’t done terrible things along the way. Every government eventually makes mistakes. Most governments make huge mistakes in their first term and only build on them, but in both of those cases it’s the ‘its time’ factor.

DAVID SPEERS: Labor’s been in 16 years in Tasmania, and South Australia its 12 years.

SEAN KELLY: It’s a very long time. And in South Australia they only just managed to snatch the last election through a clever marginal seat strategy.

DAVID SPEERS: They lost the popular vote.

SEAN KELLY: Exactly. The Liberal Party will be all over that this time. I think both Labor parties will lose.

DAVID SPEERS: Miranda, is that the main reason? Any government that has been there for 16 years – it’s a pretty hard ask…

MIRANDA DEVINE: Oh, for sure. Also, Tasmania particularly is just in the doldrums. Any decent industry [inaudible]. The timber industry has just been brought to its knees by this unholy alliance between Labor and the Greens, and I think Lara Giddings is so on the nose. Newspolls have shown that Labor will be completely routed and will be lucky to have, four seats left.


MIRANDA DEVINE: The Greens might get four seats.

DAVID SPEERS: The Greens might be the opposition. The Greens might have more than Labor.

MIRANDA DEVINE: Palmer looks like, thank goodness, he might not actually get up a candidate because he is the wildcard. What a triumvirate – the Greens, Labor and Palmer United.

DAVID SPEERS: Tasmania would be a very interesting place politically. Well, let me ask the two politicians at the table. Alan Tudge, if the Liberals do get up, Will Hodgeman in Tasmania and Steven Marshall in South Australia, that’s going to mean, for a little while at least, and perhaps only until the Victorian election in November, you’ll have wall-to-wall Liberal governments except for the ACT. What should the government do with that opportunity?

ALAN TUDGE: Well, let’s not count our chickens just yet. There are two elections to go this weekend and they will be tough elections. No matter what the polls say at this stage, in Tasmania there is the Hare-Clark system which always produces strange results. In South Australia, people thought the Coalition might win at the last election and Labor won. So people need to be thinking about their jobs, the economy. Miranda was right. They are the main issues in South Australia and Tasmania. They are the states with the two highest levels of unemployment. In Northern Adelaide you’ve got 45 per cent youth unemployment. Now, people are losing hope in places like that. Kids won’t be able to get a job and have a decent future. People are leaving the state of South Australia. Steven Marshall in South Australia and Will Hodgeman in Tasmania have got a plan to try and turn those states around.

DAVID SPEERS: So, if they do win, what should Tony Abbott and the federal government do with this opportunity which may not last to the end of the year?

ALAN TUDGE: Listen, I think that philosophically there will be an alignment about trying to grow the economy as the central overarching principle, particularly for Tasmania and South Australia, but across Australia as a whole. And so being able to have policies which are aligned in that direction will be very important.

DAVID SPEERS: You could increase the GST.

ALAN TUDGE: Good try, but like the federal Coalition, the state opposition people, the Liberal party in Tasmania and South Australia want to lower taxes, not increase them, because that helps business creation. That helps job creation. You’ve got the message.

DAVID SPEERS: Politically, the federal government can’t blame the states when they are all in the one political stripe for things like infrastructure problems, and this is something we’re all used to, health problems, education problems…

ALAN TUDGE: We’re working very cooperatively at the moment with the Napthine Government in Victoria for example, in building the East West Link which is going to be a huge piece of infrastructure and will finally connect the Eastern Freeway to the Tullamarine Freeway and create a ring road for Melbourne. That’s a massive piece of infrastructure which we’re working very closely on. We can do that again with the other states.

DAVID SPEERS: Labor had this scenario for a while with all Labor not so long ago. Do you think it’s overrated what opportunity that presents?

SHARON BIRD: I do remember when Campbell Newman as Mayor of Brisbane was the most senior Liberal in the country and I think what that tells us is that I definitely am glad that I don’t make my living out of predicting political outcomes because I think the whole environment has changed. What used to be political truisms do not apply anymore and so I think Alan is absolutely right about the elections on Saturday. I think the reality will be known when the votes are cast and counted. In Tasmania I know for example one of the big issues was actually the National Broadband Network which was problematic for the government in that state. In South Australia the jobs issue is important but also the closures and the impacts of that is an issue. And so how these play out, I don’t think you can rely on the old sorts of reliabilities about elections and the same with government. At the end of the day, these state Liberal potential governments, as much as we, don’t know what the federal Liberal government’s got proposed, because you haven’t put out there yet what the agenda is, and so they may get a surprise as well.

DAVID SPEERS: I appreciate you probably don’t want to give free advice to your Tasmanian colleagues, but was it a mistake to do the deal and form government with the Greens and give the Greens a cabinet position as well, and then at the eleventh hour say “we’re tearing it up, we never really meant it, we’re going our separate ways”.

SHARON BIRD: David, the point I just made is what I would say to you. I just think hindsight is one of the most useless political tools there is. The reality is that people at any point in time make the best call they can in terms of progressing their agenda. That’s what you’re in politics for. To put in place an agenda for your community, your state, your nation, whatever it is.

DAVID SPEERS: As a Labor MP then, because some of your colleagues have different views on this, you are comfortable doing deals with the Greens to form government?

SHARON BIRD: I think we should put out there our position, our platform, and progress that. You might remember that my seat was actually the first seat held by the Greens nationally, and many people forget that, and so I contested against the Greens to win the seat back. I think Labor does best when we put our own platform forward, that we are a different party to the Greens and that we stand for that platform and we make that clear. Where there are distinctions, and there are many, that we make those clear too.

DAVID SPEERS: Sean what do you think. It’s a constant debate for Labor I suppose – what do you do with the party on the left. But, was it a mistake federally and in Tasmania to do deals with the Greens?

SEAN KELLY: I think ‘mistake’ is very difficult to classify here. Politically, did it create huge problems, did it become poisonous? Yeah, it became poisonous at a federal level and it has become poisonous at a state level. Were they the only things going on with federal Labor in the last three years? No. And neither were they at a state level. Would Labor have taken government in any form if they hadn’t done a deal with the Greens at a federal level and at a state level? Probably not. So did it cost them dearly at the next election? You bet. Did it mean that they held government for three extra years in both of those territories? Yes it did.

MIRANDA DEVINE: But was that worth it for the damage to reputation and the fact that now they are so on the nose? I think that strategically they might have won at the next election but now they’ll be out for a long time.

SEAN KELLY: I think it is a difficult thing to answer but I think you alluded to it earlier when you were talking about the approach that Bill Shorten probably needs to take now. He probably does need to present a different type of opposition brand to the type Tony Abbott presented, and if he can, I think he probably can successfully distance himself, not from the achievements of the last few years, but from the internal discord that dominated those years.

MIRANDA DEVINE: Of which he was a great part.

SEAN KELLY: Sure, absolutely. But we’re talking about political realities here and I think he has that chance and of course Labor is ahead in the polls right now, so I don’t know if we can say never at this point.

DAVID SPEERS: We’ll see what happens in Tasmania and South Australia on Saturday, and full coverage right here on Sky News Saturday night.