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  Interview: Malcolm Turnbull March 9, 2008  Watch the video Interview by Sunday's political editor Laurie Oakes LO: Mr Turnbull, welcome to the program. MT: Good morning, good to be here. LO: Now how long can the Liberal party limp on with a leader 61 percent of coalition supporters think should get the chop now? MT: Well Brendan has got the full support of the party room and all of the team including myself, he has got a very tough job and he has to be given a fair crack of the whip, a chance to prove himself. LO: But with every opinion poll his stocks sink further, how confident are you that he will lead you to the election. MT: Well Laurie I don’t do, I don’t’ run a commentary on my colleagues, I have made a practice of every since I got into parliament of not commenting on leadership matters or commenting on my colleagues, so it is really up to you and of course up to the party room which makes decisions in a collegic way. LO: It is also up to the voters presumably and today.. MT: Well it is up to the voters at the election, that is right. They will cast a judgment on us as they will on Mr. Rudd at the next election. LO: And you‘ve got to weight all that up, now today‘s galaxy poll shows that 24 percent of voters think that you should be the leader, only 9 percent want Dr Nelson, do you hear the call? MT: Well I read the polls but I don’t, again I leave the commentary to you. LO; Do you think liberal MPs made a mistake when they elected Dr Nelson and not you? MT: Laurie again I think it is important that I stick to the position I have always taken which is to leave commentary on these internal leadership matters to the commentariat, to distinguished journalists like yourself and I’ll focus on Wayne Swan, on inflation on living standards, on mortgages, on the matters of the issues that are of real importance to Australian families. LO; But you lapsed the other day when you were asked the other day whether you ruled out a challenge, you said ‘no I don’t’. MT: Well I’m not, I was asked that question and I don’t, I’m not, I’ve never responded to that question do you rule out a challenge by saying I would rule it out or I wouldn’t rule it out, so I don’t .. LO: Then you said that you didn’t rule it out? MT: Well we are getting into subtleties and nuances … LO: Well it is not that subtle because refusing to rule out a challenge of course was the way John Howard destabilized Andrew Peacock, the way Andrew Peacock destabilized John Howard, it is the traditionally way of destabilizing a leader, is that what you are doing? MT: Laurie, nobody is destabilizing Brendan Nelson. He is getting lot of support from everybody and you see the way I support Brendan and the way my colleagues support him is by doing our jobs well, it doesn’t advance the liberal party’s course or in fact the national interest for me to be talking about internal matters. The public are not interested in politicians talking about themselves. They want us to talk about their living standards, their jobs, their homes, their mortgages, their future and so that is why I don’t talk about internal matters , I leave that to you guys and I’ll focus on the issues that are important to the people that I want have support us, now and at the next election. LO: Well one more question. MT: OK. LO: The day that Brendan Nelson was elected leader he got all teary in the party room and you went to his office later and basically told him he had to grow a back bone, has he done that? MT: Look Brendan is doing a good job in a very difficult situation, it is the toughest gig. I’ll just repeat what I said, he has full support and he has to be given a chance to prove himself. LO; All right, well whack the shadow treasurer hat on. MT: Thank heavens for that. LO: You said the other day that if you were treasurer now you would be looking very carefully at government spending. MT: Yeh. LO: Now how carefully, how seriously do you think cuts need to be made and where would you be looking? MT: Well I think you have got to look at every program all the time. And of course, governments do this, even governments who have been in power for a long time do this, look at every program and ask yourself is it delivering a net benefit? Are we getting enough bang for the taxpayers' buck? And if you don’t think you are then change it or drop it or do something different with it. And it's like everything in life, it is like a business. You know businesses will have initiatives, you know, programs, marketing programs, new products which don't do as well as they thought, change it, do something else. So you've always got to be reviewing your programs because, Laurie, it is somebody else's money. The single most important thing to remember about government revenues is that they all started off as the hard-won earnings of Australians, and so you've got to respect that. So look at it across the board and ask how effective they are. Now, what troubles me about Labor is that what they're looking at is cutting spending on the most vulnerable members of our community. LO: Well, are they? Kevin Rudd has reassured pensioners and carers. He says there is no way on God's Earth I intend to leave them in the lurch. MT: Yeh, what does that mean, though? LO: He says it will be shown on Budget night that there is priority. MT: But hang on. That's interesting. LO: hmmm MT: They're weasel words. "I won't leave you in the lurch." What on earth does that mean? There was a report in the media that the $500 bonus for pensioners and the carer's payment was going to be cut. OK. The Government could have come out very quickly and said, "That report is wrong. Those payments are going to be protected." Now, they didn't do that and we get this mealy-mouthed statement from the Prime Minister from the Solomons, "I won't leave you in the lurch." What on earth does this mean? It's meaningless. LO: It's interesting, though, that you and Brendan Nelson are defending these payments and implying that they were always meant to be permanent. And yet they were never put in the Forward Estimates, they were presented in the Budget as a one-off. Why didn't you make them permanent if they're so important? MT: Well, Laurie, it's basically what John Howard did - and he has been criticised for this. Let me make the case against John Howard in terms of the Budget and the Business Council of Australia really summed this up very well recently. Their case against John Howard is that he took profits that were made by corporate Australia because of the strong economy and were paid to the Government as taxes and recirculated them or re-distributed them to families through family benefits, to the vulnerable through payments to carers, through payments to pensioners and that instead of looking after the battlers, instead of recycling that money to the battlers, he should have hung onto it or, as the businesses would say, given tax cuts to business. Now if that is the charge that is made against John Howard, I think he would be happy to accept it. He would plead guilty to looking after the weak and the vulnerable and he had a particular passion, a real compassion for carers. I mean, John Howard was passionate about many things, as we know. LO: So why wasn't the carer's allowance included in the forward estimates? MT: Because it was something that we were able to do because of the strong economy at the time. LO: And if Wayne Swan says it's not something you are able to do now because the economy has got problems, inflationary problems, how is that differ from your attitude? MT: Well Laurie, it's completely different because the economy is in fact stronger now than it was last year. I mean the surplus will be bigger this year. I mean subject to what Wayne Swan does to our economy and at the moment I think he is a significant domestic threat to our economy, but we are going to have a bigger surplus without any action by government, without any cuts than we had last year. We could have a surplus 2% of GDP. Now that's a very, very big number. So are we really going to hammer the most vulnerable people in our society? That is the question that we're facing. And you see the amazement of people to imagine that these - that the carers and pensioners would be the ones that would be hit. LO: Well, I guess we'll find out on Budget night. MT: Well, we will, that’s right. And a lot of anxiety in the meantime and it could be put to rest. LO: But the Government's problem was summarised in a paper issued by Treasury yesterday, scholarly paper, 50 pages long. MT: Yeh. LO: And it said, among other things, that the recent growth in spending stands out along with the growth in spending under the Whitlam Government in 1974-75. Now, what's that say about your economic management when you're being compared with the Whitlam Government in ‘74/’5? MT: Look, there are some aspects of that paper I simply do not agree with. What they do is they look at spending and compare it to the Consumer Price Index, and so they look at spending in real terms and compare it to the CPI, whereas historically it has always been looked at as a percentage of gross domestic product which is in effect, what the whole nation is producing. Now the Treasury has chosen a different measure for that. I don't think it's the right one and the reason for that is that not all of the money that the Government spends is spent on consumption. A lot of it is spent on investment. So you should be using the GDP measure and if you look at that the Government, under the Howard years, has been spending slightly less. It has been jogging around that 20% of GDP level, it's been spending slightly less over that period from - if you go back to '96, and the average increase in spending in the last three completed years, in real terms, was less than 2%. So, you know, the notion that the Government was overspending is really - well, it's an argument people are entitled to make, Laurie, but then you get down to the fundamental question: Where are you going to cut? And you get the Business Council saying, "Cut payments to families. Cut tax cuts to families." You get Swan and Tanner obviously advocating, "Cut payments to pensioners and carers." Are we so mean, are we so mean a society that we have to hit the weakest and most vulnerable? LO: Well, who would you hit, that's what I'm asking you? MT: Well, I would look at every program and look and ask which ones are getting the best bang for the buck. And if there are some that do not delivery a net benefit, then either cut them or change them but you have got to go through it line by line. LO: Like $10 million for a strange rain-making scheme, for example? MT: Well, you raised that. That is a good example. That was an exercise where the University of Queensland recommended that we spend - well, we conduct a national trial-of-a new technology for making it rain, for changing the physics of the atmosphere to make it rain, and to the atmospheric meteorology, I suppose, to make it rain. It is a new technology. They did a trial last year in Queensland which was very promising, and the UQ said, "Do a national trial.’ It should have cost $50 million. I elected, as the Environment Minister to do a limited trial in one location which would have cost $10 million. And do you know, Laurie, $10 million is a lot of money. LO: Yes. MT: But do you know Laurie, $10 million is a lot of money, but do you know what it would pay? Less than one week's interest on the capital that's being spent on water projects in South-East Queensland alone. LO: Sure, but it was a whole lot of grants like that, that caused Treasury to think that you were spending like the Whitlam Government. MT: Well, I've read Treasury papers ... LO: …that we had zero productivity in the last year? MT: No, Laurie, Treasury has explained the issue about productivity very well in the past. When you have a fast-growing economy, you get a couple of things happen which put downward pressure on average productivity. Firstly, you bring a lot of people who have not had a job for a long time and are less productive workers, because that's why they couldn’t get a job, into the work force. And that is good for the economy, it is good for prosperity, but it lowers average productivity per worker. Secondly, you get a lot of long-term investment - and this is particularly so in the mining industry - where there are some massive projects, some of them won't come on stream for a few more years yet. So, again you get a lot of investment, but you are not getting any production because they haven't been completed and you haven't got the production flowing through it. So productivity figures have got to be looked at over a very long period of time and you can't just pick out a year's figure, or let alone a quarter's figure. LO: Well let me ask you this: Do you think the Government and the Reserve Bank are overreacting on inflation at the moment? MT: Well, Wayne Swan has definitely, definitely exacerbated our inflation problem. He has tried to make a politically partisan case against the Howard Government for political reasons and what he has said about our economic history is wrong. I mean, we were not given 20 warnings about inflation. Inflation was not on the march for two years. In fact, it was declining in the middle of last year. So he is telling falsehoods there. But for him to say, Laurie, the day before the Reserve Bank met for its February meeting, to look at putting up rates, for him to say the inflation genie is out of the bottle, what is that saying? LO: Well, it seems to me he is informing the people of what's going on. Are you saying the Reserve Bank is exaggerating and lying as well? MT: No, I'm not saying that at all. But what Swan was doing, Swan was sending a message to the Reserve Bank to say, "Put those rates up." Now what I said at the time was we are in a rapidly deteriorating international financial environment. We have got a whole range of mortgage lenders that have basically had to stop lending, Macquarie Bank included. You know, if you go back a year or so, the big banks were lending, making the majority of home loans, between 60-70%. Now they're making almost all of them because the credit markets have collapsed. You can't securitise mortgages in the way you could and the small lenders are out of the business. Rates are moving up faster than official rates. The US is moving into recession. So what I said was, and I say this from my background as a person who has been in business for a very long time, this is a time to stay your hand, wait and see how things develop because if there are recessionary influences coming from outside Australia, if the credit squeeze gets worse than we thought, we may find that one of these recent rate rises was one rise too many, and so you're better off waiting. The economy is slowing, Laurie. Stay your hand before rushing into it. LO: So you're worried we could go into recession as well? MT: I am worried that we could inflict disproportionate harm in those parts of our economy that are more vulnerable. The point I've made repeatedly which Wayne Swan refuses to acknowledge is that we do have a two-speed economy. You know, we have very strong growth in Queensland and WA. We have got slow growth, very slow growth in South Australia, below-average growth in New South Wales and Victoria. You have a big credit crunch here. You add to that rising interest rates from the Reserve Bank, you add to that cuts in spending - I mean, you cut out those payments to pensioners and payments to carers, not only do you hurt the most vulnerable people in the community, but this is all money that they can no longer spend. We could find ourselves having a very hard landing economically, and I just - look, Swan has been criticised not just by me for this. He has gone too far. He has been ranting like a politician trying to make partisan points when he should be talking about the economy in a steady, measured and objective way. He hasn't been. LO: We're out of time, but we thank you. MT: Thank you. |
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