SKY News interview with Peter Van Onselen

Release Date: 
10 June 2015
Transcript

PETER VAN ONSELEN:
We’re going to talk federation reform mostly but firstly, having one of the Prime Minister’s Parliamentary Secretaries here you’ve got to do me a favour – he won’t do an interview with me! I can’t get the Prime Minister to do an interview with me not for love nor money. You’ve got to wield some of that influence of yours.
ALAN TUDGE:
Is that right? I’ll do my best for you Peter.
PETER VAN ONSELEN:
That doesn’t sound like a strong commitment. Alright, also before we get to federation, Joe Hockey. I’ve actually been defending him throughout the day in between the barbs Labor has been throwing at him. I don’t think it constitutes the type of gaffe they are trying to turn it into. But it does seem that at the very least, it’s a little bit insensitive, a little bit ill-considered. Do you accept that?
ALAN TUDGE:
Peter, I think he was making a statement of the obvious in some regards that you need to have a decent, secure job in order to take out a home loan. I think he acknowledged there are some stresses in some parts of Australia, particularly in Melbourne and Sydney where it is more difficult to get into the housing market.
PETER VAN ONSELEN:
Why didn’t he say it like that? You see, you’ve said it more eloquently, Tony Abbott said it more eloquently, Craig Laundy said it more eloquently.
ALAN TUDGE:
I think, Peter, if you look at his fully transcript he actually did cover a lot of things which we are doing to address housing affordability, but he also made the point that, by in large, those people who own a home and that’s 70 per cent of people, they don’t want their house prices going down.
In fact, as you know in other places in the world, if house prices go down a lot you can have very severe economic consequences. So yes you want house prices to be up and just gradually increasing, but in some locations [inaudible interruption]

PETER VAN ONSELEN:
Barnaby Joyce says we can all move to Tamworth but I don’t think too many people are going to take him up on that despite the music festival.
Again before we move into federation reform one last question on interest rates - there seems to be this narrative developing within the government and certainly from the Prime Minister that it’s a good thing that interest rates are low. It’s a good thing if you own a home and are paying a mortgage. It’s a bad thing if you are someone who is basically trying to live off retirement savings and it’s also a sign that the economy is soft.
We can’t have the sort of simplistic argument that John Howard ran in 2004 any more can we – I mean, ‘low interest rates, trust us’. It’s more complex than that. There are moving parts and the public knows that.
ALAN TUDGE:
Well as you said, if you do own your own home and 70 per cent of people do own their own home, most of whom have a mortgage, then you want interest rates to be low and that goes directly to housing affordability by the way.
PETER VAN ONSELEN:
Self-funded retirees are your natural constituency and some are struggling.
ALAN TUDGE:
Some self-funded retirees who have their money in fixed interest. They of course do not like interest rates to be low. They prefer interest rates to be high. Of course they have other investment options as well - they can put their money into equities, they can put their money into property and other vehicles should they choose to do so.
But I accept that some people who have it in fixed interest would prefer to have higher interest rates.
PETER VAN ONSELEN:
Interest rates are too low. I mean, they are at record lows.
ALAN TUDGE:
That’s your judgement Peter. The Reserve Bank is independent. It sets interest rates on the basis of trying to keep inflation within a band of two to three per cent. It does that exceptionally well and inflation is within that band and it keeps a close eye on that.
PETER VAN ONSELEN:
Alright let’s get on to federation reform. You are right in the thick of this. I am cynical whether the government, once we see the white paper on federation reform, is really going to act on it. I hope you do, I really hope you do, but I look at that first edition of Battlelines where the Prime Minister, before he was even the Opposition Leader was gun-ho on federation reform and then I had a look through the second edition. The second edition, all of the controversial stuff was taken out.
ALAN TUDGE:
Peter, we’re still very ambitious in regards to federation reform. In essence, we’re trying to address two core problems. Problem one is that there is overlapping responsibilities in almost every portfolio area now between the states and the Commonwealth governments. When you have everyone responsible, no one is accountable.
PETER VAN ONSELEN:
Can you address that though, I mean when we see this white paper and when we see what the government will take to the next election, will you stamp out duplication?
ALAN TUDGE:
That is absolutely one of our objectives, is to try to get cleaner lines, if you like, so that each level of government can be sovereign within their own sphere.

PETER VAN ONSELEN:
I’ve got to ask you on that Alan Tudge, that’s really interesting stuff because it could well see the states getting more control of some policy areas and the Commonwealth getting more control of others, as you say, to remove the duplication.
But you’ve got to do something about vertical fiscal imbalance if you’re going to do that. Certainly, if you’re going to give anything to the states, you’ve got to address vertical fiscal imbalance.
ALAN TUDGE:
That’s probably right, Peter. Vertical fiscal imbalance means that the Commonwealth in essence collects most of the taxes and then hands a lot of the money back to the state governments.
Inevitably, when the Commonwealth hands that money over they put a whole stack of conditions on it which leads to duplication, overlap, bureaucracy etc.
PETER VAN ONSELEN:
By the way, you’re not handing back nearly as much now. $80 billion has been ripped out of health and education.
ALAN TUDGE:
That’s not quite correct as you know Peter. That money was never there. It was in the out years and never budgeted for. Our funding as you know for schools is going up by I think six per cent next year, for hospitals eight per cent.
PETER VAN ONSELEN:
But on the idea of removing the duplication, it’s a big call. We’re being told, for example, that you won’t look at the GST unless the states are on board. Are you prepared to look at removing duplication in terms of federation reform even if the states don’t like it?
ALAN TUDGE:
Well we’re doing this cooperatively with the states and that’s why we’re ambitious about this process.
PETER VAN ONSELEN:
But it’s like herding cats…
ALAN TUDGE:
We’ve had a very good process so far with the state governments. There is goodwill across the country to try and make a difference in part because every single level of government has fiscal constraints on them at the moment so there is a real desire to do things better simply because of that constraint.
Furthermore I point out that there is no election now until the federal election in 12 to 18 months’ time so we have a window where, as much as possible, some of the partisanship can be put aside for the broader interests of the country.
PETER VAN ONSELEN:
Late this year we should start to see some details?
ALAN TUDGE:
We’re going to see a green paper in the second half of this year. It will lay out some of the options which the state and federal governments agree should be considered. That will open up a conversation. Early next year we’ll then have a white paper.
PETER VAN ONSELEN:
You’re not going to want to hear this, but you sound a little bit like Kevin Rudd. He was very confident of cooperation on health reform and in the end it became a mess.

ALAN TUDGE:
That’s true. Kevin talked a big game in a lot of areas and didn’t deliver. We’re being more cautious here. We’re working more cooperatively with the states. I think there is that burning platform in terms of the fiscal constraints, and as I said the absence of an election for quite a long time gives us that window to try and roll up the sleeves and work cooperatively with state governments to get the job done.
PETER VAN ONSELEN:
You were a senior adviser during the Howard years. You were there when the debt was being paid off, indeed when it was all paid off. Rudd comes in, faces the GFC. We saw last night on the ABC this whole discussion about how they basically saved Australia from the GFC. What’s your reaction to that? I’m cynical about it. What’s your reaction?
ALAN TUDGE:
I didn’t see the program last night.
PETER VAN ONSELEN:
You must be the only person!
ALAN TUDGE:
I had a local function, actually. But I don’t need to see that program to realise how dysfunctional the Rudd-Gillard years were. In relation to the GFC though, interest rates dropped I think about four percentage points during that time. That was the main stimulus for the economy.
Obviously China was still growing very strongly and our economy was more closely connected to China than it was to the United States or Europe.
PETER VAN ONSELEN:
One quick final question and you may not have seen it last night but obviously what we know is coming up is this whole Rudd-Gillard saga and the divisions and just how debilitating it is when you have these leadership transitions, yet in February you guys had a spill.
The Prime Minister survived it and he has thrived out of it and I’m the first to acknowledge that but how on earth could you get to a point, or how could he be so on the nose with some of his colleagues to get to the point of having a spill within his first year or thereabouts in a situation where you had just learnt from all of the goings-on in the Labor years. It is pretty extraordinary.
ALAN TUDGE:
Peter I know we’ve covered this topic ad nauseam. It is behind us now. It is something that I don’t want to go through again because it is quite a brutal process whenever you have any leadership challenge within a party.
The Prime Minister did win in the end. He has strengthened as a result and we’ve now got a very united team. Even some of those people who supported a spill motion are now coming out publicly and saying ‘we back the Prime Minister strongly and want to get on with the job’.
PETER VAN ONSELEN:
A rhetorical question - some of those people but I wonder how many. Alan Tudge we’re out of time but we appreciate you joining us.
ALAN TUDGE:
Thanks so much Peter.