NEIL MITCHELL: Good morning, congratulations.
PRIME MINISTER: Thank you very much Neil, good to be with you.
NEIL MITCHELL: Thank you for coming in, I’d like to get some of that personal stuff in a moment, but this new trade deal that’s signed overnight the Pacific Trade deal. Do I sense a bit of a victory over for Australia over the Americans?
PRIME MINISTER: Well we’ve certainly stood up for our position, which was well known the United States wanted to increase the level of protection for big pharmaceutical companies for their new biologics. Our position was and remained, and is, that we are not changing any of our laws.
NEIL MITCHELL: Any we’ve won that?
PRIME MINISTER: Well that has been the agreement, yes. These deals are win/win. You know there are concessions all over the place, by its nature, its negotiation. The good news is that at least on this point, there is no change to our laws at all in terms of data protection, drug laws, patents and so forth. They all stay in place. This deal has no impact on the Pharmaceutical Benefits Scheme; it’s not going to make drugs more expensive in Australia whatsoever. Our position is that we have a very good regime which both rewards innovation for companies that develop new drugs and need to have a period of exclusivity, and also encourages competition. We believe we have the balance right and that has been accepted in this agreement with other eleven countries that make up the TPP.
NEIL MITCHELL: Andrew Robb’s on the spot but is correct you’ve been involved in negotiations direct with the American President?
PRIME MINISTER: Barack Obama and I spoke about this last week yes, he called me last week and we had a long discussion about it. Andrew and I have spent many hours on the phone at weird times of the day for him and sometimes at weird times of the day for me. But as indeed has Julie Bishop as indeed has Sussan Ley, the Health Minister . This point kept the negotiations going for an extra two days, but we were very, very clear, extremely clear about our position at the outset and we remain consistent right through. Andrew has done an extraordinary job for Australia here.
NEIL MITCHELL: Sounds like a win to me.
PRIME MINISTER: I think it is a very big win Neil. We’re talking about 12 countries that are 40 per cent of the global economy, they obviously include the United States and Japan, as well as ourselves and New Zealand and Chile and Malaysia and Singapore and a number of other countries, Canada, Mexico but what this means is that in an age of a rapidly globalising economy where services are more important than ever, where access to markets is more important than ever, where Australia is an open economy with relatively low tariffs anyway so for us to lower our tariffs or eliminate them is not giving up a lot. Any deal like this is of enormous benefit to us. It is a gigantic foundation stone for our future prosperity.
NEIL MITCHELL: So what’s the benefit to me? I’m driving to work in Melbourne, hot day…
PRIME MINISTER: It means your business will be able to sell its services into other markets around the region much more easily that it can today. It means if you’re involved in agriculture you’ll be able to sell a lot more beef to Japan than you currently can and more sugar to the United States and more cheese to Japan and so forth and so the list goes on.
NEIL MITCHELL: So it’s more jobs?
PRIME MINISTER: It is more jobs absolutely. Australian jobs depend upon open markets and free trade. You know I don’t think even a big economy could do this. A country of our size and our nature has to be a trading country. We need access to as many markets as we can get. You’ve got to give Andrew Robb enormous credit here. He has secured free trade agreements opening markets, opening them more widely to Australia in Korea, Japan, China and now of course as part of this 12 country deal the Trans Pacific Partnership.
NEIL MITCHELL: You make the point on medicines. Is anything going to become cheaper for me as a consumer?
PRIME MINISTER: Yes,I think you’ll well, you probably won’t notice it because our dollar is declining so that offsets it. But there will be a reduction of our relatively small tariffs on a number of, on many items, but our tariffs, we’re talking about a few per cent, five per cent and things like that. But I think what you will see if enhanced competition. The biggest impact of this on the price of goods and the price of services for that matter is that as you get more competition around the region you will see more innovation and hence services will become better and they’ll have greater functionality and they will generally, experience shows become cheaper. This is very, very good for Australian jobs.
NEIL MITCHELL: Is this bigger than the China Free Trade Agreement?
PRIME MINISTER: Well it’s certainly bigger because it involves many more countries. Clearly China is not part of this. I think each of them are very important. I would say the China Free Trade Agreement is comparable in terms of its size because you’re dealing with such an enormous economy. To achieve a multilateral agreement like this, this hasn’t occurred for many, many years for decades. This is a really big move in terms of opening up global trade.
NEIL MITCHELL: Are you going to get that China Free Trade Agreement through?
PRIME MINISTER: Well I believe so. I think Bill Shorten’s got to reflect very deeply on his position.
NEIL MITCHELL: There’s a report today that it will lead to an influx of Chinese workers. The report admittedly done for the ETU.
PRIME MINISTER: Yeah theElectrical Trades Unions yeah well look the reality is that Australian labour laws will obviously apply, the 457 system applies. The dire forecasts that some of the unions have been putting out there are grossly misleading, they have been disowned by one Labor leader after another. Let’s get real. Does Bob Hawke care about Australian jobs? I reckon he does. Does Bob Carr care about them? Does the Victorian Premier about them? The Queensland Labor Premier? I mean Labor leaders all over the country are saying ‘come on Bill get over your hang-ups about the Liberal Government and back the ChAFTA.’ Shorten is shackled to the unions that have gone out with a very misleading campaign and he’s really got to state Neil his own position because he’s just like a cork bobbing along in the slipstream of the CFMEU.
NEIL MITCHELL: Do you believe that it’s racially based? It’s been claimed that people are oppose this agreement on racial grounds.
PRIME MINISTER: Well it’s not language I would ever use. I mean people are entitled to criticise. Others are entitled to their view Neil. But I would say if people want to criticise a Free Trade Deal, they’re entitled to do that, in the case of the CFMEU I think some of their advertising is pretty extreme, but above all it is completely misleading. I mean essentially what they are trying to do is frighten Australians in to poverty. If you took the CFMEU’s approach to economics we would be a much poorer country in the future. They really need to ask themselves where is the growth going to come if we are not a trading country. If we don’t embrace these big markets, these big markets in the Asia Pacific, we don’t have a future.
NEIL MITCHELL: I wonder you put your headphones on we’ve got a call on this issue.. Dave, go ahead.
AUSTRALIAN VINYL EMPLOYEE/DAVE: I work for a company that’s going to be closing down at the beginning of next year manufacturing raw PVC powder which goes to our customers to make pipe. We supply about 85% of the Australian market.
NEIL MITCHELL: Australian Vinyls is it?
AUSTRALIAN VINYL EMPLOYEE/DAVE: Yes. We pay a high cost to bring our […] stock in from overseas because there is no manufacturer of that here and because of that, we’re competing against companies importing raw powder which are imported at a cheap cost because it comes in containers – we have to bring in liquid gas. Now why can’t we have some protection or some form of balancing in that sort of situation where you’ve got a manufacturer here that supplies a unique product to its customers but can’t compete against a cheaper import?
NEIL MITCHELL: Ok, Prime Minister-
PRIME MINISTER: You’ve got to look at the economy as a whole and can I say I really understand and I feel for the problems that you’re facing in your business. Business is tough. Competition is tough. Once you start providing protections for one business after another you start putting up the price of products in Australia. So the people that are buying pipes from you or buying the PVC powder from you to make pipes and poly-pipes and so forth – their costs will go up and so they pass them onto their customers and you end up in a position where you basically increase the costs across the economy and decrease the efficiency of the economy and over time of course run down jobs. The one thing we know is that protection and big tariff barriers don’t work – we tried that years ago, many decades ago and it didn’t work, it lost jobs. So the answer is what we all need to do, we need to be nimble and we need to find new opportunities, new manufacturing niches where there are real, where we’ve got an edge and that is generally going to be less in commodity products and more in areas with some technological edge like the armoured vehicles I was with Marise Payne out inspecting yesterday out at Monegeetta.
NEIL MITCHELL: Thank you Dave, just while we are on the economy can you see why Saturday and Sunday penalty rates are different?
PRIME MINISTER: Well the only reason they are different Neil, I assume is history.
NEIL MITCHELL: Will you address that?
PRIME MINISTER: Well it is a matter for Fair Work Australia as you know the Productivity Commission is certainly is also examining it, but it’s within the jurisdiction of Fair Work Australia and they have already made changes to penalty rates in some sectors.
NEIL MITCHELL: Do people have to get used to the idea that their penalty rates can’t continue the way they are?
PRIME MINISTER: Well I think over time you will see a move to a more flexible workplace, the transition to that – and of course there has been a lot of movement to that over the years and to be fair…
NEIL MITCHELL: Well it’s a 7-day economy isn’t it?
PRIME MINISTER: Of course it is Neil, but you do none the less have unions and workers who are naturally reluctant to give up benefits that they have and you’ve got to be able to, any reform, has got to be able to demonstrate that people are certainly not going to be worse off and overall ideally in net terms, better off. I think it’s very important, particularly for someone in my position as the Prime Minister – to be able to empathise with the position both of employers and of workers and understand that each have legitimate claims. But we’ve got to find solutions to create a more flexible, dynamic, 21st century economy out of which everybody wins.
NEIL MITCHELL: So you’re saying that any change to penalty rates would not leave workers worse off?
PRIME MINISTER: No, I’m not saying that at all. Are you saying I’m saying that should be the case?
NEIL MITCHELL: Hmm.
PRIME MINISTER: Well what I’m saying to you is that if you want to get the support of workers and of unions (industrial representatives) to changes like that, then inevitably you would have to persuade them that in net terms they are better off.
NEIL MITCHELL: But were you saying there will only be change if they were better off? Or if it stayed at least the same.
PRIME MINISTER: No. What I’m saying to you, I mean you’re trying with great…
NEIL MITCHELL: I’m trying to understand…
PRIME MINISTER: No, no. Well I’m offering you a statement of the obvious actually. If you put yourself into the shoes of a union official and you’ve got someone saying ‘I want you give up certain conditions or work practices which are inflexible and create inefficiencies’ - then you as the union official would say ‘I’m only going to consider that if I am ideally better off and certainly no worse off’ and so that’s just…. I’m just making an observation about a practical reality.
NEIL MITCHELL: Something that comes up a lot with our audience is - what about the possibility about some sort of tax credit for the lower paid workers which means they don’t suffer in the pocket and the boss gets a bit of a benefit as well?
PRIME MINISTER: There are a lot of ideas floating around on tax. We said at the meeting last week nothing is off the table and we are looking with an open mind at it. One of the problems with debate about the tax system is that people will say ‘you can’t touch that tax’ or ‘you can’t touch that tax’ or ‘you should do something with that tax’ and other people complain. The reality is that we have to look, I talked about the labour market a moment ago, look at the tax system. The tax system is the single biggest thing the federal government does that incentivises and dis-incentivises economic activity. If you tax something, people will do less of it generally. So your goal should be to raise no more money than you are currently and certainly no more money than you need and you’ve got to keep spending under control and so forth. But if you can raise it in a more efficient way - and when I say you, I don’t just meant the feds - state governments have got to step up to the plate to.
NEIL MITCHELL: That gives the essence of it; do we have a revenue problem or a spending problem?
PRIME MINISTER: We have a budgetary problem and we have an economic growth problem. The budgetary problem is that we are spending more than what we are receiving in revenue and the economic growth problem is that we are not growing fast enough.
NEIL MITCHELL: In those general terms, how do you fix it? Do you increase revenue or cut spending – or both?
PRIME MINISTER: Well you can obviously do both. At the moment federal taxes are already a high percentage of GDP so we are not a high tax government; we don’t want to increase the level of taxation.
NEIL MITCHELL: Do you want to ease it? Joe Hockey was saying he wanted to cut it.
PRIME MINISTER: Well yes, over time - subject to responsible budget management.
NEIL MITCHELL: That’s not close though is it?
PRIME MINISTER: Neil, I think with the deficit there if you want to draw down that deficit, your level of tax as a percentage of GDP – you would aim to bring it down but in the context of GDP growing. You see, the key to balancing the budget basically is this – you want to grow your economy at a faster rate than your expenses are growing. Your tax revenues are a function of the growth in the economy. So if your economy is growing faster than your expenses over time that deficit will shrink.
NEIL MITCHELL: But in simply terms. Tax cuts aren’t close are they?
PRIME MINISTER: Tax cuts aren’t close? Oh, ok, well I wouldn’t necessarily agree with that, no. I think there are a lot of changes that can be made to the tax system which would improve the efficiency of the system. The tax system as it stands, delivers a certain amount of money every year. The question is, can it be adjusted? You do not want to have changes that unsettle the markets and so forth – change has got to be orderly, it’s got to be well understood, it’s got to be well explained and it’s got to be accepted.
NEIL MITCHELL: But everything is on the table - superannuation, negative gearing, capital gains, tax – everything. The GST, everything is on the table.
PRIME MINISTER: Everything is on the table. That’s right
NEIL MITCHELL: That’s a bit unsettling, particularly superannuation.
PRIME MINISTER: The alternative is worse where you start saying, ‘that’s not on the table, that’s not on the table’ and suddenly there’s nothing left on the table and you’ve got no options.
NEIL MITCHELL: When will we know?
PRIME MINISTER: We will certainly be making decisions in the lead up to the budget and obviously if we have major you know tax reforms we will take them to the next election.
NEIL MITCHELL: Interest rates decision today, which I know you won’t comment on of course but have Tony Abbot and Joe Hockey left the economy in good shape?
PRIME MINISTER: Well I think the economy is in good shape. It has got a lot of head winds though. Confidence is strong, which is good. Interest rates are low, which is good for investment. There should be more investment and that’s why confidence is so important. That’s been the missing element that the Governor talks about.
NEIL MITCHELL: A couple of quick things if you don’t mind then like some personal questions; they’re not as dangerous as they sound.
Terrorism, there’s no doubt this was a terrorist attack in Sydney is it?
PRIME MINISTER: The police view and I’m going to be careful to say nothing more than what’s been said publicly because obviously I’m privy to information that’s not public but the police view is that this appears to be politically motivated violence, which is terrorism. That’s what terrorism is.
NEIL MITCHELL: Have the Muslim leadership been loud enough condemning it?
PRIME MINISTER: They’ve certainly been loud. I think we have seen strong leadership but it is a very big challenge for the Muslim community
NEIL MITCHELL: Would you like them to say more?
PRIME MINISTER: Well I don’t want to suggest that they’re not saying enough but I think the bottom line is this; that the Muslim community are appalled, horrified by this event. Leading figures in the Muslim community; Jamal Rifi notably he’s probably been on your show as well, he’s been very vocal and eloquent about this. Mike Baird and I had a good discussion with a number of Muslim, in particular Kurdish, leaders in NSW the other night. It’s a question of continued engagement and yes they should speak up but you know it’s more important from a practical point of view that there is leadership within the Muslim community which continues to demonstrate that this type of violence extremism is not consistent with Islam. This is the point that Jamal Rifi makes and a number of others have too.
NEIL MITCHELL: Is it correct that you are looking to review the laws on removal of citizenship from dual nationals?
PRIME MINISTER: The laws have been reviewed by a bipartisan committee. The intelligence committee chaired by Victorian Dan Tehan, they’ve made a number of recommendations to amend the laws and the Attorney General is looking at that very closely and it will no doubt come back to Cabinet so there’s been a lot.
NEIL MITCHELL: There’s no guarantee those laws will go ahead, to remove dual citizenship
PRIME MINISTER: The laws will go ahead that you could reasonably expect that without committing the government, you could reasonably expect the bipartisan recommendations of the committee to be take very seriously into account.
NEIL MITCHELL: Would you describe ISIS as a death cult?
PRIME MINISTER: I’ll use my own language. ISIL or Daesh is a violent, extremist terrorist organisation which is a threat both regionally and globally. Its elimination is a matter of the highest priority for Australia and many other countries, most other countries particularly in that region and the most important priority is to defeat them in the field.
NEIL MITCHELL: Victoria wants $3 billion dollars for metro rail tunnel. You’ve been talking to Daniel Andrews, any hope?
PRIME MINISTER: Well there’s always hope. You know…
NEIL MITCHELL: Any chance?
PRIME MINISTER: Well I’m yet to see a proposal, the minister is yet to see a proposal. Certainly we don’t discriminate between rail and road or any other form of transport - delighted to see a proposal when the Premier will no doubt show it to us.
NEIL MITCHELL: Any chance of jobs for Williamstown shipyards?
PRIME MINISTER: This is in relation to?
NEIL MITCHELL: There are jobs about to go there; I think its hundreds of jobs going in the Tenix ship yards.
PRIME MINISTER: Unfortunately in terms of the naval ship building program and again I don’t wasn’t to sound like a stereotype politician bagging his opponents but…
NEIL MITCHELL: They need orders now.
PRIME MINISTER: There is a new naval ship building program announced relatively recently and you know it’s a very substantial one.
NEIL MITCHELL: In Adelaide.
PRIME MINISTER: Yes and there’s also the submarine project, a new submarine project is subject to a competitive evaluation process. Can I just say to you that the mistake the previous government made was they delayed making decisions on the naval ship building program and inevitably there will be a decline, a dip in employment before it picks up again. That’s the consequence of indecision by our predecessors. And that’s not a controversial point, it’s a factual point and I don’t make it in a partisan way but this is what happens when you kick important decisions down the road and don’t make them.
NEIL MITCHELL: Is it correct you were sounded out recently to be Ambassador to Washington?
PRIME MINISTER: The answer is I was and I declined.
NEIL MITCHELL: Why? You wanted to be Prime Minister?
PRIME MINISTER: Regardless of whether I was the Prime Minister, whatever my situation is, I cannot imagine circumstances where I would want to be an ambassador. With all due respect to ambassadors they do a fantastic job but it’s not my cup of tea. I’m very committed to living in Australia.
NEIL MITCHELL: Your supporters tell me you’ve change how? Not why but how?
PRIME MINISTER: You’d have to ask them.
NEIL MITCHELL: Do you think you’ve changed? Are you more inclusive? Are you more likely to listen?
PRIME MINISTER: I think I’m obviously older and I’m wiser and as I’ve got older I hope I’ve got wiser. I’ve learnt to listen a lot more and talk less. I take a lot of notes. I’ve got my iPad here. I go to meetings and I take a lot of notes. Politicians, people are always happier to listen to politicians. I don’t learn anything from talking, I learn a lot from listening and I say to you that whether it’s in business or in politics, setbacks they can crush you of course but if you learn from them you are so much stronger as a result.
NEIL MITCHELL: Is that a message for Tony Abbott?
PRIME MINISTER: It’s a message for everybody.
NEIL MITCHELL: Have you talked to him yet?
PRIME MINISTER: No, we’ve had some exchanges via text but no chats.
NEIL MITCHELL: Will you make up?
PRIME MINISTER: There’s nothing personal, nothing personal just business.
NEIL MITCHELL: Thank you for your time. Hope we speak regularly.
PRIME MINISTER: We will Neil. Thank you.
NEIL MITCHELL: The Prime Minister, Malcolm Turnbull