QUESTION: Earlier this year we had Malcolm Turnbull in the studio and we finished our chat when he was still the Minister for Communications by asking him if he would ever become Prime Minister.
[Excerpt]
QUESTION: Are you ever going to become Prime Minister?
MALCOLM TURNBULL: As I have always said I think my prospects are somewhere between nil and negligible. I think it’s unlikely but David you know as well as I do it is an unpredictable business. Anyone in the House of Representatives is in with a chance, but I am as confident as you can be about anything in politics that Tony Abbott will lead the Liberal Party to the next election.
[End Excerpt]
QUESTION: Well he is sitting here with a smile on his face, the Prime Minister of Australia, Malcolm Turnbull joins us again in the studio. Mr Turnbull, welcome to Adelaide, your first visit since assuming the top job. Sorry to play that back to you.
PRIME MINISTER: No no, that was exactly, I was being completely sincere and candid and it just goes to show that sometimes – and the Melbourne Cup is coming up – sometimes the hundred to one outsider wins.
QUESTION: There’s a tip, always bet on the roughie.
PRIME MINISTER: Well I tipped the AFL Grand Final by a complete fluke. No, sorry! My tip for the AFL Grand Final was hopelessly wrong, my tip for the NRL Grand Final, the rugby league, was absolutely spot-on. Cowboys by one.
QUESTION: In terms of you getting the top job and it has all happened pretty quickly, just over a month now, this is your first visit to Adelaide and we want to make this a very nuts and bolts interview because the number one issue that is focused in the mind of our listeners is jobs. How do we create jobs here, in South Australia? How do we get the employment market moving again?
PRIME MINISTER: Right. The key to jobs in Australia –
INTERVIEWER: I know it’s a broad question.
PRIME MINISTER: No, no, no, no, it’s good. It’s a broad question so I’m going to start off broad and then I’ll narrow it down. The key to Australia remaining a high wage, high employment, generous social welfare net first world economy, which is what we want to be, what we are and what we want to be in the future, is for us to be much more innovative, much more productive, much more competitive, much more technologically sophisticated. We have to be constantly improving and competing and innovating. Now that is the key focus of my Government.
My Government’s focus is about jobs and growth and that is driven by all of those things. Why is that? The global economy is growing at a pace we’ve never seen in human history before. Forty years ago China was barely a part of the global economy. It was a couple, well maybe, a couple of per cent of global GDP. It’s now the single largest economy.
The China Australia Free Trade agreement which you know has now got bipartisan support and going through the Parliament and negotiated by Andrew Robb our Trade Minister. That will open up the door to that enormous market and it’s more than just what it does in terms of tariffs. And I was talking to some of your wine exporters and meat exporters last night. It’s the Chinese Government giving the good housekeeping seal of approval on doing business with Australia. And right around this country exporters, and not just the physical goods but the services as well, design services and so forth, are getting increased orders out of China. So there’s this great big global economy there.
Now some people say ‘oh that’s frightening, it’s too much competition. I can’t cope with it.’ You know something that’s wrong. You got to be, this is a time to be confident, to be optimistic, to be imaginative. The only limits on what we can achieve are our own imagination and our own enterprise, and we are an imaginative enterprising people. So that’s the big picture.
What does that mean in terms of what the Government does? Well firstly we’ve got to make sure that everything we do encourages innovation and enterprise. We will be bringing out a new innovation statement before the year’s end. Christopher Pyne as you know from South Australia is the Minister for Innovation, Industry and Science. Christopher is leading the charge on that and working very closely with me. It’s a great passion of both of ours.
On the other hand what we’ve also got to do is invest. We need to invest a lot more in infrastructure. Money has never been cheaper, interest rates are at all-time lows. We got to do so in a more imaginative way. We can’t just simply be giving, you know, the Federal Government being an ATM. We got to take equity interest, loan interest in projects, make sure they stack up, make sure that there is an economic rationale, we don’t need the sort of returns that Macquarie Bank would ask for, obviously.
QUESTION: So what does that look like for a state like South Australia? Because in the last 20 years, I guess, the history of industry policy has almost been about trying to, you know, get the heart starters onto industries, traditional 1950’s style manufacturing industries. Which in a globalised economy are always going to struggle because the cost of labour is higher here then it is in the countries that…
PRIME MINISTER: And we don’t have a high, big scale domestic market. Well I think that’s a very good point. I think there’s been a tendency, if I may say so, to put too much store on one big project, you know like Roxby became the big iconic project that was going to make the State. And everyone talked it up and then when it didn’t happen in the form that was expected then you get an enormous disappointment.
So I think the real answer is that jobs growth comes from not just from one big project but from a whole range of different smaller businesses some of them start-ups, some of them existing firms, you know you’ve got to look at innovation above all and giving people the confidence to have a go.
You know confidence is the most critical thing. If you’ve got leaders, whether you’re in business, in the media or in sport – imagine before the team runs on to the field if the coach were to say ‘oh you know these other guys we’re playing, they’re big, have you seen how big they are? And their backs they’re so fast. You’ll never catch them.’ Imagine if you did that – they wouldn’t come out of the sheds right? See my job and all of our jobs as Ministers and Members of Parliament, Senators is to speak positively, not to mislead people but just remind people that we have the ability to take on the world and we are doing it now. And you’re doing it here in South Australia.
QUESTION: Is part of that creative multifaceted approach to reinvigorating an economy like South Australia about raising the GST?
PRIME MINISTER: Well no, that’s on the table clearly but I think and I was just talking to Stephen Marshall about this earlier today and I’ll see Joe Weatherill later. I know Stephen very much shares my views which is that changes to the GST should be on the table but the idea that State Government can just say we’re not going to do anything about making our hospitals more efficient or our schools more efficient, we just want to put our hand up for more money.
That’s …
QUESTION: The previous view of Federalism was much different to the most recent version and now the funding arrangements that have been agreed to especially in health have changed so it’s sort of right to say …
PRIME MINISTER: Well yes, in the sense that I understand the point you’re making but there is more Federal money going into health every year. I don’t have the precise figures in front of me but health funding from the Federal Government is increasing every year. Let me give you an example of where the language of politics is completely out of sync with the real world. Politicians you will hear all the time say, ‘we are going to spend more on X’ (education, health, roads) and they’ll just say as those spending the money was virtuous in itself.
Whereas in business you would say, ‘we are going to deliver more procedures at lower cost,’ or ‘we are going to reduce hospital stays by ‘x’ days,’ or ‘we’re going to treat more people,’ or ‘we’re going to get better results from our students.’ ‘We’re going to move the kids in this school from this level to that level’ – you talk about outcomes. That’s where we’ve got to get to, because the real issue is the outcome.
You can spend a lot of money on something and make no difference at all; you can spend a lot of money on something and go backwards. There is a failure, I think, to… this is one of the reasons why I genuinely want to change the way we talk in politics, so that we’re talking in a way that is rational and business-like and people can say ‘Yeah, these politicians are respecting my intelligence, they are explaining things to us.’ And we can have a sensible debate.
The slogans and ‘politician-speak’ is very, very misleading and it turns a lot of people off. That’s why, if you ask me a question I’ll answer it. If I don’t know the answer I’ll get back to you when I have the facts.
QUESTION: Just on what you said just then PM about the GST and discussions you are having with the States, were you saying then as John Howard did when they introduced the GST way back in 1998, is your message to a State Government such as ours, that you would only increase the GST if it was part of a suite of measures that involved the abolition of some other state taxes?
PRIME MINISTER: Well, it certainly has to be a part of a suite of measures, it’s not doing it, no one I think is seriously suggesting doing it in isolation…
QUESTION: Well Jay Weatherill sounded a bit like…in fact, he said it on our show.
PRIME MINISTER: Okay, well apart from Jay Weatherill, no one is saying that. I’ll take your word for it. You’ve got to look at it in, as a whole context, and that involves what you’re doing with inefficient state taxes, what you’re doing with states exploiting their own tax faces, what you’re doing about improving their efficiency. As I said, you can’t just treat the Commonwealth Government as an ATM. Because everybody has got to improve the way they’re delivering services. And we’ve got the ability to do that – I mean the changes in technology alone enable us to deliver services much more efficiently.
QUESTION: Does that mean then too that the distribution model of the GST would have to be a component of that debate?
PRIME MINISTER: Well, the distribution model of the GST as you know has to be agreed between the states. There was as you know quite a controversy with the West Australians where their share of GST got down to a very, very low figure and there was a true-up payment to them of around $500 million. I think the formula, as between the states, is one that really has to be agreed between the states. It’s not something that the Federal Government can or would want to make a decree about. But there is a degree of cross-subsidy in Australia, just like there is a degree of cross-subsidy within a state.
QUESTION: In terms of stimulating the local economy and also creating jobs, two big issues on the horizon are the submarine wrangling, which I’m sure you fully expect to get asked about and also the Royal Commission we are having here into the creation of a nuclear industry. On subs first, do you feel that you have inherited the promise made by David Johnston to build 12 subs here in Adelaide? Is that still a live promise and secondly would you support the creation of some sort of nuclear industry in South Australia?
PRIME MINISTER: Well firstly let me just say on the subs, I don’t want to buy in to the David Johnston remarks but I’d say to you that we do have a competitive evaluation process underway. As you know we’ve got three potential partners – Japan, France and Germany. I am very committed to Australia having a strong defence industry, a very strong defence industry. I think a country of our size, and with our defence budget, should have a very significant defence industry. I think it should be not simply focused on catering for our own needs, but catering also for export. It should be focused on innovation and a good example of that is the Hawkei armoured vehicles which Thales have developed in Victoria in fact and these are in effect a mine-resistant SUV, I suppose would be the simplest way to describe them. The global addressable market for these vehicles is tens of thousands of vehicles. So it’s not the Bushmaster that I’m sure you have travelled in when you’ve been in war zones, which is a mine-resistant armoured personnel carrier – great Aussie innovation, best in the world – but obviously a limited market. These vehicles could be – tens and tens of thousands of vehicles would be the addressable market. Now they have to get out and sell them, but that’s a good example of what we need to be doing more of. We need to be recognising that our defence needs which are substantial, we have a very big defence budget, should also be able to generate the innovation here that enables us to explore elsewhere. That is not just in terms of the prime contractors that we are talking about, but also in spin-offs . You’ve seen Jim Whalley’s business here in South Australia, I’m sure you are familiar with his good example of that, where you get spin-offs of smaller firms, where people who’ve built up their expertise and their techniques and IP I suppose to some extent move out into enterprises of their own.
QUESTION: And on nukes as well?
PRIME MINISTER: On nuclear power I commend Jay Weatherill for having the Royal Commission I think it’s good that he has done that.
QUESTION: I mean he’s probably going to say yes, go ahead and create some kind of nuclear industry. What would you say?
PRIME MINISTER: I was just talking about this with the cook in the café downstairs when I was having some coffee and breakfast with Steve Marshall, as Brett the chef was saying, his view and I think a lot of South Australians feel like this and it is a perfectly reasonable view, is we have got the uranium, we mine it, why don’t we process it, turn it into the fuel rods, lease it to people overseas, when they are done we bring them back and we have got stable, very stable geology in remote locations and a stable political environment. That is a business that you could well imagine here. Would we ever have a nuclear power station in Australia or like the French do, dozens of nuclear power stations? I would be a bit sceptical about that and I am not talking about the politics David, we have so much other affordable sources of energy, not just fossil fuel like coal and gas but also wind, solar, the ability to store energy is getting better all the time and that’s very important for intermittent sources of energy, particularly wind and solar. But playing that part in the nuclear fuel cycle I think is something that is worth looking at closely.
You remember in the Howard Government, Ziggy Switkowski did a similar exercise, [Journalist: former Telstra boss] yes, and former nuclear physicist, did a study like that for the Howard Government of which I was a Minister and came to similar conclusions.
Isn’t it great, I am here in Adelaide, and I am having discussions with people, not just politicians and distinguished members of the media like yourself and with the guy that’s doing the cooking down in the café.
QUESTION: I reckon Brett the cook is right on the money. We have time for one more PM. Something we talked about with our listeners in that earlier in the week …
PRIME MINISTER: The beans and eggs were good. Very nice poached eggs Brett.
QUESTION: Righto.
PRIME MINISTER: And he actually said to me, he is quite interesting Brett, he said, I wouldn’t have your job and I said why is that? He said because you have to keep everybody happy. He said I reckon if I keep 70 per cent happy that’s enough because of turnover. I think he was marking himself too hard, I reckon if I had 70 per cent happy I would be very relaxed.
QUESTION: You almost do in Newspoll at the moment. Can I ask you about interest rates? Because the National Australia Bank have revealed their full year profit in excess of $6 billion, up nearly 20 per cent. A number of banks have raised interest rates recently, they say in relation to your regulation of capital they have to hold against their risk assets. Do you cop that?
PRIME MINISTER: I cop it in the sense that I hear what they say. But the increase they are making is higher than is justified by the additional capital they are being required to hold. This is the recommendation from David Murray’s Financial Systems Inquiry. There are a number of recommendations there. This is the point about banks holding more capital as a global trend so that banks are safer but I think and this is not just me thinking this, this is what David Murray has said and what others have said, that they are increasing, in the case of Westpac for example, they put their mortgage up by 20 basis points, so you know, 0.2 of a per cent and that is about double what they would need. So yes I think they have overdone it.
But can I say that out of that Financial Systems Inquiry, there is one really good measure we have undertaken and that is to say that when firms, merchants, airlines, hotels, whatever, when they charge a surcharge for using a credit card, that surcharge can be no more than their actual cost of using the credit card. And you will notice a particular lot of people use the credit card surcharge as a means of just upping the price. I think that’s going to be very good for consumers because the reality is that very few people go around paying for things in bundles of bank notes.
QUESTION: Exactly. Prime Minister Malcolm Turnbull, thank you so much for joining us in the studio this morning. Enjoy your time in Adelaide and we will stay in touch with you.
PRIME MINISTER: I am getting a tram later on today so that will be fun.
QUESTION: You funded some trams on the Gold Coast recently.
PRIME MINISTER: I am told there is only one tram in Adelaide so I get the Sherlock Holmes prize for finding it.
QUESTION: There used to be a lot more back in the nineteenth century…
PRIME MINISTER: No, they are good. Light rail is good.