PM: Prior to the last election, we said that we would abolish WorkChoices and replace WorkChoices with a fair and balanced industrial relations system, through the Fair Work Act. We also said that in the construction industry, that the ABCC would be retained until 2010 and that we would replace it with a tough cop on the beat with proper procedural fairness.
Subsequent to the election, as you know, the Government appointed Justice Wilcox to examine what should replace the ABCC. Justice Wilcox subsequently reported that the particular problems of the construction industry, particularly in Western Australia and in Victoria, warranted the retention of a separate legal jurisdiction for the construction industry, one which retained coercive powers and one which had better legal protections.
Over the course of the last week, the cabinet committee, the cabinet, the various committees of the caucus, together with a full meeting of the caucus just now, in an extensive and animated discussion over two and a half hours, has resolved that the Government will introduce legislation into the parliament for the creation of a new building industry inspectorate that will be based on Justice Wilcox's report.
There will of course be loud complaints from various people in the trade union movement. I accept that, there will be complaints also from various parts of industry, I accept that as well. But complaints from the union movement, complaints from industry would probably suggest that the Government has got the balance right in acting in the national interest.
Tough decisions of this type will not be welcomed by various parts of the trade union movement, but these are tough decisions which are important in the national interest, given the particular history of the construction industry, and its centrality in the economy.
Furthermore, I would like to underline in absolutely clear cut terms that this Government will not tolerate violence, threats of violence or intimidation in any part of the industry. And we believe we acted accordingly through the legislation which will be introduced in the parliament.
I will now ask the Deputy Prime Minister to go through the detail of what the new body, the Building Industry Inspectorate, will do.
DPM: Thank you. Thanks Prime Minister. Tomorrow I will introduce into the Federal Parliament, a Bill which will amend The Building Construction Industry Improvement Act. Those amendments will abolish the Australian Building and Construction Commission and from the 1st of February 2010, create it with a new specialist inspectorate for the building industry.
This is honouring Labor's election promise as given in the 2007 election.
On the powers of the new body, we will be guided by the report of Mr Justice Wilcox. The Government asked Mr Wilcox to report on the powers of the new body. He gave us a comprehensive report and I have described it as a good report.
We will implement his recommendation that penalty provisions between building workers and other workers should be equalised. We will implement his recommendation to keep the coercive powers for a five year period and to have a sunset at the end of the five years, with a review to be conducted prior to that sunset.
We have accepted his recommendation that these coercive powers need oversight and the legislation will include his recommendation that an individual exercise of the coercive powers should be approved by a presidential member of the Administrative Appeals Tribunal.
We have also accepted his recommendation that the exercise of the coercive powers and the hearings that result should be videotaped, the videotape provided to the Ombudsman and the Ombudsman should periodically report on the conduct of those hearings.
We have also accepted his recommendation that a person required to attend for a coercive powers hearing should have all of their costs - wages lost, travel, and the costs of a lawyer - met.
Those recommendations are in the legislation which I will introduce tomorrow.
In addition, in the legislation, we have developed a mechanism to focus compliance in the building and construction industry where it is needed the most. His Honour, Murray Wilcox found very clearly that compliance problems tend to be concentrated in parts of the country.
He referred especially to the compliance problems in Victoria and in Western Australia.
We accept his conclusions that there are more problems in some parts of the industry than others. Consequently, in this legislation, there will be the ability for the coercive powers to be switched off for projects that have good industrial behaviour and a good record.
That decision will be made by an independent assessor. It will be made on application. For good behaviour, good behaviour can be rewarded by the coercive powers being switched off. But for bad behaviour, the coercive powers will be there. These laws are there to show that we want to drive cultural change in the building and construction industry.
The Prime Minister has remarked that there are many law abiding citizens who work in the building and construction industry and there are many projects in this country that are completed on time, some of them before time, and on budget.
Good industrial behaviour can be rewarded under this legislation. But clearly, for those parts of the building and construction industry that aren't doing the right thing, the full force of these laws apply to them.
It will enable us to focus our compliance activities where that is needed the most, to deal with those parts of the industry that Mr Wilcox has pointed the Government to.
We believe that this package gets the balance right, gets the balance right for an industry where we have seen problems with unlawfulness in some parts of the industry, gets the balance right so there is always a tough cop on the beat dealing with compliance in building and construction and gets the balance right by creating a reward for good behaviour and driving cultural change in this industry.
JOURNALIST: (inaudible) did your legislation or your initiative change at all over the course of the discussions with your colleagues over the last couple of days?
DPM: No not in any way.
JOURNALIST: Wouldn't it mean switching off coercive powers because surely if there wasn't a problem in that section of the industry they wouldn't be invoked anyway?
DPM: Well what it means is that an independent assessor will say that the coercive powers aren't necessary for that project, it's to be done on a project by project consideration. We think that's important because we think for those parts of the industry, those projects where there is good industrial compliance, that that ought to be acknowledged, and it ought to be acknowledged by saying the special laws that are necessary to deal with tough compliance in some parts of the industry are not necessary for that particular project.
JOURNALIST: (inaudible)
DPM: It will be possible for the independent assessor, particularly having received information from our new specialist inspectorate, to turn the coercive powers back on, should that be viewed as necessary. But what we are actually creating here is a system to drive cultural change, a system to reward good behaviour and most importantly a system to focus compliance, focus the attentions of the tough cop where those attentions are needed the most.
JOURNALIST: (inaudible) penalties for non-compliance in the building industry create incentives for bad behaviour, reward bad behaviour in that sense?
DPM: Well the penalties in the Fair Work Act for industrial misconduct are considerable. They are considerable for the individuals involved, they're considerable for the industrial organisations involved. The independent report provided to us by his Honour Murray Wilcox considered this question, it is a very good report, he has reasoned through having talked to hundreds of people, the circumstances of this industry, in a very detailed way.
And he has recommended to us that he believes penalties should be equalised. He is obviously saying in that that the penalties available under the Fair Work Act are sufficient, but he has made his recommendations about the coercive powers. They are in this legislation and they are in this legislation with this particular focus about making sure that those parts of the industry that need the attentions of the tough cop, that the tough cop's attention will well and truly be there.
JOURNALIST: Mr Rudd now that you know, now that we all know what Peter Costello is doing, you have some surety, more than you did before, as to who you'll be facing at the next election. How will you beat Malcolm Turnbull at the next election and what is your response, were you surprised by the fact that he is gaining on you in the Newspoll?
PM: Julia and I have had this bet going for quite some time, that I thought I would be up against Mr Costello at the next election, I think I have said that to most of you around here, I don't think it is any surprise.
While I was surprised, it shows that she is smarter than me.
DPM: You owe me 20 bucks.
PM: And I owe her 20 bucks. There you go. Sorry. So that is the first point. The second thing is that this is a global economic recession and the next Australian election will be very, very tough, it will be very, very competitive, because we are in very, very hard economic times. The Government has a clear cut strategy, Nation Building for Recovery, Nation Building for the Future. I have yet to see what the alternative strategy is.
But our ground is clear, and on that point, can I say that we, in these difficult circumstances, are doing better than most other economies. Whether it is on growth, whether it is on unemployment, whether it is also on debt and deficit and on the question of recession, but we are not out of the woods yet, that's why this next election will be very, very tough indeed.
And on the last part of your question, this Government in the lead-up to the Budget took a whole series of very tough decision. And many of those tough decisions taken in the national interest are not popular, I accept that fact and I take full responsibility.
JOURNALIST: Prime Minister what's your message to bank executives today as they jack up mortgage interest rates and then apparently choof off for some Bacchanalian feast of champagne and caviar?
PM: A what?
JOURNALIST: Bacchanalian.
PM: Oh right. (Laughter) Could you put that question again please?
JOURNALIST: Chow down on champagne and caviar as they jack up interest rates Prime Minister.
PM: Okay, fine. I was just getting some clarification on what you were saying. I think everyone out there relying upon the banks for their loans would like some explanation of the circumstances surrounding this report about the CBA. I think that would be useful for everybody. These are tough economic times, people are making hard decisions out there in small business, hard decisions also about home loans. I think it would be good, very good indeed, if we had some explanation as to what are the circumstances surrounding this report.
JOURNALIST: Mr Rudd, (inaudible) two banks today lifted their fixed rates because of the economic impact about. Why can't we do more to stop that?
PM: As you looked at the statement by the CBA, it was quite clear about the fact that of course the cost of funding is primarily shaped by offshore wholesale markets. And yesterday in the Parliament you'll recall that I detailed the extent to which offshore markets are shaped by the magnitude of the bond market. It is about 80, the figure I used yesterday I think was some 84 trillion dollars worth of bonds on issue and the Australian Government representing something like 0.001 per cent of that. Let's put all of that into some context.
Second point is this. On interest rates, notwithstanding these most recent unfortunate actions by the banks, we are currently experiencing interest rates at a 40-year low.
To put a point of contrast, interest rates when the government was elected, the standard variable mortgage rate was 8.55 per cent. Now, the standard variable mortgage rate is on average 5.78 per cent. So if you have an average mortgage of $300,000 you're now saving around $530 a month.
So interest rates now through six interest rate cuts in a row are now at 40 year lows in contrast to 10 interest rate rises in a row under our predecessors. The Government will always keep under review measures to enhance competition in the banking sector and we'll do so into the future.
JOURNALIST: Mr Rudd, Mr Costello - can you see a time when you might offer him a job to work with your government? He's very experienced in matters financial and he's not got a job.
PM: Have you got anything in mind?
JOURNALIST: (inaudible)
PM: I hope the Government has demonstrated in the period that we've been in office that we have a pretty open minded approach in terms of who we appoint to positions. We've appointed people like Tim Fischer to the Ambassadorship of the Holy See.
And as I said in the Parliament, I meant every bit of it - Mr Costello is a highly intelligent individual who's made a big contribution to Australian public life. So I would not rule out at all the possibility of appointing him to a position in the future. Do I have anything in particular in mind? No.
But can I just say this. This is a nation which should properly harness its talent, do you know what I mean? If I look back and I see one huge error made by our predecessors, all those bright people in the Hawke and Keating period, they just weren't properly used, and I just think that's just a bit of a national tragedy. We actually need to change our political culture a bit so that good people, intelligent people who have extensive national and international experience can be properly deployed.
Do I have anything particularly in mind in terms of Mr Costello? No. Do I rule out appointing him to such a position? Not at all. He's, as I said in the Parliament yesterday, a highly talented individual.
JOURNALIST: Prime Minister, (inaudible) can Craig Thomson remain as the Chair of the House Economics Committee while these allegations are hanging over his head?
PM: My understanding is that this independent report has been now submitted to the AEC and to the Industrial Registrar and we'll wait for the conclusion of those processes.
JOURNALIST: Prime Minister what do you think about the New South Wales Government's push for a ‘made in Australia' ban China campaign which it's pushing in today's State Budget. Do you support it? And will it breach any of Australia's free trade obligations?
PM: What I'd like to do is I think their Budget's coming down about now is that right? I'd actually like to see it in black and white (inaudible) actually look at the detail of what's actually being proposed before making any further comment. Dennis, over to you mate.
JOURNALIST: Mr Rudd, the Queensland Government is bringing down its Budget this afternoon and we know quite a bit of what's in it -
PM: What is in it?
JOURNALIST: Well, asset sales, clamps on public service -
PM: Where's your copy?
JOURNALIST: (inaudible) cuts to local government funding and the abolition of the fuel subsidy. Now these measures I guess might be a bit unpopular in Queensland. Are you concerned at all that your government might suffer some electoral blowback from this?
PM: Look, as I said in Queensland the other day when I was asked about these things - at least I think it was in Queensland or elsewhere - Anna Bligh the Premier is making some tough decisions. The details of what's in the Budget, I will wait until I actually see what's in the Budget papers consistent with my response to the question just now about New South Wales.
And having said that, I want to zip because I'm cold.