HOST: Prime Minister Julia Gillard stood up for quite a long time yesterday with Industry Minister Kim Carr as well as Treasurer Wayne Swan to talk about what they're going to do to support workers and steel communities and the Prime Minister joins us now, you're at 97.3 ABC Illawarra, Julia Gillard good morning.
PM: Good morning.
HOST: Wayne Swan yesterday talked about our patchwork economy and if I can extend the metaphor a little further, it looks like the seams are starting to come apart in some places such as the Illawarra. Is the pain of job losses in manufacturing worth the economic value of the resources boom to Australia?
PM: We've been using the terminology ‘patchwork economy' for a while because I think it does help explain what's happening in our economy today. We are seeing transition in the world economy where economic weight is moving to our region from West to East. That has got huge opportunities, big opportunities in resources, in exporting services to a new Asian middle-class which is growing rapidly, it's also got big opportunities for food production but it does mean our Australian dollar's strong and it's going to stay strong and that puts pressure on and we've seen the outcome of some of that pressure yesterday with the announcement from BlueScope. So I do understand that for many in the Illawarra yesterday would have been received as devastating news and we will be there working with the people of the Illawarra as they go through this period and we will be working to secure new economic opportunities in the Illawarra. I'm an optimist about the Australian economy, I'm an optimist about a long-term role for manufacturing, but we do live in a time of change where we need to keep working to strengthen and modernise our economy with the new opportunities of the future including clean energy, including higher value added and new skills and including the opportunities of new technology and manufacturing can be part of that and benefit from that.
HOST: Are we truly modernising our economy if moves such as we saw yesterday mean we're less of a manufacturer, less of a value-adder, and simply more of a sandpit for China?
PM: I don't think that is the future vision of our economy. Yes we will have a strong resources sector, we've got hundreds of billions of dollars of projects in the pipeline, that means jobs in construction, it means ongoing jobs in mining, it means we've got very strong terms of trade, record terms of trade, it also means we've got a high Australian dollar. That will be a strong and growing part of the Australian economy but it will be part of the economy. We will be a nation that makes things, that manufactures goods, we will be a nation that provides services, we will be a nation that seizes the opportunities that flow from a cleaner energy future, from higher skills and higher value adding as well as from new technology like the NBN, but to get there requires work and there are, in the Illawarra and around the country, there are industries and regions facing very painful transitions. I very much understand that pain which is why yesterday I made the announcements with Wayne Swan and Kim Carr about our support for the people of the Illawarra and why today I want to say to you and through you to the people listening we will be there working alongside the people of the Illawarra during this period.
HOST: Part of it was to bring forward $100 million of payments under the Government's steel transformation plan, now this is supposed to be to help companies such as BlueScope adjust to what you're calling a clean energy future, to cope with the carbon tax, but BlueScope says the decision to cut those 800 odd jobs has nothing to do with the Federal Government's proposed carbon tax. Can you explain how this makes sense, that this money goes to them?
PM: Well certainly BlueScope said that yesterday's announcement's got nothing to do with carbon pricing-
HOST: So what are they getting carbon pricing money?
PM: Well when we sat and talked to our steel industry as we were putting together the carbon pricing plan, we were alive to the fact that there were other pressures on the shoulders of the steel industry, pressures from the high Australian dollar, pressures from competition, pressures from costs. So we understood that this was a period of transition in the steel industry already and consequently we worked on the steel transformation plan and it's been appropriate to access some of that money early to make a difference for BlueScope now.
We've also announced a package of $30 million, $20 million from us, $5 million from the New South Wales State Government and $5 million from Blue Scope itself to work with the region for economic diversification and the creation of new jobs and new opportunities, and there's $10 million of immediate support for people who lose their jobs, who need employment services, opportunities at new skills, support to get a new job for the future.
HOST: Ok so what you're telling me is the Government's Steel Transformation Plan is not just about adjustment to a clean energy future and to the imposition of a carbon tax, it's about coping with the high Australian dollar as well?
PM: Look it was understanding that we already had a steel industry in a big time of change and of course further change is going to be brought by pricing carbon and so we though what is the best way we can help our steel industry transform for the future, given all of these pressures.
HOST: You've also, as part of this help to the workers, said that you're going to fast track relocation assistance for BlueScope workers, that could be up to $9,000 for families with dependent children, are we just going to see these 800 fly directly to Western Australia?
PM: No of course not, there will be different decisions made by different working people and we want people to have options. It may be that some people want to relocate, that they see a new opportunity and a new future in another part of the country and if people see that then of course we will work with them so that they can seize that new opportunity. But in the Illawarra I want to see new jobs, new opportunities right there and that's what the $30 million of investment is about, diversifying the economic base of the Illawarra. So I see a strong future for the Illawarra but we do want to facilitate people making the choices that are right for them and their families.
HOST: Prime Minister I have a question here from a listener of ours called Colin, Colin go ahead mate.
CALLER: Simply matter might be to put a tariff on imported steel, seeing we've got billions of dollars of expansion which requires a hell of a lot of steel, and as far as pollution goes the rate that steel is producing worldwide are we going to see much reduction in that?
HOST: Ok, Prime Minister the question is why haven't we put a tariff on imported steel?
PM: I thank Colin for that question. We wouldn't put tariffs on because if we start building up trade walls then other countries do the same and our great exporting industries, whether it's resources, or whether it's agriculture, or whether it's manufacturing, because we do export manufactured goods, then our great exporting industries pay the price as other countries retaliate and start building up their tariff walls as well.
So, we've taken a different approach to supporting manufacturing. We did in 2009 announce the Australian Government Procurement Statement, that was a $50 million plan, it brings with it the buy Australian at home and abroad initiative, so that's about encouraging the use of Aussie goods, including Aussie steel.
We have what we call industry participation plans, so when Government goes out and says we want to buy big things, then the people we deal with have to have a plan about how they're involving-
HOST: -the Australian Steel Institute says those regulations are completely flimsy and are flouted all the time. We need to strengthen that Australian Industry Participation Plan to ensure that Australian manufacturers, steel industry in particular, gets a fair go at a tender.
PM: Well, we have had these new initiatives put in to place. They have levered new investment, so in the past 18 months we've seen around $2.8 billion, almost $3 billion worth of announced contracts that have had these plans, Australian Industry Participation Plans. We've used other government policy areas too, for example there are some firms that seek to have some concessions on import of goods - we say well, if you're going to do that you have to have an Australian Industry Participation Plan. That's meant that there are those plans in place for Aussie firms for around $11.2 billion worth of projects.
And we also have what we call the Supplier Access to Major Projects Program. That embeds procurement specialists who are there advocating for local businesses and local industries. And that's resulted in $3.5 billion worth of contracts flowing, which may not have otherwise flowed.
But there are these special measures in place to support Australian procurement. During the course of this week we will announce some further modest measures, and of course we're going to stay strongly engaged in manufacturing - employers, employees, employer organisations, unions - during this time of change.
HOST: Right, even though you're encouraging people to buy Australian and you say we have these plans in place, I'm sure Australian manufacturers get a fair go at contributing to some of these resources projects. The bigger issue and even Paul O'Malley agrees, that - he's a believer in free markets - that we are not on a level playing field, particularly where the Chinese currency is concerned, this is a major problem.
Is there anything the Australian Government can do to put pressure on the Chinese Government to float their currency in a fair way?
PM: We advocate through all of the international forums that I attend and the Deputy Prime Minister attends in his capacity as Treasurer, for balanced global growth, for making sure that economies, including our own, can continue to grow and of course questions of currency and currency value have been raised in those discussions. So, we will continue to have our voice heard on that question, whilst we take the practical measures here in Australia today that can make a difference for local manufacturing.
HOST: OK, back to the Investment and Innovation Fund, is $30 million, some of which actually comes from BlueScope Steel. How many jobs do you envisage that actually creating?PM: Well, yes, $5 million does come from BlueScope. I think, to be frank, we're at a stage before that yet, we've got to use this $30 million in great consultation with people of the Illawarra and the businesses of the Illawarra, about how best to structure the future. It's not going to be a question of us sitting here in Canberra and saying ‘gee, we know what's good for the Illawarra, let's go and tell them'. That's not how it's going to work. It's going to be a process that involves the people of the Illawarra working with us, with the State Government, with these funds through Local Government, local employers, local unions, working together to design a shared vision of the future.
HOST: BlueScope say that they're already one of the world's most efficient plant, they spend hundreds of millions of dollars on R&D. Can simple funds just create innovation in the Illawarra and actually create jobs?
PM: Well, you can certainly catalyse innovation and I've seen that all around the country. I mean we are a nation of very smart people, very smart people with great ideas and when we put those great ideas into effect then that can make a big difference for our competitiveness and our ability to sell things to the world. So, one of the reasons I'm such an optimist about the future of the Australian economy, is I'm such a great believer in the skills and capacities of the Australian people. I, as Prime Minister, get to see that on display every day.
HOST: Many economics commentators, including the ABC's Stephen Long on 7.30 last night, said that we're suffering a resources curse, or the Dutch disease, that this boom in resources, inevitably is going to squeeze other areas of the economy, whether it's retail, or tourism, or manufacturing, as we've seen yesterday.
Are we making enough out of our resources to ensure that the rest of our economy is not simply squeezed out of existence?
PM: One of the reasons we designed the Minerals Resource Rent Tax is precisely this - we've understood for a long period of time now that this was going to be a time of opportunity, as we saw huge demand for our resources in the region in which we live, as we saw record terms of trade, and a time of opportunity, as we saw a growing Asian middle class, wanting many of the services and products and food that Australia's got to sell. So, there are great opportunities around, but we also understood this would be a time of sharp adjustments and adjustments with pain associated with them in other parts of the economy. So, we designed the Minerals Resource Rent Tax so that we would take more tax from the turbo-charged super profitable section of the economy, resources, and use that to support other areas in the economy, by cutting company tax and by providing special tax breaks for small business, as well as by increasing out national pool of savings through superannuation, which is good for individual workers when they retire, a bigger retirement income that's a good thing, but it's also good for our national economy to have a greater pool of national savings.
So, our framework in making decisions about taxation for the resources sector has been about supporting and balancing growth in other areas of the economy.
HOST: OK. Finally, you've suggested that you would wear out your shoe leather travelling around the country talking about the carbon tax, and while we do appreciate your time on the phone this morning, when are we going to see that shoe leather on the footpaths of the Illawarra?
PM: Look, I'm making it my business to travel widely. Of course I travel widely for a whole variety of purposes, including talking to people about carbon pricing. We will stay very strongly engaged with the people of the Illawarra during this period. You've got great local members in Stephen and Sharon, who every day will be advocating the case for the people of the Illawarra, so I'll look forward to a future visit, but the work of designing that economy of the future is starting right now, arising from the decisions that we announced yesterday.
HOST: Julia Gillard, thank you for your talking to us this morning.
PM: Thank you very much.