LEIGH SALES:
Prime Minister, thank you for coming in.
PRIME MINISTER:
Great to be with you.
LEIGH SALES:
Your innovation package gives businesses more capacity to poach good people from overseas and it will also allow some foreign students to stay in Australia rather than take the skills they acquire back home. What do you say to Australians who might bristle a bit at that and think, ‘well hang on, they’re taking Australian jobs’?
PRIME MINISTER:
Well, that’s not right actually. Take in the ICT area and post-graduate tech – if you like – computing sciences and so forth at universities, over three quarters of the students studying here are foreigners. We don’t have enough Australians studying ICT. We don’t have enough Australians, particularly Australian girls and women, studying STEM subjects and computing related subjects generally.
So we are in a world where the most valuable capital is human capital and that’s why it’s very important to be able to retain our best brains to create an environment where they can grow businesses and try things out, use their imagination and innovation and also be attractive for talented people from other parts of the world whether they’re students here or not.
LEIGH SALES:
You mention girls and women, there was I think there was $13 million to go towards the greater participation in science and maths areas. That sounds pretty general and nebulous; I mean what specifically would that $13 million be spent on.
PRIME MINISTER:
Well it’s all to do with programmes and awareness. You put your finger on one of the biggest challenges we face. We don’t have enough Australians studying technology, studying maths, studying science, studying computing science. The percentage of women, girls, studying maths, for example, for their final year of high school has been declining. It’s lower now than it was --
LEIGH SALES:
You’ve got $13 million to change that so how exactly are you going to.
PRIME MINISTER:
By creating more awareness, showing role models, a lot of mentoring as a part of that. You’ll find one of the things a lot of schools are doing now is finding role models, women who are doing well in technology companies.
Maile Carnegie who is the head of Google here is of course a great example and there are many others so that girls understand that this is an area where they can prosper, where they can succeed, where they can do well. This is a big cultural issue.
Can I just make this point Leigh, there’s a lot of money involved here and there’s investments into a new fund with the CSIRO, there are tax breaks for early stage investment in start-ups and venture capital and all of those things but one of the big shifts we have to make is a cultural one. We have to think in a much more innovative way, we have to be prepared when I say we, I mean the ABC the Government, every business – we’ve got to be prepared to do things differently tomorrow than we did yesterday because the pace of change in the world in which we live is unprecedentedly fast and so we have to treat all of that change in the world as creating great opportunities that’s why I keep saying it and it’s true. There’s never been a more exciting time to be an Australian.
LEIGH SALES:
The plan will also make it easier for entrepreneurs to bounce back from bankruptcy, but the reason that some businesses go bankrupt is because they’re not very good businesses. Do you run the risk here of artificially propping up failing ventures and mediocre business people?
PRIME MINISTER:
People learn from failure, or from lack of success. Our insolvency laws are very outdated people have been calling for them to be reformed for many years. In fact some of the changes here I proposed – and they weren’t new then – I proposed back in 2009 when I was Leader of the Opposition, Leader of the Liberal Party.
One of the failings in our insolvency laws is that they don’t do enough to promote business continuity. This is one of the great strengths of the United States for example with their Chapter 11 so that when a business hits the wall from a financial sense there is a much greater opportunity to restructure, bring in some new capital, change the management and keep the show going on.
And what that means is fewer jobs are lost, less money is lost, particularly by shareholders and subordinated creditors, and so it’s very important. See again, key focuses of the government. Agility, dynamism, enterprise and all of these measures, over 20 of them in this Agenda are designed to enhance that.
LEIGH SALES:
You mentioned people had been calling for that for years. Something else that business has been calling for for years has been a cut in the company tax rate. Wouldn’t that be the best way to encourage businesses to spend money on innovation or collaboration with universities?
PRIME MINISTER:
Well it would be a way but I think, of course, the problem is affordability. A cut of 5% or 10% in the corporate tax rate would be an enormous charge on the budget at the present time.
LEIGH SALES:
This government has previously told us that doing that would stimulate growth so it would actually deliver money.
PRIME MINISTER:
Well it would stimulate growth but it would have a cost the budget, Leigh there’s no question about that so affordability is very important.
LEIGH SALES:
I hesitate to ask this because I know you’re not doing rule in or rule out but that sounds like you’d be saying, ‘well, I’m sorry we don’t have scope at the moment for a company tax cut.’
PRIME MINISTER:
We’ve just had a company tax cut, of course, for smaller companies but we’re looking at every possible measure.
Can I just say to you that in terms of the incentives to invest there are a number quite a few measures here. There are very generous tax credits or tax offsets, I should say, for investing in start-up companies, 20 per cent tax offsets.
So if you, for example, you invested $1 million under our proposal, someone invested $1 million, or people collectively invested $1 million in a new business, they would get a 20 per cent tax offset. So they could offset their tax liabilities from their other income to the tune of $200,000 - that’s a very big incentive. So suddenly with this change, people that are starting a new business, a new innovative business are going to find it a lot easier to get money to get started and it’s that early stage of investment where there has been the market failure.
If you want to raise $100 million or $200 million, there is plenty of avenues to get that - not least of which is the Australian Stock Exchange - but at the early stages where there has been failure. We’ve worked very carefully with the industry, with the innovation sector to come up with these measures...
LEIGH SALES:
Many people in that sector and other sectors would tell you the most critical thing for their business these days is a speedy internet - so why then do you continue to back a broadband network that relies on a decrepit copper network?
PRIME MINISTER:
With great respect that is just completely wrong. I’ve...
LEIGH SALES:
It relies on copper to get from the node to the house and that copper network is old.
PRIME MINISTER:
But it doesn’t matter whether it is old or young so long as it works. Under the approach we are taking to the NBN we will get the network completed six to eight years sooner than it would be under Labor’s proposed method – and $30 billion cheaper, or at less expense to the government, which makes broadband more affordable. It is remarkable, it doesn’t matter how many facts are presented by the company on this issue we still get the same assertions...
LEIGH SALES:
I don’t want to get bogged down in the NBN because I want to get through a lot. But there was a leak of internal NBN documents to The Australian newspaper showing that the copper network is in such poor shape that the company has to spend tenfold what the company had planned to spend to whip it into shape.
PRIME MINISTER:
Well that’s simply not true.
LEIGH SALES:
Let’s whip through a few other things. Your Minister Mal Brough…
PRIME MINISTER:
You’ve lost interest in innovation, have you?
LEIGH SALES:
I haven’t lost interest, but there’s a lot of things to get through and there’s limited time.
PRIME MINISTER:
Aunty ABC loses interest in innovation.
LEIGH SALES:
I wish we had unlimited time.
LEIGH SALES:
Your Minister Mal Brough misled the Parliament last week and he also contradicted himself publicly about whether or not he asked staffer James Ashby to procure information from the diary of Peter Slipper the former Speaker. Have you asked Mr Brough to clarify his position?
PRIME MINISTER:
Well Mr Brough certainly did clarify his remarks in the Parliament last week.
LEIGH SALES:
What about the contradictory yes/no answer about did he actually try to get that information?
PRIME MINISTER:
Well he set out his version of events and there is an investigation going on.
LEIGH SALES:
I might be a bit obtuse, but so do you understand that he did or he didn’t ask James Ashby to do that?
PRIME MINISTER:
Well he says he did not. He says he did not ask James Ashby to copy Mr Slipper’s diary.
LEIGH SALES:
He previously said that he did.
PRIME MINISTER:
Well, Leigh he has set out to explain that. I really don’t want to go into the ins and outs of Mr Brough’s remarks but certainly it’s an issue we’re all very keenly aware of, but there is an investigation under way and it will take its course.
LEIGH SALES:
Has he offered to step down from the front bench?
PRIME MINISTER:
I don’t want to go, with great respect, into discussions between myself and Minister’s on this or any other matter.
LEIGH SALES:
Is there a risk that this issue could turn into a running sore for you the way that, say, Craig Thomson turned into for Julia Gillard?
PRIME MINISTER:
Well Leigh, again, I’m sorry you’ve lost interest in innovation...
LEIGH SALES:
There’s lots of issues, we can walk and chew gum at the same time.
PRIME MINISTER:
The problem is we can’t. You see we can’t chew the gum at the same time because...
LEIGH SALES:
If every guest on the program came on and they only got to talk about what they wanted to talk about it would be a very different program.
PRIME MINISTER:
Let me ask you this question – how interested do you think your audience are --
LEIGH SALES:
I ask the questions on this program. I think they’re very interested frankly!
PRIME MINISTER:
Do you think they’re more interested in innovation and jobs?
LEIGH SALES:
I’ll tell you what I think they’re interested in, one of your colleagues resigning from the Liberal Party to join the National Party, Ian Macfarlane. A number of your colleagues have criticised him including the Attorney-General, George Brandis, who said it’s left a bad taste in peoples mouth. How do you feel about it?
PRIME MINISTER:
Well what I’d say is, Ian has been in the Cabinet, Cabinet or Shadow Cabinet since 2001. He’s a friend of mine, he’s been a very capable Minister. The reason I did not appoint him to the Cabinet after I became PM was not because he had been a poor performer, far from it. It was because I wanted to make room for new people, for younger people, for more women.
There are only so many places in the Cabinet and you cannot bring new talent up unless some of the older talent moves on and I give the example of Gail Kelly, former CEO of Westpac. Gail could have run Westpac for another decade or two, but she moved on because other people had to move up. So you’ve got to have succession.
LEIGH SALES:
Nonetheless, how do you feel now about Mr Macfarlane leaving the Liberals to join the Nationals?
PRIME MINISTER:
Look, other people have commented on it, I think I’ll - there are some issues to be sorted out with the LNP in Queensland. These internal party matters I think we should keep internal to the Coalition. But the Coalition is very strong.
LEIGH SALES:
Let me ask you one more question. Is it a betrayal that your Deputy Prime Minister Warren Truss didn’t inform you that these sorts of discussions were going on?
PRIME MINISTER:
Leigh, again, I’m very keen to talk about the agenda, the reform agenda, the innovation agenda that will provide great jobs and exciting business opportunities for your children and your grandchildren, but the internal workings of the Coalition are really best discussed internally.
LEIGH SALES:
Let me ask you about another important matter then, foreign diplomacy. There are reports that Joe Hockey is about to be announced as Australia’s new Ambassador to Washington. Can you confirm that and why’s he your pick?
PRIME MINISTER:
That’s a very good question, but what’s that great line? ‘You may very well say that, but I couldn’t possibly comment’. Joe is a great Australian and I look forward to him serving Australia in other capacities, but any announcements will be made in a more formal and appropriate manner.
LEIGH SALES:
A little gift, back on the innovation package to finish.
PRIME MINISTER:
How very kind of you!
LEIGH SALES:
The Treasurer says that the spending on this package will come from cuts in other areas which will become clearer in about the next week or so as the Mid-Year Economic Forecast comes out.
Is it fair to say that your political honeymoon will be over once the focus shifts to tough spending decisions that you’re going to have to make?
PRIME MINISTER:
Well Leigh whether it’s fair or unfair it’s something for you to comment on not for me. You often invite me to comment on myself, but that’s your job and I don’t want to do a work to rule here, but I think it’s very much your responsibility.
LEIGH SALES:
Does the public need to brace that there’s going to be some bad news coming down the pipeline?
PRIME MINISTER:
Well I think the public understand that governments always have to make tough decisions and have to make choices. We have limited resources - we can’t afford to lower taxes and raise expenditure for example.
The Australian - can I tell you, the biggest mistake that any politician can make is underestimating the intelligence of the Australian people, the Australian people have a very good understanding of what the challenges there are.
And what they expect me to do as the Prime Minster is to explain what the challenges are as I have done in terms of our transition from the mining boom. Our terms of trade, our income – all of us got wealthier off the back of the mining boom. Now that has receded, mining’s not going out of fashion but the boom days are over.
What takes its place? It is the ideas boom. It is innovation. It is taking advantage of the imagination, the creativity of Australians, all 24 million of us, and taking advantage of that human capital. That’s the objective, and what I’ve set out - I think everyone agrees with that - and I’ve set out the measures that I believe will enable us to do it.
And so that’s what I’m seeking to do, secure the future of our children, our grandchildren and many generations to come. That’s the direction in which a successful nation must go. Innovation, imagination, technology, science.
LEIGH SALES:
Prime Minister, thank you very much for coming in this evening to speak to us.
PRIME MINISTER:
Thank you so much.