Housing; energy; taxes; Wentworth; the Budget; petrol prices
Prime Minister
ALAN JONES: Prime Minister, good evening.
PRIME MINISTER: G’day Alan, I don’t know much about horses I must confess.
[Laughter]
JONES: That’s horses as well as sheep.
PETA CREDLIN: Don’t worry PM, he does.
PRIME MINISTER: He does, that’s true. How are you?
JONES: I loved it what you said about drought, I don’t know one end of a sheep from another. You don’t have to. Just on a couple of things that I made earlier, dividend imputation and negative gearing as two Labor policies. No doubt you’ll be having plenty to say about that in the weeks ahead.
PRIME MINISTER: Well what this basically means is you buy a new house and the minute you buy it, it declines in value. It’s a bit like buying a new car and you drive it off the lot and it falls in value because the people you can sell it to after you buy it are different to the ones you’ve just been competing with to buy the first one. I mean, what is basically does is brings down the values of everybody’s house because it means that there are fewer people buying the house you own. And when there are fewer people who want to buy the house you own, guess what happens? Your value goes down. Now Labor don’t understand economics, they don’t understand housing markets. As Peta was saying before, there has been a soft landing in the housing markets and last election, you know you had Sydney house prices running at double digits but now they’re not and there has been a soft landing. And what Labor is proposing on putting up capital gains tax by 50 per cent and by abolishing negative gearing as we know, that means your house will be worth less.
JONES: And dividend imputation?
PRIME MINISTER: Well dividend imputation, for small business in particular, yes it hits all of those retirees you’ve talked about including pensioners, but I know that many small businesses they own Australian shares and in times when things are pretty lean, what they live off, the income that is coming in and they’re not making a profit out of their businesses, is that imputation credits that come through from the Australian shares that they have bought. So it is absolutely true we have retirees all around the country who did nothing more than buy shares in, you know, GIO many years ago, or Commonwealth Bank or Qantas or something like that and they are getting, in some cases, tens of thousands of dollars that are supporting their retirement income. And look, Labor is just going to strip it away. Now, there is no rhyme or reason to it. They’re just coming after your money because they can’t control what they spend so they’ve got to tax you more and they’ve got more than $200 billion in higher taxes that they’re going to whack you with over the next ten years.
JONES: Following that Newspoll this week, one commentator said a view that you were solidly capturing the Coalition vote and also appealing to a fair slice of Labor voters on key issues. What are the key issues?
PRIME MINISTER: How much people pay for everything every day and how they’re able to afford it, and you can’t afford it if you don’t have a job and you can’t afford it if you’re not working in a business that’s doing better and particularly a business, a small and medium sized business, that has to pay more to the Government. That’s means they can’t support you more or their business more. So lower taxes are important, lower electricity prices is important, dealing with the drought obviously is something we have spent a lot of time on. Making sure that you have a strong economy because the Labor Party can promise all they like on what they’re going to spend, but if you don’t run a strong economy, then you can’t pay for it. And we saw that when they were in government. They had to stop listing pharmaceuticals on the PBS because they couldn’t afford it. I mean, things got even that bad for Labor. They would spend money like there was no tomorrow.
But when you don’t run a strong economy and you can’t manage the Budget, well you can’t support hospitals and schools and education more broadly. You can’t pay for pharmaceuticals and be able to have affordable medicines. You can’t pay for Medicare. So that’s why running a strong economy is important to the essential services that Australians rely on. But there’s three things – keeping the economy strong, keeping Australians safe and keeping Australians together. You can’t lead a country that you’re trying to divide.
JONES: Alright you made a point there about electricity prices. Last year, Matt Ridley who is now Lord Ridley, a member of the House of Lords in Britain, and he has been on this energy issue for years, wrote for the Spectator magazine. And he was asked the question, and I quote, “To the nearest whole number, what percentage of the world’s energy consumption was supplied by wind power in 2014?” Which was the last year for which there were reliable figures. To the nearest whole number. What is it, 20 per cent? 10 per cent, or 5 per cent? He answered his own question. None of the above, it was naught per cent. That is to say, to the nearest whole number, there is still no wind power on earth, he made the point, the last year which there are reliable figures wind provided 0.46 per cent of global energy consumption. Solar and tide 0.35 per cent. Now, how much longer are you going to continue subsidising renewable energies and when are we going to get an affirmation that our energy future relies on coal-fired power and nuclear power, which is illegal in this country?
PRIME MINISTER: Well it’s all forms of reliable power that our future for energy depends upon, and we can’t run an energy system that relies on intermittent power sources like wind and solar. They, look, they form part of the mix but they are never going to be what keeps the lights on and you know there’s increasing investment going into these areas and these subsidies run out in a couple of years under the programme that we affirmed some years back and those subsidies run out. Because you don’t need them anymore because a lot of these technologies on those areas of energy generation, well they stand up on their own two feet. They don’t need subsidies. So I’m not keen to have a system that is subsidised because if you’re subsidising energy generation, guess who pays for it? You do.
JONES: Is that the reason though that when we don’t have people investing in coal-fired power, for example, I was looking at some figures today. Coal-fired power stations are under construction everywhere. 583 in China, 271 in India, 145 in Indonesia, 71 in Turkey, 84 in Vietnam, 45 in Japan. There is none here in Australia. And they are using Australian coal. Are we going to reach the -
PRIME MINISTER: Well they are and I hope they continue to do that, using Australian coal. I mean, all those countries you have just mentioned Alan, they have very different demand profiles going into the future. What I mean by that is when you look at energy consumption in all those countries over the next five to ten years, it’s a curve that looks like that. In Australia, the curve is like that. And so that is obviously going to impact on what adds up from an investment point of view. But what Angus is working on as we speak is working from the ACCC report that I commissioned when I was Treasurer which showed that we need to have a better investment framework for reliable what I call fair dinkum power. And there was a whole range of recommendations but one in particular which looked at ensuring that we were guaranteeing the take-out price of investment in reliable power so that the finance could come so those projects could stack up. We just want to see projects stack up, we don’t want to go around taking money from taxpayers and putting up tax because that’s a false economy. If you put people’s taxes up to bring their electricity prices down, well they won’t thank you.
JONES: But if you don’t have coal-fired power plants, I mean are you going to sort of do something about AGL and Liddell? I mean, if these things close in 2022 we are short of reliable, affordable and available power. No question about it, prices will go through the roof.
PRIME MINISTER: Well we saw that after the closures in Victoria as well and there are a range of things we’ve got to invest in. I mean, down in Tasmania I think last time I was on your program I was talking about what Will Hodgman is doing down there. I mean, Tasmania is completely driven with projects that began in the early 1900’s with using their dams and their hydro power and they want to double the capacity of that so they can actually be a battery of the nation to the rest of the country. And there are other projects that are like that. But whether it’s the traditional sources like coal or gas, you know my views of gas. I’d like to see us get more gas from under the ground, I’d like to see farmers share in the revenue from that. I mean, when I was in the United States earlier this year in Texas, they pay a third to a half of what we do because they have had a gas revolution there and more gas. Make sure it doesn’t go overseas, make sure it stays at home. We’ve got those policies and that gets prices down.
JONES: What about nuclear? I mean there are thirty countries currently operating 450 nuclear reactors, 60 nuclear plants under construction in 15 countries. We’ve got 40 per cent of the world’s uranium and no nuclear energy?
PRIME MINISTER: Well there have been a number of reports that have done this. I remember the Howard Government did one, Ziggy Switkowzki, and the recommendations of that weren’t terribly favourable in terms of stacking up. But as I said on your program last time, where something can stack up and can actually bring prices down, I’m all for it and you’ve just to do the work to make sure it does that.
CREDLIN: Just on that though, Prime Minister, why won’t you move to repeal the prohibition on nuclear power development in this country?
PRIME MINISTER: Well right now I would like to see the work which shows there is a point to that because we could do it on a commercial basis and it would actually bring power prices down. So I’m totally open to that work Peta, I’m totally open to a lot of these propositions. But what we need to do is make sure that it can stack up and we can successfully move in that direction. See, the source of it doesn’t really bother me. What matters is that it is reliable, it can be contracted, it can be priced at lower than what we are getting currently because that’s what brings people power prices down. I’m not too much into an ideological debate about from what source it comes, I just want to make sure it turns up and that it brings power prices down.
CREDLIN: If you are agnostic, if you are truly agnostic, then coal is a no brainer, gas is a no brainer and obviously nuclear because nuclear has the double whammy of being available in baseload and low, actually no emissions. But I want to ask you about Paris, because -
PRIME MINISTER: Well just on that, the only work I have seen, Peta, the only work I have seen on that and it would be the same work you would have seen, is that is only achieved with very significant government subsidies. I mean that’s the available work, but if there’s new work that’s good.
CREDLIN: No less significant, PM, than what has been put into wind turbines and solar panels on roofs and many other things. But I wanted…
PRIME MINISTER: Maybe check the numbers, but I think it’s a pretty big public investment.
JONES: I think those subsidies are $3 billion a year and $30 billion by 2022. So I think -
PRIME MINISTER: The source of it is not the issue. Yeah, go on.
CREDLIN: Let’s turn to Paris. Way back, take your mind back to the Cabinet discussions in 2015 and the announcements made publicly by the then Prime Minister Abbott was that Australia would have the 26-28 per cent Paris provided it was an all-in agreement and everybody else was at the table with us. Australia reserved its right to withdraw if things were to change quite dramatically right now. Of course they did, the United States withdrew. When Malcolm Turnbull went to the Paris conference at the end of that year in 2015 in December, he promised $1 billion from Australia. Now about half of that money has been paid. You’re likely, or at least your representative, to go to that meeting in Poland at the end of the year. You have an opportunity in those meetings to withdraw without penalty from the Paris Agreement and 60 per cent of the big emitters in the Paris Agreement are no longer reducing emissions. It’s business as usual, or increases. So 60 per cent, there is a material change. 1) That’s a precondition to leave and 2) my other question is there has been some lukewarm responses from your Ministers about tipping in this additional money. As I said, the former Prime Minister –
PRIME MINISTER: Well, we’re not going to do it.
CREDLIN: So you rule out any further money into the reliable fund?
PRIME MINISTER: We’re not putting any money into it. No, we’re not.
CREDLIN: Terrific. Say that again PM, because it hasn’t been clear from your Ministers.
PRIME MINISTER: Well I’ve already said before this program.
JONES: He has said it.
PRIME MINISTER: I’ve said it several times. We’re not chucking money at it. We’re not going to do that.
JONES: Can’t you rip it up, PM, can’t you rip it up?
PRIME MINISTER: I was at the Cabinet meeting back then, I was at that Cabinet meeting. And I recall that we set the target at what was in the middle of the pack in what was something that was very achievable, it wouldn’t have a material impact on electricity prices. That’s what I remember, and that actually hasn’t changed. I mean, our 26 per cent target is not going to have an impact on electricity prices at all. I tell you what is though, a 45 per cent emissions reduction target and that is Labor’s target and what that is the equivalent on and the information I have seen from the University of Wollongong is a Carbon Tax three times of the one we got rid of back in 2013. So if people are worried about impacts on power prices, they should be worried about Bill Shorten’s 45 per cent emissions reduction target. That’s his plan, that’s what he’s going to do.
CREDLIN: By why stay in Paris, PM? Why stay in Paris? You say it’s not a big deal -
PRIME MINISTER: What’s to be gained by getting out? What’s to be gained by getting out?
CREDLIN: What’s to be gained by staying in?
PRIME MINISTER: Well there are very important relationships we have in our Pacific region that you would be very well aware of, you’d be very well aware of the strategic significance of those relationships -
CREDLIN: But they’re not dependent on Paris.
PRIME MINISTER: Well Peta, on the most recent Pacific Islands Forum highlighted just how important the commitments we’ve made are to our neighbours in the region, very important strategic security -
CREDLIN: But that’s not about the Paris Agreement, that’s about funding.
PRIME MINISTER: I’m sorry Peta, I don’t know if you were at the meeting -
CREDLIN: No but I read the documents.
PRIME MINISTER: Sure and you will see the level of concern and it wasn’t about the money Peta. It’s about our commitments, and keeping our commitments Peta. I was there when we made that commitment, right? I was there, we made the commitment as a Government, our Government. Australia, when we make a commitment, we keep them. As we do with every commitment we make. It’s not going to have an impact on power prices, so honestly, people can talk about this until the cows come home, I’m just interested in what’s going to bring power prices down.
JONES: But I’ll note this is about a commitment, you’re also a signatory, or Julie Bishop is, to the global compact on migration. Are going to allow the United Nations to tell us what our migration levels are to be? If not, why did we sign this damn document?
PRIME MINISTER: No we’re not, and that’s been an issue under consideration for some time and I’m not going to say much more about that tonight. But I think I’ll leave it at that.
Thanks for being with Peta and me and thanks particularly to the Prime Minister, being able to discuss these things and give people an insight into it, it’s very, very important.
PM you were just talking about cost of living there about 25 minutes ago. Can I just raise this business, I know everyone seems to have no answers about this, about petrol prices. Now coming down the Pacific Highway in Sydney on Friday, the petrol prices was 169.9, on Monday morning it’s a 147.9. How do you persuade the motorists, the poor coot, no money in his pocket, that he’s not being ripped off?
PRIME MINISTER: Well we’ve been living with these cycles for a long time and petrol prices at the moment, I know they’re quite elevated, they’re much higher and all around the country too. The things that are driving the overall high level of price as we know is the crude price and the exchange rate and the fall in the Australian dollar. I mean that’s the economic reason. But these variations I think have always puzzled us.
One of the things I did as Treasurer was give Rod Simms at the ACCC the power to see not just what happens, how they were pricing it at the bowser at a particular station, but to go right back through the entire fuel supply chain right back into the board rooms and the head offices. Now Rod has been working away on that. I’m keen to get the report back from him as to what he’s found, as to how that’s impacting the cycle. The good thing today though is, you get these apps, you can look at them and you can actually find much better deals –
JONES: Yeah, but you can’t do that when you’re, you can’t be -
PRIME MINISTER: These days, well, people who are into it –
JONES: Driving around Sydney all day?
PRIME MINISTER: No, no, but look, many people, they are very into it -
JONES: [Inaudible]
PRIME MINISTER: Good deal. Well, I used to actually. I get driven around now, they won’t let me drive any more Alan, in a lot of ways that’s probably a good idea I suspect, other motorists are safe. But what’s important though is there are a lot more tools to help you manage it and I think that’s good for families. These things really do hit you, they really do and they hit businesses too. Because if you’re a tradie driving a ute and you’re out there going from site to site or you know, you’re supervising as a boss across a range of sites, you’re chewing up that fuel. So ensuring –
JONES: Have we got a competition, sorry Prime Minister, we’ve got a Competition and Consumer Commission. I don’t know quite what they do, but isn’t there someone somewhere in this gigantic bureaucracy that is able to walk into a petrol station and say: “Look, excuse me, could you turn the bowsers off. You were selling this stuff for 149 on Friday, it’s now 169, please explain to me how you put the same product up by 22 per cent.” Isn’t there someone who could do that?
PRIME MINISTER: Well there is, his name is Rod Sims and that’s what he has the power to do. He is at the ACCC and that’s when they’ll take the suppliers to court and he will seek remedies against them and he has been successful, I understand, in doing that. That is his job, we have an independent watchdog, a cop on the beat when it comes to petrol prices. That’s his job.
CREDLIN: PM I want to ask you about some of the issues that you had, I think, drag the vote down in 2016 and where you might go at the next election. One of those key to supporters of the Liberal Party was superannuation. People who feel ripped off by policy changes, having put something away so that they’re not on the pension, they’re standing independently from the government teat. Now, as you’re preparing all your polices as you go into the next election, do you have anything on the table for superannuation? Are you going to make changes? Do you rule out any adverse changes if you are elected?
PRIME MINISTER: I do 100 per cent, absolutely, we’re not doing it. You know we made some changes a number of years ago and they were difficult decisions. The Budget is coming back into balance next year, that’s the projection, that’s been a big task. I mean you can’t underestimate the size – and I know you wouldn’t, you were there at the start Peta – but in five years, we will have been able to get the Budget back from the horrendous deficit we inherited from Labor, back into balance. Now everyone, I think, out there would probably agree that in New Zealand under John Key and Bill English, they did a great job on getting the New Zealand finances back on track. It took them six years to achieve that, we’ve done it in five. That’s been a big, hard effort over many years. We tried a number of things and it has – as you recall – some of those or many of those, we were unable to get through and we had to come at it another way. But what we’ve done, which the Liberal Party-led Governments always do is we don’t make excuses about it, we just get on with it. We needed to rebalance the books and that’s what we’ve done.
And we’re not touching super. The only person who is touching people’s super is Bill Shorten, with the dividend imputation refund, which he will strip away.
CREDLIN: That’s right.
PRIME MINISTER: That’s $5 billion a year he is going to be stealing from Australians who did nothing other than buy Australian shares. Their taxes were paid on it and they should be treated exactly the same as those who are high income earners who actually can access the imputation credits.
JONES: PM, alright, on what’s affordable. I know that you’ve managed to drag Bill Shorten into the net in relations to company tax. He has essentially agreed to what you were proposing last week, for companies with a turnover of $50 billion or less. But could I just put this to you. Companies don’t vote, individuals vote. For some poor coot out there who is only on $65,000 a year, okay he gets the first $18,000 tax free but one he gets to $37,000 he’s paying 32.5 cents in the dollar tax. That’s one dollar in every three is going to the tax man. Is there any likelihood that you will be able to provide relief to these people?
PRIME MINISTER: We legislated in this year’s Budget, that taxpayers in particular, will get just over $500 in tax relief in this financial year alone. Going forward, we’ve got further tax relief going right across the spectrum, whether it’s at the top end and right through the middle, we’re going to get rid of the 37 cent tax bracket. Like completely abolish it. So 94 per cent of Australians will not face a marginal tax rate higher than 32.5 cents. But what I was also saying – you mentioned small business – well more than half of Australians work for a business that will be getting the tax cuts that we are taking through the House of Representatives today and they’ll got through the Senate. Now you say that the Labor Party is going to support me, well they had to be dragged kicking and screaming to that. But I tell you what they’re still going to tax small business with; they’re still going to hit them with the family business trust taxes. They’re still going to hit them with the higher personal income tax rates because they’re putting – we’ve got $144 billion of tax relief for personal income tax, Labor is going to cut that in half, to just 70 billion. So they’re going to steal away the tax cuts we’ve already made law.
Let’s say you’re a young person out there in Wentworth this afternoon, this evening, over the next ten years it will be your ambition to earn more and more as you have more experience in the work force and do much better for yourself. Over the next ten years under Bill Shorten’s plan, you’ll pay more tax. Under our plan you’ll pay less. Because we believe lower taxes are right, because we believe Australians should keep more of what they earn. That’s what a fair go for those who have a go means. It’s what we believe. That’s why we want taxes to be lower.
CREDLIN: Prime Minister why should Liberals vote for your Government, why should they vote for Dave Sharma on Saturday?
PRIME MINISTER: Because if they want the certainty of a strong economy and to keep the strong economic performance which has been empowering the 29,000 small businesses that are in Wentworth, the 60,000 Australians that will benefit from the income tax cuts that we’ve legislated, if they want to continue to benefit from the strong economy that is enabling us and has enabled us to bring the Budget back into balance, so we can afford the essential services Australian can rely on, then Dave Sharma is the Liberal candidate that delivers that certainty and that continuity on all of those things. If you want to keep Australians safe, if you want to ensure that there is a Liberal and National Government that knows to do the right thing when it comes to national security and frankly do the right thing when it comes to our stand on important issues like the security of Israel. Thirdly, if you want to keep Australians together - and not have militant unions run the country and come and picket outside your business - and reinstate the Australian Building and Construction Commission, a vote for anyone else other than Dave Sharma is a vote that brings Bill Shorten closer to your wallet, to your business, to your house.
JONES: Thank you PM, I think the best reason why people should vote for Dave Sharma is he’s an outstanding candidate, I would hope that we’ve reached the point where merit is the criterion.
PRIME MINISTER: Absolutely.
JONES: One thing before you go, are Muslim communities for example, I know there’s talk about Indonesia, going to be upset with this proposal about moving our embassy from Tel Aviv to Jerusalem, given that they believe many of the holy sites, Muslim and Arab holy sites are also within the precinct of Jerusalem? Is there going to be a backlash from Muslim and Arab communities towards Australia?
PRIME MINISTER: Well I’ve been in contact throughout the day with President Widodo as has the Foreign Minister with her counterpart in Indonesia as well. I mean we’re a sovereign, independent country, where we explain what we’re doing which is what we’ve done today and over the last night. I think people respect that countries will take positions on things from time to time. But what both Indonesia and Australia are committed to is a two state solution when it comes to the Middle East. Now what Dave Sharma has proposed is a way to achieve that, to pursue that goal while at the same time providing recognition for Jerusalem as the capital of Israel and indeed for the capital of Palestine, for Palestine in east Jerusalem, Israel in west Jerusalem. Also, by the time everyone gets up in the morning, we would have voted against – oftentimes before they’d abstain, abstain, abstain – we will have voted against an important motion in the United Nations General Assembly that would see Palestine conferred a special status to chair what’s called the G77 of all the developing nations.
CREDLIN: Hear hear PM.
PRIME MINISTER: Now we don’t think providing that reward…
JONES: Yep, absolutely.
PRIME MINISTER: We’re voting no. We’ll be voting with Israel and of course the United States and we’ll take that position as well. You’ve got to just stand up for what you believe and you can do that when you’ve got good relationships with your neighbours, which we do. If you’re honest with your reasons for it, we’re not rushing into anything, we’re being consultative but we‘re being up front with people. When you’re up front with people, I find you’ve got a better chance of convincing of the merits of your argument.
JONES: Good to talk to you, thank you for your time. There’s many more other things we could discuss but that’s it for tonight. We’ve run out of time, we’d be here forever. That you for your time, it’s much appreciated by us and our listeners.
PRIME MINISTER: See ya guys.