TOM CONNELL: Well, it’s time now to welcome you back to our weekly edition of “Hume and McAllister”. Each week Finance Minister Jane Hume and Assistant Climate Change and Energy Minister Jenny McAllister face off and fire up on the big news and political developments. Jane, Jenny, welcome. We missed our big fancy opener. I’m sure it will be back next week. So, I was a bit put off there. We, of course, begin by letting you both warm up with a topic of your choice. We’ll start with you, Jane. What’s been on your mind this week?
JANE HUME: Well, I think what’s been on my mind this week is the same as all Australians, Tom – that interest rate rise. You know, just over a month ago Labor’s budget forecast that interest rates were going to stay the same at 3.85. That quickly became obsolete. With the interest rate rise this week, many Australians really feel that they’re doing it tough and rightly so. Jim Chalmers has said that the RBA Governor has to explain the reasoning behind his decision, but quite the opposite. It’s Jim Chalmers that needs to explain to the Australian people why the Budget that he delivered gave the RBA no reason to not increase interest rates. In fact, what was the Treasurer thinking delivering a high-spending Budget during a period of high inflation?
But then the Government doubled down by advocating to the Fair Work Commission to increase wages by at least inflation. Now, the good news is they demurred on that level of economic irresponsibility but even a 5.75 per cent increase was more than the market was expecting. So, of course, the RBA had to push up interest rates. It’s in its mandate to keep inflation down and it’s only got one tool in the shed. If the Government was doing its share of the heavy lifting, then perhaps it wouldn’t be necessary. So, quite the opposite. I think it’s Jim Chalmers and Anthony Albanese that have their explaining to do to an angry Australian public.
TOM CONNELL: Jenny, what has you fired up this week?
JENNY MCALLISTER: Well, we’re all heading back to the Parliament next week, Tom, and there is an important bill on the notice paper. Labor went to the last election committed to establishing the Housing Australia Future Fund – $10 billion fund and the biggest investment in a decade in social and affordable housing. It’s backed by stakeholders, Premiers of all colours and descriptions, community housing organisations, and, of course, it is desperately needed because all around the country, Australians are asking, “What will we do about housing? How can we get more housing into the mix and in particular how can we get more social and affordable housing into the mix?” Now, this was a bill that in the Lower House was backed by all of the crossbench, by the Greens and one Liberal. And so when it comes into the Senate, the question that needs to be answered by the Liberals and by the Greens is why won’t they back this critical bill, this bill that will deliver the social and affordable housing that all Australians intuitively understand we desperately need?
TOM CONNELL: All right. Jenny and Jane, thank you. So, that’s your turn. Let’s delve into the rest of the program. We’ll get to our big topics of the week but first, our big top story today, including part of this story that broke on Sky News last night. Katy Gallagher facing serious accusations she misled Parliament. This is over what she knew about the Brittany Higgins case before it was in the media. So, very specific question to you, Jenny: do we at least need clarification, given the text messages David Sharaz, the partner of Brittany Higgins sent to Brittany Higgins that clearly in this timeline suggests that Katy Gallagher did know? Does she need to clarify exactly what she knew?
JENNY MCALLISTER: Well, no. Katy has given statements this week indicating she’s comfortable with her public responses and her public statements and that’s the end of it from my perspective. Katy Gallagher is an extremely important member of our team. She’s a person who’s highly regarded for her capability and for her integrity and she’s doing a very important job for the country.
TOM CONNELL: Right. But all she said this morning in one interview is that she didn’t know David Sharaz particularly well and she wouldn’t comment further. When you say she’s commented on this, she hasn’t said exactly what she did or didn’t know. Doesn’t she at least need to clarify that given the allegations that are now out there?
JENNY MCALLISTER: Well, she’s indicated that she’s comfortable with her statements that are on the public record. I will say this: it is a strange line of argument from the Opposition. This was a very significant national story. It related to serious allegations, both about conduct within the building, but also about the way that the government of the day was responding to that conflict. It’s actually unsurprising that questions were asked about this matter and I think the public would have expected that questions were asked at that time.
TOM CONNELL: They absolutely would, but the crux of this is what Katy Gallagher knew, whether she said one thing but knew something else. Isn’t that something that should be clarified? Wouldn’t you be asking for the same thing on the Liberals’ side if there seemed to be that contradiction?
JENNY MCALLISTER: Well, as I’ve indicated to you, I’m comfortable with the response that Katy has provided this week.
TOM CONNELL: Jane, your reaction to this?
JANE HUME: Well, there does seem to be some inconsistencies here and I think that’s all we’ve asked for – is that those inconsistencies are cleared up, are clarified. Because misleading the Senate is a really, really big deal and we just want to make sure that that hasn’t occurred. So, how do we marry up what we’ve learnt this week through those text messages with the evidence that Katy Gallagher has already given? I don’t think that’s an unreasonable request.
TOM CONNELL: So you’re asking for an explanation. If she gives one and says “I didn’t know.” Is that it? Would you ask to have further text proof? What’s a high-enough bar for the Opposition on this?
JANE HUME: Well, that’s a very good question. I think we need to start with Katy on this one, because clearly there were communications between David Sharaz and Brittany Higgins and Katy Gallagher prior to Brittany Higgins going public. That doesn’t seem consistent with what we’ve understood so far. Let’s let Katy explain what it is that she knew, when she knew it and whether that is consistent with the evidence that she’s already given the Senate, because as I said, misleading the Senate is a really big deal and it does need to be addressed.
TOM CONNELL: Let’s move on to productivity in Australia. It’s plunged to an historic low in terms of where it’s moved from on Wednesday. National Accounts of the March quarter reveal the steepest 12-month decline in productivity since the Bureau began taking records since 1978. The importance has been flagged by RBA Governor Phil Lowe who says productivity plays a key role in inflation.
TOM CONNELL: So, Jenny, we’ve heard a lot about it. I’m not sure voters will be sort of captivated by Phil Lowe and his graphs, as important as they might be. What are you actually going to do about it? Can you sum it up in a simple way or is it this big, unwieldy, impossible to pin down thing that’s just how the economy is going more broadly?
JENNY MCALLISTER: Productivity is absolutely essential and you heard that there from the remarks from the Treasurer and it is a key feature of many of the investments that are in the Budget. When we laid out the Budget we made it clear that there were three objectives, to take out some of the pain, to provide targeted relief where we could to some of the challenges that Australians are experiencing this year, to deal with the supply side challenges that were constraining, amongst other things, the performance of the economy and productivity and, of course, to do all of that in the context of a responsible Budget that didn’t add to the burden of inflation. That was the objective and that was the basis of the Budget we laid out.
On that centre question around productivity, there are some really important things we can do. We can invest to lift the skills of Australians so that they are better placed to be more productive at work. We can invest in technology. That’s not unrelated to skills, because more skilful workforces and more skilful management are better positioned to integrate technology into their businesses and lift productivity and, of course, we can help diversify the economy by doing – making some of the important investments we’re making in clean energy, in our military capabilities, through the AUKUS arrangements, and through a range of other investments to rebuild manufacturing in this country.
TOM CONNELL: All right. So, I guess the interesting thing about this, Jane, that you probably agree it’s not up the scratch, but that’s been the case for a long time and productivity is a real lag factor, right? It’s another one of those things where you go, “What was the Coalition doing for the past decade?”
JANE HUME: Not only that but, in fact, in the Budget that Jenny was just speaking about, productivity is forecast to go down over the next – over the forwards and also over the medium term. I think that’s something that we should be really concerned about. Jenny is right that there’s plenty we can do to enhance productivity and not all of it involves what taxpayer funds can do. There’s an awful lot that the private sector can do too. Low energy prices and reliable energy sources are a great source of productivity and have, in fact, been fundamental to the economic growth to, particularly, say, my state of Victoria and the growth of manufacturing here for decades and decades. That seems to have disappeared off the agenda.
Having a flexible industrial relations system is also a good way to enhance productivity and yet we’ve seen this government do the exact opposite with its industrial relations reforms, both the ones that have already gone through and the ones that are now proposed. Making sure that you cut red tape and increase competition and very importantly have an effectively managed migration program – these are all things that you can do to enhance productivity right now and they don’t all need to have taxpayer money redirected into pet projects by this government.
TOM CONNELL: Yep. But what about the lag factor, Jane, do you sort of put your hand up and say maybe we didn’t do enough on this when we were in government?
JANE HUME: Look, I think that government’s past have been absolutely remiss in their ability to make a real difference in shifting the dial on productivity because it is so fundamental –
TOM CONNELL: So yours included when you say that?
JANE HUME: – to a sustainable growing economy. Look, I am not going to put my hand on my heart there and say “Look at all the great things we did” because we did do some things that were good, don’t get me wrong, but at the same time, could we do more? Absolutely. Could this government do more? Absolutely. In fact, it must do more because as Phillip Lowe said it’s the only way to sustainably bring inflation down and allow real wages to grow.
TOM CONNELL: In 30 seconds or so if you could, Jenny, do you understand why voters may have a perception you’re more focused on splitting up the pie than growing it?
JENNY MCALLISTER: Well, I reject that entirely. There is a Budget full of measures that seek to actually repair the damage that’s been done to the economy over the last 10 years by a Government that really was focused on the wrong priorities – always on the politics, never on the national interests. Unfortunately, that delivered the worst decade of productivity growth in 60 years. We need to deal with that. Investments in the NBN, investments in skills through fee-free TAFE, cleaning up the energy market and repairing it after a decade of failed policies by the now Opposition –
JANE HUME: Lower prices, Jenny. You’ve got to lower the prices and make it reliable.
JENNY MCALLISTER: There are so many things that are required to be done to actually repair the economy and set us up well for the future. It was one of the three pillars and a real focus in the Budget, and we’ll be talking to voters about that in the coming months I am certain.
TOM CONNELL: Well, we’ve got to quickly get to a break.
TOM CONNELL: Welcome back. For the first time, Australia's banking regulator APRA will be required to consider climate change risks as part of its work. The government mandating APRA to adopt new climate reporting standards. The authority must also promote transparency in relation to financial risks arising from climate change. Jenny, right in your hitting area. So, the government undertaking this change. What are you trying to address here? I mean, is this a bad investment for people? Shares, making sure their returns are dwindling? A company gets in trouble, they will have known whether a company was taking climate change risks seriously?
JENNY MCALLISTER: Well, Australians, I think, instinctively understand that the climate is changing. We've endured several years of droughts, fires, floods, cyclones, heat waves, and all of the advice from the scientists are that these kinds of events are going to become more frequent and in some cases, more intense. And so we actually need to prepare our economy for this. And an important part of that is making sure that everyone's got the information they need to make prudent decisions. The direction to APRA follows a long period where APRA has been considering how the institutions that they regulate should best report on climate risk.
But it's actually not the only thing that the government is doing. We're also making decisions to invest nationally for the first time in a National Climate Risk Assessment that will let us see the kinds of risks that we face by different infrastructure, different services, different assets around the country. And we're making quite important investments in actually preparing and insulating communities from the impacts of some of these hazards which we know have been so devastating to so many people over the last few years.
TOM CONNELL: It looks, Jane, like we're going almost straight from La Niña, three back-to-back La Niñas and the devastation that's caused to El Niño. That's now pretty bad for Australia, too. Dry and hot. It could be a pretty dire summer ahead in particular because all that fuel, as we call it, the undergrowth, gets dry and turns into fuel for fires.
JANE HUME: There's no doubt that climate risk mitigation is a priority that governments and communities have been dealing with now for many years and will continue to do so. The question is, of course, at what cost and at what cost to those communities if they don't have reliable energy sources to deal with, whether it be a cold snap, whether it be pumping water, whether it be just needing power for a community that's been cut off by a flood. All of these things are really important and yet don't seem to be part of that conversation about climate risk mitigation. Having reliable and affordable sources of energy from diversified sources is so important. My concern is that because this government is putting all its eggs in the renewable basket, it's actually foregoing that diversification of our energy mix that is fundamental to making sure that communities can be – can reduce their risk, can reduce their climate risk and cope with disasters that you're talking about right now.
TOM CONNELL: Ok. Jenny, just 30 seconds to respond to that before we get to our last topic because I know it's your area, I'm sure you've got a response.
JENNY MCALLISTER: Look, two things. I mean, over the last decade, very little was done to help communities understand their own risk. For the first time, we are going to make that information available and we know it'll be really important to the many asset owners, local governments, state governments and individual households who are trying to make good decisions in their community and in their operating environment. On the question of energy, come on, Jane. 22 failed policies, none of them implemented, left the system in a mess and we are cleaning it up.
JANE HUME: Except prices went down and supply went up. And that hasn't happened under you, Jen, quite the opposite has happened. So, you can explain it to those communities when they're facing blackouts and brownouts. This winter, this warmer winter that you guys are talking about.
TOM CONNELL: Got a minute. Ok. Got a minute to go, I’m sure –
JANE HUME: That’s not going to be a warmer winter for those that can't turn their heaters on.
JENNY MCALLISTER: Jane. Ten years. 22 policies, none of them landed.
TOM CONNELL: We're getting there, we're getting there.
JANE HUME: All of them brought prices down.
JENNY MCALLISTER: Ok Tom.
TOM CONNELL: Just on something a bit more light-hearted. Maybe, maybe not. Maybe it'll take you back to a bad memory. Jane, we're talking holidays that went wrong today because we've got a long weekend, I'm sure there'll be some dodgy camping trips that we've heard about before on this show. What do you cast your mind back when I think of that topic?
JANE HUME: When my kids were quite young, they were nine, seven and five, I offered to a girlfriend who had kids the same age to take her children away with mine for one week while she started in a new job. And the kids were all going to go to a tennis camp and it was going to be fantastic and I was going to have plenty of time to myself. Unfortunately, it rained. It rained and it rained and it rained and the tennis camp got cancelled every single day. So, I had six children under ten, two dogs, a filthy house full of mud. It was the most miserable holiday I have ever had, so I am never doing that again.
TOM CONNELL: Six kids under ten is a special type of nightmare. Jenny?
JENNY MCALLISTER: Jane's actually triggering me with a whole other different example to the one that was contemplating sharing originally. But mine also goes to kids, which is just this simple sort of tip for new players, which is that adult passports last for about twice as long as children's passports. So, if you believe, correctly, that your adult passports are valid and you're able to travel, you have to check your children's as well. Because I had a holiday where it became apparent two days before we left and about five days before Christmas, when everything was sort of slowing down, that neither of our kids had passports and it was an absolute catastrophe.
TOM CONNELL: Why do I get the sense that all these stories will start with or end with kids somewhere? Mine are only three and one, I think I've got all the dodgy holidays to come. I'll tell you about them one day. Jenny, Jane. Thank you. We'll talk next week.