Latest / Uncomfortable Conversations with Josh Szeps / "The Death of Policy?" with John Hewson

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"The Death of Policy?" with John Hewson · Uncomfortable Conversations with Josh Szeps

• 0:00
  G'day, humans! I'm on the road this week. If I sound a little muffled, it's because I'm sitting on a
• 0:07
  dusty bed in a cheap motel room in the nation's capital of Canberra. The Australian capital territory,
• 0:13
  the bush capital, they call it. And I know you probably think that my travel habits are somewhat
• 0:19
  more glamorous than that. You probably have images of me stepping off a private jet into a stretched
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  limousine to whisk me to my four seasons sweet and yes I do that sometimes. But this weekend,
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  I'm in the nation's capital to bring you a special episode about whether or not it's possible
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  to still have big ideas in politics. I'm speaking with the man who tried to drag Australia into the 21st
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  century and failed about the fate of the truly radical and visionary attempt to reform the political
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  system to reform the economic system, whether we should aspire to such things and if we're going
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  to how best to pull them off. This is a conversation that is timely, it's interesting,
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  it is pressing even here in Canberra and that is yes. Still, perhaps now more than ever. Uncomfortable.
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  It's a big show this week. As I mentioned, it's the man who's been called the best Prime Minister
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  Australia never had. In 1993, through a bit of background, the government of the time,
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  the ruling Labour Party, was fighting for its life, it was going into an election that would give
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  it a fifth consecutive term with the Prime Minister Paul Keating going up against the only liberal
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  leader ever to have never had a cabinet level political position. John Husson was his name,
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  he was an economics professor. Australia was emerging from the recession of the late 80s and early 90s
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  so it seemed at a perfect time for an economics professor to take over the helm from a very long
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  serving Labour government. It was called the unloosable election for John Husson and yet he lost it.
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  Labour won re-election and then didn't win another election for another 14 years. Husson took to
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  that election a radical set of economic reforms. He wanted to introduce a whole new tax,
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  a goods and services tax or a GST. He wanted to introduce a co-payment for accessing Australia's
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  free universal healthcare system, Medicare and this makes John Husson who is now a professor at
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  the Australian National University. The perfect person to talk to about whether we can still do
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  big things. You may not agree with the things that John Husson was trying to do in the 1990s but
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  you can't deny it was an enormous undertaking to persuade the national electorate that they needed
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  a new tax and major reforms to almost every aspect of the economic and political system.
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  I put John Husson on the spot in this interview about one of the most fateful interviews in
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  Australian political history. Election analysts say that the turning point in the 1993 election
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  campaign was an interview that John Husson gave to Mike Willissey on a current affair, which is one
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  of the longest running prime time current affairs shows in Australia. It was the third of March 1993
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  and Willissey asked John Husson about the GST that would be payable on a birthday cake.
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  You will hear Husson's lessons from that train wreck of an interview and his thoughts on why
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  politics is so petty, so short-term, so small-bore, do enjoy this aspirational vision of the politics
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  of the future, with the one and only John Husson.
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  Use that as a metaphor or as one example of the kind of dysfunction that you were just talking
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  about, the short-termism of politicians at the moment. What's the cause of that?
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  Well, it's just incredibly, it's becoming an incredibly short-term focus game. I remember when I
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  lost in 1993, first day back in Parliament, Keating took me aside. A apologise to all the
• 4:32
  names he called me, which I laughed about, but he said, no, I'm serious, he said, I could have
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  lost you, I respect you, and I didn't mean anything to ever said about you. And then he said,
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  but you have to understand, John, that to me politics is just a game, and I will say or do whatever
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  I have to to win. And I hadn't really focused on politics in those terms. I thought it was a pretty
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  significant challenge, a business and so on to provide good government. Do you think that Paul
• 4:57
  Keating meant that? Yeah, he meant it. If you look at some of the things he did when he was Prime
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  Minister, they didn't get a lot of attention, but he in the 85 tax package that he and Hawke
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  took to the Parliament, it had a broad-based consumption tax, which Hawke took out on a private
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  deal he did with Bill Kelty, you know, the famous Mochelle Room deal. And Keating said at the time,
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  he would die fighting for that. And of course, when it came to running an election, where I was
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  making a play for broad-based tax reform, he used everything he could to undermine the credibility
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  of the proposal. Of course, but that is the rough and terrible. And you know, when Hawke, for
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  example, had actually championed a co-payment in healthcare to in the early 90s, and Keating won
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  the support of the party to take over from Hawke by promising that he would not proceed with that.
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  You know, so he is a sensible policy initiative, a very difficult one, always, to make those sort of
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  changes to an essential service that Hawke was prepared to, as he did in a number of other areas,
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  prepared to fight for it and argue through it. And Keating used it for political, to political
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  gains. So there were the early stages, you know, you see an habit come along, and of course,
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  he's just 80 whoever's in government, whatever they're doing, and disagree with everything.
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  When I cooked over as leader at the opposition, I had a... Well, I just started... What
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  yet did you take out in 1990? I had a constant strategy then. Sure, when I disagreed with the
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  government, I would disagree. But on substance, on the substance of the issue, but I also saw our
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  role as being constructive, try to be constructive, get out in front, call on the government to do
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  things that would make it easy for them to do. And so when there was a big debate about how to
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  handle monetary policy, you know, we were easing the past to the raising interest rates, which
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  said if they didn't raise them early, they'd have to raise them later, and they'd put them up
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  much higher, and they'd do a lot of damage, and of course, that gave us a recession. But, you know,
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  a lot of other things are calling on the government to commit to the first goal for maintaining a
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  relationship with China when Hawke wanted to close the embassy, but supporting down to the
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  giving a visa status to those Chinese students and others who were in the country, post-Teniman square.
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  And, you know, I give you zero tariff protection, kidding, you used to call me Captain Zero,
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  but it made it very easy for him to cut, you know, textile clothing and footwear tariff from
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  in the hundreds of percent down to, you know, a low number, and they didn't get the resistance to
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  that. So it was a more constructive process, and that's what was lost. That was really the point
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  of his comment to me, you know, that in the end, if you want to win government, you, you know,
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  he'll run a scare campaign, which he did, is ironic that everyone focuses on the fact that the
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  GST was supposed to be the basis of a scare campaign that cost his government, but it really
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  wasn't in our nightly polling that started to disapuse an issue about 10 days out. The big issue
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  was health, which was a genuine scare campaign, you know, the claim that went into about 13 key
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  marginal seats at every level from little box drops to local media, and so on, dawn-ocking, and so on,
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  that if you, if mum took two kids to the doctor under Houston, it cost $92. There was nothing in
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  the policy about costing anything. And scaring people about it. But scared, it was a great
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  experience. And it worked very well and reliable. Now scare campaigns have become a feature of
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  political campaigns, although to a lot of people, I think they're wearing a bit thin, because when
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  you see that there's been an issue that's been left to drift for so long, and the government's
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  really struggling to deal with it. And, you know, there are a number of those now. I guess you
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  could almost go into any area of public policy and find where there's been policy drift.
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  So I mean, I want to talk to you about that. I want to talk to you about how you do do big reform.
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  Then, like, if we are mired in the short-termism, which is probably partly due to the
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  Keating World view that you just articulated that I won't necessarily condone, but this sort of
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  rough and tumble politics is everything. And we don't need to think about long-term policy
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  point of view. And probably partly also caused by the speeding up of the news cycle and social
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  media and all of the things that kind of made it a lot easier. It's a lot easier to run a
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  scare campaign on Twitter and social media and Facebook and so on now than it ever was.
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  And I can understand a certain level of cautiousness now amongst politicians. We're not wanting to
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  embark on big ventures, but big ventures are exactly what we need.
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  Well, I, you know, problems five back was a broad-based reform agenda, not just in tax
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  but in every here in public policy. This was your big economic policy.
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  Big economic social policy in the early 90s. And when I lost, it immediately became what
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  everyone referred to as a small target strategy. You know, Houston had been a big target and he'd
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  lost. So don't, don't, don't be a big target. Well, I mean, it reminds me a little bit of the
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  last election here, but with the parties flipped in that the Labor Party went to the last election
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  with a very ambitious set of economic reforms and the government, the conservative government was
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  able to do very, very little apart from just raised question marks about the credibility of those
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  reforms and was able to get in. So how do you twist the dial so that it's ambitious enough to be
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  worth doing, but not so ambitious? It's a very good question and we haven't had a very good
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  history over the last couple of decades of any of this from which you could sort of draw
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  authoritative lessons because different strategies have been run. I mean, how'd one
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  succession of elections by not prompting to do too much at all or capitalising on issues like
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  vote people and so on, as they arose. He did one big thing early on. But the deal he did for
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  that gave away the bulk of the essence of the reform. But you know, I nearly had nearly cost him,
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  I think, basically almost beat him in the next election. So he, I think he didn't know that added
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  to the sense that you can't take a big, big policy to an election. Why do you say that he
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  reformed the GST out of its purpose? Well, there are a number of reasons I've written quite a lot
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  about this over the years, but I mean, one reason was to get the deal done through the parliament.
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  He left a lot out from the tax base. And so now what the GST is levied on is not growing,
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  the spending is not growing as fast as what is not levied on. So it's not the growth tax that
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  they claimed it would be. And of course, the states haven't benefited the way they thought they
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  would. This is mainly because the more left wing parties didn't want it to be levied on things
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  well, you know, he just did the deal to get it through. The other thing, which was a clever
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  political move in saying that the committee that he would give all the revenue to the states,
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  but that just guaranteed an annual shoot for it about the distribution of that revenue, you know,
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  so it's been, and you've had some extreme examples of dissatisfaction with that distribution,
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  the West being a classic example. I mean, when the revenues were down from mining royalties,
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  of course, they complained a lot about the distribution, distribution of the GST.
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  Don't hear them complaining so much these days, and they don't want to give back the
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  special assistance they got. So I mean, it's not a stable structure either. So it's structure
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  in terms of its implementation, what it covers was lost to something. So the whole idea of
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  broad-based consumption tax was to move away from the lines of income taxes and, you know,
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  building the tax base to include expenditure was a much broader tax base. And, you know,
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  the tax system now just is one of those classic areas which is still way, it's got so many weaknesses
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  and so many inefficiencies. It's very complicated, increasingly complicated, not very efficient,
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  very inequitable, you know, it's impact, and you're seeing that when there were tax changes and
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  the current tax packages, it's just been released in a sponsor or accelerated in response to COVID,
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  which the bulk of the benefits to the high income earners at the end of the price is really
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  need the money. And they'll really spend the money, you know. Let's think about these reforms then.
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  So you come, you take control of the Opposition Party in Australia, you go, we're going to have a
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  big suite of economic reforms called fight back. That doesn't work. John Howard wins the
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  subsequent election after that. So then thinking, I'm just trying to get a handle on big
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  rough on how big reforms have done in Australia. So we can talk about how to do them. So how it comes
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  along with the GST, he wins that election and I suppose gun law reform would be another major
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  domestic policy success. And then what else happens between then and now that's a big
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  a big reform. I mean, there's the climate, there's the, there's labor's carbon.
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  You know, so we had, we had attempts to, you know, do something substantive on climate.
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  And I think back to the policy, we took in 93, which was a 20% cut in emissions by the year
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  2000 for 1990 base. Now, if we'd done that each decade since, we'd be at less than half our
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  period level of commitments already. So we sort of did ourselves a lot of gratuitous harm through
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  that political point score in process. What's happened to conservatism? Well, you know, I said
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  all along in my political career, I don't like labels. I mean, I don't think anyone is consistently
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  in politics. These days, anyway, consistently conservative or left or right or, you know,
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  or any of the other labels that they're progressive and so on. I mean, I guess I'm using it in the
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  the purest possible sense of the word in that in being a sort of instinctive desire to do the
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  minimum amount to find the minimum effective dose to address the problems that we've got whilst
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  retaining the institutions that have made us prosperous and free. If you look at the,
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  what defines a liberal or national party member today, they would say that they believe in
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  the supremacy of the individual. They believe in small government. They believe in market-based
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  processes where possible and minimum government regulations on. Now, if you apply that sort of
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  thinking to the issue of climate, you would put a price on carbon and get out of the way
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  and let the market essentially drive that adjustment process. There would be a need to do more,
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  but that would be the basis on which you could move. And the world is now coming to that for
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  your own Canada. It's just put a price on carbon. The Chinese and put a price on carbon.
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  You know, it's happening. But that would have made a big difference. So that is a conservative
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  position by their own definition, which they have just skewed. And in the process, they've gone
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  the other way. They've become quite socialist with big stick policies against the power
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  authorities and regulatory changes to achieve particular ends, which is just nothing to do with
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  and they'd still claim to be conservative. But so the nature of the response to policies is shifts
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  to shift it around. And so as a labels don't mean much. It's better to look at what they actually do.
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  Not so much even to listen to what they actually say, but look at what they actually do,
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  do, what they do deliver. And we've ended up with a position where we are now globally.
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  We're a leader in the Kyoto process. We've punched above our weight. We've got a very attractive
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  deal for Australia. And from that, from that, we're not just locating any position.
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  Was that poor kidding only believing in in politics? No, that was really just had been negotiated
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  by a number of players over the time. Both sides of politics had been part of this.
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  It was his government, right? It was it was the Keating government. It was a poor Keating
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  government. I think not sure when it actually started. I can't quite remember. Because I think
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  92 they signed it. So it was never ratified in Australia. But the point was we were a leader
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  and we now, by any independent assessment, we are one of the most conspicuous laggards.
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  We have done so much less than we should have done, given our emissions domestically and our
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  responsibility for the global emissions, as we are the largest or second largest, they should
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  export a fossil fuels in the world. If you look at the transition, it's essential, let's get to
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  a low carbon world by mid-century. And you've got three decades. This decade's the crucial one.
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  This is where you have to do all the heavy lifting. I mean, did I read a comment a stat, John,
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  that since Kyoto, so since the early 90s, more than half of the world's total carbon emissions
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  have been emitted. So it's just it's crazy. It's like since we've known that this was a problem
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  that we need to be addressing, we've continued to double the scale of the problem.
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  There's a credible body of opinion that says you should be actually aiming for net negative
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  by 2050. And you know, a country like Australia can actually do that. The agriculture sector can
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  be net negative. By simply, the very simple changes in farming techniques for generative agriculture,
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  it's called, you can measure the improvement that that will give you in the carbon content of the
• 18:03
  soil. The advantage of that to a farmer is that that's a carbon credit for the sequestration of
• 18:08
  the carbon. And you know, that's another income source, which gives them a long-term sustainable
• 18:14
  position. At the same time, you've got the national party who don't understand their constituents,
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  saying, well, you know, if there is a commitment by the government to net zero by 2050, we should
• 18:24
  exclude agriculture. It's about as dumb as you can imagine, but they don't get it. And yet,
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  the regional benefits of regenerative agriculture are phenomenal. So when you say that,
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  they don't get it. And they don't have a policy to deliver it. The conspiracy theorist or the
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  disenchanted voter or the person who's susceptible to believing crank theories on Facebook looks
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  at all this and goes, it's Murdoch, it's maybe Bill Gates, it's George Soros, it's something
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  or there has to be a reason why these supposedly, apparently intelligent people are refusing,
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  are they in bed with big mining companies? Are they taking bribes? Like what's the non-conspiracy
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  theory explanation from you as to why they're so deaf about addressing things that even their
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  constituents would want them to? Yeah, a lot of elements, I mean, they are afraid of change.
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  Your concept of conservative means in one sense afraid of change, minimum change, do as little
• 19:25
  as possible to get by. Secondly, the science is overwhelming. I mean, not nearly all climate
• 19:32
  scientists these days agree. And the urgency may get you the problem, but they set that aside.
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  And it's interesting, I noticed in the pandemic, they're saying, oh, we rely on the medical science,
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  which is so rudimentary. And, you know, poorly peer-assessed and so on compared to the enormous
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  volume of science, if you give it on climate. Well, we do have a few Australian parliamentarians who
• 19:53
  don't rely on the medical science in the pandemic. So at least they're consistent.
• 19:57
  Yeah, but, you know, and I think that there's concern about change. There is undoubtedly a very
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  powerful fossil fuel lobby, which has them, you know, channeling a whole lot of business into
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  those sectors, which are either their mates or their funders in a political sense.
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  And I think that the idea of planning for a transition over the next two or three decades,
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  which you should do, and it's not that hard to do, and other parts of the world are doing it,
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  they just find that all too risky, too disruptive, too modern impact on their short-term
• 20:36
  political position. But I mean, if you go to any of the sectors that would be seriously affected,
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  like the coal mining industry, or, for example, where the major miners now,
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  Rio and BHP are two large world exporters of thermal coal, have both said they're getting out of it.
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  They don't see any long-term future in it. They recognise that that means that in coal mining
• 20:57
  communities there will need to be a transition for the workers, for the communities, whether it's
• 21:03
  retraining, whether it's relocation, whether it's retrenchment, whatever, that it can be planned,
• 21:08
  it should be planned. But the way the process works, these things are going to happen. I mean,
• 21:14
  coal-fired power stations are going to close. We had Hazelwood close in Victoria, it was about 11
• 21:21
  percent of Victorian power. Forget the number of works as far as 6 or 700 workers,
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  directly than a whole hundreds and hundreds more in the community. Just no transition strategy
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  at all just closed. They were left high and dry. The community of the Latro Valley was left high
• 21:39
  and dry. Same as northern when it was closed, the northern power station near Fort Augusta,
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  the same thing, no planning, no transition. You would think to yourself, as a politician,
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  I'm going to be held accountable for that. I should make a big effort to bring the community
• 21:53
  into consult, to negotiate a transition strategy. Get everyone to do their bit and pay their
• 21:58
  part. I don't need to do that. I don't blame the Greens and say that if it was up to us,
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  we'd be building coal-fired power plants all over the country. And there's this silly debate on
• 22:08
  the other side that you're pointing to, that they want to build coal-fired power stations, say in
• 22:12
  North Queensland, where there is no net demand for power in North Queensland, where there isn't a
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  significant international investment bank that would fund it. There isn't an insurer, a global
• 22:25
  insurer now that would ensure it. And by the way, solar is so much cheaper than the new coal-fired
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  supercritical, super-efficient, whatever. And I hear North Queensland is quite sunny.
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  The resources are there to make the transition. And on people in the industry know that,
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  they just want a bit of leadership. I would think the governments you talk about longer term
• 22:47
  strategy thinking, that's strategic thinking you've got to be able to do. You've got to be able
• 22:51
  to plan. And look at what's happened with electric vehicles. The government says, oh, we have a
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  strategy. And in the last election, Shorton identified specific. And I expect that there'll be 50%
• 23:04
  electric vehicles registered in 2030, this sort of thing. And then Morrison Amidus says, oh no,
• 23:10
  he's going to steal your weekend. You know, he's going to take you. You might be able to tell your
• 23:13
  boat. Yes, but people who don't remember this, before the last Australian election, there was a
• 23:17
  scare campaign by the government against the Labor Party saying that you're not going to be allowed
• 23:21
  to have a four-wheel drive anymore as Labor wins because they're going to force you to be driving
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  time to prepare for free or something. Stop here. And look, it's... What do you make of the
• 23:31
  Lego in that too, John? What do you make of the state of the left? Well, you don't like labels,
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  so it's not called on the left, just the Labor Party. I think, look, for most of these
• 23:42
  public policy issues, there are left or right dimensions that you would consider a left or right.
• 23:48
  I mean, some of the social disruption requires you to think about the consequences of the policy
• 23:55
  change. I'll give you a specific example, which nobody focused on. In the early 90s, when we're
• 24:00
  introduced in the GST, calling for 15% GST, very big compensation package by way of tax cuts and
• 24:06
  other things to compensate, you know, just about everybody. But in there, I saw a unique opportunity
• 24:14
  to actually do more, to take a social policy progressive position on pensions. And as I looked at it
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  at the time, you know, a pensioner going into residential aged care was left with about 20 bucks a
• 24:26
  week. And that meant that was their six and their grog and their kids, grandkids, presents and so on.
• 24:33
  You know, they have a lot of money. And the access to health insurance was very limited,
• 24:38
  most of them didn't have it and so on. So I said, okay, let's have a compensation for the pension
• 24:43
  of community, which is that we will double their pension, not just 15%. We'll double the pension
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  and we'll give them free access to private health insurance and a number of other benefits,
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  which was an overwhelming social policy shift at the same time in the context of, okay,
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  introducing a board-based consumption tax. So they're going to be way in front. And, you know,
• 25:08
  the, so you could say that the progressive element of that was very significant. And, you know,
• 25:13
  it was, it was lost in the fight about the tax itself. And now we have a situation where the
• 25:20
  government is finally going to increase the unemployment benefit. What used to be called new start.
• 25:25
  Now is called Job Seeker. Change the name, you know, change the criticism is the hope.
• 25:32
  But now we're going to increase that by about $3.47 a day. So it's $43.47 or $57 a day.
• 25:42
  And, you know, recognizing that that is way below the poverty line. And yet these people are going
• 25:47
  to the prospect of coming out of this COVID recession with a much higher level of unemployment
• 25:53
  and a much higher level of under-employment, you know, the worst time to actually be being so,
• 25:58
  so, so measly. And that's what they do. And so an opportunity to do a serious piece of progressive
• 26:07
  policy development is being lost. And, you know, I'm not overwhelming support for
• 26:12
  telling you. I'm asking you about how much vision there is on the labor side because, as we
• 26:15
  mentioned earlier, you know, they went to the last election with some big economic reforms,
• 26:20
  which had, which were quite complicated, were too complicated for my answer to understand.
• 26:25
  And therefore, I knew short and was going to lose the election a week beforehand because
• 26:29
  people couldn't quite understand what imputation dividends meant and how the negative
• 26:33
  gearing changes might affect them and so on. Do you see a, do you see a, do you see vision on the left?
• 26:43
  Well, you can say some of that was visionary or some of it was just, I mean, there's no doubt if
• 26:47
  you were doing broad-based tax reform, that as you're looking at all the weaknesses of the
• 26:51
  existing system and trying to fix the more restructure the system so that it gave you a better
• 26:56
  outcome, a simpler outcome, a fairer outcome, a more efficient outcome, then those sort of tax
• 27:01
  changes would have been part of it, but you would have been part of a much bigger package.
• 27:05
  Right. You know, and a lot more happening to pick just one or two out and then not explain
• 27:10
  them was pretty high risk strategy. It also to be a person who's bad at explaining things as
• 27:14
  I mean, it didn't really try to explain, took it for granted that they go and look, they left
• 27:20
  themselves vulnerable, not just to the accusation about, you know, the, the fanking credits and
• 27:26
  people had some difficulty understanding, although the people who got them did seem to understand
• 27:29
  what well what they were, but not trying to explain that allowed them the government to say
• 27:37
  it's really, you know, a wealth tax, you know. It was a complicated thing to try to explain and
• 27:45
  I don't think that, I mean, my fear is that the takeaway from the last election will be the same
• 27:50
  as the takeaway from the election that you lost, which is don't try to do things that are too ambitious
• 27:55
  because they're too hard to get done, we should make sure that we're as small or as possible.
• 28:01
  When in fact maybe the problem with the last election was, I mean, I was presenting the breakfast
• 28:07
  show on Telly on the weekends during the election and remember Bob Hawke died a week before
• 28:15
  the election and Bill Shorten came on TV. Yeah, Bob Hawke is Bill Shorten's mentor, right? I mean,
• 28:22
  the lion of the Labour Party is a great hero and Shorten comes on and goes, well, it's a very sad day
• 28:28
  and I could have kept on going with my usual schedule to Perth but I decided to not cancel it
• 28:36
  because, you know, I could be doing a big display and showing everybody how good I am but I'm just
• 28:41
  more fair dinkum than that and I thought he's going to lose. If he can't make me feel emotional
• 28:46
  about Bob Hawke's death, if he seems like he's a politician in still in politician mode and not
• 28:51
  very good politician mode at a moment when he is supposed to be lionising the most important person
• 28:56
  in his party and he's not the seal, because a big reform is about trust, but people have to trust
• 29:02
  you as a human being that you're not going to screw them if it's complicated and I don't trust
• 29:06
  that man just because his cover is his back. If you take Hawke and reverse the position of it,
• 29:11
  it was Hawke in that position, he may well have cried, he may well have, he may have well said,
• 29:17
  you know, anyone who thinks they're going to campaign the days of bum, you know, this sort of thing,
• 29:20
  as he did in other occasions and he was had much greater empathy with the issue and with people
• 29:27
  but I think the big thing that stood out through Shorten's leadership was that he was never
• 29:33
  net positive in his personal rating in the polls and people downplayed that because the Labour
• 29:38
  Party was always in front of the polls, but he wasn't and so you go back to the issue of trust,
• 29:45
  they only had to create enough uncertainty about him in certain parts of the country,
• 29:51
  particularly Queensland for example, which I think the parmer advertising did a lot of damage
• 29:56
  to Shorten, not so much of the government, that that was the main factor, was his unpopularity
• 30:05
  that was a defining factor and then of course over above that there were a number of policy elements
• 30:11
  which people quite often just don't bother to try and understand this figure,
• 30:15
  the governments there do a job and I expect they'll do it, sort of thing, they'll do with the big
• 30:19
  issues as best they can, I can't because I'm too small and I'm in significant.
• 30:24
  And so he lost the second layer then, it was causing confusion, having a lot of people saying
• 30:30
  I don't understand it or it's a wealth tax or it's, you know, in the all fear of a socialist agenda
• 30:36
  based on wealth taxes and so on became quite real and that's a very difficult term,
• 30:42
  the difficult set of circumstances to turn around, but we're at the stage now, you know,
• 30:46
  where a lot of the issues, there's an imperative to deal with them, you can't imagine that you could
• 30:51
  let the aged care issue drift any further, but to turn it around is going to cost tens of billions
• 30:57
  of dollars and the government doesn't have that, they've just spent, you know, they're boasting all
• 31:02
  the time about how well they've done in terms of the management of the virus and the economic
• 31:07
  management of the recession and the recovery from the recession. But if you look at why, well,
• 31:13
  we closed our global borders so we isolate ourselves a bit of disruption domestically but
• 31:18
  nothing compared to the rest of the world and raised the questions to whether how quickly
• 31:22
  we'll be able to open those international borders. But the second thing is we spent 15, 17
• 31:28
  percent of GDP, if you can't get a good growth number or a low base spending that much money,
• 31:33
  there's something wrong with it. Okay, so we had two good quarters of growth, we haven't recovered
• 31:37
  the pre-covered level and we're still 10 percent or more below where we would have been as we would
• 31:42
  have continued to grow rather than shrink into the recession. So we'll never recover that ground
• 31:48
  unless we have several years of growing above trend. So you can paint a good picture, but the
• 31:53
  transition is still to be made. You take the 17 percent out of the economy and they said the
• 31:59
  government's not there on funding everything and, you know, and a lot of those businesses that
• 32:05
  were supported were marginal before the COVID, so they're right. But you couldn't do anything else.
• 32:10
  No, they had to do it. It seems a bit petty to say, well, if you took out what the government's
• 32:14
  saying, the economy would be doing what they've lost. I mean, the fact is the government did do
• 32:18
  that and the government's not doing it that way. To go to your point though, you're having
• 32:22
  recognised the significance of that and having to do that and doing what everybody thought they
• 32:26
  had to do, you can debate more or less about particular measures and certainly some sectors got
• 32:31
  left out and that sort of thing. But the key point is here's a unique opportunity. If you really
• 32:37
  want to now launch a reform agenda, let's talk about a sustainable recovery out of this,
• 32:42
  let's address the structural weaknesses of the economy and the social structural weaknesses and
• 32:47
  see whether we can fix them and create a basis on which we can sustainably recover. Climate
• 32:52
  offers a great way to do that, you know, hundreds of thousands of jobs, billions of dollars of investment,
• 32:58
  new businesses everywhere, this sort of thing. But in anywhere, you have public policy,
• 33:02
  that's largely true. Do the tax system in which you haven't been able to do fixed child care, fixed
• 33:08
  age care. You know, these are issues that, in themselves, they're difficult, you know, you are
• 33:14
  going to have to explain hard and work hard. But that's a unique opportunity to do that and that's
• 33:20
  what's been lost. As we monitor the other day by a head of a secretary, one of the, he's been
• 33:26
  ex-head of secretary of two major government departments in his time. He said, back in the 70s,
• 33:31
  he had a major issue with Doug Anthony who was his minister and it was related to the oil price
• 33:38
  and a very, very difficult controversial issue. He went into, he didn't know what this kind of
• 33:43
  say to Anthony, you know, and he said to him, look, your job is to get the policy right.
• 33:49
  Just don't worry about anything, just get it right. My job's in to explain it and sell it.
• 33:55
  I haven't heard that happen in for decades in this country. No, they don't think that way anymore.
• 34:01
  And so it wasn't about dealing with the issue, it wasn't about governing, it wasn't about solving
• 34:05
  problems. It was about, today it's about, we can't do that and might cost me a vote here or a vote
• 34:11
  there. I might offend this person that's funded all this industry that's funded our election campaign
• 34:17
  or, you know, part of what's got to be done is to get rid of all that funding, you know, to
• 34:21
  actually clean up for the funding of politics and the influence of lobbyists and truth and advertising
• 34:28
  things like that. As often as not, it's the party trying to hold together its own flanks,
• 34:33
  quite apart from parliamentarians caring about it. Yeah, but that gets exaggerated.
• 34:37
  I mean, Turnbull's usually arguing, Morrison's usually arguing, I've got a rump that I have to do.
• 34:41
  She didn't deal with them. You let them run. You let the horses out. I mean, it takes a while to
• 34:46
  get them back in. They won't come back. I had put that question directly to Malcolm Turnbull
• 34:51
  on the air where I said, I know hindsight's 2020, but let's go back to the beginning of your
• 34:57
  prime ministership and let's imagine that you come in and you go, all right, guys, on the right
• 35:03
  wing of the Liberal Party and the Conservatives and the National Party. I know that I told you guys
• 35:06
  that I wouldn't move on same-sex marriage and I know that I told you that I wouldn't do anything
• 35:11
  on climate until after an election, but I'm sorry I lied. We're going to go big and you can either
• 35:17
  come with me or you can topple the government. What do you think happens? And he's still to this day
• 35:21
  says they would have rolled me. What's your sense? Do you believe that that the right wing
• 35:26
  backbentures would detonate the government? Look, there is an element in whoever's in government,
• 35:31
  I've found that there are always a group of backbentures who prefer to be in opposition,
• 35:37
  because in government they don't have much influence, but there's a very small crew.
• 35:42
  And there were some in the phoesies which I used to talk to as a chief of staff, that sort of thing.
• 35:47
  But no, basically you have to call them out and you have to insist on the rules.
• 35:53
  I mean, you fish those right from the head, you do have to set the standards and you do have to
• 35:57
  enforce the standards. And if they're not going to be enforced, you know, you've got to call people
• 36:03
  out. But if you let them go, if you're allowing people like Christians and others to go to a
• 36:07
  part of your meeting and come out and call a press conference and say, oh, I just rolled the government.
• 36:11
  I mean, I don't think you've got anyone to blame for that but yourself. What do you do? You call
• 36:16
  them out. And you make it difficult for them within the party structure. You isolate them in
• 36:22
  the party room and you make it difficult. I mean, they may be able to keep their
• 36:28
  electoral conference support. It doesn't always work. I mean, Kelly couldn't,
• 36:33
  the only reason Kelly persisted was those Malcolm and Turnbull. So Malcolm and Morrison
• 36:40
  intervened and ensured he's priestly. Look at the problem they created. I mean, that's my point
• 36:47
  really. I wonder if it's possible anymore to keep all of the, to herd the cats the way that it was
• 36:54
  in your day. I think it does come down to management structures and enforcing rules and discipline.
• 37:02
  But you know, when I took over in 1990, coming out of the Howard Pico hero, the only reason I stood
• 37:09
  and I'd only ever wanted to be treasurer. I never wanted to be leader. And the only reason I stood
• 37:14
  was just to say, oh, God, you know, Peacock has lost and now's never going to run again. We can't
• 37:18
  go around this mall. We wish one more time. So I'll stand. And so in my first speak to the party room,
• 37:24
  speech to the party room, I said, we have three weaknesses. One is unity, disunity. We have disunity
• 37:31
  within the liberal party within the national party and between the coalition partners. The second
• 37:36
  weakness is we have no policy credibility. You know, what do we stand for? Howard's tax package
• 37:40
  didn't add up in 1987. You double counted the revenue. Peacock couldn't remember the health policy
• 37:46
  in 1990. We have no credibility. We have to build policy credibility. And the third weakness is we're
• 37:51
  not a competent on the ground campaigning for sort the labor parties. We have an anachronistic
• 37:57
  mid-1940 structure for the party. And that's that's that's those are the three things. And I said
• 38:02
  publicly, they will we will I'll work flat out over the three years to achieve the outcome
• 38:09
  to improve all three of those. My suspicion is it'll take me six years, not three, but we'll give
• 38:15
  it our best shot in three. And we fixed two. We never did actually fix the campaigning capacity
• 38:21
  of the party. But we did fix the first two. We certainly got rid of disunity and we certainly
• 38:27
  had policy credibility. People always say too much. But you know, that's but that's you had to get
• 38:33
  everyone to sign off on the basic strategy at the beginning. And then all everyone was given a
• 38:38
  part. Every single person had a role in policy development in the development and in the in the
• 38:45
  marketing of the policy. Everybody. They had a sign roles. And you know, the ones that might cause
• 38:50
  your trouble. I found them perhaps pretty useful in defense, you know, where they might spend some
• 38:56
  time in the US or the UN to either Pentagon, you know, you can manage it just out of the country.
• 39:03
  You just have to manage it. For to listeners who may not remember how your leadership of the
• 39:10
  opposition party and how close you came to being Prime Minister, they won't remember the birth
• 39:15
  they cake interview that the political analysts now now identify as the point at which you lost
• 39:24
  the unloosable election. What do you what do you rely on? The answer was actually correct. And in the
• 39:30
  the reason we get I gave the answer was we had a strategy to answer all questions. And okay,
• 39:37
  the problem was that the tax system was very complicated at the time. Sales tax, also sales tax
• 39:42
  had multiple rates and multiple layers of incidents. So depending on what you were replacing with
• 39:49
  a 15% GST, the price may go up or down. That was the point. And so my answer was technically correct.
• 39:59
  Politically, not very clever. It was used against me. Easy to say, look, he doesn't understand he
• 40:04
  can't explain it. I still get it all the time that can't explain it. But, you know, I was making
• 40:09
  the point was that transition from a multiple right, multiple incidents tax system to one single
• 40:16
  right. It was not a simple answer. And I could have just said it'll go down or it'll go up.
• 40:21
  And the chances were, of course, he'd have a different version of the cake, we'd say it didn't go.
• 40:25
  And this came out of the background of people like Peacock and how not knowing how much a card
• 40:30
  and milk was or a loaf of bread or, you know, you needed to have the answers. Now strategy was,
• 40:35
  we had very detailed work done on what what what the impacts were. So politically not very clever.
• 40:41
  The truth really didn't count for much. Well, an alternative way of putting the truth is to say,
• 40:47
  look, I'm not going to take the bait on a particular question because we can argue specifics
• 40:51
  until the cows come hurt them. But, you know, obviously, he was. I should have just taken the
• 40:56
  broad answer and not answered the specific question. Can I just ask you a simple question,
• 41:01
  as an example of this, if I buy a birthday cake from a cake shop and GST is in place, do I pay
• 41:10
  more or less for that birthday cake? Well, it will depend where the cakes today in that shop are
• 41:16
  subject to sales tax, or they're not. Firstly, they may have a sales tax on them. Let's assume
• 41:22
  that they don't have a sales tax on them. And then that that birthday cake is going to be
• 41:26
  sales tax free. And of course, you wouldn't pay. It would be exempt. There would be no GST on it
• 41:32
  under our system. If it was a one with a sales tax today, it would attract the GST. And then the
• 41:37
  difference would be the difference between the two taxes, whatever the sales tax rate is. On
• 41:41
  birthday cakes, how it's decorated, because there'll be sales tax, perhaps on some of the decorations
• 41:46
  as well. And then, of course, the price will reflect that accordingly. But the key point is that
• 41:53
  the average Australian will have more money in their pocket. Now, we're just on the
• 41:56
  test on the birthday cake. It's a simple example. You tell us in what you've published
• 42:03
  that the cost of cake goes down. The cost of confectionery goes up. That's right. On this icing,
• 42:08
  and maybe ice cream. And then there's candles on top of it. That's right. Now, that's the difficulty.
• 42:12
  That's what I'm addressing in the question. To give you an accurate answer, I need to know exactly
• 42:17
  what type of cake to give a detailed answer. I mean, if it's just a cake from a cake shop that
• 42:23
  isn't not presently subject to sales tax, it will not attract the GST. It isn't, isn't it?
• 42:27
  If it is a cake shop, it's cake from a shop that has sales tax and it's decorated and candles,
• 42:32
  as you say, had attract sales tax. And of course, we scrapped the sales tax before the GST.
• 42:37
  Okay, but as opposed, it's just an example. If the answer to a birthday cake is so complex,
• 42:42
  you do have a problem with the overall GST. Have you read Obama's biography the first part of his
• 42:48
  view? Not the old one. It's worth a read because you were just reminding me of it in the sense that
• 42:53
  he talks about the moment at which he went on meat the press and he had decided privately that
• 42:58
  he was going to run for president. And he had previously been saying that he wasn't running.
• 43:04
  And they were in the car on the way to NBC studios. And Axel Rodden, his other advisors were
• 43:11
  saying, okay, you're going to get asked, are you running? And so how do we say this? They
• 43:16
  argued back and forth 15 minutes about how do you say that he's not without actually admitting
• 43:21
  that he's not, because you don't want to say yes, but you also have to say no in such a way that
• 43:25
  it doesn't make it subsequently seem like you were lying or being disingenuous when you do throw
• 43:29
  your hat in the ring. After a while, Obama looks out the window of the car and then he turns
• 43:33
  him, he goes, why don't we just tell the truth? And he says so that he gives the answer. He says
• 43:39
  previously, I've said that I wasn't. I'm now rethinking that. I'm not saying that I am,
• 43:44
  but it's no longer than know that it used to be. And of course, that makes headlines, but it's a
• 43:49
  amazing to me, reading that, how novel it might be in politics to just say what is in your head.
• 43:57
  And look, ever since then, the concept of truth in politics has taken hell of a beating.
• 44:05
  And we can go as far as Trump and fake news and all that. And governments do use, they do spin,
• 44:11
  they do put the favorable gossip just about anything. But the bottom line of that is you can
• 44:16
  understand that behavior. But if it means you don't solve a problem to just kick it down the road,
• 44:21
  it's only a short term benefit. And this is what is wrong with politics is run for the
• 44:26
  expedient political expediency. What they perceive to be a short term benefit of taking
• 44:30
  in particular position and not doing what any rational person was saying, well, why wouldn't you
• 44:36
  do that? Why wouldn't you tell the truth? Why don't you just admit you don't know? Why don't you
• 44:39
  admit that you're going to do so? And that's, you know, nobody does it anymore. Nobody actually
• 44:45
  lays themselves bare. So I think he's a problem. I'll let you get out of here, but my kids are three
• 44:50
  years old. Their twins, when they're my age, is Australia going to be a better place? Is the
• 44:54
  world going to be a better place or a worse place to live in? I think this decade of the 2020s
• 44:59
  is the defining decade myself. It's one of the reasons why some of us push so hard to try and get
• 45:05
  sensible government, longer term or strategic thinking and focus government, solving problems,
• 45:11
  not worrying about, you know, whether or not you should win the election. My first engagement
• 45:16
  with politics in the early, in the middle 70s when I came out of the Reserve Bank on succumbent
• 45:20
  to the Treasurer's Office. So I did say on the firm belief that good evidence-based policy
• 45:26
  would be good government and good politics with a relatively short lag.
• 45:31
  Today, it has to say that short term politics is stopping any possibilities good government.
• 45:34
  Great to talk to you, John. Thanks as always. Thanks very much.