E&OE TRANSCRIPT
Q&A - AUSTRALIAN FINANCIAL REVIEW BUSINESS SUMMIT
SYDNEY
WEDNESDAY, 6 MARCH 2019
 
SUBJECTS: Australian economy; Labor’s tax reform agenda; wages policy; energy

PHIL COOREY, AUSTRALIAN FINANCIAL REVIEW: Thanks for your speech Mr Shorten.
 
BILL SHORTEN, LEADER OF THE OPPOSITION: Thanks Phil.
 
COOREY: Before we get into the detail of it, if I could start a bit generally on the economy. I think we’ve seen in the last few days competing economic narratives. Both yourself and the Prime Minister coming at it from different angles. I had a conversation about a year ago with Kevin Rudd, your predecessor times two, and he said one of the difficulties a Labor Opposition always faces close to an election is a reluctance amongst voters to hand the economy to Labor, especially a recovering one or a strong one. He encountered that problem in 2007, and he said that's why he had to make those answers about being an economic conservative and so forth. He said it's always - the polls would always close on you just because of that inherent reluctance. How do you, mindful of what you've just told us, how do you sort of combat that sentiment? We heard yesterday the Prime Minister waving the recession word around, leaving that hanging, obviously trying to reinforce that negative perception. How do you get around that?
 
SHORTEN: Well, I wouldn't have predicted when I became Leader of the Opposition about 1,970 days ago – but who's counting, that stability would be such a plus for Labor. So we live in different times I think, to perhaps some of the previous electoral cycles. The government is on their third Prime Minister, they're on their 11th energy policy, their fifth Defence Minister. You know, one comment I got over summer wherever I went is I had people come to me and say I've never thought about voting Labor before. Don't agree with everything you're saying. But just promise us you'll be stable.
 
So the first observation I'd make Phil is that there is a hunger for stability that is as intense as any time as I've seen. And whatever one thinks about every policy Labor has, no one can fairly say that we are not the stable proposition in Australian politics. And the second point I make is that this government is a desperate government. Their shrillness and desperation is almost measurable in decibels. You know, a frolic to Christmas Island - what a waste of money.  We find out they've cut the Border Force funding, then you've got a marketing campaign. 
 
The point about it is it's desperate stuff because the economy is right here. As someone once said "it's the economy, stupid." Energy prices are going up and up and this government is paralysed on climate. And I don't think that's too harsh an analysis. Health costs, out of pockets - since this government's been in with the Medicare Patient Rebate freeze, that's transferred the cost - $3 billion dollars of the cost of the health system into out of pockets and to doctors. 
 
So wages growth is stalled. The housing market - they want to talk about us, the housing market is very patchy now under the current government, but the single thing which is the biggest challenge - wages policy, the government doesn't talk about. 
 
COOREY: I was going to ask you about it, because the Prime Minister made the point yesterday, his line is you have to grow the economy to pay for all these things, health and so forth, all the issues that you hold dear. What's your basic plan for growing the economy? Is it this inclusive growth strategy that Labor has or something a bit more basic?
 
SHORTEN: It's a fair go for all. Invest in education. Do you know, we've got an exciting plan which will put Australia back at the top of the league table of countries in early years education? How many people here know that we're spending more on tax loopholes than we are on universal access to kindergarten for three and four year olds? Why are we the country with the most unusual dividend franking arrangements, but we don't want to be the country which is best in the world for educating our three and four year olds? It's about priorities isn't it. 
 
And so you know, you talk about economic plan - education, it's property funding out public schools. The Federal Government's put money after pressure from us into Catholic schools, but there's a $14 billion cut in funding to government schools over the next 10 years, despite what they promised when they got elected. So university and TAFE I mentioned - so one strand of a fair go has to be education, education, education. You give people the tools to better themselves in life, they'll grab it with both hands. 
 
Of course the other thing has to be physical infrastructure. The politics of infrastructure in this country is deeply frustrating. The money's there to invest, the liquidity is there, but we've got a blockage in deals because too much of the decision making is short term. If I become Prime Minister in my first week, I'll write to whoever's in charge of the Opposition - that could be anyone's guess. The point about it is that we're going to invite them to nominate directors, give us a shortlist, to go onto Infrastructure Australia. See, the government loves to bag having a bit of a union background, but one thing I did learn is you must negotiate. So I want to involve the Opposition in political decision making. I don't mean ringing me up on the morning they've leaked a story about the new Chair of the ABC - that's not consultation, that's patronising. But the real issue is that on infrastructure - and business, surely this is music to businesses' ears. Let's get the best and brightest in a room on the Infrastructure Australia Board and make long term decisions and submit their logic publicly. 
 
So infrastructure, education, but you’ve got to have a wages policy, you've got to have a climate policy, you've got to have an energy policy. See the beauty of renewable energy is that it is becoming the cheapest form of energy in the country. So what we can do is help put downward pressure on individuals' and businesses' energy prices and at the same time take long term action on climate. So infrastructure, energy, education and then of course you need to have a wages policy because you need to develop confidence and I articulated some of that in my speech.
 
COOREY: Could I ask you about that - on wages, because there was a bit of interest in this room. One of the criticisms of business is the money has to come from somewhere. You talked about the minimum wage being inadequate, not a living wage. Is a living wage still on the table as part of Labor policy and also you didn't mention in terms of things you would do, the reintroduction of industry wide bargaining in low paid sectors which came up in Labor's National Conference last year. Are those two ideas still potential Labor policy position?
 
SHORTEN: Well, the first thing is do we agree wages are too low in this country? See, if you don't think that wages are too low in this country, then wages growth doesn't matter. Nothing else I say really matters. You can - that's a start. But I actually think wages growth is too low - it's unhelpfully low. And what that means is that there's not enough money circulating through the economy and people are either not spending, or they're dipping into savings which is an unhealthy state of affairs. 
 
So we've said - and I'll go to your two specifics at the end, we said we want to restore the penalty rates. When you cut penalty rates arbitrarily, it's not people on $200,000 you're cutting, it's people on $40,000 and $50,000. And if they don't have the money - they're not saving that, they're not buying Swiss gold bullion, they spend it in the High Street. So when you cut penalty rates you cut the volume and the velocity of cash in the economy, and that actually then stifles and hurts the whole business chain. The more economic activity, as you've got wages moving, the more you create volume of economic activity.

So some of the specific measures, restore the penalty rates. There's nothing wrong with paying women in feminised industries better. We let our kids go to pre-school - the first relationships they have with adults outside the family unit is with these early years educators, and we pay these people in child care terrible wages. So I think there's a whole section of the economy and feminised industries, equal pay, a lot more can be done there.
 
In terms of the minimum wage, it's about $18.93 for an adult. I don't know how many of you are living on $18.93 an hour. If you don't want to live on it, why do we expect everyone else to live on it? 
 
COOREY: So we could be looking at a living wage?
 
SHORTEN:  I think that we now need to - the minimum wage concept set by - it came in as a principle before we had mobile phones, before we charged for water, the internet hadn't been invented. So there's living cost and energy prices. Australians are still confounded by this government. We should be an energy superpower. We've got gas, we've got coal to export, we've got renewables - yet somehow we sort of go into the gymnasium of economics very fit and we come out this sort of puny unit at the end of it. The politicians are letting down our energy system. So we've got energy price problems and that doesn’t help with the minimum wage.
 
In terms of bargaining, the bargaining system is broken. There's a lot of great companies, and some of them are represented here. You're bargaining with your workers, but you've got new entrants into the industry who can just go along and pay the award.  You've done the right thing, you've done six or seven rounds of bargaining, and the problem is you're now at a competitive disadvantage because employers can just opt out of the bargaining system and say to their employees "cut your wages or we'll take you back to the award." There is a problem. 
 
COOREY: Okay, we've only got a minute to go, so I'll take that as it’s on the table. 
 
SHORTEN: I didn't mean to - sorry if I was ambiguous about that. 
 
COOREY: No that's okay. Just very quickly, two things of interest to our audience. You've outlined your carbon emissions policy for the energy sector, you’ve flagged a baseline and credit scheme for heavy manufacturing (inaudible) will we see the details of that before the election?
 
SHORTEN: Yes. We will do more on our climate policy before the election.
 
COOREY: Just also all your tax changes, negative gearing, CGT, franking credits etc. The election timing is going to be very tight in terms of the start of next financial year, should you win the election there'd be a fairly quick turnaround to try to get the Parliament back and actually legislate anything.
 
SHORTEN: It depends on when we introduce it Chris and I - 
 
COOREY: That's what I'm wondering. 
 
SHORTEN: Chris and I will have more to say about the timing of that and in plenty of time before the election, absolutely.
 
COOREY: So investors will know the start dates of those policies?
 
SHORTEN: We will provide that certainty. Although you mentioned negative gearing, how embarrassing for the government that their Treasury Department has been out in some of the newspapers today. The government went back and said so we want to fact check that Labor's policy will, you know wreck housing prices. Treasury came back and said you can't say that, that's not right. Anyway, can I just say to you, the people of Australia want good policy debate, we'll give you that. I get that there's different points of view, I get that what I've said to you today, some of you will not agree with everything I said, and I don't expect you to. But what I can promise you as representatives of business, people interested in the future of this nation, I've got a talented team, they're going to be the same team before the election as after the election too. I have a stable team, and I have a united team. And what I've said today is we've got to renovate our wages system. But the whole message I put to you is the way in which I will be a Prime Minister if I am elected. I want to work with you. I won't work for any particular section of the economy or the society, but I will work with you and we will get the best ideas on the table. And we're treating the electorate respect by putting a lot of our policies out upfront. I promise you a better level of political discourse in this country than the toxic, turgid, fear mongering and desperation which we're currently seeing in the nation.
 
Thank you very much. 
 
COOREY: Okay thanks Bill.
 
ENDS