WARREN MOORE: You're listening to Warren Moore on 2GB 873.
Minister for Finance, Superannuation, Employment and Workplace Relations, Bill Shorten, joins us on the program. Good afternoon.
BILL SHORTEN: Good afternoon.
WARREN MOORE: I tell you, your ministry is one that's - well, it's always important, isn't it, jobs? But it's one of those where, when things are good, it's the best portfolio in the world. Coming into 2012, it seems like it's going to be a bit of a tough year in many ways when it comes to jobs, particularly when we've just seen the talk about Alcoa, just in the last day or so.
BILL SHORTEN: Yes, well, being the Minister of Employment, when there's good news, you generally don't get - no-one rings the minister. But when it's bad news, obviously that's when people are a bit more interested in what we're doing.
Specifically with Alcoa, as fate would have it, I used to be the union representative for Alcoa Point Henry for 14 years before I came into parliament. So I'm very familiar with the business and I actually know a lot of the men and women who work there. I've been in touch with some of them overnight.
WARREN MOORE: Yeah.
BILL SHORTEN: The plant was built in 1969. It's an aluminium smelting plant. They make aluminium ingot there. It has periodically been reviewed by Alcoa worldwide. It was in Pittsburgh, now in New York.
The plant is an efficient plant. The workplace relations there have been very constructive, not just because I was involved with it, but more seriously the workforce has shared jobs. They have very good work practices. They've got rosters which are aimed at being productive. It's a pretty safe plant. But it is an old plant. The operating costs get higher with old plants.
WARREN MOORE: Yeah.
BILL SHORTEN: The major trouble that Alcoa faces is our high Australian dollar. When you've got a global network of aluminium smelters making aluminium ingots and Alcoa have them all over the world, in hot places, cold places, third world countries, first world countries, the Australian dollar means that, to buy our aluminium ingots is a lot more expensive. The dollar is a big challenge.
The other big challenge is they use a lot of electricity making aluminium.
WARREN MOORE: Yes. Very, very electricity intensive, isn't it?
BILL SHORTEN: It is. Some say it's molten electricity. So these are the two issues which periodically then Alcoa worldwide review the operations. Now in its favour though…
WARREN MOORE: Yeah.
BILL SHORTEN: …the productivity is very high there. The other thing is, funnily enough, because it's an old plant, it's been fully depreciated on the books of Alcoa. So, if you like, it doesn't carry a lot of liabilities. So I think it is possible that Alcoa can bat through these matters. But it's the mining boom's causing us to have a high dollar. The high dollar makes it hard for us to export product. And that, I think, is at the heart of this latest turmoil for Alcoa.
WARREN MOORE: Yeah. I mean, I've obviously got to ask you the question about what happened in parliament yesterday, the prime minister saying that the linking of debates to do with the carbon tax is disgusting.
BILL SHORTEN: Oh, well, I read the press release. Alan Cransberg is the gentleman who runs Alcoa. I read his press release. He made it clear that this review and the decision about its future was influenced by the high Australian dollar.
WARREN MOORE: Yes.
BILL SHORTEN: It had nothing to do with carbon. It was in the press release. Now the Liberals, as they will, have just got negative and want to say it's all to do with carbon. I've got to say, for your listeners, I don't mind if you vote Liberal, Labor or Independent or whatever. I know the Alcoa plant at Point Henry intimately. I visited it more times than any other politician in Australian politics. It's the high dollar which is making us look less attractive when Alcoa global looks at all its Alcoa smelters…
WARREN MOORE: [Interrupts] Yeah. They do say that. But they've also said that the business needs to take into account future impacts. Now if you're - and I accept what you're saying about the announcement made yesterday. But if you are looking at future impacts in any industry that's a very intensive user of electricity, the carbon tax has got to come into play somehow, doesn't it?
BILL SHORTEN: Putting a price on carbon does have a price on power generation. There's no question about that. But the Libs also never talk about - they'll always tell you about the problem. They won't tell you about the positives. We're providing support for our emissions-intensive trade exposed sectors, which this smelter falls squarely within. So there is government support to help them absorb the price of putting a price on carbon.
WARREN MOORE: I guess, getting back to the fact it's been a rocky road when we come to job announcements in the last little while. We've also got 150 people from Heinz, 200 from Vodafone, 1000 from Macquarie, 560 from Westpac…
BILL SHORTEN: Oh…
WARREN MOORE: …350 from Toyota, 210 from Telstra. The list goes on. So it has been a tough time for manufacturing and some of those other finance sectors as well.
BILL SHORTEN: You're right. Two points. One is a lesser point, one's a stronger point. The lesser point is those job numbers are a bit over-inflated with some of those companies. Macquarie's made it clear that those numbers of 1000 are over inflated. Some of them come from overseas. So they don't really count in Australia.
WARREN MOORE: Yeah.
BILL SHORTEN: Also, a lot of these companies do try and redeploy. But the bigger point that you make is that certainly financial services has been affected by this latest instability in Europe. Traditionally, for a decade plus, we've had fast credit growth. In other words, people have borrowed more money than the Australian economy has grown. I think we're heading into a period of time, what they call - the experts call the new normal, where you'll see slower credit growth around the size of the growth of the Australian economy. That means there's a slowdown in the number of financial services jobs needed.
But in the media - and if you're losing a job - and I've been in touch with the Finance Services Union. I've spoken to ordinary people who work in banks about these issues. It is - it's terrible.
WARREN MOORE: Yeah, yeah.
BILL SHORTEN: I would say, in the medium to longer term, financial services will grow. I mean, this is a tough patch. The reason why I say it'll grow is that Asia's growing to the north of us. They're going to have a lot of people in their middle class. Australia's good at financial services. They'll need our services.
Secondly, we're increasing compulsory superannuation savings in Australia from nine to 12 per cent. What that means is there's going to be more money to manage.
WARREN MOORE: Yeah. That's in finance. But generally speaking, I mean…
BILL SHORTEN: In terms of manufacturing, that's the other point you raised.
WARREN MOORE: Yeah, yeah, I was, yeah.
BILL SHORTEN: Manufacturing, in 1960, there were 30 in every 100 Australians working in manufacturing. Now it's about eight or nine in every hundred.
WARREN MOORE: Yes.
BILL SHORTEN: I think it'll decline a bit further. I think we will still keep making things in Australia. That's why we, unlike the Liberals, are supporting the car industry. That's why we've got a plan to support aluminium and steel through the carbon price.
WARREN MOORE: But the Liberals have said that they'll commit one billion dollars to the car industry until 2015.
BILL SHORTEN: Ah no, sorry. The Libs haven't said that they're going to match what we're doing in supporting the car industry. They have been all over the place on this. They have been all over the place. They need Bear Grylls to go and find them. You know, they are lost. They are not saying the same as us. And so there is a distinct difference between the Labor Party and the Liberal Party.
But on manufacturing, part of the challenge for manufacturing is, you know, I used to look after men and women who made rope. The fact of the matter is third world countries are going to make rope cheaper than us. We can't - unless we can charge a lot for our rope. And the point about that is manufacturing, we need to be selling things to people where we can charge a proper price. It's got me amazed. Switzerland, you know, Switzerland's basically a big series of mountain tops…
WARREN MOORE: It is an incredible country. You're dead right there.
BILL SHORTEN: And yet they make things.
WARREN MOORE: They do, yeah.
BILL SHORTEN: But what they do there is they've got strong brands. We've all heard of the Swiss army knife.
WARREN MOORE: Yeah.
BILL SHORTEN: No-one's really heard of the sort of the Australian knife.
WARREN MOORE: No. We had - when - the government's talking about creating 700,000 jobs…
BILL SHORTEN: Yes, that's true.
WARREN MOORE: …how is that going to happen, particularly in the light of manufacturing having difficulties and also the carbon tax, when you're talking about international competitiveness? Because you have to say, if you're talking about the Swiss, let's presume we did have a Swiss army knife, an Australian army knife, the cost of manufacturing that under the carbon tax is going to be inflated by the fact that carbon's at $23 a tonne.
BILL SHORTEN: Yeah. But they don't use a tonne of carbon in each knife. I'd just say to you this about carbon manufacturing and the creation of jobs. Since 2007, the western world - you know, they're the ones we compare ourselves with - have shed 30 million jobs. We've added 750,000 new jobs.
Now a lot of those new jobs though are in emerging industries, health and aged care, construction. There's been some added in mining. Personal services. Other areas have been shedding jobs, like manufacturing. The challenge in manufacturing is we've got now a tax scheme to help people fund research and development. We've also got - we're training more apprentices than ever. We're spending - the best way we can secure job security, leaving aside all the politics of who's right and who's wrong, is having highly skilled workers trained.
WARREN MOORE: How do you…
BILL SHORTEN: My kids are in primary school now. The reality is they will have eight or nine jobs in their life.
WARREN MOORE: Yeah.
BILL SHORTEN: The best thing I can do to protect their job security is give them the most skills possible so that they can, you know, change as new opportunities arise.
WARREN MOORE: How, Minister, do you look after communities, though? And I think that's an important point that often gets left out. When you talk about absolute numbers, be it 700,000 jobs created or this number of jobs lost…
BILL SHORTEN: Yes.
WARREN MOORE: …it does change the way communities work, doesn't it? If you've got a community that relies on aluminium, that's no longer there now, sure, there might be jobs created on the other side of the country or in another sector. But how do you protect…
BILL SHORTEN: I agree. Not everyone's mobile. Not everyone wants to…
WARREN MOORE: How do you - and older people as well.
BILL SHORTEN: People don't…
WARREN MOORE: How do you protect them?
BILL SHORTEN: Not everyone wants to go and live in the north-west of Australia.
WARREN MOORE: Yeah.
BILL SHORTEN: I get that. I think that we're going to need a new dialogue and some new leadership on how do we help create jobs in the communities where people live?
WARREN MOORE: Mm.
BILL SHORTEN: If you're - especially in country towns. If you're a one-company town and that company shuts…
WARREN MOORE: Yes.
BILL SHORTEN: …well that's a disaster. Property values fall. The older people, there's discrimination against older people.
WARREN MOORE: Yeah.
BILL SHORTEN: I don't think there's one…
WARREN MOORE: Well, I'll tell you a good example, getting back to aluminium. I grew up in a country town in the Hunter Valley, Kurri Kurri, which the coal there, well the coal industry went. Aluminium was the saviour of the place. Obviously, if that aluminium smelter - not that there's any question it will - but if that aluminium smelter was to go, it would very much change the fabric of the whole place.
BILL SHORTEN: Oh, absolutely. I've been to Kurri Kurri too, because the union I worked for represented aluminium workers. An aluminium smelter job is a good job. So I've never had the sort of greenie view that they shouldn't get subsidised electricity, because I think that they're good community-building jobs.
WARREN MOORE: Yeah.
BILL SHORTEN: I think state government's got a role to play here. There's - it's always been understood that the economic multiplier benefits of aluminium justified a subsidy in terms of the electricity prices which the state government supported them on. So I do think - this is not just a federal game. The state governments have got to make a decision. Do they want to support these industries or not? I know that Alcoa will be talking with the Victorian government.
WARREN MOORE: Yeah. Well that's how it got up and running in the first place, wasn't it? Or kept going in the '80s. They did a deal for cheap electricity with the Victorian government.
BILL SHORTEN: There's I think three or four things which have kept it, these smelters running. One is access to good port infrastructure. Now the Federal Government's working on ports.
WARREN MOORE: Sure.
BILL SHORTEN: The second thing is good industrial relations. And, you know, despite all the hoo-ha from the conservatives, the aluminium workers are not a radical bunch. They've worked through the changes. They've got good conditions. And other issues, access to electricity. You know, there's - and the dollar.
WARREN MOORE: Yeah. Well, they're all factors. Just before I let you go, on the issue of the carbon tax - and you're talking about jobs being created and there's claim and counter claim. At the end of the day, here's the question, I think. Can you guarantee that no job will be lost because of the carbon tax?
BILL SHORTEN: I can guarantee that we'll have more jobs in 2020 than we have now. In terms of what happens at a particular factory or a particular company, where they make decisions for a range of reasons, I don't think anyone can guarantee that a company is or isn't going to shed jobs.
WARREN MOORE: Because of the carbon tax.
BILL SHORTEN: Well, no, I'm not saying - I don't see that the carbon tax will be the specific cause of a loss of jobs.
WARREN MOORE: So that's the question I asked. Will the carbon tax lead to a job being lost?
BILL SHORTEN: I don't believe the carbon tax is the issue which is going to determine the fate of Alcoa or any other business. If you're asking me though about every business model going on and what businesses say and don't say, well, I'd be a mug to commit to the details of every company which I don't know, every balance sheet which I don't know, and every set of circumstances which I don't know.
But in terms of reassuring people, and we've got Alcoa as the hot example, the Australian dollar is the key issue in the future of that and whether or not it's possible to shave costs and make changes which allow Alcoa to weather the storm. Our dollar will go down eventually. I guess though you and I could probably retire if we could know exactly when the dollar will go down and we don't.
WARREN MOORE: Yeah and whether jobs are being lost in the meantime. Thanks for your time. I appreciate it.
BILL SHORTEN: Okay. Thanks, bye.
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