Subjects: Metadata laws, infrastructure investment, debt, gas crisis
DAVID LIPSON: For more on that and the other big stories of the week, I was joined by Minister for Industry and Innovation, Arthur Sinodinos; and shadow minister for infrastructure and transport, Anthony Albanese, for our Late Debate.
Gentlemen, thanks for your time on Lateline.
ARTHUR SINODINOS: Thanks, David. Thanks, Anthony.
ANTHONY ALBANESE: Thank you.
LIPSON: Let’s start with the metadata breach. Can we still, Arthur Sinodinos, have faith in the system, now that we know that an AFP officer has accessed a journalist’s metadata to find out who was leaking? This was meant to be about national security.
SINODINOS: Well, I think what’s good about this is that the commissioner, Colvin, has come out pretty quickly to be very transparent about what has happened and about the action that’s been taken.
I am not across all the details of the case that’s involved, but I think we can take some comfort from the fact that someone like Commissioner Colvin is prepared to come out there, make a clean breast of what’s happened.
And to the extent that this feeds into issues around how that sort of data is protected and all the rest of it: well, then, obviously that’s something that can be looked at in due course. But let’s get the full facts on the table first.
LIPSON: So, Anthony Albanese, is this where it should end? Or should there be some sort of investigation?
ALBANESE: Well, journalists of course expressed concern about this legislation at the time. And it was this very – what appears to have happened here was the very concern that they had. So there does need to be a proper investigation. There needs to be…
LIPSON: Should that be independent of the AFP?
ALBANESE: I think that would be appropriate for at least some level of oversight; and for there to be a sober analysis of what went wrong here.
And if any response is required to make sure this isn’t repeated, then the Government and the Opposition should both be prepared to, in a bipartisan way, make sure that that happens.
LIPSON: So that might come, say, from rewriting legislation if needed?
ALBANESE: Well, we’ll wait and see. I don’t want to get ahead of it.
But what’s very clear is that this is precisely the concern that many people have about the retention of metadata. And that metadata should be retained only on the basis of the strict protections that were put in place.
It appears there’s been a breach of that, so there clearly needs to be a response.
LIPSON: Would the Government consider an independent investigation?
SINODINOS: Look, let’s get the facts on the table first. And the Attorney-General will obviously have to consider what’s happened and the circumstances surrounding it.
But again, I’d just make the point that Commissioner Colvin has come out very quickly on this and I have no doubt that there’ll be lessons to be learnt from this.
LIPSON: OK. A lot of politics to get through from the week. This was the Treasurer, Scott Morrison, yesterday talking about good debt and bad debt. This was his definition:
SCOTT MORRISON: Australians understand that taking out a mortgage to pay for their home is a wise investment for their future. But they also know that putting your everyday expenses on the credit card is not a good idea. It never ends well.
And that is basically the difference between good debt and bad debt. The same is true for governments.
LIPSON: Minister, this concept of good debt and bad debt is nothing new. Big business has used this model for a long time. Some states have done it, too.
It was really only the Coalition that framed all debt as bad debt, through the Abbott and Hockey years, saying the “debt and deficit disaster”, the “budget emergency”. Is this reframing a concession that that wasn’t the right approach?
SINODINOS: I think some history first: deficits lead to debt.
So it was really the issue of deficits running wild that was the issue that led to the whole debate around: well, what are appropriate levels of debt? And it was in that context that there was the talk about what was an appropriate level of debt to have, as opposed – and that’s when the implication was drawn that, well, there are some levels of debt that get too high. That’s a bad level of debt to have. So that was the context in which the whole debate started.
LIPSON: Sure. But we have increased net debt by $100 billion since you came to power.
SINODINOS: The Coalition has never argued that you shouldn’t borrow for productive infrastructure. And what Scott Morrison has done yesterday and today is: set out a framework for the budget for putting that forward.
Now, I notice within the Opposition Mr Shorten has tended to criticise where Scott Morrison is going, whereas Anthony and Chris Bowen have shown, I think, a greater willingness to consider the option.
And I think in terms of budget presentation it will just help to clarify what we’re spending on infrastructure, that is productive, generates a return; and then the other spending, where we have to incur debt and where ideally you’d want a situation where on your recurrent, your ordinary annual services of government you are paying for that through your revenue and not incurring debts that in the future would have to be paid back.
LIPSON: It seems a happy coincidence for the Government, though, that the areas of bad debt are Labor’s strengths of health, education, welfare in particular. Is the Government taking into account the positive impact of investing in human capital in those areas?
SINODINOS: Look, let me make it clear. Spending in health, education, all those is not bad spending or bad debt. That’s not what the Coalition is saying.
Bad debt is a situation where, on your recurrent spending, you’re in a situation where you’re borrowing and in the future you may either have to cut that spending back or raise taxes to pay for it. It becomes unsustainable.
Now, human capital: the point you raise is a very good one. And we have known for a long time that investing in human capital is important.
Now, the issue with investing in human capital is: you can’t quite get a return back in the way that you can investing in infrastructure, in terms of the direct impact on the budget balance.
Because that’s what he’s talking about. You get a direct return to the Government from investing in that sort of productive infrastructure.
LIPSON: Anthony Albanese, good debt, bad debt: does Labor have a problem with it conceptually?
ALBANESE: Well, Arthur: I’ll give him points for boldness.
Here they are. They’ve had a massive increase in the deficit. They’ve increased the debt by $100 billion. And now they say that it’s still all about Labor.
The truth is that their real definition is: when Labor is in government, debt’s bad. When they’re in government, debt’s good. That’s the real distinction that they’re drawing here.
LIPSON: But Labor has looked at this as well: dividing…
ALBANESE: I have been arguing for a long period of time about productive infrastructure being an investment, not a cost.
That’s why, when we were in government, one of the reasons why debt increased was: we doubled the roads budget. We increased the rail budget by more than 10 times. But we increased the productive capacity of the economy. And that’s led…
LIPSON: So what’s your definition of productive infrastructure?
ALBANESE: Well, my definition is: let’s have some objectivity here.
One of my concerns here is that, at the same time as they’re speaking about good debt: like the Reserve Bank governor indicated, some of those same issues, economists have all said that at a time where you have record low interest rates, where have a problem with demand in the economy, investment in infrastructure can be good, even if it means borrowing. But it has got to be for the right projects.
Now at the same time, they’ve sidelined Infrastructure Australia. Infrastructure Australia gets its budget cut on July 1, and in every year thereafter under this Government’s watch. They’ve established an infrastructure financing unit in the Department of Prime Minister and Cabinet. So: reporting directly to Malcolm Turnbull, rather than independent, at arm’s length, doing that objective cost -benefit analysis, which is required.
LIPSON: This is an important point that Anthony Albanese is making, because not all infrastructure is productive. Not all infrastructure spending delivers that return that you need. So how can you be sure that it’s going to if you don’t have that independent oversight?
SINODINOS: Well, because Infrastructure Australia is still there. It’s still providing 15-year pipeline projects to the private sector…
ALBANESE: It’s just not relevant.
SINODINOS: It’s prioritising projects and that’s very transparent from the work that they have been doing.
The project unit, financing unit that Anthony is talking about in PM&C: that’s got a different role. That’s a role of seeking to leverage the balance sheet of the Commonwealth and find innovative ways to finance more infrastructure.
ALBANESE: Which is part of Infrastructure Australia’s charter: was about how financing occurred. That was part of its charter. I wrote the legislation. And it’s still there.
SINODINOS: Well, if you let me…
ALBANESE: But it’s not just having a list that’s about the financing of projects.
SINODINOS: If you let me finish. When Malcolm Turnbull came Prime Minister, in the context of also the city deals we’re talking about, the view was: we should look at a whole series of options about how we have more financing techniques.
For example, do we do more what’s called ‘value capture’, where we actually have an infrastructure development that leads to an increase in land centrals? How does the Commonwealth – or in concert with the states – get some of that value back and help finance that infrastructure going forward?
LIPSON: It looks like the Treasurer is gearing up for a big infrastructure budget. That seems to be from reading the tea leaves, obviously. Can we expect that nation-building budget – and in the areas of particularly energy security and transport, of course, as well?
SINODINOS: Well, I’m not across everything that’s going to be in the budget. But it’s clear from what the Treasurer has said that infrastructure is a priority. Housing affordability is an issue. Energy security will be also canvassed.
But I think, also, measures that go to regional Australia and what we do to make sure that regional Australia have appropriate accesses to goods and services, particularly government services, is going to be important in this budget as well.
I think there are going to be a number of priorities. But one of the threads running through it is, as you say, building for the future and making sure that we have a productive base for the economy. And we also lock in that non-mining investment that we need to secure that transition from the resources boom.
ALBANESE: There is a huge gap between the Government’s rhetoric and what it’s actually doing.
Arthur raised again this issue of value capture. That’s not new. That’s how the London Underground was built.
And projects like Brisbane’s Cross River Rail and Melbourne Metro had, as part of the Infrastructure Australia process, part of the funding that was in the 2013 budget, value capture. And yet it was cut in 2014. A project like Cross River Rail in Brisbane: if it does not receive funding in this budget then it completely undermines the Government’s position.
LIPSON: OK. I to want to turn to gas, another big issue this week. A fairly dramatic intervention by the Government to ensure that there is enough supply in Australia. This was the Prime Minister explaining it:
MALCOLM TURNBULL: Australian jobs, Australian families have to come first. It is ridiculous for us to be on the edge of becoming the largest LNG exporter in the world and not to have enough gas for our businesses, for our households, for industries: great industries like this, here in Australia.
LIPSON: Anthony Albanese, it’s no small thing to ban a company from exporting their product. The Government’s measure is temporary. The Labor Party is pushing for a more permanent measure.
How can you be sure that that is a better way to go and won’t impact too much on sovereign risk, in particular, which the companies have raised?
ALBANESE: Well, we argued this at the last election campaign for a permanent national interest test. Is the national interest something that’s only there some of the time? Or is it a permanent feature of what governments should do? So you need to do that.
And the second element that you need to do – and Arthur knows this – is an emissions intensity scheme. You do need that signal being there. The energy sector all say that. Economists all say that.
The Government knows that that’s the case. It was raised at the end of last year by the Energy Minister, Josh Frydenberg, and shot down in the space of a couple of days because of the Government’s internals, with the ongoing fight between the Abbott forces and the Turnbull forces.
But it is common sense and it needs to have both those elements.
LIPSON: Arthur Sinodinos, this temporary measure is up to the Minister’s discretion.
LIPSON: Beyond that, though, it’s pretty unclear as to what will sort of meet the benchmark of a shortage. So what will be a shortage?
SINODINOS: So what would happen is: the Minister for Resources, in consulting other relevant ministers, would look prospectively and the period to be determined still – whether it’s 12 months, for example – prospectively at the supply and demand balance in the economy when it comes to gas: how much is potentially going overseas, how much is potentially available domestically; looking at whether…
LIPSON: But it’s a judgement call in the end?
SINODINOS: No. It’s based on facts. It’s based on information that will be provided by the companies, information that’s provided by the ACCC…
LIPSON: But a judgement call, based on facts…
SINODINOS: The numbers will tell the story. Either those big gas producers that we’re talking about are net contributors to the domestic gas supply – in which case they’re putting more into the system than they’re taking out – or they’re not.
And the point is: the Minister for Resources would then make a judgement as to whether a particular company and particular shipments could go forward.
Now, you’re right: this is a strong thing to do. But we’ve had two rounds of discussions with the gas producers. I have been there as Industry Minister.
It’s become clear to me, increasingly with the stories I get out of all sorts of small, medium, larger enterprises being asked to pay double their gas bill from last year, 80 per cent increases, 100 per cent increases…
LIPSON: So will price be a factor in that decision by the Minister? Will the price of gas play into this?
SINODINOS: Well, what we see the prices being is an outcome of a process, where we make sure that the gas producers are making a net contribution to domestic gas supply, so that there’s downward pressure on prices.
LIPSON: So it’s about the quantity of gas, rather than the price of gas?
SINODINOS: Exactly, and the price will ultimately reflect that balance.
LIPSON: Because the Prime Minister did say that wholesale prices should not be materially different to export prices.
SINODINOS: When you net back the costs of preparing gas for export, there should be a broad equivalency. And so the point he was making was: on that basis, prices should be lower than some of the prices that are being quoted.
LIPSON: It doesn’t sound that clear. I mean, businesses need certainty, don’t they? This seems a little bit opaque.
SINODINOS: Well, what do you want us to do? Do you want us to go out tomorrow and say, “We will make the gas price $6 or $4?
The fact is: you can’t do it like that. You either look at the quantity or the price, not both. We’re looking at the quantity to put that downward pressure on prices.
ALBANESE: I tell you what business wants: they want the certainty that the national interest isn’t a temporary phenomenon; that the national interest is something that is considered as part of policy.
SINODINOS: Yes, but that policy would do nothing.
ALBANESE: Well, Malcolm Turnbull made an announcement the other day about wholesale prices should be half and then changed it by the afternoon.
SINODINOS: No, no. He didn’t change at all. He didn’t actually change.
LIPSON: Well, he didn’t. I mean, Labor has been saying that, but…
ALBANESE: He’s been all over the shop on this issue…
SINODINOS: Comrade, it’s Shorten who has been misrepresenting. Shorten has been misrepresenting…
ALBANESE: No, no. He’s been all over the shop on this issue. And you’ve done anything to avoid an emissions…
LIPSON: He said – I mean, I’ll give you the quote. He said, “People are being offered prices of $20 a gigajoule. It should be around that half or less.” He’s talking about the wholesale price from the start…
SINODINOS: Exactly. Exactly.
LIPSON: …and at the end.
SINODINOS: Not about the retail price…
ALBANESE: Sure, they try…
SINODINOS: …but about the offers that people were being given in contracts.
ALBANESE:…but now they’re saying – and when Arthur’s asked whether the price should be a signal should be whether there be this intervention or not, they won’t say whether it is.
SINODINOS: No, no. We’ve been consistent from day one.
ALBANESE: They won’t say whether it is.
SINODINOS: And can I say: the national interest test that Labor talk about: that’s a prospective thing to do with new developments. It does nothing for the situation now. That’s what we’re dealing with: a short-term intervention until our longer-term measures to improve the market – greater transparency of gas prices, increase the competition, get more exploration development going in states like Victoria and New South Wales where there have been limits or moratoria.
This is: you’ve got to walk and chew gum.
LIPSON: Arthur Sinodinos and Anthony Albanese, thanks very much for joining us on Lateline.
ALBANESE: Good to be with you.
Leader of the Australian Labor Party, MP for Grayndler, Rabbitohs Life Member. Authorised by Anthony Albanese, ALP, Canberra.
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