Australian Government coat of arms

Prime Minister of Australia

The Hon Malcolm Turnbull MP

Interview with David Penberthy and Will Goodings, FIVEaa radio

05 February 2016

Prime Minister

E&OE

JOURNALIST: Malcolm Turnbull’s mantra has been jobs and growth. Well we’ll be talking about jobs. Quite obviously South Australia is the number one place in Australia when it comes to the level of concern about the need to create jobs here. The Prime Minister is on the line. Mr Turnbull thank you very much for joining us on Fiveaa breakfast.

PRIME MINISTER: It’s great to be with you David.

JOURNALIST: There’s some glimmers of hope on the horizon for the car industry with the interest that’s being shown by this Belgium industrialist Guido Dumarey, he was in town yesterday for talks with the Premier and Opposition Leader. We understand that he has met with your Minister for Innovation Christopher Pyne. Have you had a chance to bring yourself up to speed broadly with the plan and if it does require some sort of industry assistance from Canberra, is that something you would be prepared to consider?

PRIME MINISTER: Well look, let me say this, David, it's very early days but there is a, they have had some success in Europe, as you know, in using an old GM plant. There have been a number of cases where new automotive manufacturers have taken over old plants. I mean the Tesla in San Francisco is being built in an old General Motors plant. So there is, you know, there are precedents there and it's encouraging. I did meet very briefly Mr Dumarey. He came to my Office as well as meeting Christopher Pyne as you said he came into my office and met with some of my team. It was good to see him.  Looks it's very encouraging but I don't think we want to get ahead of ourselves. They’ve obviously got to have talks with GM.

There’s a lot of work that would need to be done. As far as the Government's role, there is, as you know, in place an Automotive Transformation Scheme which can provide support to help transform car makers into modern or more modern export-oriented industries. That legislation remains in place. It can provide funds for car makers and component manufacturers, as long as there's a car maker or a component manufacturer who can access the scheme. And if the Punch Corporation were to set up, come to an arrangement with GM and set up, produce the required number of units that’s required to qualify under the legislation, then they would be eligible like anybody else would be. But it is, I think this is something, that this is promising, it's potentially very exciting but it's very early days so I wouldn’t, you know, I think what we've got to do is provide encouragement but not get ahead of ourselves in terms of the potential here.

JOURNALIST: The starting point for a conversation between the Federal Government, any party wanting to resuscitate the automotive manufacturing industry in Australia, is the starting point that any ongoing Federal Government assistance would have to be the lower level of per unit subsidisation than we've seen in the past?

PRIME MINISTER: No. There is an Automotive Transformation Scheme in place and if a manufacturer can qualify for that and potentially a new manufacturer could, then they would be eligible. But there’s no, that's the - I think the first thing, as I understand it from my brief discussion with Mr Dumarey, he has to obviously progress discussions with General Motors. There is a lot of expense associated with site remediation and so forth. Its early days but it's encouraging. I would just encourage him and I would encourage everyone to provide as much assistance as they can but we shouldn't get too far ahead of ourselves on this.

JOURNALIST: Prime Minister, on the question of tax reform, all the players in this debate are sort of shadow boxing at the moment in the absence of a firm proposal for change. When are we going to see a firm sort of blueprint from the Government about the direction that it might take us in tax-wise?

PRIME MINISTER: Well you’ll see the Government’s, well, the full Government economic blueprint, if you like, in the Budget of course, which is in May. We will likely make announcements between now and then. But let me just touch on...

JOURNALIST: Like a separate stand-alone tax White Paper?

PRIME MINISTER: I think the, the Budget is three months away so in practical terms, the Budget. The White Paper is where a Government sets out its policy on a particular topic. I think given we’re so close to the Budget, the Budget will be, for all practical purposes, the White Paper.

Can I just say though - let's talk about the GST. The GST, as we know, is a tax on spending, on consumption. It doesn't have a universal base. There are a lot of things, health, education, fresh food and so forth that are not included. It raises around $60 billion a year, thereabouts, a little bit less in fact. The argument has been put that it should be increased for a variety of reasons. Your Premier in South Australia, Jay Weatherill would like to see it increased to fund health and education. Others have argued that it should be increased in order to enable a reduction in personal income tax. This is the tax mix switch argument. All of these, you know, people are entitled to make these arguments and we are looking at it in a very careful way. I've been quite deliberate in not rushing to take proposals or ideas off the table. Labor is trying to run scare campaigns, although the major proponent of GST increase is their friend Jay Weatherill but any way, consistency has never been a big target, KPI for Mr Shorten.

But I just say the bottom line is if you are going to make a change to the tax system, what has it got to do? How does it satisfy a responsible Government that it would be worth doing? Well firstly, you’ve got to decide whether you want to raise more tax overall. Now we don't. Labor does. Labor wants to raise more tax to spend more. We believe the Government is spending enough. We actually believe it's spending too much and we've been trying to restrain spending but we're not able to get all of our spending reductions through the Senate, as you know. So we think we're already spending more than enough. That's one philosophical difference. The other issue is if you're going to make a change in the tax mix without raising in total more tax dollars, you can only do so if the change is going to result in higher productivity and stronger growth, more jobs, more investment and so forth.

Every tax affects the economy in one way or another. Some taxes are more efficient than the others. The argument has been made, for example, that you could raise the GST and devote the money raised to reducing income tax. Well there is no doubt you could do that. The problem with that, though, is that in order to make that fair, you would have to, naturally, increase pensions. They would be increased by CPI. You have also got to address the position of people who do not pay a lot of tax, either because they are living off savings or they are living off tax-free income from super or they are, you know, they are on low levels of income that are not hit with much tax, if any at all. So there’s obviously got to be a lot of compensation, whether it's through tax cuts, welfare increases and other benefits. And then after you have done all that, you have got to say after we've done all of that, are we getting a productivity benefit, a growth dividend that justifies the trouble and expense, complications of making the change? That's why it's a detailed matter that’s got to be looked at very carefully. I really welcome the contributions of - constructive contributions of people in the debate, including Jay Weatherill.

I don't agree with Jay's agenda of raising more tax to spend more. But nonetheless I thank him for making a thoughtful contribution, as we do from Mike Baird and even Paul Keating had some fairly pungent words about it this week. All of that is helpful to the Government as weigh it all up. So that’s basically where we are. I can assure you there are three things - we do not want to raise, we’re not going it raise more tax overall, number one. Two, any changes are going to be rigorously fair, absolutely fair…

JOURNALIST: The criteria...

PRIME MINISTER: And three, you have got to drive jobs and growth.

JOURNALIST: PM when John Howard brought the tax in after the 1998 election, it was predicated on the removal of some existing State taxes. Is there a risk now though that the States, we include South Australia obviously in that, seem to be arguing they want an increased GST but they don't want it do the heavy lifting when it comes to State taxation. Would you tolerate that as the nation's leader?

PRIME MINISTER: Well you’re absolutely, it's a very fair point, David, you are absolutely right. The States have got themselves into a way of thinking that every time they need more money, they just go to the ATM of the Federal Government and when you say to them, when you say to the States, as we did at COAG, and they have agreed to look at this, I'm not sure how seriously they will look at it, but when we said to them at COAG at the end of last year 'okay, you guys, you are sovereign governments, you have tax bases of your own. You have got actually very efficient tax bases, you've got land tax, you've got payroll tax, what are you going to do about that?' And they say 'Oh, that would be politically difficult' and you say 'well, that you are asking us to put up the GST, do you reckon that is politically easy'?

JOURNALIST: A piece of cake.

PRIME MINISTER: A walk in the park.

JOURNALIST: Is it your contention, that, that is what Jay Weatherill made the point repeatedly to us, the growing incapacity for the South Australian State Government to sustain increases in healthcare in South Australia. I think they have said over the course of the next two decades, the cost of healthcare in South Australia will eclipse the entirety of the state budget. Are you saying it is entirely within the purview and responsibility of the state government to find a way to fund that and that the Federal Government will not partner a solution, GST or otherwise?

PRIME MINISTER: No, I’m not saying that. But, that is a very comprehensive statement. I’m not saying that at all. What I’m saying is that we recognise that health costs are increasing, everyone understands that. And you know, in many respects that’s a good thing David. I mean, we are getting a, we are living longer. That’s good. We are getting people having hip replacements and their knees fixed, you know, when they are in their 70s, and sometimes older. And, you know, they are having a much higher, better quality of life and longer life. All that is good. So, yes we are spending more on health but we are getting the rewards for the, we are getting benefits from it in terms of our lifestyle and personal well-being.

So, yes, we do need to spend more money on health. The question is, there are at least two questions. One is we have got to make sure the health system is run more efficiently. The pressure, the onus has got to be on the states who run the public hospital system. It’s their hospitals, yes, we contribute currently around 40 per cent of the costs but, they run them. They have got to do the heavy lifting in terms of getting the maximum health bang for the taxpayers buck. And, they are businesses that the states own and operate. That is number one. Number two, the states cannot disclaim responsibility for raising revenue. I mean, they have got to be prepared, I believe, to go to their citizens and say, for example. We want to – we need to raise money, more money to spend on our schools and our hospitals. And, we are going to increase this state tax, or that state tax.

Now, when you say that to them, they don’t want to do it. They recoil at the political horror and say no, the Federal Government should do it. Well actually, some of the most efficient tax bases in Australia are state tax bases like land tax, and payroll tax. Some of the most inefficient tax bases are also state taxes such as stamp duties, particularly, not just on real estate which is obviously the big one, but on insurance. So, the idea that you would tax people when they enter into an insurance contract. I mean, really we should be, in a country like ours where natural disasters are all too prevalent, we should be encouraging people to insure. Insurance, insurance is something that should be encouraged, yet, it is taxed, as you know, at state level.

JOURNALIST: Prime Minister, can we just get your thoughts on the school threats that have been gripping schools around our country. We saw yesterday, four schools here in South Australia were the subject of  these robo calls. Clearly, you would get intelligence briefings and, it looks like these are coordinated hoaxes. But, with so many schools being affected, I mean, it really is the dictionary definition of cowardice by the perpetrators, isn’t it?

PRIME MINISTER: Well, it is. It is also the dictionary definition of a crime by the perpetrators. And, I would hope and expect the police to track these people down and they should then be prosecuted and hopefully, dealt with you know as rigorously and firmly as the law allows.

JOURNALIST: Just on immigration, we are seeing a change in sentiment in Europe. And the sentiment probably changed most dramatically in the wake of the Paris attacks. Australia is still committed to accepting some 12,000 displaced people from the Middle East. How confident are you, as Prime Minister, that we can establish in advance that these are all good people.

PRIME MINISTER: Well, I am very confident the security vetting is being done very carefully. As you know, that’s their job and they are doing very carefully. One of the benefits, one of the many benefits from obviously having a strong border protection policy and being able to decide who comes to Australia, and that is basically what we are doing, what we have done. We have stopped the boats, we have done that as a compassionate nation. As a nation that cares about people, as a nation that does not want to have tens of thousands of unauthorised arrivals and thousands of people drowning at sea. So, we have taken control of our borders again since we came back into government, after the Labor Party’s six years of losing control.

And, what that means is we can now provide, in addition to our already generous humanitarian program, we can provide these additional 12,000 places. We would not be able to do that if we were back in the days of Kevin Rudd and Julia Gillard, that’s a simple fact of life.

JOURNALIST: Prime Minister, has the European experience forced something of a philosophical change within the government? ABC Lateline programme last night quoted from documents from the Immigration Minister’s office that seemed to be contemplating a suite of reforms to Australia’s Visa framework. It seemed to be a case of tighter scrutiny for Australia’s humanitarian program.

PRIME MINISTER: Well, I haven’t seen these documents, and as I understand it neither has the Minister for Immigration. So, these are, I’m not quite sure of their status, I don’t know what their status is. I can just say that we will continue as a government to ensure that we do everything we can to keep Australians safe at home. And, as far as we are able to, safe abroad. And we will do everything we can to ensure that we maintain control of our borders.

So, of course that enables us to have a generous, and very compassionate humanitarian program, as we discussed. As far as future policies are concerned, I can ensure you that in terms of people’s rights, that there is only one class of citizenship in Australia, so all citizens have got the same rights that they also have the same obligations and one of those obligations is obviously to obey the law. And so, that applies whether you were born here or whether you took out your citizenship last week.

JOURNALIST: Prime Minister, we have got to let you get back to running the nation, but before we do, you are probably aware that it is meat tray Friday here on 5AAA. We have been asking our listeners if they have a favourite Australian expression and we were wondering whether you, as the nation’s head honcho, to use an Australianism. Have your own favourite Australianism?

PRIME MINISTER: Well, my dad, Bruce Turnbull, was a very colourful Australian. You know, classic Australian guy, he had lots of, he was peppered with rhyming slang. Which is probably a bit dated now. But you know, he would talk about his, you know, he would say oh ‘my old china plate’, meaning my mate. He would talk about, oh, crumbs, I’ve forgotten the next one. But that was basically, Bruce had, Bruce was - Oh, butcher’s hook, you no ‘how are you mate, oh, I’m feeling a bit butcher’s hook’. I’m a bit crook.

The other one which is a very Sydney expression, in the old days Bondi Beach used to have two tram lines. In fact the whole suburb is built around trams. So, you could always get a tram at Bondi. And I would say, if someone made a hasty departure you would say he shot through like a Bondi tram.

So every now and then, you see, I grew up with my father. My mum left us when I was you know, nine or so and I grew up with my father. He was like, sort of a big brother little brother kind of relationship. And so, I’m an okay basic cook and a reasonable ironer. I’ve got a few domestic skills.

So, sometimes people look at me because I come out with these expressions of my father’s which are literally about 50 years out of date

JOURNALIST: But, that does put you in the running for the meat tray. Prime Minister Malcolm Turnbull, very lovely to catch up with you. Thanks very much.

PRIME MINISTER: Very good.

JOURNALIST: Take care this morning.

PRIME MINISTER: Okay.