ABC The Insiders

E&OE TRANSCRIPT
ABC The Insiders
Date 04/05/2014

SUBJECTS:   Commission of Audit, Federal Budget and higher education

FRAN KELLY:  That's the Sunday papers. Up next is our guest, Leader of the Government in the House, Christopher Pyne. While he joins us, here's Tony Abbott and Tony Shepherd on the state of the budget.

TONY ABBOTT:  Inevitably, Labor was gilding the budget lily pre-election. But given the circumstances that we're in - given the budget emergency - a lot of things have to be adjusted.

COMPERE:    Do we have a budget emergency?

TONY SHEPHERD:  We don't have an immediate budget emergency, although we are in the sixth year of consecutive deficit. If we don't take action our prognosis is we will have 16 years of deficit and no chance of recovery.

FRAN KELLY:  Christopher Pyne, welcome to Insiders.

CHRISTOPHER PYNE:  Good morning Fran.

FRAN KELLY:  Well, your own audit commissioner says there's no immediate budget emergency. So why the immediate need to move on things like indexation of welfare payments and also some income tax hikes - it would appear - for middle and wealthy Australians?

CHRISTOPHER PYNE:  Well Fran, that's one interpretation of what Tony Shepherd just said. I think the other one that he's saying is that there is a growing alarm in the economy that a government has to meet. Now, Labor didn't ever meet it in six years. They made no effort to look down the road and see what was ahead. They kept borrowing, creating more debt and more deficit, higher taxes and more spending.

What Tony Shepherd is saying is that a responsible government led by adults will address the concerns that are down the track about the Australian economy. We don't want to end up in the situation that Europe and the United States are in and we don't have to, as long as we have a government that is prepared to take responsibility and make the decisions now that will set up the economy and our society in the years ahead.

FRAN KELLY:  One of those decisions down - coming down the track is that it seems to be some kind of deficit tax - deficit levy. A Galaxy poll out today gives the Government a pretty clear impression on what voters think of that. Almost three quarters of respondents said it would be a broken promise. Do you agree? It would be a broken promise?

CHRISTOPHER PYNE:  Well Fran, of course I can't comment on what will be in the budget Tuesday week. But what I can say is that whatever we do has to be fair for all. It also has to reflect the fact that there's no easy way out from the debt and deficit disaster left for us by the Labor party and it needs to be right for the country and that's exactly what we will do.

We made a commitment before the election in 2013 that we would fix the budget and we'd fix the economy. The Australian people expect us to put our best efforts forward to do that. They know it won't be easy and it's important that everyone shares in that burden of repairing the damage that Labor did to the economy and to the budget. What I took from that Galaxy poll was that Labor's vote is completely unmoved at thirty-seven per cent. Why is that?

FRAN KELLY:  Well, perhaps you should be focussing on the fact that the Coalition's vote has moved and it's moved down. One thing the voters clearly took from the Prime Minister before the election was that he would be true to his word that there would be no new taxes. Carbon tax would go off and no income taxes would go up. In fact, he said the best thing we can do for the families of Australia is to precisely honour the commitments we made to them at the election. Is this Tony Abbott's Julia Gillard moment?

CHRISTOPHER PYNE:  Well no, it's not. Fran, I think as a politician of 21 years standing I think I know the Australian public pretty well. I think that they fully understand that we are going to have to make the tough decisions necessary...

FRAN KELLY:  And break some promises?

CHRISTOPHER PYNE:  ...to get the economy and the budget back on track again. I think what's interesting is that they are looking at the Labor Party and they recognise that they are not the party with the answers. The Labor Party is like a drunk driver who's hit five parked cars and then insists on being given the keys back because they think they're capable of driving.

Now, the police know that the drunk driver is not capable of driving and the public know that the Labor Party is not capable of making the decisions necessary to repair the damage that Labor created after six years of deficit budgeting.

FRAN KELLY:  So what you're saying is that there is a case sometimes for breaking promises? Are we in the realm of core and non-core promises here?

CHRISTOPHER PYNE:  Well, I'm not saying that there are any broken promises. The budget will be Tuesday week. People will be able to judge themselves. But the overriding commitment that we made to the Australian public was that we would repair the damage that Labor's done. There's no easy way out from the debt and deficit disaster that Labor left us.

But what we do has to be fair to everyone and it has to be right for the country. That's the job of governments. Labor never did it. Every budget they squibbed. Every budget they said we can borrow more money and debt was rising to $667 billion dollars coming off a net zero. Labor was having deficits of $123 billion dollars over five budgets. When they came to government they had a $22 billion dollar surplus. Now...

FRAN KELLY:  Well, obviously…

CHRISTOPHER PYNE:  Nobody believes that Labor has the answer.

FRAN KELLY:  Labor has a different take on all of that of course and we'll let them argue that. But the Prime Minister quite clearly did back down this week on his paid parental leave promise, lowering the threshold from $150,000 to $100,000. Now, I think it's fair to bet that some people would have voted for the Coalition Government on the basis of that promise. Isn't that a breach of faith?

CHRISTOPHER PYNE:  Fran, in the current economic circumstances that we face and particularly the budget circumstances that we face, there have to be adjustments…

FRAN KELLY:  Yes, but this only makes a modest fiscal adjustment by the PM's own admission.

CHRISTOPHER PYNE:  Well modest adjustments to things like the paid parental leave scheme that is yet to be implemented is only common sense. The opposite to what you're suggesting would be knowing what we know about the budget and about the Australian economy, the government proceeded with policies that they knew would make it more costly to the budget down the track but be completely ignoring the realities of what we know.

Now, that's what Labor did. Labor just kept spending money and kept borrowing money and kept taxing the Australian public in spite of everything that they knew. We've come to government. We now know exactly what they knew and we are going to make the changes that are necessary to keep our commitments to the Australian people that we would fix the budget and grow the economy. That's what the public expect.

I give them a great deal more credit than a lot of other people clearly do. I think the public get it. I think they know that the Government has tough decisions to make. But they have to be fair to everybody and they have to be right for the country. I think the public know that there's no easy way out from Labor's debt and deficit disaster.

FRAN KELLY:  Well, let's go to some of the tough decisions that are being mooted, and have come out in the Commission of Audit this week, including some in your own portfolio which we'll get to. But the Government has had that report now for some weeks. The Treasurer says he's gone methodically and carefully through it but he's not ruling anything in or out. Why not?

CHRISTOPHER PYNE:  Well, because the response to the Audit Commission report will be contained in the budget on Tuesday week. Now, there's been a lot of speculation about the budget, as you'd expect. This is that season, the month before the budget where everyone tries to break the big stories. That's - that is continuing apace.

But the reality is that the budget will be our response to the Audit Commission. There are eighty-six recommendations in it. Some of them are unlikely to be implemented. Some of them will be implemented in full. Others will be implemented in part. That is the nature of a report to government, rather than a report by the government.

FRAN KELLY:  One of the recommendations is a co-payment - a $15 co-payment for a visit to the GP. The Treasurer said on Friday there's no such thing as a free visit to the doctor. Is a co-payment to the GP, is that fair enough? Is that a good idea?

CHRISTOPHER PYNE:  Well, in the budget you'll see the response on health to the Audit Commission's suggestions. But I do think that the public understand that one of the most expensive services that they all receive - that we all receive - is Medicare.

We train our doctors - they are extremely expensive to train in our medical schools - and yet, going to the doctor can cost a patient absolutely nothing. Now, in an economy, putting no value whatsoever on the most expensive service in the economy is a slightly bizarre situation...

FRAN KELLY:  What about those people though - I was listening to talkback radio this week and a number of callers ringing up saying they're on welfare payments. $6 dollars a visit to the doctor is a big deal for them. One bloke said he can only afford to eat once a day because that's how tight things are.

Are you worried about those people - people really, you know, living really close to the bone? They're going to have to make choices now about going to the doctor or not going to the doctor because they can't afford it. Are you worried about that?

CHRISTOPHER PYNE:  Well Fran - Fran, what we will always do in the Coalition is look after the people that need the greatest help in our society and in our community. That is definitely true. Those people...

FRAN KELLY:  So what does that mean? The lowest paid will be exempted from a co-payment?

CHRISTOPHER PYNE:  Those people on the lowest incomes, on fixed incomes, on pensions and welfare, have to be the government's primary client in ensuring that they have a standard of living that a country of Australia can expect all of its residents to enjoy. So they will always be treated with the utmost generosity by government. You will see that in the budget on Tuesday week.

FRAN KELLY:  So the lowest paid won't have to pay a co-payment?

CHRISTOPHER PYNE:  That's not what I said Fran. But what I did say is that we will always make sure that those on the lowest incomes - those on welfare and on fixed incomes - are always those who are protected by government because that is one of government's primary responsibilities.

That is why people on fixed incomes and low incomes are very strong supporters of the Liberal Party and the National Parties because they know that we are truly the only national party across the economy and the country, whereas Labor represents sectional interests in the union movement.

FRAN KELLY:  Minister, let's go to your own portfolio now because the Audit Commission had a fair bit to say about that. It recommends the deregulation of the higher education system, allowing universities to charge students more for their degrees. I think that echoes a call certainly from some vice-chancellors and I think recommendations from the Kemp-Norton review which you commissioned. Are you on board with this idea of universities being able to charge higher fees?

CHRISTOPHER PYNE:  Well, what I'm on board with Fran is setting up our universities and our higher education institutions into the future to compete with our Asian competitors. Five years ago there were no Chinese universities in the Top 100 Universities in the Jiao Tong Index. There are now five.

In less than 10 years China is catching up to Australia, the UK and the United States. We have to do two things in higher education policy. We have to set up our universities so they can compete - so that they can fly - to unshackle them from heavy regulation and government control. So I do support that very strongly.

FRAN KELLY:  And how do you do that and maintain standards? Because I notice that the agency that is set up to maintain standards in the universities, it's been offering redundancies. It's had budget cuts. Will you - if you're going to open up that sector to more players, are you going to beef up the standards agency?

CHRISTOPHER PYNE:  Well, there are two ways to ensure high quality standards Fran. One is government regulation - and there will always be government regulation. The other is competition because competition ensures the best quality and the best standards because without competition, of course institutions cannot perhaps perform at their best and still receive government support. So I'm in favour of deregulation.

I'm in favour of more competition. I'm in favour of universities being able to reach their full potential. But also I'm in favour of spreading opportunity to more students to go to university. That's why I'm very attracted to the recommendations in the Kemp-Norton report about expanding the demand driven system to sub-bachelor courses - to diplomas and associate degrees which are the degrees and diplomas that set students up to go to undergraduate courses and do bachelor degrees, usually from first generation university goers.

So we want to have fair deregulation. Set universities up for the future by unshackling them and giving them the opportunity to reach their full potential and spreading opportunity to more students to get a university degree.

FRAN KELLY:  Minister, we're almost out of time but are you also in favour of the suggestion that students pay more of a share of their course? They currently pay forty-one per cent now under the HECS system. The suggestion is they pay up to fifty-five per cent share and the government share goes back from sixty to forty-five, that'd save around $1.5 billion. Is that a good idea and will you pledge that that money saved will go back into the university education area?

CHRISTOPHER PYNE:  Well Fran, there are lots of ways of funding universities and allowing them to raise their own revenue. I will say this, and that is...

FRAN KELLY:  I'm talking about the share the students pay.

CHRISTOPHER PYNE:  Yes, I understand that. The Audit Commission was talking about the share between the Commonwealth and students - the percentage share that they contribute.

There are lots of different ways to let the universities grow their own revenue. But I do think students who pay about 40 per cent in their late income life, so later on when they are earning over 50,000 they start paying, they borrow every dollar from the taxpayer up-front, and there are no domestic fee-paying students in Australia.

That is a great system, the envy of the world, which we will maintain. But I do think that there is capacity for students to contribute more to their own education, especially knowing that they are very likely to have an unemployment rate below 1 per cent, and also that they will earn, over a lifetime, 75 per cent more than a person without a university degree.

FRAN KELLY: But education funding won't be reduced? You have pledged there won't be reduced funding to universities, do you maintain that promise?

CHRISTOPHER PYNE: What I said before the election and what will remain the same is that the overall spending on education, both school and higher education spending, will increase. But it won't be in the Labor Party's priority area; it will be in our priority areas because we won the election on September 7, therefore, the public expect us to fund our policies, which we will. We won't be funding Labor's policies, which in many cases were flawed, expensive and ineffective.

FRAN KELLY: And Minister, just very finally, in what's been going on in the ICAC (Independent Commission Against Corruption) in New South Wales this week, lifting the lids in terms of relations between politicians and political parties and developers, NSW is the only state to ban donations
from developers, political donations from developers. Given what we've seen about the potential of favours being linked to donations, would you support that idea in South Australia? Should all states ban donations from developers?

CHRISTOPHER PYNE: I think all donations should be banned other than from individual Australians. I don't believe that the trade union movement or corporate Australia should be able to donate to political parties. I think only individuals should be able to donate to political parties so that they make the decision that, with their after-tax income, they feel strongly enough that they want to support a political party, whether it is Labor or the Greens or the Liberal Party.

I note the largest political donation in history in Australia was by a corporate donor to the Australian Greens. So let's not have any hypocrisy about political donations to political parties from one party or the other. I think all political donations should be banned other than from individuals.

FRAN KELLY: Christopher Pyne, thank you very much for joining us on Insiders.

CHRISTOPHER PYNE: Pleasure.

[ends]