Q&A

E&OE TRANSCRIPT Interview – ABC1 Q&A with Tony Jones Monday 29 September 2014 SUBJECTS:  The economy; Education; Economic Reform TONY JONES: Good evening. Welcome to Q&A. I'm Tony Jones and joining us tonight, the political editor of The Australian Financial Review Laura Tingle; the Minister for Education and Leader of the House, Christopher Pyne; celebrated actor and activist Tony Barry; the head of the Australian Chamber of Commerce and Industry Kate Carnell; former Treasurer Wayne Swan. Please welcome our panel. Thank you and Q&A is simulcast on ABC News 24 and NewsRadio and overseas on Australia Plus and you can join the Twitter conversation by using the #qanda hash tag. If you’ve got a live question at @qanda to help us find it. We asked our Facebook followers what they’d like to see discussed on Q&A tonight and they nominated climate change, the response to terror and tax evasion. Well, our first questions comes from Ursula Hogben. URSULA HOGBEN: A recent analysis of 16,000 ASX listed companies says nearly a third face financial catastrophe due to the slowdown in China and the recent end - looming end of the investment - mining investment boom. How is our economy placed to deal with another crisis and what would this Government do differently from the Labor Government that it criticises? TONY JONES: Christopher Pyne? CHRISTOPHER PYNE: Well, I don’t think we are facing an economic crisis. I think we - there are always the slings and arrows of outrageous fortune in economies throughout the world and different governments deal with them as they appear. The current government’s plan is to put Australia in a strong economic position by reducing debt, delivering surplus budgets down the track, reorienting the tax system, so we have abolished things like the mining tax, which we regard as a present and future break on economic investment and growth, abolishing the carbon tax, which was a handbrake on the economy and particularly disadvantaged our export-oriented industries. So, what we’re trying to do is reduce the tax burden, reduce the debt, deliver surplus budgets, economically put the budget in a strong position to deal with future shocks as they may occur but while there are obviously weak spots in the world economy, there are also strong aspects and the United States is doing a lot better today than it was several years ago and I think that is a strong positive for Australia. And China, in spite of what some commentators are saying about China, it is still anticipated to have a 7% plus growth and they want to maintain their growth, of course, because they have a 1.3 billion person population and high growth, a growing economy, maintain social stability. So I don’t think it’s all doom and gloom. In terms of what we would do differently, we supported the first package of measures that Wayne Swan introduced when he was the Treasurer. We didn’t support the second and I think we might have spent the money differently and I think some of the money was misspent on things like the Pink Batts program and the Building the Education Revolution but they’re arguments we can have around the edges. In general that’s what we would do. TONY JONES: $48.5 billion, that’s the deficit Joe Hockey announced just on Friday. Was that due to or how much of that was due to falling revenue as a result of the end of the mining boom? CHRISTOPHER PYNE: Well, there was a revenue element in that. There was also an element of the new Government coming to power and doing things like putting the Reserve Bank on a stronger footing, where Labor had taken, for want of a better description, dividends from the Reserve Bank. We tried to re-orient them so they could deal strongly with changes to the economy over the coming years. It’s true though that Labor delivered six deficit budgets in a row, having promised surplus budgets. TONY JONES: Shortly, can you put a figure of how many billion dollars the-- CHRISTOPHER PYNE: $240 billion of accumulated deficits. TONY JONES: No, how many billion dollars the falling revenue from the mining boom is actually costing (indistinct)-- CHRISTOPHER PYNE: No, I - no, I haven’t got that information at my fingertips, Tony, but I can tell you that the Government - the previous Government delivered $240 billion of deficits and that, of course, has had a big impact on the flexibility that the government has, because we’re paying 1.2 billion a month in interest-free payments alone. The north/south corridor in South Australia, the road from the north to the south to the western suburbs is costing a billion dollars. To put that in perspective, we’re doing a north south corridor every month just in interest repayments... TONY JONES: Okay. All right. CHRISTOPHER PYNE: ...because of the deficits left to us by the previous Government. TONY JONES: Let’s hear from the other side of government. Wayne Swan, you were Treasurer for a long time. WAYNE SWAN: Look, I’m an optimist about the Australian economy but this exaggeration of deficit and debt needs to stop because the Government has been talking the economy down. Yes, we do need to bring the budget back to surplus but in terms of our economic prospects, I think that they’re weaker now than they were six months ago because there has been too much negative talk about the economy. We’ve got a difficult transition going on in the economy between mining sources of growth and sources of growth outside of mining and that means we do need to stimulate demand somewhat. That’s why the government is not even coming back to surplus on a timeline that they had talked about earlier. So the most important thing to remember here is that the fundamentals for Australia are good. We came through the global financial crisis in better shape than just about any other developed economy. Our economy is 15% larger than it was at the end of 2007 and there is not a developed economy anywhere in the world that can claim that record but that doesn’t mean to say that there aren’t challenges and the best thing that has happened in recent times is the dollar has finally come off. The dollar has been sitting on our economy weighing down our economy for the last couple of years and causing the revenue problem which is causing the deficit and debt. Most of the money that you asked Christopher about is reduced revenue. It’s not some spending spree that Labor went on and it’s certainly not a spending spree this Government went on. TONY JONES: So just - let’s just get these figures on the... WAYNE SWAN: Sure. TONY JONES: ...on the table before we go on. Four months after your last budget, not long before the election, your Government announced the deficit had blown out from $18 to $30 billion. WAYNE SWAN: That’s right, yeah. TONY JONES: It’s now blown out to $48 billion. WAYNE SWAN: That’s right.   TONY JONES: What happened actually? WAYNE SWAN: Predominantly revenue write-downs but, as Christopher said, there was some additional spending when they came to Government. It would have been absolutely the wrong thing to do, either by us or by the current government, to come in and really slash spending at a time when the international outlook was volatile. So there comes a time where you let - you take those revenue write-downs. You continue to spend because you keep people in jobs. When growth returns then you bring the budget back to surplus. So we had a week spot in revenue. The big debate in the Australian economy is what percentage of the current revenue write-downs are structural and what percentage are cyclical and we don’t know the answer to that but the problem with deficit in Australia at the moment is a revenue problem not a spending problem. TONY JONES: We’ll actually just go to our next question before we bring in the rest of the panel. It’s from Daniel de Voss. DANIEL DE VOSS: Both major parties seem to see a budget surplus as a sign of fiscal responsibility, often without taking much into account in terms of the prevailing economic conditions. With unemployment and underemployment trending up and now five unemployed people for every job vacancy in Australia, real wages growth negative, shouldn’t now be the time for the government to spend rather than cut back? Rather than using the economy to try and balance the budget, shouldn’t it be using the budget to try and balance the economy? TONY JONES: Let’s hear from our other panellists first. Kate Carnell? KATE CARNELL: Look, I have to say we wouldn’t agree with that approach at all. If the Treasury figures suggest that if the Government do something about its spending, we’re going to end up with a $667 billion deficit in ten years’ time, now, if Australia went down that path, the problem that we would have is that we simply couldn’t manage any hiccup in the economy globally. It’s true that today we don’t have a crisis but unless we start to deal with that sort of budget deficit, then when there is that inevitable little hiccups you see around the world - sometimes those hiccups are very big. Something happens in China, something happens in the US, something happens in Europe, we simply won’t be able to manage it in Australia and I think Ursula made some good points earlier when she talked about the challenges that business are facing right now. Our surveys at the Australian Chamber of Commerce and Industry show that business is still doing it pretty tough. Profits... TONY JONES: Can I just ask... KATE CARNELL: Yeah. TONY JONES: ...what did you make of the figures that Ursula’s question contained: 16,000 ASX-listed countries(sic), nearly a third of those companies at risk of financial catastrophe?   KATE CARNELL: Well, I’d like to hope that it’s not catastrophe but we do know that the figures show quite clearly that business - a very large percentage of business hasn’t become - hasn’t got their profit on the rise again since the global financial crisis. It’s that simple, although, on a positive note, over the last quarter we’ve seen sales start to go up a bit, which is a - which is a real positive but still that hasn’t reflected in profit. It hasn’t reflected in business telling us that they’re going to start employing, which is a real problem for that next - for the next question that we’ve got a very large percentage now of particularly young Australians that are unemployed. There’s something like now, 580,000 young people aged under 25 that are not in full-time work or full-time study or some full-time combination of the two so we’ve got a really big problem in that area and it’s the reason... TONY JONES: Does it require, the questioner asked, fiscal stimulus? KATE CARNELL: Look, that would be the worst thing, from our perspective. The last thing we want is for the budget... WAYNE SWAN: That’s absurd. KATE CARNELL: ...for the budget deficit to go up.   WAYNE SWAN: That is absurd. That is absolutely reckless. I can’t believe you’re saying that. KATE CARNELL: Okay. The reason... WAYNE SWAN: Your organisation has never said that like that before. I’m shocked by what you just said. KATE CARNELL: Well, I think our organisation has said often that what we need is the budget balancing and the reason for that is that gives business confidence and business doesn’t employ unless it’s confident. WAYNE SWAN: But not on a rigid timetable like that, surely. KATE CARNELL: The rigid... CHRISTOPHER PYNE: But you certainly don’t support Keynesian economics, Wayne, surely? WAYNE SWAN: I absolutely do. CHRISTOPHER PYNE: Oh, so you want Keynesian. You want to spend and pump prime the economy. KATE CARNELL: We believe that the approach - I’d have to say the approach the Government’s taken... WAYNE SWAN: That’s not what’s Keynes is on about but anyway. KATE CARNELL: The approach the Government has taken... CHRISTOPHER PYNE: That’s what - that’s what our question Daniel is on about. KATE CARNELL: ...to get the budget back in balance in four years... TONY JONES: Okay. KATE CARNELL: ...is not something that’s really quick. TONY JONES: All right. I’m - I’m just going to - well, I’ll just let you make a quick response to that. I want to hear from the other panellists. WAYNE SWAN: It would be reckless to be savagely cutting the budget right now in light of the figures that were just mentioned before. What we need to do is support our economy when demand is weak. When demand returns... KATE CARNELL: But we’re not savagely cutting the budget now. CHRISTOPHER PYNE: But Kate’s not suggesting that you savagely cut the budget. Well, you’re just saying that... KATE CARNELL: No. CHRISTOPHER PYNE: ...she doesn't think that Daniel de Voss's plan for pump priming the economy is a good one. KATE CARNELL: What we’re suggesting is the approach... WAYNE SWAN: You're pump priming the economy at the moment by running a deficit. CHRISTOPHER PYNE: But I think want Daniel wants us to do is run a much bigger deficit. KATE CARNELL: Bigger deficit. CHRISTOPHER PYNE: A much bigger deficit. KATE CARNELL: Absolutely. TONY JONES: Okay. Okay. All right. I’m going to... CHRISTOPHER PYNE: Isn’t that what you want us to do? MULTIPLE SPEAKERS TALK AT ONCE TONY JONES: I’ll just put everyone on pause for a minute so I can actually... CHRISTOPHER PYNE: Yeah, he's nodding. He’s nodding. He wants us to run a bigger deficit. KATE CARNELL: He’s saying it’s true. TONY JONES: We’ve got - we’ve got two panellists we haven't heard from yet. CHRISTOPHER PYNE: Money is no object for Daniel. TONY JONES: I’m going to go to, first of all, Laura Tingle to get your perspective on the discussion and the two questions and the discussion around it. LAURA TINGLE: Well, I think the really interesting thing here is that if you look at what the new Government did in its first Budget was is it suddenly discovered, oh, actually the economy's actually quite weak and all that stuff about getting back to surplus, we can't actually do it as fast as we thought we could. We're going to actually have to go really softly-softly in the next couple of years. Now, whatever the sins of both sides of politics, it essentially means that both sides have got the same dilemma. I remember Wayne Swan's first Budget before the Global Financial Crisis, he was criticised because the Government then was saying, well, things are looking a bit, you know, bit edgy. We might not be able to get in there and cut as much as we wanted to. People were cynical about that. There was the GFC. This debate we have about debt and deficits seems to go on in this bubble, which doesn’t take into account what’s happening in the rest of the world, the fact that the rest of the world has been through his major economic trauma, and it also doesn’t seem to add up to the fact that if you do try to protect the economy from a downturn, which any politician is going to do if there’s a crisis - you know, if there’s a crisis, politicians will want to try to protect people, whether it’s a national security crisis or an economic crisis, if they - if they go in and do that, the cost is that going to run up some debt. You try to get rid of the debt over a cycle. We've had a very, very sluggish cycle and it’s just very difficult for both sides to do it. But if you listen to what both sides are saying, they're essentially now, believe it or not, arguing the same point of view about where the role of Government policy fits. TONY JONES: Let’s hear - I want to hear from... CHRISTOPHER PYNE: I didn’t want to interrupt you. WAYNE SWAN: So cop that... MULTIPLE SPEAKERS TALK AT ONCE TONY JONES: I want to hear from Tony Barry on this now. You’re listening to this discussion. CHRISTOPHER PYNE: Wayne started mugging Kate so I felt like I should come in and (indistinct)... MULTIPLE SPEAKERS TALK AT ONCE LAURA TINGLE: I can look after myself. TONY BARRY: It all sounded very reasonable and I was listening to all you guys and I thought, "How would Ben Chifley handle a situation like this?", to go back a way. Most of this audience are probably too young to remember him but with the muffled drums of war in the distance, a war is not a way of dealing with a deficit or a downturn in the economy and I'm concerned that if we put all our eggs in one basket, as we seem to have with the mining, I don't want to see Australians, particularly young Australians, stumbling around with half empty casks trying to dodge the big holes in the ground where they've dug up everything of value and sold it to someone else. I think we should be investing in education and in our younger people today and I agree with Daniel, I think that's a way of stimulating the economy. I just think that people have tired of the rhetoric. They're looking for something positive to come out of the conversation and rather than sniping. TONY JONES: Let's go to our next question, because it does actually take a longer term view of the economy. The next question comes from Brigitte Holbach. BRIGITTE HOLBACK: Oh, that is me. TONY JONES: Yes, it is. BRIGITTE HOLBACK: My question is so Australia's economy has been based in the past on exporting like food, wool and minerals for other countries then to use their intelligence to make use of those resources. So when will the Australian economy be based on the intelligence of its citizens so we don't - so we've got it in - you know what to do with their own resources here not have to leave it up to other countries, like being Australia, the lucky country, like we've got it here. TONY JONES: Let's start with Laura. LAURA TINGLE: Well, it was interesting when the then Government floated the dollar in 1983. There was this great sort of excitement that this would be the start of a transformation that we would actually start to see value-added products, that we would start to use our own minerals to make things and all those sorts of things. Now that hasn't happened, partly because we have opted to remain a high-wage country and I think most people wouldn't want it to be any different. Now, that means you've got to look for, you know, the intelligent industries, if you like, and we do have those. Things like we're a big exporter of education services, but we're now seeing this transition, partly driven in the last few years by the Australian Dollar being so high, where we've moved straight beyond manufacturing and the new Government is saying, well, the future lies in services. Now, I think that's a debate which we still haven't really had very much of. We haven't really discussed whether we're prepared to get rid of manufacturing, which is the sort of thing that you're talking about. BRIGITTE HOLBACK: But, yes, this was more in terms of like really in education, like investing into the skills of Australian citizens. TONY JONES: Kate Carnell? KATE CARNELL: Look, there's no doubt that skills absolutely are fundamental for business to grow, to invest, to employ and to export and I think some of the changes that are being made at the moment to ensure that the skills that we're training people with are the ones that business needs to be able to produce the products and the services to export to other countries. I mean that’s the way we can employ. There's not much point in training people with skills that won't mean they're going to get a job and I think we've had a bit of a disconnect in Australia, lots of training that don't necessarily fill the needs of business and that's a tragedy if that happens, what we're seeing now is a bit of a move on that and we're seeing some really smart Australian companies start to value-add here. I was just in Tasmania last week. A smart young company called Bellamy's Organic Food, you know, I mean, value-adding in Tasmania, employing in Tasmania and sending product into China. A whole range of those companies are out there and we've got to talk them up. TONY JONES: Tony, this is what you were talking about, to some degree, before we moved on to that question. Is that - are you hearing what you're hoping to hear? TONY BARRY: Well, I'd like to think that we're focussing on successive generations. I mean there’s a, correct me if I'm wrong Christopher, and I know you will, that if the education that’s been set up for... CHRISTOPHER PYNE: Not deliberately. TONY BARRY: No, of course not. The education that and the model that we're involved in at the moment, the education model is not preparing young people for the jobs that may be available in 20 years’ time because we don't know what they are and a lot of the jobs that are available now, the paradigm paralysis within the education system is not actually helping young people gain the confidence they need to know that they're going to be actively engaged and, as a consequence, be able to appreciate some of the lifestyle and quality of life that Australians of my generation and yours have come to know. TONY JONES: Christopher, is there a need for a national strategy to deal with this youth unemployment crisis that's been identified? CHRISTOPHER PYNE: Well, that's a different question to the one that Brigitte asked and I'd like to answer Brigitte's first. TONY JONES: You can do both. CHRISTOPHER PYNE: Then Tony raised a different point and you’ve raised a third one. I think I’m really pleased to say that actually education is our third-largest export industry after iron ore and coal, then it's education, then it's gold. But university education is a really, really important part of our economy and the reforms that I have bought into the parliament, that I hope will pass, are all about - well, not all about but one of the main factors behind them is maintaining our reputation for very high quality education to continue to attract those international students, which both the Howard Government and then the Gillard-Rudd Governments maintained. LAURA TINGLE: What about the local ones? CHRISTOPHER PYNE: Well, the local ones have massively increased exponentially the number of places for local students, because the international students have created a whole revenue stream that didn't exist before, which is worth $15 billion a year to the Australian economy and to universities actually paying for the domestic students to be able to continue to have a massively subsidised education so I really want education to continue to be a growing export industry, which is all knowledge-based, it’s all services-based. Briefly on your point, what we have to do is educate students not just for today's skills but to give the knowledge. What Australia does very well internationally is creativity. So when I was in Shanghai a couple of weeks ago talking to the Chinese about their learning, which produces great results in mathematics and literacy, et cetera, they were actually talking to us about what we do in Australia that’s so - makes us so creative and gives our opportunities the opportunity to actually move from job to job relatively easily. TONY BARRY: But do you consider education is a basic human right? CHRISTOPHER PYNE: Of course. TONY BARRY: Or is it a commodity? CHRISTOPHER PYNE: No, it's a human - it’s a human right. TONY JONES: Okay. Can I just - I'm just going to interrupt that part of the debate, because that's anticipating a series of questions we have coming later. I'm actually going to move on to a question about economic reform and we’ll come back to that. WAYNE SWAN: Hang on a sec. TONY JONES: The question comes from Ted Wziontek. You can obviously add to this in later discussions. TED WZIONTEK: So, Wayne Swan, you're quoted in Paul Kelly's recently published book that economic reform these days is - achieving economic reform is a lot more difficult. The life of a political - the change of political life is driven very much by technology and media. Political journalism is largely broken down and we have a generation of journalists that really failed and really weren't mentored properly. I wonder if you and the panel can comment. WAYNE SWAN: Okay. Well, I think what I talk about is the power of vested interests and how - the way in which that has been wielded in recent times is a recipe for permanent reform failure. If you go through what occurred with carbon pricing, the most fundamental structural reform we needed for the future of our economy, it was basically opposed by powerful vested interests, ditto with resource rent taxation. Absolutely critical to pay for education for the next generation of young Australians and many other things. Just to go back to what Christopher said and the question that was asked, the fact is that education is really the platform on which we take advantage of the Asian Century and two years ago we put in place an Asian Century White Paper. The central recommendation of that was for Australia to massively invest in Asia capability but also to dramatically lift our standard of education and the key to that were the Gonski Reforms for schooling and of course further reforms in tertiary education. The fact is that what the current Government is doing is a form of intergenerational warfare against young Australians. What is going on in the tertiary education system with $100,000 degrees in prospect for very basic occupations, the failure to lift the standards through the Gonski Reforms in primary and secondary school, that is going to mean that we will not maximise the opportunities that will come from the Asian Century and will not continue to grow and will not replace what has occurred with manufacturing industry and I'm very, very angry about the fact that we're going to miss this opportunity precisely at the time that Asia is growing, hundreds of millions of people moving into the middle class all demanding new services, whether it's value added products in agriculture, whether it's education, whether it's high technology, we can only win that by winning the education battle and we're losing it massively at the moment. TONY JONES: Wayne Swan, can I just - I’ll just - just a quick follow up question. Yes, I will - quick follow up question. If the mining tax that you just cited was so important to pay for all of this, why did you invent a tax that didn't raise any money? WAYNE SWAN: Well, let’s just go through that. I’m really pleased you asked that question because, essentially, by the time the tax came in, prices had taken a huge dive and the fact is, as we go forward, mining exports are going to go through the roof and prices will rise again and we would be raising money through the MRRT when that occurs at some stage in the future. TONY JONES: But that's a hope, isn’t it? I mean how can you... WAYNE SWAN: It’s not a hope. MULTIPLE SPEAKERS TALK AT ONCE TONY JONES: ...how can you base - how can you base funding for education on a hope that something might happen? WAYNE SWAN: No, we didn’t didn’t base our funding on education solely on the mining tax. The fact is, I said before, we've got a revenue problem not a spending problem. If we're going to be able to invest in education and health we've got to have adequate revenues. The fact is we don't have adequate revenues at the moment. There's a structural and cyclical problem in terms of company tax. That has got to be dealt with if we want to provide the services that enable us to win in the Asian Century. LAURA TINGLE: But, Wayne, wasn't the upshot of the mining tax, when you finally got it through, was one that you ended up letting the vested interests design the tax. I mean that’s... WAYNE SWAN: No, I don't accept that at all, Laura, and I go through that a great... LAURA TINGLE: Well, they were in - they were in the Cabinet room. WAYNE SWAN: ...I go - I go right through that in my book. We have a design which would have produced a revenue... MULTIPLE SPEAKERS TALK AT ONCE WAYNE SWAN: Yeah, my book. Read it all in The Good Fight. MULTIPLE SPEAKERS TALK AT ONCE CHRISTOPHER PYNE: There will be lot of those plugs throughout the rest of the show. WAYNE SWAN: I mean, the mining industry has rewritten the history of this, as have others. At least in my book I put down my history and we need a resource rent tax, as we need a carbon price if this country is going to prosper in the 21st century. TONY JONES: Kate Carnell. KATE CARNELL: Look, one of the great dilemmas of what you just said, Wayne, is assuming what we were doing in education was actually the right thing for the next century. WAYNE SWAN: Sure. KATE CARNELL: And what we were doing is producing a range of graduates that weren't necessarily aligned to what business needed to be able to become part of that next century or those next - those next jobs for the future. Australia was bottom - and is still bottom of the OECD countries in terms of partnerships between universities and business, to actually deliver the people from our university sector that fill those jobs of the future, surely you've got to have those partnerships in place and we haven't done it very well up until now. TONY JONES: Kate, the question, just to go back to the question - he's got his hand up actually. We'll go back to our questioner, Ted Wziontek. TED WZIONTEK: Yeah, so, Tony, the part I wanted the panel to focus on was your quote about the political life and being driven by the technological change in media and the fact that political journalism is now largely broken. That was the part that I actually would prefer you to focus on, if you wouldn't mind. WAYNE SWAN: He’s still a politician. CHRISTOPHER PYNE: It was a really long question though. WAYNE SWAN: I'm happy to go on for hours on that. TONY JONES: Well, just a brief, let's say 30 seconds, on that, so we can hear the other panellists talk about this reform issue. WAYNE SWAN: Well, I think the media cycle is so fast it really is running journalists ragged. We don't get the sort of scrutiny we need. That's the kind interpretation of what's going on in terms of structural change but, frankly, a large part of the media in Australia is barracking for one side of politics and that's a huge problem in terms of our future political debate. And people with very deep pockets are getting their message across and people from our side of the tracks are not getting their message across because lot of the media doesn't want to deliver it. TONY JONES: Tony Barry, does that sound true to you? TONY BARRY: Well, I'm just concerned that both Wayne and Christopher are talking about education and the Asian Century and the market for education over there. What about the people who are here, our own Australians? And, I mean, I'm concerned that educated Australians will be working for tips like they are in America with BAs and they've got - they've been to university but there are no jobs around. Now, surely we need to be looking at the jobs first rather than the education. KATE CARNELL: I think that's the point. TONY BARRY: And what jobs are we creating? And I think - I think there's a paradigm paralysis, like I said earlier. I think we’re - there's an old saying that if you continue to do the same thing over and over again and expect a different result, that's the definition of insanity. CHRISTOPHER PYNE: Sure. TONY BARRY: And I think when we are driven by the abacus and not by the morals and values of the community, then it becomes an economic exercise and I think we need to get back to the humanity and just start to look at how the lifestyle and quality of life is impacted upon Australians today when they're looking down the barrel of no education and no work. TONY JONES: Laura Tingle, and we can also pick up on the point Wayne Swan was making about the political class of journalists not being mentored properly and not being able to do proper analysis. LAURA TINGLE: Look, I think there's been a lot of things happening. I mean, Wayne's talked about tribalism or that’s what I'd call tribalism in journalism. I think one of the sort of - there are a couple of things that have happened is media organisations are sort of gradually collapsing from within. When I joined the Canberra press gallery, the various bureaus I was in would have specialist writers who would write and know about what was going on in health or would know what was going on in education. The Financial Review is now probably one of the few bureaus that actually has that sort of specialisation to any extent. Now, what does that mean? When - it means that when a story comes up, whether it's Gonski, education funding, health funding, you have a whole heap of generalists who go in and say, "Oh, what does this mean for Labor and the Coalition?" They look at it as a political story, which is a reasonable enough thing. Plus, of course, we've had 10 years where leadership stories were just an ongoing feature of life and... CHRISTOPHER PYNE: And made journalism easy. LAURA TINGLE: Well, I think it did make journalism easy. CHRISTOPHER PYNE: Because there is always a news - there’s always a leadership story. LAURA TINGLE: Yeah, and, you know, sometimes you go, oh, God, can we just not have a leadership story? And you couldn't avoid it because it just change the way the country (indistinct)... TONY BARRY: Are you running for leadership? CHRISTOPHER PYNE: I’m very happy with what I’ve got, Tony. LAURA TINGLE: Let's have a new leadership story. TONY BARRY: I’m sorry. LAURA TINGLE: So, I mean, I think there are those issues plus I think the rise of what I call personal pronoun journalism, it’s instead of it being about them, it's about me and it's about we, you know, whether it's when we talk about the war, suddenly you find journalists saying, "When are we going to war?" and the personal pronoun arising with the blog. I think it has changed the way journalists interact with politics and the way they see themselves. TONY JONES: Christopher Pyne, then can I bring you back to the first part of the question, which is about reform? CHRISTOPHER PYNE: I was going to answer the question about journalism but that's okay. TONY JONES: You can briefly, if you wish, and I'll come back to you. CHRISTOPHER PYNE: Do a little bit of both. TONY JONES: Yes, go ahead. CHRISTOPHER PYNE: I think Laura's made a lot of very good points about the press gallery and I think, as the Education Minister - and I was the shadow for five years - so for six years I have been deeply involved in education policy, schools and universities from both sides of the fence and there are very, very few specialists in the gallery today who actually talk about education policy. I won't name them because it would embarrass them. But six years ago there were actually quite lot of journalists in the gallery who were education specialists. They might have also been a health specialist or social security but they were education specialists and one of I think the problems - I think Wayne hit upon it as well - it actually takes accountability away from Government a bit and Oppositions a bit too if you can get away with skating over policy because the questions are not going deeply to what either Government's, Labor, Liberal, are trying to do. But we also see then what the media do is report politics as a football game - who's up, who's down, who's got the ball, who's kicked the last goal - rather than policy that’s trying to improve the lives of all Australians. So I do think this is a problem in our polity. I don't think social media or blogs have replaced it, because I think it’s very opinionated and I would like to see more specialists in the gallery again, because I think it holds both sides to account. TONY JONES: Okay. TONY BARRY: Christopher... TONY JONES: Yeah, go ahead. TONY BARRY: If I may, don't you think the press gallery follow the bouncing ball in politics and they watch the way you guys play the game and they report it? CHRISTOPHER PYNE: Yeah. But there's a lot more to politics than that. I mean that part of... TONY BARRY: It’s hard to see that if you're just tuning in. CHRISTOPHER PYNE: Sure. The theatre of Question Time is not really Government policy, it is not about changing, you know, Australia for the better and I would say that Labor did things that I didn't agree with but they probably thought they were the right thing to. I'm sure that if Wayne had his chance again he might have done the pink batts thing differently for example and I'm sure we'll do things that we’ll later on think to ourselves I wish we'd done that differently. But by and large a lot of that report... TONY JONES: Do you think the new Government will call Royal Commissions if you do? CHRISTOPHER PYNE: A lot of that reporting though that goes on now - a lot of the reporting that goes on how that is the bouncing ball means that politicians can get away with things that they shouldn't be able to get away with in a policy sense, in a understanding deep policy. TONY JONES: Okay, I’m just going to... TONY BARRY: Well, look, at the ‘60s. TONY JONES: Sorry. No, go ahead. TONY BARRY: Well, just in the '60s I worked for Rupert Murdoch and Frank Packer. I was a waiter and I worked at their tables. CHRISTOPHER PYNE: Hear, hear. TONY BARRY: And I saw the way Rupert Murdoch, as a 40-something, invited Robert Askin, who was the Premier of the State at the time, and Pat Hills, who was Minister for Roads, he invited them to lunch. They came to him and the deference they paid to Rupert Murdoch was interesting to witness as a waiter. When Rupert said, "What can we do about the traffic problem, boys?" “Boys” and these were both men in their fifties and I realised where the real power was and you might remember when Kevin Rudd and Rupert Murdoch came down prior to Kevin Rudd being elected - and they came down from his offices in New York and a journalist said, "What sort of a Prime Minister do you think Kevin Rudd will make, Mr Murdoch?" and he said, "I think he’ll make an excellent Prime Minister." CHRISTOPHER PYNE: He was wrong about that. TONY BARRY: And they both had - well, it’s always a matter of opinion (indistinct)... CHRISTOPHER PYNE: Didn't turn out - didn’t turn out so well, I don’t think, that one. TONY BARRY: Well, he did his best, as you will. CHRISTOPHER PYNE: As I said, we've actually got a series of questions on education but before we leave the topic of reform, we have time for a whimsical look at the economic reform debate. Our next question is on video it’s from Terence Hewton in Andalusia in Spain. TERENCE HEWTON: Here in the small and remote village of Marinaleda in southern Spain, the locals have constructed a socialist utopia as an antidote against the severe economic measures, the austerity measures, being implemented in Spain. Now, given that Wayne Swan has made some noises about the poor rebelling against the rich in Australia in a French-style rebellion, what are the chances of Australians implementing something like this and would be a good thing if they were to do so? TONY JONES: Wayne Swan? WAYNE SWAN: Well, a month or two ago I was in New York and I was walking down a place called the high line which is a railway in central New York and there was this big building which had this big sign on it just in the middle of nowhere. It was about five storeys and it said, "The French aristocracy didn't see it coming either," and I think... TONY JONES: Does that reflect your view or is it that just an anecdote? WAYNE SWAN: No, it doesn't but it reflects the fact that globally there is a very important debate about how capitalism is not working well, that you're getting increasing concentrations of wealth at the top. That’s acting as a hand brake on growth. It is not good for the capitalist economy to have great concentrations at the top and this is one of the factors that is slowing growth but it is also causing, I think, a lot of social problems and social unrest in many parts of the world. So there’s a real discussion that ought to go on in this country and other countries about how fairly we share the benefits of growth. In Australia, we've done it really well and we've got to continue to do it well. I've got a disagreement with Christopher about some of the policies they’re putting in place that won't do that but we have done better than any other country in the world in the past century about being a truly middle-class society. You can't say that about the United States and you can’t say it about Spain.   TONY JONES: Can I just ask you the obvious question, since you talk about the disparity in wealth.   WAYNE SWAN: Sure. TONY JONES: There’s so much wealth concentrated at the top. Are you suggesting that you work out some way of redistributing the wealth at the top through taxation? WAYNE SWAN: Certainly progressive taxation policies are a critical part of solving this problem. The IMF put out a report a couple of months ago about this problem of base erosion, multinationals not paying their tax in countries where the money is earned and the countries that are losing the most aren't countries like Australia. It’s developing countries like Indonesia, who then don't have the capacity to actually invest the money they should be getting from those corporates in education and infrastructure. This is a big issue in the global economy, debated everywhere else in the world not but really on the agenda here. TONY JONES: Kate Carnell, do you agree? I mean multinationals paying a tiny percentage of what they earn in Australia as tax, while other companies, Australian companies, have to pay full company tax? KATE CARNELL: Look, it's absolutely true that big multinational companies will pay tax in the country that is most advantageous for them to do so. TONY JONES: Like the Bahamas, for example? KATE CARNELL: Well, you know if it's the law, their job is to operate in the best interests of their shareholders. TONY JONES: But that’s what we're talking about, isn’t it, letter box affiliates in Netherlands funnelling money to the Bahamas where they have either no tax or very low tax. KATE CARNELL: Look, there is certainly multinationals that do that but it’s a tiny little bit of the taxes Australians get. TONY JONES: Well, Wayne Swan is shaking his head there so we’ll... KATE CARNELL: One of the things we’ve got to and Wayne... WAYNE SWAN: It’s definitely not. KATE CARNELL: ...and Wayne would know that Australians pay - I think Australia is the second in the world in terms of the ratio of corporate tax to GDP, the second-highest in the world. Australia pays a lot of corporate tax. WAYNE SWAN: Well, let me take you through that. TONY JONES: Could you fix a Budget deficit by taxing multinationals at what they should pay, for example? WAYNE SWAN: It would help. I mean our corporate rate is 30 cents. Mining companies in Australia pay an effective rate of 15 cents. Think about that. So when - when people are comparing the 30 cent rate here, they're not actually comparing what many people are actually paying. KATE CARNELL: But what they're actually paying is what the law says they have to pay. WAYNE SWAN: Sure. KATE CARNELL: And it is about things like research and development, about restructures, about a range of things that are appropriate. TONY JONES: Sounds like Wayne Swan wants to change those laws, Kate. KATE CARNELL: He wants to get rid of research and development. WAYNE SWAN: Or it might be about transfer pricing or it might be about a whole series of other practices which are legal but not ethical. TONY JONES: Okay. Can I just throw this across to Laura Tingle. Financial Review has done quite a bit of work on this topic. LAURA TINGLE: We have and it is an issue right around the world. It's not something that’s just happening here. I was up in Cairns for the G20 and BEPS, base erosion and profit shifting, is an agenda that was under way when Wayne was treasurer and it's still going. Everybody has got this problem. It isn't a tiny bit of money. There are massive amounts of money. The tech companies, Google and Apple, are often mentioned but it's not just them and what the G20 is now trying to do is say, "Well, look, you have to pay where you earn." Now, that sounds like a really straight forward idea but trying to implement it is really difficult because, as Kate says, it's quite legal to do these things. It’s not illegal to have a company in Ireland where the tax rate is only 10% or whatever it is. You know, so it is a huge problem for all developed economies and even for the developing economies, who have got an even bigger dilemma because they're much more interested in getting very competitive tax rates to attract business, so they've got a bit of a moral dilemma there about what they do about it. TONY JONES: Yep. Christopher Pyne, is this heavily on your Government's agenda to try and work out a way of getting back the revenue from multinationals, of changing laws here and internationally to make that happen? CHRISTOPHER PYNE: Well, it is and, as the chairman of the - the chair of the G20 this year, Tony Abbott's made it perfectly clear that we have that very much on the agenda. Joe Hockey, in the G20 Finance Ministers last week in Cairns - the week before last in Cairns, talked about that very much as number one on the agenda and I think most countries around the world, most developed countries, believe that is where we should be headed. Of course talking is cheap and the Australians have a higher motivation for bringing this about than some other countries who are doing quite well out of the fact these rules are a bit loose. To answer some of the questions from our friend from Andalusia, I don't believe in a socialist utopia. I do believe in a progressive tax system and I think the difference between Labor and Liberal in lots of respects is that I believe that individuals and families make better decision about how to spend their money than Governments do. So we believe, in the Liberal Party, in lower tax, less Government, less regulation. That doesn't mean we don't believe in a progressive society and I think we've had more Liberal Governments - I think 40 years in the last 60 years we've had Liberal Governments in Australia and we’ve produced this marvellous middle-class country because both sides believe in those things but I think our emphasis is slightly different, that it doesn't extend to socialist utopia. KATE CARNELL: It’s really important though, just for a moment... CHRISTOPHER PYNE: Well, I think Tony - Tony Barry would like to comment on the socialist utopia. TONY BARRY: Well, just, I'm wondering whether you're taking responsible for the fact that with those 40 years of Liberal Governments there's four out of five young people haven't got jobs. CHRISTOPHER PYNE: Well, that's not quite right actually. KATE CARNELL: Well, not four out of five. No, that's not right. TONY BARRY: Those figures? Well, that... CHRISTOPHER PYNE: No, that’s not right. TONY BARRY: Well, you’ve been bandying figures around. I just thought I’d throw some in myself. MULTIPLE SPEAKERS TALK AT ONCE CHRISTOPHER PYNE: You thought you could just throw one in but that’s not quite (indistinct)... TONY JONES: Well, it is - it is - it is up to 25% and 30% in some parts of the country. TONY BARRY: Yeah, maybe I was getting ahead of myself. TONY JONES: So it’s a very serious - which actually bring - it’s a question you didn't answer before that I raised with you. Should it be a crisis agenda to try and fix this? CHRISTOPHER PYNE: Well, there isn't a crisis. There is certainly a emphasis from the Coalition on young people either learning or earning. So when they leave school and, happily, more people are finishing Year 12, which gives them a better chance of getting a job, more people are going onto higher education than ever before, so they're - more better chances of getting a job. TONY JONES: Okay. Sorry, I'm going to pause you there, because you'll get a chance to talk more about that subject in a moment. Let's go to the question from Mary Wren. MARY WREN: Yes, this is a question for Christopher Pyne. We've been talking a bit about the importance of the fair, equal society and my belief is that a well-funded public education system is crucial for that. So do you accept that the link between social disadvantage and poor student performance is much stronger in Australia than in any other OECD country? And, if you accept this link, why is your Government refusing to keep its promise in relation to the Gonski funding model? CHRISTOPHER PYNE: Yeah, well, I don't accept the link because it isn't true. The OECD PISA results released last December, which confirmed the ones of four years previously, showed that in Australia, the number one issue, in terms of the outcomes for students, is teacher quality, in fact they said eight out of ten reasons why a student does well in Australia or badly is the classroom to which they are allocated. In other words, the teacher to whom they are allocated. One out of ten reasons was socio economic status background and one out of ten were all other reasons put together. And the OECD PISA results showed that Australia was a high equity - a high equity - country not a low equity country. So I simply don't accept that suggestion because it isn't true. In terms of funding, funding a public education system appropriately is a high priority and we are putting more money into school education and university education than ever before over the next four years and it is rising every year over the next four years, exactly as we promised it would. TONY JONES: Christopher... CHRISTOPHER PYNE: But there are other priorities. TONY JONES: Christopher, I'm going to - I’m just going to - I’m going to just let you come back to some of these issues. We want to hear from other panellists though. Wayne Swan? CHRISTOPHER PYNE: Because I was doing well so he wanted to shut me up. WAYNE SWAN: Well, Christopher hasn’t kept his commitments on Gonski. CHRISTOPHER PYNE: He hates it when I’m doing well. Hates it when I’m doing well. Wanted to make sure I didn’t finish my statement. Never mind. TONY JONES: That's not true, I'm just running a clock over here. CHRISTOPHER PYNE: Never mind. WAYNE SWAN: Well, let's just be very clear. Christopher has not kept his promises on Gonski and that is a tragedy for this country. Our standards have been coming down. We had a very big debate. We commissioned the report. It’s very clear that teacher quality is a very important part of it, but so is social disadvantage and we desperately need those Gonski reforms. They're the key to the job creation in this country this century, the job creation that Tony was talking about before. That will lift our capacity to leverage the growth in Asia and to produce the products that they're demanding and it's just not happening and that's a very big economic and social problem. TONY JONES: Kate Carnell, the question was about Gonski. KATE CARNELL: Well, I mean, I suppose getting back to education for a moment and I think Wayne hit the nail on the head, what we've got to have an education system that produces people who are job ready so that they can go into jobs. TONY JONES: But the question, I’m just going to bring you back to the questions. KATE CARNELL: Yeah. TONY JONES: It was specifically about the Gonski reforms and the whole idea of inequity being built into the Australian education system. KATE CARNELL: Look, I must admit I agree with Christopher. I don't think those figures are right. It's certainly true that social determinants of health and education run pretty close together. We know that young people who leave school before Year 12 are much more likely to have chronic diseases, to have a whole range of issues. We know for young people who leave school before Year 12 and don't have at least a Cert III certificate, I think 25% of them will never have a job and I think that's absolutely tragic. So, we desperately need to keep people at school. We need to ensure that the skills that they've got make them job ready, because the real social determinant is people not having a job. Quite seriously. TONY JONES: Laura Tingle? LAURA TINGLE: Well, I think the education debate is the great tragedy of the last five years and I think there are a few problems with it. One of them was the Gonski report was a real breakthrough, first really big independent review, unfortunately I'd say maybe 5% of the population actually understood what Gonski was about and that's a tragedy because it's been able - made it much easier for Christopher and the Coalition to knock it off. Now he's saying that he's keeping the funding for four years but not for the six years of Gonski and I think one of the organise things that's very disingenuous is the Coalition says just throwing more money at education hasn't worked in the past. Well, that was under the Coalition. That was under their - under their funding model. We still haven't actually had a really decent policy debate of the sort we were talking about before about what we actually need to do here and I suspect that what's happening, if you look at what's happening with the education funding agreements, health funding agreements for the States, partnership agreements with the States, we know that the Coalition wants to rewrite the rules of the federation and you've got to presume there's going to be a shift in responsibilities here and I think falling through the cracks of that is addressing these sorts of issues about how the education system does work to produce jobs, does work to produce social disadvantage. TONY JONES: Christopher, I will come back to you on this. I just want to hear from Tony Barry and then we’ll come back to you. TONY BARRY: Christopher, you’re saying there's no crisis in the youth education in this country? CHRISTOPHER PYNE: I don't think it's a crisis. I think we've got policies in place to try and address issues around learning and earning and unemployment and drugs et cetera, of course, but I wouldn't say that was a full-blown crisis, no. TONY BARRY: Okay. I was just looking for a yes or no answer. That’s all right. CHRISTOPHER PYNE: Sorry. TONY BARRY: There's lot of young people in the audience tonight and I wonder whether they consider there's a crisis in the education system? AUDIENCE MEMBERS: Yes. TONY BARRY: There's a few. CHRISTOPHER PYNE: It’s the Q&A audience, Tony. I think you're the most popular... TONY BARRY: So but you think (indistinct)... CHRISTOPHER PYNE: You’re the most popular member of the panel. TONY BARRY: No, but are you saying... CHRISTOPHER PYNE: You’re the most popular member of the panel. TONY BARRY: No, but are you saying... TONY JONES: The Q&A audience is invariably a relatively young audience. So, I mean, that's the bias you're talking about. CHRISTOPHER PYNE: I'm not going get to into an argument with the audience. TONY JONES: Okay, do you want - do you want to pick up... TONY BARRY: That’d be a first. CHRISTOPHER PYNE: What's the point of that? I mean... TONY JONES: Do you want to pick up on the issue that Laura was talking about, that this was a missed opportunity? CHRISTOPHER PYNE: Well, firstly, I don't think Laura is right, actually, about a lot of the thi