Tue, 5th February 2008
Interview with Kerry O'Brien (7.30 Report, ABC TV)
The Hon Dr Brendan Nelson MP
Leader of the Opposition
E&OE
QUESTION:
The Liberal leader joins me now from our Canberra studio. Now, Dr Nelson, first interest rates and today's rise flows directly from the cost of living inflation in the last quarter of last year. So, it did happen on the watch of the Howard government, not the Rudd Government. You seem to be taking issue with that.
DR NELSON:
Good evening, Kerry, and welcome back from your leave. Look, the most important thing today is to think of Australian families. Every person with a credit card, a car loan, a mortgage, or running a small business, the most important thing is that Australia, under our government, when we were in government, gave to Mr Rudd a prosperous, strong economy, a confident nation. We had home loan interest rates at every year lower than they were under the previous Labor government. They averaged more than, they were 5.5 percent lower in fact. We had inflation at the midpoint of the Reserve Bank range of two to three per cent. It averaged 2.5 percent, Kerry and, as you know, almost every Australian that wants a job was able to find one.
There are inflationary pressures in our economy, they're both global and they're domestic. The important thing is that we, the alternative government, will do what we can to work with Mr Rudd and his Government to make sure that he takes responsibility for this.
QUESTION:
I'm sure you will.
DR NELSON:
Well, Kerry, he said today of his Treasurer, he said the buck stops with the Treasurer, the Treasurer of the day, he said. The important thing is that we get it right for Australia. It's very important that we don't allow union control of government policy. It's very important that many of the reforms that must go on in terms of powers of the ACCC, business regulation, uniformity across the states in terms of the things that drive pressures in our economy, that they are addressed. And it's also important that Mr Rudd and Mr Swan, in particular, actually reinforce the fundamentals that are so strong in the Australian economy. One of the things that we've noticed is that Mr Swan keeps talking up the issue of inflation.
QUESTION:
He says it's public enemy number one in terms of putting the economy back on track in a completely healthy state, and I'm sure you of all people would acknowledge that having inflation under control is absolutely fundamental.
DR NELSON:
Well, certainly and that was the target that in government we had given the Reserve Bank of Australia in its independence...
QUESTION:
But if that's the case, Dr Nelson, if the Howard government had inflation under such tight control for all of its 11 years and you delivered the economy, including inflation in such good shape, why were there 10 consecutive increases from May of 2002 until you left government and why is there now an eleventh rate increase just a couple of months later?
DR NELSON:
Well, Kerry, firstly I don't think the average Australian is going to be too impressed if we keep talking only about the past. The important thing is what's happening today in the future as far as Australian families are concerned. It’ shouldn’t…
QUESTION:
But you just can't take credit for the good things and not acknowledge those rate increases, can you?
DR NELSON:
Well Kerry, it shouldn't be forgotten, as you reminded your viewers in your introductory remarks, that when the Howard government came to office it inherited $96 billion in debt, inflation had been running at an average of 5.2 percent through the period of the previous Labor government, home interest rates had reached 17.5 per cent. We got all of those things under control, including inflation. We had the extraordinary environment of very low unemployment and low inflation and now we're in a situation where it's very important that the confidence of every Australian, whether they are in business, large or small, whether they're families, whether they're individuals who work, it's very important that confidence be maintained, Kerry. And the one thing we can't afford is to have the Treasurer of our country constantly talking up in the most negative way the impact of inflationary pressures on the Australian economy. The other thing…
QUESTION:
Okay, you've made the point, Dr Nelson, can we move on with the time we've got available.
DR NELSON:
Just one other thing, Mr Rudd and Mr Swan were elected to take responsibility for this, not to complain about it. They’ve got a responsibility to manage this.
QUESTION:
But you see, here you are 11-and-a-half years after the last Labor government still raising $96 billion of Labor debt in 1996. So that sounds, dare I suggest it, just a little bit hypocritical? They're not allowed to complain about you but you're still complaining about them 11-and-a-half years ago?
DR NELSON:
Well, Kerry, I don't want to get drawn into some sort of trivial, semantic argument about this. The important thing is, as everyone Australian knows, our economy was in terrific shape when it was handed over to Mr Rudd and Mr Swan. Mr Rudd and Mr Swan, in particular, seem to lack confidence to know exactly what they should be doing. There are challenges, inflationary challenges and they should be able to manage them.
QUESTION:
Mr Rudd, in fairness, outlined a five-point-plan to tackle inflation just five or six days ago, or 10 days ago now, and what he is saying is that the inflation rate he inherited from your final months in office is at a 16-year high, and that the Howard government presided over an inflationary build up despite some 20 warnings from the Reserve Bank going back to 2005 about the risks posed by capacity constraints and bottlenecks in the economy. Shouldn't you and your former Cabinet colleagues take some responsibility for that?
DR NELSON:
Well, we take responsibility, Kerry, for having given Mr Rudd and Mr Swan an economy that was in first rate condition where we had record levels of low unemployment, where we had had consistently manageable and much lower home interest rates than we had under the previous government and the important point is that in the period leading up to that election, that inflation had averaged the midpoint of the Reserve Bank's range.
QUESTION:
Dr Nelson, isn't it a fact, isn't it a fact that one of the reasons you lost office was because of the accumulated impact and pain on those very same mortgage holders of 10 consecutive rate increases in your time?
DR NELSON:
Well there's no question, Kerry, that not one of us that has a mortgage or a car loan or a credit card, myself included, enjoys any kind of interest rate rise at all. But the important thing, referring to Mr Rudd's first economic speech to the business community in Perth and his five-point-plan, as he describes it, the one thing that he did not mention, which is the most significant, immediate threat to inflation in this country and there in the impact on interest rates, is the application of his workplace relations laws and the possibility of unions running loose throughout the Australian economy and the impact of wage pressures in one sector of the economy feeding through into others. It's extremely important, Kerry, that of all of those things that were achieved over the last decade or more in Australia, that we don't return to an environment where we have union demands for wage increases in sectors of the economy where they cannot be sustained by productivity.
QUESTION:
Dr Nelson, you yourself have now declared that WorkChoices is dead, your last attempt at reform of the workplace. Can I bring you back to what the Reserve Bank itself has fingered as a primary cause of inflation and an ongoing one, and that is those same constraints in the economy caused by skill shortages and other bottlenecks that Mr Rudd says he is now acting on and that you ignored when you were in government.
DR NELSON:
Well, it's an absolute nonsense to suggest that in some way they'd been ignored. We increased investment in skills by 85 percent real over more than a decade. We also trebled the number of apprentices. Many of your viewers would recall me, when Education Minister, arguing that we should not live in a country where every young person felt that if they did not go to university that in some way they were not as valued as someone else who did. We worked very hard against the Labor Party, the State Labor governments and the unions, to also get national recognition of skills qualifications, to shorten the length of apprenticeship training. We put in train Australian technical colleges, again opposed by the Australian Labor Party. And also, as far as infrastructure is concerned, let's not forget that the State and Territory governments themselves that are primarily responsible for those things, had been starving them.
QUESTION:
Okay, we've literally only got a few minutes left and I would like to move on to the stolen generation issue. On the Rudd plan to formally apologise to the stolen generation of Indigenous Australians in the new parliament next week, you seem to be having trouble working out your position on this. As Liberal leader tomorrow, standing in front of your colleagues, will you be showing leadership and telling them what you think you as a party should do in the parliament, or will you be asking them to tell you what you should do?
DR NELSON:
Well, firstly, Kerry, I will almost certainly be telling them my view and my strong belief in terms of what we will need to do, that will be informed in part, I understand it, by Mr Rudd giving me some indication as to precisely what we're being asked to agree to.
One of the other things that is extremely important to me, Kerry, and my leadership, is that the men and women whom I lead in the Liberal Party, in particular, and across the Coalition, come from the length and breadth of Australia. They reflect Australia. They reflect the diversity of opinion in this and many other issues. And wherever I possibly can, I will make sure that the first time that they hear what I believe we will need to do will come directly from me and not through some announcement by media or newspaper or any other device.
QUESTION:
By the same token, Dr Nelson, would you agree that all of your rhetoric on this issue since Kevin Rudd has raised it has been negative? Every piece of rhetoric you have offered suggests you are opposed to a formal apology.
DR NELSON:
Kerry, this is a very complex issue, it's a very sensitive issue. It's about men and women who have been deprived of that which many of us value most highly and that's our family relationships, notwithstanding the economic and other outcomes they may have achieved. I continue to have great difficulty with the notion of intergenerational responsibility for the good or not so good things that were done by our ancestors. I note…
QUESTION:
Is it really responsibility or simply saying that there were elements of this saga that represent a dark part of history and that some form of apology is deserved and is important as a piece of symbolism?
DR NELSON:
Well, Kerry, my colleagues will hear what I think about this tomorrow when I speak to them directly. The nature of leadership, particularly in the modern age with a 24/7 news cycle, is that at times decisions need to be made in consultation with my leadership colleagues but there are some issues that go to the heart of the kind of society we are and the people we want to be and my colleagues deserve the right to discuss that directly with me. That's how I feel about this issue and it will be informed in part by Mr Rudd giving us some direction as to what it is precisely that we are likely to be asked to apologise for and the terms of that.
QUESTION:
Certainly Malcolm Turnbull seems to be having no trouble coming to the view there should be an apology. I'm sure you would agree, Dr Nelson, that perception in politics is at least as powerful as reality and here's how the mainstream media is depicting your leadership on an apology. The Sydney Morning Herald story on your request to your Party Whips to find out what your colleagues are thinking before tomorrow's meeting, quote, headline: “A Sorry Affair, Nelson in Search of an Opinion.” A devastating cartoon in The Australian newspaper shows you standing alone in the Australian desert with a sign pointing one way saying: “Sorry, 1000 Kilometres" – a sign pointing in the other direction saying, "Not Sorry, 1000 Kilometres," depicting you with a little tent as a township of one, and it says, "Welcome to Brendan, Population One." And then there's the Sydney Daily Telegraph showing you sitting on a curb side with a homeless person with the heading, "One of these men is down on his luck with an uncertain future, the other is homeless." Past political history, I'm putting to you, would suggest that when a party leader suffers that kind of ridicule, that his leadership is in trouble.
DR NELSON:
Well, Kerry, if I'm going to be ridiculed for actually asking my colleagues what they think and taking into account their views and the attitudes that they represent from the electorates from which they come throughout Australia, then you better get used to it because I'm about to conduct, along with my Shadow Ministers, a significant national consultation with Australians about what they think.
It's a combination of two things, Kerry. On the one hand it's a combination of making a judgment based on your party's philosophy and what's in the interests of Australia and driving it hard, and at other times it equally requires you to listen to the views of others. I have the right to speak as the leader but I have a greater responsibility to actually listen to my colleagues and that's what I'm doing and I will make no apology for it, and that's what I will be doing to all of Australia. And the other thing I must say is that I think the media treatment of that photograph of that young homeless man is something that that particular media outlet ought to reflect upon.
QUESTION:
Dr Nelson, thanks for talking with us.
DR NELSON:
Thank you, Kerry.