Bill's Transcripts

Doorstop: Bassendean - Western Australia; GST; Jobs




SUBJECT/S: Western Australia; GST; Jobs; Abbott Government’s $80 billion cuts to health and education; Abbott Government’s Hospital cuts; AMA Report card.


BILL SHORTEN, LEADER OF THE OPPOSITION: Good morning everyone, it is great to be here in Perth at Hofmann Engineering, looking at Australian innovation, Australian smart manufacturing taking on the best in the world and winning. I'm here visiting this remarkable centre of innovation and hard work and skill with Labor's Parliamentary Secretary for Western Australia, Alannah MacTiernan. Today though West Australians are wondering why is Tony Abbott washing his hands of the financial troubles in Western Australia? Why has Tony Abbott thrown in the towel and said that the only way that there can be any resolution to the GST issues or the fall in iron ore prices is for Tony Abbott to sponsor a cage fight among the different States arguing over the crumbs that he and Joe Hockey allocate from the Commonwealth?


Everyone appreciates and understands that iron ore prices have fallen remarkably and remarkably quickly. But of course this problem has fallen upon and been compounded by two earlier problems. Colin Barnett’s stewardship of the West Australian economy has been lamentable. When he came to office, debt was, net state debt was $3.6 billion, now it's around $25 billion. When he came into office, the contribution of royalties to the State Budget was 4 per cent and he allowed it to get up to 20, 21 per cent and now what's happened is that the bottom’s fallen out of some of the commodity prices, his lack of foresight, lack of economic management has caused a problem for West Australian finances.


On top of the Liberal mismanagement at the state level we've got Tony Abbott and Joe Hockey's unfair Budget from last year which took billions of dollars away from West Australian hospitals and schools. So there's a trifecta of trouble for Western Australia arriving in almost a perfect storm of circumstances, falling iron ore prices and commodity prices, compounded by State Liberal mismanagement, and indeed Tony Abbott and Joe Hockey's broken promises and their chaos and confusion of the Federal Budget. And the only answer Tony Abbott has said is to throw up his hands and say it's all too hard, it's a matter for the States to sort out. But Labor has a view that leadership is required, not surrender, not just simply saying the problem’s too hard.


The solution to the short-term troubles that Western Australia faces in terms of its financing doesn't involve walking away and just inciting a cage fight between various State Governments. I believe that the Commonwealth Government has a role as the steward of the national financial system to provide, to step in and support what is manifest unfair outcomes in terms of Western Australia. What I mean by that is that there's clearly a lag time between what is happening to West Australian finances and how the independent process moves towards resolving it. It's a classical economic problem where the equation is lag times and lead times.


So I offer today to Tony Abbott this following suggestion - bring forward a one-off financial assistance to help smooth the problems that the West Australian economy is experiencing. Problems in part caused by falling iron ore prices but problems in part caused by Tony Abbott and Colin Barnett's mismanagement of the financial set of circumstances in Western Australia. It is clear to me that leadership is not saying the issue is too hard.


Good leadership for Western Australia involves not just being here in the good times but being here in the tough times. Good leadership says that there's a clear transition challenge for Western Australia, the Federal Budget’s coming up, rather than be a referee in some unedifying state versus state, west coast versus east coast struggle, weighing up do you punish Western Australia or do you punish the east coast and instead what Tony Abbott should do is show that he's a leader and provide financial assistance on a one-off basis to Western Australia that could involve bringing forward infrastructure, and or bringing forward job creating and skill creating programs to help the West Australian economy transition from the peak of the mining boom to a different set of circumstances.


JOURNALIST: Does your plan involve the other greedy states having to forego some of their buckets of money?


SHORTEN: Well let's be very straight here. The GST formula process is set by, the allocation of it, is set by the Commonwealth Grants Commission. I believe that process should be independent and it can't just simply be one State versus another. We've seen an unseemly argument where some of the east coast States will say that the problem is all Western Australia's making and you see an argument in Western Australia saying it's not fair to us. The truth of the matter is, leave aside the political sloganeering; one, Colin Barnett has presided over the demise of the State finances of Western Australia, debt is up, their position is in a very difficult situation. The second fact is that Tony Abbott launched a surprise attack on all the States, where he cut $80 billion out of hospital and schools in last year's Budget with no pre-election warning, it was a broken promise.


That will see up to $10 billion taken out of West Australian programs which look after West Australian children, sick people in Western Australia and other projects which the West needs and of course there is those two man-made problems plus of course the iron ore prices falling. So when it comes to Tony Abbott's recipe which is seeing Western Australia locked in some sort of cage fight with other states of Australia, that's not leadership. The Commonwealth does have a role and steward of our national financial system to recognise that this is a classic lag time problem in terms of West Australian finances, added to by political mistakes made by the Liberals. But the issue is that West Australians suffer, it is not fair to see Western Australia suffer because you've got a Prime Minister who’s ducking for cover, washing his hands of the issue.


JOURNALIST: So how much do you think this one-off payment should be?


SHORTEN: Well I think it should be significant and not just token. I think it should go towards, and perhaps and we're happy to work with the Liberals in Canberra, but it could go to perhaps bringing forward infrastructure expenditure which will help create jobs, create demand for manufacturing, soak up some of the skills of people displaced by the mining sector. It could go to other job creating, skill creating programs as we transition away from the extent of reliance we've had upon the important mining sector.


JOURNALIST: But can you put a dollar figure on it? A rough figure?


SHORTEN: Well, we’ve thought about this and we think perhaps a figure of around $300 million, one off from the Budget may be appropriate. But again, I caution before we rush to the final number just to say this - the problem is there's a trifecta of causes for Western Australia's current predicament in the short-term. Tony Abbott's cuts to the Budget taking $10 billion out of Western Australia over the next 10 years, you've got Colin Barnett's mismanagement of allowing net state debt to absolutely blossom and grow unchecked and of course you've got iron ore prices.


It is not good enough for Tony Abbott to say this is a problem of federation. There are times when we are six states and two territories. I get that. But at a time when Western Australia is experiencing significant change, and some political mistakes as well, it's not good enough for our national politicians to simply say the issue’s too hard. So I believe fundamentally there's an opportunity here in this Budget, just in this Budget, to provide a transitional payment which goes towards smoothing the lag time effect as Western Australia's economy changes its profile and where its sources of income come from.


JOURNALIST: You identify a lag time, you have a situation where WA gets 30 cents back in the dollar, why do you not see anything wrong in the Commonwealth Grants Commission formula and the way its divvies up the GST pie?


SHORTEN: Well, first of all I didn't get stuck in a traffic jam here behind Federal Liberal MPs with a solution. If we want to talk about a lag time, where is Tony Abbott? He was happy to be over here in Western Australia when the things are going well but when there's a need for a plan he doesn't come anywhere near the place. So I believe that the first issue, the first issue is to make sure that there can be some rebuilding of confidence in Western Australia. It is the case that under Colin Barnett net state debt has gone up. That is a fact, from $3.6 billion to $25 billion. It is a fact that what we've seen is Tony Abbott in the 2014 Budget announced over the following next 10 years he was going to take billions and billions of dollars away from State Government coffers which gets spent on hospitals and schools. These are the facts, compounded by the truth of the matter that right now iron ore prices have gone down. The issue which Labor is tackling here is the issue of transition. I do believe that we need to try and have an independent process in terms of the Commonwealth Grants Commission, the more you politicise these issues that means every year well have these arguments.


JOURNALIST: Exactly, but you’re talking about a short-term solution, on a long-term solution regarding the equity of the Commonwealth Grants Commission formula, now are you backing the current system that’s in place or do you accept that there needs to be some change?


SHORTEN: Well first of all, let’s go to the first part of your question because there’s a couple of assumptions there which I want to tackle. You said that you’re offering a short-term solution, my emphasis is on the word ‘solution’- leadership is not just describing a problem. Tony Abbott and Joe Hockey get the big bucks to try and make sure that when’s there’s a problem in the nation they’ve got a plan. I was appalled this week when we saw Tony Abbott say, ‘this is all just too hard, it’s a matter for the states to sort out.’ Let's decode what Tony Abbott said there.


When he said it’s a matter for the states to sort out, you don't need to be a PhD in politics to understand that the expectation of New South Wales or Victoria or Queensland are simply going to sit around the table with Western Australia and sort it out when they’ve all got their own sets of interests. That's a recipe for failure. So Tony Abbott's only solution is to guarantee failure. So whilst you describe it as short term and I do see it as a one-off matter in the 2015/16 Budget, at least Labor is proposing something which will tackling business confidence right now in the West, which recognises that the West's issues can't wait for a long-term analysis of the Commonwealth Grants Commission. We're always up for reviewing how the Commonwealth Grants Commission calculates –


JOURNALIST: But your colleague next to you wrote [inaudible] in the Western Australian today , due to the current system, the current formula the Commonwealth Grants Commission [inaudible]


SHORTEN: I don't believe that by tomorrow we can rip up the formula. I don't believe that by tomorrow we can simply say that everything’s changed, so what I'm looking at –


JOURNALIST: But do you think it’s fair and equitable?


SHORTEN: Sorry, I’m going to try to answer your question and give it the seriousness which it deserves. You're asking me at tomorrow's COAG would I change the way it all works and just come up with new numbers. That's not the way allocation of taxpayer funds should be worked out, it has to be long and considered. My colleague wrote I thought a very informative piece published in the newspaper today, but these matters go to the medium and the long term. But right now in Western Australia, the mums and dad who’ve relied on the mining boom, the mums and dads who want to make sure their kids can get a proper education in a government school, people who want to make sure that their loved ones are getting proper care in the emergency departments and the hospitals of Western Australia, they want to hear answers. Now what they don't want is some sort of State of Origin bun fight over the GST. I think that not only West Australians, all Australians are sick of each state pointing the finger at each other and they're sick of Tony Abbott just saying ‘this is all too hard’.


What we are saying in a bipartisan spirit, which is what the nation’s crying out for, is we get there’s a problem. Now we get the problem is not just because of iron ore prices, it's because of ballooning state debt, that's a fact. It's because of Tony Abbott's cuts to hospitals and education and crushing business confidence, that's a fact. And iron ore prices falling, that's a fact. And what we say is that at COAG tomorrow, because some issues can't afford to wait for two or three years to be worked through, at COAG tomorrow why doesn't Tony Abbott - and he can call it the Tony Abbott plan, he doesn't have to mention Labor, it's not about who gets the kudos here. Why doesn't he say we look at some transitional finance assistance because of the facts which I just articulated.


JOURNALIST: A one year freeze would deliver WA an extra $500 million, why would people be satisfied with your proposal for $300 million?


SHORTEN: Well, you ask me about a number and whilst I was happy to offer a number to get the ball rolling, I did actually say and please look at the rest of what I said, is that it should be something significant and not token. If the Federal Liberal Party as a result of what I’ve said today come up with a proposal - well, we’re not going to be throwing rocks at it, are we? See, the problem in Australian politics at the moment is as soon as Labor says something, you get the Liberals walking a million miles from it and saying it is no good.


Ultimately if the number is different to the one which I put forward in this discussion this morning, we'll have a look at it, but the message I'm selling today, the message I'm putting forward on behalf of people who are sick and tired of this infighting, of this refusal to take responsibility for leadership is that Labor has a plan. Now, if the Liberals have got a plan which they want to call their own or amend or do something else with, we're happy with that. If there wasn't a problem, we wouldn't be here today talking about an answer.


JOURNALIST:  How did you arrive at $300million, did you just make it up on the spot?




JOURNALIST:  - how did you arrive at $300 million - ?


SHORTEN: It's got to be something which is significant and which creates jobs -


JOURNALIST:  - how did you arrive at 300 million?


SHORTEN: Let’s go back a bit, I heard your question, I’m certainly going to answer it. What we say is you need something which is not just symbolic. You need something that is going to generate a flow of contracts. This is a remarkable business and you have had the privilege of walking around and seeing what a family business over a number of generations, skilled engineers and families putting their personal balance sheet on the line can deliver. What they need to know is there is an infrastructure project or infrastructure projects coming forward; there is a flow through of work. What we also want is you've got as we speak thousands of fly-in fly-out workers who have been working in the north who are seeing their jobs going and they would like to think that their politicians have got a plan. I’ll tell you right now if the Liberals have got a better number and if the Liberals have got a proposal which would see a recognition that Western Australia is caught in the classic economic trap of a lag time in terms of the way funding formulas are guaranteed and the immediate issues they've got, we will work with them but as I say to you -


JOURNALIST: Did you write it on the back of an envelope?


SHORTEN: No, I didn't, not at all. But what I do say is that when I came into the car park at Hofman Engineering today, I didn't get caught in a traffic jam of Liberal politicians with an answer, did I? I don't know if Tony Abbott is going to visit Western Australia anytime soon, but what I know, through talking to West Australians and through talking to Australians generally, what I know through talking to business, small and big, is that they just want some certainty. There is no doubt in my mind that there is a problem here, that there is unfairness, and that what we need to do is resolve it. If tomorrow Tony Abbott and his colleagues come up with a proposition which recognises that Western Australia is caught in this transition trap, then we will be happy.


JOURNALIST: [inaudible] how did you come up with the $300 million?


SHORTEN: Well, first of all, we see the number of the freeze is one proposition. Our view is if you want to get confidence going, if you want to have certainty about infrastructure, it has to be a significant project. Ultimately if the Liberal Party of Australia have got a plan for Western Australia which makes sense and makes sure that Western Australia doesn't get caught in a trap, we will sit down and work with them, but what I've done today is get the ball rolling, to a solution which gets away from the cage fight of East versus West.


JOURNALIST: A number of schools, number of hospitals?


SHORTEN: Well, I will tell you some other numbers, unemployment in Western Australia since Tony Abbott has come in, Western Australia has gone up 1 per cent. Business confidence has fallen in the West since Tony Abbott got elected. Here is another number that doesn’t get a lot of coverage, there is $5.7 billion being cut by Tony Abbott out of West Australian hospitals. Now this is not fair on West Australians and now we're seeing this argument about the GST and what Tony Abbott has said is this is all too hard. We've seen his own Cabinet Ministers from the West start disagreeing with each other and other colleagues elsewhere. Something has to be done. It isn't good enough that this problem just drifts along and everyone kicks it is down the road to the into the too-hard basket.


JOURNALIST: What did you make of Colin Barnett’s comments linking Western Australia’s generosity to Victoria during the Black Saturday bushfires to this debate?


SHORTEN: Yes, I saw those comments. I think they were deeply unfortunate. I get that the GST debate is a big, big issue here, but I think all of us know and I saw personally as I worked on the reconstruction of the bushfires, as I sat talking to the survivors, and the loved ones of people who were lost in the fires, that the Black Saturday bushfires where 177 people died should not be politicised at all. I understand there is a lot of pressure on, but I think if Colin Barnett had his time again, he would pick different words, and I know that all Australians when there is a natural disaster anywhere, especially when property is lost and there were over 3,000 houses destroyed in these bushfires, but more importantly where lives are lost, no-one wants to so he that go anywhere near the field of politics. It was I think deeply unfortunate.


JOURNALIST: [inaudible]


SHORTEN: No, I said that there is a short-term problem and there is a longer-term issue. You correctly referred to what Alannah had written in the newspaper. There is a long-term debate about how the Commonwealth Grants Commission works through its processes but for goodness sakes, we can't have the politicisation of this formula every time there is a decision, every year. That needs to be done calmly and coolly, but in the meantime, there is an immediate issue. Iron ore prices have fallen off a cliff. Colin Barnett has taken state debt in Western Australia to much higher levels than when he inherited it and also, you’ve Tony Abbott and Joe Hockey's cuts to the West Australian Government and the funding, so it’s a trifecta of problems all colliding right now. There is an opportunity tomorrow for Tony Abbott to take decisive action. We are speaking out today in response to the fact that Tony Abbott when confronted with his problems, with his ministers going all over in different directions, with state governments at each other’s throat; the Commonwealth is the steward of our national financial system.  I think it is clear that the option of some sort of financial assistance on a one-off basis to help West Australians cope with the changes that they're experiencing right now should be put on the table and again I would say that if Tony Abbott has a constructive leadership position to put tomorrow, Federal Labor will look favourably upon that proposition and that's what the people want to hear us say.


JOURNALIST: You are in WA to see for yourself about job losses and that sort of thing, talking to workers, is it a bit awkward that the national and state rates have both fallen today?


SHORTEN: Well, first of all, you can take a month by month analysis, I take a longer-term analysis. When Tony Abbott got elected, unemployment in Western Australia had a 4 in front of it, now it has a 5 in front of it, and if you think that it's awkward to be talking about unemployment, just talk to someone who has lost their job on the mine sites or some of the contractors who are no longer working there.


I get that you can't keep every job exactly the same as it was for life, but there is a real problem in terms of unemployment in the West, youth unemployment is high. I think it is proper and appropriate that Labor is talking about jobs. That's what's in our DNA. We believe in seeing people employed. I am impressed by the apprentices here. I'm impressed by some of the new migrants who are citizens now and working here in these jobs.  I'm impressed by the innovation and the proportion of RND expenditure that Hofmann puts into its business so it can complete with the rest of the world. But what we can’t do is take our good fortune for granted. I think the story of the mining boom of Western Australia has been the State Government here has taken it for granted, hasn't planned for a rainy day, we’re fortunate though there’s individuals and families like the Hofmann Engineering business.  I might ask my colleague Alannah who of course you all know and is very familiar with the challenges of employment in the West to talk a bit further about some of the issues.


ALANNAH MACTIERNAN, MEMBER FOR PERTH: Thanks Bill, thanks very much for recognising West Australia has got an unfair disability and that we do need the Commonwealth to step in and help Western Australia. So I'm really pleased to have the acknowledgement of that formally from Labor and a preparedness to make a change, to make a special financial grant and to look constructively at anything the Abbott Government might come up with to help WA. There is absolutely no doubt that West Australia is going through a really tough time. We have been really giving big time to the nation over the last 10, 15 years, and now it's our time for a little bit of consideration.


So we're really very, very grateful, Bill, that Labor has acknowledged that and has indicated a preparedness to take action. I just want to say the unemployment figures that come out today, I don't think are going to reflect really what is happening here. I think to some extent the job losses are being masked by the redundancy packages that people have, and I think it's going to take a couple of months for this to really show up in the figures. I travel around this State all the time, the number of people that have become unemployed in the last couple of months, the number of small businesses, dry cleaners, delis, restaurants that are saying that business over the last three months is going down, that you can see across the economy people are tightening their belts, so this is going to have a real consequence.


The construction industry is going to be contracting over this year, so we have got a real issue. And this is not a total surprise. We were saying this six months, 12 months ago that we need a proper transition program. There has been no jobs planned by either the Barnett or the Abbott Government. Nothing put in place to help WA make this transition away from mining jobs and into jobs like this, advanced manufacturing. All we have actually seen is one industry, the renewable energy industry, for example, completely undermined. We've lost about a thousand jobs in renewable energy just in this State alone because of the hand grenades that Mr Abbott put out in relation to the Renewable Energy Target. So, we've got a real job to do to create jobs. This is why I asked Bill to come and see a company like Hofmann Engineering, because this company tells us that we can do this. If we get behind companies like Hofmann, if we make sure that our Defence contracts are built here, our submarines are built in Australia, then we can ensure that we've got an industry to go forward, that we've got jobs in the future. This is a company that has demonstrated that it can work with overseas companies, it can build submarine parts. We can do this in Australia, we've got the skills, we've got the expertise. We just need to understand, we need government to get behind these companies and create that environment where these companies can prosper.


JOURNALIST: You said earlier that WA is going through a tough time. Perhaps explain how that $300 million one-off assistance figure was calculated?


MACTIERNAN: It's certainly looking at what we would need to do to ensure that there is enough; there are new projects that come on board that could generate some new jobs. Now, as Bill said, we haven't settled on that particular figure, it's just notionally something around that amount that might help even-out the fluctuations from last year to this year, and as I've said, and I stand behind my comments; I support the idea absolutely of all states having equal capacity to service their communities. We signed up to be Australians and that's part of the deal. But what I am saying and I do think that the Grants Commission is not properly taking into account the difficulty and the cost in Western Australia  of delivering programs to those remote areas, and I think that we do have to look and ensure that the Grants Commission has a bit more rigour in its process, that it doesn't make arbitrary decisions and adopt arbitrary principles that absolutely downgrade and underestimate the cost of delivering those services in remote Western Australia. And of course we know that that's only going to get worse because the Federal Government has stepped away from its obligations to provide for the 169 remote communities that it used to fund.


JOURNALIST: [Inaudible]


MACTIERNAN: We need to really look at how these industries work. If you look at everything that Mr Abbott and Mr Barnett since they have been in government is to actually move away from the 21st century industries. So instead of supporting things like renewable energy and those new industries, instead of supporting a proper NBN which is absolutely essential for us to be able to compete globally. They have bagged those; they have moved away from it, they have actually no vision about how we support Australian business into the 21st century. Their idea, is supposedly to make government little and build a couple of stadiums and that will do the job – it doesn’t. Every other country, Germany, the United States, the United Kingdom – they are in there with creative plans to assist industry make that transformation into the 21st century highly globalised economy. We are not doing that here. We are having an engineer’s forum immediately after this, where we are going to be talking a lot of engineering experts in Western Australia to have a look about what we might do to create 21st century jobs.


JOURNALIST: Do you think we need corporate bailouts rather than building more infrastructure to help miners like [inaudible]?


MACTIERNAN: No, no, I don’t think the answer is just more corporate bailouts. It really is looking at what are going to be the jobs of the 21st century and how do we go in and support companies like Hofmann to expand and ensure that jobs are created that are going to keep us competitive. It’s just not about coming in and bailing out. It is doing the really big thinking and being prepared to invest in things like the NBN -  100 years ago, people might have been having a debate about do we really need to reticulate electricity all around the country. Answered clearly yes, that drove the 20th century economy. The NBN is the equivalent of that. We need to reticulate access to the internet, high speed access to the internet around this country.


JOURNALIST: What do you make of Colin Barnett’s stand [inaudible]?


MACTIERNAN: Everyone in WA, I think, really gets the fact that we haven’t been dealt with fairly. But I do think there has been tilting at windmills and shadow boxing. I mean the idea of talking about scrapping the whole notion of horizontal fiscal equalisation – that is never going to go anywhere. That’s actually locked in as an essential [inaudible]. Rather than doing the detailed work and working out where the Grants Commission have got it wrong, where we could within that fundamental principle of federation get a better deal. I think they have been very philosophic in the way they have done it and not detailed and been disciplined and analytic enough to get the arguments up there.


JOURNALIST: What about threats to disengage [inaudible]?


MACTIERNAN: Well I can understand that, I mean you know, I can understand if there’s not a response and my colleagues around Australia we’ve been banging on about this issue as you can imagine in the federal caucus and I’m pleased that Bill and our leadership team have accepted now that something has to happen, that the status quo is not acceptable. I just hope that tomorrow that we see the Abbot government do this. This is not something as Bill said, it’s not something that is going to be resolved by trying to get a consensus to money from states, there has to be some definitive action on the part of the Federal Government.


SHORTEN: Ladies and gentleman perhaps one more question.


JOURNALIST: The AMAs warned a funding black hole looms for hospitals, any comment on that? And where would you find the money for hospitals?


SHORTEN: Well the AMAs right, the Abbott Governments cutting $55 billion from our health system in particular our hospitals over the next 10 years. What that means in the case of West Australia is $5.7 billion dollars. Now we’ve just seen how we’re having a debate about the funding challenges and the finance of West Australia right now. Can you imagine how much deeper and longer the problem’s going to be if the Abbott Government carries out their $5.7 billion worth of cuts? That’s why today Labor has put forward a circuit breaker. We’ve seen thought bubbles from different cabinet ministers, maybe we could go this way, we’ve seen on the other hand expressions of undefined sympathy. But sympathy in and of itself to the position of West Australia doesn’t actually solve anything. Labor today recognises that you’ve got ballooning state debt by Colin Barnett, who recognised Tony Abbott, as your question and the AMA say has cut massive amount of money from hospitals and schools and of course we’ve got the fact of iron ore prices falling off a cliff.


So today what Labor has proposed is a circuit breaker. We recognise, and just simply hoping that all the states are engaged in a tug of war for the crumbs of Tony Abbott’s table is going to simply fix things, that isn’t an option. So Labor today has put forward a proposition, we hope that the Liberals pick up with it and run with it or that they at least match or come up with something which goes towards dealing with the manifest difficulties which exist right here today in Western Australia. That’s our aim. We’re confident and we hope that perhaps we’ve given some of the political room for Tony Abbott to stop playing in the traffic, getting New South Wales and West Australia at each other’s throats and instead deal with the immediate problem which can be solved tomorrow by the Abbott Government taking responsibility as the Commonwealth should to help sort out some of the transition effects as our economy changes.


Thanks very much everyone.