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Flood Levy Debate: Don’t Patronise Me, Neil

The debate over the Gillard government’s flood levy got willing today as the Prime Minister clashed with Neil Mitchell on Melbourne radio station 3AW.

Towards the end of the interview, Gillard and Mitchell clashed over Cabinet support for the levy and oversight of the flood recovery spending.

  • Listen to Gillard and Mitchell: “Don’t patronise me, Neil.” (3m)
  • For the complete context of the encounter, listen to the complete Gillard-Mitchell interview. (20m) – transcript below.

Later in the morning, Queensland Premier Anna Bligh and Treasurer Andrew Fraser held a press conference to outline infrastructure rebuilding plans.

  • Listen to Bligh and Fraser. (26m)

In a speech this afternoon to the CEO Institute in Brisbane, the Federal Treasurer, Wayne Swan, defended the government’s plan for the flood levy. He argued that in a growing economy it is important “to pay your way as you go”. Swan said it would have been irresponsible to borrow to fund the rebuilding program.

  • Listen to Wayne Swan’s speech. (25m)

Transcript of Julia Gillard’s interview with Neil Mitchell.

GILLARD:

Good morning, Neil.

MITCHELL:

Thank you very much for your time. I appreciate it. Prime Minister, with your Government’s history of mis-management, like the insulation program, school re-building, who are you going to put in charge of the spending of this money you’re going to take from us?

GILLARD:

Major-General Mick Slater is the chair of the Queensland recovery authority.

MITCHELL:

But he’s a soldier. Is he going to be in charge of the money?

GILLARD:

So, Queensland has created a recovery authority just like Victoria did when we had the very devastating bushfires. We’ve made Mick Slater available. He’s obviously going to bring all of his Defence Force experience to that role, and then of course the authority will employee professional people, just like the recovery authority did in Victoria, to roll out funds.

We will also have an agreement with the Queensland Government with strict guidelines around expenditure, but we do need to get on with this job, Neil, and start the re-build.

MITCHELL:

Look, I couldn’t agree more, but with due to respect to the Major-General, he’s probably a terrific organiser and soldier, but he’s not an accountant. He’s not a money man, and Defence hasn’t got a great record of managing its money. How can you guarantee us that it won’t go the way of the insulation program and the school rebuilding? Putting a soldier in charge doesn’t fix it.

GILLARD:

Well, the money will be spent through the recovery authority, which will obviously engage the professional staff it needs, the accountants, the-

MITCHELL:

-So who’s accountable?

GILLARD:

Well, the recovery authority has Mick Slater as the chair. There is a committee there that will run the authority. Obviously, the authority will report to the Queensland Government and we will receive reports from the authority, and we will have an agreement with the Queensland Government. I will, the Federal Government will, make sure that the guidelines are there and that they’re adhered too so that we get value for money.

MITCHELL:

You keep talking about Queensland. Does any of this money come to Victoria?

GILLARD:

Yes, of course, Neil-

MITCHELL:

-So who oversees it in Victoria?

GILLARD:

We’ll work with Baillieu Government on that, and see what sort of arrangements Premier Baillieu wants to strike-

MITCHELL:

-and what about Tasmania? Same thing in Tasmania?

GILLARD:

Well, yes. Neil, I think we’ve just got to take one step back here. Special arrangements in terms of a recovery authority are being made in Queensland because of the size and scale of the devastation – 75 per cent of the State natural disaster declared – but yes, we’ve got rebuilding to do in other parts of the country, including in Victoria. Now, the damage is there, it needs to be addressed, and we will work with the Baillieu Government to do it-

MITCHELL:

-So, I guess the bottom line is trust. How can we trust you? Why should we trust you, given the history of the Government, not to waste it?

GILLARD:

Well, Neil, what I’ve just said to you is the way I’m going to approach this. We’re going to get it done. We’re going to get it done with value for money. I was so concerned about value for money that I have deliberately deferred some infrastructure spending so that we didn’t have an overheated construction sector and not being able to get value for money in these rebuilding jobs.

Now, deferring infrastructure’s never popular. When you go to people and say ‘actually, you were going to get your road re-built and now I’m putting it back a couple of years’, but I’ve done that and made that decision deliberately because of my concern about value for money questions.

MITCHELL:

Can we go to that? Looking at it, I think it’s roughly $300 million deferred in Queensland, $600 million in the other States. Is it right that of that $600 million, two-thirds of the spending is in Victoria, so $400 million deferred in Victoria?

GILLARD:

Well, we will work through with State governments, and when we’ve got agreed arrangements, which we hope to have shortly, we’ll announce full details of that, then.

MITCHELL:

But that’d be a pretty heavy belt, if Victoria was to cop a $400 million cut in spending.

GILLARD:

Well, I’m not going to deal with it in the hypothetical, Neil. We’ll work through and we’ll strike arrangements with State governments-

MITCHELL:

-So we don’t actually know where those cuts will be yet.

GILLARD:

Well, we’ll work through, we’ll strike arrangements. You will know very soon. The Minister for Infrastructure is in discussions with State governments now. We had already worked with Queensland to identify projects-

MITCHELL:

-But that’s hypothetical. We don’t know whether it’s going to be cut yet, don’t we?

GILLARD:

Well, Neil, you will know, and we are talking about deferrals. I‘ve stressed that – deferrals, not projects being cut entirely.

MITCHELL:

Prime Minister, if the budget figures are better than expected, because this cuts in at the end of the financial year, or the beginning of the new one, would you drop it?

GILLARD:

Drop the levy?

MITCHELL:
Yep.

GILLARD:

No, I won’t-

MITCHELL:

-Why not, if we suddenly have boom figures?

GILLARD:

Well, Neil, we obviously keep a weather eye on the budget figures and we’re also putting together what is the best possible estimate of the damage here. Our nation has faced what is probably the most costly disaster in economic terms in our history-

MITCHELL:
-So why won’t-

GILLARD:

-and as a result, we are going to need funding from a variety of places, including asking people to pay this levy, but I do stress we’ve made cutbacks and deferrals in the Federal Government budget, so out of this package around $2 comes from cutbacks and deferrals for every $1 we’re asking for people to pay through the levy, and, you know, it’s a 12-month levy, one-off. 60 per cent of taxpayers will pay less than $1 a week.

MITCHELL:

OK, why won’t you use the contingency reserve, which has got several billion dollars in it?

GILLARD:

Well, this is a complete misunderstanding of what the contingency reserve is. I’ve had this debate today on television this morning. The contingency reserve is not a fund put aside for natural disasters-

MITCHELL:

-Well, can I quote to you from the budget papers? It is there, quote, ‘provisions for events that are reasonably expected to affect the budget estimates. For example, provision for the continuation of drought relief.’ Now, if it’s a continuation of drought relief, why not flood relief?

GILLARD:

Well, Neil, you misunderstand what the contingency reserve is for-

MITCHELL:

-Well, I’m quoting direct from the budget papers.

GILLARD:

And I’ll give you the explanation which explains those words to you as well. The contingency reserve is there in the Federal Government budget because we, in the budget, have a number of programs that are demand-driven. Big example of that and one that people would understand is Medicare, so when we put aside money for Medicare we’re obviously working off the best possible estimates of how much that’s going to cost, but we don’t, you know, if people unexpectedly go to the GP more in any one year, you don’t need that assumption that’s driven the costings to be wrong by much before you’re talking about hundreds of millions of dollars extra. That’s what the contingency reserve is for, and-

MITCHELL:

-But it specifically outlines it can be for drought relief-

GILLARD:

-and yes, yes it does, because-

MITCHELL:

-why not flood relief?

GILLARD:

Neil, I can explain that. Drought relief is a standing part of our budget. We are paying drought relief, so just like my Medicare example, it is possible for the amount of drought relief needed in a year to be more than was factored into the budget. That’s what the contingency reserve is for-

MITCHELL:

-So why not-

GILLARD:

-Neil, if I could just, I do really want to explain this point because there’s a lot of misunderstanding out there. To quote-

MITCHELL:

-There’s a lot of disagreement, Prime Minister, not misunderstanding.

GILLARD:

No, there’s misunderstanding on this point, Neil-

MITCHELL:

-Just because we don’t agree with you doesn’t mean we misunderstand it.

GILLARD:

No, no, there’s direct misunderstanding of what these funds are for. I’m using the misunderstanding deliberately because it’s true. I’ve had people put questions to me today which misunderstand what the contingency reserve is for. As the former Treasurer Peter Costello said, this is not a rainy day fund, and as Treasury said as recently as when it was costing the Federal Opposition’s election promises, if you raid the contingency reserve you punch a black hole in the budget and I’m not going to do it.

MITCHELL:

Have you looked at cutting some of our foreign aid?

GILLARD:

Well, we do make foreign aid available, that’s right, to countries around the world, and countries around the world have come to our assistance during this natural disaster. I selected the parts of the budget for cutback which I thought were the right ones to-

MITCHELL:

-So you considered foreign aid, did you?

GILLARD:

Obviously, Neil, I looked at the Federal budget, I made decisions about where to make cuts that were the best places to do it, and that’s the list that I published yesterday.

MITCHELL:

So why not cut foreign aid, things like the $500 million that’s been so contentious for the schools in Indonesia? Why not cut that?

GILLARD:

Well, I think the Australians are a generous nation and we do go to the assistance of other countries for poverty alleviation – you know, kids that are literally at risk of starvation. We do help our regional neighbours. It’s in our interests for our regional neighbours to be peaceful places and education, a great education system, helps with that, so we do make those kind of investments, and I do stress, of course, that the world has also responded to help Australia during our hour of need. But I thought the best place to make budget cutbacks to support this package was in a range of environmental programs. We’re going to get on with the job of pricing carbon. That’s a more efficient way of dealing with carbon pollution-

MITCHELL:

-Another tax.

GILLARD:

-We’re cutting back some business assistance-

MITCHELL:

-Another tax-

GILLARD:

-because that was the right thing to do, too, and we’re deferring some infrastructure. That’s got to do with making room on the Federal budget, but it’s also about managing demand for construction in our economy.

MITCHELL:

OK, we’re coming up to the news, we’ll just hold onto the news for a moment. Prime Minister, do you agree you’re staking your whole political future on this? If you can’t sell this, you’re finished.

GILLARD:

Look, Neil, you know, you make any declaratory statement you like. I’ll-

MITCHELL:

-We’ll, I’m asking a question. Do you believe you are facing-

GILLARD:

-Look, I’m not interested in any of that. What I’m interested in is doing the right thing to rebuild this country-

MITCHELL:

-So you’re not interested in the politics, here. You’re not interested in the politics here?

GILLARD:

I’ve put together a package I believe is right for the nation now. It’s full of tough decisions. When I was making them I knew they would be controversial. I believe it’s right. I’m going to get on with doing it.

MITCHELL:

Prime Minister, every economist I’ve seen says this is political opportunism. It is not about the nation, it is political opportunism so you’ve got money to spend going into the next election campaign and so you bring the budget back into surplus. Do you deny, do you deny there are any political imperatives in this?

GILLARD:

That’s complete nonsense, Neil-

MITCHELL:

-Do you deny that you’ve got any political considerations whatsoever?

GILLARD:

Complete nonsense. Bringing the budget back to surplus is about what our national economy needs-

MITCHELL:

-I’m sorry, but complete nonsense, do you deny that there are any political-

GILLARD:

-The motivation for bringing the budget back to surplus is an economic one, not a political one. In 2012-13, our economy will be running hot. It will be running at close to full capacity. What’s the right thing to do by the national economy in those circumstances is for the Government to deliver a surplus and reduce the footprint of government on the economy. That’s the right thing to do by this nation, and I’m going to do it.

MITCHELL:

You say Australians are a generous people. You say this is the right thing to do. Why is there such massive opposition to this? Why do people not accept it? Is it possible they don’t trust you?

GILLARD:

Well, look, I’ve had people contact my office today Neil. I’ve had an invalid pensioner contact my office, saying ‘can I pay the levy?’ Well, of course they don’t have to, but that’s how generous someone on a fixed income-

MITCHELL:

-Are you denying it’s massively unpopular?

GILLARD:

Well, I’ve seen stories in today’s newspapers, Neil, of people who are flood victims themselves – who do not have to pay this levy – saying they’re prepared to pay it voluntarily-

MITCHELL:

-That’s what puzzles me, because Australians are so generous and they do donate so well, but I can tell you by the reactions to the newspapers, the television stations and to this radio program and stations like this, they hate it. Why? Why is it so unpopular?

GILLARD:

Well, Neil, I believe Australians will work their way through, they’ll get the details of the levy, they’ll assess what it means for them. I believe people are generous, they do want to contribute, and people will make their minds up about it. I think people are still, probably, getting all of the information they need, and that is very understandable when something was announced yesterday. This is the right package for the nation and I’m determined to deliver it.

MITCHELL:

Do you believe that it could affect future donations? I’ve had people ring me and say ‘I’ve already donated several hundred dollars. Now they’re going to hit me again.’

GILLARD:

People have been very generous with donations, but the donations that people have made are being used for a different purpose than this levy money. We need to give people-

MITCHELL:

-They’re still being hit twice. I mean, they’re still being hit twice.

GILLARD:

We need to give people a helping hand, and that’s what the donations are for, but we need to rebuild the vital economic infrastructure, too. Farmers can only get back to running their farms if they can get their produce to market. People can only back to their jobs in coal mines if we can get the coal out, get it to the port and get it on a ship and export it to the world. We have to rebuild that infrastructure.

MITCHELL:

The floods are continuing in Victoria today and into next week. We’ve got no idea what it’s going to cost. How can you put together a plan when you don’t know the cost yet?

GILLARD:

Well, we work to get the best possible estimates available to us-

MITCHELL:

-So what’s the estimate in Victoria?

GILLARD:

Well, we worked with Victoria in this package-

MITCHELL:

-And what was the figure?

GILLARD:

Well, in this package Neil, there is an estimate of a billion in Victoria, and we will work through with the Baillieu Government to refine estimates. I will be in Victoria myself today, in flood regions, talking to people directly, but we needed to get started. We needed to get started on this rebuilding. That’s why I announced the package and that’s why we will make a payment to Queensland very soon of $2 billion – so we get started.

MITCHELL:

Are you confident that this can be done without being inflationary, without forcing up interest rates, or is it inevitable now that interest rates will go up?

GILLARD:

Neil, I deliberately deferred infrastructure because of my concerns about capacity constraints, and that is a way of managing demand. You are right – when the economy is running hot you’ve got to manage demand so you don’t put upwards pressure on inflation and interest rates. That’s what the infrastructure deferral is about, and ultimately that’s what bringing the budget to surplus is about, too.

MITCHELL:

What if, God forbid, we have massive fires somewhere next summer somewhere in Australia, and the Victorian fire’s an example of horrendous loss of life and horrendous cost. Would you look at another tax then?

GILLARD:

Well, we are a nation that sustains natural disasters, Neil. Tragically, we sustain them quite frequently and we manage our way through them. This is different to things we’ve seen in the past. This disaster is probably the most economically costly disaster the nation has ever seen, and that’s why there are special arrangements to deal with this natural disaster.

MITCHELL:

Has the Party, have you or any of your people, spoken to the independents? Can you get it through the parliament?

GILLARD:

Look, we’ll work, you know, in discussions, we’ll make briefings available, but I’m determined to see this go through the parliament because it’s the right thing to do.

MITCHELL:

OK, what, will you negotiate it further, or is it set in stone?

GILLARD:

Look, I will be saying to every parliamentarian this is the right thing to do and we need to get on with this urgently.

MITCHELL:

Is it set in stone or will you negotiate it further?

GILLARD:

Look, Neil, what I’ve just said to you is what I can say to you – I want this package through the parliament. That’s what I’ll be saying to people – let’s get on with it – and I will certainly be saying to Tony Abbott, leading the Opposition, if he thought a levy was good enough to pay for his election promises, then I really can’t see how he can say to people around the country affected by floods that it’s not good enough to rebuild.

MITCHELL:

That’s a fair point, but you want to get this through the parliament. Will you negotiate it and change it if necessary to get it through the parliament?

GILLARD:

Look, I will brief the independents. I will of course talk to the independents, but I am determined to get this package through, Neil.

MITCHELL:

OK, so you will negotiate if necessary?

GILLARD:

Well, I just said to you I am determined to get this package through. Of course, I’ll go through proper processes, talking to the independents and of course the Australian Greens in the parliament.

MITCHELL:

Is it possible you could take money out of the Future Fund to avoid it?

GILLARD:

No. The Future Fund is set aside to meet liabilities coming at the Commonwealth through superannuation. If you took money out of that all you’re creating is a black hole for the future.

MITCHELL:

Just finally, you’re confidence has taken a bit of a battering lately, hasn’t it? I mean, you’ve had a pretty rough start to the year. People have been critical of you. You’ve had an emotional start to the year. We saw your partner talking about that, getting around, talking to people. Has your confidence taken a battering?

GILLARD:

Look, Neil, I am determined. We’ve been through an incredibly sad time and I’ve shared some of that sadness. I’ve sat in evacuation centres with people who have lost everything. I’ve sat and listened to people tell me the most horrendous stories about fleeing walls of water smashing at their homes and their cars. There’s been a lot of sadness around, but I am determined now to do what we need to do to rebuild. That’s what’s driving me.

MITCHELL:

OK, but not everybody in your Cabinet agrees with it, do they?

GILLARD:

Oh, Neil, don’t be ridiculous.

MITCHELL:

No, it was a question.

GILLARD:

And I’ve just given you the answer.

MITCHELL:

Don’t be ridiculous is a statement. Does everybody in your Cabinet agree with it?

GILLARD:

This is my package. This is the Government’s package. Full stop.

MITCHELL:

Does everybody in Cabinet agree?

GILLARD:

Oh, look, Neil, don’t be so silly. We, as a Government, want to rebuild Queensland. We, as a Government, support this package.

MITCHELL:

Sorry, why is that silly? I asked whether it-

GILLARD:

-Well, it’s silly, Neil, because you are trying to create an apprehension that somehow there is division about this. There is not division-

MITCHELL:

-Well, with respect, Prime Minister, you can end that by answering it-

GILLARD:

-And Neil, if you allow me to say a few words, I probably will-

MITCHELL:

-Well, you haven’t-

GILLARD:

-There is not division. We will get on with the job of delivering this package. Everyone wants to rebuild, as we need to. Everyone wants to support Australians. Everyone understands the need to do the right thing by the national economy, bring the budget to surplus by 2012-13, and we’ll get on with delivering this package.

MITCHELL:

Fair enough, but look, I would just say, if there is one rort, if there is one travel junket, if there is one wasted dollar in the next couple of years, there’s going to be hell to pay because the people won’t cop it.

GILLARD: Well, Neil, we will work to deliver value for money-

MITCHELL:

-And to manage the money properly! Please!

GILLARD:

Neil-

MITCHELL:

-No more people in-

GILLARD:

Neil, you don’t need to patronise me, thank you very much.

MITCHELL:

I didn’t mean to patronise you.

GILLARD:

I understand, Neil, thank you-

MITCHELL:

-I didn’t mean to patronise you.

GILLARD:

-the need for value for money. I understand that. Why do you think-

MITCHELL:

-Well, Prime Minister, you didn’t when you were running the building the education system, that rebuilding.

GILLARD:

OK, Neil, do want me to answer the question, or-

MITCHELL:

-Well, no, you say I’m patronising you. I am not. You ran the Building the Education Revolution, and it was an absolute disaster, so don’t tell me that.

GILLARD:

Neil, what nonsense. 3 per cent of schools complained, and on the question now of value for money, you’re talking to the person who decided to defer $1 billion of infrastructure because I was concerned about value for money. Do you think that’s an easy decision, Neil? No, it’s not. I’ve taken it-

MITCHELL:

-Don’t patronise me, Prime Minister. Of course it’s not an easy decision.

GILLARD:

No, and I’ve taken it because of my concerns about value for money, so thank you very much for making that point. I am making it too.

MITCHELL:

OK, I appreciate that. I am simply looking at history and I think the people look at history and say this Government has a history of waste. Please don’t waste this new tax.

GILLARD:

And people will look at this package and say ‘gee, they must have been really concerned about value for money to defer $1 billion worth of infrastructure.

MITCHELL:

Thank you for your time.

GILLARD:

Thank you.

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