Topics: Barack Obama’s election win, China, Treasury costings, domestic leadership
Helen Dalley: Hello and welcome to The Nation. I’m Helen Dalley and I’m sitting in for David Speers who has been covering, as you no doubt know if you’ve been glued to Sky News, who has been covering the American election in Washington. He will be back in the chair very soon.
Well it has been a very big week in global politics. The American election is done and dusted and President Obama is heading back into the White House in the world’s biggest superpower. But there has also been a transition change that is about to unfold in next few days in the second largest superpower, that’s China. Their new leader, the once in a decade transition, will happen in the next few days so what does this mean for both these superpowers? Where does Australia fit in? And how do we mix with them and play our cards well for both sides? Here to join me on the panel is Ed Husic, Labor MP; Kerry Chikarovski, who is a former Liberal NSW leader; Cassandra Wilkinson is a former Labor adviser; and Liberal Senator Scott Ryan joins me, welcome to you all.
Now the US election has obviously had all of us who love our politics glued to the chair. President Obama back for another term. But before we talk about what’s in store for him – because there is a lot in store for him – Ed Husic, let’s look at why he won and why Mitt Romney could not get enough people, why he could not persuade the American electorate to go with him?
Ed Husic: I think a number of things. I think the odds were really against President Obama if you were looking at the lead in to the election itself. People figured he would have the fight of his life, he certainly did. What was interesting, and I actually had an opportunity to talk today to Damien Ogden, who runs Campaign Action here in Australia, and is over in Minnesota working alongside Geoff Blodger on the campaign and he made a number of observations. One was that the Democrats were massively outspent on advertising. The Republicans had a lot of money through the Super PACs and had spent quite a lot over the course of the year. But what the Democrats had focussed on was a lot of grassroots campaigning and bringing together a coalition of various groups and what was telling was to look at the diversity of groups represented at President Obama’s acceptance speech, he was able to bring together a wide range of groups in American society to support his re-election, so it was a triumph of people over money.
Dalley: Kerry Chikarovski, you’ve watched a number of American elections.
Kerry Chikarovski: Yes I am the oldest person around the table, that’s ok.
Dalley: No I didn’t say that. It has been an interesting race this one, I guess we say that about every one, but for Mitt Romney, was it that he appeared to change positions a number of times and wasn’t comfortable with some of them? Was it that he perhaps didn’t embrace all the changing demographics that are going on in the United States and this whole lack of being able to give the Hispanic community a pathway to citizenship, which is really all the President has promised them? Or was it perhaps the Tea Party sitting on his shoulders pushing him further to the right than he was comfortable as, as the Governor of Massachusetts?
Chikarovski: Well tick, tick, tick. I think his big problem was that he had to position himself further to the right than he actually is in order to secure the nomination for the Republican Party. You know, if you look at it, at the people who were standing against him, in many ways, he was the moderate candidate for the Republican Party. In order for him to get enough votes in the primaries to win, he had to actually repudiate some of the things he actually believed in and stood for, and had advocated and delivered as the Governor of Massachusetts, for example he actually did have a form of gun control, he did have a form of medicare, so he implemented those things as the Governor of Massachusetts. When he got the nomination, I said then that his big challenge was to bring himself back a little bit more to the centre and the challenge he was going to have was whether he would have enough time to do that and persuade the American people that that was where he really stood. I think he actually ran a pretty good campaign, I agree with Ed, I think the real lesson out of this for any future campaign, regardless of which side of politics you sit on and in the States in particular, you have to be able to turn out the vote. We don’t have that issue here because of the compulsory voting, but there is no doubt that the Obama machine was extraordinary.
Dalley: We do know that they were a lot better at getting to people, at getting older people to polling booths, urging young people, being on the phone, driving them in busses. Do we know if that was the same for the Republicans?
Chikarovski: For example, I’m told that in Ohio, they had three times as many full-time organisers as the Romney campaign. A lot of those people had stayed in place for four years, they had been out there. If you talk to people about turning out the vote there, it is as much about saying that ‘the bus will be driving down your street at 10.30 in the morning, it will pick you up and take you to the polling booth’, that is part of it. But it is also about saying to all their neighbours and all their friends and everyone who they know, the people their workplace, ‘you have to go and vote’. And you can vote either early in some of the states, or you have to do it on the day, but it is about persuading enough people to turn out the vote. I think the big concern for the Obama campaign this time, was that a whole lot of the people who had turned out to vote last time, they were worried. I follow Obama on Twitter, and I was getting the tweets three or four weeks ago saying ‘don’t forget to register, don’t forget to vote’, so I mean, they were concerned that that base may in fact leave them, but they didn’t. That was the really extraordinary thing for the Obama campaign is that the actually turned out. Not as many as last time, there weren’t as many people who voted as last time.
Dalley: Senator Scott Ryan, how do you feel about the way the Republicans dealt, or perhaps didn’t deal properly with this growing demographic in America, which is the Hispanic community?
Scott Ryan: Well firstly, the result that we got yesterday in America didn’t surprise me at all. There have only been two presidents who didn’t manage to get elected for a second term – Jimmy Carter and George Bush Snr. They were both up against some pretty extraordinary politicians in Ronald Reagan and Bill Clinton, so Obama had that going in his favour. As Ronald Reagan showed in 1984, unemployment can be high, as long as it is heading in the right direction, and it had been heading down, even though it was still at a very high number. So the trend was with him.
On top of that, you mentioned the ‘get out the vote’ campaign. Obama’s campaign has been extraordinary in data mining and primarily in getting younger people out to vote in a way that they have not historically voted.
When we talk about the Hispanic community, I think we have got to be careful. It is an easy catch-phrase for the newspaper, but it is not a single, homogenous group in America. You’ve got the Cuban-Americans, you’ve got Puerto Ricans who live on the mainland and are automatically US citizens, you’ve got the children of immigrants legal or otherwise, and Republicans have successfully gathered that vote before. George W Bush, his brother Jeb Bush, there is a female Hispanic governor of Colorado at the moment who is Hispanic. So I don’t see this as being …
Dalley: Yes, but I guess this pathway for the people who come from Mexico and their children and how they deal with this, because there clearly is a view in America among some people that they shouldn’t be given citizenship. Yet when Obama talked about ‘we’ll at least talk about a pathway to citizenship’ and the Republicans did nothing about that, that appeared to give him a boost.
Senator Ryan: It is undoubtedly a bigger issue. We need to remember that anyone born in America is a citizen; it is the parents who come over the border illegally, so to speak, that need the pathway. I noticed there was a ballot in Maryland that allowed illegal immigrants to access state-funded higher education. But there is one important thing about the result, Obama has had the smallest re-election margin of any president since World War II. He is the first president to go backwards. Reagan won by more, Bill Clinton won by more in 1996, George Bush increased his margin in 2004.
Dalley: It wasn’t as close as we thought, was it? Cassandra Wilkinson, were the polls wrong? The last polls I was dealing with on Sunday and Monday night were talking about [how] there were weekend polls in the United States. I think nine of them said it was probably going to be Obama – that he was a nose in front – three of them had it tied and only one, I think, had Romney in front. So they weren’t that wrong, but so many of the commentators seemed to say ‘this is line-ball, this is going to go down to the wire’, it didn’t.
Cassandra Wilkinson: I think that Mitt Romney put on a much stronger end-run than anyone expected to and I think it is because fundamentally he was better positioned on security and the economy and probably deserved to win on issues that usually stand much more large in the debate. But the fact is the US put uterus’ before duterus’ (sic) at this election, it is the first time it has ever happened that women’s issues have been front and centre and I think the President who once campaigned on hope, campaigned on fear, and American women were terrified of losing their fertility rights.
Dalley: It did become a big issue, particularly with a couple of those Republican candidates. Kerry?
Chikarovski: In hindsight you can see what they were trying to say.
Dalley: Can you?
Chikarovski: I actually think the gentleman who was saying that …
Dalley: That the body can expel a baby it got by rape?
Chikarovski: No, no, no. I think he was saying that every baby God gives you is a gift.
Dalley: That was the second guy.
Chikarovski: That’s who I am referring to.
Senator Ryan: The Republicans knocked out Richard Luger, a six-term senator of international standing, in a primary in Indiana and lost a seat that there was a 20-point difference between the vote for the president, which Mitt Romney won comfortably, and the vote for the Senate. That’s an indictment on what the Republicans did on that particular incident, and I think they’re talking about that themselves.
Chikarovski: I think one of the interesting things about the vote yesterday, was that the Tea Party, which has certainly been in the ascendancy, got kicked.
Dalley: Do you think they’ll be back in their box?
Chikarovski: You probably think that’s strange coming from the good conservative I am, but I actually think it’s the best thing that can happen in the United States is that the Tea Party is kicked and moves away. With the greatest respect, it is kind of a little bit like what happened here when we had One Nation. We had this great noise, a whole lot of drama about One Nation, and the vast majority of overwhelmingly conservative people did not support what One Nation was saying, they didn’t support it. And I think the vast majority of overwhelmingly conservative people in the United States do not support the Tea Party. I think that what needs to happen – and I’m not convinced it will happen because you look at some of the people sitting in the Congress, who still hold those incredibly, not conservative, but right-wing, almost fascist views, they are still sitting there. They will have to compromise.
Husic: That is an important point. The US paid a high price for the influence of the Tea Party in Congress. They had a credit down-grade, they had an inability to come to terms with what they need to do to address their financial situation, they know have this fiscal cliff that everyone is talking about, and they are going to really need to deal with what’s coming up ahead and they are going to need to be able to find a solution. Again, the inability of the Tea Party and the refusal to back moderate Republicans who recognised the importance of being able to get a deal on the budget, they have paid a high price. The Republicans have paid it themselves and it is important. I think what Kerry said earlier, that this, in effect, will force a re-think in the Republicans on their approach to things, but also as a nation recognising the importance of being able to strike compromise, with both the Democrats and the Republicans saying this will be vital in the weeks ahead. I hope that we can see the wash-out of that influence and then being able to put their economy in order because so many of us rely on America doing just that.
Dalley: I would be interested in both your views because you both sort of said it was the Tea Party that was intransigent and didn’t compromise, but Ed, would you agree that there has been a lot of criticism of President Obama? That he didn’t seal the deal, make the sale? He didn’t engage enough with the Congress? He wasn’t used to that, he was inexperienced at that and he needed to put himself out more. Will he have to do more of that this time?
Husic: Yes I think so and I think he knows the big focus now, there is no break or reprieve whatsoever, they’ve got to get to a deal ahead of the 1 January deadline.
Dalley: For viewers’ sake let’s just go over this because we are going to hear this a lot in the next little while. My reading of it is and my understanding of it is, they’ve got to get the US public finances back into some shape and the urgent need to avoid this fiscal cliff, which is something like $600 billion worth of Bush income tax cuts and Obama post-GFC payroll tax cuts that are going to expire and then there will be automatic spending cuts, which will be ticking over from new year’s eve to the first of January.
Chikarovski: There was an agreement by both sides of the house that unless there was an agreement to do otherwise, it would automatically kick in.
Senator Ryan: And it was specifically set up so it could be done after the election, by what is known as the ‘lame duck’ Congress because the new Congress doesn’t take office until January 3, so even those who lost their seat will get a vote on avoiding a fiscal cliff.
Dalley: So Scott, will that mean there might be a bit of vested interest in them playing politics again, ‘saying I don’t care, I’m out of here. I’m going to object to it and be obstreperous’?
Senator Ryan: I think we have to be careful. Take what you said about the Tea Party. The Tea Party is a broad group that was a very spontaneous development. It became more homogenised and directed after Fox News sort of grabbed it and ran with it a bit, but the Tea Party was not a group that arose with particular social concerns, it was sort of a rebellion and a frustration at the lack of restraint in government spending. Now whether or not they had all the knowledge, I’m not trying to put that case, but I think it was relatively well-informed because the people at the tea parties were not people from Wall Street, they were people in pick-up trucks. I happened to see one when I was in Tennessee.
Dalley: So do you think they should have as much influence as they appeared to have in that congressional period?
Senator Ryan: Well they won’t again, I don’t think. Michele Bachman, who was one of their cheerleaders, is struggling to hold her seat in the House of Representatives, and I think that in itself will send a signal. But American politics is not about party leaders and factional bosses. These people are all elected in primaries. So for anyone to say we need to have a different sort of political discussion, the responsibility is to go and convince the people of that. The Democratic and Republican parties cannot choose their candidates, the people do.
Husic: Two things, one longer term. There has always been this view if you look at the history of the US in terms of government spending within their means; you can go back to the 50s and find that. There was always a discomfort about governments exceeding their mandates and then you had, in the context of the GFC, this reaction to the bail-out in terms of assisting the financial sector, and the recoil there. We may disagree on this, but their reluctance to move quickly, in terms of putting in to deal with the GFC at that point in time and ensure the economy didn’t seize, has really cost them in terms of jobs and a high level of persistent unemployment that is starting to come down now.
Dalley: Do you think they will do it this time?
Husic: They have to. It is $16 trillion in debt that they’re looking at, a potential down-grade of their credit setting in 2013 further from what they’ve been at.
Dalley: That’s right. The two ratings agencies, Fitch and Moody’s, have indicated there could well be a ratings down-grade. But if they don’t do it, they’re in danger of slicing four per cent off US GDP next year alone.
Senator Ryan: That’s hotly contested that it will cut GDP by four per cent. The last time there were spending cuts in the US was when Clinton was president, when the Republican congress and he came together with Newt Gingrich and it actually led to the start of the second part of the long boom. It gave people a sense of confidence. Before that you had George Bush Snr actually increase his taxes and break his promise famously. All that led to a much stronger economic environment. Spending trillions of dollars hasn’t worked in America and a lot people actually believe it is time for the alternative, which is actually to go down the path of pulling back on spending, because spending and borrowing hundreds of dollars a month actually isn’t working.
Dalley: Cassandra I’d like to hear from you.
Wilkinson: One of the bigger concerns they have on this, it is not just the fiscal policy, it is actually the regulatory burden. And one of the key issues that didn’t get any air-time in the campaign was that the Obama Administration, post the GFC bail-out package, put in many, many new thousands of additional regulations, some of them environmental regulations, many, many of them small business and financial regulations and more are assumed to be coming now in the second terms as well. There are a lot of think-tanks and economists in the US saying at the moment it is the handbrakes across the economy on entrepreneurs and on the ability to raise capital that is going to be the bigger frustration. In terms of your original question, the US Congress always cuts a deal at the 11th hour, I don’t think that’s a problem, I think it is the fact that Obama – as The Economist and every leading commentator has said – never outlined an agenda for a second term and no one is quite sure what he is going to do.
Chikarovski: It is interesting, I’ve spent a bit of time on the international media, on their blogs and stuff today, looking at their newspapers and blogs over there, and it is really interesting. You sort of look at The New York Times and there are obviously people on there who are bankers and financiers who are just about to slit their wrists and they’re saying exactly that, that their business environment in the United States is just getting worse and worse, both because of the regulation and because the President doesn’t have a real belief in entrepreneurship and the ability of the private sector. Look, he could be a bit jaded after what happened after the GFC. As I was saying, in New York, which is such a Democratic state, but you have all these people saying on The New York Times blog, ‘what are we going to do next?’
Dalley: So what do you think, as the panel here tonight, one day after he has been elected, can he do it? He gave such an extraordinary speech, like he did last time, but there has been a lot of commentary out of the United States that he disappointed people, that he was an academic and not a politician.
Wilkinson: You’ve got to remember he is a person who never had a real job before going into politics.
Dalley: He was a law lecturer, he was an academic, that’s a real job surely Cassandra?
Wilkinson: He taught briefly, very briefly at the university he studied at. Then he went straight into being an organiser, and straight into the state congress and then straight into the federal senate. Really, he has never had to run a P and L, he has never had to hire someone or fire someone, he has never had to create wealth. I think he has shown extraordinary ability to grow on the job. The fact is these last four years, he is probably the only person who has come to the presidency with such little experience, other than George W Bush – at least he was governor for a few years. But I think that when you see the change between the economic policy he tried to implement in the first couple of years, where he was trying to control every aspect of the US economy, he pulled back and changed some of his positions. His early position on Israel and security was quite a change and shift for America and I think frightened a lot of people about global security, but again, he moderated. I think in the second term he is likely to moderate further still.
Husic: I think the other thing is too, just going back to the economics of it all, the fact of the matter is they have to find massive savings. The big debate will be in the weeks ahead. You’ve already got the Republicans saying they have to look at things like Medicaid and Medicare as areas of cuts, whereas economists are saying ‘that’s not really where you are going to make the savings, it will be in defence’. Now what President Obama has been able to do in terms of the withdrawal out of Iraq, the drawdown in Afghanistan and being able to then change the spending. This will be the big focus in the coming weeks and the next 12 months. For them to be able to – I take on board what Cassandra said about him growing in the job – he will recognise too the approach that is required and he will get through that too. But he has really been presented with some massive challenges, in terms of the GFC, Iraq, Afghanistan and then seeing what will happen in the domestic economy, these weren’t small things to deal with.
Wilkinson: Every president faces those challenges. Bill Clinton faced Bosnia, George W Bush faced the, I’m sorry George Bush Snr faced the invasion of Kuwait and George W Bush faced September 11. The ability to rise to extraordinary unforeseen challenges, that’s bread and butter in being president in the United States.
Husic: Nothing in terms of the GFC.
Wilkinson: That’s not right at all.
Husic: If you look at the challenge that it presented in terms of our own economy, the worst impact in 75 years, this was not a small thing. It is great having hindsight now and saying these are challenges any president would have to deal with, but frankly these are massive challenges in terms of international policy and domestic.
Senator Ryan: Do you know what the difference with a great leader is? And you want to bring in Australia to it, that’s a good example. A great leader stops talking about the reason for all their problems by the time four years is up. Barack Obama ran a very good campaign against Congress, very similar to the one Bill Clinton ran in 1996 against Newt Gingrich and that was quite an effective political campaign. But I will tell you the difference between an average leader and a really great one it is when they’re telling the story four years later of how they dealt with the problem not blaming it on the problems they had to face. That’s the concern that we have in a lot of the Western world, western Europe is still talking about the GFC.
Dalley: So Scott you don’t think he is a great leader, is that what you’re saying?
Senator Ryan: Often great presidents are defined by their second term because they know they can’t run again, that has been removed from them, so they are given a degree of freedom to act. I’m not making a judgement about him, but I think this is the moment. This is the moment when Ronald Reagan rose.
Dalley: Just briefly Kerry.
Chikarovski: You don’t want to be having the Republican candidate at the next presidential election as Mitt Romney was saying this time: that is, that the economy is a complete disaster and there has been no decisive action taken. This is Obama’s chance to make sure he hands over a legacy to the Democrat candidate at the next election, which allows a proper and hopefully more confident economy, not how bad it is.
Dalley: We’re going to take a short break on The Nation.
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Welcome back to The Nation, I’m joined on this panel tonight, Ed Husic, Labor MP; Kerry Chikarovski, a former Liberal NSW leader; Cassandra Wilkinson, former Labor adviser; and Liberal Senator Scott Ryan.
We’re going to move on and talk about China because they are also going through their once-in-a-decade leadership transition. Xi Jinping will be announced as the Supreme Leader within a few days, as we understand, while the People’s Congress is meeting right now. Ed Husic, how do you feel about … we know that he has visited the United States a couple of times, what else do we know about what he will be like as a leader and where and how he will move China forward. It is talked about how this generation will be the more Western influenced and clearly he has liked the United States, well he has been there, but also they are the first generation that has been totally brought up under Communism.
Husic: What’s interesting, when you look at the commentary in China people don’t know much about him. He has literally climbed the ladder …
Dalley: He has been the faceless man?
Husic: Well I don’t know anything about that.
Chikarovski: You deflected that very well Ed.
Husic: But at any rate he has managed not to offend anyone and come up through the process. But his actual upbringing itself, in terms of his father falling out with the Chinese leadership and them being effectively exiled, he calls himself the ‘son of the yellow earth’, living in a cave with his folks and working his way back, effectively that’s what you’ve learned in terms of his background. He is someone who others have said they will be able to do business with, he has an external focus. But I want to come back to something else you’ve said, one of the changes that is happening through what is evidenced through the reporting within China, one of the big things is they are recognising the need to be much more responsive toward public opinion. They are nowhere near it in any way, shape, or form.
Dalley: You mean their own public opinion?
Husic: Exactly. They’ve got a lot of pressure within there. The big challenge for China is in the intersection between political reform and the economics, especially in terms of everyone else. What they’re able to get away with in terms of economic reform because their political system doesn’t allow for internal dissent, and then what that does for economies that they trade with, that is a critical issue in the years ahead.
Dalley: What are you smiling about?
Chikarovski: I just think that the contrast between these two great superpowers. We’ve just spent – what was the estimate? – two, three billion dollars electing the American President. We’re going to elect the new Supreme Leader in China and it is going to be elected by, I think, 2500 of the party faithful, one of whom was commenting today in the paper, we’re going to be here the next two or three days discussing motions and we’ll have absolutely no power to vote on anything. I think the contrast between the two – this great democracy, and, you can’t even call China an emerging democracy, that’s the reality. The reality is they are being forced into a whole lot of change because of their economic growth, because of their position within the world, they’re embracing that.
Dalley: You can also say they’ve managed and they’ve controlled that economic growth, they did want it. You’re saying it as if it is forced, as if they have no control.
Chikarovski: The problem they have is because they have this huge expectation domestically, people are wanting to become more affluent, and a lot of them are, they’re all wanting share in that. I have a very strong view, capitalism is probably the best way to get to democracy normally, because people as they become more affluent, they become more educated, they become more informed. Particularly in the age of the media we have now, and in spite of their best attempts, they can’t control all of the media in China, so people are going to be pushing. The people’s democracy will eventually come through, but I don’t think it is going to happen for a long time.
Dalley: Scott, do you think this is going to happen? Some sort of liberalisation in their politics?
Senator Ryan: I think the big challenge that is going to face their leadership is this expectation of economic growth. You also have a great disparity of wealth and experience of economic growth between the coast and the inland areas. One of the driving sources of this anxiety is corruption, and we know it is a significant problem. When there are more dollars available for patronage and those sorts of schemes, then you get more corruption. I sense that will be their main institutional effort over the coming years.
Dalley: Sorry what will be?
Senator Ryan: To attack corruption.
Dalley: What about strengthening some of their legal institutions? We know they are already trying to do that.
Senator Ryan: I think as people get economic affluence, they are going to start to expect more of these liberal institutions, particularly the children who won’t remember poverty. I personally think it happens along an institutional framework, you tend to get courts and other institutions of liberal democracy, and only towards the end do you get people being given a ballot paper. That’s sort of our own history in many ways. I think corruption will be their first one because that’s where I think they’ve got a lot of anxiety and a lot of internal tension.
Dalley: Cassandra, what’s you view about this? Because it is interesting, we look on these leadership transitions in China and think there are going to be big things, but they want it to be step-by-step.
Wilkinson: I think we can be too beguiled by China and I think we can be too impressed by the progress they have made. I think as you nearly said, they are not a democracy, they are a dictatorship, they are a large dictatorship very close to us in our region. What gets forgotten is that there are as many non-Communists in our region as there are Communists. Just because there are a billion Chinese doesn’t mean that we should try to find ways to talk ourselves into getting along with them better all the time, which is what we seem to do. I think it is at times like this when you have a new leader emerging, looking to make a name for themselves, this disgraceful behaviour with fighting Japan over the islands, more tensions over Taiwan, it is really important for Australia not to pretend China is less of a continuing threat to global stability and democracy than it is.
Dalley: So you think it is a continuing threat?
Wilkinson: Yes, I absolution do. And I certainly hope that Obama doesn’t go looking for massive cuts in defence spending, a strong America has got to be the future of this planet for many decades to come, otherwise we are going to be very lonely down here in our corner of the world without them.
Dalley: All right, just to go back to the Australian perspective because there have been many comments made over the last few weeks and months about China, businesspeople like Kerry Stokes and James Packer have come out really strongly and publically said we should be bending over backwards virtually to be friendly and not to treat them as a foe.
Wilkinson: It is outrageous.
Dalley: You’ve saying that is outrageous?
Wilkinson: With all due respect, seeing former people of high standing, like Alexander Downer, working for large state-owned enterprises in China, like Huawei, and coming out and telling everyone to stop worrying about the Communists and start doing business, is unbecoming. The extent to which Australian leaders in business and politics are bending over backwards to try and be friends with the Chinese.
Dalley: So are you saying we shouldn’t be selling our iron ore? Are you going that far?
Wilkinson: No, no. I always believe free trade is a fundamental condition of freedom for communities and the growth of democracy. Trade is absolutely fundamental to the freedom of the Chinese, as well as the prosperity of Australians. I’m just saying don’t try and look at a Communist dictatorship and tell yourself it has got all these green shoots of democracy all over it. This guy is an oligarch, his entire career has been in the state-owned oligopolies of China, I don’t see any indication he has any great democratic tendencies at all.
Dalley: In fact I don’t think there are many democratic green shoots, apart from the internet. As Kerry mentioned, we’ve seen a lot of attempts within China, haven’t we, where they’re trying to get rid of Google, they’re trying to get rid of dissidents.
Senator Ryan: I profoundly disagree with the comments by those business leaders, but that’s why we have elected politicians. I don’t think we’re having this debate about people who say we should be trading more, or we should be more wary, this is actually a healthy sign of debate. Our relationship with China has deepened to the extent that we can have these debates. I was in Taiwan recently. Taiwan’s relationship with China is the best it has been. They’re in a very different situation to Australia being a fair bit closer with a difficult history, their view is you park the very difficult issues and find areas to cooperate on. That doesn’t mean, by any stretch, we put aside our values. Because I don’t think anyone in Australian politics would pretend that the People’s Republic of China is in any way a democracy or has any respect for liberal human rights in a way we think a nation should.
Dalley: All right, if that’s the case, Ed, how do you feel about James Packer and Kerry Stokes saying very publically that we should not treat China as a foe, we should actually go out of our way to show we are very much their friends?
Husic: Well given we’re in a democracy, we can agree to disagree on those views. I don’t agree with what James Packer and Kerry Stokes said and in a democracy it is a great thing we can disagree in that way. I do think that there is a balancing act between basically, also picking up on something Cass said, that trade does open doors between nations and allow dialogue to happen, recognising they have a very long way to go in terms of embracing democracy. I think their failure to embrace democracy, not only does it affect their own citizens, but it has an impact also on us, as I was saying earlier, where they are able to achieve things economically that we as a nation wouldn’t because we have a range of stakeholder interests and demands that we need to balance in making sure it is not all economy at the expense of everyday communities.
Senator Ryan: But Ed, that’s also a limitation.
Husic: I was just going to make this point. I’m not prone to quoting former prime minister Howard, but he does say, talking about the complex relationships between the US, China and ourselves, saying that we share a lot in common with the US, but that we shouldn’t have to get involved internationally between the two. That we have a way to be able to manage these issues within our region as well.
Dalley: I think Paul Keating said something along those lines too. Cassandra, I’d just like to – because we have moved on to the American, how they are going to take the impact of China’s change in leadership. Mitt Romney was talking very tough, now he hasn’t got the job, but Barack Obama we know, has done a pivot – as they like to call it – from the Middle East to Asia. There is this tension, they are now basing troops …
Wilkinson: He did tell us in the debate that he’d freed Egypt, which I thought was quite an astounding claim. The history of 20th century security shows that when the West turns a blind eye to trouble around the world, things get worst. When the French and British ran out of Suez, the Middle East got less safe, and when it took the US and Europe overly long to be dragged into the former Yugoslavia breaking up, the whole world got less safe. At the moment, seeing our leaders in politics and business trying to convince us it is time for everyone to stop spending money on defence and start learning to get along, we have real continuing security problems on this planet and it is worrying we have people trying to pretend we don’t.
Dalley: All right, Kerry Chikarovski, how does Australia manage this relationship? It is clear that there are tensions between the United States and China and Cassandra would say that’s probably a good thing. But we do depend on them for a lot of trade and we’re going to we’re told, we just had the big White Paper on the Asian century.
Chikarovski: We are focussing a lot of attention onto Asia.
Dalley: How do we manage that so that we say ‘yes, we’ll trade with you, thank you very much, but we have to be careful of our relationship with the Americans too’?
Chikarovski: Well we had a recent example when we allowed more American troops to come into the northern part of the country and we were apparently taken to task for that by the Chinese diplomats in Canberra who made it clear they were unhappy.
Wilkinson: If I may say, I don’t think we can use the words Asian and Chinese interchangeably like this. When we had that episode, as you say, with putting more American interests in northern Australia, non-Chinese Asian countries, many of them, support us standing with the democratic countries of the world. There are as many non-Communists in Asia as there are Communists.
Senator Ryan: And the Communists don’t get asked whether they’re Communists or not.
Chikarovski: So the point is that we will be positioned not quite in the middle, but certainly so we will have to make some choices. In the making of those choices we will be having to take into account two very different sets of interests: in the one set of interests clearly will be our economic interests and the other set of interests, as Cassandra has outlined, they’re our security interests.
Senator Ryan: I disagree. I don’t think there is a choice here, we deal with people on our own terms. John Howard famously said you don’t have to give up a friend to make a friend.
Chikarovski: I didn’t say that Scott, I said we’re looking at two different sets of interests that we have to balance and that I think is what we need to be doing. We need to look at how we balance those interests and maintain the two relationships and I agree with you, it doesn’t necessarily mean we are going to have to exclude one over the other. It would be insane if we did that.
Senator Ryan: I think we under-estimate how much China needs us. We are a reliable supplier of commodities in very close proximity and they need access to energy and commodities in a way they can’t instantly get access in many other parts of the world.
Husic: They also understand our relationship with the US. Just on a point, quickly, that Kerry was making, I represent an electorate where eight per cent of the people there are from the Philippines and they are very concerned about territorial issues occurring that you touched on earlier. So it is a very complex situation in the region, as indicated earlier, but we do have a valuable role to play in terms of bringing parties closer together.
Dalley: Can we manage the relationship between both those superpowers?
Chikarovski: We have to agree that we can’t be friends to everyone on all occasions. That’s the simplest way of putting it. There are times when we will have to look at our national interest and how that reflects …
Dalley: Well we’ve often backed the United States so are we going to do that over China and over our trade links?
Chikarovski: I think it will be a case-by-case basis. One of the reasons we’re sitting on the [United Nations] Security Council now is we’re going to take a broader view of our world positioning.
Senator Ryan: Our national interest is in liberal democracies, the rule of law, free and open trading on the oceans and links that are historic. There is only one country that has been on the battlefield every time the Americans have in the 20th century and that was Australia. Those links are cultural, there is an affinity there, but it is not a matter of choosing between one or the other. I would say the relationship with the United States is on a completely different plane.
Dalley: Far too much agreement in that session, we will have to get to Australian politics to get some disagreement. We’re going to have a short break.
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Dalley: Welcome back to The Nation, I’m Helen Dalley and I’m joined on the panel tonight by Ed Husic, Labor MP; Kerry Chikarovski, a former Liberal NSW leader; Cassandra Wilkinson, former Labor adviser; and Liberal Senator Scott Ryan. We’re going to talk a few issues Australian. Now Treasury got itself in all sorts trouble with your side of politics Scott Ryan and Kerry Chikarovski, to the point where the Treasury secretary had to come out and defend his department. We know it was leaked, I understand it, by Wayne Swan’s office, not by Treasury, they’ve said there was no breach there. It ended up saying that the costings of several policies would cost business some $17 billion over four years, or about $4 billion in one year. Kerry Chikarovski, why shouldn’t the Treasury cost, for the public, any policy that is put up by an alternative government?
Chikarovski: The first thing you’re doing, in doing that, is dragging Treasury into the politics of it all and that is completely inappropriate. I was talking to Alexander Downer last night and he said when they were in government, there was a suggestion they should do something similar, but the Treasury officials made it perfectly clear that it would be completely inappropriate because of the politics.
Dalley: But there have been several instances where it has been detailed in the media of it being done under Peter Costello, the same thing.
Chikarovski: Well Alexander said last night that on his watch, when he was involved, he cannot remember any instance of it happening.
Senator Ryan: And Peter Costello outlined the work that had been alleged to be done by Treasury had actually been done in his office, by his personal staff. This is not a Treasury issue as much as it is a Treasurer issue, in Wayne Swan. He asked a question that was going to come back with an answer that he wanted, because he didn’t want to ask all the questions. He didn’t ask the impact of getting rid of the carbon tax, he didn’t ask the impact of getting rid of the mining tax, he didn’t ask them the cost …
Dalley: We’ve been through that for probably two years Scott, these are new issues the public hasn’t been able to judge a policy that is probably going to go to an election in a year.
Senator Ryan: He asked Treasury to cost a selection of things he said the Opposition was going to do and didn’t actually complete the full policy. Then he handed over the Treasury Minute. That has never been done before. We’ve got a Treasurer who was out on his own budget last year by $24.5 billion, a Treasurer who, for four years, has been out on tax receipts by $40 billion, $23 billion over the past two years, he is just trying deflect attention from his own failure to even restate a commitment to a budget surplus, which he brought out in MYEFO only two weeks ago.
Husic: If revenue situations change and you get less revenue than you predicted and that means you’re out on your costings, you shouldn’t, with all respect, suggest he has been out because he miscalculated and got the figures wrong when circumstances change. I think what is important here is context. You went to an election where your promises were under-funded by $11 billion, you went to an election in that circumstance, wouldn’t follow the Charter of Budget Honesty, used an accounting firm that got wrapped over the knuckles for the way in which it handled that issue, won’t support the Parliamentary Budget Office …
Senator Ryan: We voted for it.
Husic: … Have come up with a $70 billion figure for cuts, which according to Laurie Oakes in February was a dud figure to trap people who were leaking within your ERC [Expenditure Review Committee], and now won’t put out your policies and demonstrate what you’re going to do, and then get uptight that we use Treasury to cost what we know. Then get uptight …
Senator Ryan: Completely untrue. We supported the Parliamentary Budget Office, we’ve said we’re going to use it.
Husic: Can I tell you Senator, I was in the House of Reps when you squirmed, avoided, voted against getting involved in the PBO, if you’re saying now the Coalition is supporting the PBO and will put your costings through it, hallelujah.
Senator Ryan: Joe Hockey has said we will be using the PBO.
Husic: Don’t complain that when you won’t put out your figures, you won’t put out your costings, you won’t give any detail, and then we do something that your side of politics did regularly in office, do not complain.
Dalley: Scott Ryan said it was never done before …
Chikarovski: As I said, Alexander said exactly the same thing last night.
Dalley: You are saying you have evidence it was done under the former Howard-Costello era?
Husic: The former Liberal administration had regularly used Treasury to cost what we were trying to do from Opposition. I have no issue whatsoever in Treasury doing that again in the future because I think that we are accountable through the budget, through MYEFO in terms of what we do and the other side of politics, there are a whole set of mechanisms put in place to do that, they didn’t do it during the election, they haven’t done it mid-term and they won’t do it at the next election.
Senator Ryan: You have changed the budget constantly. When you say the tax receipts were under-estimated or over-estimated in Wayne Swan’s case, then explain why the only year you got them close to being correct in the budget estimates was the election year so it looked like you had a surplus in the forward estimates? Every year under the Howard-Costello government you expected some variation in tax receipts, but under us we always under-estimated to make sure it was a good surprise for the Australian people.
Dalley: That’s because you had a great boom coming at you.
Senator Ryan: No hang on, commodity prices are higher, volumes are higher, the terms of trade are higher now than they were at any point under the Howard Government.
Husic: Commodity prices are weakening.
Senator Ryan: The terms of trade are better because of volumes. You have constantly over-estimated tax receipts by $40 billion. One year alone, Wayne Swan underestimated the budget deficit by $24 billion between May this year and May last year.
Dalley: Cassandra, do you think that is the biggest sin of Wayne Swan?
Wilkinson: Can I say, what isn’t being discussed at the moment is what a waste of time it is. The problem with Treasury doing estimates of policy proposals is that every policy is based on assumptions, it is based on a theory of a problem. So for instance, you might say, I’m going to cut business taxes, I expect that to result in higher employment, I’m going to make savings in the provision of the dole. Others might say, well that trick of economics is nonsense, it is not going to make you the savings in welfare. Treasury officials, no matter how many times they run the numbers, can’t answer the question that’s about a philosophical policy or economic theory of an approach. That’s why politicians and Treasury are not supposed to do these exercises together. The politician has to go to the public, explain things better.
Dalley: Don’t you think they should have to put a figure on their policy?
Wilkinson: The point is the figures play out differently depending on whose assumption about the economy’s response to those measures is correct.
Senator Ryan: Cassandra there is an important point here, they’re called second-round effects, in America it is called dynamic scoring. To be fair, in Australia, there are very few examples of if a business tax cut will cost the budget this much, what the impact would be on the dole and jobs. We generally don’t do that. I’ve asked those questions regularly in estimates, those second round effects often aren’t used at the federal level.
Wilkinson: Well it’s nice for you that you’ve been in estimates, I was chief-of-staff to a treasurer and I actually know what goes on when Treasury prepares costing of election promises.
Senator Ryan: Well at the Commonwealth level, it is different.
Wilkinson: The fact is that the numbers change depending on what your policy structures are and that is why accountants can’t tell you what the results will be. That is something that public policy experts have to argue out in public.
Dalley: We’re going to move on because we’re going to run out of time. I do want to get to leadership issues on both sides with both parties. Ed Husic, Kevin Rudd has done a media blitz, I don’t think you could call it anything else, this week. He’s been on our network a couple of times, he co-hosted The Project on Channel 10 for an hour, as I understand it, on Monday night. It can’t be a coincidence that he does a media blitz when the Prime Minister is out of the country?
Husic: Well he is damned if he does and damned if he doesn’t. If he was just sitting here doing nothing, he would be criticised for occupying space and not doing his role as an MP.
Dalley: Sorry that doesn’t quite make sense, he is a backbencher, so shouldn’t he be sitting on the backbench?
Husic: If he is out in the public domain and able to assist, particularly with campaigns on the ground, he is also criticised for that. If he says nothing or does something either way someone is going to find fault with him.
Dalley: Going out on the campaign and helping someone is quite different to doing very high profile media every day the Prime Minister is out of the country.
Husic: He has done heaps of high profile media over the past few weeks. I don’t see what the difference is, people just want to pick that slice out this week and go for it.
Dalley: Do you think any reasonable person thinks he is not pushing his own credentials, either with the caucus or with the public?
Husic: He is out there doing what he should be doing, which is helping the Labor cause and he has been doing that over the last few weeks in particular. He has been out in the electorate I represent and he is a fantastic person to campaign with and be able to boost our support. Frankly he needs to be used more and he wasted just sitting there doing nothing.
Dalley: You’re all going to get a say because you’ve all got about 30 seconds. Kerry Chikarovski what do you think about this and of course, on your side of politics, the Galaxy Poll came out this week saying Malcolm Turnbull is so much more popular than your leader?
Chikarovski: I always refer to the front page of The Bulletin, where they had a photo of John Howard on 13 per cent saying ‘why does this man bother?’ The reality is opposition leaders are inevitable unpopular. The reason they are is they’re out there complaining all the time about what the government does. Nick Greiner was called ‘whiner Greiner’ before he got elected. I go back to something that was said earlier, and I can’t actually remember who said it, about people growing into jobs. I’m looking to watching Tony Abbott grow into a fantastic prime minister of this country.
Dalley: Cassandra Wilkinson do you have a view about is Kevin Rudd trying to push for the leadership, he said he won’t challenge.
Wilkinson: Look, fish gotta swim and Kevin gotta hug people and shake people’s hands. I’m more interested in Julia growing into her job, which I think she is doing quite nicely.
Senator Ryan: I think Ed’s contortions there reflect that Kevin tends to equate the Labor Party’s interests with his own. I’m not criticising Ed for not going and hosting The Project, I think it is just a bit of an excuse that he is just ‘doing what any normal MP does’.
Dalley: What about on your side of politics, is there any way that the Liberal Party might panic and go for a new leader?
Senator Ryan: Tony has been the most effective Opposition Leader this country has seen. He has forced Labor to knife its own person, he brought a first-term government to a hung parliament for the first time. Tony will go to the next election as our leader, and I’m confident become a great prime minister.
Wilkinson: Kevin was such a great opposition leader, he is still doing it now, beat that.
Dalley: Ladies and gentlemen, we will have to call it a program tonight.