MEET THE PRESS INTERVIEWS WITH MINISTER FOR FAMILIES AND COMMUNITY SERVICES JENNY MACKLIN AND HELEN DENT FROM THE AUSTRALIAN SHAREHOLDERS' ASSOCIATION September 28th 2008 DISCUSSIONS ABOUT $700 BILLION US BAIL-OUT, $4 BILLION AUSTRALIAN BAIL-OUT, PENSION INCREASES, CORPORATE TRANSPARENCY MEET THE PRESS PRESENTER DEBORAH KNIGHT: Good morning and welcome to Meet the Press. It's been a week of mixed fortunes for the Federal Government, finally getting its luxury car tax hike through the Senate, but forced to go back to the drawing board on the medicare surcharge bill. Most heat was generated by a bold and rare move from the Opposition, introducing and passing a bill in the Senate to increase the single pension by $30 a week. OPPOSITION LEADER MALCOLM TURNBULL (Tuesday): They are asking Australian pensioners to accept a payment, a pension, that they say, in their arrogance, they cannot live on, but they will do nothing about. Here is the bill. Here is the answer. This can fix it. MINISTER FOR FAMILY AND COMMUNITY SERVICES JENNY MACKLIN (Tuesday): The reason we will not be introducing anything like the bill they're proposing is because it is so, so extraordinary in the way it sets pensioner against pensioner. What it does it ignore the needs of 2 million pensioners. DEBORAH KNIGHT: The Minister for Family and Community Services, Jenny Macklin, is our guest this morning. And later - the Australian Shareholders' Association joins us, to look at the impact of the Wall Street meltdown. But first, a look at what the papers are reporting this Sunday September 28. The 'Sun-Herald' in Sydney carries the headline "Interest rate relief, $80 a month." The Government's $4 billion bail-out to boost competition in the lending market could see savings on the average mortgage, but it may take months for the benefits to flow through. The Sunday 'Age' in Melbourne headlines the "US bailout battle heads to a showdown." American Congressional leaders say they're expecting a deal on the $700 billion financial rescue package this weekend, with staff on Capitol Hill working through the night to break the deadlock. REPUBLICAN SENATOR ARLEN SPECTER: It's a gigantic figure and the public response understandably is "Why?" DEBORAH KNIGHT: The package aims to unstick credit markets, without risking taxpayers money. Sydney's 'Sunday Telegraph' reports, "Parents are failing Australian children." One in five mothers and fathers are unfit to be parents, because they lack the means or life skills. And Brisbane's 'Sunday Mail' headlines, "Actor Paul Newman has died of cancer." The 83-year-old Oscar winner, who personified on-screen cool, lost his long battle with the disease, surrounded by his family and close friends. Many ministers admit they could not live on the single pension, but the Federal Government continues to defend its decision to delay any immediate increase. That task lies primarily with Family and Community Services Minister Jenny Macklin. Welcome back to the program. JENNY MACKLIN: Good to be with you. DEBORAH KNIGHT: Now, there's no denying that pensioners are doing it tough and that the current rate is simply not enough for many to live on. Could you live on $270 a week? JENNY MACKLIN: I've made it very clear that we understand just how difficult it is and that's why, in our first Budget, we significantly increased the utilities allowance. When we came into government just nine months ago, the utilities allowance was only $107 paid to pensioners. It's now $500 as a result of our Budget moves. DEBORAH KNIGHT: But could you live on $270 a week, Minister? JENNY MACKLIN: Well, I've made it clear how difficult it is and we do understand how difficult it is and that's why we made the improvements that we did straight away on coming to office. And in this fortnight, what that's actually going to actually deliver to pensioners into their bank accounts is the third quarterly increase in that utilities allowance and in this quarter, because it's already been indexed, it will be $128 into the accounts of pensioners. Now, we know that this is just a start. We're also adding to the telephone allowance. That's gone up as well, but we want to get this right. DEBORAH KNIGHT: OK, well, you're waiting on a review, obviously, into the pension rate. Why not bring in an interim payment in the meantime? Say, a $1,000 bonus? You say it is tough. Surely that would help. JENNY MACKLIN: Well, we also - while we're on bonuses - decided in the Budget to pay a $500 bonus and that was paid at the end of June. DEBORAH KNIGHT: Would you consider, though, an interim payment, though, for pensioners now? Because obviously those payments have been made and pensioners appreciate that, but they still are doing it tough. Would a $1,000 bonus payment, say, or some form of interim payment, be considered before the next Budget? JENNY MACKLIN: Well, they are doing it tough and that's why we made the decisions we did. Just so people are aware, that was an investment of $7.5 billion in the Budget. So in our first Budget, we increased the funding to pensioners of $7.5 billion. I'll just say, for the first time also, extended the utilities allowance to carers on and those on the disability support pension, recognising that they're doing it tough as well. DEBORAH KNIGHT: But pensioners are looking to the here and now and to the future. JENNY MACKLIN: They are. DEBORAH KNIGHT: What can you tell them? Will they save any payments prior to the next Budget? JENNY MACKLIN: They'll continue to receive the increased utilities allowance. So they're getting the quarterly increase in this fortnight and they'll get the next in December. DEBORAH KNIGHT: So nothing on top of what's already been promised? JENNY MACKLIN: These are significant increases, remember. I'm not for a minute saying that people aren't struggling to make ends meet, but we have in our first Budget made a good first step. Many, many pensioners also recognise how important it is to get this right for the long term. DEBORAH KNIGHT: Now, the Opposition is obviously pushing for a $30 a week increase in the single pension. This is how one of their senators put it. NATIONALS SENATE LEADER BARNABY JOYCE (Tuesday): There is nothing to be lost by showing a little bit of compassion now and, you know, adjusting it later on and if we need more later on, let's do more later on, but to say, "That's not enough so we're going to give you nothing," doesn't seem to make any sense. DEBORAH KNIGHT: You really do seem to be losing this argument in the community. How soon after the review is brought down will you look at increasing the pension? JENNY MACKLIN: Well, just on the issue of the Opposition first, given you've just given a clip from someone in the Opposition, we find from the media today that the new Leader of the Opposition actually opposed this proposal to have an increase in the pension in his own Shadow Cabinet and we also know that the last Howard cabinet also opposed an increase in the pension. So I think we should put aside the hypocrisy from the Opposition. When they had the chance, in government, to do something about the pension, they did nothing. What we've done in office is extend the utilities allowance, extend the telephone allowance, pay the bonuses, and now we're doing a proper inquiry to get this right. DEBORAH KNIGHT: OK. Well, another review is under way into another issue in which the community wants immediate action, the issue of paid maternity leave. The Productivity Commission's interim report is due out tomorrow. What should we expect? JENNY MACKLIN: Well, one of the great things about the Productivity Commission inquiry has been the enormous community debate and I'd encourage everybody, once we see the report tomorrow, to have a look at the draft recommendations. It is a draft. It is going to now be out for public comment until, I think, the middle of November, so please, everyone, read the report, get on top of the recommendations and come back to the Productivity Commission with your views. DEBORAH KNIGHT: Can you give us any indication on what the recommendations will be? JENNY MACKLIN: I think it's important to wait till tomorrow but it's something that I personally feel very strongly about. I think it's so critical for mothers to have time to recover after the birth, for parents, mums and dads, to have time to bond with their newborn babies. We know how critical that is for the baby and also very, very important for the new family. I'm a great advocate. Let's see the report tomorrow, but engage in the debate over the next couple of months. DEBORAH KNIGHT: And will taxpayers foot the entire bill for any paid maternity scheme or will business also be expected to pay out? JENNY MACKLIN: Well, in the different recommendations that came from various groups leading up to the Productivity Commission's report, different views have been put. There'll be suggestions in the Productivity Commission's report tomorrow. But people still have the opportunity to put alternative views and then, of course, the Government will respond, once we get the Productivity Commission review report in February. We'll wait eagerly for the internal report tomorrow. When we return with the panel - what came out of the Prime Minister's controversial trip to the Big Apple. And the 6-point faux pas of the week, according to the Treasurer, went to Malcolm Turnbull, who brought birds into the equation, when he named the Roosters as an AFL team. TREASURER WAYNE SWAN (Tuesday): There are no Roosters in the AFL Grand Final, Mr Speaker. There've been plenty of swans. There've been plenty of hawks. But there are no Roosters, Mr Speaker. Mr Speaker, I'd, you know, I wouldn't be surprised if he was out there next congratulating Ricky Ponting on winning the Brownlow Medal. (LAUGHTER) DEBORAH KNIGHT: You're on Meet the Press with Community Services Minister, Jenny Macklin. Welcome to our panel, Louise Dodson from the 'Financial Review'. Good morning to you. And Glenn Milne from the 'Sunday Telegraph'. Good morning, Glenn. GLENN MILNE, NEWS LTD: Morning. DEBORAH KNIGHT: The Prime Minister has now jetted back into Australia, but the Opposition made sure his three days in New York, at the United Nations General Assembly, were the most controversial of his 10 overseas trips so far this year. It didn't miss an opportunity in Parliament to press home points like this. LIBERAL MP NOLA MARINO (Wednesday): If it's good enough for the Prime Minister to go overseas and announce an international commission on nuclear disarmament, what would prevent the Prime Minister from making an announcement in New York to increase the single pension by $30 a week? GLENN MILNE: Jenny Macklin, the centrepiece of Kevin Rudd's trip to New York was, of course, his speech to the UN General Assembly, but that assembly was near empty. What was the point? JENNY MACKLIN: I think, Glenn, you understand and, of course, all of your listeners understand, that we are in a very, very difficult international financial situation. It was a critical time for the Prime Minister to be in New York, to have the opportunity to speak with world leaders, financial leaders, and really to make sure that he was able to get the best understanding possible of what's happening, especially in the United States, but also in Europe, so that we can make sure we're as well informed as possible. GLENN MILNE: But what's the point when no-one's listening? Those pictures from simply embarrassing, weren't they? JENNY MACKLIN: As you know, he an enormous number of meetings with financial leaders, banking people, other government leaders. These critical meetings are going to mean that we're much better placed to understand and to respond to the financial crisis to protect Australian jobs and to make sure that our mortgage-holders are protected. GLENN MILNE: OK, but he's got to plan for the financial crisis. He's got a plan for the UN. He's got a plan for the region. But he has no plan for pensioners, for example. Has he taken his eye off the domestic ball, do you think? JENNY MACKLIN: Well, that's not right. As I was saying to Deborah earlier, in our first Budget, only six months after we were elected, we delivered a significant increase to pensioners, an increase in the utilities allowance, of just under $400. We paid the bonuses to pensioners at the end of June. And if you add up all that we did for pensioners in our first Budget, it actually amounts to around $20 a week. Now, we know there's more to be done. We do know there's more to be done and that's why we're doing this major inquiry, which was a recommendation from the Senate. LOUISE DODSON, 'AUSTRALIAN FINANCIAL REVIEW': Jenny, you attacked the Opposition for not including carers in their proposals. Will you guarantee, when the report is out, that carers and all pensioners will be covered by an increase? JENNY MACKLIN: Well, that's the thing that unfortunately, the Opposition don't seem to understand about our pensions system, that a person who's a carer gets paid at the same rate as a single aged pensioner and we do want to make sure that carers and those on the disability support pension, who are also doing it tough, get looked after. There were 2 million pensioners who missed out with the Opposition's, you'd have to say... GLENN MILNE: So they won't miss out under you? That's the implication? LOUISE DODSON: So they'll all get an increase? JENNY MACKLIN: We know we have to get this right for all pensioners. GLENN MILNE: So does that mean all pensioners will get an increase? JENNY MACKLIN: We've given an increase already to all pensioners. We extended the utilities allowance to carers... LOUISE DODSON: But in the Harmer review? JENNY MACKLIN: Of course, we'll wait to get the Harmer review. But you can hear from what I'm saying that we do understand that aged pensioners, carers, people on the disability support pension, are also doing it tough. LOUISE DODSON: Minister, on this question of reviews, you know, do you think the Government is being paralysed - there's certainly a feeling in the community that the Government is putting off decisions for all these reviews? Is there anything you can do to speed them up? Speed up the Harmer Review, for instance? JENNY MACKLIN: Once again, I think you can see that we were determined to act in our first Budget. We didn't leave out 2 million pensioners in the way that that the Opposition proposed to do. We made sure that aged pensioners, carers, people on the disability support pension, got some interim help while we do a fundamental review of the pensions system, which was a recommendation, a bipartisan recommendation, from the Senate that came down in March this year. GLENN MILNE: Minister, could we turn now to the Government's mortgage package, the $4 billion package brought down by Wayne Swan at the end of the week. That should reduce pressure on interest rates, but at the same time, Mr Swan is now warning this could eat into the surplus, which would put upward pressure on interest rates. Which way will it go, do you think? JENNY MACKLIN: It's not for us to speculate on which way interest rates are going to go. What's important is that the Treasurer has acted to make sure that competition in the mortgage lending market is as strong as possible. That's what home-loaners expect us to do and they also expect us to make sure that we have a strong Budget surplus. And I just say... GLENN MILNE: I was going to say. Do you think the international financial crisis meanings we're looking at a tough Budget come May? JENNY MACKLIN: I think it's important that we behave responsibly in our economic policy, that we're very careful with how we spend the taxpayers' money, and that's why it is extraordinary the way the Opposition is behaving in the Senate, just vandalising the Budget surplus. DEBORAH KNIGHT: Does the economic situation mean we should expect less from the Government in terms of increases to the pension, in terms of a paid maternity scheme? JENNY MACKLIN: It just means we have to be very careful. We have to make sure we keep a very weather eye on spending so we don't put upward pressure on interest rates, so we don't put upward pressure on inflation, and at the same time deliver to those people in the community who really need it, like pensioners. LOUISE DODSON: On the Opposition, Malcolm Turnbull seems to have changed the dynamics in the Parliament and the Government has been accusing him of being a rich man and politics of energy, etcetera. Has it changed things? That looked a little bit desperate, you know, accusing him of wealth. JENNY MACKLIN: I think - Glenn's piece in the papers this morning demonstrates that there's still shocking unrest inside the Liberal Party. They're plainly providing lots of information about which way the new Leader of the Opposition actually voted in the Shadow Cabinet. Apparently, he voted against the $30 political play that they've just gone through. He doesn't believe in increasing the pension. He slapped their Shadow Minister for Ageing down just after the Budget and said that, as far as he was concerned, there would be no increase in the base rate of the pension, so I don't think pensioners can rely on Malcolm Turnbull. DEBORAH KNIGHT: Jenny Macklin, we are out of time, I'm afraid. Thanks for joining us again on Meet the Press. JENNY MACKLIN: Thank you. DEBORAH KNIGHT: Up next - how hard will the Wall Street crash hit us here at home? Helen Dent from the Australian Shareholders' Association joins us. And Brett Lethbridge on the 'Courier Mail's website sees the arrival of Malcolm Turnbull as a big challenge for Kevin Rudd, who looks eerily like the robot character, Wally DEBORAH KNIGHT: You're on Meet the Press. The world's largest economy is in a mess, with the ructions on Wall Street reverberating around the world. The fiscal crisis prompted the United States Government to announce a $700 billion bail-out plan to try to stem the system. And our stock market hasn't escaped the roller-coaster ride. TREASURER WAYNE SWAN (Wednesday): The impact of these events in the United States and on global markets is one that has been quite profound. The flow-on impacts of that in terms of world growth are yet to be seen. DEBORAH KNIGHT: Helen Dent joins us from the Australian Shareholders' Association. Welcome to the program. HELEN DENT, AUSTRALIAN SHAREHOLDERS’ ASSOCIATION: Thank you. DEBORAH KNIGHT: How exposed are we here in Australia to the global economic situation? HELEN DENT: Well, there's no denying that we do live in a global world and we're certainly very badly affected, potentially very badly affected, some people more than others. There's a lot of fear, there's certainly a lot of anger and a great deal of mistrust amongst shareholders of companies that have had their share price trashed. We've put a lot of trust in terms of our money into these companies and with what's happening on Wall Street and what's potentially happening this weekend, we won't escape those effects and what could be in store for investors - well, who knows? We've seen a lot of value go out of the market. A lot of the companies that said they were doing all the right things weren't. LOUISE DODSON: On that question, Helen Dent, is this the time to really push for greater information for shareholders? Greater transparency? And also perhaps some new rules for excessive executive bonuses? HELEN DENT: Well, it's often the case that every time something goes wrong, we Australians say, "the Government should do something," and more often than not, it's also the case that if you regulate, for example - you can't regulate against greed. You can try to regulate against dishonesty. You certainly can't regulate for integrity. So it's not necessarily the case that you can re-regulate or change the sorts of regulations that we have in order to get through this problem. There's not - there's no easy answer. DEBORAH KNIGHT: So it should be up to shareholders to pressure rather than the Government to intervene when it comes to executive salaries? HELEN DENT: Well, it's certainly up to shareholders and that's one of the main things that the Australian Shareholders' Association attempts to do, which is to pressure companies into ensuring that the way they remunerate their executives is in line with the interests of their owners, the shareholders, and all those pesky little things that the Australian Shareholders' Association has begun going on about in terms of corporate governance have actually meant quite a lot, because you see the companies that have opaque and extremely difficult-to-understand remuneration packages, who do not like to have their shareholders in the know, who do not like their shareholders to have a transparent capacity to know what they're doing. LOUISE DODSON: So there shouldn't even be a review, perhaps? HELEN DENT: Oh, I'm not saying there shouldn't be a review. What I'm saying is we shouldn't depend on being able to write on black letter law to fix the problems. GLENN MILNE: On that point, should bad companies just be allowed to fail? Should the market operate? HELEN DENT: That's what should normally happen. We're looking at the situation now, we're looking at approaching $1 trillion being given to companies that have, in effect, failed. GLENN MILNE: A reward for failure. HELEN DENT: We're rewarding them for failure. Not only that, there are a lot of companies that haven't been profligate, that haven't been dishonest, that do have integrity. They're all operating there and at the very time when they should be getting the rewards, when they should be able to pick their way through the toxic mess and pick up the value that is there, we've got the spectre of the United States turning round and saying, "Oh, no, we're not going to reward you people. We're going to bring taxpayers' money in to give it to the same guy who is got us in this mess." GLENN MILNE: On the question of taxpayers - because they're bearing the brunt of this, overseas particularly. But for Australian taxpayers, ordinary Australians, who much wealth do you estimate they've lost in the last year when you take into account, housing prices, share prices, assets, superannuation? HELEN DENT: Look, it's not really possible to answer that. It depends on the situations of the individuals. But, say, if you're a person who's retired and you've got, effectively, a a fixed amount of wealth to last you for the rest of your life, you've certainly lost a fair amount, whereas if you're younger, you've still got another 10, 20, 30 years to go before you retire, now is the time when you could be building your wealth for the future, when the prices really are low. But it gets back to the same issue of the fundamentals. You've got to work out what's still going to be in existence and invest in that, but in terms of how much, on average, people have lost, it's impossible to say other than that there's some very significant losses. DEBORAH KNIGHT: And just very quickly, should people be considering moving their funds in super, particularly, out of super into cash? Out of shares into cash? HELEN DENT: Again, it depends on what their situation is. If it's someone who is not in the accumulation phase, you perhaps - if it was me - I can't give advice, the ASA doesn't have a licence - but if it was me, I'd be very firmly sitting on my hands because you'd be selling straight into the worst possible market. DEBORAH KNIGHT: Helen Dent, we're out of time, I'm afraid, as always. Helen Dent from the Australian Shareholders' Association, thank you for joining us. Thanks to Louise Dodson and Glenn Milne. Good morning.
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