ABC 891

SUBJECTS: Interest rates; Labor’s factional crisis

E&OE………………

(Greetings omitted)

Presenter: Now, should we start with interest rates? Mark Butler, interest rates this low, at record lows. Is that actually a sign of a sick economy?

Butler: Well, I think it’s a great decision for Australian families. It’s also a great decision for many small businesses that hold mortgages and for the retail industry going into Christmas. There’s no doubt from a statement of the reserve bank that there are still pretty strong headwinds for the economy because of what’s happening in Europe, because of what’s happening in the US and because of what’s happening with commodity prices. But I think, beyond that, the statement by the RBA governor shows that this is still a strong economy, growing at a round trend, with good prospects for recovery in the housing market and in consumer spending. So, I think it’s a win-win. We’ve still got an economy that is the envy of the world, but interest rates that mean a family with a mortgage of $300,000, for example, are paying about $5000 less per year or $100 less per week than they were when we came to government with interest rates where the Howard government left them.

Presenter: I forget exactly what quote was but Treasurer Wayne Swan was saying, you know, you’d be a pretty miserable person if you didn’t welcome this as a gift at Christmas time. What about the people on fixed incomes or investments, investments waiting for return on their money. Some of them have lost, I think one figure on the news last night, one example was $5000 has been lost in interest over the last 18 months; an annual cut to your income of $5000.

Butler: Look, as Minister for Ageing I come across people are in this position fairly often, every day. Self funded retirees are hurting at the moment because of what’s been happening over the last few years in share markets. Their investments, their superannuation is not performing as well as we’d got used to over 10 or 20 years. And if they have money in fixed term accounts with banks they’ve been copping the downside of interest rate reductions. Now I think it’s important that we bear that in mind as a government and as a community. It’s very good news for households with mortgages, for businesses with mortgages and for the retail industry, but there are groups in the community, particularly self-funded retirees, for whom this is not the best news.

Presenter: And Chris Pyne, John Howard for years made a virtue out of low interest rates, saying you always get a lower interest rate regime under a Coalition government, you must welcome this.

Pyne: Well David, of course, it is a two-edged sword. It’s not good for self-funded retirees and those who rely on interest rates being higher for their income. It is good for mortgagees, people like myself and Carolyn and our children, we’ll have a little bit more money in our pockets and mortgagees across Australia will be better off because of low interest rates, but it also confirms what everyone in business, small business knows and that is that the economy is very sluggish. Unemployment is rising, inflation is rising, the Reserve Bank is trying to stimulate the economy. The Government’s economic policies are not giving business confidence and average households are saving more, are paying off more credit, are not spending as much at Christmas, I mean in just anecdotal evidence from talking to people, they’re cutting back on holidays this summer, they’re cutting back on Christmas spending because people are very nervous about the state of the Australian economy and the competence of the Government in fixing it. So sure, it’s good there are low interest rates, the Coalition always welcomes that but what it indicates is that we are at emergency levels, the same as the global financial crisis and the government has spent any reserve that would’ve been in the bank, we now of course have a massive budget deficit. They’ve had four budget deficits in four years and there’s no room, there’s nothing else in the tank to fall back on as there was at the end of the Howard era.

Presenter: Mark Butler on another topic, Labor elder statesman, John Faulkner has said that Labor’s factional system allows corruption to flourish. Now as a factional leader yourself and the head of the Miscellaneous Workers’ Union for many years, you’re a senior figure in the Labor left faction. How do you respond to John Faulkner? Do you think he’s right?

Butler: Well, a couple of things about John’s speech, I read briefly last night. I agree with almost all of it I think, if not all of it. I think it was a very strong speech, it talked at length about the Governments’ reforms around transparency, many of which he introduced while he was the Special Minister of State. What we’re gonna do next year around improving protections for whistle blowers, the code of conduct vote that happened in the Parliament, the code of conduct for MPs vote that happened in the parliament last week and a range of other things. But he did talk about a number of issues within the party and I think if you read the speech, they were pretty strongly directed at the New South Wales branch.

Presenter: When you have the same level of factional control here in South Australia, you’re not saying that we’re saints here in South Australia, but in New South Wales, that’s where the devils are?

Butler: Well if you read the speech that John gave, it’s pretty clearly directed at what’s been coming out of the ICAC in New South Wales and I think directed particularly at the factional protection that we’ve given in New South Wales, but to people like Eddie Obeid and Ian McDonald and other characters who are, at the moment in the witness box in ICAC. The idea of factional discipline or binding factional members to votes within Caucus that John was talking about again I think, was particularly targeted at New South Wales I mean these are, things for example in the Federal Caucus that haven’t happened in the five years I’ve been there. (inaudible)…votes for leadership (inaudible)

Presenter: But if you have the same system here in South Australia, why would we think that if it’s not the same as New South Wales, it doesn’t have the potential to be the same as New South Wales?

Butler: Well I think John was talking about New South Wales, if you read the speech, he was very much talking about the sort of factional control that happened particularly in the New South Wales Caucus of the New South Wales Government and what that lead to in terms of protecting people who are now very much under the spotlight, Eddie Obeid, Ian McDonald and a number of others. Of course, they’ve gotta go through these ICAC enquiries to determine their guilt or otherwise, but it’s not a good look, I think it’s devastating, very distressing for party members like John Faulkner in New South Wales.

Presenter: But as a factional leader, you would concede that there is scope to loosen the grip of the factions on the party?

Butler: Look I think, in the 20 years I’ve been involved, I think the grip of factions has been loosened. I mean it hasn’t been factional discipline on leadership votes, for example at a federal level for 20 years. There’s no longer factional input into ministerial slates, that was got rid of.

Presenter: How can you say that? When Mike Rann lost his job because two factional leaders went to him and said sorry, you’re not gonna be premier anymore. How can you convince our listeners that the factions don’t have the same level control?

Butler: Well, what John was talking about particularly was the idea that factions would bind their members to vote a particular way in a Caucus vote. Now quite what would’ve happened if there’d have been a vote in the South Australian Caucus I don’t know It’s speculation, I’m not even a member of the South Australian Caucus but I can tell you, having been involved in a couple of votes in the Federal caucus, that there has not been a binding decision by factions for 20 years, or even more than 20 years. I think the second Hawke and Keating ballot was the last time that was attempted and it failed. There hasn’t been a binding vote around a policy matter within the Labor Caucus federally and as you know, the leader now selects the Ministers or the Shadow Ministers if we ever make it to opposition in a way that’s completely different from the way in which the New South Wales Caucus operated while they were in Government.

Presenter: Christopher Pyne, the South Australian Liberals would have been in power much more often and for longer if they’d shown the same discipline Labor’s factions deliver.

Pyne: Well David, Mark as the leader of the left in South Australia has manfully tried to defend the role of the factions in the Labor party. The problem is that John Faulkner has exposed what most people know and that is that the faceless men are still calling the shots in the Labor party and the reason why it’s become an issue is because it’s damaging Labor’s brand when people like Eddie Obeid and Joe Tripodi and others, and Ian McDonald are in the headlines in New South Wales and Australia and so Labor factional leaders, they’ll try and downplay as Mark just has, the power of the factions when they’re unpopular. When they’re on top of course, they want to herald the power of the factions. The Liberal Party of course, we simply just don’t have that kind of factional control. We’re much more porous in terms of different votes on different issues on different days. I think it was Tom Playford that said you have different friends on different days for different reasons in politics and the Liberal party prides itself on not being a Stalinist party where factional bovver boys control the votes. John Faulkner, quite rightly, is thoroughly sick of it. He’s been the victim of the rot in New South Wales for decades. He’s a man of great standing and Labor should listen to him if they want to repair their very tarnished brand which continues to be tarnished.

Presenter: Gentlemen, we’re out of time. It’s two minutes to nine, but thank you for your time, Christopher Pyne, Liberal MP for Sturt.

ENDS