SENATOR THE HON PENNY WONG
LABOR SENATOR FOR SOUTH AUSTRALIA
TRANSCRIPT
13 March 2014
SKY NEWS WITH GRAHAM RICHARDSON
E&OE - PROOF ONLY
GRAHAM RICHARDSON: In our Adelaide studio, I think is Penny Wong. Good evening Penny, how are you?
PENNY WONG, LEADER OF THE OPPOSITION IN THE SENATE: Good to be with you Richo.
RICHARDSON: Yes it’s been too long. Now you’ve got a new role these days, I mean apart from being the Leader in the Senate which is a role you already had, you are now Shadow for Trade and Investment, is that correct?
WONG: That’s right, that’s right. Looking at Australia in the global economy, Richo. A pretty important issue.
RICHARDSON: It is an important issue but it’s always worried me when we’re in Government and way back when I was a politician back by the way, when I left 20 years ago this month, so it is a long time ago –
WONG: So should I congratulate you or commiserate?
RICHARDSON: No, the anniversary is not for a couple of weeks. I’ll let you know. You can send me a bottle of champagne.
WONG: No worries.
RICHARDSON: But I was always worried about this whole idea of free trade because it seemed to me – and especially the last 20 years proves it conclusively – we seem to be the only ones who take our commitment seriously in this regard. Everybody else seems to find ways around it. And it amazes me that as an example the US is talking about a free trade agreement when they do everything they can to have anything but free trade. How do you resolve that kind of conflict?
WONG: I think it has got to start with first principles and the fact is our economy needs to be able to trade with the rest of the world if we’re going to continue to grow and create jobs. That’s a reality.
It’s always been important but it’s even more important now as we live through this period in the Asian Century where we see Asia, particularly China, but other countries in the region really developing. Now to hook into that growth requires us to be able to trade with them, it means we need market access, we need to be able to sell into those markets, to trade with those economies, and we also need to make sure that trade isn’t just agriculture and resources but also services which is obviously a big growth sector for Australia.
RICHARDSON: Now it’s huge but it doesn’t work too well if we let them sell everything in here and they still find ways and means to get around the intent of a free trade agreement and that seems to happen all the time.
WONG: The point you make is a pretty good one, because your first best policy – as you sort of pointed out first up – is to have multilateral trade liberalisation. That is, everybody doing the same thing. That’s obviously your first best policy position.
If you can’t get that then you know people have looked to free trade agreements – so bilateral agreements or plurilateral agreements. But you’ve got to make sure they’re high quality. So you don’t just sign up to anything because you’re absolutely right, you want to make sure you get a good deal for Australia. And that’s the approach that we’ll be taking, whether it’s on the Korean Free Trade Agreement which the Government has released or the upcoming agreements which are being negotiated, many of which have either commenced or progressed in negotiation under the Labor Government.
RICHARDSON: Yeah, because it’s interesting the Korean one. At the very time that you were trying to save the car industry a couple of months back you announce a free trade agreement with a country that exports cars here by the zillion.
WONG: I think if you look at the car industry the major factor which drove the decisions to close the Australian operations were the actions of the Government in taking money out of the industry scheme – half a billion dollars – and giving them nothing but uncertainty with the Productivity Commission review, and then of course the Treasurer standing in the House of Representatives demanding that the company made a decision before the review had even reported. I mean those things were really the drivers behind those decisions that were made by the companies.
RICHARDSON: We don’t often disagree but wouldn’t it be possible to just make a slight suggestion that maybe the economies of scale are simply non-existent in Australia when you talk about Korea which is making what, twenty times more cars than we are, and so their production runs are so much bigger, the economy scale is much better, and of course the dollar has been an absolute shocker. Don’t you think they might have contributed as well?
WONG: I don’t disagree that we are up against it when it comes to, as you said, economies of scale, scale in particular industries. I think the issue with cars was always whether or not we thought that was a very important strategic industry for Australia because of the level of skills which were developed around the car industry.
You know I’m from Adelaide, South Australia and if you walk around the defence industries here you’d have to say a fair few of the highly skilled tradespeople working in those sectors did learn the tools of trade in the auto sector and it certainly made a valuable contribution there. But anyway those are issues we can discuss for a long time I think fundamentally.
RICHARDSON: Penny you raise a good point though. When I look at Adelaide at the moment, you’ve had the arguments about the submarine program which I think we’d all have to agree wasn’t exactly a stellar performance. And now that you’ve got this talk about the destroyers and apparently the overcosts and all the rest of it.
Is it worth Australia trying to prop up the defence industries here? I mean, it’s been costing us a fortune. And when those submarines sailed out of the dock in Adelaide they could hear them in Beijing before they got 100 yards. Isn’t there a bit of a problem there?
WONG: When I was the shareholder Minister for the Australian Submarine Corporation I said to them ‘I want us to be able to win work on our merit. I want us to be so good that the Government wants to give us work based on the merit of the organisation, and that’s what we should aspire to.’ And we did a lot of work in Government with the ASC – the Australian Submarine Corporation – to improve their performance.
I certainly think having defence industries on shore is a good thing. Making sure we have that capability is a good thing, as well as a good thing for Australian jobs but you’ve got to make sure the organisations perform and people learn from their mistakes.
RICHARDSON: Are we doing that now? Are you confident that if the next destroyer contract is given here, or given in Adelaide or given in Australia anyway, that you’re going to get the value for money and then you’ll get actually something that works?
WONG: We’re not in Government anymore and you know that will be a matter for the Government to make sure it manages those contracts appropriately. What I would say is we’ve got some very skilled people in Australia, we’ve got a real possibility of losing a lot of skilled employees if the Government doesn’t deal with this issue and we’ve seen a lot of job losses already. This is an area where you would want to retain these skills in Australia and I think the Government needs to deal with it promptly.
RICHARDSON: But it just seems to me that the tendency is that yes you do, you throw some more money at it but as I said in the case of the submarines there were so many things about the submarines that wouldn’t work. So whatever message you were imparting to them, are you sure they actually got it?
WONG: The project was over a long period and you would know a bit more than I would about the early years of it Richo, but I think Stephen Smith when he was Defence Minister did a lot of good work to try and make sure we did a full and frank review and we faced up to the issues, and the organisation engaged in a lot of change as a result.
So my view is we always have to make sure we’re doing a good job, but there have been many very highly skilled employees working on the Air Warfare Destroyer. That’s very important for our economy and our capability and we don’t want to just leave them in the lurch by not making procurement decisions and capability decisions which the country needs.
RICHARDSON: Yes, it seems to me that when you’re looking at investment in Australia I always believed that a logical thing for Australia to do – and you imagine you’d be able to do it well – would seem to be secondary processing. We’ve got all the minerals here, there’s everything here basically. So you’d think whether it was iron ore or aluminium or whatever you’d have secondary processing. But even that, we seem to be failing dramatically with that as well.
WONG: We certainly are going through a period of a lot of change in the economy and certainly we’ve seen a lot of jobs lost since the election of the Abbott Government. And I think we have to say to ourselves is ‘ok, what is it that we think we can do together as a nation to make sure we keep growing jobs?’ I think trade is a really important and an important part of that jigsaw because hooking into the growth of Asia going forward is going to be so important for jobs. I’ve just come back from Tasmania –
RICHARDSON: Oh, you’ve been overseas already?
WONG: I’ve just got back from Tassie this afternoon and visited a couple of firms there and the University of Tasmania, but a couple of firms who are selling into Asia. One company got some very substantial contracts with Malaysia, exploring opportunities in Vietnam, another producer sending his product into Korea and China, and it really is a reminder that when we talk about Australia in the Asian Century we’re talking about jobs in Australia which are generated by tapping into that growth, making sure we’ve got the products to tap into that growth. Now that’s what we have to do, and what we have to work out as a nation is where do we invest, what are the things we need to do in order to best tap into that growth, and trade is an important part of that.
RICHARDSON: It is, I just don’t think we’ve ever been able to quite get the mix right. If you look for instance at the Japanese they’ve got some of the most inefficient industries in the world in terms of beef and rice, and yet they keep everybody else out, it’s so hard to break in. How do you as someone now involved in the trade area, how do you try and break that down?
WONG: The point is, I’m not sure you could look at that and say that was a great thing for their economy.
RICHARDSON: It’s dreadful, but I mean they do it. It’s politics sometimes you know.
WONG: That’s the point I’m making. And that’s a matter for them. I mean we have our views about wanting access to the Japanese market. But I think, it’s certainly not a prescription for economic growth. Trade and trade liberalisation, bringing down the tariffs, which was done under the Government of which you were a part Richo, has been a very good thing overall for Australia. It certainly did hit some industries very hard and government should make sure they respond appropriately, but from a broader perspective for the community and the economy it certainly ensured, one of the things that has driven economic growth, certainly, cheaper good for consumers and that has its own benefits.
RICHARDSON: There has certainly been plenty of that although I remember when we shut down the TCF – textile, clothing and footwear – I just remember when you displace 600 workers in somewhere like Wangaratta you leave them in a terrible position because their houses are worth next to nothing compared to buying a house in Sydney or Melbourne where they had to go to try and get a job. I just hope in the current wave in the car industry and other industries where people are losing their jobs there is some thought given to that.
WONG: Well actually on that, I’m deeply worried about that. And we’ve seen these closures, we still have no plan from the Federal Government. If you go out to the northern suburbs of Adelaide where Holden is located, you’ve already got high levels of youth unemployment, you add these sorts of job losses, it’s obviously going to be a really significant regional impact. It’s very disappointing and says something about Tony Abbott’s values that we haven’t seen from him what the Federal Government would do for those communities and those workers.
RICHARDSON: I’ve already been critical of that, and I still believe there needs to be a real package for those workers and I haven’t seen anything near what it needs to be yet. Now I’ve got to ask you this last question before we go. It would seem now certain – I know you’re a realist – that on Saturday the last two Labor governments, bar from the municipal government in Canberra, the last two go on Saturday. What’s gone wrong? Only a few years ago everywhere was Labor. After Saturday, midnight, there will be none.
WONG: Let’s wait and see the result. But you’ve been around in politics a fair while Richo, you know that sometimes you win and sometimes you don’t. What I would say about these elections, the most important thing in many ways is that you know Tony Abbott is refusing to release his commission for cuts, his Commission of Audit report, nine hundred pages of secret cuts sitting on his table that he’s making sure don’t come out before the South Australian and Tasmanian elections and before the Western Australian Senate by-election. I think that says all you need to know about what Tony Abbott’s agenda really is.
RICHARDSON: I agree with that. But it still doesn’t explain why Labor’s going to do so badly on Saturday, but I didn’t really expect that you’d give me a long explanation on that. Penny Wong, thank you for your time.
WONG: Good to be with you.
ENDS
GRAHAM RICHARDSON: In our Adelaide studio, I think is Penny Wong. Good evening Penny, how are you?
PENNY WONG, LEADER OF THE OPPOSITION IN THE SENATE: Good to be with you Richo.
RICHARDSON: Yes it’s been too long. Now you’ve got a new role these days, I mean apart from being the Leader in the Senate which is a role you already had, you are now Shadow for Trade and Investment, is that correct?
WONG: That’s right, that’s right. Looking at Australia in the global economy, Richo. A pretty important issue.
RICHARDSON: It is an important issue but it’s always worried me when we’re in Government and way back when I was a politician back by the way, when I left 20 years ago this month, so it is a long time ago –
WONG: So should I congratulate you or commiserate?
RICHARDSON: No, the anniversary is not for a couple of weeks. I’ll let you know. You can send me a bottle of champagne.
WONG: No worries.
RICHARDSON: But I was always worried about this whole idea of free trade because it seemed to me – and especially the last 20 years proves it conclusively – we seem to be the only ones who take our commitment seriously in this regard. Everybody else seems to find ways around it. And it amazes me that as an example the US is talking about a free trade agreement when they do everything they can to have anything but free trade. How do you resolve that kind of conflict?
WONG: I think it has got to start with first principles and the fact is our economy needs to be able to trade with the rest of the world if we’re going to continue to grow and create jobs. That’s a reality.
It’s always been important but it’s even more important now as we live through this period in the Asian Century where we see Asia, particularly China, but other countries in the region really developing. Now to hook into that growth requires us to be able to trade with them, it means we need market access, we need to be able to sell into those markets, to trade with those economies, and we also need to make sure that trade isn’t just agriculture and resources but also services which is obviously a big growth sector for Australia.
RICHARDSON: Now it’s huge but it doesn’t work too well if we let them sell everything in here and they still find ways and means to get around the intent of a free trade agreement and that seems to happen all the time.
WONG: The point you make is a pretty good one, because your first best policy – as you sort of pointed out first up – is to have multilateral trade liberalisation. That is, everybody doing the same thing. That’s obviously your first best policy position.
If you can’t get that then you know people have looked to free trade agreements – so bilateral agreements or plurilateral agreements. But you’ve got to make sure they’re high quality. So you don’t just sign up to anything because you’re absolutely right, you want to make sure you get a good deal for Australia. And that’s the approach that we’ll be taking, whether it’s on the Korean Free Trade Agreement which the Government has released or the upcoming agreements which are being negotiated, many of which have either commenced or progressed in negotiation under the Labor Government.
RICHARDSON: Yeah, because it’s interesting the Korean one. At the very time that you were trying to save the car industry a couple of months back you announce a free trade agreement with a country that exports cars here by the zillion.
WONG: I think if you look at the car industry the major factor which drove the decisions to close the Australian operations were the actions of the Government in taking money out of the industry scheme – half a billion dollars – and giving them nothing but uncertainty with the Productivity Commission review, and then of course the Treasurer standing in the House of Representatives demanding that the company made a decision before the review had even reported. I mean those things were really the drivers behind those decisions that were made by the companies.
RICHARDSON: We don’t often disagree but wouldn’t it be possible to just make a slight suggestion that maybe the economies of scale are simply non-existent in Australia when you talk about Korea which is making what, twenty times more cars than we are, and so their production runs are so much bigger, the economy scale is much better, and of course the dollar has been an absolute shocker. Don’t you think they might have contributed as well?
WONG: I don’t disagree that we are up against it when it comes to, as you said, economies of scale, scale in particular industries. I think the issue with cars was always whether or not we thought that was a very important strategic industry for Australia because of the level of skills which were developed around the car industry.
You know I’m from Adelaide, South Australia and if you walk around the defence industries here you’d have to say a fair few of the highly skilled tradespeople working in those sectors did learn the tools of trade in the auto sector and it certainly made a valuable contribution there. But anyway those are issues we can discuss for a long time I think fundamentally.
RICHARDSON: Penny you raise a good point though. When I look at Adelaide at the moment, you’ve had the arguments about the submarine program which I think we’d all have to agree wasn’t exactly a stellar performance. And now that you’ve got this talk about the destroyers and apparently the overcosts and all the rest of it.
Is it worth Australia trying to prop up the defence industries here? I mean, it’s been costing us a fortune. And when those submarines sailed out of the dock in Adelaide they could hear them in Beijing before they got 100 yards. Isn’t there a bit of a problem there?
WONG: When I was the shareholder Minister for the Australian Submarine Corporation I said to them ‘I want us to be able to win work on our merit. I want us to be so good that the Government wants to give us work based on the merit of the organisation, and that’s what we should aspire to.’ And we did a lot of work in Government with the ASC – the Australian Submarine Corporation – to improve their performance.
I certainly think having defence industries on shore is a good thing. Making sure we have that capability is a good thing, as well as a good thing for Australian jobs but you’ve got to make sure the organisations perform and people learn from their mistakes.
RICHARDSON: Are we doing that now? Are you confident that if the next destroyer contract is given here, or given in Adelaide or given in Australia anyway, that you’re going to get the value for money and then you’ll get actually something that works?
WONG: We’re not in Government anymore and you know that will be a matter for the Government to make sure it manages those contracts appropriately. What I would say is we’ve got some very skilled people in Australia, we’ve got a real possibility of losing a lot of skilled employees if the Government doesn’t deal with this issue and we’ve seen a lot of job losses already. This is an area where you would want to retain these skills in Australia and I think the Government needs to deal with it promptly.
RICHARDSON: But it just seems to me that the tendency is that yes you do, you throw some more money at it but as I said in the case of the submarines there were so many things about the submarines that wouldn’t work. So whatever message you were imparting to them, are you sure they actually got it?
WONG: The project was over a long period and you would know a bit more than I would about the early years of it Richo, but I think Stephen Smith when he was Defence Minister did a lot of good work to try and make sure we did a full and frank review and we faced up to the issues, and the organisation engaged in a lot of change as a result.
So my view is we always have to make sure we’re doing a good job, but there have been many very highly skilled employees working on the Air Warfare Destroyer. That’s very important for our economy and our capability and we don’t want to just leave them in the lurch by not making procurement decisions and capability decisions which the country needs.
RICHARDSON: Yes, it seems to me that when you’re looking at investment in Australia I always believed that a logical thing for Australia to do – and you imagine you’d be able to do it well – would seem to be secondary processing. We’ve got all the minerals here, there’s everything here basically. So you’d think whether it was iron ore or aluminium or whatever you’d have secondary processing. But even that, we seem to be failing dramatically with that as well.
WONG: We certainly are going through a period of a lot of change in the economy and certainly we’ve seen a lot of jobs lost since the election of the Abbott Government. And I think we have to say to ourselves is ‘ok, what is it that we think we can do together as a nation to make sure we keep growing jobs?’ I think trade is a really important and an important part of that jigsaw because hooking into the growth of Asia going forward is going to be so important for jobs. I’ve just come back from Tasmania –
RICHARDSON: Oh, you’ve been overseas already?
WONG: I’ve just got back from Tassie this afternoon and visited a couple of firms there and the University of Tasmania, but a couple of firms who are selling into Asia. One company got some very substantial contracts with Malaysia, exploring opportunities in Vietnam, another producer sending his product into Korea and China, and it really is a reminder that when we talk about Australia in the Asian Century we’re talking about jobs in Australia which are generated by tapping into that growth, making sure we’ve got the products to tap into that growth. Now that’s what we have to do, and what we have to work out as a nation is where do we invest, what are the things we need to do in order to best tap into that growth, and trade is an important part of that.
RICHARDSON: It is, I just don’t think we’ve ever been able to quite get the mix right. If you look for instance at the Japanese they’ve got some of the most inefficient industries in the world in terms of beef and rice, and yet they keep everybody else out, it’s so hard to break in. How do you as someone now involved in the trade area, how do you try and break that down?
WONG: The point is, I’m not sure you could look at that and say that was a great thing for their economy.
RICHARDSON: It’s dreadful, but I mean they do it. It’s politics sometimes you know.
WONG: That’s the point I’m making. And that’s a matter for them. I mean we have our views about wanting access to the Japanese market. But I think, it’s certainly not a prescription for economic growth. Trade and trade liberalisation, bringing down the tariffs, which was done under the Government of which you were a part Richo, has been a very good thing overall for Australia. It certainly did hit some industries very hard and government should make sure they respond appropriately, but from a broader perspective for the community and the economy it certainly ensured, one of the things that has driven economic growth, certainly, cheaper good for consumers and that has its own benefits.
RICHARDSON: There has certainly been plenty of that although I remember when we shut down the TCF – textile, clothing and footwear – I just remember when you displace 600 workers in somewhere like Wangaratta you leave them in a terrible position because their houses are worth next to nothing compared to buying a house in Sydney or Melbourne where they had to go to try and get a job. I just hope in the current wave in the car industry and other industries where people are losing their jobs there is some thought given to that.
WONG: Well actually on that, I’m deeply worried about that. And we’ve seen these closures, we still have no plan from the Federal Government. If you go out to the northern suburbs of Adelaide where Holden is located, you’ve already got high levels of youth unemployment, you add these sorts of job losses, it’s obviously going to be a really significant regional impact. It’s very disappointing and says something about Tony Abbott’s values that we haven’t seen from him what the Federal Government would do for those communities and those workers.
RICHARDSON: I’ve already been critical of that, and I still believe there needs to be a real package for those workers and I haven’t seen anything near what it needs to be yet. Now I’ve got to ask you this last question before we go. It would seem now certain – I know you’re a realist – that on Saturday the last two Labor governments, bar from the municipal government in Canberra, the last two go on Saturday. What’s gone wrong? Only a few years ago everywhere was Labor. After Saturday, midnight, there will be none.
WONG: Let’s wait and see the result. But you’ve been around in politics a fair while Richo, you know that sometimes you win and sometimes you don’t. What I would say about these elections, the most important thing in many ways is that you know Tony Abbott is refusing to release his commission for cuts, his Commission of Audit report, nine hundred pages of secret cuts sitting on his table that he’s making sure don’t come out before the South Australian and Tasmanian elections and before the Western Australian Senate by-election. I think that says all you need to know about what Tony Abbott’s agenda really is.
RICHARDSON: I agree with that. But it still doesn’t explain why Labor’s going to do so badly on Saturday, but I didn’t really expect that you’d give me a long explanation on that. Penny Wong, thank you for your time.
WONG: Good to be with you.
ENDS
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