Politics with Michelle Grattan

Scott Morrison has indicated he wants to embrace a 2050 target of net-zero emissions. That, however, requires bringing the Nationals on board, and a vocal group in that party is fighting a fierce rearguard action.

The Nationals deputy leader David Littleproud, who is Minister for Agriculture, is sympathetic to the target - so long as there is a credible path to get there, which won't disadvantage rural Australians.

In this podcast Littleproud says he believes the pathway could be settled this year. 

"That's not in my remit. But there is a hope to accelerate that and to make sure that we can provide that [pathway] as quickly as we can. The money's been set aside for a lot of that work and some of that work's already been completed."

As for that Nationals, "our position is we want to see the plan first. Our party room hasn't got to a juncture of dismissing it. We want to see what the plan is and who pays for it."

Asked whether agriculture would have to be exempted for the Nationals to sign up to the 2050 target, Littleproud says, "Well, with respect to ag, I think it cane be part of the solution".   

On the ANZ's announcement this week it would stop lending to Australia's biggest coal port, the Port of Newcastle, Littleproud is scathing:

"Well, they're a pathetic joke... We had a banking royal commission and here we are, a bank telling the Australian people about how society should run. That is not their role. Their role is to provide capital." 

Last year, Anthony Albanese was criticised for his lack of cut-through during the COVID crisis, as Labor was sidelined by a hyperactive government.

This year, amid ALP leadership speculation and now a shadow ministry reshuffle, Albanese is seeking to assert himself more forcefully, declaring last week “I will be leader of this country after the next election”.

With that election possible within the year, the need for Labor to outline its policies, including on climate change and industrial relations, is becoming more pressing. Albanese is still intent on taking his time on climate policy, where international developments are fast-moving, but the IR policy is imminent.

This week, the opposition leader joins the podcast to discuss the reshuffle, and his and his party’s goals.

“Labor will always stand up for the interests of working people,” he says, and that commitment will be at the heart of its workplace policy.

The policy’s “priorities are very much on job security and income security.”

“Whether it be people in labour hire companies…working next door to someone but earning less money… whether it be people in the new gig economy who are sometimes working for almost nothing in some cases, whether it be issues of workers who are having to bid against each other.”

Albanese says the policy will be in direct contrast to government legislation, drafted last year and now before parliament, which would “cut wages and conditions”.

Will the ALP definitely vote against the government’s measures?

“We’ve said we will not vote for any legislation that cuts wages or cuts conditions such as penalty rates.”

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This week's update shows an improvement on the numbers in the budget that was delivered only 10 weeks ago. The prospects for growth and employment have been revised upwards. While the forecast for the deficit remains massive, at nearly $200 billion, it has been revised down. 

But even as we return to some sort of normality, it will be many years before the economy resembles its pre-COVID self. And the Parliamentary Budget Office predicts the federal budget won't leave its deficit behind in this decade. 

Treasurer Josh Frydenberg joins the podcast to discuss Thursday's budget update and the economy's future. 

Frydenberg acknowledges the road back will be tough, for the economy and the budget. 

Given the "huge economic shock" of COVID, the "unprecedented spending" will leave us in the red for a long time. "There will be a very challenging fiscal environment for years out of this crisis."

But the economic future looks vastly better than in the hairy initial days of the COVID crisis. 

"Very early on it was uncertain, and many of us feared the worst."

"Treasury told me early on in the pandemic that the unemployment rate could reach 10%, and, but for Jobkeeper, reach 15%. That's a very different world to the one that you and I face today."

"Programmes like JobKeeper, the cash flow boost, the JobSeeker Coronavirus Supplement, the $750 payments, now $250 payments to pensioners and to carers and others on income support have very much helped pull Australia through this challenging time. 

"Australians go into Christmas with real cause for optimism and hope."

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This month Alan Finkel ends his term as Australia's Chief Scientist. 

An entrepreneur, engineer, neuroscientist, and educator in his former life, Finkel describes the role he's held since 2016 as consisting of two activities.

There's "reviewing" – briefing government on all matters scientific, including energy and climate change. And then there's "making things up" – developing programs to support the communication of science, technology, innovation, and research across the community.

Writing for The Conversation, Finkel expresses confidence Australia will achieve the "dramatic reduction in emissions" that is "necessary". 

However the road has not been easy, with many political setbacks.

"I was certainly somewhat personally disappointed, and disappointed for the country, that the Clean Energy Target wasn't adopted," Finkel tells the podcast.

"On the other hand, I took a lot of comfort from the fact that the other 49 out of 50 recommendations [in his report] were accepted and adopted and most of them have been implemented."

"Those recommendations – a lot of them have been part of the reason that we've been able to introduce solar and wind electricity at extraordinary rates in the last three years."

The debate currently is whether Australia will sign up for zero net emissions by 2050. While Finkel says "that's a question for politicians, not for me", he adds that "we're taking the right measures already consistent with a drive towards zero or low emissions".

These measures, he says, involve cheaper batteries, solar, wind, pumped hydro, and gas as a "backstop", as we transition out of coal fire electricity.

Asked if a new coal-fired power station project could ever be started, Finkel said that to comply with carbon capture and storage, the cost of electricity from the plant would be "five or six times higher" than electricity produced by solar and wind.

"I would never predict anything...but I can say with some degree of confidence that that economics would be challenging". His message was clear.

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Chinese official Lijian Zhao’s tweeting an image depicting an Australian soldier holding a knife against a child’s throat and the subsequent angry exchanges is the latest incident in an exceptionally poor year for Australian-Chinese relations.

Tensions deepened after Australia’s call for an inquiry into the origins of the coronavirus, and the Chinese have hit Australian exports, most recently with punitive tariffs on wine. Diplomacy is of the mega variety; Australian ministers can’t get their calls returned.

Bates Gill is Professor of Asia-Pacific Security Studies at Macquarie University, and has published extensively on Chinese domestic and international affairs. His coming book will focus on the goals driving Chinese foreign policy under Xi Jinping.

Gill predicts Chinese military capability, while limited to the areas closest to its shore, will be more assertive in the next five years.

He says the list of 14 Chinese grievances, recently reported, gives an indication of what China thinks the ideal relationship with Australia would be.

“It would mean keeping our heads down, not criticising the nature and actions of the regime in Beijing and just generally being more accommodating and friendly towards China’s steady rise and ambitions.”

“That’s what they want out of Australia.”

While it’s often said one Australian export China would find hard to hit – because it depends on the supply – is iron ore, Gill sounds a caution.

“Something in the range of 60 or 70%, I believe, of Chinese iron ore imports come from our shores, but they are looking [for] – and there are – other sources out there.”

“We would be naive to think that Beijing and its iron ore importers are not looking and … trying to figure out ways to become less dependent on what they see and understand to be a relationship which is not going in a positive direction

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The increase in the compulsory superannuation contribution, legislated to rise next July from 9.5% to 10%, is being fiercely debated following the release of the retirement income report.

In this podcast we hear the views of Brendan Coates, Director of the Household Finances Program at the Grattan Institute and Greg Combet, former Labor minister, and chair of Industry Super Australia.

Coates, who opposes the July and later scheduled rises, says ultimately the money comes out of the worker's pay because employers will increase wages more slowly.

Coates argues the present superannuation arrangements are adequate for most retirees who own their homes, and will be in the future. 

Although he says retirees potentially face financial stress if renting, Coates wouldn't favour letting people dip willy nilly into their super for a deposit on their first home. But "if the rate of compulsory super goes to 12% as legislated, I think the right answer is not ... to let them take out their super for housing, it's to let them take out anything above 9.5% each year" for any purpose.

Combet flatly opposes the use of super accounts for housing.

"If we are concerned about housing affordability and trying to lift the level of home ownership in the country, you don't go and cannibalise another part of the retirement income system, the superannuation system. 

"You address the issues of housing supply. You address the issues of housing affordability, and you can take some specific public policy measures for helping first home buyers."

In response to the criticism that higher contributions will diminish wage growth, Combet says: "Let's go back to the 90's. Paul Keating promised to get to a 12% super guarantee. John Howard froze it... No compensating pay rises that are discernible anywhere."

The findings of the inquiry by Justice Paul Brereton into the misconduct – including allegations of murder of non-combatants and mistreatment of prisoners – by Australian special forces in Afghanistan are released on Thursday. 

Scott Morrison last week warned the findings will be "difficult and hard news" for Australians. 

The leadership of the Australian Defence Force will drive a program of reform in the wake of findings that put a deep blemish on what the ADF and most Australians see as the nation's proud military tradition.

Allan Behm, from The Australia Institute, an expert on defence and security issues and a former senior public servant and ministerial adviser, joined the podcast on the eve of the release to discuss the background to the report. 

"I think it is going to be quite shocking for many of us. And I think...we will feel a sense of shame."

"It will get many people to think about issues of moral hazard. It will certainly get people to think about what kind of administrative and organisational arrangements within the Australian Defence Force permitted this to happen."

"I think it will cause a lot of Australians to think quite deeply about the moral peril that we expose young soldiers to in warfare. 

If reports are true "that prisoners were shot dead, that noncombatants were simply 'wasted', to use the language of warfare, as collateral damage in pursuit of military objectives, many, many ADF people will be very perturbed by that."

Asked about the culture of these soldiers, Behm described the special forces as "elites". "Elites can be highly problematic," he says.

In the wake of the report, there will be the question of whether special forces are needed. 

If they are to be retained, "the second thing will then be to decide whether we need to have the special forces quarantined, separate from the rest of our forces...or whether the special forces should be more clearly part of our standing army."

Having the special forces work across a wider base within the military could "militate against the formation of uncontrollable elites or rogue elements".

"And there's history to be dealt with. 

"I mean, we have a regiment which is highly decorated and highly recognised. At the same time, it is this regiment and this function, which ... has brought this shame upon us. 

"And that will require a lot of evaluation."

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Labor's Joel Fitzgibbon this week quit the frontbench, ensuring he'll become even more vocal in his campaign to have Labor's climate policy move to the centre and the party give greater attention to the working class part of its constituency. 

Fitzgibbon – who was shadow minister for resources – and climate spokesman Mark Butler have been at loggerheads, and in this podcast Fitzgibbon makes it clear he believes Butler should be moved when Albanese has an expected pre-Christmas reshuffle.

"I think a refresh in that area would be good ... I think someone without his history, someone who doesn't bring baggage, if you like, to the conversation might be better placed to prosecute Labor's case in the broader electorate."

Fitzgibbon was active in Labor's 2013 leadership change back to Kevin Rudd. 

He says he supports Albanese's leadership. But asked whether, if it became clear next year Labor was heading to a likely really bad defeat, he would be willing to push for a change, he says: "I think senior people in the party have a responsibility to ensure that the party doesn't go over the proverbial cliff.

"And none of us are as big or bigger than the party itself. 

"The party has to be the key interest and its capacity to win government, because millions of people are relying upon us to be a government from time to time. And we  owe it to them to be electable."

Sounds like a warning.

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In his budget reply, Anthony Albanese said women have suffered most during the pandemic, but were reduced to a footnote in the budget. He promised a Labor government would undertake a generous reshaping of the childcare subsidy to enable more women to join the workforce or to work more hours.

This week, Michelle Grattan talks to Grattan Institute CEO Danielle Wood who, in writing for the Australian Financial Review, described the budget as “blokey”:

“We look at those areas that have received direct support - construction… the energy sector, defence, manufacturing, all of those areas where the government has put direct money into a particular sector - they tend to be male dominated sectors.

"And actually often they’re not the ones that have taken the hardest hit in this recession.

"The sectors that have been hit really hard: hospitality, tourism, the arts, recreation, administrative services tend to be actually slightly more female dominated… we really don’t see any direct assistance for those sectors in the budget. ”

When asked about the budget generally Wood, the president of the Economic Society of Australia, is concerned all the eggs have been put into the “private sector basket”.

“If it doesn’t pay off, then we may see unemployment sticking around for a long time to come.”

In the Grattan institute’s report, co-authored by Wood, and titled Cheaper Childcare, Wood endorsed reform in a similar vein to Albanese’s proposal.

“Our numbers suggest that for every dollar that you spend reforming the subsidy…you return more than two dollars in additional GDP,” she says.

“The Labor reforms… you’re probably talking, if its $2 billion a year… something in the vicinity of $5 billion return each year for GDP.”

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With the budget’s expected eye-watering debt and deficit numbers, the question remains whether the huge spending will be enough to fight the coronavirus slump.

Minister for Finance Mathias Cormann and Shadow Minister Katy Gallagher joined the podcast to discuss the budget’s entrails.

The government has faced criticism for benchmarking the much vaunted tax cuts against 2017-18, making them appear larger. Cormann said 2017-18 is the appropriate benchmark, and wouldn’t be drawn on giving further detail.

“The costing has been done on the basis that we’ve published it.”

Gallagher declared the budget expressed Scott Morrison’s choice to leave some people without support.

In particular, the decision to leave those on JobSeeker hanging was described by Gallagher as “frankly, just plain mean.”

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