TRANSCRIPT OF THE MINISTER FOR COMMUNICATIONS
THE HON MALCOLM TURNBULL MP
INTERVIEW WITH MICHAEL STUTCHBURY
CRAWFORD SCHOOL, ANU
MICHAEL STUTCHBURY:
Thank you very much, Gareth, for welcoming us up on stage. On behalf of Fairfax Media and the Financial Review, I'd very much like to thank Gareth and the ANU and the Crawford School, along with the support of the Business Council for putting on what I think so far everyone agrees has been a fabulous morning session we've had and I'm looking forward to continuing this over lunch with Malcolm Turnbull.
And from the Financial Review's point of view, it's something that we're really thrilled to be associated with and I hope it keeps on going. We're in conversation now for the next 50 minutes or so. I'll have a little eye on the clock over there in the far corner and I hope to talk between us for perhaps half an hour or so, but I want to leave some time for questions at the end.
So if you keep in your mind that there will be some time for questions that keep the conversation going, anything that doesn't come up here or something that you want to continue with, please feel free to think of your question, put your hand up and I'll pick you out and we'll have some time for questions at the end.
This conference - the theme of this conference, Global Realities and Domestic Choices, the sub-theme is around much of - isn't around much of the developed world. Governments are finding it more difficult to build political or community consensus around good policy. They're having trouble making good policy equal good politics.
Here to discuss this over the rest of - over the next 50 minutes or so, we have, of course, Malcolm Turnbull, who to an Australian audience needs little introduction. To many of the international audience needs no introduction, but, of course, deserves an introduction. Malcolm Turnbull, former journalist, barrister, internet entrepreneur, investment banker, republican movement leader, Minister for the Environment and water policy under the opposition - under the Howard government, opposition leader and now member - Minister for Communications in the Abbott Government.
As Gareth alluded to, someone who, when we're talking about good policy and good politics, has been really at the crucible of politics in Australia over the past decade, being the opposition leader in a very difficult time for an opposition leader in the high watermark of the Rudd Labor years, experiencing what it's like to have public opinion polls for an opposition leader - very difficult; lost to Tony Abbott in the leadership stakes by one vote - that must be excruciating; and, now, is in the interesting position of finding himself one of the most - scores very highly and perhaps the most highly of any political leader in Australia in terms of who would you like to lead the country, where, as Gareth's pointed out, it's in the unusual situation of most of that support comes from the Labor Party rather than [indistinct].
Now Malcolm, if we start off with that one - with the theme of this conference and the session - the terrific session we had first thing this morning, that one of the global realities for Australia is our really unique circumstance that the driving source of our material prosperity is due to - is also the new strategic rival to our defence, ally and protector. We had this morning what could be called the Kurt, Wu and Hugh show, where Hugh White suggested that the US is in denial over its challenged primacy and that this denial could be - itself a source of conflict.
We had Wu Xin Bao suggest that there are limits to Australia's - how far Australia could seek to deepen its already deep strategic alliance with the United States if it wants to get the full benefits of the economic relationship with China. And then Kurt Campbell forcefully denied that Washington was like some sort of heroin addict hooked on the primacy - of maintaining primacy of the region and much of the problem is getting China to engage outside the Chinese version of a zero-sum where the parable is always one of American weakness, decline and retreat. This tension seems to be rising amid territorial maritime disputes in the region. How do you judge the risk of serious miscalculation here which could lead to some sort of serious conflict in our region?
MALCOLM TURNBULL:
Well, I think the first thing I'd say is that China's foreign policy in recent years has been singularly counter-productive. If China's objective was to persuade the United States to pull back from this side of the Pacific - from the western Pacific - or to play a less forceful role to manifest its latent and active power less obviously, then what it would need to do is to create the highest level of trust and confidence among its neighbours.
And if you look at the way - as a good example of what I'm talking about, if you think about the year - the decades following the declaration of the Monroe Doctrine in, I think, 1824 - Americans, please correct me if I'm wrong - the Americans gently pressured - not always so gently, but gently pressured the United Kingdom to pull out of that western hemisphere.
And the British were happy to do that, because they saw the United States as being substantially a benign power and the countries in the region - in the Americas - saw the United States as, essentially, a benign power. But - and that's - you know, that's pretty obvious, right? You don't need to be a strategic genius to work that out. What the Chinese policy has been, which I think is curious, because it has been so counter-productive - it has been to muscle up to one or other of its neighbours or all of its neighbours at different times.
It has, really, no allies in the region, apart from North Korea - the sort of ally you need when you're trying to have enemies, I suppose - and the consequence has been that these - our neighbours, China's neighbours, are drawing closer to the United States and - than ever before, or than for a very long time. So I think, if the question is: what is the risk of a miscalculation?
Well there's always a risk of a miscalculation. It's not terribly meaningful to express that type of risk as a percentage, because the consequences are so gigantic, you know? The - I think it's a line Hank Paulson used the other day when he talked about there being a few potholes, but they are very, very deep. And - so, that's my overall view. I think it's a pity, because the Chinese policy a decade ago was much more accommodating.
I think the - if you look at the way China settled its borders with Russia, for example, in 2004, I think, the - as many of you know, there's - a big chunk of what is now Siberia was essentially stolen by the Russians during China's weakness in the period of the unequal treaties. There were two - in the 1860s, two treaties, one in Peking and one in Aigun, which essentially took the whole - what is now the Amursky region.
China, recognising that it is getting stronger vis-à-vis Russia every year as Russia's population declines, Siberia depopulates, China gets stronger, could quite easily have just put those issues into the bottom drawer and said, well, look, we'll come back to that in 20 years’ time, consistent with Deng Xiaoping's injunction back in '79. But, instead, those borders were settled.
They've been, you know, renegotiated; a very small adjustment was made. And I thought that was a - at the time, I thought that was a very signal move, but the sort of envelope pushing and testing in the South China Sea is - well, far be it from me to advise Beijing on foreign policy, but I don't think it's calculated to achieve what I assume is the objective, which is to have greater freedom to move in their immediate vicinity.
STUTCHBURY:
But, Malcolm, would you accept which I think probably all the key speakers this morning would accept, in some way that the international order or the framework in the institutions needs to work harder to accommodate what is the reality and the inevitability of rising Chinese economic weight and hence strategic weight in the region and the world?
MALCOLM TURNBULL:
Yeah, but it has to be done on a basis that people can live with. I mean, you know, really, it's extraordinary to see the Vietnamese being pushed closer and closer to the United States, in strategic terms. That is remarkable. That's quite an achievement, when you think of the history. The - you know, you get back to - there are two great passages in Thucydides that I often think about - this is the history of the Peloponnesian War I'm talking about, of course - the - relevant to this.
You know, one is the one that Hugh White talks about, where he says the - where Thucydides in explaining the causes of the Peloponnesian War says the cause of the war was simply that trust had broken down, the - well, both sides became anxious about the growing strength of the others. That was the - so it wasn't so much a single incident, it was a fear of the new rival. But there is - the bit that I think is perhaps more relevant is in book five, where the Athenians go to the island of Milos, which was a neutral city in the war, and demanded that they become allies of Athens.
And the Melians said: no, we just want to be neutral. We're just - look, you know, we're just doing our own thing here. Give us a break. Fair's fair. And the Athenian ambassadors, led by Alcibiades said: look, cut the crap. You know as well as we do that in the real world, justice is to be found only as between equals in power. As for the rest, the strong do as they will and the weak suffer as they must.
Now, if that's the message that China is sending to its neighbours, they will say, we a) better get closer to the one guy that is as strong, if not stronger than China; and b) we'd better make sure we're strong ourselves. So my contention is that the Chinese, their current foreign policy, as distinct from what they were doing over a decade ago, I think, is genuinely counterproductive, in the sense that it's like the United States, you know, policy towards Cuba. It is counterproductive in the sense it frustrates and makes harder to achieve the goal that one assumes you want to achieve.
STUTCHBURY:
And would this Chinese aggressiveness, as you might put it, tempered by what must be their own realisation that it would damage - any serious conflict would damage their own economy and, presumably, hence the control of the party, if you like, on the country?
MALCOLM TURNBULL:
Well we're being -and this is the year, the centenary of the First World War. We're reminded of a war that broke out which was obviously going to damage the economies of all of the participants, but still broke out. So that's - you know, rationality doesn't always prevail. I'd make this observation though as between the United States and China: a United States administration, a president, may not survive an unsuccessful war.
Sometimes they do, sometimes they don't. But let's say they don't, but the United States constitution would. A war - you have to ask yourself whether the regime itself - I don't mean the actors, I don't mean the members of the politburo or any of the individuals, but would the system survive the economic collapse or the economic impact of a serious conflict in the region?
And I think that's the - in that sense, China has more to lose from conflict. I mean, everyone's got a lot to lose, but what China has to lose is existential. Not in the sense that anyone's going to invade China or anyone sane is going to invade China, but given that the primacy of the Communist Party has been based on a bargain, and the bargain is you let us run the country and we will deliver rising living standards. That's the bargain.
And if that bargain were to be broken, if those living standards were, you know, not to rise, there would be serious economic setbacks. I mean, you look at the way in which Xi Jinping is - I mean every - he and his two predecessors have all said: China needs to rebalance. They all know that household consumption has to grow at a faster rate than GDP. That is the only way you can get the share of consumption to grow overall. You have to have a significant change.
And that means pulling resources, pulling all of that free money away from the privileged, you know, Nomenclatura. I'm not sure what the Chinese name for that [indistinct]. Help me out. But the - you know, the political leaders and the business leaders to pull that free money away, because as we know it’s being supported by, you know, negative real interest rates, so there's been this massive transfer of wealth every year from households to the banks and then onto business.
But he's got a - everyone knows that has to be turned back. It's been - that's been accepted for years. But the problem is what happens to employment? And so you can see there's a sort of a - almost a jittering going on in terms of policy at the moment. Now, if the leadership are anxious about that, what would their level of anxiety be about a conflict?
STUTCHBURY:
And looking at the US on the other side, the Americans, they're still weighed down economically by the financial and fiscal crises, still now being drained by these wars in the Middle East. How concerned should Australia be that Washington won't follow through on the pivot to the region?
MALCOLM TURNBULL:
Well I - I mean I'm not sure what you mean by concerned, Michael. You certainly shouldn't be complacent. We have to look to our own defence. And we, I guess we have to be --
STUTCHBURY:
[Interrupts] Do you doubt that the Americans have got - with the state of the economy, they're still battling the wars they're fighting that they basically have to resolve and the wherewithal to still play the very strong primacy [indistinct] in the region?
MALCOLM TURNBULL:
Well what you're - you're sort of posing the question, if I can refer to another publication, The Economist, posed recently was referring to Syria. How can anyone be sure anymore that the Americans will turn up? That was the question, question mark. I don't have any doubt that if there were a serious threat to Australia or to any of America's allies in this part of the world that the United States would turn up.
And I am again getting back to Thucydides and the origins of that war. When there's a degree of misunderstanding and distrust about the other party's position, then there is greater incentive to test the envelope, right? And I think that the - it may be that the Chinese strategy is to test whether America will react. That, again - that is also I think a counterproductive strategy, so I'm not - do I think Australia is going to be abandoned, no, but having said that, we've got to be able to defend ourselves as best we can, given our resources. We cannot be complacent about our own security.
STUTCHBURY:
Now, Hillary Clinton suggested over the weekend that Australia is putting too many of our economic eggs in the China basket, almost like Europe has done with its dependence on Russian gas. Are we overexposed or overweighed to China?
MALCOLM TURNBULL:
I'm sure that we'd love to export vast quantities of iron ore to the United States but they've never shown any enthusiasm in buying them. So I - look, with all due respect to the former secretary of state, I'm not quite sure what she meant, and I suspect that that observation wasn't given the deep reflection and consideration that, perhaps, it should have been.
STUTCHBURY:
Okay, this is where we segue to...
MALCOLM TURNBULL:
[Interrupts] I mean, one may make the same - to quote Hillary back at herself, she is the one who, referring to how dependent the United States was on Chinese capital to fund the government debt, she said: how can you argue with your own banker? So I think in terms of dependency, I'm not sure that we're really - we really don't need to be concerned about that. But again, I suspect that was a - an off the cuff line without a lot of reflection.
STUTCHBURY:
This is where we segue into domestic policy, domestic choices we have to have in response to the global realities. Australia's well into the third decade of unbroken economic growth. We've also heard this morning we've just been through our biggest investment boom in our history. We're, sort of, levels of prosperity we've rarely seen relative to the rest of the world, yet the political system seems incapable of delivering the sort of, reforms that we saw in the 80s and 90s. Fundamentally, why do you think that is?
MALCOLM TURNBULL:
Well I think - and I want to, sort of, channel John Edwards a little bit on this. And, I mean, I see Ross Garnaut here and I've learnt a lot from both of them. But I do think that it is a bit - I think you've got to be careful assuming that the glory days of the reform era, you know, floating the dollar, for example, is something that you can do every 10 years.
There were some big changes that were made and it's hard to see what the reforms of that equal would be. This is Edwards' argument and I think there's some force in that. I do think, however, that there are - that you've got to remember, and I'll just make this observation. You've got to remember that if you want to effect any reform or any change - reform, one person's reform is another's, you know, retrograde, backslide, of course.
But if you want to effect any change, you've got to persuade people they've got a problem to begin with. And this is why I think that the path of reform has got to be first, explain the problem. And that doesn't just mean put out a report. That means really explain it and expose it and, for people in my line of work, repeat yourself again and again and again.
And then you've got to outline your solution and why that is the right one. But unless people accept that there is a problem, they won't, you know, they won't act. And to take a, sort of, a not so controversial one - and I see Jason Clare is here, who's the Shadow Communications Minister. The post office obviously has a massive existential problem, high fixed-cost business with letter volumes declining every year at a, just a rate that will lead to nothing eventually. So obviously all of those profits are going to turn, very soon, into losses, and unless there is change will require very big government subsidies to keep afloat.
So the first thing to do and when, after the election, the first thing I did regarding post was to say to the management and the chairman, you've got to explain your position, be totally transparent about it, spell it all out. They've got some good third party verification so that people knew they weren't just talking their own book. And I think we now have - there may be disagreements about precisely what measures should be taken, but at least everybody agrees there is a problem.
And we did a similar thing with the NBN, you know the - it was important to explain why the project was failing, how much it was failing by and then lay out a solution. So I think that's the, perhaps if reform is getting more difficult, perhaps it's because we're not doing a good enough job at explaining the circumstances that give rise to the need for it.
STUTCHBURY:
So on some of the big policy areas of our time, do you think the Australian people - this was discussed this morning as well - do you think the electorate agrees or understands right now that there is a serious budget problem that's running us down?
MALCOLM TURNBULL:
I think, increasingly, they do, but it takes time. You know, we just have to keep on getting - look, the numbers are very clear. If you - business as usual trajectory leads you to $667 billion of debt within the decade. We are, prior to the budget - prior to our budget and assuming our budget gets passed. Prior to our budget, we were spending significantly more than we were receiving in income.
And my point to our friends in the Labor Party and our critics elsewhere is very simple: do you think this is tenable? Hardly anybody says yes. Okay, so that's not tenable. We've got to do something about it. Alright. The only way to fix it is to spend less and/or raise more taxes. And you can do that in any number of ways. There's an almost infinite range of possibilities.
We have set out some changes. Spending cuts, revenue increases. If you don't like that, that particular mix, what is your alternative? And I - then I - and that was my criticism of Bill Shorten's budget in reply. You know, I was opposition leader for one budget in reply and at the time, in 2009, at the time we were very concerned that nothing we said could be accused of making the budget outcome worse.
And we did object to the removal of the private health insurance rebate and so we proposed an alternative measure slugging the poor old smokers again - always a good one to have. Ken Henry knows that’s a good one you can always pull out of the top drawer when you want to raise some more money.
And so at least we had it, so people could say you don't like that, what are you going to do about it? Well here's an alternative, we'll raise the same amount of money and you get the same bottom line. I think that's what Labor should have done.
STUTCHBURY:
But getting away from Labor versus Liberal and so forth --
MALCOLM TURNBULL:
Sorry, it's hard.
STUTCHBURY:
You said that the real precondition for getting changes to explain to people the reason for change --
MALCOLM TURNBULL:
Yes.
STUTCHBURY:
And they can understand it and then suggesting that people are now starting to understand the problem, you know, weeks after the budget was brought down. Is it the fact that at the last election, neither side of politics was really up front with the electorate to say we didn't really need to go through a MYEFO exercise and all that sort of thing to know that we did have a big budget issue or --
MALCOLM TURNBULL:
Well I --
STUTCHBURY:
They both agreed that in a sense the Australian public didn't want to hear that message or that neither side could break ranks and say, you know, we're going to have to sort of take things away from you or money has been falling from the sky for 10 years and it's been great, but now we're going to take some of that back?
MALCOLM TURNBULL:
Well, look, we've been hammering debt and deficit for a long - themes of debt and deficit for a long time. And you remember during the GFC we opposed part of the second - the larger part of the Rudd Government's stimulus which was very unpopular, so I think our credentials on that are good.
If what you're saying Michael is that people have not - not enough people are aware of the scale of the problem, then clearly, we have not done a good enough job, I mean, you know, in terms of getting that message across.
I think the - when my - my experience is that when - once people accept that we are in a very structural way, spending more than we're receiving, they recognise that something has to be done.
Now, as to what - look, I sent out to my - some - I'm sure many of you are on my email list so you know how I persecute my constituents and supporters and friends. So I sent out about 60,000 emails in my budget eletter. 3000 of those recipients responded to me and most of them at some length.
When I say at some length, you know, two or three or more paragraphs. So it wasn't - it was a - it was a huge labour reading them all and replying to them all, which I have now done. So if you've got my eletter lying in your inbox and you haven't replied to it yet, it's old news; don't bother, move on.
[Laughter]
But anyway, what was - what was interesting was the number of people that wrote to me and said I agree with you that we have got to do something about it, but I don't think you should have done this. I think you should have done something about negative gearing. I think you should have done something about superannuation.
And, you know, there was a - and that's the sort of debate that we should be having. I was having a better quality debate in my email correspondence than we are having in the House of Representatives because people were proposing alternative - you know, they were saying, you know, we think your measures are too tough on - on people on low incomes, why don't you, you know, tax the rich more or hit super more, or - you know, and there are all sorts of - there are any range of proposals, but that was - that's the sort of policy - see, again, I don't want to make - turn this into a partisan rant, so I will just make this one observation.
That is what a responsible opposition would have done. A Labor Party that was responsible would have said: yes, we've got to do something about this. But, you know, this deficit. They might have said it wasn't - reframed it slightly, but said: we have got a different set of measures and proposed the set of measures that - that - from - that they thought would be more defensible, more popular, perhaps. That would have been a smarter thing to do, but instead there was basically no alternative.
STUTCHBURY:
You just promised you weren’t going to --
MALCOLM TURNBULL:
The Member for Fraser -- the Member for Fraser would have done - when he is shadow Treasurer, I promote him, we all promote him. Because we all know - you know Gareth you know, people think we promote Andrew Leigh to make him uncomfortable on the opposition bench, and that is not true.
It is not true, it’s because all of us know that at some point the political cycle will turn and there will be a Labor government again. Hopefully a very long way off. So we would just like there to be someone that's highly numerate and economically responsible somewhere near the top of the tree that, you know - and he is a young man, he can wait until he is in his early sixties.
STUTCHBURY:
Are we in danger of really now going backwards, you know, policy, tried to get industrial relations reform up and it not only collapsed it went backwards.
MALCOLM TURNBULL:
Yes, that's correct.
STUTCHBURY:
Tax reform under Labor was botched, quite frankly. Carbon pricing is now sort of - it looks like the great Australian experiment of carbon price is going to collapse. The budget is having trouble being sold. And one point that strikes me is that Australia has now got a top marginal income tax rate. Just got to have one from, you know, tomorrow. Basically 49 per cent.
MALCOLM TURNBULL:
Yes.
STUTCHBURY:
New Zealand is 33 per cent. Though are we just - in key areas - I mean, seriously going backwards?
MALCOLM TURNBULL:
Well, I - I - there is no - one of my - one of the great mistakes that was made was when Ken Henry produced his fine tax review, ably assisted by a number of people in this room, including Heather Ridout, who I see over there.
It should have been released immediately. This pro - you know, governments --
STUTCHBURY:
[Interrupts] and the Audit Commission.
MALCOLM TURNBULL:
You may very well say that, but I couldn't possibly comment.
But the - but you see, the - you see there is a lot to be said for getting reports out quickly. I mean, you see with the - again, I will just speak for myself. For the strategic review of the NBN, which is quite a controversial document. That lingered on my desk for days - literally for days and then it was out.
We got it out as quickly as possible and we will do the same thing with the report from the Vertigan Panel, because the - you know, often when you - if you, particularly if you want to promote discussion you want to get it out and then if you publish your report - if Ken's report had been published at the time it was given and every journalist said: rule this in, rule that out, what about this, what about that, the Treasurer could have said: look, I've only just got it. It's, you know - it's as thick as a phone book. Or, give me a break I'm going to take it off and read it over the summer. And - and then you would have had a - a much better debate.
And I don't think the RSPT would have - I think the flaws in that, you know, the - it was one of those things that worked in theory but not in practice. I don't think that would have seen the light of day had there been a proper debate. So yes, I do think you need to get that stuff out there and debate it early, but there is always reasons to sit on this kind of thing, so that should be avoided.
STUTCHBURY:
[indistinct] Really, the question is are you, yourself, sort of feel uncomfortable with having - you know, top marks for a tax rate going back up to 49 per cent - basically 50 per cent while, you know, our close competitor, New Zealand, has got 33 per cent - a third rather than a half?
MALCOLM TURNBULL:
Well, there is no - there is no question that we are - we are far too dependent on personal income tax. And - and, you know, we are in a competitive world. I - I'm not suggesting that the - look, here's - let me make this observation and see - and see if in the discussion people agree with me.
I'm looking at this - I'm not a tax expert at all, but looking at it from 60,000 feet - that's looking at Australia's tax rates you would say that it is too tough on people earning income, i.e. the entrepreneurs, the people who are growing and driving, younger people in jobs, working hard, making money in their businesses. It is too tough on them.
But it is incredibly concessional to older people who have made their money. Right. And so that is the - now, you know, all of these areas are very hard to - very hard to deal with, because any change invariably when people receive advantages from changes in government policy they are sometimes grateful, sometimes regard it as insufficient acknowledgement of their worth.
A slight change to their detriment and they become very angry. So that's why reform is very difficult. But, I mean, that's - that - you know, we are too dependent on income tax, plainly.
STUTCHBURY:
Thank you, Malcolm. Before we start turning to the - to the floor, could I just ask you - I do have to ask you, what came into your mind when you heard that Clive Palmer was about to hold a press conference with Al Gore?
[Laughter]
MALCOLM TURNBULL:
Um, well, that was - not a lot. I mean, you - I think it's better - I think so as not to be subject to - to any more surprises than you otherwise would be, it's better to keep the mind clear when you hear about Clive being about to make a pronouncement, but it certainly was a - it certainly was a very effective PR stunt.
I don't know - I would have loved to have had a penny - I would give - I would give a penny - I would give more than a penny to know what was going through the Vice President's mind as he was standing there listening to Clive. But I thought - you know, Kevin Rudd patented that - I've got to zip, as a rather daggy way of ending a press conference.
I thought Palmer's “I have an urgent dinner to attend” really trumps that.
[Laughter]
I mean, I think we should, I think we should all use that.
STUTCHBURY:
Well, is this a sign that after we had - we've had several years of leadership turmoil in the Labor Government, minority government, everything that went with this, that now under the new Senate controlled by the Palmer Party that the government is now going to be really hostage to populous whims of Mr Palmer and his group, and that this is a real challenge for the sort of rational policy making that this conference is really wanting to promote.
MALCOLM TURNBULL:
Well, look, there are not many governments that have a - enjoy a majority in Senate, number one. So having to wheel and deal with cross benchers in the Senate is situation normal. The difference between our relationship with, say, Palmer and the other independents and the previous government's relationship with the Greens and the cross benchers in the House is that they needed their support in the House to survive as a government.
And we have a very substantial majority in the House of Representatives. The only question is how much of our agenda can we get through the Senate? That was - you know, that has been a problem for everyone. It was a problem for John Howard in all but one term of - of his government, so I'm - the cross benchers are broadly speaking from the centre right, so I'm confident that we will be able to achieve - I'm confident we will get the budget through the Senate and I'm not - perhaps not every item precisely in the form it has been presented, but I don't see - I don't see it as being - saying the Senate is in control of Clive Palmer or the nation is being held hostage by Clive Palmer, or we are all sort of, little dinosaurs in his dinosaur park. I mean, just - no, that's getting too carried away.
STUTCHBURY:
Okay look, the turn for - if people catch my eye, and there is microphone coming around here, and just identify yourself, even though you might be very well known to people, if you can identify yourself and your affiliation.
QUESTION:
[indistinct] from [indistinct] University of China. I enjoyed very much the conversation; and getting back to the question about China’s relationships with its neighbours. I agree with you that China, sort of, managed carefully its relations with - with [indistinct] neighbours and it can't have been [indistinct] beneficiary of important government of the last several decades and they should speak to [indistinct] of [indistinct].
However, bearing in mind that China has roughly about 20 neighbours [indistinct]and [indistinct] and there are - are issues left about the past between China and some of these neighbours. So what I guess, sometimes it's difficult for other countries, including, you know, countries like Australia, who has so few neighbours, to appreciate the complexity and challenges in managing the relations with our neighbours.
And also, you know, if we look at the [indistinct] we have disputes now with several of our neighbours, but forming relations with most of our neighbours they're fine, they're normal. So I think we should now exaggerate the [indistinct] between China and these neighbours.
It is true we do not have many allies and that's our policy; that's our choice. Our policy's now to [indistinct] allies with our countries. [indistinct] policy is to not to forge so much alliance but rather to, you know, have the minimum of enemies. So even through the US has so many allies, it also has so many enemies through the world. That's not good choice for China.
And the final [indistinct] when, you know, [indistinct] about, you know, China's relations within our states, let's be careful not to put everything in a context of China-US relations. I mean, the skills within China, neighbours, they're happy there for decades. They are not necessarily a cast off the US policy [indistinct].
When the US, you know, [indistinct] and has our global or strategic [indistinct] not necessarily because of China. So it's very important for US allies to bear in mind that US has its own interests in pursuing this [indistinct] in this region. Not necessarily in the [indistinct]. So that's my [indistinct]. Thank you.
MALCOLM TURNBULL
Thank you - in the words of Tony Jones we should take that as a comment, that's a good - you know, I think it would be fair to say though - I don't want to respond at length, but it would be fair to say though, notwithstanding your remarks, and I don't disagree with them materially, but there's no - I don't think there's any question that relations with a number of important neighbours have deteriorated in recent years because of these maritime disputes, and they're all readily resolvable.
And my question, I guess, to you would be to say, why are they - why has China not been able to resolve them in the same manner it was able to resolve what I would have thought was a much bigger thing, being the border with Russia?
Because there you were talking about large chunks of Chinese territory that were taken during the, the same way the Russians took part of the Liaoning Peninsula, for example.
QUESTION:
Graham Samuel, and let me just make one quick comment about Clive Palmer. I think he's probably a better spinner than Shane Warne, but ably assisted by a fairly gullible media with the exception, Michael, of the paper with which you're currently associated and that which you used to be associated with just a couple of years ago.
But that brings me to the media, and you've been reported as saying that the media deregulation that you've been contemplating, it's the subject of an excellent paper put out by the department, by your department, is subject to getting an agreement from all the major media proprietors. I'm sure that's a misreporting of the position or misstating of it. Is there a prospect that the public interest will be in placed in ascendancy to that of the strong, powerful private interests of the existing media?
MALCOM TURNBULL:
Yes. Definitely. Well our job is to serve the people, as you know, as the government [indistinct]. And that is our responsibility, we represent the people. We're - we are - the only point I made about getting some degree of unanimity was that particularly in - the reality is this: that we have a big reform agenda on our plate.
And I've got a big, I've got, the NBN to deal with, we've got some big issues for the public broadcasters, we've got Post, we've got a massive deregulation agenda in terms of the telecom sector, and so media - the media ownership regulations are 1990s regulations, there's no question about that. They are pre - they're from a pre-internet era, but it's obviously a lot easier - my only point was to say to the various entities and stakeholders - was that if you - it's a lot easier for us to achieve change if there is a degree of unanimity. If there is a pitched battle that makes it hard, so it was just a simple, practical point, Graham, and you know, you've made your compliment about the Financial Review and I obviously echo that, and I just say that the real - probably the real reason why reform is so difficult is that not enough people read the Financial Review.
QUESTION:
Just following up on Graham's point now, that the media industry…
MALCOM TURNBULL:
Yes.
QUESTION:
Is probably the industry where the sector itself and all the incredible dynamism, the technology of the sector has outgrown the regulatory framework more than any other industry. So what are the barriers to basically having a fairly sweeping deregulation of all those rules on who can own what in the internet world, whether you own a newspaper or radio station and these sorts of things for the regulations?
MALCOM TURNBULL:
Well, look, I think there is a very - I mean I think it's pretty clear where my sympathies lie. I think it is very clear, very - it's quite clear that the media is more competitive now than it has been at any time in any of our lifetimes. The internet -look, media regulation was based on the concept of having a number of platforms which were limited.
Newspapers, anyone could start a newspaper of course but the economies of scale made the barriers to competition impossible to climb. Television stations were licensed. Radio stations were licensed. But then came along this uber-platform of the internet to which everybody has access and it has revolutionised and in some areas devastated media businesses.
And so what you now have is much more competition than you ever had before. You - it's a completely different world and so the argument is, and this is really the point, Graham, that we're seeking views on and debate on, here is the proposition: given the fact that this uber-platform the internet is available to everybody, and given the fact that there is more competition and diversity than there has ever been, say in our lifetimes at least, possibly ever, why should there be ownership and control provisions relating to the media that are other than those - that are industry specific?
In other words, let the ACCC deal with it, and they do. I mean when Graham was running the ACCC they stopped Stokes buying more of Foxtel, I think, yes? Yes, Foxtel. You know, a lot of people say if you change the rules it will mean News Limited could buy Channel 10; News Limited can buy Channel 10 now under the broadcasting legislation. There is nothing to stop News buying 10.
The thing that would stop them would be potentially the ACCC, that's the issue. So do you really need more than the general competition laws? That's the proposition and that - and then there's the perennial argument about anti-siphoning which is too arcane to…
QUESTION:
Don’t let us stop you.
MALCOM TURNBULL:
No, no. That's where - that is where - look, can I tell you, I - I don't want you to think I'm very old, but I first represented a television network to a Federal Government on media policy in 1977 so I've sort of seen this film before quite a few times.
STUTCHBURY:
Quickly, Andrew Leigh, we will try to get a few more questions in quickly.
QUESTION:
Thanks, Malcolm. Andrew Leigh. Look, I was tempted to mount a spirited defence of all the positive ideas Labor has put forward or to ask you something cheeky about your views on…
MALCOM TURNBULL:
But you don't have enough time. It will take hours.
QUESTION:
But exactly, and in view of your generous flattery I thought I would go to an issue that you've been thinking and writing about a little bit lately which is the dearth of entrepreneurship in Australia. You know, there's some good little bright sparks but in general fewer [indistinct] from a typical developed country, and I wanted to know to what extent you think that's got to do with sort of tax and regulatory structures and the extent to which it's got to do with cultures around business failure and whether there is a role for government in changing that.
MALCOM TURNBULL:
Yes. I think there are. I think there are some clear tax changes that have to be made. The changes to the tax law made in 2009 regarding employee share schemes and [indistinct] option schemes are clearly counterproductive. And just for the visitors here, what these changes meant was that if a company gave its staff shares or options which obviously start-ups do because it's - they've always got plenty of scrip. They don't necessarily have lots of cash.
The employee had to pay tax on them on receipt even though it was not saleable, it was, you know, hard to know what it was worth, etcetera. It killed that whole type of incentivisation, but that has got to be changed and we will address that shortly. I think crowd funding is another area where we need - and you know there's a lot of work going on with that.There has been a report by CAMAC - just an advisory body to government for the visitors - on this area and I would hope that we would come close to emulating President Obama's changes on crowd funding. More generally I think there are - it's puzzling, isn't it? I mean why is a country, a highly-educated country with a non-deferential culture not have a stronger - a larger share of its GDP contributed from its own intellectual property?
It really is one of those issues that does keep me and I suspect many, many of us awake at night and I don't know that there is any quick fix with it, but I think a lot of it is part - is the tax issue that I mentioned earlier but I think also a lot of it is cultural, perhaps something for a longer discussion.
STUTCHBURY:
Thank you. And Kurt Campbell.
QUESTION:
Minister, thank you very much, very provocative, thought-provoking, forward-leaning discussion about the future. I just want to say a word of congratulations to Crawford and the ANU, really a good session and really valuable for us. Tom Pickering and I here our covers that we're part of this conference. We're actually at the leading edge of a giant ore - iron-ore mining binge.
We brought extra bags. We're going to be travelling around the region to sustain American hegemony here. Thank you for that. I wanted to ask you a question. One of the reasons why Americans like or at least recognise Australian politics is frankly, you know, it's colder here but it's every bit as bitter in terms of the political dialogue.
We ask ourselves a lot of questions in the United States; what has happened to the context of our political discourse? It used to be that we had a saying, a famous saying from the 1940s about certain kind of debates dying at the water’s edge in terms of if we unite for a common purpose.
We see less and less of that in the United States and our politics have gotten more and more bitter. We see some signs of that in Australia and I would be curious to hear your views, why you think that is and whether this is a temporary phenomenon or whether this is here to stay. Thank you.
MALCOM TURNBULL:
Well, I don't know that - I don't know that Australian politics has ever been noted for its cheerful bipartisanship, so I'm not sure. Kurt, I don't know that I could buy into the proposition that it has become worse. You know, perhaps every generation - like every generation thinks the youth is worse than they were. I think we always think that our politics has deteriorated because we look back at the past through rose-tinted glasses.
So I mean look, what else can we say? The other thing is that the media environment has changed dramatically and that is - a lot of people misinterpret this by the way. They say this has given the media too much power. The media has never had less power. The proprietors have never had less power. You know, the fulminating editor, even a wise one like this, has less impact now than he or she did a generation ago because there are so many more sources of information.
You know, in days gone by - I will tell a story. This involves the Fin Review so don't take offence at this. The Financial Review some time ago published an article by John Roskam, used to work with me once and so you know, he's a good guy, a friend of mine, but he was scathingly critical of something I was doing.
I read that over my breakfast and quickly pounded out a blog responding to it and being equally charitable towards his reasoning, Tweeted it, Facebooked it and of course it started to get a lot of hits and it was being widely read. By 11 o'clock one of your editors rang up my staff and said: could we put Malcolm's blog on our website? And we said: sure, that's fine.
And there it was. It was all - by 11 o'clock a newspaper that anyone who had read probably read maybe at 9 o'clock or 8 o'clock. There was the response on the website at 11. Now, in the pre-internet era I would have been grovelling and begging, you know, trying to make you feel guilty, then threatening you. I would have played every emotional leg, every emotional note and you would have said: yeah. You'll get one paragraph. That's all you're going to get if you're lucky, you know.
And that's the difference, you see. So I think the - I think we've got much more - you know, politicians shouldn't complain. Politicians have now got their own megaphones in a way they - they do not need to be intermediated in the way you used to be, and that is a very significant change.
STUTCHBURY:
Okay. Thank you very much, Malcolm.