INTERVIEW WITH KAREN TSO AND BERNIE LO, CNBC Asia

KAREN TSO: Joining us is Chris Bowen, Financial Services Minister of Australia. He’s also the campaign spokesperson for the Labor Party. Minister, great to have you on board with us today.  

CHRIS BOWEN: Good to be back with you, Karen. 

TSO: Let’s get to the campaign basics. You know, one of the key issues yesterday, the media was abuzz with the fact that Kevin Rudd had stolen the headlines away from Julia Gillard, turning up at an event at the same time. In fact, one of the key TV coverages went straight to the Rudd arrival at a school in Queensland. Is this going to be one of the hardest challenges over the next few weeks, getting over this Kevin Rudd issue? 

BOWEN: Look, I think, Karen, people are going to vote on issues that are important to them: policy issues, health, education and economic management. They’re not going to be voting on who turns up at what event and which media go to which event. That’s something which is for the commentariat and media speculation, but voters are going to be focused on the real issues, I think. They are focused on the difference between our approach and the approach of our opposition. 

TSO: It is a tricky situation, though; Kevin Rudd, of course, being a once popular leader and the way he was deposed just in the last few weeks obviously going to be key for some voters still. I want to bring up some of the criticism or just the discussion points today about the way the campaign is being conducted, that Gillard has been fairly low key. Do you agree? Is that the campaign that’s been rolled out in Australia, sort of a softly, softly approach? 

BOWEN: I think the Prime Minister’s been campaigning particularly well. She’s been in several areas of the country already: Queensland and New South Wales. She’s been in lot of different areas talking to voters, she’s made a number of speeches, she’s been campaigning very solidly, and people have been responding very well to her. 

BERNIE LO: Minister Bowen, it’s Bernie Lo in Hong Kong. I appreciate your time, sir. I know you’re very busy.  

BOWEN: Hi, Bernie. Pleasure. Nice to talk to you again. 

LO: The tenets of the two campaign platforms could not be more different. You know, Prime Minister Gillard made peace with the miners over the RSPT. You know, there’s a newfound peace which has broken out. But on the flip side, Mr Abbott and the Liberals, you know, have basically taken a page out of the, you know, austerity kind of doctrine. I mean, ‘The stimulus doesn’t work, we’re going to cut jobs, we’re going to streamline, we’re going to fix the deficit through those means.’  

I mean, you couldn’t be more stark, and that is the choice which both sides are essentially giving the Australian people. How are you going to make sure that your message resonates and that the LNP’s doesn’t? 

BOWEN: Well, of course, the Opposition wants to pretend, for example, that Australia hasn’t gotten through the global financial crisis better than most other countries; that our stimulus wasn’t key in doing that. They have a policy which we see as taking Australia backwards, and we’ll be pointing that out, that they don’t want to proceed with our National Broadband Network; they don’t want to proceed with our boost to our pension incomes through our superannuation system; they don’t want to proceed with our reforms to our health system; they don’t want to proceed across a wide range of areas. They don’t want to proceed with our changes to financial services and interest withholding tax. They oppose us on so many areas.  

We’ll be pointing out that we have a positive agenda for the future and the Liberal Party wants to take us backwards; backwards in so many areas. Backwards economically: they opposed the stimulus package; they said they wouldn’t have a stimulus package of anywhere near the same size. They have a very different approach to us. We’ll be pointing out that our debt levels are low, our deficit is low by international standards, we still have our AAA-rating. But yet we’ve managed to get through a very low unemployment rate and a growth rate which is very solid. 

LO: But Minister, is it not a choice for the Australian people between government activism and letting the market take care of itself? I mean, you talk about bumping up the superannuation contributions; that’s largely going to be funded through the mining tax. I mean, so are you saying that Mr Abbott and the LNP’s doctrine of hands off and just kind of tighten things is completely wrong, that you need to spend, you’ve got to keep spending, the Federal Government has to put its hands in every pie possible? 

BOWEN: Well, it’s not a matter of keeping on spending, Bernie. We had a stimulus package which was specifically designed to wind down, and a number of commentators internationally have said that that’s one of the best designed stimulus packages around the world. Joseph Stiglitz, the Nobel laureate in economics, said so the other day. So we don’t believe in just keeping on spending. We have a stimulus package which is winding down.

We do believe, we make no apologies for boosting our retirement income system. We have a retirement savings gap in Australia and we want to deal with that. We want to deal with the ageing of the population. We have the fourth largest pool of funds under management in the world, as you know. We want to add to that. The reforms we’ve announced would add another half a trillion dollars over the next 25 years; we think that’s a good thing. It’s good for the nation, good for individuals to have a much more comfortable retirement income and good for the nation to have that income at their disposal.  

Bernie, you know how beneficial the superannuation system has been to Australia over the last two years. We want to make it stronger; we make no apologies for that. The Liberal Party just doesn’t seem to get its importance. 

TSO: Minister, I don’t envy your job. Some of the cues out of the Australian economy are so mixed at the moment. Growth is not exactly stellar when you liken it to Asia, for instance, but then inflation starts to creep in, unemployment’s very low by comparison to anywhere else in the world.  

When you look at the fiscal promises and you try and get the deficit back to order by 2013, how do you rate some of these other unknowns that are out there? Ben Bernanke just talking about this overnight, that we’re looking at unusually uncertain circumstances. Could this be a key risk to this top election promise that you’ve got to restore fiscal order? 

BOWEN: Look, our commitment to bringing the Budget back to surplus in 2013 based on conservative estimates. The Treasury estimates are not written by the Government, they’re written by the independent Treasury. They do their forecasts and their projections. They don’t take the best case scenario, they take what they expect is their best estimate of what’s going to happen over the next few years. We are estimated to come back into Budget surplus by 2013. We think we’ll achieve that. While there’s downside risk in the economy around the world, we are very confident in our Budget projections.  

TSO: Economic credentials are really a key on that. First, John Howard, one of the former leaders, used it in an election campaign. It was used early on by Tony Abbott in this campaign, pointing out that the amount of borrowing by the Government, even if it is low compared to other countries, is still potentially squeezing out corporates and having an impact.  

Do you think if you look at this and you look at the argument that’s put forward about conservative governments having more discipline, being more conservative, is there a case for it? How do you cut through on that message? 

BOWEN: Absolutely not, Karen. We have, over the last three Budgets, identified $83 billion worth of savings. Yes, we stimulated the economy, as every prudent government around the world did. We did so in a way which was designed to wind down. We did so in a way which protected our AAA-rating. Government debt will peak at six per cent or thereabouts of GDP, compared to well over 90 per cent in the G7, for example. So, look, we have very fundamentally good economic settings in Australia. Our Budget is in fundamentally good shape.  

And of course, if you hadn’t stimulated the economy, if you’d let the economy go into recession, you would have found bigger Budget deficits as our unemployment rate went up, our welfare payments went up and our tax revenue went down. So the prudent thing to do was stimulate the economy. We did that. It not only led to us having a very low unemployment rate by international standards, but it’s also meant that we’ve managed to keep our debt to GDP ratio low by international standards and by historical Australian standards, lower than it was, for example, in the year 2000.  

So we think we’ve got the fundamentals in Australia right and we would reject this notion that somehow Tony Abbott would be a superior economic manager because he’s shown no indication of that at all. He’s made the wrong calls on so many issues over the last two years in economics and our track record is one that we’re more than happy to run on. TSO: Minister, good luck with the campaign. We’re all eagerly awaiting the result come 21 August.  

BOWEN: Not as much as we are, Karen. Thank you very much. 

TSO: [laughs] Talk soon. 

BOWEN: Talk to you later.

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