The Oakes Interview: Malcolm Turnbull

Nine political editor Laurie Oakes presents his weekly political interview on TODAY on Sunday every Sunday from 7am -10am on the Nine Network.

Malcolm Turnbull, leader of the opposition.

LAURIE OAKES: Mr Turnbull, welcome to the program.

MALCOLM TURNBULL: Morning Laurie.

LAURIE OAKES: Now the Sunday papers today are excited about some figures on the cost of ministerial travel? Has that got you excited?

MALCOLM TURNBULL: Well, it's interesting that the Government chose to reveal all of this travel on the day of the Budget when it wouldn't be noticed so they are clearly ashamed of it, they let it out on a day when it would be overwhelmed by other events. But you know, it reminds me that there are many things that are Whitlamesque about Kevin Rudd, the size of the debt and the deficit, the big unfunded plan.

LAURIE OAKES: He’s shorter?

MALCOLM TURNBULL: Yes he is shorter, that’s right, but much more expensive to the taxpayer. But there's also the constant travelling. It reminds me of what Jim Killen, the late Jim Killen said about Gough. He said he has crossed the international dateline so often, he doesn't know whether he's AM or PM. And I think you could say the same thing about Kevin Rudd.

LAURIE OAKES: You probably could have said it about John Howard. He seem to remember he spent $20 million in travel when he was Prime Minister didn’t he?

MALCOLM TURNBULL: Well he was Prime Minister for a very long time. Just remember that, 11 and a half years. I think Kevin Rudd will top the travel stakes very quickly.

LAURIE OAKES: OK. The economy, which is what you want to talk about and everyone wants to hear about.

MALCOLM TURNBULL: Sure.

LAURIE OAKES: You've ripped in to Kevin Rudd as a spend-thrift but you were a champion-class splurger yourself weren’t you, in government?

MALCOLM TURNBULL: I don't think so. no. Not at all.

LAURIE OAKES: Well the reason I ask that, I've been reading Peter Harcher’s book on the dying days of the Howard government, it's called 'The Bitter End'. He writes about a proposal from you to pay for the insulation of every house in the country and he writes this, he says, "This would go to every house in the country. Peter Costello asked incredulously that every Point Piper mansion, Malcolm. Why don't we just nationalise the housing stock?" Now he obviously did think …

MALCOLM TURNBULL: Well Peter Harcher wasn't in the cabinet room and those remarks…, those words were never uttered to my recollection anyway. The insulation has always been an efficient way of reducing CO2 emissions because it improves energy efficiency. But that type of insulation support, insulation pays for itself and so it is something that is quite properly and reasonably means tested which is not what the Government is doing. So the Government is actually doing what Peter Harcher has accused me of suggesting but was never my idea. Well, the Harcher suggestion – is there was no means test. It just strikes me as odd that you're proposing this massive spending and now you're criticising Kevin Rudd over his pink …?

MALCOLM TURNBULL: I’m just telling you Harcher is wrong there.

LAURIE OAKES: Have you got that information from Peter Costello, Peter Costello is telling fibs? MT; Laurie, how do you know, where do journalists get their information? And when they do get it, they can never tell, so.

LAURIE OAKES: Well the Coalition's decision to vote against means testing of the private health insurance rebate in the Budget appears to be fine. Is tt totally unchangable or could there be circumstances where you look at that again?

MALCOLM TURNBULL: Well Laurie, it's a very, very bad policy. I mean it's dishonest. Kevin Rudd gave an absolutely rolled, gold emphatic promise that he would not tamper with the 30% private health insurance rebate. You know, he's broken that promise flagrantly. He doesn't need to, I mean it is going to raise $1.9 billion over four years.

LAURIE OAKES: That's at the start but then it increases as a proportion of GDP?

MALCOLM TURNBULL: Well, but Laurie, it's a tiny, tiny percentage of the Federal Government revenue. So that amount of money, while large, viewed in isolation…

LAURIE OAKES: I like your view, there was also a time when nine billion was considered to be real money.

MALCOLM TURNBULL: It is real money, it is a lot of money, but the point I am making is that it is $1.9 billion over four years at a time when the Federal Government revenues will be $1,200 billion. So it’s ..

LAURIE OAKES: But your squealing abut deficit and now you are sort of saying $1.9 billion is nothing? It’s ridiculous.

MALCOLM TURNBULL: That is not what I’m saying, and what I’ve actually office, this is the difference between me and Mr Rudd. I have offered him a responsible choice. I’ve said to him, "You can either make health more expensive, you can put more pressure on the public hospital system, you can break a solemn electoral promise to raise that money. Or you can put up the price of cigarettes by about 3 cents a stick, which will raise the same amount of money and will actually take pressure off the public hospital system. "So it's really a question of priorities and values. Does Mr Rudd value honesty? Does he value keeping his election promises? Does he value health? Does he value the public hospital system? Or is he just on an ideological tirade to undermine the private health insurance system? Now everybody suspected he was going to that when he was in Opposition because that is why he was repeatedly asked to give a pledge. I mean people would not have asked him again and again, "Promise, Mr Rudd, that you will not undermine the private health insurance system if they didn't think he was inclined to do so.

LAURIE OAKES: But I want to talk about all those things, but firstly. Wayne Swan said the other day, "I've always had private health insurance but I don't expect people earning $60,000 a year to subsidise it for me? Now why do you expect people lower down the income scale to subsidise your private health insurance.

MALCOLM TURNBULL: But Laurie, that's nonsense, with great respect. There is a public policy objective of …

LAURIE OAKES: …looking after the wealthy?

MALCOLM TURNBULL: No, just let me finish. There is a public policy objective of having more people to take up private health insurance so there is a tax break for private health insurance. Because we want as many people as possible to take it up. That is certainly our view. It's a view based on self-reliance. We need more money in to the health system. The more people in private health insurance the less pressure on public hospitals. We understand all of that. Now, so there's a tax break. So Labour wants to break – now they obviously agreed with that when they gave their promise in 2007. But if you're going to means test tax breaks, why don't you means test the research and development tax breaks that companies have? So are we going to suggest that only companies with low levels of profitability can have an R&D ..

LAURIE OAKES: So this time last year before the last Budget, you were defending the baby bonus for millionaires, now you are saying that people way down the income scale should subsidise your health insurance, my health insurance. Don't you believe at all in means testing?

MALCOLM TURNBULL: Well I think there is a role for means testing when it is a social welfare grant that's designed to relieve or address issues of low income or poverty. Let me give you an example. We all want farmers to plant more trees and look after their land, right? So we've had for many years Governments on both sides, we've had tax breaks for land care and environmental work of that kind on properties. Are we seriously saying that farms that are profitable, that are highly profitable, should not get the benefit of the tax break? Are we saying that companies that are highly profitable should not get the benefit of the tax break?

LAURIE OAKES: So the family that earns $60,000 should be treated the same way as that company, and they're trying to educate their kids and look after their kids' health, and you going to treat them the same?

MALCOLM TURNBULL: Laurie, the family that is on a low income, that cannot afford private health insurance, is using the public hospital system, which a slow deterioration in the private health insurance system which is what Mr Rudd obviously wants will result in them facing longer queues.

LAURIE OAKES: Treasury’s figures in the budget say that won’t happen. But could … MTL Well that’s what they assert. But let me say this to you Laurie. If you take money out of the private health insurance system, private health system, you take money out of health generally, it puts more pressure on public services and people on lower incomes, many of whom are older and are therefore have more need for medical services, are going to have to face longer queues.

LAURIE OAKES: This is what Yogie Barrar would call deja vu all over again. This time last year you said that the Government's actions on Medicare, on the safety net surcharge then, would cause people to flood out of the health insurance system? In fact they are flooding in at the rate of 4,000 a week.

MALCOLM TURNBULL: Yeh, and you know whey they are flooding in?

LAURIE OAKES: Why are they flooding in?

MALCOLM TURNBULL: Because Kevin Rudd has so neglected the public hospital system. You see, what he has done he has so let down Australians with his pledge to fix public hospitals and his neglect of public hospitals and the public health system is so severe, naturally people are taking out private health insurance more often. Just think about this, in that budget …

LAURIE OAKES: So your predictions are wrong, you the changed the basis of it?

MALCOLM TURNBULL: No because there are a lot of factors Laurie. If you put up the cost of private health insurance, that is a disincentive for people to take it up. If on the other hand you allow the public hospital system to deteriorate, that is a countervailing incentive. So all of these factors often are pulling against each other, but just think about this, in the Budget papers Kevin Rudd has a big glossy brochure about infrastructure. The amount of money allocated to hospitals and health care is less than 10%, less than 10% of what he's allocating to a completely unplanned, unanalysed broadband network which is just a figure plucked out of the air. Look, his priorities are completely wrong. I mean, just how can you be serious as a Prime Minister and say you care about health and to put the price

LAURIE OAKES: You see …

MALCOLM TURNBULL: ..of health up as opposed to putting up the price of cigarettes.

LAURIE OAKES: You say people are flooding into private health because the Government is not spending enough on hospitals. That's an argument for not subsidising private health insurance but for putting that money in to hospitals, surely?

MALCOLM TURNBULL: But Laurie, it is … you need .to have.

LAURIE OAKES: You can't have it both ways.

MALCOLM TURNBULL: Laurie, Laurie, that’s, again, this is, now you're sounding like Kevin Rudd. Kevin Rudd sees it as an ideological war between the public..

LAURIE OAKES: I haven’t asked myself one question yet?

MALCOLM TURNBULL: That’s true, exactly right. He sees it as a war between public and private. It isn't. What we want to do, and we did this when we were in Government. We increased funding to Medicare, for example, by 48% in real terms. That's 48% after taking into account inflation, and our policy saw the number of Australians taking up private health insurance grow from 34% of the population to 44% of the population. That was a win-win because there was more money going in to every aspect of the health system and that benefits everybody. What Kevin Rudd wants to do is to undermine the private health system. He wants to undermine choice. He wants to undermine the option for Australians to get the health services and the doctors they choose, undermine that choice, and at the same time, he is completely neglecting the public hospital system, and, if I might say, breaking his promise to fix it all up by June 30.

LAURIE OAKES: Now you’ve advocated an increase in tobacco taxes. Presumably you're going to have to backflip on your opposition to an alcopops tax which will raise even less than the piddling $2 million you're talking about.

MALCOLM TURNBULL: Well it is not a piddling two billion dollars Laurie. It is not what I said at all. The only point I made about the $2 billion is, $2 billion compared to $1,200 billion is a relatively small sum and the point I made was that Kevin Rudd's claim that he had to break his solemn promise in order to get a budgetary result is simply not right. And what we've done is proved that this was an ideological political move to attack private health insurance and had nothing to do with budgetary or financial necessity.

LAURIE OAKES: Well I could point out that the Howard Government in 2004 broke its promise not to change the Medicare safety net thresholds and I don't remember you squealing, but we haven’t got time to go in to that except to say that governments do these things. Now will you look again at the alcopops tax?

MALCOLM TURNBULL: We will definitely look at again in the context of what they present us with, we have seen their new bill, and also we've got to take in to account the budgetary environment has changed. I mean last year the Budget was solidly in surplus, this year we have a record deficit. A deficit so large, so shameful, that the Treasurer wasn't even prepared to mention it in his speech. You would know this, is this the first time in history that a Treasurer with a huge deficit has failed to mention it in the Budget?

LAURIE OAKES: Well I think it is the first time any Treasurer in my memory has failed to mention either the deficit or the surplus. I mean, they normally give the bottom line, and I was as gob smacked as you were.

MALCOLM TURNBULL: I know. It is an incredible…, and you know the rather sad thing about Wayne Swan, the pathetic thing about it was that last year he had a surplus which he had inherited from John Howard and Peter Costello and he boasted about that. But then when he had a deficit all of his own making, he wasn't prepared to speak about it. It says a lot about this Government's addiction to spend and their failure to address the substantial challenges that Australia faces.

LAURIE OAKES: I read a column today talking about you outspinning him in the budget. Can I ask you this, the main criticism of your budget reply was that you failed to give any indication of how you would deal with the deficit and debt issue?

MALCOLM TURNBULL: Oh well, that's what Labour has said but it's absolutely not true.

LAURIE OAKES: Well it was also my impression. Can I ask you this?

MALCOLM TURNBULL: Sure.

LAURIE OAKES: Would you abide by the discipline that Kevin Rudd has said he set himself that when the economy starts to grow again, real spending, Government spending will not be allowed to grow faster than 2%?

MALCOLM TURNBULL: Well I certainly would abide by whatever disciplines we set but the one thing you know about …

LAURIE OAKES: 2%?

MALCOLM TURNBULL: Well the one thing you ..

LAURIE OAKES: No, no - we're talking about you. MO: No, no. Look I think that is a worthwhile discipline, yes. And we will..

LAURIE OAKES: Commit yourself to it?

MALCOLM TURNBULL: We will assess exactly what disciplines and limits we'll impose on ourselves, when we go to the election and Australian people …

LAURIE OAKES: What's the matter with 2%? It's pretty tough.

MALCOLM TURNBULL: Laurie, it is tough but the question is will Kevin Rudd abide by it? It may not be tough enough.

LAURIE OAKES: Well I'll ask him that when I get a chance. I’m asking you, will you abide by it?

MALCOLM TURNBULL: We will abide by the disciplines we set. 2% seems fair but what I'm not going to do is give a pledge about the financial policies we will take to the election, in a year's time or more today, because we've got to assess it in the light of the situation at the time.

LAURIE OAKES: We’re talking about pledges, will you guarantee that you won't go to the election offering election bribes?

MALCOLM TURNBULL: Laurie, I think any responsible Opposition going to the next election is going to offer, have to offer discipline, and a discipline that the Rudd Government has not been prepared to impose on itself. I mean just think about this, these guys say, "We will constrain spending to only 2% growth.". They have not been able to constrain their own spending now. They've broken all their own rules. Their broadband network proposal has never been costed, hasn't been analysed, no business plan.

LAURIE OAKES: But people want to know about the alternative. Can I ask you this, if you become Prime Minister, do you accept that you won't be able to offer tax cuts for many years?

MALCOLM TURNBULL: We'll see Laurie. I think there's always a case for having a more efficient tax system and that will, that could involve some taxes being lower, some taxes being higher, perhaps a broader base, lower rates. It's that the tax system drastically needs reform.

LAURIE OAKES: Peter Costello says Australians can forget about tax cuts for probably 20 years. Do you agree?

MALCOLM TURNBULL: Well, I think in terms of the overall level of tax, he's probably right. 20 years is a long time and I think Peter would recognise it's a long time to forecast, but the big concern that I have is that our tax system is very inefficient and there are some taxes, as I say - you can have a tax reform, for example, which collects the same amount of money but has lower rates and a broader base. In other words, the scope of income that it's addressing is wider. Can I just come back to one thing, though? The big thing that was missing from Wayne Swan's Budget speech and which was the centrepiece of what I had to say was supporting small business. You see what Labour has done is nothing, nothing to support small business. That's the engine room of the economy. So whether it was our proposal to really take on the big issues of cash flow, with our tax loss carryback proposal. Now think about that. That is an eminently, practical, sensible proposal. An arrangement that's available in many other countries. So a company that loses money this year can than take that loss back, set it against their profits last year and recover the tax they pay.

LAURIE OAKES: We're out of time.

MALCOLM TURNBULL: That provides real cash flow for small businesses.

LAURIE OAKES: We'll let you finish on that free kick. Thanks Mr Turnbull.