May 29, 2025 • 24 mins
Well, they fight, they break up, they kiss, they make up.
Never before have the lyrics of a Katy Perry song been more relevant to federal politics.
After last week’s shock split, this week the Coalition got back together again. But at what cost? What compromises have been made on both sides? And will the Nats and the Libs be able to work constructively together after all the drama?
Meanwhile, Labor is moving ahead with plans to hike taxes on super accounts of more than $3 million, and Anthony Albanese hardens his rhetoric on Israel and its killing of civilians in Gaza.
Here to discuss all this with host Jacqueline Maley is new chief political correspondent Paul Sakkal, and foreign affairs and national security correspondent Matthew Knott.
Subscribe to The Age & SMH: https://subscribe.smh.com.au/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:00):
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics.
S2 (00:04):
So you're getting back together?
S3 (00:05):
No. This will allow time today.
S4 (00:09):
Dave and I have reached agreement formally to reform the coalition.
S1 (00:13):
Well, they fight, they break up, they kiss, they make up.
Never before have the lyrics of a Katy Perry song
been more relevant to federal politics. After last week's shock
split this week, the coalition got back together again.
S5 (00:25):
A bit like two parents who couldn't decide in a
divorce who looks after the kids.
S4 (00:30):
Well, Andrew, I don't accept the word bitter and, you know, people.
S1 (00:34):
But at what cost? What compromises have been made on
both sides? And will the Nats and the libs be
able to work constructively together after all the drama? Meanwhile,
labor is moving ahead with plans to hike taxes on
super accounts of more than $3 million. And Anthony Albanese
has hardened his rhetoric on Israel and its killing of
civilians in Gaza. As you know, our former chief political correspondent,
(00:57):
David Crowe, has gone off to Europe to become the
Europe correspondent. So this week we have our new chief
political correspondent, Paul Seckel, and our foreign affairs and national
security correspondent, Matthew Noche. Welcome, gentlemen.
S6 (01:09):
Lovely to be here.
S1 (01:10):
Hello, Paul. Let's start with the coalition rapprochement. And not
because I just wanted to say rapprochement. What is the
nature of the formal agreement that the two parties have struck?
S7 (01:20):
Well, it was eight days after David Littleproud, the nationals leader,
stood up and said the coalition was no more. About
2 or 3 days later, he said they're back on.
Sussan Ley agreed to go back to her party room
and reconsider the four policy requests that David Littleproud had made.
One was around breaking up anti-competitive supermarkets, another around nuclear energy,
which is significantly watered down and will not include the
(01:41):
building of nuclear power plants anymore. Another one was a
bizarre and very niche policy around universal mobile service obligations,
which is was a was an issue ten years ago
and has not really been debated for a long time.
And the other one was, can someone remind me what
the fourth one was? I really should.
S1 (01:58):
Divestiture. Did you say that one?
S7 (01:59):
Yeah, I said that one.
S6 (02:00):
Divestiture. Telecoms.
S7 (02:02):
Nuclear and regional. The $20 billion regional slush fund to
build dams and other things in in rural areas, which
again was coalition policy. So it was largely uncontroversial. This
was a kind of game of brinksmanship. The idea that
this was ever around for specific policy issues was always simplistic.
It was around personality. This was around philosophy of what
(02:24):
the National Party should be and whether it should be
joined at the hip to the Liberal Party. There were
National Party kind of supremacists. I'd call them like Bridget McKenzie,
who do believe that the National Party is a distinct,
standalone conservative outfit that can go it alone, trying to
wield their power internally to cause a split that, in
(02:45):
their mind, give the nationals more power and freedom to
advocate for their constituents. After a couple of days, this
all went pretty pear shaped. There was a lot of
outside criticism. Parties came back together over the weekend. Susan
Lee and David Littleproud had a number of conversations the
Liberal Party room agreed to in principle agree to those
four policies we mentioned. And by Wednesday morning, the two
(03:05):
leaders had another final conversation and agreed to give the
National Party six positions in the Shadow Cabinet. David Littleproud
initially wanted seven. They're entitled to six on the numbers,
which is a quota formula based on how many MPs
they have. They got a new economic portfolio. They hadn't
previously had been the assistant treasurer, which went to Pat Counihan,
who's a close ally of David Littleproud's from the seat
(03:28):
of Cowper in New South Wales. Matt Canavan was offered
that role. The rebel senator who's highly interventionist kind of
agrarian socialist. He's chosen to go to the backbench to
advocate on or against net zero. But the coalition is
back on.
S1 (03:43):
So was anything gained by this split and the coming
together again? I mean, if it was a game of brinkmanship,
do the Nats actually get anything out of it?
S7 (03:50):
I'd say the loser here, at least at this stage,
and there's still a lot to play out, is probably
the National Party leader, David Littleproud. He has animated both
sides of his party room, including his previous supporters such
as Sam Birrell, Darren Chester, Michael McCormack who I'd describe
as the more moderate wing of the National Party. They
(04:11):
were upset at the way he handled it. They didn't
understand the haste at which he proceeded, and they believed
that a split was in the best interests of nobody.
And on the right of his party, even Barnaby Joyce,
who is probably also a little bit of a National
Party supremacist, was also a bit bemused at what occurred.
So he's lost support on both sides of his party.
And he it's not out of the realms of possibility
(04:33):
that he faces a leadership challenge. And when we're back
in Canberra for the parliament parliamentary sittings in late July,
I'd say that if there is a winner here and it's, um,
there's definitely a case to be made that they all
look a bit silly. If there is a winner here,
I think Sussan Ley comes out of it with slightly
more authority. She stood up to David Littleproud's demands at
a time when her mother was dying in quite a
(04:54):
dignified manner. There is an argument that she caved on
the four policy principles, but she hasn't really committed to
putting them in the coalition agreement, which is what David
Littleproud wanted. And there is what this whole episode has enlivened,
I think is a greater fortitude inside the Liberal Party,
across both the factions of the Liberal Party, to stand
(05:15):
up for liberal values and oppose being, you know, um,
driven by National Party demands for the rest of this term.
I think it's awoken this, this, this sense that, no,
the Liberal Party is its own beast. It is not
to be dictated to by the National Party. It has
its own values. It's a free market party, its bases
in the cities of Australia. And it will stand up
(05:37):
for itself.
S1 (05:38):
Yeah. I want to talk about how that, um, sort
of impacts on the net zero commitment in a minute,
but just let's quickly talk about the new shadow ministry,
because after the after the parties came back together, Liberal
leader Sussan Ley gave a press conference with David Littleproud
and they announced their new shadow ministry of the newly
backed together and still passionately in Love Coalition. Matt, were
(05:59):
there any surprises in the lineup for you, for the
Shadow Ministers?
S6 (06:02):
Yeah, there were quite a few. Actually, I thought I
thought it was fascinating to see the way you could
see the personal and political dynamics playing out and people
being rewarded and punished. The fact that Jane Hume is
completely out of the ministry is quite stunning. Maybe you
would have expected her to have a bit of a demotion,
(06:23):
or be moved sideways from finance after the disastrous, uh,
return to work policy. But with so many talented performers gone,
the fact that she's completely out is pretty stunning. She
has paid a big price for that.
S1 (06:39):
So just quickly, Paul, you wrote this morning that it
wasn't a revenge thing to have Jane Hume out and
that she might come back at a later date. Well,
if it wasn't revenge, what was it?
S7 (06:49):
Well, Susan Lee told her colleagues yesterday that this wasn't
about revenge and this wasn't about punishment for Jane Hume's
two key blunders during the campaign being about the work
from home policy and her very late comment about Chinese spies.
But it's hard to have seen this outcome occur if
those two gaffes didn't happen.
S1 (07:08):
Yeah, okay.
S7 (07:08):
It's clear that Jane Hume has lost a lot of
credibility among her own faction, being the moderates. There's divisions
within that group about Jane Hume aligning with Angus Taylor
in the early part of the leadership contest. There's actually
conjecture about who she voted for in the end. Right.
Quite a lot of colleagues view her relationship with Sussan
Ley as quite poor and not having been solid over
a period of years. But Jane Hume was floated as
(07:31):
a deputy candidate with Angus Taylor for a long time.
So there is I think there's a mix of punishment
for poor performance. The fact that Jane Hume has lost
a lot of allies does not have a factional support base,
and doesn't have the best relationship with Sussan Ley.
S6 (07:45):
The other big loser, of course, is Jacinta Price, who
made this pretty spectacular play to switch from the National
Party to the Liberal Party to try and be Angus
Taylor's deputy. That didn't work. She was in the shadow
cabinet while she was in the nationals, and she would
have stayed there if she'd remained in that party. Now
she's been relegated to the Outer Ministry in Defence Industry.
(08:11):
Not really an area that's been in her field, although
she there's some scope now for her to get into
maybe some issues around woke woke activities in in the military.
But that's really not been her focus. And she's she's
made it pretty clear immediately going on Sky news and
saying she doesn't think that this is a shadow ministry
appointed on merit. So I think she's going to be
(08:32):
causing a trouble for Susan Lee.
S1 (08:35):
And in theory, she is bound by the principle of
cabinet solidarity because she's in the Outer cabinet, outer shadow Cabinet.
But it remains to be seen whether or not she
will maintain that.
S6 (08:44):
I think that'll be tested.
S1 (08:45):
Yes, it's.
S7 (08:46):
Been tested within hours and.
S1 (08:48):
Based on past form. Let's get to net zero. Matt Canavan,
who is an outspoken Queensland Nationals senator, is not in
the shadow cabinet, which means he can continue to be outspoken.
He's a big critic of Australia's net zero by 2050 pledge.
It's no secret that he wants the coalition to pull
out of that pledge, basically. And he says there's a
flashpoint looming on this. Paul, is that a threat or
(09:09):
a promise? Notably, Susan Lee sort of refused to absolutely, fundamentally,
totally commit to net zero by 2050, in the press
conference she gave on Wednesday. Do you think that there's
going to be another clash on this, like another saga
of the climate wars?
S7 (09:24):
Almost inevitably, this debate will continue to play out in
the in the coalition over the next year, perhaps the
next three years. This has been a policy area that's
bedevilled Liberal leaders since Brendan Nelson. And it's only been
Tony Abbott. And then, uh, Peter Dutton and Scott Morrison,
who've had internal authority, who've been able to kind of
(09:45):
bridge the divide between the climate sceptics and the more
moderate MPs who believe in climate change, really through band
aid solutions, including on, on, on. Well, on Abbott's side,
it was direct action and fighting against Labor's carbon tax
under Peter Dutton. It was coming up with a nuclear plan,
which Matt Canavan has admitted was really a political solution
to bridge that divide. And under Scott Morrison, it was
(10:08):
paying off the nationals leader, Barnaby Joyce, with billions of
dollars to sign up to the net zero deal. But
at the party's core, there is not a consensus on
whether climate mitigation is something the party should take seriously.
And when there's a leader with weakened authority, these these
policy debates just come into public view. Sussan Ley, as
(10:29):
you said, opened the door to a review of the
net zero policy. The nationals party room is heavily split
on this. Matt Canavan and Barnaby Joyce are now in
the backbench and will advocate daily on net zero being
a negative for the country. But even within the coalition
shadow cabinet, I mean, Andrew Hastie a few days ago,
I think maybe last week the new Home Affairs shadow
(10:50):
said that he has questions about net zero. It's not
as narrowly confined to just being the Barnaby Joyce's and
Matt Canavan's of the world. Conservatives are looking to the US,
Republicans to the Kiwi conservative Party, to Tony Blair in
the UK and saying the world is shifting away from
green ideology in the view of conservatives and Australia should
have another look at its policies.
S1 (11:10):
Hmm. Interesting. Seems like self-sabotage to me. Let's switch to
the Labour government, as the coalition sort of made themselves
the news this week and last week, the Prime Minister's
been sort of quietly touring flood ravaged communities in the
mid-north coast. He also made some strong comments, Matt, about
Israel's ongoing bombardment of Gaza and its refusal to let
in sufficient food and supplies to the absolutely devastated communities there.
(11:33):
What did he say exactly?
S6 (11:35):
Yeah, this was a strong language.
S8 (11:38):
People are starving. And the idea that a democratic state
withholds supply is an outrage.
S6 (11:47):
We had seen the previous week, uh, an interesting group
of the United Kingdom, France and Canada had got together
and put out an extremely tough statement a threatening, concrete actions,
including sanctions against Israel if they didn't change their behavior. Essentially,
if they didn't stop the war, if they didn't allow
(12:08):
more aid into Gaza. And also what we've seen with
settlement activity in the West Bank. Australia joined a weaker
statement with a bigger group of around 24 countries that
was saying very focused around getting aid into Gaza. And
what the Prime Minister said was that Israel's actions have
(12:29):
been an outrage on the lack of aid going into Gaza. Yes,
he said, it's outrageous the way the country has behaved,
that it's completely unacceptable.
S8 (12:38):
And we find Israel's excuses and explanations are completely untenable
and without credibility.
S6 (12:46):
This is becoming a very active issue among the Labour
grassroots and the branches. People are fed up with the
way that Netanyahu government has prosecuted this war. You know,
there's a widespread view now that this there's no military
gains left to be had in this war, and that
the war is essentially being prolonged just for him to
(13:08):
stay in power. And so the patience is very much
up with Israel. And there's the branches within labor are
becoming very active on this. There's a commitment in the
labor policy platform that they should recognize Palestine as a state.
This is all coming to a head in international forums now.
So yeah, there's pressure on the Prime minister. He's obviously
(13:31):
been reelected. He was criticized a lot in the first
term from the pro-Israel side of the debate. He's won
a big victory. So there's a lot of anticipation and
people speculating about how far he'll be willing to go
now that he's been reelected with a big mandate.
S1 (13:49):
It's really interesting, as Albanese said, people are starving. I mean,
that was a very, very strong sort of plea just
based on the suffering of the Palestinian people, which is
quite obvious. There are strong pro-Palestine voices within Labour who've
been active. So Ed Husic, who now is sort of
now he's not in cabinet. He can talk and say
whatever he wants. But you also reported this week not
on Gareth Evans, who's a bit of a Labour elder statesman,
(14:11):
and he says it's time to recognise Palestinian statehood.
S6 (14:15):
Yeah. Ed Husic was a strong voice for Palestine in
the cabinet. He's gone, so he's more free to speak.
But also importantly, uh, two of the biggest supporters of
Israel in the cabinet have gone Mark Dreyfus. And the
other was Bill shorten. So there has been a change
in the the makeup there. Uh, and yes, so, so
(14:38):
the backstory of this is that there's going to be
a big conference in New York next month, in the
middle of June, co-hosted by France and Saudi Arabia. Uh,
French President Emmanuel Macron has been active trying to make
this into a successful event in which countries will get
together and try to drive progress towards a two state solution,
(14:59):
essentially to breathe life into this comatose process. And so
people like Gareth Evans, who was Labour's longest serving foreign minister,
is a very respected voice in the party. He's someone
who someone like Penny Wong would listen to, even if
she doesn't always agree with him. He says the time
is absolutely right. Australia should use this conference as an
(15:22):
opportunity to recognise Palestine as a state, to try and
drive forward this process, to try and pressure Israel into
coming back to the negotiating table. Other countries might be
doing that as well.
S7 (15:36):
Noddy could I could I just jump in and ask
a question if I could? It's unclear to me what
the government's policy is on on recognition. There was that
speech from Penny Wong at some point last year, which
was a big pivot, where she made the argument that
Australia should recognise or could recognise earlier in the process
as a way of reaching an eventual two state solution.
But every time the Prime Minister is asked about this,
(15:58):
including during the campaign repeatedly, he says there's nothing to
recognise and no recognition can be made until Hamas is gone.
They seem at odds.
S6 (16:07):
Yeah. And Penny Wong has stuck to the line she
made in that speech, which was very deliberate to try
and put a spotlight on this idea. Uh, this week,
Australia's top diplomat at the United Nations was emphasizing this
point that Australia doesn't see a recognition as coming at
(16:28):
the end of the process anymore, that Australia sees it
as something that can happen along the way. So the
positioning has been there, but they haven't committed to it.
And I think you're just seeing the more cautious side
of Anthony Albanese coming out there that they haven't made
a decision to do this. They don't quite know how
to do it. Uh, they clearly want to um, it's
(16:50):
something they've been leading up to. There's a big debate
ultimately about whether it would make a huge difference. The
vast majority of countries already recognise Palestine. More Western countries,
countries that we would consider like minded to Australia traditionally haven't.
And so that would be the change. But ultimately, what
everyone in this space acknowledges is that regardless of whether
(17:14):
Australia recognises Palestine or not, it's ultimately going to be
it's ultimately going to end up in a negotiation between
Israel and Palestine. And you need leaders on both sides
who are able to do it. It's just whether we
can do anything to try and incentivize that.
S1 (17:30):
It does seem that world sentiment is turning a little
bit against Israel, and I think probably Israel has heightened
awareness of that. I want to ask you both a
personal question. Do you have more or less than $3
million in your super accounts?
S6 (17:43):
I need to check, but it's definitely less.
S7 (17:45):
Paul, I think I just need to merge my two
accounts and I'll be well over.
S6 (17:48):
Oh, you're paying.
S1 (17:49):
Those fees, baby.
S6 (17:50):
You're wasting money on fees. Consolidated their life insurance policies to.
S1 (17:55):
The reason I ask this pointed personal financial question is because,
of course, Treasurer Jim Chalmers this week is trying to
get through the Senate his proposed tax hikes on super
accounts of more than $3 million. So the tax rate
would be doubled on earnings from those super accounts on
the portion of above $3 million. That, of course, affects
a very small percentage of the population, but there is
(18:16):
some opposition to it. Will this get through the Senate
with the support of the Greens? Paul.
S7 (18:21):
It looks like it will. The Greens leader, Larissa Waters,
says that she agrees with the policy on principle. They've
said this from the outset. The Senate last term block
this bill from Jim Chalmers. It's been sitting in the
Senate ever since. The government does not remove the bill
from the Senate procedure list, because it's baked into the
budget that comes with considerable savings, that the government is
(18:42):
desperate to continue banking in its forward estimates. It's $40
billion over the next ten years. It's quite a peculiar
debate the way this has played out, because this bill,
as I just mentioned, has been in the parliament for
years now, and there wasn't a huge media or political
backlash from the Liberal Party or really many MPs in
the parliament last term. But it's kicked. It's kicked off post-election.
(19:04):
It's almost become the dominant point of political commentary and
reporting about the government's agenda, even though it's not a
new policy item.
S1 (19:12):
My sense of that during the last term under Dutton
was that they didn't sort of stand up for people
with more than $3 million in their super accounts when
they were banging on about the cost of living, quite rightly. Um,
let's just talk about the opposition to the bill, because
it does sound like, you know, it's a tax on
people who can kind of afford it. And it's a
very small percentage of people who would be affected. Matt,
do you have any sense of what the opposition to
(19:33):
the bill is or the arguments against?
S6 (19:35):
There definitely are people, including within labor. There are people
who hold a quite philosophical, principled opposition, particularly to this
idea of the taxing unrealized gains, this idea of taxing hypothetical.
S1 (19:49):
Yeah. So basically, if I have a $3 million house,
which is in my superannuation account, but I live in it. Um,
I'm going to get a tax on the $3 million
of 30%, even though I don't have that cash flow.
S6 (20:01):
Um, this does happen in other ways in terms of
home values are assessed, but that's more of a mechanical, uh,
thing than than the way it would be done here.
So I've spoken to people who do worry about the
principle here. Not so much the the 3 million balances
and increasing taxes on super that's seen as these are
people who can take it, uh, they're wealthy enough. That's
(20:24):
absolutely fine. It's it's just whether you could tweak this
in a way and perhaps, uh, raise as much money
or even more by toughening up that tax without going
down this path of the unrealized capital gains, which sets
economists off and people who care about the principle of
the policy.
S1 (20:41):
And there are high profile critics of the policy, like
Paul Keating. Um, there's also the issue of no indexation
on the amount. So it means over time, as inflation grows,
more and more people will be affected by it. It's
a risk many of us are going to have to
take in the next few years as our super balances grow. Um,
and what are your thoughts?
S7 (20:58):
Well, the the cult, you're right. The coalition of people
who have come out to oppose this, this new and
largely unprecedented taxing of unrealized gains is really large. Like
it's Ken Henry, the former Treasury secretary, Paul Keating in private,
Bill Kelty, the confidant of Paul Keating and a labor doyen,
a bunch of different economists. Uh, Matt, you're right. I've
(21:19):
heard of labor backbenchers who are quite concerned about this
as well and the political risk here. And it's been
lit up by the newly or probably elected member for Goldstein,
Tim Wilson, who's the defender of all manner of tax
breaks for wealthier individuals, who says that once the tax
office gives itself the power to do valuations of property
(21:39):
or any asset at a yearly level, and tax people
on those unrealized gains, that could be then expanded into
trusts and all all other forms of wealth accumulation, which
turns which turns this from a more narrow issue around
very wealthy super balances to a broader economy wide risk
to what he describes as aspiration. So that's the political
(22:00):
risk here.
S1 (22:00):
It is an interesting debate about what super is for
as well, because it's supposed to afford people a comfortable,
comfortable and dignified retirement, and it's supposed to ease the
public purse in getting people off the age pension. But
is it supposed to be a sort of tax haven
or something that you can use as tax breaks and
pass it on to your children?
S7 (22:18):
It's become an estate planning thing. And the treasurer makes
this point that and most economists agree that the concessional
rates of tax on super should shouldn't exist. We should
raise more money on super. People should not use it
as an inheritance vehicle. But the trade off there is
that if you do try and put in put in
place rules such as this one to avoid people doing that,
(22:39):
do you reduce the incentive to invest in your super,
and do you diminish the overall purpose of super as
a massive pool of investment for the economy, which is
Paul Keating's concern?
S1 (22:48):
Well, I mean, there's so much money in super as well.
So if you're if you're Jim Chalmers or any treasurer
trying to raise money for the, you know, for the
structural deficit, um, to be eased, then you know, that's
a very tempting.
S6 (23:00):
That's what I was going to say. I think this
is also going to take off in another way, uh,
is in terms of the use of super is trying
the government, trying to get a superannuation funds to invest
in particular things that they're interested in. They have all
these national priorities. This I think, is going to be
an interesting direction, particularly with Anthony Albanese's passion for infrastructure.
(23:21):
And they want to get things going on housing and
to try and direct, and.
S1 (23:26):
They need that money.
S6 (23:27):
Yeah. Now that's also of course, that might be a
conflict with the idea of directing maximum returns to superannuation holders.
You know, you want as much money as possible and
maybe that's, uh, mining stocks or Telstra stocks or something
rather than building housing. But I think that's going to
be a lively debate.
S1 (23:45):
It's very interesting. Um, we don't have time to go
further into it, but we will because I think this
is going to bubble away. Guys thanks so much. That
was a varied and interesting chat. And both of you
are worth more than $3 million to me individually.
S6 (23:58):
I'll I'll write the check for you.
S1 (24:00):
Okay.
S7 (24:00):
See you guys.
S6 (24:01):
Bye bye.
S1 (24:04):
Today's episode was produced by Tammy Mills with technical assistance
from Debbie Harrington and Josh towers, and Tom McKendrick is
our head of audio. To listen to our episodes as
soon as they drop, follow Inside Politics on Apple, Spotify
or anywhere else you listen to your podcasts. To stay
up to date with all of our politics coverage and exclusives,
(24:24):
visit The Age and The Sydney Morning Herald websites to
support our journalism. Subscribe to us by visiting The Age
or the SMH. Subscribe. I'm Jacqueline Maley, thank you for listening.
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics.
S2 (00:04):
So you're getting back together?
S3 (00:05):
No. This will allow time today.
S4 (00:09):
Dave and I have reached agreement formally to reform the coalition.
S1 (00:13):
Well, they fight, they break up, they kiss, they make up.
Never before have the lyrics of a Katy Perry song
been more relevant to federal politics. After last week's shock
split this week, the coalition got back together again.
S5 (00:25):
A bit like two parents who couldn't decide in a
divorce who looks after the kids.
S4 (00:30):
Well, Andrew, I don't accept the word bitter and, you know, people.
S1 (00:34):
But at what cost? What compromises have been made on
both sides? And will the Nats and the libs be
able to work constructively together after all the drama? Meanwhile,
labor is moving ahead with plans to hike taxes on
super accounts of more than $3 million. And Anthony Albanese
has hardened his rhetoric on Israel and its killing of
civilians in Gaza. As you know, our former chief political correspondent,
(00:57):
David Crowe, has gone off to Europe to become the
Europe correspondent. So this week we have our new chief
political correspondent, Paul Seckel, and our foreign affairs and national
security correspondent, Matthew Noche. Welcome, gentlemen.
S6 (01:09):
Lovely to be here.
S1 (01:10):
Hello, Paul. Let's start with the coalition rapprochement. And not
because I just wanted to say rapprochement. What is the
nature of the formal agreement that the two parties have struck?
S7 (01:20):
Well, it was eight days after David Littleproud, the nationals leader,
stood up and said the coalition was no more. About
2 or 3 days later, he said they're back on.
Sussan Ley agreed to go back to her party room
and reconsider the four policy requests that David Littleproud had made.
One was around breaking up anti-competitive supermarkets, another around nuclear energy,
which is significantly watered down and will not include the
(01:41):
building of nuclear power plants anymore. Another one was a
bizarre and very niche policy around universal mobile service obligations,
which is was a was an issue ten years ago
and has not really been debated for a long time.
And the other one was, can someone remind me what
the fourth one was? I really should.
S1 (01:58):
Divestiture. Did you say that one?
S7 (01:59):
Yeah, I said that one.
S6 (02:00):
Divestiture. Telecoms.
S7 (02:02):
Nuclear and regional. The $20 billion regional slush fund to
build dams and other things in in rural areas, which
again was coalition policy. So it was largely uncontroversial. This
was a kind of game of brinksmanship. The idea that
this was ever around for specific policy issues was always simplistic.
It was around personality. This was around philosophy of what
(02:24):
the National Party should be and whether it should be
joined at the hip to the Liberal Party. There were
National Party kind of supremacists. I'd call them like Bridget McKenzie,
who do believe that the National Party is a distinct,
standalone conservative outfit that can go it alone, trying to
wield their power internally to cause a split that, in
(02:45):
their mind, give the nationals more power and freedom to
advocate for their constituents. After a couple of days, this
all went pretty pear shaped. There was a lot of
outside criticism. Parties came back together over the weekend. Susan
Lee and David Littleproud had a number of conversations the
Liberal Party room agreed to in principle agree to those
four policies we mentioned. And by Wednesday morning, the two
(03:05):
leaders had another final conversation and agreed to give the
National Party six positions in the Shadow Cabinet. David Littleproud
initially wanted seven. They're entitled to six on the numbers,
which is a quota formula based on how many MPs
they have. They got a new economic portfolio. They hadn't
previously had been the assistant treasurer, which went to Pat Counihan,
who's a close ally of David Littleproud's from the seat
(03:28):
of Cowper in New South Wales. Matt Canavan was offered
that role. The rebel senator who's highly interventionist kind of
agrarian socialist. He's chosen to go to the backbench to
advocate on or against net zero. But the coalition is
back on.
S1 (03:43):
So was anything gained by this split and the coming
together again? I mean, if it was a game of brinkmanship,
do the Nats actually get anything out of it?
S7 (03:50):
I'd say the loser here, at least at this stage,
and there's still a lot to play out, is probably
the National Party leader, David Littleproud. He has animated both
sides of his party room, including his previous supporters such
as Sam Birrell, Darren Chester, Michael McCormack who I'd describe
as the more moderate wing of the National Party. They
(04:11):
were upset at the way he handled it. They didn't
understand the haste at which he proceeded, and they believed
that a split was in the best interests of nobody.
And on the right of his party, even Barnaby Joyce,
who is probably also a little bit of a National
Party supremacist, was also a bit bemused at what occurred.
So he's lost support on both sides of his party.
And he it's not out of the realms of possibility
(04:33):
that he faces a leadership challenge. And when we're back
in Canberra for the parliament parliamentary sittings in late July,
I'd say that if there is a winner here and it's, um,
there's definitely a case to be made that they all
look a bit silly. If there is a winner here,
I think Sussan Ley comes out of it with slightly
more authority. She stood up to David Littleproud's demands at
a time when her mother was dying in quite a
(04:54):
dignified manner. There is an argument that she caved on
the four policy principles, but she hasn't really committed to
putting them in the coalition agreement, which is what David
Littleproud wanted. And there is what this whole episode has enlivened,
I think is a greater fortitude inside the Liberal Party,
across both the factions of the Liberal Party, to stand
(05:15):
up for liberal values and oppose being, you know, um,
driven by National Party demands for the rest of this term.
I think it's awoken this, this, this sense that, no,
the Liberal Party is its own beast. It is not
to be dictated to by the National Party. It has
its own values. It's a free market party, its bases
in the cities of Australia. And it will stand up
(05:37):
for itself.
S1 (05:38):
Yeah. I want to talk about how that, um, sort
of impacts on the net zero commitment in a minute,
but just let's quickly talk about the new shadow ministry,
because after the after the parties came back together, Liberal
leader Sussan Ley gave a press conference with David Littleproud
and they announced their new shadow ministry of the newly
backed together and still passionately in Love Coalition. Matt, were
(05:59):
there any surprises in the lineup for you, for the
Shadow Ministers?
S6 (06:02):
Yeah, there were quite a few. Actually, I thought I
thought it was fascinating to see the way you could
see the personal and political dynamics playing out and people
being rewarded and punished. The fact that Jane Hume is
completely out of the ministry is quite stunning. Maybe you
would have expected her to have a bit of a demotion,
(06:23):
or be moved sideways from finance after the disastrous, uh,
return to work policy. But with so many talented performers gone,
the fact that she's completely out is pretty stunning. She
has paid a big price for that.
S1 (06:39):
So just quickly, Paul, you wrote this morning that it
wasn't a revenge thing to have Jane Hume out and
that she might come back at a later date. Well,
if it wasn't revenge, what was it?
S7 (06:49):
Well, Susan Lee told her colleagues yesterday that this wasn't
about revenge and this wasn't about punishment for Jane Hume's
two key blunders during the campaign being about the work
from home policy and her very late comment about Chinese spies.
But it's hard to have seen this outcome occur if
those two gaffes didn't happen.
S1 (07:08):
Yeah, okay.
S7 (07:08):
It's clear that Jane Hume has lost a lot of
credibility among her own faction, being the moderates. There's divisions
within that group about Jane Hume aligning with Angus Taylor
in the early part of the leadership contest. There's actually
conjecture about who she voted for in the end. Right.
Quite a lot of colleagues view her relationship with Sussan
Ley as quite poor and not having been solid over
a period of years. But Jane Hume was floated as
(07:31):
a deputy candidate with Angus Taylor for a long time.
So there is I think there's a mix of punishment
for poor performance. The fact that Jane Hume has lost
a lot of allies does not have a factional support base,
and doesn't have the best relationship with Sussan Ley.
S6 (07:45):
The other big loser, of course, is Jacinta Price, who
made this pretty spectacular play to switch from the National
Party to the Liberal Party to try and be Angus
Taylor's deputy. That didn't work. She was in the shadow
cabinet while she was in the nationals, and she would
have stayed there if she'd remained in that party. Now
she's been relegated to the Outer Ministry in Defence Industry.
(08:11):
Not really an area that's been in her field, although
she there's some scope now for her to get into
maybe some issues around woke woke activities in in the military.
But that's really not been her focus. And she's she's
made it pretty clear immediately going on Sky news and
saying she doesn't think that this is a shadow ministry
appointed on merit. So I think she's going to be
(08:32):
causing a trouble for Susan Lee.
S1 (08:35):
And in theory, she is bound by the principle of
cabinet solidarity because she's in the Outer cabinet, outer shadow Cabinet.
But it remains to be seen whether or not she
will maintain that.
S6 (08:44):
I think that'll be tested.
S1 (08:45):
Yes, it's.
S7 (08:46):
Been tested within hours and.
S1 (08:48):
Based on past form. Let's get to net zero. Matt Canavan,
who is an outspoken Queensland Nationals senator, is not in
the shadow cabinet, which means he can continue to be outspoken.
He's a big critic of Australia's net zero by 2050 pledge.
It's no secret that he wants the coalition to pull
out of that pledge, basically. And he says there's a
flashpoint looming on this. Paul, is that a threat or
(09:09):
a promise? Notably, Susan Lee sort of refused to absolutely, fundamentally,
totally commit to net zero by 2050, in the press
conference she gave on Wednesday. Do you think that there's
going to be another clash on this, like another saga
of the climate wars?
S7 (09:24):
Almost inevitably, this debate will continue to play out in
the in the coalition over the next year, perhaps the
next three years. This has been a policy area that's
bedevilled Liberal leaders since Brendan Nelson. And it's only been
Tony Abbott. And then, uh, Peter Dutton and Scott Morrison,
who've had internal authority, who've been able to kind of
(09:45):
bridge the divide between the climate sceptics and the more
moderate MPs who believe in climate change, really through band
aid solutions, including on, on, on. Well, on Abbott's side,
it was direct action and fighting against Labor's carbon tax
under Peter Dutton. It was coming up with a nuclear plan,
which Matt Canavan has admitted was really a political solution
to bridge that divide. And under Scott Morrison, it was
(10:08):
paying off the nationals leader, Barnaby Joyce, with billions of
dollars to sign up to the net zero deal. But
at the party's core, there is not a consensus on
whether climate mitigation is something the party should take seriously.
And when there's a leader with weakened authority, these these
policy debates just come into public view. Sussan Ley, as
(10:29):
you said, opened the door to a review of the
net zero policy. The nationals party room is heavily split
on this. Matt Canavan and Barnaby Joyce are now in
the backbench and will advocate daily on net zero being
a negative for the country. But even within the coalition
shadow cabinet, I mean, Andrew Hastie a few days ago,
I think maybe last week the new Home Affairs shadow
(10:50):
said that he has questions about net zero. It's not
as narrowly confined to just being the Barnaby Joyce's and
Matt Canavan's of the world. Conservatives are looking to the US,
Republicans to the Kiwi conservative Party, to Tony Blair in
the UK and saying the world is shifting away from
green ideology in the view of conservatives and Australia should
have another look at its policies.
S1 (11:10):
Hmm. Interesting. Seems like self-sabotage to me. Let's switch to
the Labour government, as the coalition sort of made themselves
the news this week and last week, the Prime Minister's
been sort of quietly touring flood ravaged communities in the
mid-north coast. He also made some strong comments, Matt, about
Israel's ongoing bombardment of Gaza and its refusal to let
in sufficient food and supplies to the absolutely devastated communities there.
(11:33):
What did he say exactly?
S6 (11:35):
Yeah, this was a strong language.
S8 (11:38):
People are starving. And the idea that a democratic state
withholds supply is an outrage.
S6 (11:47):
We had seen the previous week, uh, an interesting group
of the United Kingdom, France and Canada had got together
and put out an extremely tough statement a threatening, concrete actions,
including sanctions against Israel if they didn't change their behavior. Essentially,
if they didn't stop the war, if they didn't allow
(12:08):
more aid into Gaza. And also what we've seen with
settlement activity in the West Bank. Australia joined a weaker
statement with a bigger group of around 24 countries that
was saying very focused around getting aid into Gaza. And
what the Prime Minister said was that Israel's actions have
(12:29):
been an outrage on the lack of aid going into Gaza. Yes,
he said, it's outrageous the way the country has behaved,
that it's completely unacceptable.
S8 (12:38):
And we find Israel's excuses and explanations are completely untenable
and without credibility.
S6 (12:46):
This is becoming a very active issue among the Labour
grassroots and the branches. People are fed up with the
way that Netanyahu government has prosecuted this war. You know,
there's a widespread view now that this there's no military
gains left to be had in this war, and that
the war is essentially being prolonged just for him to
(13:08):
stay in power. And so the patience is very much
up with Israel. And there's the branches within labor are
becoming very active on this. There's a commitment in the
labor policy platform that they should recognize Palestine as a state.
This is all coming to a head in international forums now.
So yeah, there's pressure on the Prime minister. He's obviously
(13:31):
been reelected. He was criticized a lot in the first
term from the pro-Israel side of the debate. He's won
a big victory. So there's a lot of anticipation and
people speculating about how far he'll be willing to go
now that he's been reelected with a big mandate.
S1 (13:49):
It's really interesting, as Albanese said, people are starving. I mean,
that was a very, very strong sort of plea just
based on the suffering of the Palestinian people, which is
quite obvious. There are strong pro-Palestine voices within Labour who've
been active. So Ed Husic, who now is sort of
now he's not in cabinet. He can talk and say
whatever he wants. But you also reported this week not
on Gareth Evans, who's a bit of a Labour elder statesman,
(14:11):
and he says it's time to recognise Palestinian statehood.
S6 (14:15):
Yeah. Ed Husic was a strong voice for Palestine in
the cabinet. He's gone, so he's more free to speak.
But also importantly, uh, two of the biggest supporters of
Israel in the cabinet have gone Mark Dreyfus. And the
other was Bill shorten. So there has been a change
in the the makeup there. Uh, and yes, so, so
(14:38):
the backstory of this is that there's going to be
a big conference in New York next month, in the
middle of June, co-hosted by France and Saudi Arabia. Uh,
French President Emmanuel Macron has been active trying to make
this into a successful event in which countries will get
together and try to drive progress towards a two state solution,
(14:59):
essentially to breathe life into this comatose process. And so
people like Gareth Evans, who was Labour's longest serving foreign minister,
is a very respected voice in the party. He's someone
who someone like Penny Wong would listen to, even if
she doesn't always agree with him. He says the time
is absolutely right. Australia should use this conference as an
(15:22):
opportunity to recognise Palestine as a state, to try and
drive forward this process, to try and pressure Israel into
coming back to the negotiating table. Other countries might be
doing that as well.
S7 (15:36):
Noddy could I could I just jump in and ask
a question if I could? It's unclear to me what
the government's policy is on on recognition. There was that
speech from Penny Wong at some point last year, which
was a big pivot, where she made the argument that
Australia should recognise or could recognise earlier in the process
as a way of reaching an eventual two state solution.
But every time the Prime Minister is asked about this,
(15:58):
including during the campaign repeatedly, he says there's nothing to
recognise and no recognition can be made until Hamas is gone.
They seem at odds.
S6 (16:07):
Yeah. And Penny Wong has stuck to the line she
made in that speech, which was very deliberate to try
and put a spotlight on this idea. Uh, this week,
Australia's top diplomat at the United Nations was emphasizing this
point that Australia doesn't see a recognition as coming at
(16:28):
the end of the process anymore, that Australia sees it
as something that can happen along the way. So the
positioning has been there, but they haven't committed to it.
And I think you're just seeing the more cautious side
of Anthony Albanese coming out there that they haven't made
a decision to do this. They don't quite know how
to do it. Uh, they clearly want to um, it's
(16:50):
something they've been leading up to. There's a big debate
ultimately about whether it would make a huge difference. The
vast majority of countries already recognise Palestine. More Western countries,
countries that we would consider like minded to Australia traditionally haven't.
And so that would be the change. But ultimately, what
everyone in this space acknowledges is that regardless of whether
(17:14):
Australia recognises Palestine or not, it's ultimately going to be
it's ultimately going to end up in a negotiation between
Israel and Palestine. And you need leaders on both sides
who are able to do it. It's just whether we
can do anything to try and incentivize that.
S1 (17:30):
It does seem that world sentiment is turning a little
bit against Israel, and I think probably Israel has heightened
awareness of that. I want to ask you both a
personal question. Do you have more or less than $3
million in your super accounts?
S6 (17:43):
I need to check, but it's definitely less.
S7 (17:45):
Paul, I think I just need to merge my two
accounts and I'll be well over.
S6 (17:48):
Oh, you're paying.
S1 (17:49):
Those fees, baby.
S6 (17:50):
You're wasting money on fees. Consolidated their life insurance policies to.
S1 (17:55):
The reason I ask this pointed personal financial question is because,
of course, Treasurer Jim Chalmers this week is trying to
get through the Senate his proposed tax hikes on super
accounts of more than $3 million. So the tax rate
would be doubled on earnings from those super accounts on
the portion of above $3 million. That, of course, affects
a very small percentage of the population, but there is
(18:16):
some opposition to it. Will this get through the Senate
with the support of the Greens? Paul.
S7 (18:21):
It looks like it will. The Greens leader, Larissa Waters,
says that she agrees with the policy on principle. They've
said this from the outset. The Senate last term block
this bill from Jim Chalmers. It's been sitting in the
Senate ever since. The government does not remove the bill
from the Senate procedure list, because it's baked into the
budget that comes with considerable savings, that the government is
(18:42):
desperate to continue banking in its forward estimates. It's $40
billion over the next ten years. It's quite a peculiar
debate the way this has played out, because this bill,
as I just mentioned, has been in the parliament for
years now, and there wasn't a huge media or political
backlash from the Liberal Party or really many MPs in
the parliament last term. But it's kicked. It's kicked off post-election.
(19:04):
It's almost become the dominant point of political commentary and
reporting about the government's agenda, even though it's not a
new policy item.
S1 (19:12):
My sense of that during the last term under Dutton
was that they didn't sort of stand up for people
with more than $3 million in their super accounts when
they were banging on about the cost of living, quite rightly. Um,
let's just talk about the opposition to the bill, because
it does sound like, you know, it's a tax on
people who can kind of afford it. And it's a
very small percentage of people who would be affected. Matt,
do you have any sense of what the opposition to
(19:33):
the bill is or the arguments against?
S6 (19:35):
There definitely are people, including within labor. There are people
who hold a quite philosophical, principled opposition, particularly to this
idea of the taxing unrealized gains, this idea of taxing hypothetical.
S1 (19:49):
Yeah. So basically, if I have a $3 million house,
which is in my superannuation account, but I live in it. Um,
I'm going to get a tax on the $3 million
of 30%, even though I don't have that cash flow.
S6 (20:01):
Um, this does happen in other ways in terms of
home values are assessed, but that's more of a mechanical, uh,
thing than than the way it would be done here.
So I've spoken to people who do worry about the
principle here. Not so much the the 3 million balances
and increasing taxes on super that's seen as these are
people who can take it, uh, they're wealthy enough. That's
(20:24):
absolutely fine. It's it's just whether you could tweak this
in a way and perhaps, uh, raise as much money
or even more by toughening up that tax without going
down this path of the unrealized capital gains, which sets
economists off and people who care about the principle of
the policy.
S1 (20:41):
And there are high profile critics of the policy, like
Paul Keating. Um, there's also the issue of no indexation
on the amount. So it means over time, as inflation grows,
more and more people will be affected by it. It's
a risk many of us are going to have to
take in the next few years as our super balances grow. Um,
and what are your thoughts?
S7 (20:58):
Well, the the cult, you're right. The coalition of people
who have come out to oppose this, this new and
largely unprecedented taxing of unrealized gains is really large. Like
it's Ken Henry, the former Treasury secretary, Paul Keating in private,
Bill Kelty, the confidant of Paul Keating and a labor doyen,
a bunch of different economists. Uh, Matt, you're right. I've
(21:19):
heard of labor backbenchers who are quite concerned about this
as well and the political risk here. And it's been
lit up by the newly or probably elected member for Goldstein,
Tim Wilson, who's the defender of all manner of tax
breaks for wealthier individuals, who says that once the tax
office gives itself the power to do valuations of property
(21:39):
or any asset at a yearly level, and tax people
on those unrealized gains, that could be then expanded into
trusts and all all other forms of wealth accumulation, which
turns which turns this from a more narrow issue around
very wealthy super balances to a broader economy wide risk
to what he describes as aspiration. So that's the political
(22:00):
risk here.
S1 (22:00):
It is an interesting debate about what super is for
as well, because it's supposed to afford people a comfortable,
comfortable and dignified retirement, and it's supposed to ease the
public purse in getting people off the age pension. But
is it supposed to be a sort of tax haven
or something that you can use as tax breaks and
pass it on to your children?
S7 (22:18):
It's become an estate planning thing. And the treasurer makes
this point that and most economists agree that the concessional
rates of tax on super should shouldn't exist. We should
raise more money on super. People should not use it
as an inheritance vehicle. But the trade off there is
that if you do try and put in put in
place rules such as this one to avoid people doing that,
(22:39):
do you reduce the incentive to invest in your super,
and do you diminish the overall purpose of super as
a massive pool of investment for the economy, which is
Paul Keating's concern?
S1 (22:48):
Well, I mean, there's so much money in super as well.
So if you're if you're Jim Chalmers or any treasurer
trying to raise money for the, you know, for the
structural deficit, um, to be eased, then you know, that's
a very tempting.
S6 (23:00):
That's what I was going to say. I think this
is also going to take off in another way, uh,
is in terms of the use of super is trying
the government, trying to get a superannuation funds to invest
in particular things that they're interested in. They have all
these national priorities. This I think, is going to be
an interesting direction, particularly with Anthony Albanese's passion for infrastructure.
(23:21):
And they want to get things going on housing and
to try and direct, and.
S1 (23:26):
They need that money.
S6 (23:27):
Yeah. Now that's also of course, that might be a
conflict with the idea of directing maximum returns to superannuation holders.
You know, you want as much money as possible and
maybe that's, uh, mining stocks or Telstra stocks or something
rather than building housing. But I think that's going to
be a lively debate.
S1 (23:45):
It's very interesting. Um, we don't have time to go
further into it, but we will because I think this
is going to bubble away. Guys thanks so much. That
was a varied and interesting chat. And both of you
are worth more than $3 million to me individually.
S6 (23:58):
I'll I'll write the check for you.
S1 (24:00):
Okay.
S7 (24:00):
See you guys.
S6 (24:01):
Bye bye.
S1 (24:04):
Today's episode was produced by Tammy Mills with technical assistance
from Debbie Harrington and Josh towers, and Tom McKendrick is
our head of audio. To listen to our episodes as
soon as they drop, follow Inside Politics on Apple, Spotify
or anywhere else you listen to your podcasts. To stay
up to date with all of our politics coverage and exclusives,
(24:24):
visit The Age and The Sydney Morning Herald websites to
support our journalism. Subscribe to us by visiting The Age
or the SMH. Subscribe. I'm Jacqueline Maley, thank you for listening.
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