June 12, 2025 • 22 mins
This week the Prime Minister Anthony Albanese gave a big speech at the National Press Club in Canberra, and used it to dangle the prospect of economic reform.During its first term, the Albanese government was criticised for not being bold enough in its agenda. So is the PM signalling he will use his huge majority to institute major reform? What would a daring economic reform agenda look like? And are Australians ready for it?
Plus, Jacqueline Maley, Paul Sakkal and Shane Wright discuss the hardening of the government’s stance on Israel, after it imposed sanctions on two Israeli ministers.
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S1 (00:00):
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics. I'm Jacqueline Maley, it's Friday, June 13th.
This week, the prime minister, Anthony Albanese, gave a big
speech at the National Press Club in Canberra and used
it to dangle the prospect of economic reform. During its
first term, the Albanese government was criticised for not being
(00:21):
bold enough in its agenda. So is the PM signalling
he will use his huge majority to institute major reform?
What would a daring economic reform agenda look like? And
are Australians even ready for it? Plus, we discuss the
hardening of the government's stance on Israel after it imposed
sanctions on two Israeli ministers. Here to discuss all this,
(00:43):
today we have our chief political correspondent, Paul Satchell, as
well as our special guest star, senior economics correspondent Shane Wright. Welcome, gentlemen.
S2 (00:52):
I want to see special guest star in the paper
as my byline from now on. That's it. Thank you. Jackie.
S1 (00:57):
Well, as we as we've previously discussed, you're the Heather
Locklear of this podcast, which people who ever watched Melrose
Place will understand. No one else does it.
S2 (01:08):
Know what that makes Paul circle?
S3 (01:09):
What's what's the reference there? In what way are they similar?
S1 (01:12):
Heather Locklear used to be the special guest star that
was her billing on Melrose Place, which was a very
popular show in the 1990s. Paul.
S3 (01:20):
I'm aware of the show. Um, less convinced by Shayne's specialness.
But let's get stuck into the questions.
S1 (01:27):
Well, let's let's test it out. Let's let's test that theory. Um, Paul,
the Prime Minister gave a speech at the National Press
Club this week. It was his first major agenda setting
speech since his landslide victory in May. What did he say?
In summary.
S3 (01:40):
It was his second Press Club speech. In the space
of only a couple of months. He did one during
the election campaign, maybe even less than a couple of months,
which is quite rare to do press club speeches in
such quick succession.
S4 (01:51):
Well, thanks very much. It's great to be back at
the National Press Club.
S3 (01:55):
I think he had a couple of big themes, Aims.
A big, kind of grander theme was this idea from
him that a stable majority Labour government that sticks to
its commitments, that governs with a level of maturity that
avoids populism, is an Australian antidote to what we're seeing
(02:16):
in other parts of the world, where there are more
frazzled kind of political environments. He's made a virtue of
respecting the free press of, yeah, this, this idea that
he is governing for all people. And he really kind of,
you know, got stuck into that argument, which we heard
a little bit of pre-campaign.
S1 (02:34):
He's sort of making a virtue of the contrast between
him and a certain other administration that's currently firing rubber
bullets at journalists on the streets of Adelaide.
S3 (02:42):
Exactly. And took a pretty striking step of making an
official complaint, diplomatic complaint to US officials about that channel
nine journalist who was hit with a rubber bullet, which was,
you know, not an action he needed to take. He
also called Lauren Tomassi the Tomasi, the journalist. He kind
of went above and beyond, which, as you say, is
a signal to the US administration that we're not that
pleased with what we're seeing. And that's quite a bold
(03:04):
thing to do, given the Prime Minister might be about
to meet the president next week at a G7 summit
on the sidelines, which has not actually been locked in
but is widely expected.
S1 (03:13):
Yeah. Okay. So he also had an economic agenda. He
sort of turned to the economic agenda, obviously during the
Prime Minister's first term in government. There was a lot
of criticism that their agenda wasn't bold enough, particularly on
the economic front. Did we hear something different about Albo 2.0, Shane.
S2 (03:31):
We did like Albo one or the original elbow. The
government's focus was on inflation and making sure unemployment didn't
go through the roof as the war on inflation continued.
And in that case, Albanese did effectively say mission accomplished.
With inflation at 2.4, the unemployment rate is at 4.1.
(03:52):
About a million people have got jobs the last three years.
So on that front. Yep. But you know, us economic nerds,
we want more. We are the Oliver twists of politics
saying we want more in terms, particularly around productivity.
S4 (04:06):
We want to build an economy where growth, wages and
productivity all rise together.
S2 (04:12):
And this is where he got into his surprising announcement
that he has told Jim Chalmers hold a summit. We
love summits, roundtables, whatever, whatever term you want to use
to talk about productivity. In August.
S3 (04:29):
They called it a roundtable. We called it a summit
because it sounded more important, I think.
S2 (04:33):
Yeah, I don't know where it ranks. I think this
is part of the reason for Australia's productivity malaise is
the fact that we're debating the nomenclature.
S1 (04:42):
We should have. We should have a whole podcast on
summits versus roundtables. And what's the difference between the two?
We hear a lot about productivity, Shane, because economists and
people like yourself love to talk about it. It sends
most of the rest of the population to sleep. But
you guys seem to think it's really important. And we
hear a lot about how productivity growth is low in
(05:02):
this country. What does productivity mean as an economic term,
and why do we care if productivity growth is low?
S2 (05:08):
Easy definition inputs versus outputs. So we'll use Paul Satchell
as an example. Okay. What it does not mean is
Paul Satchell working longer and longer hours and producing more stories.
It is Paul Circle, same like he he does work long.
So let's say he works a ten hour day producing
(05:31):
more output or even better output within his ten hour day.
And it's how he does it. This is why we
talk about productivity. So our world is built on productivity.
S1 (05:45):
So so why does Australia have low productivity growth in
comparison to other countries?
S2 (05:49):
We don't in comparison to other countries bar one country.
And this this has been one of the great. It's
one of the great economic conundrums of the last 20
years is that productivity has been slowing across the world.
And in the last 3 or 4 years, there's been
a real big lift in the United States. Part of
that is due to measurement. They don't measure productivity quite
(06:10):
the way everybody else does. But something has gone on
in the United States. A lot of people think it's
due to artificial intelligence. Part of it is the fact
that all these people have dropped out of the jobs
market in low productivity areas.
S3 (06:24):
It's such a shame that productivity, the word puts people
to sleep because in the long run, and this is
just a truism of economics, incomes and prosperity does not
grow over time unless you do things more efficiently. So
it is fundamentally the most important thing.
S2 (06:38):
He wants to change the economic language.
S3 (06:40):
I think the economist should get in a room with
some ad guys and come up with a better way of.
S1 (06:44):
Explaining why we need a jazzier term.
S2 (06:46):
Jazz hands for.
S1 (06:47):
Productivity like that.
S3 (06:48):
Because it affects how our politicians.
S1 (06:49):
We flagged that for another podcast. So anyway, we've got
this problem with productivity growth, which turns out is a
bit of a global problem. If we want to improve
living standards and improve our lives, then we need to
look at it. The Prime Minister has pledged a dreaded
roundtable or an economic summit. I mean, what is the
point of these summits? Paul, doesn't Treasury already have modelling
(07:10):
and the Productivity Commission, for that matter, on every single
possible economic reform or tax change that we could possibly
want to make? These things often feel quite performative and
a little bit unnecessary. Am I being too cynical?
S3 (07:22):
No, there has, but you're right. There has been a
litany of reviews and examinations from different departments and the
Productivity Commission over the years. So a lot of the
ideas are known. And this was the other big takeout
from the speech. The speech notes were dropped out on
the Monday from the Prime Minister's office, and there was
just a small segment of the speech, and that really
focused on how the government would be super focused on
(07:42):
delivering its commitments. And it was not really contemplating going further.
It was going to be a government that was orderly
and wasn't going to shift beyond the guardrails that had
set for itself. But then in the speech, Albanese gave
at least an implicit acknowledgment that more can be done
on the economy, that the election commitments are important and,
in his view, bold. But more can be done to
grow the place. And there might be a greater emphasis
(08:05):
in this government on growth because there is now space
to focus on growth, given the inflation crisis has been
put to bed or hopefully put to bed.
S4 (08:14):
This work is already underway, including our National Productivity Fund
incentivizing state and territory governments to drive efficiencies in construction.
S3 (08:24):
And so, yes, there are a bunch of ideas out there.
A lot of those ideas, particularly those raised by dryer
economists and our friends in some of the more dryer,
conservative parts of the media are heavily focused on lowering
taxes and making the IR system more flexible, which is
another way of saying giving workers relatively fewer rights. They
(08:48):
are not easy to prosecute on the left side of politics.
S1 (08:51):
Well, and also the the prime minister specifically kind of
ruled that out. I mean, he said that workers getting
a fair crack, in his words, is not something that
we will abandon.
S4 (08:58):
I'm a Labor prime minister and I support penalty rates.
I'm a Labor prime minister and I support real wages increasing.
S1 (09:06):
So they obviously made some air reforms in their first term.
That business didn't like that. They didn't really talk about
at all to the general public before the election, but
they nonetheless rushed through. I'm interested in your take because
the treasurer separately, but perhaps relatedly, the government is also
trying to push through these reforms on superannuation balances above
(09:28):
$3 million, which will affect very few people. But there
has been like a substantial pushback to these reforms and
various arguments against them. So Treasurer Jim Chalmers said this
week that the fact that there's been so much opposition
to the super tax changes doesn't augur well for bigger,
broader tax reform. And he said that while many people
sort of will say that they favor tax reform in
(09:49):
the general principle when it comes to the specific, they're
against it. So what do you think of that? And
I mean, what's the point of having a big economic
summit if everyone's going to be like, nope, don't like
that idiot. Nope, don't like that idea.
S2 (10:01):
And he was exactly right, because history is well and
truly on his side. The Productivity Commission in 2017 put
out a really important report called Shifting the Dial, about
140 150 ideas on how you could make the economy
more productive. One of them was introducing a carbon tax. Now,
(10:23):
we all know how that flies in this country, where
you have some very powerful vested interests. And one side
of politics went, oh my God, world is ending now
in the world of economics, putting a price on carbon absolute.
That's what you should be doing. But we have chosen
to take a more expensive, less efficient, less productive manner
(10:44):
in which to deal with climate change and reducing our emissions.
So when he talks about big reforms, Chalmers was there
next to Wayne Swan when the Henry tax reform paper
came out. And it says, right, let's put a special
tax in terms of resources. And we had billionaires on
the back of trucks saying, look, the people are coming
(11:06):
for you. In terms of the superannuation change. Some of
the some of the complaints about it are absolutely unhinged.
And we are talking we are talking about 80,000 people
who have more than $3 million in their super. And
you can have an argument about what this all means,
like in terms should it should have been explained better.
(11:29):
Is there an argument about taxing unrealized gains, which is
an aspect of this, although some of the opponents saying,
oh my God, they're coming for your unrealized gains, and
I say, well, you are already taxed.
S1 (11:40):
They're already do.
S2 (11:41):
Land tax and rates. That's unrealized gains that is being
taxed right now. But so his argument.
S1 (11:46):
To tell.
S2 (11:47):
Me this is a guy who has lived through what
happens when you come up with this. People talk about
the 1980s. There was some apparently, if you believe, some
economic historic revisionism, it was a kumbaya, bipartisan approach with
John Howard and Paul Keating sitting around a fire strumming
a guitar, saying, oh, I love your tax reform bollocks. Sorry.
(12:09):
Capital gains tax and fringe benefits tax were opposed by
the Liberal Party all through the 80s. And those two
taxes helped pay for Paul Keating's deep cuts in personal
income taxes, which was all that area. So every time
we get into something substantial, there are always vested interests
or people who have a different view.
S1 (12:31):
It's always contentious, it's always difficult. And I suppose that's
what we're asking, and that's what we will have to
see whether or not the Albanese government is really up
for a fight because Paul Keating was, you know, John
Howard and Peter Costello were. So I guess we'll find out.
S3 (12:44):
One very quick point to to counter that, Shane, there'll
be very few economists who you could find who have
been quoted, who say that Chalmers unrealized gains proposal is
real tax reform. They would say it's a it's a
real problem he's trying to fix on the concessions of
the super system. But I haven't heard anyone come out
and say it's a great way of doing it.
S2 (13:02):
But I will push back again because this is the
argument between economists and financial planners. They are very distinctive differences.
And we've had economists who have looked at this who
don't understand how tax operates within superannuation. It is a
absolutely complex manner. And this is so but you're but
(13:24):
Paul's broader point, and I don't want to belittle because
he's got equal billing with me in this movie with
you today.
S3 (13:29):
You're the special.
S2 (13:30):
He's, he's he is so special is that.
S1 (13:33):
I mean, I don't I don't want us to have
like a horrible argument, like a sort of bitter argument
about tax reform on this podcast. But but but um.
S2 (13:42):
I but no.
S3 (13:44):
But I'll take it offline.
S2 (13:45):
Yeah, we'll take it offline. But no, this this goes
to that broader point that whenever you get into like
the super is interesting because we, the government has chosen
to take on the 80,000 wealthiest people in the country. Mhm.
When we took.
S1 (14:02):
Their poor little easy targets.
S2 (14:03):
As opposed to like when we're talking about more broader
productivity enhancements that there will be like and people keep
talking about what happens to AI. Will that be wiping
out jobs at the bottom end where you you'll have
the the 80,000 at the top whose jobs are very secure, saying, yes,
we should be doing this reform. And there are millions
(14:24):
down at the bottom saying, hold on, that's my job.
There is always going to be tension when you're going
to say, how are we going to be more efficient?
How is the economy going to improve? How are living
standards going to improve? Because Everyone from you. Me, like
none of us have the 3 million super. But we
all have a vested interest.
S1 (14:41):
And almost by definition, the lower skilled jobs are going
to be the ones that are the most vulnerable.
S5 (14:46):
That's right.
S1 (14:51):
Paul, I just want to segue quickly to Foreign Affairs,
because this week, the Australian government did impose sanctions on
two senior Israeli ministers for their roles in human rights
abuses against Palestinians in the West Bank, not in Gaza.
It's quite a significant escalation in the Australian government's stance
on Israel Palestine. What does this signal, why is this
happening now? Why are they doing it now?
S3 (15:13):
It is a big step and it places Australia right
at the centre of a pretty significant Western diplomatic move
that pits Australia, New Zealand, Canada and Norway and the UK.
Obviously Norway is not in the Five Eyes, but it's
all four of the Five Eyes security partners other than
the US pits them against the Trump administration, who has
come out and criticized this move. It's a bold step
(15:34):
to sanction members of the actual War Cabinet. This is
not sanctioning, you know, criminals in the country as Magnitsky
sanctions have previously been used for, for example, for Russians
who are involved in the war. War, who are Putin's oligarchs.
This is actual cabinet ministers. So it's a very significant step.
The criticism from the coalition and some of the Jewish
(15:56):
Israeli groups in Australia is that these Magnitsky laws should
only be used for, as I said, kind of criminals
who are linked to non democratically elected governments. The labor
government's argument is that these ministers are extremists. They not
only advocate for violence, but they actually use their power
in the government to help create violence, for example.
S1 (16:16):
Inside.
S3 (16:17):
The inside it and create it through the funding, through
the provision of arms to violent settlers in the West
Bank and and crime in in the West Bank against
Palestinians has been growing. But even though the legal basis
for these moves was about Israeli settler violence. This is
kind of inextricably linked. And Penny Wong is open about
this with what's going on in Gaza. The Australian government
(16:39):
is fed up and believes that the Israelis are no
longer listening, and that a step like this was necessary.
S1 (16:44):
Okay, so they just they've reached a tipping point with
with the whole issue, and they want to push back
harder than they previously have.
S3 (16:50):
And I would also just add, yes, I think that's right.
But also the political environment in Australia is pretty radically
changed because they've had a commanding election win. The debate
around anti-Semitism locally has subsided, even though it's still a
real problem. And Peter Dutton, who was extremely vocal and
focused on this issue, is no longer in Parliament.
S1 (17:10):
Sure. And yet we continue to see these sort of
horrific images, particularly from Gaza, as you say, on our
TVs every night.
S3 (17:16):
Yeah. They're shocking.
S1 (17:17):
We heard later in the week that the Trump administration
will be reviewing Aukus Scott Morrison's great achievement, part of
which was the justification for his Order of Australia. Does
that put the orcas multibillion dollar deal in doubt, or
is this just sort of something that the Trump administration
will tick off on?
S3 (17:38):
Well, the orcas critics who will never miss an opportunity
to stick their head up and talk about how much
they hate orcas such as Malcolm Turnbull and Bob Carr,
and I'm sure more will come out as the day
rolls on. A quick.
S1 (17:50):
Orcas, haters.
S3 (17:51):
Orcas haters, haters gonna hate orcas. They would have you
believe that this is the kind of death knell of orcas,
that this review was an inevitability because the deal was
bad from the get go and doesn't work for Australia,
doesn't work for the US. They don't they don't have
the shipbuilding capacity and that this will lead to, you know,
a death spiral for the project. But there have been
(18:13):
other experts quoted today and speaking to political and defence
sources today, there's also a lot of caution on that side.
And in the government there is a view that this
is a review to to put pressure on Australia to
speed things up, to show more vociferous public support for
the US's role in Asia and for the role that
Aukus will play in combating China. There is a view
(18:36):
among US officials that Australia is kind of hush hush
about the true intentions of Aukus, and that is something
that displeases Elbridge Colby, who's the US defence undersecretary, who's
leading this and who has been an aukus sceptic in
the past, although he's become a bit more positive of late,
and that this is effectively leverage and Aukus will continue.
S1 (18:55):
Is there going to be a little bit of like,
I don't know, I don't want to call it blackmail
because that's too strong, but a little bit of subtle
pressure saying, you know, they obviously want us to increase
our defence spending. They want everybody to increase their defence spending.
Will there be some sort of quid pro quo there
like we'll continue with Aukus, we'll honour Aukus, but you
need to increase your defence spending as a as a
(19:17):
percentage of GDP.
S2 (19:18):
I think you're right. Using the term blackmail. Have a
look at, have a look at what Trump has done with.
S1 (19:23):
I mean that's how Trump rolls. Let's not let's not.
S2 (19:25):
No no no I don't want to give gave. Like
the Pew Research Center, that report that came out this
week showing Australians are just behind Sweden in thinking that
Donald Trump is dumb, dangerous and dishonest. The number of
Australians who think he is dishonest is in the 80% mark.
Like but to the blackmail argument. Look at how he
(19:48):
has dealt with from Greenland to Ukraine to, uh, broader Europe.
It's sorry. It is blackmail we are seeing being played out.
And in terms of the language around Trump, I think
what we are seeing playing out is historically astonishing. And
(20:08):
I think to to say, oh no, we can't go
that far. No. Let's go. Let's go hard.
S1 (20:14):
Let's go hard. You're absolutely right. And in fact, we
saw it even in his dealings with Elon Musk this
week as Jonathan Swan, former Sydney Morning Herald journalist, now
New York Times journalist, said, you know, his his threat to,
to Elon Musk was like very sort of what did
he say? It was like nice companies. He got there
be shame if something happened to them.
S2 (20:33):
Exactly.
S1 (20:34):
It's very standover tactics. It's very mafioso.
S3 (20:37):
The push for Australia and other allies to increase defence
spending did predate the Trump administration, like the Biden administration
was also trying to get the other nations defences up
to reduce reliance on the US. I'm not going to
defend the way Trump does diplomacy, but I think the
Americans have some right to tell their allies, hey, we
spend a truckload around the country helping you defend yourselves.
(20:57):
You can do a bit more yourself.
S1 (20:58):
Yeah. And it's also their argument with with NATO. And
there is a there is a very strong argument with NATO,
as you say. It's just that the tactics and the pressure. Gentlemen,
fascinating as ever. Thanks for bringing the fun into productivity.
S2 (21:12):
Well, this is why I'm a special guest.
S1 (21:14):
Star, because.
S2 (21:14):
I can do that. Let's let's be honest about productivity.
S1 (21:18):
You are. We'll have you back on very soon. Paul,
we won't be seeing you next week because you're going
on holiday, which is selfish, but we'll see you.
S3 (21:26):
I might be reading your book, Jackie, because I bought
it the other day and it was signed by the author,
and the woman at reading said, oh, is she your colleague?
I wish you'd write more. It was a brilliant book.
S1 (21:34):
There you go. Oh, that that that's really nice.
S2 (21:35):
That's a call for Jackie to be more productive.
S1 (21:39):
Yeah, I'll get to it. Today's episode was produced by
Julia Carr Katzel, with technical assistance from Josh towers. Our
executive producer is Tami Mills, 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
(22:00):
anywhere else you listen to your podcasts. To stay up
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The Age and The Sydney Morning Herald websites to support
our journalism. Subscribe to us by visiting The Age or smh.com.au.
I'm Jacqueline Maley, thank you for listening.
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics. I'm Jacqueline Maley, it's Friday, June 13th.
This week, the prime minister, Anthony Albanese, gave a big
speech at the National Press Club in Canberra and used
it to dangle the prospect of economic reform. During its
first term, the Albanese government was criticised for not being
(00:21):
bold enough in its agenda. So is the PM signalling
he will use his huge majority to institute major reform?
What would a daring economic reform agenda look like? And
are Australians even ready for it? Plus, we discuss the
hardening of the government's stance on Israel after it imposed
sanctions on two Israeli ministers. Here to discuss all this,
(00:43):
today we have our chief political correspondent, Paul Satchell, as
well as our special guest star, senior economics correspondent Shane Wright. Welcome, gentlemen.
S2 (00:52):
I want to see special guest star in the paper
as my byline from now on. That's it. Thank you. Jackie.
S1 (00:57):
Well, as we as we've previously discussed, you're the Heather
Locklear of this podcast, which people who ever watched Melrose
Place will understand. No one else does it.
S2 (01:08):
Know what that makes Paul circle?
S3 (01:09):
What's what's the reference there? In what way are they similar?
S1 (01:12):
Heather Locklear used to be the special guest star that
was her billing on Melrose Place, which was a very
popular show in the 1990s. Paul.
S3 (01:20):
I'm aware of the show. Um, less convinced by Shayne's specialness.
But let's get stuck into the questions.
S1 (01:27):
Well, let's let's test it out. Let's let's test that theory. Um, Paul,
the Prime Minister gave a speech at the National Press
Club this week. It was his first major agenda setting
speech since his landslide victory in May. What did he say?
In summary.
S3 (01:40):
It was his second Press Club speech. In the space
of only a couple of months. He did one during
the election campaign, maybe even less than a couple of months,
which is quite rare to do press club speeches in
such quick succession.
S4 (01:51):
Well, thanks very much. It's great to be back at
the National Press Club.
S3 (01:55):
I think he had a couple of big themes, Aims.
A big, kind of grander theme was this idea from
him that a stable majority Labour government that sticks to
its commitments, that governs with a level of maturity that
avoids populism, is an Australian antidote to what we're seeing
(02:16):
in other parts of the world, where there are more
frazzled kind of political environments. He's made a virtue of
respecting the free press of, yeah, this, this idea that
he is governing for all people. And he really kind of,
you know, got stuck into that argument, which we heard
a little bit of pre-campaign.
S1 (02:34):
He's sort of making a virtue of the contrast between
him and a certain other administration that's currently firing rubber
bullets at journalists on the streets of Adelaide.
S3 (02:42):
Exactly. And took a pretty striking step of making an
official complaint, diplomatic complaint to US officials about that channel
nine journalist who was hit with a rubber bullet, which was,
you know, not an action he needed to take. He
also called Lauren Tomassi the Tomasi, the journalist. He kind
of went above and beyond, which, as you say, is
a signal to the US administration that we're not that
pleased with what we're seeing. And that's quite a bold
(03:04):
thing to do, given the Prime Minister might be about
to meet the president next week at a G7 summit
on the sidelines, which has not actually been locked in
but is widely expected.
S1 (03:13):
Yeah. Okay. So he also had an economic agenda. He
sort of turned to the economic agenda, obviously during the
Prime Minister's first term in government. There was a lot
of criticism that their agenda wasn't bold enough, particularly on
the economic front. Did we hear something different about Albo 2.0, Shane.
S2 (03:31):
We did like Albo one or the original elbow. The
government's focus was on inflation and making sure unemployment didn't
go through the roof as the war on inflation continued.
And in that case, Albanese did effectively say mission accomplished.
With inflation at 2.4, the unemployment rate is at 4.1.
(03:52):
About a million people have got jobs the last three years.
So on that front. Yep. But you know, us economic nerds,
we want more. We are the Oliver twists of politics
saying we want more in terms, particularly around productivity.
S4 (04:06):
We want to build an economy where growth, wages and
productivity all rise together.
S2 (04:12):
And this is where he got into his surprising announcement
that he has told Jim Chalmers hold a summit. We
love summits, roundtables, whatever, whatever term you want to use
to talk about productivity. In August.
S3 (04:29):
They called it a roundtable. We called it a summit
because it sounded more important, I think.
S2 (04:33):
Yeah, I don't know where it ranks. I think this
is part of the reason for Australia's productivity malaise is
the fact that we're debating the nomenclature.
S1 (04:42):
We should have. We should have a whole podcast on
summits versus roundtables. And what's the difference between the two?
We hear a lot about productivity, Shane, because economists and
people like yourself love to talk about it. It sends
most of the rest of the population to sleep. But
you guys seem to think it's really important. And we
hear a lot about how productivity growth is low in
(05:02):
this country. What does productivity mean as an economic term,
and why do we care if productivity growth is low?
S2 (05:08):
Easy definition inputs versus outputs. So we'll use Paul Satchell
as an example. Okay. What it does not mean is
Paul Satchell working longer and longer hours and producing more stories.
It is Paul Circle, same like he he does work long.
So let's say he works a ten hour day producing
(05:31):
more output or even better output within his ten hour day.
And it's how he does it. This is why we
talk about productivity. So our world is built on productivity.
S1 (05:45):
So so why does Australia have low productivity growth in
comparison to other countries?
S2 (05:49):
We don't in comparison to other countries bar one country.
And this this has been one of the great. It's
one of the great economic conundrums of the last 20
years is that productivity has been slowing across the world.
And in the last 3 or 4 years, there's been
a real big lift in the United States. Part of
that is due to measurement. They don't measure productivity quite
(06:10):
the way everybody else does. But something has gone on
in the United States. A lot of people think it's
due to artificial intelligence. Part of it is the fact
that all these people have dropped out of the jobs
market in low productivity areas.
S3 (06:24):
It's such a shame that productivity, the word puts people
to sleep because in the long run, and this is
just a truism of economics, incomes and prosperity does not
grow over time unless you do things more efficiently. So
it is fundamentally the most important thing.
S2 (06:38):
He wants to change the economic language.
S3 (06:40):
I think the economist should get in a room with
some ad guys and come up with a better way of.
S1 (06:44):
Explaining why we need a jazzier term.
S2 (06:46):
Jazz hands for.
S1 (06:47):
Productivity like that.
S3 (06:48):
Because it affects how our politicians.
S1 (06:49):
We flagged that for another podcast. So anyway, we've got
this problem with productivity growth, which turns out is a
bit of a global problem. If we want to improve
living standards and improve our lives, then we need to
look at it. The Prime Minister has pledged a dreaded
roundtable or an economic summit. I mean, what is the
point of these summits? Paul, doesn't Treasury already have modelling
(07:10):
and the Productivity Commission, for that matter, on every single
possible economic reform or tax change that we could possibly
want to make? These things often feel quite performative and
a little bit unnecessary. Am I being too cynical?
S3 (07:22):
No, there has, but you're right. There has been a
litany of reviews and examinations from different departments and the
Productivity Commission over the years. So a lot of the
ideas are known. And this was the other big takeout
from the speech. The speech notes were dropped out on
the Monday from the Prime Minister's office, and there was
just a small segment of the speech, and that really
focused on how the government would be super focused on
(07:42):
delivering its commitments. And it was not really contemplating going further.
It was going to be a government that was orderly
and wasn't going to shift beyond the guardrails that had
set for itself. But then in the speech, Albanese gave
at least an implicit acknowledgment that more can be done
on the economy, that the election commitments are important and,
in his view, bold. But more can be done to
grow the place. And there might be a greater emphasis
(08:05):
in this government on growth because there is now space
to focus on growth, given the inflation crisis has been
put to bed or hopefully put to bed.
S4 (08:14):
This work is already underway, including our National Productivity Fund
incentivizing state and territory governments to drive efficiencies in construction.
S3 (08:24):
And so, yes, there are a bunch of ideas out there.
A lot of those ideas, particularly those raised by dryer
economists and our friends in some of the more dryer,
conservative parts of the media are heavily focused on lowering
taxes and making the IR system more flexible, which is
another way of saying giving workers relatively fewer rights. They
(08:48):
are not easy to prosecute on the left side of politics.
S1 (08:51):
Well, and also the the prime minister specifically kind of
ruled that out. I mean, he said that workers getting
a fair crack, in his words, is not something that
we will abandon.
S4 (08:58):
I'm a Labor prime minister and I support penalty rates.
I'm a Labor prime minister and I support real wages increasing.
S1 (09:06):
So they obviously made some air reforms in their first term.
That business didn't like that. They didn't really talk about
at all to the general public before the election, but
they nonetheless rushed through. I'm interested in your take because
the treasurer separately, but perhaps relatedly, the government is also
trying to push through these reforms on superannuation balances above
(09:28):
$3 million, which will affect very few people. But there
has been like a substantial pushback to these reforms and
various arguments against them. So Treasurer Jim Chalmers said this
week that the fact that there's been so much opposition
to the super tax changes doesn't augur well for bigger,
broader tax reform. And he said that while many people
sort of will say that they favor tax reform in
(09:49):
the general principle when it comes to the specific, they're
against it. So what do you think of that? And
I mean, what's the point of having a big economic
summit if everyone's going to be like, nope, don't like
that idiot. Nope, don't like that idea.
S2 (10:01):
And he was exactly right, because history is well and
truly on his side. The Productivity Commission in 2017 put
out a really important report called Shifting the Dial, about
140 150 ideas on how you could make the economy
more productive. One of them was introducing a carbon tax. Now,
(10:23):
we all know how that flies in this country, where
you have some very powerful vested interests. And one side
of politics went, oh my God, world is ending now
in the world of economics, putting a price on carbon absolute.
That's what you should be doing. But we have chosen
to take a more expensive, less efficient, less productive manner
(10:44):
in which to deal with climate change and reducing our emissions.
So when he talks about big reforms, Chalmers was there
next to Wayne Swan when the Henry tax reform paper
came out. And it says, right, let's put a special
tax in terms of resources. And we had billionaires on
the back of trucks saying, look, the people are coming
(11:06):
for you. In terms of the superannuation change. Some of
the some of the complaints about it are absolutely unhinged.
And we are talking we are talking about 80,000 people
who have more than $3 million in their super. And
you can have an argument about what this all means,
like in terms should it should have been explained better.
(11:29):
Is there an argument about taxing unrealized gains, which is
an aspect of this, although some of the opponents saying,
oh my God, they're coming for your unrealized gains, and
I say, well, you are already taxed.
S1 (11:40):
They're already do.
S2 (11:41):
Land tax and rates. That's unrealized gains that is being
taxed right now. But so his argument.
S1 (11:46):
To tell.
S2 (11:47):
Me this is a guy who has lived through what
happens when you come up with this. People talk about
the 1980s. There was some apparently, if you believe, some
economic historic revisionism, it was a kumbaya, bipartisan approach with
John Howard and Paul Keating sitting around a fire strumming
a guitar, saying, oh, I love your tax reform bollocks. Sorry.
(12:09):
Capital gains tax and fringe benefits tax were opposed by
the Liberal Party all through the 80s. And those two
taxes helped pay for Paul Keating's deep cuts in personal
income taxes, which was all that area. So every time
we get into something substantial, there are always vested interests
or people who have a different view.
S1 (12:31):
It's always contentious, it's always difficult. And I suppose that's
what we're asking, and that's what we will have to
see whether or not the Albanese government is really up
for a fight because Paul Keating was, you know, John
Howard and Peter Costello were. So I guess we'll find out.
S3 (12:44):
One very quick point to to counter that, Shane, there'll
be very few economists who you could find who have
been quoted, who say that Chalmers unrealized gains proposal is
real tax reform. They would say it's a it's a
real problem he's trying to fix on the concessions of
the super system. But I haven't heard anyone come out
and say it's a great way of doing it.
S2 (13:02):
But I will push back again because this is the
argument between economists and financial planners. They are very distinctive differences.
And we've had economists who have looked at this who
don't understand how tax operates within superannuation. It is a
absolutely complex manner. And this is so but you're but
(13:24):
Paul's broader point, and I don't want to belittle because
he's got equal billing with me in this movie with
you today.
S3 (13:29):
You're the special.
S2 (13:30):
He's, he's he is so special is that.
S1 (13:33):
I mean, I don't I don't want us to have
like a horrible argument, like a sort of bitter argument
about tax reform on this podcast. But but but um.
S2 (13:42):
I but no.
S3 (13:44):
But I'll take it offline.
S2 (13:45):
Yeah, we'll take it offline. But no, this this goes
to that broader point that whenever you get into like
the super is interesting because we, the government has chosen
to take on the 80,000 wealthiest people in the country. Mhm.
When we took.
S1 (14:02):
Their poor little easy targets.
S2 (14:03):
As opposed to like when we're talking about more broader
productivity enhancements that there will be like and people keep
talking about what happens to AI. Will that be wiping
out jobs at the bottom end where you you'll have
the the 80,000 at the top whose jobs are very secure, saying, yes,
we should be doing this reform. And there are millions
(14:24):
down at the bottom saying, hold on, that's my job.
There is always going to be tension when you're going
to say, how are we going to be more efficient?
How is the economy going to improve? How are living
standards going to improve? Because Everyone from you. Me, like
none of us have the 3 million super. But we
all have a vested interest.
S1 (14:41):
And almost by definition, the lower skilled jobs are going
to be the ones that are the most vulnerable.
S5 (14:46):
That's right.
S1 (14:51):
Paul, I just want to segue quickly to Foreign Affairs,
because this week, the Australian government did impose sanctions on
two senior Israeli ministers for their roles in human rights
abuses against Palestinians in the West Bank, not in Gaza.
It's quite a significant escalation in the Australian government's stance
on Israel Palestine. What does this signal, why is this
happening now? Why are they doing it now?
S3 (15:13):
It is a big step and it places Australia right
at the centre of a pretty significant Western diplomatic move
that pits Australia, New Zealand, Canada and Norway and the UK.
Obviously Norway is not in the Five Eyes, but it's
all four of the Five Eyes security partners other than
the US pits them against the Trump administration, who has
come out and criticized this move. It's a bold step
(15:34):
to sanction members of the actual War Cabinet. This is
not sanctioning, you know, criminals in the country as Magnitsky
sanctions have previously been used for, for example, for Russians
who are involved in the war. War, who are Putin's oligarchs.
This is actual cabinet ministers. So it's a very significant step.
The criticism from the coalition and some of the Jewish
(15:56):
Israeli groups in Australia is that these Magnitsky laws should
only be used for, as I said, kind of criminals
who are linked to non democratically elected governments. The labor
government's argument is that these ministers are extremists. They not
only advocate for violence, but they actually use their power
in the government to help create violence, for example.
S1 (16:16):
Inside.
S3 (16:17):
The inside it and create it through the funding, through
the provision of arms to violent settlers in the West
Bank and and crime in in the West Bank against
Palestinians has been growing. But even though the legal basis
for these moves was about Israeli settler violence. This is
kind of inextricably linked. And Penny Wong is open about
this with what's going on in Gaza. The Australian government
(16:39):
is fed up and believes that the Israelis are no
longer listening, and that a step like this was necessary.
S1 (16:44):
Okay, so they just they've reached a tipping point with
with the whole issue, and they want to push back
harder than they previously have.
S3 (16:50):
And I would also just add, yes, I think that's right.
But also the political environment in Australia is pretty radically
changed because they've had a commanding election win. The debate
around anti-Semitism locally has subsided, even though it's still a
real problem. And Peter Dutton, who was extremely vocal and
focused on this issue, is no longer in Parliament.
S1 (17:10):
Sure. And yet we continue to see these sort of
horrific images, particularly from Gaza, as you say, on our
TVs every night.
S3 (17:16):
Yeah. They're shocking.
S1 (17:17):
We heard later in the week that the Trump administration
will be reviewing Aukus Scott Morrison's great achievement, part of
which was the justification for his Order of Australia. Does
that put the orcas multibillion dollar deal in doubt, or
is this just sort of something that the Trump administration
will tick off on?
S3 (17:38):
Well, the orcas critics who will never miss an opportunity
to stick their head up and talk about how much
they hate orcas such as Malcolm Turnbull and Bob Carr,
and I'm sure more will come out as the day
rolls on. A quick.
S1 (17:50):
Orcas, haters.
S3 (17:51):
Orcas haters, haters gonna hate orcas. They would have you
believe that this is the kind of death knell of orcas,
that this review was an inevitability because the deal was
bad from the get go and doesn't work for Australia,
doesn't work for the US. They don't they don't have
the shipbuilding capacity and that this will lead to, you know,
a death spiral for the project. But there have been
(18:13):
other experts quoted today and speaking to political and defence
sources today, there's also a lot of caution on that side.
And in the government there is a view that this
is a review to to put pressure on Australia to
speed things up, to show more vociferous public support for
the US's role in Asia and for the role that
Aukus will play in combating China. There is a view
(18:36):
among US officials that Australia is kind of hush hush
about the true intentions of Aukus, and that is something
that displeases Elbridge Colby, who's the US defence undersecretary, who's
leading this and who has been an aukus sceptic in
the past, although he's become a bit more positive of late,
and that this is effectively leverage and Aukus will continue.
S1 (18:55):
Is there going to be a little bit of like,
I don't know, I don't want to call it blackmail
because that's too strong, but a little bit of subtle
pressure saying, you know, they obviously want us to increase
our defence spending. They want everybody to increase their defence spending.
Will there be some sort of quid pro quo there
like we'll continue with Aukus, we'll honour Aukus, but you
need to increase your defence spending as a as a
(19:17):
percentage of GDP.
S2 (19:18):
I think you're right. Using the term blackmail. Have a
look at, have a look at what Trump has done with.
S1 (19:23):
I mean that's how Trump rolls. Let's not let's not.
S2 (19:25):
No no no I don't want to give gave. Like
the Pew Research Center, that report that came out this
week showing Australians are just behind Sweden in thinking that
Donald Trump is dumb, dangerous and dishonest. The number of
Australians who think he is dishonest is in the 80% mark.
Like but to the blackmail argument. Look at how he
(19:48):
has dealt with from Greenland to Ukraine to, uh, broader Europe.
It's sorry. It is blackmail we are seeing being played out.
And in terms of the language around Trump, I think
what we are seeing playing out is historically astonishing. And
(20:08):
I think to to say, oh no, we can't go
that far. No. Let's go. Let's go hard.
S1 (20:14):
Let's go hard. You're absolutely right. And in fact, we
saw it even in his dealings with Elon Musk this
week as Jonathan Swan, former Sydney Morning Herald journalist, now
New York Times journalist, said, you know, his his threat to,
to Elon Musk was like very sort of what did
he say? It was like nice companies. He got there
be shame if something happened to them.
S2 (20:33):
Exactly.
S1 (20:34):
It's very standover tactics. It's very mafioso.
S3 (20:37):
The push for Australia and other allies to increase defence
spending did predate the Trump administration, like the Biden administration
was also trying to get the other nations defences up
to reduce reliance on the US. I'm not going to
defend the way Trump does diplomacy, but I think the
Americans have some right to tell their allies, hey, we
spend a truckload around the country helping you defend yourselves.
(20:57):
You can do a bit more yourself.
S1 (20:58):
Yeah. And it's also their argument with with NATO. And
there is a there is a very strong argument with NATO,
as you say. It's just that the tactics and the pressure. Gentlemen,
fascinating as ever. Thanks for bringing the fun into productivity.
S2 (21:12):
Well, this is why I'm a special guest.
S1 (21:14):
Star, because.
S2 (21:14):
I can do that. Let's let's be honest about productivity.
S1 (21:18):
You are. We'll have you back on very soon. Paul,
we won't be seeing you next week because you're going
on holiday, which is selfish, but we'll see you.
S3 (21:26):
I might be reading your book, Jackie, because I bought
it the other day and it was signed by the author,
and the woman at reading said, oh, is she your colleague?
I wish you'd write more. It was a brilliant book.
S1 (21:34):
There you go. Oh, that that that's really nice.
S2 (21:35):
That's a call for Jackie to be more productive.
S1 (21:39):
Yeah, I'll get to it. Today's episode was produced by
Julia Carr Katzel, with technical assistance from Josh towers. Our
executive producer is Tami Mills, 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
(22:00):
anywhere else you listen to your podcasts. To stay up
to date with all the political news and exclusives, visit
The Age and The Sydney Morning Herald websites to support
our journalism. Subscribe to us by visiting The Age or smh.com.au.
I'm Jacqueline Maley, thank you for listening.
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