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