Labor contemplates a "fairer return" for Australia's resources

[00:00:00]Dollars and cents is made on the lands of the Nanimal and Nambry peoples. We pay our respects to elders past and present and acknowledge that sovereignty was never seated. [music] [music] Hello and welcome to Dollars and Cents, the Australia Institute podcast where we're talking about just what the hell is going on in the economy. [music] I'm Elanor Johnson Lee, the senior content producer here at the Australia Institute and he's back. We've got our chief economist back in the hot seat, Greg Jericho. Hello, Greg.

[00:00:34]>> Oh my god, it's back. [laughter] >> We're back from holiday and back from being >> crowds going wild.

[00:00:41]>> Back from a holiday where I also decided to get sick halfway through.

[00:00:44]>> Why would you do that?

[00:00:45]>> Cuz silly mistake.

[00:00:47]>> I I enjoyed the beach walks far too much clearly and someone decided, "No, you can't have fun.

[00:00:53]>> [laughter] >> You've got to be sick.

[00:00:54]>> Yeah. Got to spend your annual leave being sick.

[00:00:57]>> Yeah. And so, uh, decided to >> stay home last week and give Matt one more go in the big chair.

[00:01:05]>> Yeah. Well, he was he was very excited to have another another go at the podcast, but good to have you back.

[00:01:11]>> I'm back. Let's do it. Great to be here.

[00:01:13]Well, Greg, we're actually recording the podcast a day early this week because tomorrow I'm going to be heading to Adelaide to the Labour Party National Conference.

[00:01:25]>> Yeah. Going back to >> going back kind of my hometown or at least uh my home state >> and where you haven't been since you were a we little girl.

[00:01:32]>> Yeah, it's probably the Australian capital city that I've spent the least time in.

[00:01:37]>> Ah, well, you'll have so much fun.

[00:01:39]>> I'll have so much fun. Yeah. Uh >> well maybe not because why are you there?

[00:01:43]>> Yeah well a few of our colleagues are doing some panels at the Fringe events.

[00:01:48]We've got a stall there I think. Yep.

[00:01:51]Lots to >> which is really conf will be very confusing for many South Australian listeners given the Adelaide Fringe is a >> Oh yeah [laughter] >> different thing. So no you would not be doing some uh live theater or comedy standup. No, fun fact, my younger sibling did uh at Fringe last year, so I'm sure they they might do that again this year. Um anyway, side note, [laughter] [gasps] I am not the uh the uh live theater uh one in my family.

[00:02:22]>> We should be getting a better deal out of gas. We export so much of it and yet we get so little uh back in terms of revenue. the middle of a global fuel crisis is the worst possible time to jeopardize these relationships or the investment that underpins them.

[00:02:40]>> I think Australians are learning that we've been giving it away uh far too cheaply uh and that uh energy companies, you know, gas companies have been taking the piss.

[00:02:49]>> Yeah, [music] I think probably the time has arrived to consider uh reviewing the taxation on gas. the Labor Party National Conference. Uh there's a few reports out recently about some different policy changes being added to the Labor platform at the conference, including changes to the Labour federal labor's stance on issues like gas tax, Israel Palestine, gambling, gambling advertising, AI. But Greg, what actually is the Labour Party National Conference?

[00:03:20]Who goes there? What happens? What's the point?

[00:03:24]>> Yeah, there's a there's a lot of delegates there and you'll hear a lot of speeches going delegates.

[00:03:30]>> Uh we come here today, United as one. Um >> who who are these delegates?

[00:03:35]>> Yeah, delegates are actually well they're a mixture. You're going to see um obviously uh the prime minister and treasurer and members of parliament.

[00:03:42]There will also be uh many union representatives there and delegates from >> um you know branches, labor branches and state branches who have been elected to attend uh the labor conference and it's it's their trienal chance. So every 3 years they do it uh where they get together and essentially hash out what's the Labor Party all about. M >> um historically these used to be very uh I say important but also very contentious things where there were real fights.

[00:04:18]>> Okay.

[00:04:19]>> Certainly in the 80s in the hawking eras there were big fights over things like Labour's policies on on banking >> and things like that because Keing of course wanted to open it up >> open up their financial system. There's, for example, the the Labour Party Constitution, which they're not going to be debating about, um, still refers to the Labor Party as a Democratic Socialist Party. Now, there have been fights over whether or not to keep that socialist aspect in there. And actually, back in, I think it was 81, uh, there was a big fight to get rid of it. They didn't get rid of it, but what they did was added about 22 clauses after that statement, which kind of made the whole thing a bit like, "Oh, yes, we're a Democratic Socialist party, but all of our real objectives have nothing to do with socialism." Yeah. [laughter] >> And what they're talking about here is they they the party platform is pretty much just about every topic you can think of, every policy plat um every policy issue. Yeah. Yeah.

[00:05:23]>> So whether it's indigenous, whether it's defense, whether it's the economy, foreign affairs, all of these things, they state some objectives, some aims, things that they believe in. And the fight are over. Let's take things out.

[00:05:40]>> Yeah.

[00:05:40]>> Like for example, um, previously there was a provision that the Labor Party was against mandatory sentencing.

[00:05:50]>> Okay. And the problem being that the Labor Party had voted in favor of mandatory sentencing on a number of issues over the past five, six years purely to sort of prevent it being labeled as being weak on crime.

[00:06:05]>> And so now that provision is apparently going to be dumped, >> okay, at this conference. at this conference.

[00:06:10]>> Okay.

[00:06:11]>> Um what they're doing that is I guess relevant to our discussion is they're going to do something on >> the economy where they want to insert a provision that is essentially talking about um gas taxes and resources tax.

[00:06:27]And what they are trying to include is the lines. Labor will ensure that the Australian people receive a fair return from their natural resources, including [snorts] through appropriate taxation arrangements while securing Australia's role as a reliable international energy supplier and investment partner.

[00:06:48]>> Okay. Sure. When you say they, who who's they that's fighting for it? Oh, that basically it's come from um obviously uh sections of the Labour Party like uh lean which is their environmental arm sort of the more leftwing sides of things although these things are all a bit dodgy given Anthony Albani is notionally of the left >> um which should be a shock to to many people um but basically there is an undercurrent of uh the Labor faithful the Labour party and also the ACTU and through the unions because remember the ACTU have been pushing for the 25% tax on gas exports. That was their policy that we helped with some of the research and has certainly been supporting.

[00:07:34]>> Um so that's where the pressure is coming from and >> it appears it's going to pass on Thursday while you're there. They they'll vote on it. It seems like it'll go through. probably the reason we'll go through is as you could as you could understand from my having read that out it feels like there's a lot of caveats there.

[00:07:53]>> Yeah. It's just what a fairer fairer return.

[00:07:56]>> Fair return. and so long as we don't affect our supply and we you know it's all a bit of a blah blah blah >> but >> the the import of it and you know back in the day the the ALOP labor platform was kind of >> sacrient >> because probably up until I'd say G Whitam and definitely Hawk uh the Labor Party kind of told the Labor uh caucus the politicians kind of what to do >> and this was certainly a thing that Whittam had to fight against that there were these faceless men who were telling him what to do. Um, and there was a famous photo of Arthur Cowwell, who was then Labour leader and Goff Whittam basically standing outside the Labour conference um that was being held here in Canberra standing under a a street light because they had to leave the the room while the party >> people voted on things. Yeah. So, it was talked about sort of these faceless men.

[00:09:04]>> Now, [snorts] it's not so much. It's not a case of if the Labor someone if the Labor Party did something against the platform that people would have to resign from the Labor Party.

[00:09:16]It's not as we see with with the the whole mandatory sentencing bit. But >> it does still have some weight. It still has that drive and it also is >> because everyone knows this is about the 25% tax on gas that the ACT is pushing it. the Labour Party have got it now, will probably have it in their platform.

[00:09:39]>> So, it kind of >> at least lets everyone know that, hey, the fight's not over yet just because they didn't change it in the budget.

[00:09:46]>> Don't think that the the push is not coming. We've certainly seen from Labour MPs like Ed Husk who last week was in a forum in Sydney with Richard Dennis talking on uh taxing gas and he's very much been pushing it. So, it's an indicator that it's not just coming from the Greens or David PCO or others. It's there's definitely within the ALP pushing for it now when it gets down.

[00:10:10]Although Anthony can say, "Yeah, give a damn."

[00:10:15]>> Yeah. [laughter] You said um that historically these conferences have been more uh what's the word? Belligerent. What did you say?

[00:10:26]There've been more fights.

[00:10:29]>> Yeah. Do I not have any fights to look forward to at this conference?

[00:10:33]>> There there could be. I mean, you know, there have been fights in the past over samesex marriage.

[00:10:39]>> Um because there were some very conservative uh labor unions, especially the shoppies who were against it. Um there's certainly been fights over asylum seekers. um very much when Bill Shorton was a leader, he wanted to get in a thing about being able to turn boats back and Anthony Albanes at the time very much was >> doing the fight to prevent that happening.

[00:11:07]>> Um this year probably the the big fight might be over Israel.

[00:11:13]>> Yeah.

[00:11:13]>> And our respon and the Labour party's responses. So look, they they always try and manage it a bit to make it look like a nice unified party, but um reality does sometimes slip through, >> but but mostly there's not as much purely because the big fights over things have have kind of been done in the [clears throat] 80s and the '9s.

[00:11:39]you know, that that real sort of shift from the old we're a 1940s50s kind of we're really socialist kind of party to >> to now it not being so much. But yeah, so probably won't be a lot of fights and I don't think there'll be a fight over this gas tax. I think it'll go through on the nod and >> no well I'll just have to start some myself. No. [laughter] Also in the news this week, Trump is still doing Trump things. I guess it's been a while since we've talked about him. He's imposed a 50% tariff on a bunch of uh Canadian goods. I don't really know why. Do you know why?

[00:12:22]>> Well, he the Canadian prime minister wasn't booed as much at the World Cup final. So that might be [laughter] >> I mean there there is talk that it it was uh due to the wildfires that are happening in both Canada and the US but certainly in Canada and some of the smoke.

[00:12:38]>> So he's he's mad that Canada's on fire.

[00:12:41]>> Well the smoke is has come across the border. I don't know how >> that's very inconsiderate of Canada to be on fire. And so he thinks because the air quality in America has become worse because of Canadian fires, they should pay a penalty, which >> Canadians who have fairly generously come to great help of America during many of the Canad California wildfires >> might be going, huh? Yeah, there was something about there might be retaliatory toward Canadian tariffs, which I suppose in turn were in retaliation.

[00:13:19]>> That's the thing. He he's he's using a piece of legislation that's known as the Smoot Holy Act, which if you've watched Ferris Buer's Day Off, you would have heard of >> and it was something that happened in the Great Depression that uh they passed this act. Smoot Holy. They were the two legislators who who sort of drove it >> that enabled the US to to levy tariffs in for basically whatever reason they wanted.

[00:13:44]>> And part of it that legislation that has never been used even back in the Great Depression was to do retaliatory tariffs.

[00:13:54]>> Yeah.

[00:13:54]>> And you're right. He's saying that, "Oh, I'm doing these because Canada is boycotting American alcohol and so I'm going to retaliate to that."

[00:14:05]>> But the point is they were boycotting that because that was in response to America's >> tariffs. [laughter] >> So, >> so it's just retaliation all the way down, I guess.

[00:14:16]>> Yeah. And look, it it doesn't seem completely legal, shall we [laughter] say? It certainly goes when the US, Canadian, and Mexican um not their free trade agreement, but the agreement that they did after the free trade agreement was superseded by something Trump came up with in his first term. So, it's and it's it's probably not even able to be done under American law, let alone as part of their agreement. So, >> who knows where it go, but it it does sort of uh just show that that Trump's still the unhinged lunatic that we always knew he was.

[00:14:53]>> To me, I think it's over. I don't want to deal with them anyway, but they're scum.

[00:14:58]>> Honestly, they haven't seen anything yet. We've been nice. We've been nice.

[00:15:04]On top of that, the war in Iran, I don't know what last time we mentioned it where we were at, but I mean I I personally like I haven't been following it super closely because it somehow seems pointless to because whenever it's announced that the war is over, then it's just immediately not over. They're always, you know, it's followed by more strikes. Um there was a blockade back on. Trump proposed a 20% fee on commercial ships passing through the straight of Hummus and then he almost immediately backed down. There were more strikes on both sides. I mean, what?

[00:15:40]>> Yeah, it's it's nothing nothing good. Uh so yeah, the memorandum of understanding was signed about a month ago >> that kind of at least >> ended hostility sort of in a >> major sense. didn't didn't begin the opening of the straight home cuz there was still a lot of dealing with mines and things like that. Trump was so declaring victory.

[00:16:03]>> Yeah.

[00:16:03]>> But a lot of the conditions of the memorandum of understanding were never going to be held. They weren't held.

[00:16:11]There were, shall we say, shots fired on both sides. And then about um a week or so ago, it really started ramping up.

[00:16:19]We're back firing against everybody.

[00:16:22]Yeah.

[00:16:22]>> You know, Iran are blowing up ships.

[00:16:24]America's blowing up whatever.

[00:16:26]>> Yeah, that was a pretty funny tweet from Hunter Biden that was like saying something along the lines of Trump should actually get the Nobel Prize for peace if he [laughter] keeps ending wars. He's ended this war so many times.

[00:16:40]>> He's ended it very many times. Um, and it was easy to do actually if you asked him. It was actually quite easy. Easier than I thought it would be. Yeah, he'll do it again.

[00:16:49]>> And yeah, >> so yeah, the the threat to put a 20% tariff on on or to a toll on on ships going through the straight home that lasted >> barely less time that it took to go from Trump's mouth to people's ears because everyone's like, "How?"

[00:17:08]>> Yeah.

[00:17:08]>> Uh how are you going to actually do that? There's you're going to set up a toll booth, are you? you realize those it the straight doesn't go through America. So we >> the only way you'd be able to do it is by having a naval blockade and those ships would be fairly >> open to be blown out of the water. So yeah, that ended. It's oil prices going back up.

[00:17:32]>> Great.

[00:17:33]>> Certainly haven't haven't got yet to the hundred US dollars a barrel, but they're going back up and certainly risen uh since where they fell after theou was signed. Um, good news here in Australia.

[00:17:46]That's that meant uh that Santos and Woodside share price has gone back up again. [snorts] So, I know we're all a little bit worried there. Yeah.

[00:17:53]>> Um, but no, they're doing well.

[00:17:55]>> Yeah.

[00:17:56]>> Look, it's it's not good because as we say, as we all know, when oil prices start going up, that starts affecting everyone and everything.

[00:18:05]>> Yeah. I mean, bringing it back to Australian economics perspective, there are suggestions that Australia could be in for uh another interest rate rise this year if the war doesn't end, which would be the fourth so far this year.

[00:18:20]So, yeah, if the war doesn't end, we get another rate rise. That seems like we're getting another rate rise then.

[00:18:27]>> Look, not necessarily. Yeah, there there have been a it's it's really weird as soon as the sort of the hostility started there have been a lot of people oh now we got a rate rise coming look at the moment the for the next meeting which is in August the futures market is rating about a 19 20% chance of a rate rise >> okay >> um and that really hasn't changed a lot it's kind of been that for for a while now there's you know It's still not even sort of getting up to a 50% chance of there being another rate rise by the end of the year.

[00:19:06]>> Now, that doesn't mean there won't be cuz we know in the past the Reserve Bank has looked for any excuse and has suggest that if inflation is going up that means we got to do something to >> temper those expectations.

[00:19:20]>> But it it shouldn't mean it. But we've got a couple things coming out um on Thursday this week. So, probably by the time people are starting to hear this, >> Thursday, we've got a couple things coming out.

[00:19:33]>> Couple things coming out. Couple things coming out. Uh, so Thursday this week, we got the latest unemployment figures that are coming out. Um, so that'll be for June. And then next week, uh, spoiler alert, this is probably what the podcast will be about. The June quarter inflation figures are coming out. And so that >> those two things, especially next week's inflation figures, will be the big ones on whether there will be a rate rise.

[00:19:56]It's probably too early to say that the impact of the Iran war heating up again is going to affect inflation because we haven't seen huge jumps in um oil and the jump in petrol prices isn't so great like it was back in February and March.

[00:20:15]>> Yeah.

[00:20:16]>> So, >> yeah, we're going to find out next week >> we are >> how worried we should be. And Greg, to finish up this week, a new report out says that Australia's privatized employment services system has failed.

[00:20:29]It is broken and it should be brought back into the public sector. It's a new report from the Center for International Corporate Tax Accountability and Research. We've talked uh semi-reently I think about Australia's employment services uh about when the federal government announced what they what they were calling the biggest reform to employment services in decades which in the end turned out to be somewhat light on details but didn't seem you know that seismic there weren't any legislative changes needed so Greg I guess just to start us off can you just I guess define what employment services are what's included under that umbrella.

[00:21:09]>> Yeah, it's um for anyone who happens to be unemployed or has been unemployed in the past, you know, 20 years, >> you'll know there's no longer a CES anymore. There's no Commonwealth employment service. You have to go to a job provider.

[00:21:24]>> Um these are often forprofit services and they will be the one you deal with in terms of trying to find work.

[00:21:35]notionally they help you find work. They will also um set you up with in a sense work for the do type of situations that you have to do. And so you're not actually dealing with government bureaucrats, you're dealing with these >> employment service providers >> who because John How thought the private sector does things so much better than the public sector and and by privatizing the uh employment service networks, uh things will be so much more efficient.

[00:22:07]>> So much more efficient. So how much more efficient are they, Greg?

[00:22:12]>> Yeah, they're not. And as we've pointed out in the past, there have been a number of reviews into this system. One of the more recent ones was done with the employment white paper back in 2023 that found that these organizations are >> Indeed. Um, they're really good at finding work for people who don't need any help finding work because they've got lots of qualifications, experience, and they live in the city and have easy access to transport.

[00:22:42]>> Yeah, I mean, it would I feel like it would be pretty easy to help find those jobs.

[00:22:46]>> They're really good at getting those people jobs.

[00:22:48]>> What about the people who don't have >> Yeah. As soon as you have lack qualifications, you live in rural areas, you have any special needs, uh they're useless, >> but they get lots of money from them, from the government. Because when we say that, oh, they do this service, they're not doing this service out of the goodness of their heart. The government is essentially paying them to do this service. And how they do that is they contract out the service and say okay we need someone to deliver this service in this area. Um it needs to cover you know this many people whatever who can do it and people bid for it and say we can do it for x amount of money.

[00:23:31]>> How much does the government spend on private contractors? And for those of you who don't want to read the entire report, you can go find a really good article on it by Gareth Hutchkins in the ABC website. He notes that the report says that O tender data and O tender is where companies go to try and get um contracts from the government. Yeah.

[00:23:52]>> Shows that employment services contracts currently total 5.5 billion.

[00:23:59]>> Okay. So that's the current current contracts that are operable right now all total up to 5.5 billion. So we don't know if that's per year or that's for the length of the contracts that are currently live right now. That's across 45 providers, many of whom are for profit.

[00:24:20]>> Yeah. And is I mean 5 billion in you know the scope of how much a government spends is that a lot compared to how much they'd be spending if it were public?

[00:24:30]>> Well I mean this is the thing it's it's >> it's are we getting value for money?

[00:24:35]Yeah >> that's the real thing. Like even if it costs 5.5 billion to do it by public sector >> that's money worth >> or 6 billion or 7 billion. Does that are we getting value for money? And as we as this report points out and as as I saying the white paper pointed out >> they we don't get value for money.

[00:24:54]>> They are great. They're basically ticket clipping in a sense. They take the money say oh we did this service. We got them to do these things. We got them to fill out these applications. We sent them off to this um employer.

[00:25:10]And be the real problem is we found that the incentives behind the system was such that because they get money per unemployed person that they get a job for. It was any job for anyone.

[00:25:24]>> Yeah.

[00:25:25]>> Not a job that best fits a person.

[00:25:29]>> Yeah.

[00:25:30]>> And that's why it they were really great for people with super qualified everything because they had so many more options. They could get a job and and it' probably be a good fit. And what they were also finding is most people like I didn't even need these people. I had to use them because I had to do that to get job seeker but they were no help whatsoever. I found my job myself in a sense.

[00:25:52]>> Yeah.

[00:25:53]>> But for the people who really needed help.

[00:25:56]>> No.

[00:25:57]>> And but so it was like oh here's a job and it's like I'm not suited for that job. It's not something I like doing.

[00:26:04]They'd get it last not very long and they'd be back in the system again. and it was just churning and >> you know it's $5.5 billion that's a lot of money.

[00:26:15]>> Yeah, if we were to do free union TA we're talking a bit over 10 billion maybe. So you know it's a lot of money >> for a service that should be about public benefit not profits. M >> and as we've said repeatedly as soon as you make public service about private or soon as you privatize public services profit becomes the motive not the service. Yeah.

[00:26:42]>> And that's what this report really shows and I think it just provides more impetus to the government to if they are going to do those big once in a generation changes get real about it.

[00:26:54]>> Yeah. and stop thinking that what John Howard viewed as good is still good because it wasn't and it isn't and all it has done is made some people extremely wealthy and it hasn't delivered uh better outcomes for for unemployed especially for long-term unemployed.

[00:27:16]>> All right. Well, I reckon that's probably all we've got time for today.

[00:27:18]Greg, >> my voice held out. I got through it with only lots of coughs. That is that our producer Angus has nicely edited out.

[00:27:26]>> Yeah. Hope so. [laughter] >> Hope so. Everyone, thank you very much for listening. It is great to be back.

[00:27:33]We will be back again and I will promise I will be back >> two weeks in a row. Yeah. Actually, no.

[00:27:39]Now I'm stared cuz I'm headed off to Adelaide next week. So, I'll probably be stuck somewhere. Anyway, >> but we will hopefully be back next week with another dollars and cents >> and we'll be talking CPI. We'll be talking inflation. This episode of Dollar Sense, however, as Eleanor point out, is is a day early. It was done on Wednesday, the 22nd of July. And some things may have changed. If you'd like to find out all about the Labor Conference and the gas tax, you can check out my column on Guardian Australia site or also head on over to the point.com.au where we will have stons of stuff on it, um, articles on it. We might even get some links to Eleanor's video coverage of all the things going on there. Is that Do we do that on the point? I think we should. I'm just going to say we do and it will manifest itself. [music] >> I'm sure there'll be some write-ups about whatever happens there.

[00:28:35]>> There certainly will be. As well as lots of other great content, including my review of the Odyssey, which >> Oh, [laughter] yeah.

[00:28:43]>> which we were going to talk about. We were going to talk about we decided to talk about actual things.

[00:28:48]>> Anyway, too long didn't read. [music] Go see it. It's very good. As always, our music is from Blue Dot Sessions.

[00:28:54]Everyone, great to be back. Have a great week and we'll see you all next week.

[00:28:59]>> Bye.

[00:29:02][music]