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- [00:00]
Jacqueline Maley
Paul, I've got a pop quiz for you. Do you know what the difference is between Parmesan cheese and Parmigiano Reggiano?
- [00:06]
Paul Sakal
I'm not sure I do, but Parmigiano Reggiano sounds like something I'd pay lots more for because Parmesan cheese reminds me of the Kraft Green Parmesan that I use on my pasta.
- [00:17]
Jacqueline Maley
Oh, yeah, I actually quite like that stuff. Don't tell. Don't tell our Italian listeners. What about the difference between Prosecco and sparkling wine?
- [00:25]
Paul Sakal
Both cheap, able to be drunk quickly and less expensive than champagne.
- [00:31]
Jacqueline Maley
Next time, we actually need to do this properly with a blind taste test. But my final question is, why are we actually talking about delicious things from Europe this week?
- [00:39]
Paul Sakal
Well, we've signed a big new trade deal with the eu, which is the last big bloc that we don't have a free trade agreement with.
- [00:47]
Jacqueline Maley
Yes, that's exactly right. This week, while we were all freaking out about the oil crisis, and rightly so, the EU president, Ursula von der Leyen, visited Australia to finalise a trade deal between us and the eu. So negotiations for this have been on and off for eight years. And so it was not a moment too soon that we signed it. But as we're going to discuss, this wasn't just about delicious foodstuffs from Europe, and indeed Europeans getting access to our delicious foodstuffs, for that matter. It was also about shoring up our strategic security in a very uncertain time. I'm Jacqueline Maley and you're listening to Inside Politics from the Age and the Sydney Morning Herald. And I'm joined as usual by our chief political correspondent, Paul Sakal from Canberra. Paul Ursula von der Leyen. Apart from having exquisite brain structure and sort of. Sort of steely European elegance to her, she addressed Parliament on Tuesday and she was the first female leader to do so. I read, which I found actually a little bit depressing. Can you set the scene for us? You were in the chamber. She played to the crowd a little bit with references to Pavlovas and flat whites, but actually her overall message was pretty grim.
- [01:53]
Paul Sakal
She's extremely European in her presentation, isn't she? She's got that kind of pan European accent which you can't quite pick.
- [02:01]
Ursula von der Leyen
Honorable members and senators, distinguished guests, indeed. My visit to Australia this week constitutes many firsts. I am the first president of the European Commission to visit Australia in more than a decade.
- [02:18]
Paul Sakal
Has that technocratic heir, former minister in the Christian Democrat Party and the kind of center right party in Germany, which is their version of the Liberal now, the EU later, and becoming a pretty influential kind of avatar in this new debate about the rise of middle powers.
- [02:40]
Ursula von der Leyen
I recently said that Europe could no longer be custodian of the old world order. This just reflects the reality of our changing environment. But this does not mean giving up on who we are, on our values. That matters, whether you are Europe or regional power like Australia.
- [03:07]
Paul Sakal
Her message was relatively grim. She, in pretty plain language similar to Canadian Prime Minister Mark Carney, who was also in Australia a few weeks ago and addressed the House of Representatives, made the point that countries like Australia who are influential but not dominant in their region need to band together and try and find complementarity where they can on defence, on dealing with misinformation, which kind of highlights the political alignment between the centrist European political class and the centre left Australian government who are very focused on taking on big tech in contrast with the us. She talked about the difficulty of dealing with the Trump administration, which has obviously been very harsh towards its NATO allies in Europe, which, which Donald Trump accuses of not pulling their way on defence spending, which has forced them to make long awaited increases in defence spending in, as well as in, including in Germany, where von der Leyen hails from. And she also talked about the difficulties in our region. She made a warning about not getting too close to China and getting the China question right. So overall painting a picture of a more treacherous world where old alliances are not holding and the need for middle powers to be much more proactive in finding security and complementarity where they can.
- [04:29]
Jacqueline Maley
Well, she said the world that we live in is harsh, unforgiving and brutal. It feels upside down. What we knew as certainties are in question. The comfort blanket of yesterday is ripped away. It is confronting which I, it's, it's kind of, it's really strong rhetoric, but I actually found it kind of refreshing because it's, it's grasping the bull by its horns and it's actually confronting reality, which our government doesn't seem to like to do so much, or at least not publicly, as you say. She also talked about how we can't be overdependent on China, basically. And she also talked about green energy, didn't she? And sort of, sort of said, and I'm paraphrasing, that the oil shock is sort of unwelcome proof that perhaps the best energy security is in renewables. So tell us what she said and how it went down, particularly with the coalition members in the chamber.
- [05:15]
Paul Sakal
Yeah, to your first point, just briefly on the really sharp and Honest language. I think you're right. It does stand in contrast to Australian ministers when they talk both about the China threat and the difficulty in our relationship with the us. The labor approach to these matters is really to use scripted, very careful, often fence sitting language on both questions. With China, the mantra is agree where we can and disagree where we must, which is kind of, you know, a method of avoiding sharp differences where they obviously exist. And with the us, it's to try and keep Trump onside to whatever extent they can, to not poke the bear. Australia is in a different situation to Canada and the EU in some regards because we haven't really felt the brunt of a big Trump assault yet. There's Greenland with Europe and with Canada, Trump talks about making it the 51st or 52nd, I forget state. So we're in a slightly different scenario there. But you're right to say there is a contrast on this question of Fondleen's stance on green energy. This has been a really interesting theme this week. A few days before, one day before von der Leyen spoke, we had the head of the International Energy Agency, Dr. Fatih Birol, addressing the press club on Monday. This is the guy kind of leading the global approach to managing the oil crisis. A really influential Paris based organisation, the iea. And his point on Monday was that Australia has amazing natural assets in wind and solar. And the way that you insulate yourself from global shocks is to build out your renewables capacity because they're clearly not affected by global shocks. And von der Leyen repeated this point on Tuesday in her speech to the Parliament to say hone in on self sufficiency, renewables is the way to go. This came about halfway through her speech. To that point, the Coalition MPs in the very packed House of Representatives, where senators go in to watch as well, the Coalition MPs were nodding along to various things. I think there's some scepticism about EU politics on the conservative side of Australian polit, but she kept the whole room pretty perky through some jokes about flat whites and whether Pavlovas were from New Zealand. But when she made this point about green energy, there were a fair few eye rolls, a dampening in the enthusiasm levels on the coalition side. So that was an interesting moment.
- [07:32]
Jacqueline Maley
Yeah, very graceless behaviour, I think, when you have an eminent European guest speaking to the Parliament. But as we were sort of, we were sort of talking about this offline and just saying how the best spin that you could put on it is that it's impractical for the coalition side of politics to deny the energy security benefits of renewable energy sources. And at worst you could say it's just rank hypocrisy. You know, this is a side of politics that has talked so much and is talking more and more about our resilience and our need to be self sufficient and our need for industrial sovereignty, particularly around our sources of energy. And this is the one thing that no one else kind of really mess with and that global supply chains can't affect is wind and sun. And the coalition's still dismissing it completely out of hand.
- [08:24]
Paul Sakal
Yeah, renewables has turned into, and this is not shared across every member of the coalition, but if you observe how they've dealt with climate debates in recent years, renewables has become a bit of a dirty word. And so even when a hard headed kind of technocrats such as von der Leyen makes a common sense argument about Australia's natural advantages, they're not able to really grapple with that without a reflexive hostility. And on the, on the Labour side, I think this crisis has also exposed some of the biases on the left side of politics in terms of how it views the energy debate. Our self sufficiency in terms of oil has been exposed. Our natural resources in terms of how we export coal and gas to Asia, which we're now trying to leverage with those Asian nations to ensure a consistent flow of oil, has put a spotlight on how valuable our fossil fuel industry is to our national wealth, our national self sufficiency. Labor has maintained a pretty balanced approach to fossil fuels. You know, climate activists would accuse them of being in bed with the fossil fuel sector, but there was some anti gas rhetoric in the early part of the government which has dropped away as they've taken a more pragmatic approach. So this crisis has exposed the denial on in sections of the coalition as well as some of the biases and ideological stances in parts of the left.
- [09:47]
Jacqueline Maley
I mean, of course now we're sort of seeing noises made from the right side of politics that have sort of echoed in various press organs that we should be drilling our own oil resources. I think we've only got two oil refineries left in Australia and they're saying we should go back to basics and just dig up our own oil.
- [10:05]
Paul Sakal
And you even hear that from one of the most moderate liberals, Andrew Bragg, who's now the environment spokesman as of the last reshuffle he's just been getting, he's a kind of productivity guy and a free markets guy and he's just been Reading the. Never really taken any great interest in the environment, but he's just started reading the big Environmental act, which labor has recently reformed, and he's kind of pulling his hair out, thinking these regulations are so over the top, so burdensome, and we should be doing much more extraction of our resources to drive up our national wealth and to help make energy cheaper and boost productivity through environmental regulations. So, yeah, there's some interesting movements on the coalition side here.
- [10:46]
Jacqueline Maley
It's a live debate. Let's talk about the trade deal, the European Free Trade deal itself, just briefly. At the moment, we impose a 5% tariff on European imports and that will be removed. And on our side, 98% of Australian goods will now be able to be sold in the European market without any tariffs. So it's a good deal for Australian consumers. Those European goods will become cheaper for us. The trade deal, as you said, has been a long time coming and we very. I mean, Ursula von der Leyen basically said, you know, the election of Donald Trump and him bringing in his tariffs basically brought everyone back to the table to negotiate, and they had sort of a much more open attitude to each other in the new environment. There were some issues with naming rights. You know, some of the names we treat as sort of generic are actually trademarks, so they're the intellectual property of the country or the region that makes them. So I think we kept our ability to call Prosecco Prosecco, at least for a while. Parmesan, Kransky, but producers of Ouzo and Parmigiano Reggiano, as we discussed earlier. We'll have to find other names. Some sectors are unhappy with the deal, and I'm thinking particularly about farmers. So red meat produces sheep and beef farmers. Dairy farmers are unhappy. Cane growers are unhappy. The timber industry's unhappy. They all said it was, you know, a really terrible deal, particularly the beef and cattle, the beef and sheep guys. Who is happy with the deal?
- [12:07]
Paul Sakal
Winemakers are happy. And more broadly, if you talk to trade experts and economists who are thinking about the aggregate effect of this deal and the overall economic impact, they would say that there'll be growth in exports and more imports across various sectors to varying degrees, and so there'll be an increase in economic activity and some boost to gdp. I think we should be skeptical about the numbers the government puts on this because the shiny, glossy figures at the front of an FTA handbook often never materialise and they end up somewhere between no net effect and the highest numbers. But there is a sense that this will increase trade mobility in key white collar sectors that our farmers will be able to send more there and we'll be able to get cheaper European cars which had a 5% tariff on them, BMWs and Mercedes and things, as well as cheaper high end EVs, because a lot of European EVs fit into the higher end of the price spectrum which had luxury car tax incurred on it. The threshold for that has increased. Some of these farming groups, and the nationals in particular, are arguing that the quotas we've been granted for beef exports into Europe were no better than what we had Pre, I think, 2019. The year is when, in a deal with the Trump administration, the EU reduced other countries quotas on red meat to quite small levels and gave the US a bigger share of the global quota. So labor says they've got these red meat quotas up about eight times what they were. But farming groups argue that they were at that point earlier, last decade anyway, and they're calling it one of the worst trade deals of all time. So farming groups in the EU are also really angry because they say that Australia has hormones and other things pumped into our meat that breach their own standards. EU farming groups are notoriously provincial and politically powerful. And politically powerful, particularly in France. So there's a bit to play out here. It still has to go through the EU Parliament, which we expect it will do. But not everyone's happy. I think the symbolism of this deal and what it meant in terms of raising up the benefits of free trade at a time when its values being discredited in various parts of the world through populist movements was in some ways a more notable part of the week than the substance of the deal itself, the fine print.
- [14:41]
Jacqueline Maley
What did the coalition have to say about the deal? Nationals leader Matt Canavan, I've heard a bit from him this week. He's been especially outspoken about it. I feel like Angus Taylor's been. I don't know if I. Maybe I haven't been paying enough attention. Maybe it's because the ABC has been on strike, which is where I get a lot of my news. But I haven't heard so much from Angus Taylor.
- [15:00]
Paul Sakal
Yeah, I think that's a fair observation. I've not either. I saw him on the Today show on Thursday morning, but I've not seen him out and about hugely over the last couple of weeks and I haven't heard his comments on the trade show. I think overall there is. I've heard a couple of people in Canberra say this week that his profile in his first. I don't even know how long he's been in the job now.
- [15:24]
Jacqueline Maley
I'm going to say like three or
- [15:25]
Paul Sakal
four weeks, something like that. Has not been. He hasn't been at the cutting edge of debate for much of his period as leader. In the first couple of weeks, listeners will recall the Isis brides issue was really at the forefront of national debate and Taylor rolled out these quite pithy and catchy one liners on protecting Australians way of life and increasing our standard of living and shutting the door to
- [15:51]
Jacqueline Maley
people who did not. Talking about shutting the. Keeping the door shut.
- [15:54]
Paul Sakal
Yeah. Which I think. I think resonated in that debate, especially because there was a new buzz around Angus Taylor. There was a clarity of message that Susan Lee was not able to bring into her political operations. But he's kind of drifted out of national debate. He's still putting his office together. And I think there was always a risk with electing Matt Canavan as well as putting Tim Wilson into the Shadow Treasurer job that those two men who are quite eye catching, love being in the media, love the brawl. We're always going to put pressure on Taylor in terms of the kind of attention on the coalition. Taylor is a pretty staid orthodox figure who doesn't love television interviews. He prefers.
- [16:37]
Jacqueline Maley
Doesn't have a colourful turn of phrase.
- [16:39]
Paul Sakal
Yeah, exactly. So let's see how he goes over coming weeks. But he has a step back a bit from the national.
- [16:47]
Jacqueline Maley
It just seems like a golden political opportunity to talk about the government selling Australian farmers down the river, so to speak. Matt Canavan has said that it's the worst trade deal in history.
- [16:58]
Paul Sakal
I think he has. I'm not sure. I think a key point to make here is I'm not sure Angus Taylor would agree that it is the worst deal ever, because as a more laissez faire, free market focused liberal, I imagine he would look at the net effect in terms of what this deal does to overall trade levels. And I suspect he would not be as keen as Canavan to take some of the loudest voices in the farming community and make that the crux of his debate. But at a time when political point scoring is at a premium, there's a chance that he does lean into that.
- [17:28]
Jacqueline Maley
Yeah, it's odd. I mean, his electorate is very pastoral as well, so I wonder what the people in his electorate are saying about it. But putting aside the anger from some producers about this deal, as you said before, it's a bigger picture. It's about diversifying our international relationships, sort of making sure we're not too dependent on China, but also making sure we're not too dependent on the United States, which is just a really volatile ally. Now. They're not a huge trading partner, not as huge as China is, but strategically they're obviously the most important. So I feel like the Albanese government and indeed the EU have sort of tried to sell it really as a hedge against risk, haven't they?
- [18:08]
Paul Sakal
Yeah, that's right. We don't do heaps of trade with the EU at the moment. It's significant, but it's not one of our top trading partners. I think I saw a prediction perhaps from Don Farrell speaking. I'm just trying to remember where I saw this. The Trade Minister maybe speaking to Latika Burke in the nightly, suggesting that this deal will see the EU overtake the US in terms of where they rank in our list of top trading partners. So just another moment to display to the public the Australian government's approach to find as many points of complementarity as possible to work with like minded allies wherever we can. Because those elephants in the room, the U.S. which is, you know, showing no regard for the old rules around free trade and China which uses 3 to 5% of its GDP each year to pump subsidies into its own industries, which have the effect of hollowing out ours still standing there, those elephants in the room. And so we've got to do what we can to hedge and diversify, as you say.
- [19:12]
Jacqueline Maley
Yeah. And credit where it's due. The government has actually, this government has actually pushed through a lot of those smaller trade deals or trade deals with smaller trading partners. Just want to touch briefly on, you know, we were talking about right wing politics before. I want to touch briefly on the South Australian election which happened of course last weekend. Labor's Peter Malinowskis won a resounding victory, which was expected. But the real story for most pundits was the one nation vote. It was extraordinary. They won about 22% of the vote, which was an increase of 19% on the vote. The. And the liberals polled about 19% so they had a swing against them of 16 or 17%. Pretty much all of the people who voted one nation were former Liberal voters. I just feel like all the adjectives we can come up with, catastrophic, devastating, are not sufficient to describe this phenomenon for the Liberal Party.
- [20:05]
Paul Sakal
Yeah. Sometimes it's difficult to put words to genuinely kind of tectonic shifts that are occurring when history is actually unfolding in front of your eyes. Yeah. Anyone who says, and I have heard some MPs say, oh, One Nation was always going to rise after Dutton left the show and Susan Lee tacked towards the centre. We got rid of all our policies under Susan Lee. So there was a gap there. I think anyone trying to say that they expected one nation to rise into the 20s in an actual election is putting a post hoc rationalisation on it and trying to make themselves sound smart. Nobody expected this.
- [20:37]
Jacqueline Maley
There's nothing wrong with that. We do that all the time on this podcast.
- [20:41]
Paul Sakal
I'm actually never wrong, Jack, I don't
- [20:42]
Jacqueline Maley
know about you, we're going to fact check that later.
- [20:45]
Paul Sakal
But anyway, no, I had no idea this was coming and anyone who says they did is kidding you. But what this South Australian result shows, I think, is that firstly, the polling numbers are real. It does translate into votes on election day. So that hope that Liberals had, that these numbers were just what people said to a pollster on the phone, we know that's not true. It might still be the case that these numbers are based on a national vibe and a buzz around a new disruptor, which is giving the major parties a middle finger after years of poor governance at national and state levels and almost 15 years of living standards kind of flatlining. So I think we'll see over coming months and years, really, scrutiny will grow on one nation at a federal level where there's a much bigger media spotlight than at a state level where there was really nothing to scrutinise. In South Australia, they didn't have an incumbent leader, there were no polic. The Liberal Party was totally dishevelled in South Australia, the result was known for months in advance and so a Conservative voter could switch out to one nation knowing they had no real impact on the result because no one else was going to win. So it was a free protest vote in some ways, yeah. So having said all that, there are some reasons for Liberals to think that the national spotlight will get the Liberals back in the game. Having said that, this is also proof that. That. Oh, maybe not proof. This is also a sign that there are voters out there who don't really care that one nation doesn't offer solutions, that they're not a credible governing alternative, that they are so fed up with the coalition have such a lack of confidence in the coalition's ability to project a message that affects their lives and creates a vision for a better country, that they're actually willing to vote for a party that. That doesn't have much to say about how it would govern because they're the change option. They're the option that says the system's no good. We're just going to shake the place up and perhaps those voters don't come back to the Liberals en masse. That's the big risk for the libs that not only are they voted, they're not even voted against at election time, they're just looked over. They're seen as an irrelevance. That's the big risk.
- [22:54]
Jacqueline Maley
I mean, when you talk about people having a lot of antipathy towards the Liberals, I feel like actually antipathy would almost be at this point because that is some strength of feeling at the moment. I feel like it's an indifference, like they're becoming sort of irrelevant because they've created a vacuum around themselves. When you talk about the sort of motivations, I suppose, of One nation voters at the moment and how it translates at the moment, I think even with that huge swing to one nation in South Australia, I think at best they might win four seats in the lower house. Right. So it's not a huge amount for that percentage of the vote. Doesn't the one nation sort of swing to one nation just decimate the Liberal Party but actually help to return labor governments? Like if we saw that, if we saw that replicated in Victoria at the state election next year, this year, or in New South Wales at the state election next year, they're just going to return the labor premiers, aren't they?
- [23:49]
Paul Sakal
You're 100% right. There is a total delusion in some parts of the Sky After Dark crowd, some in the coalition who are on the right, who believe that there could be some sort of benefit to the overall centre right if one nation rises and this populist threat kind of enters the political fray. That would only be the case if one nation rose to such an extent that it started to win seats off Labor. We saw in South Australia that Labor lost support in some working class areas to one nation quite a significant amount, but they still held almost all the seats. I think. I think one nation might win a couple and they have a enormous supermajority in the Legislative assembly at a federal level. The polling also suggests that almost all of one nation's support is coming from previous coalition voters. They've started to eat into the labor primary vote a little bit. But labor, if an election were held today, would absolutely, I was going to say shit it in. I shouldn't use language like that. They would absolutely dominate. And so this idea of a coalition between one nation and the coalition which Hanson has floated herself is folly. And the hard heads in the coalition know this and they are in the process of coming up with a plan to try and degrade Hanson's credibility, to elevate the excesses of Barnaby Joyce and his. His character flaws, to try and expose their policy agenda. Because they now have two fights on their hand. They need to consolidate the centre right to ensure that they're not decimated like they were in South Australia. And then after they do that, should they succeed, which is a tough ask to try and beat Labor. Not easy.
- [25:25]
Jacqueline Maley
I feel like being in the process of coming up with a plan, guys. You needed a plan yesterday, you needed a plan last year. Anyway, let's just.
- [25:33]
Paul Sakal
I did. And they were too busy trying to. Trying to deal with the Susan Lee problem
- [25:38]
Jacqueline Maley
just quickly to just catch us up quickly on where we're at with the fuel crisis. Cause I think there's a few movements in national cabinet.
- [25:45]
Paul Sakal
Yeah. So there'll be a national Cabinet meeting on Monday, which is. Will be about two weeks after the first national Cabinet meeting met to address this oil shortage. The Prime Minister made a comment on Saturday last week, when asked about fuel rationing and demand side measures like working from home and encouraging other policies to help people conserve fuel, he had a very reflexive response. He said, well, that's a matter for the states and territories. It's not a matter for me. Don't ask me about that.
- [26:13]
Jacqueline Maley
That didn't work out so well for Scott Morrison in the pandemic.
- [26:15]
Paul Sakal
It didn't. And some of his colleagues are well aware of that political risk. They want him to be more involved, just like state premiers do. And so throughout the course of this week, there have been conversations around the. At cabinet level about creating a more nationally consistent plan around demand side measures, you know, soft encouragements to nudge people to use less fuel. We expect that will be talked about at that Monday meeting. We're not quite. We don't know if we're quite there yet to announce those suggestions or recommendations or whatever you'll call them, but the government is moving in that direction and the expectation that they will be required. And the Prime Minister's needed to be kind of kicked in the backside a bit by some of his colleagues to get there.
- [26:56]
Jacqueline Maley
Right. Coaxed gently along the road. So basically we're talking about voluntary measures at this point as opposed to anything, you know, any sort of measures that are imposed on us, like rationing. I think we're away from that yet. But then who the hell knows, Paul? That's all we've got time for. Let's do it again next week. With a Prosecco in hand and a nice hunk of Parmigiano Reggiano in the other.
- [27:20]
Paul Sakal
I can't wait. And maybe what was the other. What was that cheese anyway?
- [27:24]
Jacqueline Maley
I mean, there's feta. There's, you know, there's Gruyere, which I think we're not allowed to call Gruyere anymore if we produce it in Australia. But, you know, on this podcast, we call cheese by whatever we want to call them, right?
- [27:36]
Paul Sakal
Maybe a bit a hunk of Munster.
- [27:39]
Jacqueline Maley
What's that?
- [27:40]
Paul Sakal
I think this is like an Irish cheese that was part of this. Anyway, let's clean up these jokes because they're bad.
- [27:47]
Jacqueline Maley
I could talk about cheese all afternoon, but we've both got work to do. Okay.
- [27:51]
Paul Sakal
All right. Great to see you.
- [27:52]
Jacqueline Maley
See ya. You can read all of our political news on our websites, theage.com au or smh.com au Today's episode was produced by Chee Wong with help from Debbie Harrington. Our executive producer is Tammy Mills, and our podcasts are overseen by Lisa Marksworthy and Tom McKendrick. Before you go, follow Inside Politics and leave a review for us on Apple or Spotify. I'm Jacqueline Maley. Thank you for listening.