Interview with Sally Sara, RN Breakfast, ABC Radio

Subjects: Tomago Aluminium, News Bargaining Incentive, housing construction code, productivity Sally Sara: Sally Sara with you for Breakfast. Well, after months of negotiations and uncertainty, the federal and New South Wales governments have struck a deal to bail out Australia’s largest aluminium smelter in the Hunter region. They’re jointly contributing $2.5 billion while Tomago Aluminium has agreed to invest at least $1.1 billion in the facility.

Daniel Mulino is the Assistant Treasurer and Minister for Financial Affairs and joins me now. Minister, welcome back to Breakfast. Daniel Mulino: Thanks very much for having me on.

This Tomago deal is a 50/50 split between New South Wales and federal governments, but with the federal funding uncapped, the upside is a deal for the federal government to share in any profits. How did the government satisfy itself that this was the way to go? Well, I think if we look at the last decade, what we’ve seen globally is that supply chain resilience is becoming increasingly important.

We saw that in the post‑COVID world where supply chains seized up, we’ve seen that with the Middle East ructions and energy supply chains. We’re one of the few countries in the world with end‑to‑end aluminium supply chain, and that’s really critical for transport infrastructure; it’s really critical for electricity transmission. And so this is our largest smelter; it’s really important that it keeps going.

We’ve put significant amounts of funding in, 50/50 as you say, but because we have an uncapped contribution it’s important that we get that upside, and what we get is – How much are you expecting from that deal; the upside? I don’t think there’s any particular figure that’s been put on that, but what we do know is that this is going to protect a significant number of jobs in the region and thousands of jobs indirectly.

So it’s really important for the region, but absolutely critical for one of our most important industrial supply chains. This deal is part of a shift in industrial policy following an era where the consensus was that rich countries should not subsidise heavy industry indefinitely. Was that a mistake, and should successive governments in Australia have done more to prevent heavy industry from going offshore?

Well, I think there’s been a growing realisation that increasing specialisation as a result of what you might call globalisation in the post‑war era, which did lead to a lot of productivity gains and a lot of lift of living standards, it did create vulnerabilities, and as I mentioned earlier, in the last decade, I think, that’s been brought to the fore. Supply chains have become more complex and in some instances more fragile.

And so I think what that means is that risk has to be put into the consideration of governments and their policies. The government will today introduce amendments to laws requiring Big Tech companies to pay Australian news organisations for their content either by striking agreements or paying a tax. You’ve made some changes since announcing the proposed laws last week.

What are the changes? So the changes that we’ve made to get this bill to the point where we can introduce it today and know that it’s going to get through the Parliament, which I’m very pleased to be able to get to, is that we’re going to change the requirement for the number of deals that have to be entered into to fully acquit the obligation. So it was 7 before?

From 6 to 8. And that will lift the cap on any individual deal from 16.67 to 25, which is where it was at in the exposure draft legislation. We’re also changing the reference year to be one year closer to the current financial year, which means that will enlarge the overall pool to take into account one extra year of growth, and we’re also going to reserve 5 per cent of any incentive payments for AAP to reflect their critical role in the ecosystem.

To simplify it, do you expect Australian media organisations will get more money or less money from the tech companies than under your initial proposal? So compared to the formulation that I announced last week, because we’re changing the reference here to one year forward, it incorporates another year of growth in digital advertising revenue, so the total pool for media will be bigger by that year of growth.

So more to the media companies? More for media. Yeah.

By specifying that tech companies must strike deals with at least 8 news organisations, is the government making a deliberate choice to support some of the smaller media companies? Yes. And so that obligation to enter into at least 8 deals is if they want to fully acquit.

So it still will be open to tech companies to only partially offset their obligation, but if they want to fully offset their obligation, there have to be at least 8 deals. In addition to that obligation, there’s a 200 per cent offset for small and medium players, so that’s also a very strong incentive for them to enter into agreements with regional media, with CALD media and LGBTQI and other smaller players.

But what I would also say is that when you look at the way that Google, and even Meta, when they were engaged in deals under the previous News Media Bargaining Code, participated, they entered into quite a large number of deals, dozens of deals. So I’m hopeful that that’s the way that they will engage with it again. Moving on to another area, Liberal frontbencher Andrew Bragg addressed the National Press Club in Canberra yesterday.

He said that building regulations were too complicated and that they required gold‑plated housing. He said that the National Construction Code should be reduced from around 2,000 pages to 80. The government also you want to streamline regulations.

Do you agree with him in principle? So when we go back to the three‑day Economic Reform Roundtable last year, better regulation was one of the key themes. It took up almost a whole day of the 3 days.

The National Construction Code came up, and the fact that the Code was changing every 3 years was seen as a challenge. It’s understandable that it’s changing because we’re trying to reflect better materials. In my own portfolio of insurance, we want the National Construction Code to reflect, for example, better ways of delivering and building more resilient buildings.

Would 80 pages get you there? Is it doable? Well, what we agreed to was to freeze the National Construction Code, and that was a reflection that we needed to stop that changing constantly in the course of long projects.

Over time it would be good to reduce the National Construction Code. I think just saying we’re going to reduce it by, you know, 90 per cent without having undertaken any of the detailed work, is I suspect, not realistic. There’s reasons why there’s a lot of detail in there.

But what we’ve undertaken and what we’re delivering is to say to the industry, what you’ve got there is going to stay, and you can build houses on the basis of that code going forward. That was seen as a really significant move and will help the industry deliver more houses. As you’re saying, we’re almost a year on from this Productivity Economic Roundtable.

Why has the government been unable to significantly shift productivity in the past year? Well, see, in the Budget there were a number of measures identified that are going to contribute to productivity; over $10 billion worth of measures were identified. That included the passage of the EPBC Act, a really significant measure, the freezing of the National Construction Code – When are we going to see a difference in the productivity numbers?

So productivity growth tends to lag the reforms; we saw this back in the Hawke/Keating years. There can be a lag of a few years. That’s the nature of the way the economy tends to incorporate these kinds of regulatory changes.

How many years do you think it will take until productivity improves under this government? Well, we saw in the last national accounts that productivity lifted and 3 of the 4 quarters were positive, so I think on some fronts we probably have seen a turning of the corner. But the RBA Governor is outlining it as an area of concern.

I don’t think you can put a particular number on when we see the impact of particular changes, but as I mentioned, in the Budget we can point to a significant number of material productivity changes, we can also point to significant changes when it comes to competition policy, the most significant changes in mergers and acquisition policy in recent decades. These will have a cumulative effect and will contribute to a more productive and competitive economy.

Daniel Mulino, Assistant Treasurer, Minister for Financial Affairs. Thanks for coming in this morning. Thanks very much.