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Dave Sharma… The Comeback King

By James Hutton on January 21, 2020 in People

The Comeback King, by Jeremy Greive.

Back in May 2019, Liberal candidate Dave Sharma staged an incredible comeback to win back Wentworth from popular independent Dr Kerryn Phelps, campaigning day and night to flip a miniscule losing margin from the October 2018 by-election back in his favour. We caught up with Dave at his electoral office in Edgecliff not long before the bushfires stranded us down the South Coast…

How are you this afternoon David? I’m good James, nice to see you.
Whereabouts did you grow up? I grew up in Turramurra, on the North Shore of Sydney. I was born in Canada, in Vancouver, but I moved here to the North Shore, which is where my mum’s from, in about 1979. I was about three years old at the time.
And your dad was from India? He’s Indian, but he’s Diaspora Indian. His parents came from India. He was born in Trinidad and Tobago in the West Indies, in the Caribbean, and he met my mum in London in the early ‘60s I think. My mum grew up in Sydney, she was born and raised in Australia. She took a boat over to London when she turned 21, met my dad who was working as a lawyer over there, had a cross-cultural romance and married, which was pretty unusual back then, to be honest.
Were they hippies? No, they weren’t hippies. It was funny though because when my grandparents were alive my mum’s parents, who I loved dearly, sent their daughter off to London thinking she’ll come back again. So she comes back with this dark Indian man, pretty exotic, grown up in Trinidad, and just went, “What’s going on?” It was unusual at the time, interracial marriages back then were pretty unusual in the ‘60s. I remember growing up – this was in the 1980s in Sydney – and there weren’t many non-white people, and there certainly weren’t many mixed marriages. It’s completely normal these days, which is great and as it should be, but it was unusual at the time.
What were his family doing in Trinidad and Tobago? His dad was a Hindu priest, a Brahmin priest. When the slave trade ended the workforce predominantly came from India as indentured labour. They had a work contract, they’d be paid for their passage – they had to pay off in two or three years – and they’d be given land. That’s how they basically got the labour force onto the sugar plantations after slavery ended and this is why these places like Trinidad are half Afro-Caribbean, half Indian, because they took the workforce from both.
My dad’s dad came out as a priest, a minister to this bigger community of Indians. His dad was a priest, a lot of his elder brothers were shopkeepers, small retailers, a common Indian story. He was the youngest of nine children so he was the one that got the formal education. They all saved up, sent him to school beyond the age of 12, he did high school and they all saved up and sent him overseas to university. He was the first one in his family to get a formal education, then everyone followed since, but he was the one they invested it all in, to move them up the educational ladder and the social ladder.
Are your parents still around? My dad’s still around, he’s 91 and he still lives in Turramurra where we grew up.
That’s a solid innings… Yeah, very good innings. He’s still in great health. I saw him on Sunday, I speak to him every day. My mum passed away when I was about 12 though, she had breast cancer. I think she got it at age 44 and she died when she was 46. I was 12 years old at the time.
Is it true you got a perfect HSC score? I got the highest one you can get. I don’t think it means it was perfect, but I was one of 14 people that year to get 100. I worked hard, I applied myself, but there’s always a bit of luck in these things. I must’ve had a good day at the exam.
Did you still play plenty of sport and have a balanced year 12? Yeah, I worked pretty hard. It’s funny, I went to a public high school – a non-selective public high school – so I think that probably actually made me work harder. I was conscious that I was doing pretty well at my school and I knew my rank, but I had no idea how my school stood up against James Ruse or Sydney Grammar or some of these selective schools. I had no idea, I thought I would get about 95, 96, 97 – I thought I was on track for that – but beyond that I thought I just can’t benchmark myself because I’ve got no idea. James Ruse takes the top one per cent of students from New South Wales, what are they going to be like? I still had lots of good mates, played basketball and tennis and messed around, used to surf and bodyboard at the beach and stuff like that. I was pretty disciplined when I was studying, I didn’t stuff around and there were much fewer distractions in those days, but then I also still had a pretty normal life I think.
Was it Turramurra High School? Yeah, that’s right, it was Turramurra High School, which is a good public school but it’s not selective and it’s kids from all walks of life.
Would you still send your kids to a public school now? Yeah, of my three kids, two of them are at public school, they’re in primary school. One of them is at high school, which is a private school. I’m a bit more pro public school, if it’s the right public school, the right child as well. Some children do better in private school, some to better in public. My wife’s from a private school. She grew up in Brisbane so she’s always been a bit more pro private school. I just want to make sure my kids grow up knowing the full spectrum of human experience and they’re not with too narrow a cohort of people, because it can mean that they have unreal expectations about what life’s like or what life offers. I’m keen to make sure that they have a broad social education as well as a formal education.
Then you went to Cambridge to study law? I started off studying natural sciences and then I changed to law and graduated with law. That was really my dad’s inspiration or encouragement because, like I said, he grew up in Trinidad, he went overseas to London to study. He encouraged me at the end of school, he said, “Look, why don’t you go and do something a bit different? Apply here for universities here,” and of course with the TER of 100 I got into everything I wanted. I got an offer to go to Cambridge University as well. I’d done an interview with them and they’d looked at my marks and I thought, “Look, this would be much more a whole of life experience, Australia will still be here when I come back. I’ll miss my friends but this will be a big adventure.” So I went off and it was a great adventure.
Why do you think you lost the Wentworth by-election to Dr Kerryn Phelps in October 2018? I think there was just a bit of a perfect storm of events. A popular Australian prime minister who faced an election himself and won it in 2016, Malcolm Turnbull, had gone from the leadership in pretty dramatic fashion. People were angry about that across Australia because, I think, we’d done this in the Labor years and people weren’t happy about it. I don’t know why we thought it might’ve been different this time, but people, naturally enough, felt that they’d vote for the prime minister, even if the system is not quite like that.
People were angry about that, and that was compounded by the fact that Malcolm was the local member here in Wentworth, so people were particularly angry about it here because they felt like this is their guy, he’s been here for 15 years, he’s part of us and you’ve treated him like this, we’re really angry about it. I think people were concerned at the time that it meant that part of the party was ascendant, that people who opposed Malcolm’s leadership and the party were moving in a different ideological direction, away from the centre and towards the right. I really don’t think that’s the case.
Then it was a by-election, and a by-election in Australian politics is always a classic textbook opportunity to deliver a message, because it doesn’t really change the government but people can say how they’re feeling. I think all of that together, plus Kerryn Phelps, good candidate.
Do you get along with Kerryn Phelps? You guys are probably quite similar politically… Yeah, I can’t pretend to know her well. I got to know her during the campaign, and that’s a pretty unusual context to get to know someone, but
she’s very well qualified, an impressive Australian who’s done a lot for the country. I think she was a formidable candidate when we started, with a higher media profile than me for sure, which helps as well. If you’ve got name recognition it means a lot in this business and she had high name recognition. You put all those things together, it was a bit of a perfect storm and I think, in hindsight, the fact that it was as close as it was gave me some encouragement to contest again.
What changed that resulted in you winning the federal election just seven months later? I think people were getting over their anger about what had happened to Malcolm. People were voting for a government this time and it was a very clear choice, it was either going to be a Liberal government or a Labor government – you weren’t going to get an independent government. I think people knew, because it was likely going to be close, that this seat really mattered.
There was more consequence? Yeah, exactly. I think I was a bit better known, the fact that I’d stuck around and gone again, I think people respected that, “He didn’t just fly in and fly out, he’s still here,” and people got to know me a bit better in the intervening period. It was still a close result in the general election, I kind of flipped the margin around basically. It was a 51.5-48.5 seat before, and it is now but it’s just in the other direction.
How much was spent on the campaign to get you elected? Is that publicly available information? No, look, I think we put… All our donations are disclosed. I don’t know the final figure but it was, in the course of a closely contested election campaign, a normal sort of figure. I think my campaign and the Phelps campaign probably spent similar amounts of money, but I don’t want to put a dollar figure on it, I’d prefer not to.
The amount that was spent, could that have been the difference between winning and losing? I don’t think so. I guess where money is helpful is it gets you a media buy, that’s basically where most money goes in campaigns. If you’re getting a lot of free media – and Kerryn got a lot of free media during the by-election – and if people are interviewing you and running your content, that’s promotion. She didn’t benefit as much from that this time around because it was a general election and there were other stories, but at the by-election it was just this story, the Wentworth story. I’d always be worried about money playing too big a role in Australian politics, but I don’t think it is at that point. You saw, just as an example, Clive Palmer spent 15 or 16 million dollars, and what did he get for it? He got a lot of billboards, he got a lot of media, he got a big profile, but it didn’t convert to anything, he didn’t win a senate seat, he didn’t end up winning anything.
I think it’s helpful to build name recognition but I think I already had that after the by-election. It’s helpful to build up your profile. But in a general election I think people are focused on national issues, the national choice, and they’re often just looking at the leaders and the two alternatives there, it’s like Scott Morrison versus Bill Shorten. They’re voting for a party and a government and a leader. Everyone’s different but I think when people go into the ballot box they’re imagining those two alternative scenarios. The candidate plays a part but I think it’s only a small part of quite a big picture.
How do you feel about political donations generally? I’d describe them as a necessary evil. The alternative is we have fully publicly funded election campaigns, where the public basically underwrites every candidate, there’s probably a cap on how much they can spend and everyone’s kind of got a level pegging. The difficulty with that situation is that if you have third party groups that don’t campaign for a candidate but campaign on ‘issues’ and they’re not subject to the same laws or requirements they can really tilt the outcome, because you can campaign on issues but you’re effectively campaigning for a party.
The other area I’d point to is that Labor has a structural advantage here because they’ve got the people, and you need people and money to run a campaign. The unions are a huge source of money for Labor but they’re also a huge source of people. If you go to any polling station during an election campaign there are a lot of union volunteers, quite often self-identified wearing the union shirt. As Liberals, we don’t have the same industrial base to draw from.
Although Labor has the support of the unions, the Liberal Party has the support of the church, which has a lot more members and influence, and you’ve also got a lot more support from big business as well… Yeah, I would say that traditionally that was the case, but I don’t think it is now. I think if you look at churches now, churches span the political spectrum in terms of orientation. During the by-election the head of one of the big Jewish synagogues here came out and endorsed my opponent. If you look at the Uniting Church, they’re pretty progressive on a lot of issues, I wouldn’t think they’d see themselves as affiliated with anyone. And then business, if you look at business donations to politics now, they generally split the difference, they’ll give to both sides, so the big banks give to both. I don’t think it’s true anymore that businesses are financial supporters of Liberals and unions are to Labor, I think business is splitting the difference both ways.
Is it a fair political system where money can by more influence than an individual voter? I don’t think it’s just money. You’ve always got to be on the lookout against structural features of a political system that can be exploited or used. The truth is that if you’ve got fame for some reason, or if you’ve got notoriety for some reason, then you’ve got an advantage over your run-of-the-mill candidate. If you’re a former rugby league player, a former business figure, a former actor or actress, a former television journalist – Kerryn Phelps did The Today Show for 20 years, big structural advantage – now is that fair or unfair? Is it a level playing field? It’s just how it is. Money is just part of the equation that makes the candidate.
You hope, at the end of the day, that voters are voting on the merits of ideas and competing views and visions of society, and not solely on the basis of the person they know the best. It’s an imperfect science and we all do, as humans, take a lot of heuristic shortcuts. We don’t always weigh out the pros and cons of every issue. We have these mental shortcuts and that’s where all these things help – fame, notoriety, looks, gender. All these things make a difference, and money’s in that mix as well, but I think it’s hard to say, “Money’s bad but everything else is okay.” They’re all shortcuts in the way we, as humans, assess and analyse things. It’s from a primordial psyche where we’re attuned to make decisions very quickly based on limited information, so we use all these cues and shortcuts. A lot of politics is about appealing to them. If people like the look of you, if they think you’re trustworthy, if you’ve got a nice smile, if they feel like they can relate to you because you’re in the same stage of life, you’ve got the same sort of profile… that all helps. I think the Clive Palmer example is pretty telling here. People didn’t find him appealing, even though he spent a whole lot of money.
Whose idea was it to announce moving the Aussie embassy in Israel to Jerusalem just before the by-election? The announcement was a review of the location of the embassy, because that review did not actually conclude until December, but there was an announcement made. It was the government’s decision.
Whose decision was it? The government’s. The cabinet’s and the prime minister’s. I was a candidate. I had, in the past, because I’d been an ambassador to Israel, I’d written publicly that we shouldn’t be ruling out this idea – this was when Trump did it – but I wasn’t part of the government at the time and so that was their decision. I respect it and I can see the merit of it. I think where we got to in the end is the right place.
But it backfired, right? Everyone felt like they were just being bribed… If you see it as a political move, but I think the idea has merit on its own terms. I think the difficulty is, because the announcement was made in the context of the by-election campaign, people saw it only through a political lens.
The timing was awful… It’s a complicated argument and debate to carry, a complex discussion to have, and in hindsight it probably would have been better if we’d had that conversation outside the context of the by-election campaign.
Do you think the embassy should be moved? Where we’ve got to now is we’ve recognised Jerusalem as the capital of Israel and I think that was important we do that, because up until now we’ve maintained a policy of ambiguity about where Israel’s capital is.
Has Australia actually done that? Yeah, so in December we announced we’ve recognised Jerusalem as the capital of Israel. We’ve opened a trade and commercial office in Jerusalem, so we have a diplomatic presence in Jerusalem now. And we’ve said the location of the embassy we’ll keep under review but we think there needs to be a negotiated solution to the Israel Palestinian conflict before we move the embassy.
Where we’ve got to is right, we’re right to be a little forward leaning on this. We’d found ourselves in this position, this all dates from 1948 when Israel was created and people expected at the time that shortly after that War of Independence that the sides would come together and basically negotiate what had become a ceasefire or lines into a permanent international boundary. We all said at the time, “Well look, we’re not going to do anything until you guys sort this out and tell us where the final boundaries are.” We’re now 71 years on and for all that time we’ve basically been treating Israel as a transient nation in some sort of sense. “Look, we know your capital’s in Jerusalem but we’re just going to pretend it isn’t, even though we’ve travelled there and lived there.” It had become almost an obstacle to peace rather than a facilitator of peace because we’d allow one side to continually exercise a veto over the other side’s legitimacy as a nation.
Are you speaking about Israel not letting Palestine have any legitimacy? No, no. There’s been good faith efforts by the Israelis to basically reach a territorial and political compromise. There’s the Oslo Process, the Camp David Accords, and on all occasions, and for complicated reasons, the Palestinians basically walked away from the table saying, “No, we don’t want to do this deal. We don’t accept the deal that’s on offer.” I think Israel has shown good faith in attempting to give land back to the Palestinians in exchange for peace.
You think they have? They have. I think they have.
Haven’t they continuously taken more and more land and exercised more and more control over Palestinian’s lives since May 15, 1948? From 1948 to 1967 the West Bank of the Jordan River was controlled by Jordan and the Gaza Strip was controlled by Egypt. In 1967 Israel was invaded by an Arab army of Syria, Iraq, Egypt and Jordan and they fought back and they occupied a whole lot of extra land after that war. It was a defensive war, they fought it because they were attacked. After that they gave back the Sinai Peninsula to Egypt in 1979, they reached a peace agreement with Jordan in about 1989, 91.
That was with King Hussein? Yeah, with King Hussein. And they’ve always been interested in a land for peace proposition. Yeah, there are Israelis living in what would become a Palestinian state, but if you travel there the number is small, their locations are small and the place is overwhelmingly Arab Palestinians. I’ve travelled through all the West Bank and Gaza, there’s very few Israelis there. Those that are there, yes, under any peace agreement they would need to be pulled out. But I think Israel’s shown it’s done that in the past by giving land back to Egypt.
They gave back the Sinai but haven’t they maintained control over the West Bank? Yeah.
And the Golan Heights? The Golan Heights, yeah.
So they took heaps and just gave back a sliver? Well, Sinai was more than twice the size that Israel is today, so they gave back 66 per cent of the land.
The Israeli settlements may only take up small amounts of land but haven’t they been built strategically in a grid so that land can never be part of a Palestinian state? Those settlers would have to vacate. When Ariel Sharon pulled out of Gaza in 2005 he forcibly evacuated a whole lot of Israeli settlers that were there – there’s no Israelis that live in Gaza now at all – so I think they’ve shown a willingness. It makes it complicated, the settlements make peace more complicated. I’m not pro settlement, I’m not going to defend them. I think they make peace more complicated but it doesn’t mean they’re an insuperable obstacle to peace.
Back to this decision to recognise Jerusalem as Israel’s capital; don’t the Palestinians want that as their future capital as well, at least the eastern part of it? Yeah.
Do you think rewarding a government that doesn’t seem to care much about the human rights of an entire race of people is a good idea? What we’ve done is we’ve recognised that Israel has a claim to Jerusalem as their capital, that’s without prejudice to the final boundaries. We said at the time that we’d envisage that East Jerusalem would become the capital of the future Palestinian state as well. Ideally it would be a shared capital with both parts. Look, the truth is that all the Israeli government institutions are in the western part of Jerusalem. Any time that an Australian prime minister, foreign minister, US president or anyone goes to Israel they go to Jerusalem, so de facto we’ve been treating it as their capital for years.
What we’ve been saying is, “Until you can convince the Palestinians to reach an agreement with you, we’re not going to recognise it as your capital, even though we visit and travel there.” It had been allowing one side to limit the normality of our interactions with another side, which I think was not right. It’s not a panacea – it doesn’t fix everything or anything – but I think it was a bit of unfinished historical business. The conflict has been characterised by too many people, focused too much on concepts and not enough on things on the ground and actually improving things on the ground. Anyone can see it’s a commonsense proposition, I think there’s been a lack of commonsense in dealing with that conflict.
I went to Jordan a while back and many of the people I met were displaced Palestinians who’d been booted off their land, or their families had been booted out back in 1948, they were basically refugees. When you speak about the Palestinians not wanting to negotiate, these people want to be able to return to their homeland but that’s off the table with the Israelis… Yeah, I think their argument would be, firstly there were a lot of Jews expelled from Arab countries around the same time. Jews had lived in Baghdad for three thousand years, and in Cairo and Alexandria, and they were all expelled by the Arab regimes. They all fled, they were basically expelled by the Arab countries in ‘48 and ‘56 and ‘67…
And they all went to Israel… They went to Israel, and they don’t say, “Look, I want to go back to Alexandria,” “I’ve got my house in Cairo still,” “When do we get to go back to Baghdad?” When the Ottoman Empire split apart, Greece and Turkey fought a war. There’d been Ionic Greeks living on the coast of Turkey, that Mediterranean coastline in Turkey, again for thousands of years. Nasty conflict, two new states created, population swapped. India and Pakistan, the partition of 1947, millions of people displaced, never to return to their homeland, having to start a new life. It’s an unfortunate reality of some of the post colonial or decolonisation conflicts in the 20th century, but the reality is those Palestinians who were displaced in 1948 are not going to be able to return in numbers to Israel, just as all those Jews displaced from elsewhere in the Middle East in 1948 and thereafter aren’t going to be able to return to their homes either. But it’s better for everyone, and particularly for the generations that come, if we all get to grips with that reality.
Conflict leads to displaced populations. We resettle people here all the time in Australia – 27,000 people a year – who’ve come from Somalia, Pakistan, Afghanistan… It’s tough for the generation to whom it happens, it’s less and less tough for the subsequent ones, but the Palestinians displaced from that conflict, because they’ve been kept in camps now, there’s several generations that this is all they’ve known and that’s not healthy and good for them. It doesn’t help resolution of the conflict and I don’t think it’s a good thing for us to be doing generally.
What if all the Russians, Eastern Europeans, Americans, Australians and Brits who moved into an Israeli settlement on Palestinian land just moved back to where they came from and let the Palestinians move back in? It’s a complicated issue. There’s virtue on both sides, there’s blame on both sides. It’s history, it’s happened, we’ve got to move on from it now.
How do you go about reducing the threat of terrorism? Firstly, you’ve got to protect your populations from it, which means police work, law enforcement, intelligence and whatnot. It’s different all the time, there’s no general answer because people turn to terrorism for different reasons. There’s been terrorism throughout the 20th century, spurred on by different political causes. Sometimes they’re historical grievances, sometimes they’re political grievances, sometimes they’re religious grievances, and so I think you’ve got to look at what is going on in each of those and how do you address some of those things.
The Liberation Tigers of Tamil Eelam, the Tamil Tigers, they were basically a nationalist movement; the Palestinian terrorist organisation, a nationalist movement; the more recent manifestations of terrorism have been Islamic Jihadist type movements, so religious extremists…
There’s a lot of discussion about reducing the threat of terrorism, but we rarely hear discussion about why terrorists would want to harm someone in Australia. What motivates someone on the other side of the world to want to do that? Do you think Australia’s defence policy of following America into all of these wars in Muslim countries has made Australia a less safe place? No, I don’t, and I don’t think we should ever allow our foreign policy to be dictated by fear. Effectively, if you think, “Oh, if we do this, it’s the right thing to do, it’s in our national interest, but we’re worried about terrorists doing X, Y and Z,” well then you’re giving them a veto over your foreign and defence policy, and I think the historical record bears this out. Why did Osama bin Laden attack the Twin Towers and conduct terrorism on US soil? A whole lot of grievances, he could say, “There were US forces in Saudi Arabia,” or, “It’s the Israel Palestinian conflict,” or, “Oh, it was this or that.” Why have the French been attacked by ISIS is recent years, the Bataclan terrorist attacks and whatnot? Is it French foreign policy or is it basically an attack against a civilization?
I’d say yes to all those things. Obviously there’s extremist doctrines like Salafist Wahhabism in Saudi Arabia and that sort of thing – there’s always going to be crazy people – but the reason that they can get such influence and attract such strong followings is because of Western nations imposing their will on other countries… No, I don’t agree. I don’t think they do have strong power over their followers.
What about ISIS? They couldn’t hold their state, they couldn’t hold their caliphate together, because people fundamentally don’t want to live under their rule. I don’t think they actually are appealing. Part of the tactic of terrorism is you conduct spectacular attacks and you terrorize people because you can’t gain any legitimacy any other way. You can’t get media or profile or support except through fear. If they had a compelling thing to offer they’d be a traditional political movement, but they don’t have a positive vision to offer, they’ve got a bundle of grievances which they’ve packaged together, overloaded with a whole load of conspiracy theories and a denial of personal responsibility and personal agency for issues and they find a convenient scapegoat. Any ideology that demonizes one single people or set of issues – just like Nazism did – for the problems of the world is basically bereft of any logical reason or intellectual underpinnings.
Totalitarianism is basically always an attempt – and the populism that comes with it – to ascribe all the ills of your society, your life condition, your economy, on to the other. And the other is always someone that you can’t identify with and has different customs, different dress, different looks, different ethnicity and a different religion. It’s a cheap stunt by populous, clever strongmen, cynical political leaders, to deny responsibility for their own failings or their own personal shortcomings and put it on someone else. There’s been lots of these types of movements in history, Islamic extremist terrorism is just the latest manifestation of that phenomena.
One of the biggest challenges around here is housing affordability. Do you think low interest policy has widened the gap between the housing haves and have-nots? Has low interest policy been a big mistake? I worry a lot about housing affordability. I think there’s no doubt now that the cost of a median house versus a median income has gone up in terms of multiples, particularly in Sydney. We’re one of the least affordable cities in the world for housing, and it has all sorts of bad social consequences. It means that people can’t afford to a buy a house in the neighbourhood in which they grew up, it might mean that essential workers who don’t get paid well, like police, nurses, doctors and teachers, can’t afford to live in the community that they’re meant to serve, which I think has bad social consequences as well.
I think there’s a lot of factors at work here, it’s population growth, it’s the slow growth in our housing stock that is partly because of the planning and controls and different levels of government that need to approve this. It has been, in the past, a fair bit of foreign money coming and parking assets in housing wealth as a hedge against political risk in their own countries, which we’ve sort of clamped down on.
Low interest rates have been part of it. I think the hard thing with the interest rates is that interest rates have never been used by the central bank to target asset prices generally, they’ve always been used to target consumer prices, inflation, and the mandate of the Reserve Bank is still basically price stability and full employment. They’re not meant to be using interest rates to pop housing bubbles or to take exuberance out of a market.
In the last 10 or 20 years there’s been a lot of instances where asset prices – housing most recently, but at other times the stock market or equities – have gotten out of whack with underlying fundamentals and we need to find a way to reign those in. With housing, we did that to a degree with the tighter prudential controls for bank lending, higher stamp duty for foreign buyers, needing to put up more of a deposit, etc. just to basically lessen the amount of money that was coming into the housing market, which I think has put a ceiling on housing prices and taken a bit off them as well.
But I think it’s one of these things, interest rates are low because the global economy’s weak and we want to stimulate demand, but it’s also going to potentially have an adverse impact on the housing market and we need to find other policy measures to address that.
What about the things you can control, like the tax treatment of housing? One thing that is baffling is that a retiree can be living in a house that could be valued at 20 million dollars and if they have no other assets they can still get a taxpayer funded pension… Yeah.
Does anywhere else in the world have such a ridiculous policy? Someone who has a 20 million dollar asset can be getting the tax dollars in the form of a pension from someone who’s on a minimum wage and can’t afford to even rent in the area… We’ve got a principal place of residence exemption, usually for land tax as well, most states do it for land tax and then for asset tested government payments like the pension. People are going to have different views on this, but I think the social judgment’s been made that if you’re a person in your later years in life, clearly you might live in an expensive home but if your partner’s died and you don’t have an income stream anymore you couldn’t afford to pay the stamp duty on an expensive home because you don’t have enough incoming money. If you were ruled out of the pension you basically force the person to sell their home, because they’re not going to be able to live otherwise.
We’ve taken the social judgment that people should be allowed to stay in their homes after they retire and not be forced into selling it because of financial pressures. They might sell up for other reasons – they might want to downsize, they might want to use that asset to go into the nursing home – but we’re not going to, through our tax transfer treatment of these things, force people out of their homes. That’s a social judgment.
What about tallying up the amount of taxpayer funded pension that someone like that receives and then paying back the government from their estate when they pass away? So like a wealth tax? Or some sort of wealth tax or inheritance tax?
Not a wealth tax, just a repayment of taxpayer money that they shouldn’t have been getting in the first place. What currently happens is that the asset gets passed on, tax free, to their kids when they pass away. So someone who doesn’t have rich parents may as well just be giving money to their mates with rich parents. It just seems absolutely outrageous… I think Queensland was the last state to abolish inheritance tax in Australia. I know people argue for it, I just don’t think there’s public support for it and I personally don’t like the idea that if you work hard to save during your lifetime with a view to providing for your children, that the clock resets on that level of effort and your children don’t get the benefit of your hard work because we are saying that we’re going to levelize everything at the end.
They still would get the benefit of what’s left but they would be getting the residual after the tax dollars they unfairly received were repaid… And what about if you’re a husband and wife, and the wife passes away, or the husband passes away, and the other party gets the full share of the family home; should that be taxed as well? And then what about if the parents pass on the place to you in their lifetime rather than when they pass away; should that be taxed as well?
We all benefit from Medicare and free treatment at public hospitals, loads of people are eligible for subsidized age care services under My Aged Care and things like that, because we think there’s a social good in all of Australians being able to access certain levels of service. With the pension it’s a case where we think if you don’t have enough of an income to live… this is a decreasing problem, increasingly, because people will be relying more and more on their super. This is a generation that’s basically transitioned from a pension era to a superannuation era, which is going to be, well, I’m a bit older than you, but the same sort of thing, we’ll be relying on that.
I think it’s a transitional problem, but I think Australian governments of both persuasions have taken the view that the social dislocation you cause by doing these sorts of things, they’re not really worth the benefit you get. The pension’s not a massively generous payment, it’s not easy to live on, unless you’ve got no other outgoings and you’re not having to pay rent or any other expenses like that. These people happen to benefit from the huge increase in housing prices, which is probably a once in a generation thing, but it’s not going to be a continuing feature of the system.
Is the Morrison government’s commitment to a surplus damaging our economy? No, I don’t think so. I think it’s quite the opposite. If you looked at what the Reserve Bank said at their last board meeting when they reduced interest rates by a quarter of a point, they said there’s global economic headwinds – undoubtedly true – which is buffeting the Australian economy – undoubtedly true – and a lot of it’s caused by US-China trade tensions, but the things that are pushing the economy ahead are interest rate cuts; tax cuts, which have gone into people’s pockets after this financial year; stabilization of the housing market, which means people aren’t feeling the wealth effect from the decrease in the worth of their house; and pretty high commodity prices by average standards, which is supporting our export sector. The Reserve Bank described that as being at a tipping point. There’s basically a whole lot of stimulus that’s in the economy now and fiscal policy always works on a longer time lag than monetary, so that sort of stimulus takes longer to work through. But I think this commitment to a surplus is not only important for the fact that we do need to pay our government debt and restore the budget to balance over the course of the business cycle. It’s also an important sign of confidence and competence and doing what you say you’re going to do.
Investors and business often take their cues from commitments and the ability of governments to meet their commitments. One of the most damaging things of Labor’s six years in government was Wayne Swan the treasurer promising four years of surpluses from the following year and then moving it back the following year and never delivering any, because that really hurts business confidence. If people think the government’s word is not worth anything, we can’t take government at its word, and that credibility matters a lot. I think the fact that we said we’re going to deliver a surplus, delivering on that is important for our credibility but it’s also important from a signalling sense to investors in the market. I think, as the Reserve Bank has said, there’s a fair bit of stimulus already in the pipeline, so we shouldn’t be throwing out the bathtub at this point in the business cycle.
Do you believe that man-made carbon emissions are warming the globe? Do most people in the Liberal Party think that? Yes. Yeah, I think they do. I think it’s one of those things that on the balance of evidence it’s pretty clear it’s happening, you just need to look at the empirical evidence, the increase in concentrations of CO2 in the atmosphere, warmest years on record…
You listen to the experts basically… Yeah, like any science, there’s no 100 per cent confident scientific judgment, but the confidence level about this judgment – the link between CO2 emissions and changed climate – is growing more and more, stronger by the day, more compelling by the day.
Population size has more of an impact on the environment than anything; does the Liberal Party have a population policy? We’re 25 million people here, there’s seven billion people around the world, so the world population is going to have an effect on emissions and I think the largest projections are that the world population will peak at around nine billion in around 2060, mainly because the birth rate in less developed countries is slowly tapering off from five or six to a replacement rate. We used to think in the 1800s that earth couldn’t support more than 500 million people – this was Thomas Malthus – and that the earth couldn’t feed as many people as were going to be on it and we’d all be facing famine and whatnot. Well, that changed because of the agricultural revolution. We have a pretty big footprint on the world at the moment with the population of six or seven billion, and that’s not just the CO2 emissions, that’s biodiversity, natural habitat, water, scarce resources and everything. It’s a good thing that the world’s population is tapering and it’s a good thing I think that it’ll cap off. But us alone in Australia, there’s not much point us saying, “Well, we’re going to cap our population at 25 million people,” while the rest of the world’s at seven or eight billion.
What about quality of life in Australia? I don’t think that the quality of life in Sydney is better now than it was five or even ten years ago, in fact it’s probably worse… Because of the increased population?
An increase in population puts downward pressure on wages and upward pressure on cost of living. It takes forever to get anywhere, you can’t park anywhere near your house if you don’t have a car park, hospitals are bursting at the seams and school waiting lists are out of control. It’s getting busier and busier. People might be able to afford a slightly nicer car but other, arguably more important things, are just getting worse and worse. Not to mention the impact on the environment… This is a generational thing and it’s change. I don’t think we can say, “Hey, we’ve got it all here, we’re going to put up the barricades and no one else can share in what we’ve got.” I think that’s quite unethical.
Really? Why? You were talking before about the inequities of intergenerational wealth transfer, so we’re saying, “We’ve got Australia, this is great, no one else can come here, no one else can share in this. If you don’t live in Sydney now you can’t come and live here. If you don’t live in Melbourne now you can’t come and live here, because we got here first and so it belongs to us.”
What about not totally cutting it off but rather than 160,000 people coming to Sydney each year, we cut that back a bit? I think we can do a better job. There are parts of Australia that desperately need more people – large parts of Australia – and then parts of Australia that don’t, and that’s Sydney and Melbourne, by and large. But the rest of Australia – Adelaide, Brisbane, Perth, all the other major metropolitan cities plus the rural areas – would desperately love more people. So we’ve got to do a better job of directing the people that are coming into Australia more to regional areas and outside Sydney and Melbourne.
Part of the problem in Sydney – and it’s already changing now, over the last couple of years – is the infrastructure basically hasn’t changed in 40 or 50 years. The roads are the same, the train lines are the same, Warragamba Dam is the same dam that feeds all of Sydney. We’re changing it now with the light rail, the metro, raising the dam heights, Western Sydney airport, etc. But, of course, if your population has gone up 50 per cent but the state government hasn’t invested in the infrastructure to support that, it’s not ideal. That’s what we’ve got at the moment, an infrastructural lag, because hospitals haven’t been built, schools haven’t been built, roads haven’t been built, railway networks haven’t been built, and this New South Wales state government I think is doing a good job of catching up on a lot of that, but it means there’s a lot of pressure on services now.
We should be able to have a comfortable quality of life in Sydney as much in a city of five million as we did with two and a half million, if the infrastructure’s right, but the population has moved ahead of infrastructure, and that’s being caught up I think now.
Do you have aspirations to be the Prime Minister of Australia? No, I’ve got aspirations to do what I can as a parliamentarian to improve Australia. I’m realistic enough in this game to know that there’s a lot of stuff you can’t control, including how your career goes and who’s in government at what time and whatnot. I’d like to make a contribution, I’d love to have a ministry one day if I get there and be involved in policy a bit more, but beyond that it’s really a bit of a crapshoot, you know, who ends up on top and who doesn’t. Look at how, just the events of the last several years, no one would’ve predicted how they all turned out. It’s like saying, “I’m going to play rugby and I’m planning to win the World Cup in 2023.” Well, who knows how good your side’s going to be? Who knows how good the competition’s going to be? I’m realistic and pragmatic enough to know there’s the stuff I can control and there’s the stuff I can’t. The stuff I can control is to try and do as good a job as I can and make as big a contribution as I can.
There’s been a lot of controversy over press freedoms in Australia and the gradual erosion of freedom generally in Australia, probably since September 11. Can you offer some commentary on that? I don’t know if I buy into there being a gradual erosion of freedom. I’m not going to sign up to that. I think the nature of the threats we face to our liberties more broadly are changing, including because of the September 11 era and terrorism. The ability of people to do us harm as a society is greater than it has been because of technology and new terrorism, transport links, cyber space and everything else, so we need to be on guard against that. Part of what we’re paid for as a government is to keep people safe. I think our environment has changed since then because we live in a less benign world than we did and so we’ve had to do things differently.
I’ve seen this campaign for press freedom. I’m always open to hearing what people have got to say about it. I think we’re open as a government to saying if things need to be adjusted they should be being adjusted. But some of the campaign, I think, has veered a bit towards the idea that journalists should be free to do what they want, and we can’t have a class of people who aren’t subject to the same laws as everyone else. I think it’s an important freedom that we’ve got to preserve, but we’ve seen lots of bad journalistic practises like the News of the World phone hacking stuff and they could’ve said, “Well, it’s public interest, we’re free to publish.” I don’t think they should be immune from those sorts of laws.
Isn’t it already illegal to hack someone’s phone? Yeah it is, but I mean, if you took this campaign to its extremes, you’d be saying it shouldn’t be illegal if a journalist does it if it’s in the public interest. It shouldn’t be illegal for a journalist to take a cabinet paper and publish it, if it was left lying around on a table, or a national security document. Because they want a different class of protections for journalists on this sort of stuff, I’m a bit wary about those sorts of arguments because ultimately it’s not about a journalist’s right, it’s about every citizen’s right to do certain things and we put limits on citizen’s rights. You don’t have the liberty to drive around without a seatbelt because of the risk you pose, not only to yourself and our public health system, but to others. You don’t have the right to use illicit drugs, even though you might only be harming yourself, because the social ills are compounded. We put limits on people’s freedoms because of the greater social good.
Journalists need to make a case for why they think our current laws don’t allow them to do their job. I was a little concerned to see the raid on those two journalists’ homes though. I would be concerned if they were to be prosecuted for that. But I’d say it wasn’t the government that raided the home, it was the police operating as it should, at arm’s length from the government.
I don’t think it’s illegitimate for the police to be trying to find the source of these documents. These are both – or at least one of them – national security related documents that had come from high security classification. If someone within the government is leaking that out to journalists they could equally be passing it to a foreign country or a foreign power. If you sign up and work for the government, you’re subject to the Official Secrets Act and I, as a former diplomat with a top secret security clearance, take that stuff incredibly seriously. So I would want to know who was leaking this sort of stuff that’s from the highest levels of government, because it’s going to compromise us in all sorts of ways. I believe that’s what the police were after in those raids, not to target the journalists but to target the source.
The Government has been heavily criticised for its handling of the bushfire crisis, particularly Scott Morrison’s leadership. How should things have been done differently? Will the Coalition make policy changes based on these events? There’s no doubt that there will be lessons to be learnt from this bushfire season, and things we can improve in future. For now the obvious priority is combating the bushfires and helping those affected to recover, but down the track I have no doubt there will be a comprehensive examination of all the issues at play: the contribution of climate change, fire preparedness, hazard reduction, federal-state responsibilities, disaster response mechanisms and so on. I’m certain this will lead to policy changes in a number of areas but I think it’s a little too early, and not very helpful, seeking to find scapegoats at this point.
In a perfect world, what does the future hold for Dave Sharma? I’ll let you and your readers decide that ●