Interview with Virginia Trioli, ABC News

Virginia Trioli: Now for more on the Prime Minister’s comments last night flagging a likely cut to the immigration intake, we’re joined now from Sydney by the Minister for Cities, Population and Urban Infrastructure Alan Tudge. Minister, good morning, thanks for joining us.

Alan Tudge: Good morning Virginia.

Virginia Trioli: A likely cut. Can you take us through exactly what the Prime Minister would like to achieve? It didn't sound absolutely nailed down.

Alan Tudge: No, he was more talking about a process to be honest Virginia, where the process may end up having a migration reduction but the process was us at the federal level setting a top-down migration number which then flows to the states and territories to deal with that population growth [audio skip] in the states and territories: how many people can you accommodate in your cities, in your states and then we'll do that bottom-up aggregation and deliver those numbers as much as possible to them.

So it's quite a radical change to how we’ll approach the population problem acknowledging that we've got the main growth levers at the federal level through the migration lever but the states and territories have to deliver the services, the infrastructure, the housing et cetera on the ground.

Virginia Trioli: Well I guess that's part of the problem isn’t it, as you yourself have acknowledged in a key speech that you gave earlier this year. In a sense, you're handing that decision to state governments who according to every major and considered analyst on infrastructure in the country whether it be Infrastructure Australia or the Regional Economic Development Corporation or even the Reserve Bank have acknowledged it's been the states that have been lagging on building and providing that infrastructure, on investing in it. They're in catch up mode now but they've been lagging on for so long so you're handing that decision to them. Is that wise?

Alan Tudge:Well we're giving more control to them too. We want to understand exactly what they're carrying capacity is in their cities and their states because as you say, they've got the large responsibility for delivering the infrastructure and the services to cater for population growth.

Virginia Trioli: And they’ve squibbed it. And they’ve squibbed it.

Alan Tudge: Well in some cases they have and here in Sydney - I'm from Melbourne - but here in Sydney, certainly a decade or so ago you had the premier of the day who was saying that Sydney was full and not building for the future but at the same time just a few years later you had Kevin Rudd who turbocharged the migration intake much of which went into Sydney.

Virginia Trioli: You’re conveniently only mentioning Labor members there.

Alan Tudge: But he had a complete disconnect. It was the most obvious disconnect between what was occurring federally through the population lever and what was occurring at the state level in terms of building infrastructure. Ideally you…

Virginia Trioli: Well allow me to point out one more…

Alan Tudge: My point is though ideally you have a closer alignment of those two things and that’s what the Prime Minister's speech last night was about.

Virginia Trioli: Yep.

Alan Tudge: Now what that ends up being and looking like in terms of an overall migration number is likely a downward figure but let's wait and see what the states and territories say to us.

Virginia Trioli: Likely is an interesting term. But let me point out another disconnect and this is a very important one this morning: nine months ago - as Treasurer - the Prime Minister said: if you cut the level of permanent immigration to Australia by 80,000 that would cost the budget, that would hit the bottom line - the deficit - by 4 billion to 5 billion over the next four years. So we assume that your government is prepared to take that hit now?

Alan Tudge: Well last year's permanent migration figure came in at about 160,000 which was 30,000 below what our cap was in any case. Now we're going to go through this process and yes there is a fiscal impact on the budget.

Virginia Trioli: So you are prepared to take the hit?

Alan Tudge: But there's also impacts in terms of congestion and liveability which people in Melbourne and Sydney particularly are facing right now because those two cities are absolutely booming as you probably know, Virginia, and all - well in Sydney's case 83 per cent of the growth into Sydney is due to migration; in Melbourne's case it’s 65 per cent of the growth is due to migration. That’s why we do have to have …

Virginia Trioli: [Interrupts] Yes, but you're not dealing with the deficit. You’re not dealing with the [indistinct] of the budget.

Alan Tudge: … a closer look at this.

Virginia Trioli: You're not dealing with that issue. Well look if you will…

Alan Tudge: We’ll, inevitably we’ll have to. That will be taken into account, of course it will be.

Virginia Trioli: Well this is what you said just earlier in the year - this is another disconnect: there are benefits of a larger more diverse population. A larger population means a larger economy. With this comes greater opportunities for Australians. Further, there is more scope for investment in public goods, including national defence. It's much easier to pay for submarines and the like with a trillion-dollar economy than one half the size.

So you've had a change of mind on this as well. You see what I'm getting at here?

Alan Tudge: I don't think so Virginia.

Virginia Trioli: We’ve got both you and the Prime Minister and the former Treasurer changing your minds.

Alan Tudge: Virginia, with due respect - so with due respect Virginia, I mean I've been consistent throughout this year saying that on the one hand migration does help grow our economy and it does. It does help lift living standards and it will continue to do so. It will continue to be a mainstay of Australia. But that is balanced off against the congestion pressures particularly in Melbourne and Sydney which are getting so much of the population growth at the moment.

Now, interestingly enough it's a completely different conversation elsewhere in the country. Now in South Australia they want more people. In the Northern Territory - the same. In Western Australia, Tasmania, equally the governments there want to grow their populations faster.

So it's not a one size fits all and that's where we want to get to as well with our migration settings is to say that we want to support the aspirations and the capacity of each of those states to grow, so we can support the growth in some of the smaller states but we might ease the pressure on the growth in Melbourne and Sydney who are really struggling with the very rapid growth which they are facing at the moment - most of which is driven by migration.

Virginia Trioli: Just quickly before I let you go on another subject, your Cabinet is tearing itself apart at the moment on the issue of Australia's embassy in Israel. Where do you stand on the matter? Where do you think the embassy should be? Everyone's having a say now.

Alan Tudge: Well I wouldn't say that we're tearing ourselves apart. We've got a process …

Virginia Trioli: Oh goodness, I would.

Alan Tudge: … which we’re going through and obviously I'll follow the process and support that process. I can absolutely see the merits though of moving the embassy to Jerusalem, where the capital of Israel is.

Virginia Trioli: You're in the moving camp?

Alan Tudge: I'm saying that I can see the merits of it. It's the only country in the world where we don't have our embassy at the capital and in West Jerusalem, it's not in dispute - that will always be the capital and I can see the merits of it but we've got a process and I'll support that process.

Virginia Trioli: Alan Tudge, good to have you on the program. Thanks so much.

Alan Tudge: Thanks very much Virginia.