LINDSAY TANNER: Tony Abbott has already broken his promise to not introduce any new taxes or increase taxes, little more than a month after making that promise and months out from when the election is due. He hasn't consulted major business, he hasn't consulted Shadow Cabinet, he hasn't consulted his Shadow Finance Minister. His own colleagues are unable to say whether his proposal is a tax or whether it's a levy and Mr Abbott himself doesn't seem to be sure whether the threshold of five million dollars is five million dollars of taxable income or whether it's five million dollars of tax actually paid. Wherever that threshold is set, were it to be introduced it would introduce a major distortion into the business taxation system. Companies would move in and out of range depending on economic conditions. There would be a significant disincentive for companies to grow, to add jobs, if their current turnover is slightly below the five million dollar mark. There would be a disincentive for companies to merge, if that were to take any of the merging companies beyond the five million dollar mark and there would be a huge incentive for companies to engage in artificial avoidance activities by structuring their businesses in ways that meant that they had a multiple number of businesses all below the five million dollar mark. Tony Abbott's tax to the max strategy hits business and jobs in order to hand out money to high income earners. It's part of a wider pattern that we're now seeing regularly from Mr Abbott. He's proposed that all high income earners, no matter how well off, should get family tax benefits for young children. I'm in that category, a senior Cabinet minister, I've got two kids aged five and three. He thinks I need a government handout. He's also continuing to announce big spending initiatives, billions and billions of dollars. Just three initiatives add up to $18 billion over the next four years - that's on climate change, on the Murray-Darling and now on maternity leave - without indicating where he would make any savings in the budget and now he's indicating that he has to rely on a tax hike on Australian business. The largest employers in Australia will be put at a major disadvantage in order to ensure that higher income earners get higher benefits under Tony Abbott.
QUESTION: The independents in the Senate are somewhat enamoured by this. They're not promising to support it outright but they like the thrust of it. Are you prepared to tweak your system up a bit if that's what it's going to take to get it through this year?
LINDSAY TANNER: We're committed to our proposal which delivers a flat paid maternity leave provision to people across the board. That's fair, it's just and it's affordable. The fact that this proposal from Mr Abbott imposes a major new tax impost on Australian business increases company tax at a time when company tax rates are tending to be reduced around the world, is a serious problem for Australia's economy. Mr Abbott is indicating yet again that he's an economic illiterate, that he's not really interested in the economy, in creating jobs and in getting Australia beyond the backwash of the global financial crisis.
QUESTION: Isn't the gaping hole in your plan though, that women miss out on superannuation during that vital time when they're at home doing that important work of caring for a newborn baby and would you rethink that part of your proposal?
LINDSAY TANNER: I'm not going to comment on specifics about our particular policy other than to say we stand by it and we are committed to putting that policy in place and ensuring that it comes into effect on January 1 next year as has been indicated. Obviously governments always want to do more. They always want to assist people more but it's my job as Finance Minister to make sure that our ultimate goal is achieved and that is that we get the budget back into surplus. We have heard endless posturing and bloviating by Mr Abbott and Joe Hockey about the evils of deficits yet every single proposal they put forward in the policy debate in Australia would increase the budget deficit and now they're on about increasing taxes after attacking the Government on the same premise.
QUESTION: Just on the issue of taxes, I note that the Prime Minister isn't committed to releasing the Henry Tax Review before the election. Surely to have any credible in an election campaign, you should tell people what your tax plans are. Couldn't it be released?
LINDSAY TANNER: I have no doubt that prior to the election we'll be giving a full indication of what our position with respect to taxation is, right across the board, and I'd expect that Mr Abbott will be expected to do likewise but I'm not determining the timing of the release of the Henry Report. We've got a lot on our plate at the moment, as you know. The health challenges are ones that we are taking up with enthusiasm because there is a major need for reform in Australia's health system but I can assure you that on matters that are central to Australia's economic future, including taxation, you'll see a full account of the Government's position prior to the election.
QUESTION: Have you done some independent analysis of the cost of his policy, putting aside the confusion as to whether it's a taxable income or company tax?
LINDSAY TANNER: Obviously we're looking at the detail in Mr Abbott's policy but it's a little difficult to pin down when it's unclear what the indicator is that he's using, whether it's five million dollars of the threshold of income earned or whether it's five million dollars of tax paid. That makes a pretty substantial difference but we will be analysing the detail in order to get a sense of the cost. He himself has suggested it would cost about $2.8 billion a year. That's a lot of money. That's a very substantial slug on the budget. That's a very significant additional hit on companies already paying significant amounts of tax.
QUESTION: How many people would the 3105 companies he's targeting employ in Australia?
LINDSAY TANNER: I don't know that figure off the top of my head and particularly given that we don't yet know whether that's the correct number, whether the indicator that he's using as a guide to the people who would be covered by this tax slug, I don't yet know that that figure will be, the total number of people employed, but I can tell you that it's a very large number. A very large number of Australians work for our biggest companies. That just makes sense.
QUESTION: Bob Brown thinks that this is a great idea. He says that there's no period more important than the first six months of a baby's life. He thinks that Tony Abbott's got it right and that the Government should step up to the mark.
LINDSAY TANNER: First, minor parties and independents tend not to have any responsibility for the overall government finances and so they always think more spending and more tax is a good idea. It's when you're far away from that kind of responsibility it's something that people tend not to worry about whereas people who are in charge of the nation's finances do have to worry about. That is our fundamental responsibility. Second, there is ultimately an equity issue involved here. That issue is whether people on incomes like mine should get substantially larger assistance from the taxpayer when they can afford to deal with these issues, as I and my wife did only a few years ago, or whether you want to have a scheme such as the Government's putting forward which gives, in effect, a flat level of assistance right across the board to people within a very broad means test range. So ultimately what Tony Abbott's proposal is give substantial amounts of additional assistance to higher income earners and that's at the cost of imposing a big new tax on jobs. People can form their own views about the merits of that proposal.
QUESTION: If I was a swinging voter and a young woman contemplating starting a family, why would I vote for Labor at the next election and get 18 weeks maternity when I could vote for Tony Abbott and get six months at my full pay and superannuation?
LINDSAY TANNER: Because presumably you'd be thinking about a range of issues. You'd be thinking, for example, about the chances of whether or not you would have a job in the future, whether your partner, if you've got a partner, would have a job in the future, the overall state of the budget, the overall state of the economy and also the question of fairness in our society. They're all the issues that are in the mix here but ultimately our responsibility is to get the policy right. Our responsibility's to ensure that the total mix of government spending, taxation and entitlement payments is appropriate. We don't believe that Mr Abbott's proposal is appropriate.
QUESTION: Tony Abbott has tried, I think, to frame himself as an honest straight talker, since his ascension to the Opposition leadership. Does him breaking his promise of no new taxes under the Coalition, does that show him to be dishonest?
LINDSAY TANNER: I think Tony Abbott's showing himself to be completely flaky and all over the place. He seems not to remember what he's said even a week or two ago and he appears just to brush these things aside. Australians will make their own judgment about whether or not he's honest or dishonest but at the very least him breaking a commitment that he made only weeks ago, to not increase taxes or introduce new taxes, before we've even got to the starter's gate in the election, gives you some indication of the extent to which Australian voters could trust Mr Abbott after an election. If he's breaking promises of that fundamental nature before an election's even called, what will he do if he's elected?
QUESTION: Are you ruling out any higher taxes on corporate Australia under the Henry Review process?
LINDSAY TANNER: Look, I'm not ruling anything in or out with respect to the Government's tax proposals because we have yet to both release the report and finalise our considerations of it, David, but I think you can get a clear indication of my view about the wider economy and the significance of employers who employ a very large proportion of Australians, many of them in internationally competitive and internationally exposed businesses, that any changes of the kind that Mr Abbott's proposing are very, very threatening to jobs.
QUESTION: Don't you have a pot and kettle problem here when you talk about Tony Abbott breaking promises, as the Government's spectacularly broken the health insurance promise?
LINDSAY TANNER: No, I don't think so, Michelle. In fact, I'd remind you of a key promise that we made which we are continuing to adhere to and that is to keep the proportion of tax as a percentage of the Australian economy at or below the level we inherited from John Howard and that is - that is continuing. Now, ultimately Mr Abbott's got to answer for his decisions and his policy positions. We've got to answer for ours. We stand by our reforms to the private health insurance rebate. They will have only a very marginal impact on the take-up of private health insurance but they will also have a big impact on getting the budget back into surplus. Mr Abbott, as well as making all of these huge promises to spend more and more and more money, is at the same time blocking major savings initiatives in the Senate such as this proposal to both means test and reform the private health insurance rebate.
QUESTION: When does a promise mean anything? On Michelle's question, Kevin Rudd went all around the country, every press conference he opened up with the words people are sick of people - of core and non-core promises. It's a broken promise, isn't it?
LINDSAY TANNER: I think if you look across the Government's record, look at the many commitments that we made on a whole range of issues, you will see that our record stands very strong and you will see that our commitments are being honoured and you also need to take into account the fact that as a result of the global financial crisis we now have a situation where the budget that was before the global financial crisis in strong surplus has been pushed by a dramatic loss of revenue, into very substantial deficit and we have now got a big task to get the budget back into surplus with the least possible impact on our economy, the least possible impact on fairness for ordinary working people. That means we have to make tough decisions. We've made some tough decisions. The coming budget inevitably will involve further tough decisions.
QUESTION: Treasury Secretary Ken Henry's made the case publicly on a couple of occasions for actually cutting the company tax rate. Are you - I mean, some of your remarks today indicate that you might also be a supporter of that proposition. So rather than increasing tax on companies are we likely to see something from the Government that might move in the other direction?
LINDSAY TANNER: I wouldn't speculate on where company tax might head in the future but there is no doubt that like a number of taxes the pressure economically has been downward rather than upward. These things do change over time. The implications of having company tax set at a particular level will vary according to wider global conditions but inevitably that's a major consideration for the Government and it just shows Mr Abbott's economic illiteracy that he thinks that he can just throw an additional tax burden on Australia's major employers without that having negative implications for jobs and their competitiveness. There's always a lot of detail in these debates, contestable debates but nonetheless his economic illiteracy is once again on display here. This is something Australia's major companies, our biggest employers do not need and they have made their view abundantly plain and he has also indicated he didn't talk to them before he made this decision.
QUESTION: Is there a big question mark over the way that you finance hospitals into the future? You're going to pick up 60 per cent of the cost, 60 per cent of the growth in cost. You're hypothecating one third of GST revenue. We don't know how this whole picture fits together in the future. There must be a big question mark over whether taxes go up in future while we don't see the Henry Tax Review, isn't there?
LINDSAY TANNER: We've taken onboard the responsibility of ensuring that the health system as a whole in sustainable into the longer term. And any Health Minister, any State Treasurer will tell you that when you look into the further distance, the financial situation is grim for state health systems and state budgets. So we have taken onboard the responsibility for this and what we are seeking to do is to reduce the costs that otherwise would apply, by having a more efficient system, by cutting out waste and duplication and having a driver of activity-based funding, that will introduce greater efficiencies into the system. And in order to ensure that the states have got the comfort of being able to participate in that, we are taking onboard the primary responsibility for those long-term financial challenges. Now that is a big challenge for Australia. It is a big challenge for the Government. And inevitably there are further decisions that have to be made. There are further negotiations with the states. But the key thing about this change is that we are not playing the old games of pass the parcel with the states. We are taking responsibility for the longer term outcomes in Australia's health system. And yeah, there are lots of challenging, difficult issues that we have to deal with and differences between the states will have some tough negotiations. But we are taking responsibility for tackling those issues into the medium-term, not just doing what John Howard did in the past, which was to just load the blame onto the states and look for a few cheap political cheers with a few one-off initiatives whenever it suited him.
QUESTION: Is there a danger that we could end up with an over paid maternity leave soon? There's a Senate battle over whether we should have one that's 18 weeks or 26 weeks. Are you prepared to negotiate on the time of your scheme?
LINDSAY TANNER: I've given up on predicting how the Senate will behave on almost anything, because we've now got an Opposition that is literally seeking to block everything the Government does and seeking just to play politics with issues no matter what the content of the issue. And that inevitably makes dealing with substantive issues in the Senate very difficult. Ultimately, we have to live with that as a reality and we have to confront the challenges that presents to us on their merits. So I'm not going to speculate about what may happen with any piece of legislation in the Senate. You'll be aware that there have been a number of incidences already, where we've had to engage in some modification to our plans because of that problem. For example, the stimulus package that has been fundamental to protecting Australia's economy at a time of giant global recession, we didn't get that through the Senate unscathed, bizarre as it may seem. Fortunately, the bulk of it got through. Fortunately for the hundreds of thousands of Australians who still had jobs and the thousands of Australian businesses that are still open as a result of that action by the Government. So this is a reality that we have to live with and we will continue to deal with what the Senate presents to us, on its merits, whatever the issue. I have legislation that's coming up soon in government superannuation, for example, where I'm facing some of those questions that I have to work with a Senate Inquiry. And I've got an open mind about how we proceed on that. But ultimately, what I'm focused on is the objective there and I'm sure that the ministers will be directly involved with respect to paid maternity leave, that have exactly the same view.
QUESTION: Mr Tanner, are you critical of the - of Tony Abbott for not being up front with the business groups before announcing this plan? What is the difference between that and your government's refusal to be upfront with Premiers about the full detail of your health reforms and your plans on tax?
LINDSAY TANNER: Well there's one fundamental difference Matthew and that is that we are putting a proposition to the states and saying; now we are prepared to consider detailed issues, negotiate, hear what your responses are. We've given them a period of time to consider the detail and obviously we will now have some robust discussions with them about it. The Opposition has simply lobbed this on the business community, without any serious consultation. I haven't heard any indication from Mr Abbott that he proposes now to negotiate the details. Now ultimately that's his choice. He has to live or die by his style, his approach. That's something that he will make choices about and as far as I'm concerned, that's the end of the matter. But it does indicate, in my view, a cavalier approach to the most fundamental responsibilities the national government has, and that is to manage our economy in ways that maximise the opportunities and the well-being and the living standards of working people in this country. And his approach, in my view, indicates that he regards that as a secondary obligation.
QUESTION: And Mr Tanner, do you suspect Tony Abbott's motives in this? I mean is he - is this just a smokescreen for blocking your plans for paid maternity leave, or do you believe that it's a legitimate alternative?
LINDSAY TANNER: I'm not really in a position to comment on Mr Abbott's motives in this regard Mark. I think - I'm always a believer in trying to treat things at face value and say, okay, well he's put forward what is, on anybody's measure, a large and very expensive proposal, so let's treat it on its face as something that he's serious about. I'm not in a position to suggest that there is some kind of tactical consideration behind this. Ultimately, we have to deal with what he puts forward, on its merits, in its entirety. In this case he's put forward a tax to the max strategy. It's simply about putting a big new impost on Australian jobs, in order to improve benefits for higher income earners. We don't believe that that's good priorities for Australia. We don't believe that increasing the tax base, in this way, is good for Australian business and jobs.
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