PAUL BONGIORNO, PRESENTER: Hello and welcome to Meet the Press. The great big tax debate continues to dominate election year politics, and that despite Tony Abbott's reprise of the Howard government policies to stop the boat people. The Opposition Leader is in the market for another remote island to park Australia's unwanted refugees.
TONY ABBOTT, LEADER OF THE OPPOSITION (THURSDAY): A coalition government will do what is necessary to stop the boats. We've done it before. We will do it again.
KEVIN RUDD, PRIME MINISTER (THURSDAY): It took just three days of debate in this chamber on tax before they returned to ‘old faithful’.
PAUL BONGIORNO: Treasury Secretary Ken Henry was firmly focussed on his creation, the Resources Super Profits tax, and in his sights, belligerent miners.
KEN HENRY, TREASURY SECRETARY (THURSDAY): Suggestions that the Australian mining industry saved the Australian economy from recession are curious, to say the least.
TONY ABBOTT (WEDNESDAY): This Prime Minister, he says that ‘it won’t damage the mining sector’. The idea that ripping $9 billion a year won’t damage the mining sector is completely and absolutely incomprehensible.
LINDSAY TANNER, MINISTER FOR FINANCE (THURSDAY): Under his proposals, company tax will be nearly 4% higher, there will be no $5,000 immediate write-off of costs for small business.
PAUL BONGIORNO: Finance Minister Lindsay Tanner is a guest. And later, mining magnate Clive Palmer joins us. But first, what the nation's papers are reporting this Sunday, May 30: The ‘Sunday Mail’ reports the tobacco tax is stubbing out spending in the shops. The paper says small retailers are suffering as customers cut back on magazines, sweets and soft drinks to buy smokes. ‘The Sunday Age’ says PM and miners splurge on tit for tat ads war. Both sides are accusing each other of misrepresenting the facts surrounding the resources tax. The ‘Sunday Telegraph’ reports, mining sector stays strong. The sector is outperforming most of the top 200 companies on the Australian stock exchange for May after a full month of debate over the Super Profits Tax. In breaking news, BP says its latest bid to stop a gushing oil well in the Gulf of Mexico hasn't worked, leaving it unclear just when the worst US oil spill will end. The bad news comes on the day President Obama visited the stricken area, promising aid for victims. And welcome back to the program, Lindsay Tanner.
LINDSAY TANNER: Good morning, Paul.
PAUL BONGIORNO: Good morning, Minister. The fact that the Federal Government is embarking on a television and newspaper advertising campaign over the mining tax, is this an admission that you're losing the argument?
LINDSAY TANNER: No, it’s not. In fact, this decision was announced in the Budget, Paul, that there was going to be an information campaign associated with a tax reform package. We think it is entirely reasonable. It has, in effect, been brought forward because of the misinformation campaign that we're facing that could have a damaging effect on the Australian economy if it’s not answered.
PAUL BONGIORNO: Who said this Minister, “The bloated government advertising programs and politicians electioneering entitlements are simply cynical raids on the Treasury coffers to ensure political survival?”
LINDSAY TANNER: I suspect you probably found a quote of mine from somewhere in the past, Paul.
PAUL BONGIORNO: Yes. Indeed, in the 2002 press club.
LINDSAY TANNER: It was an entirely legitimate description of John Howard's regime. He spent over $250 million on government advertising in his last year in office. In today’s dollars, that is about $280 million. In our first two years, we only spent about $200 million. We have been way, way more restricted on this front than John Howard. One thing I can guarantee you is irrespective of this campaign, we will still end up spending a lot less this year than he did in his last year.
PAUL BONGIORNO: Isn't one of the problems that the government is facing now is the perception of back flips and somersaults? The Rudd Government brought in tough guidelines in 2008, modified those guidelines and now is exempting itself from them?
LINDSAY TANNER: There is a provision for exemption in certain circumstances and we are using that provision. The modification was really an acknowledgement that the role we initially put in place for the Auditor-General had an inherent conflict in it. It is something the Auditor-General very early on in the discussions about these matters did express some concern about and the Public Accounts Committee, including Liberal members of the Public Accounts Committee, have been concerned about because, in effect, the Auditor-General is part of the decision-making process and then eventually potentially looking at those decisions. It is really something that was a bit in conflict with the role of the Auditor-General who is there to look back at what has happened and decide whether it has been done properly or not. We felt it was better to do it in a different way.
PAUL BONGIORNO: The Greens are saying they will bring in a Private Member’s Bill to the Senate next week to enshrine in law the Rudd Government's 2008 guidelines. I do not suppose they can expect the Labor Party to support that Bill?
LINDSAY TANNER: Paul, the Greens are the champion grandstanders of Australian policies. They will leap on any passing issue to get themselves a bit of media and wave flags and pronounce on anything that comes into their heads but ultimately, that is just more political stunts. It is more about getting some media coverage for them. We're in the business of governing. We’re in the business of trying to do good things for the Australian people. That often involves challenges and difficulties that smaller parties, like the Greens, never have to worry about.
PAUL BONGIORNO: The other issue that is playing today of course is boat people, especially with the arrival of the 61st boat this year. This is how Tony Abbott announced his back-to-the-future boat policy.
TONY ABBOTT (THURSDAY): Since the Rudd Government watered down border protection, we've had 128 boats at last count, more than, nearly 6,000 illegal arrivals by boat. It's a serious problem.
PAUL BONGIORNO: The Opposition Leader says it is a serious problem. Do you agree with him?
LINDSAY TANNER: This policy that Tony Abbott has announced, Paul, is just about staking prejudice, not about solving problems. The temporary protection visas, which have accrual impact on people who are subject to them because they have got no way of knowing what their future will be. Those temporary protection visas failed when they were introduced. They did not slow the flow of asylum seekers. In fact, that flow increased. The proposal to reintroduce the Pacific solution of course raises very critical questions about how much this is going to cost, which countries will be involved and indeed, about whether it will work because previously, the arrangements that John Howard put in place didn't have much of an impact about where asylum seekers ultimately ended up. The vast bulk of them ended up in Australia anyway. It damaged Australia's reputation internationally, it cost a lot of money, and no outcome of the kind that the government of the day then claimed would occur. So really, all this is about is not solving problems, it is just about trying to stoke prejudice in the community and get a cheap populist fix for Tony Abbott.
PAUL BONGIORNO: Time for a break. When we return with the panel, more on the mining tax. Tony Abbott had the Government puzzled on Monday and Tuesday when he dropped his attack dog demeanour in parliament. But on Wednesday, he was back in fighting form.
TONY ABBOTT (WEDNESDAY): Why aren't all the other companies in Australia saying, “Give us a super tax! If it is so good for the mining sector, give it to us!”
WAYNE SWAN, TREASURER: Well, the mad monk is out of the box today, Mr Speaker.
PAUL BONGIORNO: You're on Meet the Press with Finance Minister, Lindsay Tanner and welcome to the panel, Jennifer Hewett of ‘The Australian’ and Shane Wright from ‘The West Australian’. Good morning Jennifer and Shane.
JENNIFER HEWETT, THE AUSTRALIA: Good morning.
SHANE WRIGHT, THE WEST AUSTRALIAN: ‘Morning Bonge.
PAUL BONGIORNO: On Thursday, Treasury Secretary Ken Henry said the mining sector isn't all that it cracks itself up to be. Apart from sacking more people in the downturn, he said its contribution to revenue was less than 7%. But he did concede modifying the new tax could hurt the budget's bottom line. A point the Opposition is hammering.
JOE HOCKEY, SHADOW TREASURER (WEDNESDAY): So we will know exactly to the dollar how big the back flip is going to be and we know there is going to be a back flip. We know the back flip is going to be this big, maybe even bigger.
JENNIFER HEWETT: Minister, did you agree with the decision not to consult with the mining industry? Wouldn't it have been better if the government had followed the example of the Hawke government in extensive discussions with the industry before it introduced a new tax?
LINDSAY TANNER: Jennifer, those consultations are recurring and there’s been very substantial discussions with a whole range of companies in the mining sector, there’s a formal process occurring there and the point I’ve made before is that as soon as that proposal is announced and as soon as the government doesn't rule it out, then effectively, we are in the same position if we had just announced this is our policy.
JENNIFER HEWETT: But it would take a lot of political heat out if you didn’t - and there would be a lot less talk of back flips and things like, if you had actually allowed many months of open discussion, surely?
LINDSAY TANNER: I do not necessarily agree with that. I think that one way or another, a proposal of this scale and significance is always just going to end up in the same position we are currently in. I think the other thing that we’ve always got to acknowledge here is that ultimately, it is outcomes that count, that are crucial here. It is the process we will always produce some kind of criticism, no matter what it is but the outcomes are what matters and that is something that I don't think complaints about consultation really go to.
JENNIFER HEWETT: OK. In terms of outcomes, you are saying that it is absolutely non-negotiable, this 40% rate and the element of retrospectivity?
LINDSAY TANNER: We have certainly indicated that our framework is not going to be altered. There is a whole forest of detail involved here, and particularly the question of transition for existing mines is a matter that design issues are being discussed about. There is a lot of very complicated stuff. Stuff that I am not across because it is not my portfolio, but it is being discussed with the mining sector and that will have an impact on the overall shape of the tax. The core elements, the core framework, we intend to pursue.
SHANE WRIGHT: But Mr Tanner, with all of the consultation, which you have promised to carry out, surely that, whatever you come up with must have an impact on the revenue flows and also the other programs that are built around the financing that comes through this tax?
LINDSAY TANNER: One of the things, Shane, that we have to do is examine the implications of any refinements, any detailed rearrangements that might flow from those consultations. One of the implications of course is whether it erodes the projected revenue. But I doubt whether we are going to come up with anything that would significantly erode the projected revenue but we just have to look at those things as they emerge. The Treasury is capable of calculating what those implications are and we then just have to make judgement calls about them.
SHANE WRIGHT: Have you started looking at those issues? And are all the other offsets and all the other promises, still rock-solid in, no matter what happens in the consultation process?
LINDSAY TANNER: We are not in a position to comment, I am certainly not in a position to comment on the hypothetical possibilities that are being considered in the process. I am not directly involved. But one thing I can assure you is that we are very mindful of the fact that we have to sustain the package that we have put forward. That is critical for Australia. We lowering company tax, we are lowering taxes on small business, we are increasing investment in superannuation and we are also improving the tax situation for the ordinary citizens. So you get a $1,000 automatic deduction on a tax return, which for a lot of people will mean they will get an increased level of deduction, and you get a tax break for small savings. All of these things are very important to us and we do not intend to back away from our package.
PAUL BONGIORNO: Minister, Minerals Council CEO Mitch Hooke says the tax will be a red tape nightmare.
MITCH HOOKE, CEO MINIERALS COUNCIL OF AUSTRALIA (WEDNESDAY): That's a tax grab. That's not tax reform because we have the state royalties in place. Sure, they'll be rebated off, but you've still got to run four sets of books to comply with an extremely complex system.
JENNIFER HEWETT: Mitch Hooke is right, isn't he? This is hardly simplifying the tax system?
LINDSAY TANNER: This suggests to me, Jennifer, that he feels like he is losing the argument about the substance of the tax and he is now resorting to frankly, what is a fallacious argument. These are overwhelmingly very, very large companies with very sophisticated accounting and computer systems where questions of this kind are always going to be able to be dealt with so I do not believe this is a substantial issue in the debate. The rebating of the royalty regimes at the state level should be something that, once the calculations are done, which won't be difficult, will be a reasonably straightforward process for mining companies to deal with.
JENNIFER HEWETT: In terms of substance, companies both large and very small have all said that this will discourage investment. Don't you think, therefore, that it is very hard to be confident about your estimate of $9 billion in the first full year of the tax?
LINDSAY TANNER: We just simply don't treat those claims seriously, Jennifer and we’ve had a classic example in the last few days, an issue that the Government has a direct involvement in and I have a direct involvement in, coal companies in Queensland have just put on the table over $4.5 billion for a bid to purchase Queensland Rail. Of course, the Queensland Government is selling Queensland Rail, or its freight lines that are predominantly servicing the coal sector. The Australian Government is involved in this bid through the Australian Rail Track Corporation. Now, I ask you, if these companies thought there was a big question mark over the long-term involvement in their industry, why would they be putting up $4 billion or $5 billion to buy the rail network in Queensland? It is very clear that we are seeing a scare campaign and a lot of companies saying there is a question mark about this or there is a concern about that but we simply do not believe most of that. There is a lot of posturing going on here, as you’d expect because they're fighting for their self-interest. They do not want to pay any more tax.
SHANE WRIGHT: When you’re talking though about reforming of the tax system, it would have been far easier to take the royalties off the States, wouldn't it, rather than going through this whole process?
LINDSAY TANNER: Not necessarily because the state governments obviously would not have been particularly well disposed to that proposition and it would have meant that we would have ended up in other complex negotiations. In a practical sense, it was more straightforward for us to simply have a rebating arrangement, which achieves the same outcome in effect. We are dealing here with the Australian people's property, Shane. This is not a normal tax system. This is a way of finding a price to pay the Australian people for selling property that they cannot sell twice. Once those minerals are sold to mining companies which in turn process them and sell them overseas, the Australian people cannot get return for the sale of its property again. And what has happened is the prices on world markets for these minerals have soared and they are likely to remain much higher than has been historically been the case for some time. Therefore, it is only reasonable that the Australian people get a fair return for its property and at the moment, we're not getting that fair return.
PAUL BONGIORNO: OK. Thank you very much for being with us today, Lindsay Tanner.
| Media Contact: | Website: |
|---|---|
| Nardia Dazkiw - 0418 144 690 | www.financeminister.gov.au |
