STEVE VIZARD: Well, the Prime Minister's got some straight-shooting advice on the contentious super mining profits tax, from one of his own appointees, he's been told to tear up the current proposal, start all over again, this time with consultation with the mining industry. That advice, very clear advice, has come from Sir Rod Eddington, the head of Infrastructure Australia, but importantly in this context, also a board member of mining giant, Rio Tinto. Clearly the Government's feeling the heat from the resources sector, they're spending millions on advertising, attacking the tax, the Government's counting, with its own $38 million advertising war chest, correction, our own $38 million advertising war chest. Lindsay Tanner, Federal Finance Minister, joins me now. Thanks for talking to us, Lindsay.
LINDSAY TANNER: Good morning, Steve.
STEVE VIZARD: Let's just start with Sir Rod Eddington, he says that cool heads must prevail, is the Prime Minister up to listening?
LINDSAY TANNER: We are in discussions with the mining sector about a whole range of the features of the Government's proposal, and of course Sir Rod is a board member of Rio, and so it's entirely reasonable that he would be putting a point of view that reflects the point of view of Rio, and of the mining sector, or at least sections of the mining sector, so we have no criticism of his comments, but ultimately we've got responsibility to the Australian community, and to getting balanced, sustainable economic growth for the future, and that of course means cutting taxes across the board for Australian business.
STEVE VIZARD: But Ken Henry's not on any board, and apparently he told Twiggy Forrest yesterday that the proposed tax is pointless if one of the key components, that's the refunding the 40 per cent, the symmetrical other part, is abolished.
LINDSAY TANNER: Well Steve, I'm always very careful about treating too seriously relayed personal, private conversations, particularly when the person doing the relaying has a vested interest in a particular interpretation being put on what was said, so I haven't heard Ken Henry's version of the conversation, whether or not those words were said, or whether they've been misinterpreted, so honestly I don't know. But in my experience when person A tells person B what they said, or what person C said to them, often there's a big gap between what was said, and what was related.
STEVE VIZARD: Just finishing up on the mining tax, what's going to be the end of it, I mean what whittled-down version of the mining tax are we going to end up with, Lindsay?
LINDSAY TANNER: Well, I don't think whittled-down is the right way of looking at it Steve, but inevitably, as we said from the outset, there's a lot of very complex detail here, for example, the transition arrangements for mines that are already in existence, there's ample scope for discussion about how to deal with those things, the scope of the overall tax, the underlying detail of the structure of it in various respects, which are all things that are frankly outside my knowledge and responsibility. But ultimately we've got a core responsibility here, and that is to get value for Australian taxpayers and citizens for their resources. The head of the Minerals Council the other day said, “When the stuff's in the ground, it's just dirt”. Well, that's rubbish, otherwise where I come from in East Gippsland, there's a lot of dirt, but no mining industry, they'd be up there, digging that up, you know, it's valuable stuff, it's made more valuable by the mining industry of course, but it's got an innate value, and we're not getting a good enough return for the Australian people from it, at the moment.
STEVE VIZARD: Australia's lowest paid workers have just received, just then, a $26 a week increase, and that would take, I think, the official minimum weekly wage to around about $596.90, nearly $600, what's your response to the pay increase?
LINDSAY TANNER: Look, I haven't had a chance to look at the decision in detail yet, so I'm a bit careful about what I say, because I haven't actually read their reasoning and so on, but given that there was a freeze on the minimum wage not so long ago, there's a certain amount of catching up to do, the data over the past year or two has showed that wages growth has been frankly pretty modest, and therefore there is clearly scope for some significant increase in the minimum wage. But the most important thing here is Steve, that for those people who don't have much bargaining power, who are lower paid, every dollar is critical, and to me there's a really big picture issue here, and that is, what kind of society do we want to live in? Do we want to live in a society where we've got a significant section of people who are on ridiculously low pay, and just can't afford the basics of life? I think most Australians, even some fairly well-off Australians, don't want that, and therefore it's fair enough that we keep upgrading the minimum rate to keep people at least in the same ball park as other workers.
STEVE VIZARD: Lindsay, you'd be celebrating in a sense that good news yesterday, from the Bureau of Statistics, that the Australian economy is going forward, and that places us in one of the rare economies in the world at the moment, that would seem, I guess, and you'll use it I suppose, to support your proposition, that your incentives and your spending, are properly placed.
LINDSAY TANNER: I think that's right, Steve, these things are always contestable, you know, everybody's got a different point of view, but the growth that we're recording now is just slightly under normal, just slightly under the typical average, so it's still a bit fragile, but we're a hell of a lot better off than almost anywhere else in the developed world, and we certainly think that the evidence shows that our stimulus measures have played a big role in that. They're not the only thing of course, the Reserve Bank dropping interest rates pretty dramatically, also played a key role, the demand from China was a significant element, but what's also clear from those statistics yesterday, is that we need the remaining stimulus still to be in the system, to keep growth ticking over. It's now significantly less than it was last year, so it's winding down, but if we cut it off, just cold turkey, that would immediately switch growth back to very low levels, and of course it just means higher unemployment, businesses closing, all those things. All this has been about is just keeping activity going, keeping people in jobs, and making sure that small businesses have basically got some trade coming through the door. Now that's not easy, and inevitably it's a bit messy, but the alternative is appalling, and that's why we've done it.
STEVE VIZARD: Well that takes me to the BER, the Building Education Revolution, I think most people get the idea that you're spending money to create employment, spending money to create projects, to keep the economy turning over, that's not the criticism, the criticism is that it's not being spent effectively, or with appropriate management control, and we're hearing instance after instance, of individual schools, where huge management fees are being charged, and tiny little outhouses, or shelter sheds are being built, a disproportionate spend for what they get. What's your response to that, Lindsay?
LINDSAY TANNER: Well Steve, I think first, when you've got thousands and thousands of projects all around Australia, as we all know from experience, anybody who's done a reno or an extension to their house, knows that sometimes things can go haywire, so we certainly wouldn't claim that there are no problems out there, you're always likely, with that number of projects, to get the odd one here and there, that does have problems. The second thing I'd say is that typically the examples that end up in the media, are being reported in an extremely one-sided way, and therefore other matters that explain what appear to be strange things, are often not reported, or not referred to, and so sometimes you get a very unbalanced picture of some of these things. But given that there has been community concern, and a lot of media debate about it, we have appointed a taskforce, under Brad Orgill, who of course was a very senior banker, and somebody who's widely respected in the financial sector, and somebody who's got a reputation to defend, so he's not going to be about whitewashing the Government, because that ultimately would harm his reputation. I think we just need to see what conclusions are reached by that taskforce about some of these individual examples, before drawing an overall conclusion, and we certainly don't claim that it will find zero problems, because there are just so many projects, and it's just the nature of the building industry, you're likely to have these problems from time to time.
STEVE VIZARD: Lindsay, finally, the $38 million on the mining ads, in hindsight, would you have dipped into the public coffers, bypassing your own mechanisms, claiming that it was a matter of state urgency, and do it again?
LINDSAY TANNER: No, look, I don't make any apology for that, it was a decision that was made, as is typically the case with big, complex tax reform proposals, that there is a public information campaign, so a decision was made that there needed to be a public information campaign, and of course when it became clear that there was a lot of misinformation out there, then we acted to basically accelerate the timetable of that public information campaign. Now obviously there's a fair amount of argument and debate going on about all of that, that's fair enough, I don't mind that, but I think anything that helps to clear the air on these things, and get people with the ability to actually form a judgement about what's going on here, has got to be a positive thing. Keep in mind that we're dealing here with literally with $12 billion worth of tax changes, and money - tax increases on getting value for money for the Australian people from our minerals, that are being used to finance tax reductions, to cut company tax, to get better write-offs for small business, to give a guaranteed deduction of $1000 for every individual taxpayer, so heaps of people won't have to do tax returns, and they'll get a bigger deduction than they normally would, to give a small incentive for people with - to save in bank accounts, so trying to get that picture out, and get rid of some of the heat and hysteria, I think's a good thing, We accept we'll be criticised for that, but I don't back away from it at all.
STEVE VIZARD: Lindsay Tanner, thanks for your time. That's the Federal Minister for Finance, Lindsay Tanner, talking to us about a variety of issues.
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