The Commonwealth Treasurer
Transcript of 02/07/2010

Interview with Madonna King

ABC Radio Brisbane

2 July 2010

SUBJECTS: Minerals Resource Rent Tax

KING:

The Deputy Prime Minister and Treasurer is Wayne Swan. Wayne Swan welcome to 612 ABC Brisbane.

TREASURER:

It's good to be with you, Madonna

KING:

Is this a definition of a back down?

TREASURER:

This is a great reform for Australia. What we've got in place is a profits based tax which raises a substantial amount of revenue, not dissimilar from what we thought we would raise from the previous proposal. But we have had a sensible negotiation with the industry in recent times and there's been give and take on both sides, and what that enables us to do is what we said we would do which is to have the resources to boost superannuation, to provide small business tax breaks and also to invest in infrastructure, particularly in mining communities. So I think it's a great outcome.

KING:

Some people have called in this morning, critical that Julia Gillard and you sat in the same room up until last week. And one said well, can you ask Wayne Swan, is he powerless if he couldn't do this last week and can do it this week?

TREASURER:

Well, it was a pretty difficult discussion and negotiation for a long period of time, I've got to say. And I've been in it all of the time, and it has been difficult. I think you and I probably did speak about this back in early May. I think I said then that I didn't expect that it would be easy. These sorts of these big, fundamental reforms are always hard fought in Australia and this one has been no different. But we did get a change of tone this week, which has made it possible. I don't wish to apportion blame or responsibility for that. The most important thing is we've got a great outcome for Australia and a good outcome for Queensland.

KING:

When you say a change of tone, what does that mean? Did people have a bigger voice at the table?

TREASURER:

Well, I think that when Julia sort of said that we wouldn't proceed with our advertising, called on the mining industry to desist, and they did, I think that was very helpful. I think she came into the negotiations – I think that has helped. It has been different this week – that's a good thing, but it's not a reflection on anyone who was involved previous to that time. It has been difficult all the way through, and I've been there all the time.

KING:

Well, surely it's got to be a reflection on someone?

TREASURER:

Well, I don't intend to reflect on anyone. I'll put up my hand. I've been in there. They've been plenty of other people in there as well. The important thing is that with a big reform like this, it is always hard to achieve and we got there. That's the thing, we're moving forward.

KING:

So, the 40 per cent tax rate comes down to 30 per cent. Now, you in your words previously said – this is the bottom line. Did you really believe that at the time?

TREASURER:

Well it, what it does is that, at the end of the day, depend on all the design features and what the effective rate is. As you know, we have a company tax rate of 30 cents in the dollar but many companies don't pay it because they have access to accelerated depreciation and so on.

So one of the design features of the previous proposal was a thing called refundability, which was very expensive in terms of the revenue. The industry said they didn't want refundability, and we said – well fair enough, what will we do, and how can we redesign this tax? So we were able to redesign it with a 30 cent headline rate without refundability and some other new features which we managed to agree on, to the point that we've got revenue not that far away from what we'd originally anticipated which enables us to boost super, to give small business a tax break and to invest in infrastructure. That is the outcome of what is a sensible negotiation.

KING:

Alright. But can you put this to rest. Reports in The Australian newspaper, I think it was this morning, saying you're a bit grumpy about this?

TREASURER:

Well, I don't accept that. I might have been tired. You might recall that I flew back into the negotiations from Toronto where I'd been for a relatively short period of time. So I can certainly tell you and your listeners that I was jet-lagged. That's for sure.

KING:

Well, okay. Well, what about this, and I know you've got another interview set up, so our last question. What about, is this an indication that the squeaky wheel gets the most attention? That the louder you argue, the Government will back down?

TREASURER:

Well, we haven't, that's the whole point. I think the real…

KING:

But it is a back down.

TREASURER:

Madonna, we've got revenue of $10.5 billion. We'd originally forecast $12 [billion]. We've got big reforms still continuing. That's a very substantial reform. The fact that the design of the tax has changed is neither here nor there…

KING:

Well, you're receiving less in revenue than you were, aren't you?

TREASURER:

Well, a little less.

KING:

$1.5 billion.

TREASURER:

Yes, a little less, but we've got a $300 billion revenue Budget. So let's just look at it into perspective. The point I'm trying to make is that this is a big reform to get the mining industry, who previously had not had a profits based regime, to get some of the biggest companies in the country to come to the table and agree to that, is I think, a very big advance.

But I tell you what, Queensland is going to be a big winner from this, particularly when it comes to infrastructure.

KING:

Deputy Prime Minister, good to talk to you. Thank you.

TREASURER:

Good to talk to you.