SUBJECTS: Minerals Resource Rent Tax; Superannuation; Company tax cuts; IPART; GST review panel; Clean energy programs
I'm here with Deputy Prime Minister and Treasurer Wayne Swan and with the Minister for Resources, Energy and Tourism Martin Ferguson.
Last night the Parliament finished and passed the Minerals Resource Rent Tax. The Senate passed the mining tax. That means the mining tax will come into operation on the first of July this year.
The mining tax is about ensuring that Australians get a fair share of the benefits of the resources wealth within their grounds.
It means that we will be able to provide new tax benefits to small businesses and businesses around the nation, new superannuation benefits for Australian workers increasing our pool of national savings, and it means we will be able to fund new infrastructure for mining regions.
Ultimately the big public policy decisions in national life come down to who you stand for. In determining that at this time of our nation's history we needed a mining tax, the Government determined that at this time, particularly as we see all of the changes in our economy that the resources boom is bringing, that we needed to take special measures to share the benefits of that boom.
Put simply, it meant we determined to stand for the benefits to the many, rather than to the privileged few. To shape the future, rather than to pretend that we could stand still. To make sure that we were supporting jobs, rather than doing what we have been urged by the Opposition, which is effectively to stand in the way of Australian jobs.
I'll turn to the Treasurer now for a description of the benefits that will flow from the mining tax and then we'll take questions.
Thanks very much, Prime Minister.
This is a critical step in Australia's 30 year economic reform history. It ensures that all Australians will share more fairly in the resources that we own 100 per cent and it certainly gives us the opportunity to spread the benefits of a mining boom more fairly right around our country.
Tax breaks, for example, to 2.7 million small businesses right around the country.
A big boost to super for something like 8 million Australian workers. If you're a 30-year-old on average earnings, it's a boost to your super in retirement of an additional $100,000.
And, of course, a significant increase in infrastructure investment in mining communities.
Now I did want to pay tribute to the role of both the Prime Minister and also the Resources Minister, in what has been a very difficult and very strong political debate and economic debate in Australia.
Now the Prime Minister went in to bat for millions of small businesses and millions of workers. She won.
Tony Abbott went into bat for the likes of Clive Palmer and Gina Rinehart and he lost.
That's a very good thing for Australia, because what we have put in place is a policy framework that's going to enable us to spread the benefits of the mining boom right around our country.
We talk a lot about the Asian century and the Asian century is very important to Australia because it will provide opportunities, not just in resources, but right across our economy.
But at the moment, we are experiencing a mining boom because of the very strong growth in Asia. We can make this the Australian century in Asia if we maximise the opportunities that flow particularly from resources and spread them right around our country.
Because the fact is that there are great opportunities and there are great challenges and one of the challenges that comes with a mining boom is a higher dollar and of course a patchwork economy, because not every business or every worker is in the fast lane of the mining boom and that's why we must put in place the policies that the revenue stream from the MRRT is funding.
Now there's a rolled-gold case in terms of equity to do what we're doing but there's an even stronger case in terms of cutting taxation for business.
The economic stupidity of the Opposition in opposing our cuts to company taxation is simply breathtaking given the outlook that I've just gone through.
The fact is there are patchwork pressures in our economy, not all businesses are in the fast lane and that is why we do need to put in place, not just the measures that passed through the Senate last night, but the measures which will go to the House of Representatives and to the Senate in the budget session to give a tax cut to businesses right across the board.
So in the budget session there will be another opportunity to discuss what we have to do to make our economy stronger and more prosperous through further company tax reform. The fact is the Liberals have turned their back on Australian business and Australian workers and what we are doing is putting in place a range of measures, including cuts to company taxation which will strengthen our economy and strengthen employment.
Would you consider declaring the tax cuts a matter of confidence to force the Greens to support it?
I think you've forgotten one big thing here, it's called the Opposition. It's called the people with the most votes in this Parliament, other than obviously the Government working with the Independents.
I mean before you give Tony Abbott a get out of jail free card on this, let's just focus on what the Liberal Party has stood for and what Tony Abbott has said it stands for across the ages and in contemporary politics. Tony Abbott has said repeatedly that he thinks company tax cuts are a good thing, but he's going to come into this parliament and vote against them. He's going to vote against the Liberal tradition of supporting business tax cuts.
We will bring these tax cuts to the Parliament, Tony Abbott can answer to the Australian people for voting to deny those tax cuts.
That means he can answer to the 2.7 million small businesses around the country. He can answer to all of the businesses around the country he seeks to deny a tax cut to.
He can answer to all of the working people around the country, because business tax cuts aren't just good for business, they're good for economic activity which means they're good for jobs and they're good for growth.
Prime Minister, two questions, just separate things about the mining tax. One, are you confident of the revenue projections in the forward estimates from the mining tax and B) is a two tiered company tax system workable?
Well the company tax reductions that we will bring to the Parliament will give small business an advance down payment on tax cuts. They'll get the tax cuts first, the company tax reduction. Then the tax cuts for bigger businesses will flow.
We deliberately structured it that way because we don't think it's a good thing to have a permanent difference in company tax rates, but we did believe that it was appropriate to give small businesses a head start and we continue to believe that.
We understand that not all small businesses are companies and so we've deliberately structured benefits that flow to small businesses, whether or not they're companies, including the instant asset write-off, which helps them buy new capital for their business and get a $6,500 tax break every year that they decide to buy a new capital item.
On the revenue projections I will turn to the Treasurer.
Yes, we certainly are confident in our revenue projections and they are revised, they were revised again in the budget update at the end of last year.
So those forecasts come from the Treasury, they have worked with the industry in terms of the industry's appreciation of the starting base, volumes and price and they're the forecasts they make.
And the forecasts are always revised, depending on what's going on with the exchange rate, volumes and price. That is just common sense.
Prime Minister, you keep targeting the Coalition on these tax cuts. They have said they're not going to pass them, they're not going to negotiate. The Greens however say they will negotiate in the next couple of months. Will you ultimately accept a two tier tax system if, after negotiations with Bob Brown, that is the best deal you can get?
Well, first and foremost, I am not going to share your analytical point.
Everybody in this Parliament bears a responsibility – everybody. Tony Abbott bears a responsibility. He wants to be Prime Minister of this nation, he bears a responsibility.
And in this Parliament he is going to discharge that responsibility by walking into the Parliament and voting against company tax cuts.
And so that is the central point that should be made and should be understood around the country - Tony Abbott, from the Liberal Party, voting into the Parliament to deny businesses around the country a tax cut, despite everything that has been said over decades and decades by Liberal politicians, including Mr Abbott, on the benefit of company tax reductions.
Of course, the Government will bring its legislation to the Parliament and we will work to get our legislation through.
I've taken a question about why we structured the arrangements the way we did.
We think that that is the right structure and we will be fighting for those company tax cuts.
But I think I am entitled to say, before we get into questioning about what may or may not happen when that legislation comes in May, the only reason any of those questions are being asked is because of Tony Abbott's recklessness and negativity.
He is now so negative about this nation's future, so bitterly negative about this nation's future, that he is going to walk into the Parliament and vote against a proposition you would have said was absolutely core to Liberal beliefs.
Prime Minister, you're absolutely entitled to say that-
Yes and I just have. Love to read it in my Australian too, I'll look forward to it tomorrow.
Great. I think I wrote it today.
Right, well tomorrow's another day Matthew, I'll read it again.
Can I ask you – I believe you've been asked three times now, can you though, tolerate the idea, even if –
I've answered that question to our - the system we want is a system that gives small business a head start on the company tax reductions. We do not think it is a good system in the long term to have differential company tax rates.
The question is if the Liberals - you can't control what the Liberals do. If ultimately your legislation is not passed in such a way that gives the cuts to big business, will you - what would you do then? Are you just going to have to cop that or are you simply not prepared to contemplate the idea that you can get to that point?
First and foremost, I come to these press conferences a lot and I get told at every one of them 'gee, you won't get X or Y through'. I have put up with months and months of scoffing about the carbon price – guess what? It's the law of Australia today. I have put up with months and months of scoffing about the mineral resource rent tax. Guess what - it went through the Senate last night. Before we start on a process of months and months of scoffing about whether or not we will get through the company tax cuts, I think I'm entitled to go scoreboard and at the moment it's running more in my favour than yours.
Yes, at the back.
Can I ask the Prime Minister and the Treasurer, you've talked about potentially imposing effectively penalties on states if they increase their royalties further. At what point do you say 'okay, if royalties go up from here we will cut your infrastructure payments, we will cut your GST payments' and will it be dollar for dollar? Will states have a real stick if they choose to increase royalties?
I might go to the Minister for Resources on that.
The MRRT produces a revenue stream. It also provides that we will offset as a result of our agreement with the mining industry, any increase in state royalties. That offset effectively reduces the revenue stream to the Commonwealth. The state responsible for an increase in royalties can't then expect that the Commonwealth would turn around and eat into consolidated revenue to maintain the same infrastructure spend in that state or territory. It speaks for itself.
As a result of the MRRT we are absolutely committed to assisting Australian industry by reducing company taxation, the purchase of new capital equipment, increasing superannuation and investing in the future of the resources sector through investment infrastructure. The choice is for the states, because there's one thing guaranteed. Every time they increase royalties they don't invest it in resource regions. We will.
But at what point do you start doing that and how much are you willing to cut payments or cut infrastructure – cut GST payments or cut infrastructure payments?
Well the direct question about royalties and GST has been referred to the GST review. The Minister's made the very common sense point though that state governments can't seek to have this all ways, and another very common sense point here is the minerals resource rent tax is a profits based tax. It is a more efficient way of getting and sharing the benefits of the resources wealth within our grounds than state based royalties which hit companies whether or not they're profitable.
And of course the ordinary time cycle of a resources company is they do the exploration, that's not easy. They then do the intensive capital investment that brings the resources on stream. That's a period of large expenditure and no income. Then of course they hit the period when they are profitable, they're getting the ore out of the ground, they're getting good prices for it. The minerals resource rent tax is structured understanding that is the life cycle of a resources business and so the tax is there when the business is profitable not hitting it across the board the way state based royalties do.
On infrastructure – withholding infrastructure money. There's a – correct me if I'm wrong, there's a $6 billion infrastructure fund to be funded by the tax to be paid to the states between now and 2020. Is it from that fund only that you'll withhold infrastructure money or are you prepared to go further into general purpose payments if necessary if the states test you on this?
I'll turn to the Treasurer. Our ultimate aim is to work with the states to ensure that Australians get a fair share of what's in their grounds and we get a system that works well. We have also been clear with the states though that we are not going to be in a position to just see them gouge away here and to be of the view that it doesn't have consequences.
We've referred the matter to the GST review, that's important, and we'll get some advice from that review.
I'll turn to the Treasurer for some comments too.
Well we have referred the matter to the GST review, that is some time off. In the interim we've said that we will take it away from infrastructure payments from that fund. Okay? Thanks.
Well just go Latika, Michelle and then we'll go.
Prime Minister, IPART has had some pretty scathing views on renewable energy targets and has called for them to be reviewed with the introduction of the carbon price. Are you willing to respond to that urgency and look at that before the white paper report's back?
I'll go to the Minister.
There's already a review of the renewable energy target locked into our legislative framework model, so I'd also say in terms of the variety of clean energy programs that have existed at a state and territory level, the objective over the ensuing future is to actually rationalise them to end up with a common approach which is based on a national carbon price side by side with a renewable energy target plus a major investment in clean energy technology. That's the outcome that we have put in place, that is the appropriate outcome for the future of Australia from a clean energy perspective.
Minister, do accept that they are distorting electricity prices as IPART says?
They are very clear that there have been a variety of state and territory schemes put in place over the last decade because of a failure of the previous Howard Government to actually resolve this clean energy debate, to resolve the debate about a price on carbon.
Having now done that it is appropriate that we rationalise that set of state and territory initiatives which are like a dog's breakfast, of no benefit to industry and of no benefit to the overall economy.
Just going back to the company tax cuts, there's been some discussion that the threshold for a small business has been set very low – turnover of $2 million. Are you at all open to the proposition of looking again at that threshold to raise it to, say, $5 million or something like that?
Well I'm not going to answer a series of hypothetical questions. I'll restate my determination to deliver on the company tax cuts and that legislation will come to Parliament in May.
What we have achieved through our determination is the minerals resource rent tax against, yet again, a hysterical scare campaign from the Opposition acting as they do in the interests of a privileged few – on this occasion, taking their mining instructions from mining billionaires. So we're stared that hysterical scare campaign down. Now we've got the Opposition threatening to trash the Liberal Party brand, presumably to all cash in their Liberal Party tickets and get some other form of political party ticket and vote against company tax cuts.
Michelle, we'll do what we do in a determined fashion to deliver the right things for the nation's economic future. That includes sharing the benefits of the resources boom through these company tax cuts.
Thanks very much.