The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 30/06/2006

Press Conference
Treasury Place, Melbourne

Friday, 30 June 2006
11.30am

SUBJECTS: 1 July tax cuts, James Hardie, Telstra, David Hicks

TREASURER:

Every Australian who pays income tax is going to be better off from tomorrow.

Income tax cuts will extend to every Australian taxpayer. For low income earners, they will not pay tax until their income goes above $10,000. Improvements in thresholds and reductions in amounts will give a tax cut to every Australian paying income tax.

From tomorrow family allowances become more generous so that you can get the maximum amount of family allowance when your income goes up to $40,000. Previously you would be excluded from it.

For families with three children or more – they get an additional bonus – what we used to call the large families bonus. And this is real financial benefits to the families of Australia, for example a single income family with two children will be $1,648 better off a year through tax cuts and improvements in family allowances a single income family with three children will be $2,113 better off because of tax cuts and increases in family allowance eligibility.

In addition to that from tomorrow the Baby Bonus or Maternity Payment will increase to $4,000.

So, as this financial year closes and the new one begins tomorrow, changes in family allowances and tax cuts will mean every Australian will pay less income tax and for families, very significant benefits will be paid in addition to that.

People of course will spend that money on matters which are essential for their households. I hope that there are many that are able to put some money away, particularly from the Baby Bonus, but that is a matter for them. Families will be better off and all taxpayers will be better off from tomorrow.

JOURNALIST:

Treasurer just on another matter, the James Hardie compensation deal – are you worried that that deal might fall over given that James Hardie has received an adverse ruling on one or two issues?

TREASURER:

Well the deal shouldn’t fall over. James Hardie has full tax deductibility. If it pays compensation it can deduct it. What that means is that out of $100 paid to victims they will get $30 back as a tax deduction. This is extremely generous tax treatment. Now respectable companies like BHP and CSR have paid the liability for asbestos and recognised it. James Hardie tried to cheat the victims and then it tried to move offshore and then it got itself into tax trouble. And it wouldn’t have got itself into tax trouble if it hadn’t have tried to get its money out of Australia. Having got its money out of Australia, trying to get out of paying tax, it now wants to come back into Australia to get a tax deduction. And they have been successful in getting it – that is an extremely generous ruling to James Hardie and they have no grounds whatsoever to get out of paying the difference.

JOURNALIST:

But they didn’t get the charitable status that they were looking for for their compensation fund and they say that’s another crucial element…

TREASURER:

Well that’s James Hardie trying to be irresponsible. You have got to run a charity to be given charitable status. But if you are paying your due liabilities and you get full tax deductibility you are getting very generous, advantageous tax treatment.

JOURNALIST:

So their funds can be taxed on their earnings?

TREASURER:

Well you would have to see what the nature of the fund is. If it is a charity it would get charitable status but it is not a charity. It is not a charity, it is a fund to pay the liabilities for James Hardie for which they now have full tax deductibility – extremely generous tax deductibility.

JOURNALIST:

Do you think they are serious in their threats that they will walk away or do you think there is an element of bluff in their (inaudible)?

TREASURER:

Well I think as a multi billion dollar company now located in the Netherlands they are going to lobby for every tax rort they can get. But they have got extremely generous tax treatment and they should acknowledge it and they should pay the victims. At the end of the day the victims should get their money.

JOURNALIST:

Do you have any comments on Sol Trujillo’s statements yesterday that he’s proud of Telstra share price slide?

TREASURER:

Well I don’t think any Chief Executive would be proud of a decline in shareholders’ funds. The task of a Chief Executive is to increase shareholders’ funds. That is what they are there for, that is what they are paid for, that is what the shareholders are looking for and I would say in relation to any corporation, it is the duty of the Chief Executive to work to increase the value of the company. It is the duty of the Chief Executive to work to increase the value of the company not to decrease it.

JOURNALIST:

Mr Howard said he was concerned about the share price. Do you share that concern?

TREASURER:

Well as I said, I think the Chief Executive’s duty is to so manage the company as to increase shareholder value and I think that is what millions of Telstra shareholders will be looking to Mr Trujillo to do.

JOURNALIST:

The current volatility on the market – do you think it is a time to be thinking of the float or should the Future Fund now take the Telstra shares?

TREASURER:

We will make that decision when the time comes.

JOURNALIST:

Is it likely to be delayed further do you think because of the current share market price.

TREASURER:

We will make a decision when the time comes.

JOURNALIST:

On another matter, do you have a, what is the Government’s position on David Hicks’ future after the US Supreme Court ruling?

TREASURER:

Well the US Supreme Court has decided that the military commissions are not sanctioned by US Law, that means that other alternative arrangements will have to be put in place – court martial or the ordinary courts. The most important thing here I think is that the procedure be set and that the proceedings be brought as soon as possible but whether they are brought in one of those different forums or the other is a matter for the US Government.

JOURNALIST:

England has long held the view that it has been an inappropriate arrangement and Australia has been aligned with the US in thinking that it has been appropriate and the Court has now said it is not, it is illegal. How does Australia’s, how does the Government feel about that?

TREASURER:

Well we accept the decision. That is the decision of the US Supreme Court, it is the highest court in the United States, it has decided this under US law, not under Australian law so now the US Government will have to comply with that law.

JOURNALIST:

Back on Sol Trujillo, who’s been complaining that part of the problem with Telstra is that there has been too much regulation, do you think it would assist the share price if the Government lightened the regulation?

TREASURER:

Look Mr Trujillo is entitled to lobby the Government. Anybody is entitled to lobby the Government but at the end of the day he has got to remember that he has got a business to run. He is not in the lobbying business, he is in the business of managing Telstra for the benefit of shareholders and whilst he is entitled to lobby, don’t lose focus on what is the real business of Telstra – telecommunications and information and the obligations of the shareholders. Okay thanks.