The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

23 December 2008

Joint Doorstop Interview
with
Mr James Fazzino
Chief Financial Officer, Incitec Pivot

Incitec Pivot, Brisbane

23 December 2008

SUBJECTS: Visit to Incitec Pivot; Investment Allowance; Ross Garnaut; Clarke Report; Economic Security Strategy

TREASURER:

It's great to be here at Incitec Pivot, one of Australia's most successful manufacturing companies, to inspect today the site of the new compressor in the Urea Plant. Now, this capital item, this investment has been brought forward by the company because of the additional 10 per cent investment allowance that the Government announced over 12 days ago.

That announcement is a critical incentive for business to invest early and to invest in strengthening the Australian economy and creating Australian jobs.

So, it's just so pleasing to be here today with this company that has brought forward its investment plans so it can increase production and decrease its CO2 emissions.

So, this is a show of faith in the Australian economy. It's easy to lose sight of the successes in the Australian economy when there is so much doom and gloom around in the international economy. But there are plenty of companies out there who are investing, and plenty more who will use the additional 10 per cent investment allowance to accelerate their investment in the productive capacity of the Australian economy so we can create wealth and protect jobs.

Over to you.

JOURNALIST:

What effect do you think the 10 per cent allowance is going to have on industry?

TREASURER:

Well, I think it's going to have a very important effect. Many companies will bring forward their investment plans and that will increase their productive capacity. In the case of this company, it will increase its capacity to produce Urea and of course that increased production will replace imports. So, it's a win-win for the Australian economy – increased production because the investment has been brought forward because of the Government incentive, and on top of that it will be Australian production which will replace imports. That's a big win for the Australian economy.

JOURNALIST:

So, how many extra jobs do you expect it to generate?

TREASURER:

Certainly it will generate quite a few additional jobs. you'd have to talk to the company. But most importantly, it will strengthen its productive capacity. It will substantially increase the output of that plant, and as I said before, replace imports. That's pretty important.

JOURNALIST:

Will there be any relief for farmers in terms of the fertiliser prices that they're paying, considering that's been a big factor for them while they're still getting over the drought?

TREASURER:

Well certainly there have been cost increases in the past and I'd certainly hope that this increase in productive capacity assists farmers when it comes to price. I'm told that this plant is one of the most efficient in the world – that's a good thing – and if they're increasing their production that should be a win for Australian farmers as well.

JOURNALIST:

How many companies did you say are taking up this 10 per cent allowance?

TREASURER:

Well, this is one company that has come forward to take up the additional 10 per cent investment allowance. Other companies will be coming forward. We won't know the full figures until well after the 30th of June next year when the time to claim the allowance runs out.

JOURNALIST:

How many companies so far?

TREASURER:

Well, we wouldn't know the number of companies [yet]. What I'm saying to the companies out there is use this allowance. This is one company that we've identified that is using the allowance and I'm sure there'll be many more. They won't all be big plants like this. This is a $20 million investment. There'll be plenty of businesses out there that may buy a new vehicle or they might buy a piece of plant and equipment that costs a lot less, in the range of $20,000 or $30,000. Whether it's $20,000, $30,000 or $20 million, it will be a vital investment in the future of the Australian economy.

JOURNALIST:

What do you think about Ross Garnaut's comments that the Government shouldn't have rejected the 25 per cent ETS cap?

TREASURER:

Well, the Government is keeping faith with its election commitment – 60 per cent reduction by 2050. Mr Garnaut's suggestion would run counter to that promise that we made to the Australian people. We are keeping faith with the Australian people. We have put in place measured and achievable reductions in CO2 emissions by 2020 and the Prime Minister has made it very clear that we are prepared to consider more if there is a global agreement which would achieve the carbon reductions required that Mr Garnaut was talking about. But we made a commitment to 60 per cent by 2050 and we're sticking to that.

JOURNALIST:

The Haneef report, will there be compensation?

TREASURER:

It's too early to judge all of those matters. The Clarke report is out there for people to comment on and make judgements about. It's too early to be talking compensation.

JOURNALIST:

Is there an apology?

TREASURER:

Well, those matters are dealt with in the Clarke report and I certainly don't intend to say any more about it until it has been digested by all those that are concerned with all of the issues.

JOURNALIST:

One Brisbane shopping centre today, one of the big ones in Brisbane, was saying that they expect their Christmas retail to be up two to four per cent on last year, which was a record. Has the Government sent the right message to consumers where in this economic downturn that our Christmas spending is going to be up? Are people are going to be left with more debt?

TREASURER:

The reason the Government put in place our Economic Security Strategy to provide additional payment to families with children and to pensioners and carers was to give them a bit of extra cash before Christmas to spend as wisely as they could and to assist them with the cost of living. If people have been out and spent that responsibly in the economy and helped create Australian jobs and strengthen our economy right through to next year, I'll be delighted.

JOURNALIST:

Would you have expected a result like a two to four per cent increase in sales in retail?

TREASURER:

Well, the Australian economy is receiving a very large shock from the international financial crisis which has caused a crisis in confidence around the world and caused as pull-back in demand internationally and domestically. The whole point about the Economic Security Strategy was to assist people to spend a little extra responsibly in the lead up to Christmas so it could strengthen our economy and protect Australian jobs. And if Australians have done that, that's a win for the Australian economy, it's a win for Australian households and I think it's a win for the retailers.

FAZZINO:

The reinvestment in Gibson Island of $20 million really does show our faith in Australian farming and also our manufacturing. And I think it's a real tribute to the Government that they've taken the step that allows us to bring forward this type of investment to build on that. So, thank you very much.

JOURNALIST:

(inaudible)…prices of fertilisers. Will this have an impact?

FAZZINO:

Well, the price of fertiliser is set on import parity and so the price that farmers pay in Australia goes up and down with the global price of fertiliser. And that's the way prices are set in Australia. And you would've seen actually just recently with the declining global prices we've acted to bring prices down for farmers. I guess you've got to look at the totality of pricing and one of the reasons why fertiliser prices are higher is because our farm outputs are higher in price. So, it's the net that farmers look for and we're really hoping for really good rain so farmers can take advantage of the current good prices for commodities.

JOURNALIST:

Jobs here at the Island (inaudible)…result of investment?

FAZZINO:

There'll certainly be some extra jobs created for the construction of the $20 million when that takes place. It really secures our position here, and there may be a few additional jobs in maintenance – maybe one or two.

JOURNALIST:

(inaudible)…effect of allowance?

FAZZINO:

What it really does is it brings forward our investment and it allows us to make investments where you may just need a little extra in terms of incentive to get the numbers to work. This is a very sound investment we've got here and what we've been able to do is bring it forward and take advantage of the 10 per cent investment allowance. It just makes that investment far more attractive.

JOURNALIST:

How much has it brought it forward?

FAZZINO:

It's brought forward our plans by around about six months and it really set the scene where we're looking at other investments we plan to make in the business and say, can we also bring those forward to take advantage of it.

JOURNALIST:

And is that going to happen?

FAZZINO:

Well, we need to wait and see.