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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

20 June 2010

Interview with Hugh Riminton

Meet the Press, Channel 10

20 June 2010

SUBJECTS: Penrith By-Election; Resource Super Profits Tax; opinion polls

RIMINTON:

Now welcome to the program Treasurer Wayne Swan. Good morning.

TREASURER:

Good morning, Hugh.

RIMINTON:

You saw the Penrith results there Treasurer. What, if anything, should be taken from that by Federal Labor?

TREASURER:

Well, no implications at all at the Federal level. It was a state by-election fought exclusively on state issues. I don't see any federal implications at all. The New South Wales state Government was bracing itself for a shocking result and that is what has occurred. And it is all state issues.

RIMINTON:

It is not great for the Labor brand, is it, at the moment when federally Labor is a bit under pressure?

TREASURER:

Well, federally Labor is putting forward a very constructive program of economic reform. The State Government will put its case to the people and go to the election next year. I do believe that Australians do distinguish very clearly between federal issues on the one hand and state issues on the other.

RIMINTON:

The Prime Minister has said many times now that Labor can lose the next federal election. I guess the question now is can Labor, federally, win the next election?

TREASURER:

Well, of course federal Labor can win the next election. Federal Labor will win the next election because we have a pretty good record. We have kept this country out of recession. There is an unemployment rate of 5.2 per cent. We have put in place historic health and hospital reforms, historic parental leave reforms, reform of the aged pension, fundamental investments in education and in infrastructure. And now putting forward a fundamental reform program to meet the challenges of mining boom mark II. Of course we can win the election because we've got the big economic calls right.

RIMINTON:

I mean, everything that Labor's doing at the moment – the Paid Parental Leave scheme that came through - was almost buried because all the talk now is about the mining. Have you got any progress, have you made any progress, in your consultations with the mining industry?

TREASURER:

Well Hugh, we are having good discussions with many companies, including some of the biggest companies in the world, and most companies are engaging in that consultation process in a genuine way and we are making good progress.

But of course some companies are not behaving in an honourable way. Some companies are certainly setting out to defeat this tax because they don't want any change to the resource charging arrangements which are short-changing the Australian people.

As Treasurer I can't sit idly by - the Government can't sit idly by - and watch these permanent windfall profits simply walk out the door. We need to use those windfall profits to strengthen and to broaden our economy for the future, to create jobs into the future, and to create prosperity. That's the debate, and that is a debate which will run through right until the election.

RIMINTON:

Now, you're saying some companies are not acting in an honourable way, what is dishonourable about companies arguing - arguing vigorously - for their own self interest?

TREASURER:

Nothing at all, and we certainly welcome that vigorous debate. We welcome a full public discussion about all of these issues.

Unfortunately behind the scenes a small number of companies are using strong-arm tactics to silence other companies both in the mining sector, and more broadly in the economy, from commenting favourably on the need for us to cut the corporate rate, to invest in infrastructure, and to boost our national savings.

RIMINTON:

So what are these strong arm tactics that you've come to understand are happening?

TREASURER:

Well, they are saying to companies you should not comment in a favourable way about what the Government is proposing. The Government's proposals to cut the corporate rate across the board, to give a tax break to small business, to boost infrastructure and to boost national savings. Now, this is just a few companies, but these companies are going to fight this reform all the way.

You see, reforms like this Hugh have been hard fought in Australian history. We have seen this sort of behaviour before. We've seen the misinformation campaign that is put out there by the Minerals Council which of course in recent days has been falling apart at the seams. You've just seen the Institute of Superannuation Trustees call their claims about superannuation scaremongering and grossly irresponsible.

RIMINTON:

What you're trying to do it seems, is to divide off, divide the resources sector with different deals being offered not only to different sections of resources, but even perhaps different companies within mining. Isn't that the case? Are you getting individual companies closer to agreements on deals that will talk them round?

TREASURER:

No, we're not seeking to do that at all. We always said that we would have a genuine discussion with companies and we are doing that. Of course, individual circumstances vary a lot, and of course, circumstances do vary significantly between sectors.

Now, as we're going through the consultation we will seek to understand those differences as the companies talk to us about their circumstances. Common sense tells you there are a variety of circumstances, and that's why we said from day one that we would have a genuine consultation and discussion because we do need to understand the difference circumstances across different sectors and within different sectors, and that's what we're doing.

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DODSON:

Mr Swan you just talked about some companies behaving not honourably. Would you name those companies?

TREASURER:

No I cannot name those companies because that information has been given us confidentially. But I think Louise it's well known in the Gallery, and it's well known across industry, but I can't name those companies because those details are confidential. But it's only a few companies. Most companies are behaving honourably. We are having good discussions across a wide range of companies, and that's very important so that we can understand their circumstances, the circumstances of their sector, and individual characteristics which are relevant in terms of their own individual operations.

DODSON:

So in terms of the different approaches of different companies, are you prepared to carve out companies, for instance, the coal seam gas industry and sand and gravel quarrying?

TREASURER:

What we have said is that we have a 40 per cent rate, we will have generous transitional provisions and we will be discussing the detail with the companies. Now we're moving through that process very well with many companies; some companies are not genuinely participating in that process. And as I've said, we would like to resolve this as promptly as possible but the most important thing is to get it right for Australia.

You see, we never thought this would be an easy discussion. There was plenty of consultation with the panel in the lead-up to the report, and when I released our response to the report in May, I made it very clear that we would have a long consultation and we would sort out issues with the industry. What I didn't expect was some parts of the industry to go to war with the Government with a $100 million advertising campaign almost from day one. That has made it a more difficult process, but it doesn't in any way diminish the genuine desire of the Government to consult and negotiate with the industry and that is what we are doing.

HARTCHER:

Mr Swan, a few minutes ago you listed for Hugh the Government's reforms and achievements. Now, if that list is right, valid, and those achievements are as serious as you say, why is Labor's primary vote at 35 per cent and why, if an election were held two weekends ago, would the Government have lost to Tony Abbott?

TREASURER:

Well, because reform is always hard in the Australian environment and it is always hard-fought, and we have got a very hard fight on our hands right now, Peter. I mean, you've got the mining industry…

HARTCHER:

Do you blame the miners?

TREASURER:

Not exclusively, in terms of the polls. I think the polls will be difficult for us for some time to come. But there is no doubt that this $100 million misinformation campaign that has been waged by sections of the mining industry has had some impact. Now we have seen in recent days that campaign exposed for what it is. Some of the bogus claims that have been made by miners about the putting of projects on ice, some of the bogus claims that have been made about the impact on superannuation and so on, have now been exposed.

This is an industry that has always fought reform. And there are sections of the industry that don't want to pay one extra dollar in tax, despite the fact that prices are through the roof and they are going to be high and sustained for some time, but they don't want the Australian people to get a fair share of those permanently higher prices and they are going to fight this to the bitter end.

HARTCHER:

Mr Swan, you are Australia's chief economic officer. How do you think it assists Australia's national interests for you to be insulting the profit generators, otherwise known as corporations? Today you've called them not honourable, you have in the past called them ignorant or liars. How does insulting them help the economic interest?

TREASURER:

That is not a correct characterisation of what I've done. Most companies are behaving in an honourable way., and I have great respect for the profit generators of Australia, as I have great respect for all the people who work for them.

Some companies, a few companies, as you know Peter because you are in the Gallery, are behind the scenes behaving badly. I have got to call that for what it is because this is an important national reform to strengthen and broaden our economy.

Australia should get a fair share of the resources that we own 100 per cent and which can only be mined once. We should use a share of that to strengthen and broaden our economy by boosting national superannuation and a national savings pool, by investing in infrastructure, and by cutting the corporate rate so that all companies can grow.

We have put in place here a reform, which is in the national interest, which looks after the interests of all of our corporations, and says the Australian people are entitled to a fairer share of that resource wealth. Now, in the process of that, a few companies have behaved badly. And I think I have to call it for what it is. When you have got...

DODSON:

Just getting back to the polls, Mr Swan, you were involved in the tax obviously, as the architect, and also the decision to shelve the ETS, the Emissions Trading Scheme. So do you bear responsibility for the plunge in support for Labor in the polls?

TREASURER:

I accept my central responsibility in the Government. I accept that, and I accept responsibility for all the decisions that the Government takes, all ministers do, and I accept that I have a central role here. But you have to look at what the Government is doing. We are putting in place a fundamental reform which will strengthen and broaden our economy so we can take advantage of and maximise the opportunities which will flow from mining boom mark II. I can't sit idly by and watch the share the Australian people have in those resources simply walk out the door in windfall profits not being used to strengthen our economy.

HARTCHER:

On that point Mr Swan, what exactly is the share that the Federal Government is expecting to collect through the Super Profits Tax? Because so far, you have told us only the net that the Government expects in the first two years of the tax; you haven't told us the gross amount. You are proposing a new tax without telling us the total take that the Federal Government is expecting. Can you tell us what that total take will be?

TREASURER:

We have published our revenue estimates in the normal way. This is what Governments have done, and that is what we have done in these circumstances.

What we have said is that we will use that revenue to invest in superannuation, to invest in infrastructure and to cut the corporate rate. What we've said is there should be a fairer share and I think that is reasonable. Even the mining industry has argued for a profits-based tax. Sadly, some sectors of the industry don't want to actually pay any more even though they acknowledge the case.

HARTCHER:

At the time that the Liberal Party proposed a GST, if they had not told us the total revenue that they were expecting, you would have been aghast. Today you are proposing a new tax, you are telling us the net take you are expecting, but that is after deductions you have allowed for mining losses and other factors. Why won't you simply tell us the gross revenue you are expecting from your new tax?

TREASURER:

I don't accept that characterisation. We have answered these questions that were put to us in Estimates in a fulsome way. There's a variety of figures that are floating around. I think Mr Hockey the other day published a series of figures about profits and or resource rents. I think he had four sets of figures. Every single one of those figures showed that resource charges as a percentage of resource rents or profits have dropped significantly.

There is a rolled-gold case for the Australian people to get a fairer share. We have put forward a proposal - a 40 per cent profits-based tax with generous transitional provisions. We are talking to the industry about design features of that. That is the way that you normally go about this sort of policy making, and that is exactly what we're doing.

RIMINTON:

Well, we look forward to this debate continuing right through until the next Election as you say. Treasurer, Wayne Swan, thanks very much for joining us this morning on Meet the Press.