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

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

29 March 2011

Press Conference

Canberra

29 March 2011

SUBJECTS: RBA Appointments; Resource Rent Tax

TREASURER:

Well, this morning I'm here to announce the appointment of two outstanding candidates to the board of the Reserve Bank – Ms Catherine Tanna and Dr John Edwards. Now both will be appointed for five-year terms. They will replace Donald McGauchie and of course Professor Warwick McKibbin.

I'd like to start by thanking both of those for their very important service on the Reserve Bank Board. They've both served two full terms, that is 10 years on the Reserve Bank Board and of course that's a very significant contribution to the Reserve Bank Board over a long period of time. Now, of course we've worked very closely with the Reserve Bank Board over the past three and a half years and Professor McKibbin and Mr McGauchie were a very, very important part of all of that.

Now, both candidates bring great experience to this job – Ms Tanna, particularly when it comes to the resources sector and of course all of the challenges that flow from mining boom mark II, through her activities with the BG company, her background in regional Queensland and indeed the fact that she was educated in Gladstone all bring together some unique experience which will be very important on the Reserve Bank Board. Both her, and Dr Edwards understand the challenges that flow through the mining boom and all of the opportunities that can flow to Australia in what is going to be the Asian century.

Now, Dr Edwards of course has very extensive experience in economic policy making. He spent 12 years as a chief economist at HSBC and of course at the moment he's an adjunct professor in the John Curtin Institute of Public Policy at Curtin University. He's currently overseas but will be returning to Australia to take up that and other roles. He has extensive experience in financial markets and indeed his academic work is in the area of monetary policy. He has unique experience to work on the Board, particularly when it comes to dealing with all of the issues that flow from the global bank capital and liquidity reforms.

So today's appointments also come on top of the reappointment of Roger Corbett and of course Jillian Broadbent over the past couple of years. So what we've got is a very good blend of experience and renewal on the Reserve Bank Board. I'd like to take the opportunity today to congratulate both of these candidates and wish them all the best in their new role. Over to you.

JOURNALIST:

Treasurer when you legislate the mining tax, I'm wondering exactly how you'll do that. Will you use separate bills for the tax and then for the associated measures which will fund cutting the company tax rate etc. Or will it all be dealt with together?

TREASURER:

Well, the first thing is that the MRRT legislation is currently being developed and we'll go through the consultation process that I spoke about in the press conference here at the end of, I think, last week. It will then go to the Parliament. We will of course have to put in place other changes as well to legislate for changes to the company tax rate and also the legislation associated with the $5,000 instant asset write off, plus what we are going to do in areas of superannuation. So the revenues from the MRRT are linked quite closely to company tax cuts, particularly the head start for small business, to the additional contributions to low income earners in the superannuation system and our spending on infrastructure. So some, but not all of that will involve legislation, but it does come as a package and it's very important because it goes to the core of our response to the patchwork economy and the challenges that arise from Mining Boom Mark II.

We absolutely understand the importance of making company tax in this country competitive of attracting international investment to drive the opportunities which will flow from the mining boom. So we're very much of the view that the balance in the package is right. It's what Australia needs to maximise the opportunities flowing from the mining boom.

JOURNALIST:

Are you surprised the Greens have announced today that they're going to oppose those company tax cuts?

TREASURER:

Well, I've heard it today as you have heard it. But we will pursue our objectives very strongly in the Parliament for the reasons that I outlined before. I note that there's been some commentary today from Mr Robb. As far as I know the Liberal Party policy is still to increase the company tax rate so there will be a very clear choice between the Labor position there and the Liberal position which is to increase the corporate rate.

JOURNALIST:

But Treasurer, you say that it's going to come as a package but will you set about trying to entrench the company tax cut inside the package more closely so that you can't have one without the other?

TREASURER:

We will put in place the legislative arrangements which are required to achieve the objectives that I just outlined to you.

JOURNALIST:

Are you disappointed that in the past Bob Brown has said he is going to back the MRRT?

TREASURER:

Well, Mr Brown has said in the past that he is going to back the MRRT and I don't think he's contradicted that today. What he has said today is that he won't support the company tax cut which is being funded by the revenue from the MRRT. These will be matters for the Parliament but we will pursue strongly the package of reforms which maximise the opportunities flowing into the Australian community from the resource rent tax.

Never forget this – the number one recommendation of the Henry Review was for a resource rent tax. What flowed from that recommendation was a further recommendation that Australia needed to make its company taxation regime more competitive in a world where there was vigorous competition for global capital and we need that global capital to further drive investment in this country. So the two are linked very much in terms of the recommendations from that report and we accept that that central thrust, that's clearly not accepted by the Greens so there will be a clear divergence of opinion between the Greens and the Government on that question and between the Government and the Liberal Party on the other side which wants to increase company taxation.

JOURNALIST:

Can Bob Brown actually support the mining tax in the Parliament if he doesn't want the company tax rate reduced to 29 per cent?

TREASURER:

Well, you'd have to go and ask Mr Brown. I don't speak for him.

JOURNALIST:

Will the legislation be separate? Will there be an opportunity in the Parliament to vote for mining tax and the company tax – separate?

TREASURER:

Let's be really clear about this. The MRRT legislation stands in its own right.

JOURNALIST:

And the company tax legislation – separate, yes?

TREASURER:

Yes.

JOURNALIST:

So they won't be tied? (Inaudible)

TREASURER:

We have made it very clear over time that there has to be a revenue source for these initiatives and that if you can't get the MRRT through there is no revenue to necessarily purse the investment in the infrastructure or for that matter a company base cut.

JOURNALIST:

He'll pass the MRRT but he won't accept –

TREASURER:

Let's not get ahead of ourselves here or speculate about what may or may not happen. What I've outlined to you is the Governments policy and approach which we put in place in early May last year. Now, we have fought hard to have resource rent taxation in Australia to give Australians fair value for the resources they own 100 per cent. That legislation has yet to pass. We are going to pursue it strongly in the Parliament, in the House of Reps and the Senate. Getting that in place provides the revenue stream to continue to reform the economy, to deal with the challenges of the two speed economy. Many small businesses out there need and want and deserve a cut in tax and the revenue stream is there if the MRRT passes. The Greens are not the only actors in the Parliament, either in the House of Representatives or in the Senate when it comes to the passage of this legislation. The Government will pursue its program because it's right for Australia.

JOURNALIST:

Mr Swan, you've made it clear that you believe you've got the balance right with these measures. The Greens' Bob Brown said in his statement today that there is actually doubt over whether you need to have a, the value in having a competitive tax-raising regime (inaudible). Do you think that he understand the implications potentially of what he's proposing in terms of what message it sends to the international community?

TREASURER:

Well, I think he has made the wrong call. We need a competitive taxation system to drive jobs, to drive investment and to drive prosperity. Now, I'm a member of the Labor Party and I believe in creating prosperity to spread opportunity, and opportunity comes with a prosperous economy. So we've got to get the balance right. We've got to make sure our tax system, both personal and business is competitive. On the other hand we want to make sure that the opportunities that flow from Mining Boom Mark II flow to all of our people. We also know from the Henry Report that because of Mining Boom Mark II we need to substantially lift our national savings. We've chosen to approach that in the Labor way – making additional contributions to the lowest paid workers to boost their super for the future, improve their quality of life, but also lift our national savings, plus make the investment in the infrastructure that is required in particular in our great mining regions.

Now, the Greens have always been hostile to that sort of investment in those regions, particularly in the mining regions. We know those regions need the revenue stream so they can continue to be the great engine rooms of the Australian economy.

Ms Tanna for example is from Gladstone one of the great engine rooms of the Queensland and Australian economy. One of the great beneficiaries or one of the regions which will be the great beneficiary of the flow of money that will be invested in infrastructure, because if you go to Gladstone today the roads simply clog up. The transport links aren't up to it. We've got an investment boom going on in Gladstone right now – three big projects, in total more than $60 billion worth of investment going in. The revenue from the MRRT will make that region work and make life more bearable for the people that live in that great economic powerhouse.

JOURNALIST:

Mr Swan, do you agree with the Greens' figures because Treasury forecasting is that the company tax cut (inaudible) so it would be worth $1.45 billion. Bob Brown has had his own maths done, which I understand he's just taken 1 per cent of the total (inaudible). Has Treasury underestimated the size of the tax cut?

TREASURER:

I haven't seen his figures today and I haven't had them –

JOURNALIST:

He's says it's $2.4…

TREASURER:

Well, I haven't had them run through the Treasury. I'm happy to run them through the Treasury and see whether they stack up or not, but that's not the point. The Greens aren't the only people voting on this legislation in the House of Representatives or the Senate because there is a very clear choice.

The Liberals have gotten themselves into this extraordinary position where they say that very profitable and super profitable mining companies are paying too much tax and they should pay less. We're saying they should pay their fair share. That is the agreement we reached with those companies at the end of last year and that is what governs the design of the tax we're putting forward. That revenue stream is absolutely essential for Australia and our future economic development and the jobs that come with it.

JOURNALIST:

Mr Swan, do you think that the change of government in New South Wales will make it harder for you as Treasurer, to negotiate on issues in your area including on things like royalties even though it's not a resource state?

TREASURER:

Will it is actually –

JOURNALIST:

Well, I mean –

TREASURER:

There's very substantial resources in New South Wales, that sometimes does get lost a bit in this discussion. No, look I don't anticipate that would make it more difficult. We come to the table with the national interest at heart and I hope they do too. And when we're talking about the issue we're just talking about now of the resource rent tax or the MRRT and the distribution of the revenue from it, what we're talking about is an issue for the whole of Australia. When we're talking about a cut in taxes for small businesses we're talking about 2.4 million small businesses right around Australia.

We recognise that not every small business in Australia is benefiting from the boom in resources or is located in a community which is benefiting from the boom in resources, that's why we want to give them a very substantial tax cut. We recognise that not every company is benefiting from the boom in resources, that's why I want to give them a company tax cut. We want to do something which is economy wide for all of those people that aren't necessarily in the fastest lane of the economy. That's why we want to use the revenue from the resource rent tax, to do something for everybody, to spread the prosperity that flows from the investment boom.

JOURNALIST:

Treasurer, have you had talks with the country Independents in the Lower House about the MRRT?

TREASURER:

I haven't had any discussions with them recently, but we will have discussions with them as the legislation proceeds through the Parliament and we will put our case. I believe it is a very, very strong case.

JOURNALIST:

What is your confidence level?

TREASURER:

Well, I don't speculate about it. You know, we in the Parliament have progressed all of our legislation in the time that we have been in Government.

JOURNALIST:

Treasurer, are you concerned about cyber hacking?  Are you concerned about the security of your correspondence as a Cabinet Minister?

TREASURER:

I've got a long standing policy of not commenting on security matters. Thanks a lot.