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

2 November 2011

Joint Press Conference
with
The Hon Martin Ferguson MP
Minister for Resources and Energy
Minister for Tourism
and
The Hon Bill Shorten MP
Assistant Treasurer
Minister for Financial Services and Superannuation

Press Conference

Canberra

2 November 2011

SUBJECTS: Introduction of MRRT; Woolworths announcement; NAB interest rate decision; QANTAS grounding; Industrial relations; coal seam gas;

TREASURER:

I will be very brief for obvious reasons. We're here today to talk about the Minerals Resource Rent Tax which is a very significant reform in Australia. What it will do is spread the benefits of the boom right around our economy. And Martin Ferguson is going to say a bit more about that because he has played a really important role in putting this very important reform for Australia in place, and of course Bill is going to say a fair bit about super as well.

Now, I just wanted to make a couple of other points. Today we've had an announcement from Woolworths, which will create an extra 10,000 jobs. Now this is a stunning vote of confidence in the strong fundamentals of the Australian economy.

Secondly, I want to say something about the pass through of the RBA rate cut. We have seen a full pass through from the CBA, the ANZ, Westpac, Bank of Queensland, ME Bank and of course many other institutions. But it's a very disappointing decision from the NAB not to pass through in full. It's a kick in the guts to working families. It's a greedy decision from the NAB and it is not justified in my view by the fundamentals.

The NAB abolished all exit fees on their mortgage loans in response to initiatives form this Government so NAB customers have the choice to walk down the road and get a better deal, and walking down the road and getting a better deal is possible because there are many other institutions, some of our mutual organisations, other institutions which are offering cheaper rates. Over to Martin.

FERGUSON:

Today's introduction in the House of Representatives of the mining industry tax legislation represents the outcome of a lot of hard work and I must say detailed consultation and to a large extent agreement with industry. This is our one-off opportunity as a nation to get a fair return from our capacity to develop our non-renewable resources. We are talking about new taxation opportunities for two principal commodities – coal and iron ore. In terms of petroleum it's effectively whatthe industry wanted is the extension on land of the existing PRRT which applies to offshore petroleum development in Australia and I must say from an LNG export point of view the application of the PRRT on land is what industry sought. It wants a level playing field. Now we are being, we are very fortunate at the moment. This new industry and it is a new industry to Australia both in Gladstone, represents for us at the moment, $45 billion in new investment, and about 18,000 jobs in Queensland in the foreseeable future.

Let‘s go to the issue of the nature of the tax. It is a prospective tax therefore it has not in any way dampened investment in Australia since we announced it. We are very fortunate as a nation at the moment. We have got planned or committed capital investment an investment pipeline of $430 billion in the commodities sector, principally in petroleum both on and offshore, coal and iron ore and a range of other commodities. In LNG alone we have got $140 billion committed, the latest being the Wheatstone project of just about a month ago $29 billion, the biggest single investment by Chevron in Australia's history. And I also say that we are very close to achieving the Ichthys investment, a whole new LNG province in Darwin. This is going to change the economic base of the Top End of Australia, very much secure the future of the Northern Territory, not only as a major domestic gas sub but a major international gas sub servicing, for example, the first ever floating LNG plant in the world, Prelude, which enables us to realise the potential value of LNG opportunities that were historically stranded because of their remote distance from shore.

Let's go to the investment opportunities and the prospective nature of this tax which guarantees continuing investments. Our mining investment has skyrocketed from $35 billion in 2009-10 to $47 billion in 2010-11, expected to be around $80 billion in 2011-12. But can I also say it's reflected in the individual investment decisions that have been made by the companies that have been involved in discussions over the last 12 months.

BHP Billiton has plans to invest more than $80 billion by the end of 2014 on new projects. One board decision in March of this year they invested over $12 billion in Australia in coal, in thermal and metallurgical coal and I might say in a major expansion of the iron ore sector in Western Australia. Fortescue, my close friend Andrew Forrest, he has announced $8.4 billion of new investment, almost treble the output in Western Australia. Rio Tinto has announced $6 billion worth of new investment, a major expansion of its iron ore opportunities. Of course in recent times iron ore has been a river of gold for Australia. It's our chance to actually share the benefits of this investment for the whole Australian community.

Can I say in terms of earnings for Australia, earnings for resource and exports reached a new record of $175 billion in 2010-11, a record jump of 27 per cent. We expect a further growth of 21 per cent in 2011-12 to $215 billion, hence why shouldn't we share the benefits of this huge jump in earnings to the whole Australian community and this is what Tony Abbott and the Coalition have got to think about.

The sentiment about this debate has changed in the Australian community at the moment. It has now sunk into the broader Australian community that we are the beneficiaries of a huge investment pipeline, huge profits to Australian industry, ongoing opportunities and we've got to make sure they get their fair share.

And I must say the tourism sector that I represent, the cut in interest rates yesterday are of major significance. The capacity to cut company taxation plus the new write-off of capital equipment is of extreme importance to this industry that's been under the pump because of the resources boom and the impact from the Australian dollar.

Could I also raise in conclusion the issue of profits. FMG latest profits showed a 76 per cent surge to a net profit of $985 million. Last year Rio made a record $14.32 billion profit, a record it's on track to break this year. BHP Billiton $22.48 billion in profits for the year ended June 2011, an increase of 86 per cent. I simply want to say that in terms of this debate the legislation is appropriate. Reform has never come easy to Australia, we've basically taken this on argument in some ways ahead of community sentiment but the community has actually come around and supported the Government.

The only people out of step at the moment are the Coalition led by Tony Abbott and he's got to say to the Australian community why shouldn't you get a share of these record commodity prices? Why shouldn't you get a share of these record profits being earned by the commodity investors in Australia and why shouldn't you share these benefits with the other parts of the Australian community that are doing it exceptionally tough at the moment by cutting company taxation, investing in productivity related infrastructure which has further secured opportunities for Australia, and assisting small business to purchase new capital equipment necessary to strengthen their business activities and can I also say increasing our savings capacity as a nation.

Increasing superannuation takes pressure off the budget process in the future. So in that context can I ask Bill to say a few words about the details he's got responsibility for but the work's being done, industry is largely on board and the tax speaks for itself in protecting small business by guaranteeing that those who can afford to pay, pay and share it with the broader community.

SHORTEN:

Good morning everyone. Today in the House the Government put forward some bills, which will keep the promises the Gillard Government made at the last election to Australians.

Today the Government has put forward a bill which would seek to increase the compulsory retirement savings of 8.4 million Australians from nine per cent to 12 per cent in staggered amounts over the next seven years.

Also, the Parliament has now been presented with the Bill which will abolish the concessional tax paid by 3.6 million Australians who earn less than $37,000 per year. Let me be clear, at the moment in Australia if you earn under $37,000 per year the money you're required to save in superannuation is taxed at the same rate that you pay in income tax, so there is no tax concession for 3.5 million low income people. What we're doing by putting forward our bill today is we're proposing to give the money that people currently pay in tax and superannuation, low income people, 60 in every 100 of these 3.5 million people are women, we're saying that all of that will go onto their superannuation savings, we're proposing 3.5 million workers will pay no tax on their superannuation in the accumulation phase.

Australians understand that, as we are living longer than ever before, we need to make sure that we don't work hard our whole working life and retire poor.The experts say that it's important that you have a retirement replacement rate after you've stopped working, a replacement rate of your pre-retirement income of around 65-70 per cent. The status quo of nine per cent will not deliver an adequate replacement rate for two in every three Australians who are at work at the moment.

Furthermore, in our legislation we're proposing to use the proceeds of the mining tax to make up the tax concessions passed away from half a million Australians, but we're also seeking to support small business. We've put legislation in to the House today using the proceeds of the mining boom to assist 2.7 million small businesses. We are proposing to allow companies to have an instant asset write off of $6,500 up from the $1,000 which it currently is. This will mean that people who run their own businesses, businesses with a turnover of less than $2 million, they'll be able to get instant write-off for the high-end printer, for the refrigerator, for the cost of running their business. In addition for small business, the people who take the initiative to run a business, small business employs another five million Australians, we'll be allowing... making sure that when they purchase a motor vehicle for the purpose of their business, that $5000 is instantly written off in terms of their taxable liability. Put in plain English – a tradesperson buys a ute worth just over $33,000, they will get an immediate cash benefit to their income of $1275.00.

Also today the Government has announced that for the tens of thousands of people who are over the age of 70 and going to work, currently they are not eligible to have the compulsory superannuation paid on their earnings. The Government had initially proposed to increase the threshold whereby people who work up to the age of 75 would be eligible to get superannuation. Following lobbying from the backbench of the Labor Caucus, and the Members for New England and Lyne, we've decided to abolish any barriers to people over the age of 75 from receiving superannuation.So there's 18,000 Australians over 75 at the moment who are still going to work. When we pass this law they will be able to get superannuation.

TREASURER:

Thanks Bill. Over to you.

JOURNALIST:

Ministers, you haven't got the Coalition. You need Tony Windsor, have you got him?

TREASURER:

Well, we're having a very constructive discussion with Tony Windsor and also with the other independents and minor parties. We're going to work very hard on that because as you've heard today the benefits to Australian small business and to Australian workers are very substantial.

JOURNALIST:

Mr Swan, will you have to actually spend more money to get those independents on side with this tax?

TREASURER:

Well, we are operating a very strict fiscal strategy here and we'll continue to operate that fiscal strategy.

JOURNALIST:

But will you have to spend more money to get (inaudible), spend more money?

TREASURER:

Well we're in discussion with them. I don't propose to go into detail of those discussions.

JOURNALIST:

Mr Ferguson you said community sentiment has now changed and people now get the reason for this tax. Why, therefore, could you not increase it a little bit to (inaudible) to Andrew Wilkie, or Windsor or even the Greens, given how people get the reason for the tax?

FERGUSON:

We entered into on an agreement with the mining industry last July. We've established a process – the Argus-Ferguson process - to actually work out the details of this tax. Those recommendations were adopted by the Cabinet at the beginning of this year. We've now added an extra reference group to work out how you turn complex mining terms into a complex tax Bill. It's not been an easy task. We gave them our word that was the end of the debate. Our job now is to deliver on our word and we've got no intentions of breaking our word with the miners – I simply acknowledge that (inaudible). Community sentiment has now changed and I remind you 90 per cent of the original RSPT revenue would have come out of these commodities. This is where the huge growth in commodity prices has been, you know just a few weeks ago the spot price for iron-ore if I remember correctly was $177 a tonne. Not that long ago the spot price for thermal coal was about $133 a tonne, metallurgical coal about $330 a tonne. I've just come back from chairing the International Energy Agency (IEA) Ministerial Council, the World Energy Outlook Report of the IEA will be released in London on the 9th of November. Just take coal and LNG – that shows huge growth on both commodities and huge opportunities for Australia. We are going to seize the moment, the demand is there, to put in place a tax system that delivers to the Australian community, shares the benefits of this resource boom.

JOURNALIST:

Mr Ferguson and maybe Mr Swan as well. Mr Albanese said to you in a press conference earlier today that the Government had the Fair Work at about the right balance. How can that be taken seriously when only a few days ago the aviation sector crucial to your portfolio was brought to its knees. Does the Government plan to look at some of the elements that allowed QANTAS to do what it did in terms of legislative amendments and shouldn't you be reviewing the Fair Work Act now, not next year?

FERGUSON:

The Fair Work Act actually delivered over the weekend. There had to be a national interest test. The work of my department on Saturday evening that very quickly established that national interest test because of the huge impact of what occurred on Saturday in terms of the tourism sector.

The Fair Work Commission lead by Justice Judith (inaudible) accepted that argument and then went into a detailed argument about whether we suspended industrial action or terminated industrial action. In my opinion they made the right act. The Government's call was absolutely correct – be decisive, argue for a termination. Let everyone have the opportunity to put forward their alternative arguments. The Commission listened to the arguments and determined on merit that we've had enough, the tourism sector had had enough. You are going to negotiate. Industrial action is terminated. If you don't, we will determine those issues on merit.

JOURNALIST:

But wouldn't you have wished that it could have not gotten to that point? Anna Bligh, for example, is saying why don't we have a test that allows it to have an intervention before a company like this grounds its fleet?

FERGUSON:

Having been a union official for a few years, from time to time we have some disputes but then you get to a point where the Commission has to act. I've seen it act in the past and it's acting on this occasion. That national interest test has proven to be of benefit to the broader Australian community. The dispute is over, the planes are in the air, the tourism industry now has certainty to actually promote a very fine product that employs directly and indirectly just under 1 million Australians both domestically and internationally. Let's get on with the job of highlighting the details of this dispute and ensuring we return with certainty to a bright future for the tourism sector.

JOURNALIST:

So is Jeff Lawrence just misguided in his criticisms?

FERGUSON:

I like to work with Jeff Lawrence but to be honest with you I haven't focused on what he's said. I've been too busy worrying about other issues, for example, about how we get people to come to Australia to have a holiday. The end of the dispute means I've got certainty. That's all I'm focused on, not trawling over the events of the last couple months.

JOURNALIST:

Is the Government saying that it is happy with the situation that allowed this dispute to get where it did without the ability to intervene earlier? Are you happy with that?

TREASURER:

Well, you are arguing that there could have been some action taken before QANTAS actually announced their decision to lock out their workforce

JOURNALIST:

I'm asking you whether there should be a provision to intervene earlier.

TREASURER:

No, the answer from Minister Ferguson was very clear – the Act worked and worked well.

JOURNALIST:

What does Mr Shorten think about Jeff Lawrence?

SHORTEN:

Well, I like him. The question which you're asking Michelle, and Matt's asking as well, is can there be legislative precautions to stop what has happened, happening? First of all let's be clear, there are sections in the act which QANTAS could have chosen to utilise and chose not to but, earlier than that, how does a globally sophisticated company allow itself, in the process of enterprise bargaining, get itself into a situation where it feels that the only way it can persuade some of its employees about the path of change it's proposing, the only way they feel they can do that is by damaging the economy. Now, I concur with the Minister for Tourism's comments that we're pleased that the parties are back, they're focussing on getting planes in the air, that there's now certainty.

But the Government doesn't run QANTAS. Management of QANTAS run QANTAS and, at the time, if you want to achieve real change it can be too much focus on the legislative regulation. Good bargaining starts the day after you conclude the previous enterprise agreement. The process of change is constant in the workplace and I think there's a challenge here for all companies. And I don't think many companies will be rushing down the lock-out-path in the future, but the challenge here is for companies and their employees and their representatives to work collaboratively together…

JOURNALIST:

But Mr Lawrence says more protections are needed in this act. You reject that?

SHORTEN:

I think that the current act served the Australian public well. The Government acted in a very speedy fashion as the Minister for Tourism observed. Once you make an application to terminate, which the Government did immediately upon notification of this lockout, this strike against the public, then what we did is that you have to have the hearings. All Parties have got rights to be heard, 16 hours of hearings, all evidence that the Commission moved speedily and we‘ve got certainty back.

JOURNALIST:

Mr Ferguson, on the mining tax, are you willing to change the treatment of the smaller miners to get Wilkie across the line and you repeatedly say you wanted a deal done with the big miners, what do you say to the argument that the tax payers in this have been duded?

FERGUSON:

I actually think we got a fair return. This is a complex tax. It's a profits based tax which I might day the mining industry wanted. They don't like the royalties system because you pay royalties in good and bad times. This effectively means at times such as we've got at the moment they understand they've got to put their hand in their pocket and give something back to the Australian community over and above the normal royalties system. Small miners, well let me have a look at the details of the tax bill, and I must say it is a complex tax Bill. Turning mining concepts into tax rules and regulations are not easy. Take magnetite. The value of the dirt at the point of taxation is worth very, very little. The magnetite industry will pay little or no taxation. The small end of town in terms of the mining industry – a tax free threshold of $50 million and a phased increase up to $100 million. That's built on the announcement of last year in terms of trying to make it work to the benefit of the small end of town. I actually think it's a fair system, not only reflected in the investment, also have a look at the exploration figures that I released a couple of weeks ago from my Department. Exploration brownfields and greenfields continuing in Australia and more importantly so is our mining services sector growing. We've now got an opportunity to actually achieve export earnings through the capacity to strengthen the intellectual investments we make in innovation in emerging mining nations such as Africa. We are well placed but we also have to broaden our economy that's why this tax helps us maintain the strength of a broader economy, some parts of which are doing it a bit tough at the moment such as the tourism sector.

JOURNALIST:

Mr Ferguson, given you're actually responsible for the Government's coal seam gas policy and your the one who does the (inaudible) with the states, what do you make of the reasonableness of what Tony Windsor is asking for and given your portfolio responsibilities will you be active in the discussions to resolve the deal between the Independents?

FERGUSON:

Firstly Wayne is conducting negotiations with the minor parties and Independents. Can I say I don't make the regulatory decisions in terms of the environmental approvals. Sometimes I might like that extra power but I'm sure the government won't give it to me. More seriously, have a look at the three investment decisions in Gladstone at the moment - $45 billion. Today you're in the area covered by the Murray Darling legislative responsibilities with the Commonwealth , hence the Environmental Protection and Biodiversity Conservation Act kicked in.

There are 1,200 state environmental conditions and 300 federal environmental conditions. We largely determine the water conditions, the most rigorous in Australia. I'd also remind you that this is not a new industry to Australia, 30 per cent of eastern coast gas comes from the sector at the moment, 90 per cent of the gas in Brisbane. It's now exported. I've been having discussions with the State and Territory Ministers of all political persuasions about getting a common approach. This industry is going to grow, there are opportunities in a range of (inaudible). Why should the potential conditions on water – aquifers etc – east of the divide be different to that in the Murray Darling region for which we have responsibility. Why should they be different potentially in Western Australia, Queensland or New South Wales? Which chemicals can or cannot be used. The industry is growing too quickly. When I became the Minister in December 2007 this was a pipe dream. No one saw $45 billion in this new industry. They've concentrated on theirinvestment decisions, they've now got to concentrate a little more on their community engagement. The Mining industry has done it for years, simple things about how you treat farmers, the local communities some of them are doing it well and some aren't but you know I also see the benefits. I went to Biloela.

I opened an apprenticeship centre called the Banana Shire apprenticeship centre. That would never have been built out there without this industry. I met mums and dads that are delighted that their young boys and girls are now going to train locally. I saw adult apprentices working for Anglo, working for the local power station. All because we've had investment in those regions that were struggling to actually ensure we developed this industry. But I absolutely accept that in working our way through this there's only one approach, it's got to be based on the science. I'm very comfortable with that. My job is to deliver all states through a common approach, then the regulators, the Ministers for Environment make the necessary regulatory decisions and as always I will abide by those decisions.

JOURNALIST:

Could the Commonwealth legally override the states when it comes to regulating mining projects? I mean, aren't these rhetorical because can it actually be done?

FERGUSON:

Where do you start and finish this debate. In 100 years of legal decisions in Australia in terms of who is responsible for on land resources. We're responsible for Australian waters in the petroleum industry. I think the best approach is to try and work through how we get a common commitment from state and territory governments, how they work with the Commonwealth and how in essence we get best practice in place. And I am committed with the buy in to date by state and territory ministers, my counterparts of all political persuasions and the work being done by officials led by the Commonwealth. But we've got to accept in the end the science determines these issues, not political decisions. The last thing we need is for politicians to sit in rooms without proper assessment and science to determine which projects start or finish in Australia. That doesn't give any certainty for investment in Australia which is what we talked about today. The tax gives that certainty.