SUBJECTS: 'We'll get back to you' Budget Reply, Tony Abbott's $10,000 stay-at-home proposal, Resource Super Profits Tax, superannuation guarantee, WorkChoices, polls.
KIERAN GILBERT:
It was a pretty clear cut message last night: bring it on.
CHRIS BOWEN:
Well, we're happy to bring it on, because he last night confirmed that he wouldn't support small business tax cuts, he wouldn't support a superannuation boost for Australian workers and therefore also he wouldn't support a boost to infrastructure, all funded by the Resource Super Profits Tax. We're more than happy to argue our case vigorously because there's now a clear difference: we're prepared to take tough decisions, to introduce a more efficient and equitable tax system to fund things like boosting Australia's retirement incomes.
GILBERT:
Well, his argument is that you're going to handicap the most successful industry in the country, the one that helped us ride out the recession and it did, didn't it? It did help. I mean, it was the success of the mining industry, largely, and the resources to China that helped us.
BOWEN:
Well, we've always said that the mining industry's important to Australia and that's why we've considered this very closely, and our modelling shows that mining activity would increase. Now, there's an important difference here: we believe in reducing corporate taxes across the board. We'll reduce the corporate tax rate by two per cent and do it earlier for small business.
His policy is a corporate tax rate 1.75 per cent higher, so there's now effectively a four per cent gap between our plans and his plans for corporate tax in Australia.
GILBERT:
Except if you're a mining company.
BOWEN:
Across the economy, Kieran. This is very important and that's very important for investment for capital inflows and for the way –
GILBERT:
And an impost in terms. I mean, you're the Minister for Superannuation and you know that the superannuation guarantee's going to go up, so that impost is going to be felt by employers.
BOWEN:
And that'll be a subject for negotiations employers, unions and employees, just as it was when superannuation was introduced, and I don't think anybody now suggests that that was a bad idea. We heard all the same sorts of scare campaigns when Paul Keating introduced superannuation. I think everybody, if they're honest, acknowledges that's been a very good thing for the Australian economy and a very good thing for individuals.
But last night, Kieran, Tony Abbott had a chance – as the alternative Prime Minister of Australia – he had a chance to outline a plan, costed and funded policies. And what we got was half an hour of sound bites and one liners. No plans, no costed or funded savings, just glib one liners and half an hour of negativity. And he lost his golden opportunity last night. We've had three responses to Rudd Government Budgets: one from Brendan Nelson, one from Malcolm Turnbull and one from Tony Abbott. Last night's was the most important because it's the alternative Budget before an important federal election, and it was the worst, the weakest, no funded, costed, detailed policies.
And we know Tony Abbott wanted to go on a cash splash of $10,000 and his colleagues had to hold him back. The only thing we heard from Tony Abbott last night is that he supports bringing WorkChoices back.
GILBERT:
He did come up with an idea to save about $4 billion in freezing recruitment in the public service. He says he's going to cut Government advertising by 25 per cent and he says he's not going to go ahead with the Renewable Energy Future Fund. They're fairly substantial savings, all of those.
BOWEN:
They're not savings, Kieran, they're sound bites. I mean, let's go through them. The public service cuts: I mean, this is the last refuge of an Opposition without policy. It wasn't properly costed, no proper details. We have a spending cap, we have an efficiency dividend which allows departments and agencies to provide an efficiency dividend to the Government, but to work out the best way of doing it. He would just put on an arbitrary public service slash. Now, it wouldn't work. His plan to strengthen the Australian economy is to cut jobs in the public service. It's just a stunt and as I say, oppositions, when they're devoid of any proper policy, go down this sort of road.
And advertising: I mean, give us a break. He was a member of a Government which spent a billion dollars on advertising. We've pared back Government advertising and he wants us to believe that they've changed their spots and they'd pare it back more. I don't think anybody's really going to believe that.
GILBERT:
Okay. The Opposition obviously doesn't have the resources of Treasury, the Treasury department, they're not going to come up with an alternative Budget, are they? In Tony Abbott's defence, he did say that next week Joe Hockey's giving an address to the National Press Club, there'd be more detail there on the savings, and he says before the election there will be full costings.
BOWEN:
Yeah, he said, 'We'll get back to you shortly'. This was a 'we'll get back to you shortly' Budget response. That's unacceptable. I've been involved in crafting Opposition responses to Budgets. If we tried this in Opposition, we would have been laughed out of Parliament House. They would have said, 'The Labor Party's not credible'. It's just not acceptable to say, 'Oh, sorry, we don't have the resources of the Treasury, we can't come up with any costed or funded policies'. That's not acceptable. In Opposition, the Labor Party would put out funded and costed alternative policies. He singularly failed to do so.
GILBERT:
He does have behind him, though, and this is fairly clear cut from, you know, the reaction from Rio Tinto, BHP and others, and the Minerals Council. I think we've got an advertisement we'll put up on the screen now for our viewers, but this is the sort of ad – page seven of the Herald today – the entire page is that ad that you can see there now, the Minerals Council advertisement. There's a lot of money behind this campaign, a lot of powerful people and companies, and they're going to be taking you on in WA and Queensland, and in marginal seats that you need to win.
BOWEN:
And you don't let vested interests write public policy. We want to work with the mining industry. We're prepared to sit down and talk to them, and the majority of sensible mining companies are prepared to sit down and talk to us about any implementation details. But we knew this was going to be a tough fight. We knew it was going to be difficult to take on a very well resourced sector that wouldn't like a change in tax arrangements. We knew that, but you write your public policy based on what you think's in the best interest of the nation, based on your advice and your very detailed consideration of it.
Now, we've done the modelling, we've done the work, we've done the research which shows that if you change the taxation treatment of mining, you can actually encourage investment. We've done things that the mining industry's been calling for for as long as I can remember. For as long as I've been interested and involved in economic policy, the mining lobby have been calling for and asking for changes to rebates for exploration, encouragement of exploration and start up mining companies, and they've been right to call for it because it is important for the nation. We're the first Government that's actually done something about it, but we also think that if the minerals belong to Australians, there needs to be a fair share when profits hit a certain level, and they need to be distributed accordingly, and we don't shy away from that.
So Tony Abbott can say, 'Well, I'm going to take the easy road, the low road, I'm just going to stick with the status quo because the mining lobby is very powerful and well resourced, and they might help me in the political campaign'.
We have a different approach and we'll be arguing the alternative, which is that we'll fund – through the Resource Super Profits Tax – we'll fund tax cuts for businesses and quicker tax cuts for small business; we'll fund a boost to the retirement incomes of Australians; and we'll fund an infrastructure fund; as well as savings incentives through the tax system and simplification of our tax system, and giving people the chance to not have to do an annual tax return. All funded through the Resources Super Profits Tax, all things that Tony Abbott would not be able to deliver.
GILBERT:
Tony Abbott said in his Budget Reply that he would make the transitional employment contracts less transitional, make flexibility in flexibility agreements. What's wrong with that? What he has said is that they will not remove the no disadvantage test in industrial relations, so it's not going to be a return to WorkChoices and yet Labor just reverts to the scare campaign.
BOWEN:
But it is, Kieran. I mean –
GILBERT:
But he said that the no disadvantage test would remain, so –
BOWEN:
Yeah, but John Howard had a no disadvantage test in WorkChoices Mark II. I mean, it's going back to WorkChoices. You can't say 'the phrase WorkChoices is dead' and then say 'but we're going to bring back the key elements of WorkChoices, but I'm going to call it something else so it's not WorkChoices'. I mean, when Australians looked at WorkChoices, they saw AWAs, they saw the abolition of unfair dismissal protections, and they saw WorkChoices, and they saw their rights and flexibility going out the window. Tony Abbott, we all know, is a WorkChoices addict. He loved WorkChoices. He said on the day he became leader, 'the phrase WorkChoices is dead' but the principles remain, is his approach. And last night he confirmed it.
GILBERT:
You seem to have just slipped into the scare campaign fairly easily again because of two fairly innocuous comments that he's going to, I mean, the transitional agreements are already in place under your Government. He's just going to keep them in place.
BOWEN:
I don't think many people would see that as innocuous. People who voted against the Howard Government because they'd gone too far with WorkChoices know that Tony Abbott wants to bring back its core elements. I don't regard that as innocuous at all, Kieran, and I don't think it's inappropriate to point that out.
GILBERT:
Just one final question, then. Simon Benson and Malcolm Farr, in the Daily Telegraph, are reporting about some internal marginal seat polling that shows in seats like Macquarie in the Blue Mountains, Lindsay at the foot of the Blue Mountains in the west of Sydney, Eden-Monaro just down the road here at Queanbeyan on the South Coast, they're all key marginal seats, and the Prime Minister's approval rating has plummeted just like it has in the published polls.
BOWEN:
Kieran, I don't tend to comment even on publicised, traditional and well respected polls, let alone anonymous, bogus polls.
GILBERT:
[laughs] If it's a bogus poll, they're quoting internal Labor polling.
BOWEN:
No, well, that's not the story I read, Kieran, and I don't comment on a poll which doesn't have any numbers in it and doesn't have any analysis, and doesn't have any backing. I don't think that that's fair dinkum. More than happy to talk about polls within reason, but anonymous polls – and you're going to see a lot more of these between now and the next election – anonymous polls that are put out.
GILBERT:
Well, polls within reason: let's look at where they were in the last couple of weeks, the collapse of the Prime Minister's approval rating. You really need this Budget to turn things around, don't you?
BOWEN:
Well, no, we didn't frame this Budget in terms of opinion polls.
GILBERT:
You might not have framed it solely in terms of opinion polls, but surely you've got half an eye on them?
BOWEN:
Kieran, when you're in Government, you've got to govern in the national interest, and that means sometimes making difficult decisions. It means sometimes putting up cigarette taxes, it means sometimes doing things which might frustrate people who voted for us in the last election. We expect that. We understand that Governments go through rough patches and from time to time polls will go down. We know that, but we're focused on the job and we're also focused, quite frankly, as the election nears, on pointing out the differences between our handling of the economy and the risk that Tony Abbott would bring to handling the Australian economy.
GILBERT:
Okay. There was one other issue I wanted to touch on, and I missed it when we were talking about the mining tax, but I do want to put it to you now: the RBA's suggestion, some suggestions out of the RBA, that they'd be pleased if one or two projects, mining projects, fell over. I wanted to get your response to that. I mean, that's not the best message to be sending to the mining sector, surely.
BOWEN:
Kieran, we've made it very clear from the Government's point of view, and Ken Henry made it very clear yesterday from the Treasury's point of view. The modelling shows that because you introduce a more efficient tax system for mining, and you effectively get rid of royalties by paying them back to mining companies, that you can actually encourage and expand investment. The independent modelling shows that, so that's our position.
GILBERT:
So the Deputy Governor of the RBA is wrong?
BOWEN:
Well, I've seen one unsourced report, one report which said that one of the Deputy Governors said this at a private lunch. He hasn't come out and confirmed that. All I can say, Kieran, is that our position and the Treasury's position is that this would encourage mining activity over the medium to long term.
GILBERT:
Well, that's over the long term, but in the short term, if one project fails and it sort of evens up the economy rather than the dual-speed economy that we see …
BOWEN:
Well, no project has failed yet, Kieran, and our modelling shows that mining activity would increase. You're going to see a lot of speculation, you're going to see a lot of brinkmanship, you're going to see a lot of claims. We understand that. This is important to a lot of people, and a lot of people have a lot at stake in this. We understand that, and you're going to see a lot of political argy-bargy. We knew that when we took this decision. We knew it wouldn't be easy. We knew that taking on, as I said before, a well resourced sector that wouldn't necessarily all of them welcome this change.
There are many mining companies that are saying, 'well, actually, we've been calling for these things and this makes sense to us', but we knew that they would nevertheless be controversial but in the public interest and worth doing to fund things like the boost to the retirement incomes of Australians, a cut in the corporate tax rate, really a very big simplification in the small business tax regime which people have been calling for for a long time. These things don't come without a cost, they've got to be funded. It's the only fiscally prudent thing to do and we think an efficient and equitable way to do it is through the Resources Super Profits Tax.
GILBERT:
Chris Bowen, appreciate your time.
BOWEN:
Always good to talk to you, Kieran.