SUBJECTS: Resource Super Profits Tax, superannuation, Clive Palmer, Securency International.
KIERAN GILBERT:
Chris Bowen, thanks for your time.
CHRIS BOWEN:
Pleasure.
GILBERT:
The Minerals Council's launched another set of ads; these ones on the radio claiming that the tax is going to hit superannuation and the cost of living. You're the Minister for Superannuation. What's your response?
BOWEN:
Well, it's just plain wrong and the superannuation industry themselves have dealt with this. A couple of weeks ago, the Industry Funds Network released research which, from their analysis, showed at that point the impact on share prices on somebody's retirement balance would be about $57. Even if that's conservative, even if it's four times as big, it's a very small impact on the retirement incomes of self-funded retirees.
GILBERT:
But for people seeing their stocks, their superannuation figures, their amounts fall in recent weeks, how are they going to respond to this argument?
BOWEN:
Well, let's be clear, Kieran. Share markets are falling around the world because of a range of factors and many non-mining companies in Australia have had very big falls in their share prices as well because of those factors.
But the particular claim from the mining lobby that this is having an impact on people's retirement incomes has been pointed out by the superannuation industry itself that it doesn't bear close analysis, particularly when you look at what we're funding through the super profits tax, which is a massive boost to people's retirement incomes through superannuation. So you're going to expect this sort of argy-bargy, this sort of claim and counter-claim in this sort of debate, but we need to stay focused on the facts and stay focused on the national interest as well.
GILBERT:
But can you understand why people are nervous here, when they see their mining stocks fall? I know you say there's uncertainty around the globe, but specifically we've seen mining stocks in Australia take a hit. Can you understand the nervousness, particularly among older Australians?
BOWEN:
Look, I understand change is always difficult. Major reform always has its issues and worthwhile reform is rarely uncontroversial. I mean, when you look at all the big tax and economic reforms that have been introduced in Australia over the last 30 years, they've all been controversial. There have been argument and counter-argument about all of them.
But if you're interested in serious, long term, nation building reform to improve the efficiency and the equity of Australia's tax system then you've got to be prepared for a willing debate. You've got to be prepared for a bumpy road and got to be prepared for people who have, frankly, a lot tied up in this to punch back. We're expecting it, it's happening, but we'll also respond with the facts and we'll also respond by sticking with the national interest.
GILBERT:
But the Government has argued and did argue at the weekend – the Deputy Prime Minister, the Treasurer this morning – that the mining companies are paying, the big multinationals are paying only 13 per cent effective company tax. The Minerals Council says that's disingenuous, that figure, because you haven't factored in the royalties, the state royalties that they pay as well.
BOWEN:
Well, they're the ones who've raised the matter of corporate tax – and I know you and I have discussed this in the past – and mining companies are the only people who receive as their primary business input the wealth of all Australians, being the minerals of Australia. Now, they've always had to pay for royalties and they'll have to pay for the minerals under the ground through this new tax, which will replace royalties in effect because we'll pay them their royalties back.
Simply, we're making the point that some of the facts that you're seeing, or some of the alleged facts that you're seeing in this debate, don't take into account the full picture, which is the full deductions that are utilised by mining companies. If you're going to have a debate about mining tax in Australia, about the tax that's paid, well let's have a full debate and let's have all the facts on the table, and we've pointed out some of those facts.
GILBERT:
They're saying that you're not putting all the facts on the table because the 13 per cent figure for multinational mining companies, 17 per cent for Australian mining companies, does not include the royalties that they pay. Is that not inaccurate?
BOWEN:
Well no, we've always pointed out that there's royalties and there's corporate tax, and that the corporate tax deductions for mining are very substantial, and the mining companies pay less corporate tax than the retail industry or the manufacturing industry for those reasons.
GILBERT:
It didn't sound very clear yesterday listening to the Deputy Prime Minister. She was saying that this is the tax, they're paying 13 per cent, 17 per cent. There was no mention of royalties.
BOWEN:
Well, I thought the Deputy Prime Minister was very clear, and when I was watching it I thought it was particularly clear, and I thought that it was appropriate to make the point that if the mining companies are going to argue that they're paying corporate tax as well as royalties, or as well as the super profits tax, that's fine, but let's have a discussion about just how much corporate tax is paid and what the total tax paid is.
Because, of course, it often gets forgotten in this debate that the Resource Super Profits Tax will be a deduction when they come to pay corporate tax, will be deducted from the amount of corporate tax. So, as I say, there's always going to be a willing debate, there's always going to be claim and counter-claim, but we have an obligation to point out the facts as we see them and as been evidenced by the independent tax review.
GILBERT:
The consultation panel the Government set up, the members of Treasury, the Tax Office, industry figures, they're reporting back to you this week with their initial report.
The suggestion in The Australian newspaper today that the Government will be advised to reconsider the 40 per cent write down on projects that fall over, the 40 per cent write off for losses for mining companies, that that hasn't proven popular. Is the Government willing to consider getting rid of that and lifting the increase in the uplift threshold for where the tax actually kicks in?
BOWEN:
Kieran, I've seen that report in The Australian but I haven't seen the report from the consultation panel and until we see that, then it would be imprudent to go through what may or may not be in it.
But we've said it's a genuine consultation process. We've encouraged mining companies to engage in that consultation process and from our point of view, it's a genuine process, and we will take into account their feedback and the feedback of the panel.
GILBERT:
If they don't want that write off, though, that'd save hundreds and hundreds of millions of dollars and would therefore probably give you a bit of scope to lift the threshold at which super profit is defined and when the tax kicks in.
BOWEN:
Well, Kieran, as I say, it would be imprudent of me to speculate about what the advice from the consultation panel may or may not be. They've worked through those issues with the mining industry very assiduously and we'll work through the report very assiduously, and we will respond in a sensible but well considered manner.
GILBERT:
Okay. Well, as you sit here now, Parliament returns. What are the prospects of a deal when you look at the likes of Clive Palmer and so on saying, ‘we're not going to talk'.
BOWEN:
Well, Clive Palmer, I mean, fair dinkum. I mean, this is a man who has been very hyperbolic in his claims. This is a man who bankrolls the Liberal and National Parties.
GILBERT:
But he's a big mining figure in Queensland.
BOWEN:
And he also said that National Party ministers who are corrupt should be treated as national heroes.
But the majority of the mining industry are people who recognise that in fact they should be paying more tax. I've heard several of them accept that the current arrangements don't work that they're not paying more tax, and those people who have constructively engaged with the Government recognise that, and have engaged in those constructive conversations with the consultation panel, the Treasurer and the Minister for Resources.
GILBERT:
But are you still confident of a deal?
BOWEN:
Well, look, the Government will be proceeding with our policy, but we will also be proceeding with what we said, which is that we will consult and we will take into account constructive feedback from the industry and from the panel.
GILBERT:
One last issue I want to get your thoughts on. A Reserve Bank subsidiary currency firm, Securency International, apparently, according to Four Corners and The Age newspaper, allegedly willing to bribe foreign officials, supply prostitutes and so on to win contracts for their currency firm. What do you make of these reports?
BOWEN:
Well, Kieran, again, unfortunately, I know as much as you do. I've read the papers, I've heard the radio this morning. I have no other insights. I understand there's a –
GILBERT:
Concerning, though, the suggestions that they're willing to go and bribe senior officials.
BOWEN:
Any allegation of bribery is serious and concerning, but there's a Federal Police investigation and it would be improper for me as a Government Minister to comment while there's an investigation ongoing.
GILBERT:
You've got a Ministerial meeting this morning. Thank you for making some time for us. I'll let you go.
BOWEN:
Good on you, Kieran. Nice to talk to you.