HOST:
David Bradbury, recently promoted to Assistant Treasurer, western Sydney MP in the seat of Lindsay at the foot of the Blue Mountains. Mr Bradbury's with me this morning. Thanks for your time, good morning to you.
BRADBURY:
Good morning Jason, happy birthday.
HOST:
Thank you.
BRADBURY:
I won't be singing though.
HOST:
That's a bummer, I was really looking forward to that. Mr Bradbury, let me start with this. Why is it, just in general terms here, forget about the broader policy of the whole thing, but in the general terms, why are we taxing a sector that is booming and Australia is enjoying the back of that boom, through employment, through growth, while everything else simply is not.
BRADBURY:
Look, it's fair to say that the resources sector is booming, I think we understand that, but it's not entirely correct to say that that is sustaining the rest of the economy. And in fact, one of the principal factors that comes along with a mining boom that we've seen has been an increase in the Australian dollar. On the one hand the mining sector has been doing very well and that has been a good thing for the Australian economy, but with that rising dollar the strength and the good fortune of the mining sector has also had a negative impact on many other parts of the economy. What we're experiencing is an unprecedented boom and, look, I know that when the mining tax was first proposed this was going to kill off investment in the mining sector. Let's just be clear about this: over the last year, the investment coming into mining has more than doubled, so in a period where people said this was going to scare the horses and there won't be any investment, we've seen a doubling of investment.
What we need to do, and what we're trying to do is to spread the benefits of the boom. See, mining is very different to most other sectors in that the mining industry rely upon the Australian people and the permission that we give them to dig up the resources that each and every Australian owns. That's not like a manufacturer, who go and buy their raw materials just on the open market, you actually have to get the permission of the Australian people to use these resources.
HOST:
But let's not simplify it too much, there's a fair bit of work and investment and risk that goes into mining.
BRADBURY:
Absolutely.
HOST:
And there's very few people that don't have enormous lead times in striking these minerals that we speak so simply as coming out of the ground.
BRADBURY:
No, very true and there's two points I'd make on that. The first one is that that's true but we give monopoly access, monopoly rights, monopoly access to these raw materials so we expect a return. The second point is that it is true that mining companies have to invest a lot of money through exploration and ultimately extraction but that is why the mining tax is a much better tax than the sort of royalty-based system that we've had in place. Just to explain that: royalties, they tax miners regardless of whether they're making a profit. They tax them on volumes and production. This resources tax that we're introducing taxes profitability.
HOST:
But can we get over the principle here, I think this is an important thing, that mines exist, commercial mines exist to make profit, they don't exist for community service. People that are out there in the remote corners of Australia digging this up are doing this for benefit and they are paying royalties and they are paying company tax along the way. I am troubled by the sort of assumption that this is not going to have any impact on the growth that that sector, that booming sector is contributing towards Australia. I mean you talk about it as not the only sector but tell me what's next?
BRADBURY:
Well, mining actually only accounts for a reasonable small proportion of employment across the economy, but –
HOST:
Well what about employment growth at a time when things are contracting?
BRADBURY:
The services sector is doing very well, whether it's health, aged care, there are a range of sectors in our economy that are growing jobs, but the point that I'd make is that if you're a truck driver in Penrith or you're a hairdresser in Blacktown or an IT consultant that runs their own business up in Springwood, you are someone that might be doing it tough at the moment. We are trying to provide a tax cut. Now people are saying it's a modest tax cut. Well the people I talk to out in small business, they say give us whatever you can because it all helps and we're doing it tough and we need it. Now some of the industries in communities like mine in western Sydney are doing it tough because of the high dollar –
HOST:
Yeah but Mr Bradbury, it's the argument again that if you tax something that's a long way away then it's not going to have any impact on the people that you're talking about, driving the truck in Penrith or going to work on the train this morning to the hospital. The tax impact of that will flow because that's how taxation works, it gets passed down.
BRADBURY:
True, but the choice here is that those people pay more tax directly or those in the most profitable sector in the economy who are doing very well out of a resources boom that, they're contributing through their own wealth and their own contributions, but the demand factors that are coming from abroad, a range of structural factors that are in play, mean that there is huge demand for these resources. This is a once-in-a-lifetime opportunity for all Australians to secure some of the gains of this boom.
HOST:
And a once-in-a-lifetime opportunity to tax.
BRADBURY:
Well –
HOST:
Because we may not have it.
BRADBURY:
It's about spreading the benefit to all Australians. Once these resources have been dug up and sold off we'll never get them back again so we've got an obligation as a Government to do that. I simply say this to you, Jason, why should the truck driver in – this is an either or proposition really – the truck driver in Penrith pays more tax or the miners pay more tax. Most people are looking at what's happening in this economy and they understand. I think it was starkly brought home to us on the same day that BHP announced record profits, Bluescope Steel also had to lay off a couple of thousand workers.
HOST:
Yeah, for differing reasons.
BRADBURY:
But this –
HOST:
I don't think we can safely lump them in. Let me change the topic for a second because I think that's been well-discussed here. I've got a minute and that's all I've got on this. There's a half-billion dollar a year bill on consultants in the operations of the Federal Government. Please tell me that this has not been justified this morning.
BRADBURY:
Well look, I've seen the reports. I think that all governments need to do as much as they can to reduce waste. Now –
HOST:
Is that waste, all that money, half a billion on consultants?
BRADBURY:
All consultants reports do not necessarily equate with waste, and in fact there are some times, and this is the reality of it, there are some times when engaging a consultant for a specific purpose in a technical area is a much more efficient way of achieving government [inaudible]
HOST:
But I would think if we're spending half a billion dollars on consultants we'd be spending half a billion less on public servants? It's one or the other isn't it?
BRADBURY:
Well if you look at the changes we made through the efficiency dividend which is something we've imposed on all government agencies, that has enforced savings within all departments.
HOST:
OK, I've got to hit the news here, I appreciate you coming to talk to me this morning, thanks for your time.
BRADBURY:
Thanks Jason.