QUESTION:
[Inaudible] On the petrol excise, I was wondering whether you would be prepared to be flexible in the allocation of the revenue if the Greens want to negotiate on passing that [inaudible]?
TREASURER:
Well, Phil, we have endeavoured to consult with everyone in the lead up to this and quite frankly, they've had rather – our critics and opponents – have had rather perplexing positions that have often varied. So, if there is any change in their positions, well we are all ears but we have got to push on. I mean, this is $19 billion to the Budget over 10 years and it is 40 cents a week to families. We have got to be able to pay our way.
QUESTION:
In terms of pushing on Treasurer, [inaudible] seek a meeting with Senator Milne to explore the possibility of some sort of a compromise deal?
TREASURER:
James, for quite some time, they didn't even return our calls. So, I know that Mathias has been endeavouring to have numerous conversations with them and will continue to. I mean, we are open for discussion. We are not changing our positions, what's happened is that others have changed their positions. It is a little bizarre.
QUESTION:
[inaudible] You mentioned flexibility and the importance of it and the Productivity Commission [inaudible] the Fair Work Act [inaudible]. I guess I would like to know, are the terms of reference finalised and when do you anticipate the actual inquiry will begin?
TREASURER:
Yeah, we are working through it. I mean, the PC has had a fairly full dance card. As you know, I have got the report in relation to childcare coming out soon and I also have to make a couple of further [inaudible] to the PC to allow them to deal with the workload but it is not that far away.
QUESTION:
In terms of – just one more on the PC, and the Childcare Report: at this point in time do you anticipate immediately responding to it [Inaudible] what is the process?
TREASURER:
I haven't seen it yet. So, let's see it first. I mean it won't – inevitably, as it goes out there it will form part of the [inaudible]. Childcare is an immensely important issue for workforce participation and you know, as someone with children – nine, eight and now five actually – I think – I know how important it is to deal with this to have flexible childcare, very important, in order to allow for particularly workforce participation.
[inaudible exchange]
QUESTION:
As the report says, the big culprits in this red tape problem appear to be more [inaudible] and especially construction and mining companies in the last ten years what the hell is going wrong? Why are these companies getting it wrong? [Inaudible] but these problems have been caused by decisions of companies, why is this?
TREASURER:
Well, I mean part – some of the more regulated work environments where there is a closer relationship between business and more aggressive unions would suggest that some of the work practices that are negotiated as part of workplace agreements are overly regulatory. Now, when you speak to builders and developers there are rules that they have in place that are gobsmacking but a lot of them have been negotiated with the CFMEU or some of the other building unions and sometimes, the regulation imposed on businesses or within businesses is a direct result of those workplace negotiations. So, in order to buy peace, there will be a new regulation that requires that someone needs to have a backup worker available and needs to have these sorts of requirements in relation to employment and so – but I don't forgive the businesses for that because they are the ones that, they build it into their costs and it is passed through to the consumers ultimately, as well.
Look, also very large businesses can have a lot of bureaucracy and I think that's – for everyone, for a lot of people who are in this building or have left this building, in fact I was talking to a former Kevin Rudd staffer the other day, who was telling me about the red tape in the business they have joined and they reflected on the fact that it was easier to get things done in government sometimes than get things done in business because of the red tape burden within business. So, we have a collective goal here and that is to get rid of red tape from the public sector and from the private sector, so that we can be more efficient.
The thing that is going to change a lot of behaviour in the private sector is disruptive technologies, and you know, along comes an Uber, or along comes you know, eBay or PayPal or various other things and that completely changes the dynamic and the most obvious handbrake is trading hours and the internet has no trading hours. So, you look at the red tape restrictions or regulatory restrictions on retail and effectively, you know, disruptive technology is working its way. Same for government, and this is something that hasn't been properly discussed, and maybe it is something that you guys could focus on in the series, government – and it is something that I have raised actually at the G20, government has spent a lot of time introducing laws and regulations that fix a current problem but governments now, because of disruptive technologies and the evolution of an entirely new world based on the digital economy, governments now need to start thinking about future proofing the regulation, or future enhancing the regulation and legislation.
Now, how do you do that? Well, one of the reasons why I was so determined to have a Financial System Inquiry was, and I specifically said to them, including technology specialists from the United States and people involved in transformative activity elsewhere around the world, I said, 'I want to have a financial system that can facilitate the future'. So, when along comes Apple Money or PayPal or Bitcoin, I want to know that we can cope with that. That it is not seen as a threat to the regulatory environment of the future but rather, we know it is coming, we know what it looks like, we have a way of handling that in the future and that is the focus of the Financial System Inquiry.
In relation to competition policy, it is the same. I said to Professor Harper, when the original competition laws were designed, they were based on the Australian marketplace being as big as the land, you know, constrained by the ocean. Today, the marketplace is the whole world, not in every product, but in the whole world. And therefore, because it is the whole world, we need to look at – we can't regulate the market. All we can do is empower consumers to be able to be protected in so far as their interests are protected, to be properly informed, to have a right of redress where there is a failure but ultimately, consumer sovereignty is going to be far more important and powerful than protection in markets. So, there are plenty of things ahead.
QUESTION:
Are you any closer to making a decision to sign up to the China's development bank?
TREASURER:
Well, that is something that has consumed a hell of a lot of my time over the last few weeks and it is, the challenge with AIIB, which we have communicated directly to the Chinese Government, as well as to other interested parties, is that there is a considerable amount of work that needs to be done to ensure that it is truly a multilateral organisation. Now, we have offered to assist China and the other signatories of the MOU in that regard, but as it stands, there are a large number of questions that have not been formally answered. There have been informal answers but not formal answers and there is still a considerable amount of work to be done.
QUESTION:
[inaudible]
TREASURER:
Well, we're working with the Chinese Government and other interested parties.
QUESTION:
This is sort of a regulatory question, do you think Peter Costello made changing the GST so difficult that it is become a bigger thing that it needs to be. For example, the UK, New Zealand, they change their consumption taxes quite easily. And I ask Chris if he thinks that if there should be changes to the GST, given it is one of the most efficient taxes we've got.
CHRIS RICHARDSON:
Some things are easier for me to say. Let me say that if you compare it to other nations our tax burden falls more heavily on income taxes and less heavily on taxes on spending. So we're actively discouraging work and innovation and so the extent of our tax is there and if anything relative to other nations, we are encouraging our spending. [inaudible]. We know as a nation that we can do better. Treasurer, yesterday if memory serves, The Prime Minister was actually having a bit of a conversation around this, the nation needs to be part of that conversation because it's really hard for politicians to do all the heavy lifting here. [inaudible].
TREASURER:
I think too many people are focussing on the tail of the horse rather than the head. Effectively the Prime Minister is encouraging people to participate in a full and frank discussion about the state of the federation and how to better structure the federation. We can no longer afford for state governments to be bidding against the federal government to be bidding even against local government with the same taxpayer's money in order to deliver the same service. The days of duplication between Commonwealth, state and local government must be over, because we have all got little financial capacity to be engaged in that sort of [inaudible]. Now when you work out exactly who does what, who has full responsibility for what particular area of service in the community, then you work out how much money you need. The last position should be to increase the tax, that should be the last position. The reason why, you know, we have gone down the path in relation to fuel is simply to pay for the biggest road building program in Australia's history and it's not even payed for in full, it's just making a contribution, but the beneficiaries of the better roads are the ones making a contribution of 40 cents a week. This is hugely important – paying our way. What we're endeavouring to do is to find a more efficient way of running government, and government, that's small 'g' government, local government and state government and federal government and hopefully the federation will be a stimulator of the debate.
QUESTION:
Treasurer, how hopeful are you, though, of the prospect of a mature debate when we see things like Jenny Macklin yesterday, already accusing you of having broken a promise and hitting households with another $3900 impost and Denis Napthine's coming out criticising the Federal Government too. How optimistic are you that we can actually have this debate as a nation about the need for…
TREASURER:
…I hope we can. We are only going to get significant structural reform faster, which delivers better economic growth and more jobs if we have bi-partisan agreement. I know confrontation is something that is exciting to some, the hardest decision in Government is to say no, and the hardest decision to say in Opposition is yes.
QUESTION:
Treasurer you've only got, I think, another six weeks with your current Treasury Secretary, when will you be announcing your next one and what are your thoughts on John Fraser?
TREASURER:
All in due course.
QUESTION:
[inaudible]
TREASURER:
[inaudible] A mate of mine came from the United States the other day and he was going from North Sydney to the City and he called up a car on his Uber app. As he's driving off in this car, I thought to myself, well he's using his American credit card, to pay Uber in the United States, so Uber is not paying company tax in the United States, if there was a transaction payment I'm certainly not getting that and will I ever see the GST, as the car's driving off and will I ever see any company tax revenue? Then you think about it a bit more, a taxi driver who pays a license fee isn't getting an income. The taxi driver is still going to have to pay his license fee so the states are potentially going to lose that revenue. You start to think a bit more about whether, in relation to indirect taxes is this crafty technology, digital economy going to completely change the equation? And Australia has one of the highest reliances on company taxes in the OECD.
You look at what's happening with company tax and the race to the bottom by many countries to lower the company tax rates, including in the United Kingdom [inaudible] and you say to yourself, well, you know, one of the things I really do want the Treasury and the Taxation White Paper to focus on is again looking forward of what the world's going to look like in five, ten, fifteen years, twenty years, and then identifying what the revenue needs are of the government to deliver the services that the people expect.
Now, I think inevitably there is going to be a number of tariffs, as tariffs go, that's a classic case, thankfully, tariffs are going, [inaudible] that's a classic case of a tax that no longer raises the revenue it once did. So, it's not so much about the rates and changes to existing taxes. It is what is happening to the existing framework and how is the framework for taxation and revenue in the future going to cut it with the disruptive technologies that exist today and still haven't been thought of for tomorrow.
QUESTION:
Thank you very much.