JOURNALIST:
Is the sugar industry still on its knees or has it picked up?
TREASURER:
It is a recognition that prices have increased, and because prices have increased with the three cent levy the costs have risen for people who are making soft drinks, who are canning foods. So we thought it was a good thing to do, to take that levy off. It will give some relief to the manufacturers and the soft drink industry. But the reform package will still go on, it is just that the reform package will be funded out of general taxation revenue; it won’t continue to be funded out of the three cents per kilogram sugar levy.
JOURNALIST:
But it has been underspent so far anyway, hasn’t it?
TREASURER:
It hasn’t been underspent, it has been under-raised.
JOURNALIST:
It has been under…
TREASURER:
It has been overspent compared to the money that we raised out of the levy. The programme is a $444 million programme, the levy has raised $80 million. If we’d have kept the levy in place it would have raised another $28 million, but patently the levy was not going to raise the full cost of the sugar industry reform package. The full cost was being met out of general taxation revenue. By abolishing the levy from midnight on the 30 November it means the remaining cost will be funded from general taxation revenue.
JOURNALIST:
Is there any chance though that remaining $120 million will actually kept by the Government, rather than actually be allocated, because it is running out as soon as the middle of next year?
TREASURER:
Well as I said the sugar industry reform package will continue to go on. That obviously depends on the number of people to take it up, you’re quite right. But we have budgeted $440 million for that. The levy only ever raised $80 million that balance is being funded by general taxpayers, so whichever way you look at it a large proportion of the reform package will be met from general taxation revenue.
JOURNALIST:
Is that aside with the take up offer within the sugar industry, whilst taking the point about the payment (inaudible) has the sugar industry reformed itself or not?
TREASURER:
Well, the fact that prices have risen probably means that fewer people will want to restructure out of the industry, quite right. If the price is low, people are more likely to want to restructure out of the industry, if the price rises if incomes return they are less likely to. But this was never a forced restructuring package, it was always a voluntary one. Dependent on the number of people that took it up, we are prepared to fund the full numbers that do. I would still say to a lot of people, particularly growers that are getting towards the end of their career, have a look at it, think about it carefully, I can’t guarantee, no one can guarantee that the sugar price will remain where it is or go higher. It is going, to fluctuate in relation to world markets.
JOURNALIST:
Do you think the removal of the sugar levy will have any inflationary effects?
TREASURER:
If it has an effect it should actually reduce inflation because it is 3 cents a kilogram, nearly all manufactured foods and certainly all drinks, fizzy drinks in particular but also juices have sugar as input, and if that input decreases then you should get a decrease in relation to food and beverages but you have got to bear that in mind, it is only 3 cents a kilogram.
JOURNALIST:
Are we going to have cheaper lollies and cheaper beer for Christmas?
TREASURER:
Well we will be asking the manufacturers to pass this tax cut through to their products and if they pass it through to their products, it should reduce prices and we will be asking the manufacturers to deliver the benefit to consumers.
JOURNALIST:
Will it really have any effect on our farmers though, in terms of growers, it is more of a manufacturing thing though isn’t it?
TREASURER:
Yes, the benefit of the abolition of the sugar levy will be passed through to manufactures and beverage makers. The price for sugar will not change. What will change is instead of there being a tax on sugar, that tax is abolished, and so the people that use it, and it gets used in nearly all foods and beverages, will have lower costs and therefore prices should be cheaper. Bear in mind it is only 3 cent per kilogram and you wouldn’t have a kilogram of sugar in every product but prices overall should be cheaper.
JOURNALIST:
Mr Costello, can I ask you about Qantas, will the Government be considering raising the threshold of foreign ownership and at what point will the national interest test be used?
TREASURER:
Can I say in relation to Qantas, the Government policy is that the majority ownership of Qantas should be Australian. (inaudible) In the relation to Qantas the Government policy is that the majority ownership should be Australian. That is the Act, that is what the law says and I don’t believe there are any grounds to amend the law to reduce the requirement for Australian ownership. And let me make it also clear that apart from the Act there are various foreign investment requirements that any new investors in Qantas will have to have a look at.
JOURNALIST:
And so what would your attitude be on the proposal (inaudible)?
TREASURER:
Well my attitude would be that Australian ownership for Qantas is important, and that means that a majority of Qantas should be in Australian ownership. And I don’t see any reason why that should be changed. I think the airline has operated well with majority Australian ownership, it flies the flying kangaroo. And the flying kangaroo says Australia. And as far as I’m concerned that means majority Australian ownership.
JOURNALIST:
What of those other requirements that any foreign investor would have to go through?
TREASURER:
Well where a foreign investor takes a substantial position, including a possible controlling interest, that would have to meet foreign investment approval, and also where a significant foreign position is taken in a sensitive industry, that requires notification. So, if any foreign investor is proposing to take a substantial, or a controlling interest in Qantas, they should be notifying the Foreign Investment Review Board.
JOURNALIST:
What about the prospect that Qantas could be broken up under this plan, that more jobs could be shifted offshore?
TREASURER:
Well I can’t see any reason why Qantas should be broken up. Qantas is a full service airline, it’s the only full service airline that we have domestically, it is a major international carrier and I think Qantas, as a full service airline, is very valuable both to its shareholders and to its customers. And I can’t see why any proposal to split the thing up would be in anybody’s interests.
JOURNALIST:
If there were a proposal like that, is that something the Foreign Investment Review Board would take into consideration?
TREASURER:
Well, as I said, if there is a substantial interest coming from a foreign investor, then they should be notifying the Foreign Investment Review Board. Various conditions would require approval, and we would decide that on the basis of the national interest.
JOURNALIST:
Is 49 per cent too much of Qantas to be foreign?
TREASURER:
Let me put it this way: I think Australians should have majority ownership, and majority ownership means 50 per cent or more. And that’s the law. And I for one, most certainly wouldn’t see that reduced.
JOURNALIST:
How would this bid compare to, say, the Woodside Petroleum one in 2001?
TREASURER:
Well, all these matters are assessed on their merits, and as I say, if a foreign investor has a proposal they should notify the Foreign Investment Review Board and then it will be considered, but I can’t give a running commentary until I know (a) whether there is a proposal and (b) what it is.
JOURNALIST:
Mr Brough has come out in support of food vouchers as part of welfare payments, is that something that you see as a good idea?
TREASURER:
I think there are circumstances where people, say they have an alcohol or drug problem, and they are on welfare, and because they have this problem the welfare gets misused into alcohol or drug addiction. I think for people like that, to try and restrict the money to food and keep it out of their habit, would be something well worth looking at.
JOURNALIST:
Do you think though with every rule comes a way around the rule, there could be a black market in the vouchers, is it not really attacking the problem?
TREASURER:
Well the problem for people like that is their drug or alcohol addiction. And that’s got to be attacked, I agree, but I think if you were a taxpayer and you thought that your taxes, being paid by way of a pension to someone else, were ending up in drugs or alcohol, you’d be interested in looking at ways to stop that, and I think in those circumstances, well worth looking at.
JOURNALIST:
On Qantas …
TREASURER:
Okay, last question. Let this lady have a question…
JOURNALIST:
On the Switkowski report, in relation to that, given that many State Liberal leaders are taking a stand against it, is nuclear power still the way to go?
TREASURER:
Well the report has been made. I think we ought to have a genuine and open and honest debate. I’m certainly interested in looking at the economics of it because one of the things that it says at the moment, the economics of nuclear power don’t stack up. And I think it says that maybe by 2020 or 2025 or something, or ten years in the future, it might, so I’m really quite keen to get the information out before making any final decisions.
JOURNALIST:
What does it mean for a carbon tax?
TREASURER:
Well, I don’t think the arguments for and against carbon trading should be decided on the basis of trying to make nuclear power competitive or not competitive. I think that stands on its own and that’s another issue which we are also facing up to at the moment.
JOURNALIST:
(Inaudible)
TREASURER:
Well I had the privilege of presenting a new coin, which is being minted by the Royal Australian Mint to Cricket Australia, and it’s a silver coin, $5 coin, which is being minted to commemorate the Ashes. It has the Ashes trophy in the centre of it, it has the Australian kangaroo on one side and an English lion on the other. It was used for the toss this morning, which Ricky Ponting won. So the Royal Australian Mint and its newly minted coins have already brought Australia good luck. This coin will be put up for auction during the course of the Test, and the proceeds will go to the Royal Flying Doctors Service. So I was out at the Gabba this morning to present this coin to Cricket Australia, it was used in the toss, you can buy it, if you win the auction, the proceeds go to the Royal Flying Doctors Service. If you miss out on this coin, you can buy a collectors’ set from any coin dealer.
JOURNALIST:
You missed the first ball then.
TREASURER:
I missed the first ball because I wanted to see you ladies and gentlemen, but I hope I will see a ball while I’m here in Brisbane today.
JOURNALIST:
You headed back down there?
TREASURER:
I hope to get back there for a while this afternoon. Thank you.