TREASURER:
Good morning everyone. Well, for some months now we have been working with states and territories first consulting them last year to deal with the issue of critical infrastructure asset sales and the application of those arrangements for non-state owned enterprise investors.
While things are continuing to occur up there in the Senate, in the other place, the Government is getting on with the job. The Government is getting on with the job of governing which is what the Australian people would be expecting us to do and this is a matter that we've been working on now for some time. I can announce that today from 31 March this year the Foreign Investment Review Board will formally review critical infrastructure assets sold by state and territory governments, while governments can and do work with the Commonwealth when selling such assets the proposed change will formalise the process and ensure that future sales of critical infrastructure to privately owned investors are scrutinised under the FIRB arrangements.
Under current rules, which have not been amended by previous governments I should stress, FIRB assessment of critical infrastructure was only required when assets were sold to state owned enterprises. Critical infrastructure assets are now subject to that formal review when sold and that includes public infrastructure, an airport or an airport site, a port, infrastructure for public transport, electricity, gas, water and sewerage systems, existing and proposed roads, railways, intermodal transfer facilities, the part of the northern land transport network, or designated by a state or territory government as significant or controlled by the government as well as telecommunications infrastructure, and nuclear facilities for that matter.
The changes add, I think, to the continual strengthening of our foreign investment framework that this Government has been putting in place. Our arrangements on foreign investment are open, they're transparent but overall they're sovereign. These are important ingredients, I think, to any forward looking foreign investment policy. Australia does and always has relied on foreign investment to invest in Australia in its future and it will be a critical, continued requirement for this to occur to drive jobs and growth for our transitioning economy. Attracting that capital, investing that capital, in our country, in our industries, in our transitioning economy is a key part of this Government's plan for jobs and growth.
Formal requirements on foreign investment applications now, in addition to what I've just mentioned, now you will know that I made the decision that all requirements for applications now must satisfy a tax deed for multinational companies. When a foreign investment application is approved, by me as Treasurer, it is now a requirement that there is a tax deed which makes sure that multinational companies pay tax, that they don't engage in transfer pricing arrangements which would seek to shift profits and the first of those arrangements was the VDL decision. That was the first transaction that I applied that to and it was a critical factor in going forward with that decision; they need to pay tax, they need to invest in the country, it needs to support jobs and growth. That's what our national interest is.
In addition to that you'd be aware of the other changes that have been introduced; greater compliance powers from the Australian Taxation Office and strict new penalties for those caught breaking the rules, a new agricultural land foreign ownership register and a reduction of the screening threshold for proposed foreign purchases of agriculture land by private investors to $15 million, a FIRB screening of direct interests in agribusiness valued at now $55 million or more and also these are very important appointments. The appointment of David Irvine, as you know, a former distinguished Director General of both ASIS and ASIO to the Foreign Investment Review Board together with Mr Peever. Bolstering, I think, significantly the FIRBs experience and expertise in issues particularly in national security, as you know, for sale of 27 properties, worth more than $76 million illegally acquired by foreign nationals. It's about having the right set of rules and having the will to enforce these rules which is what the Government is doing.
I want to thank all the state and territory treasurers who have been part of the consultation process in getting to this point. These measures will take effect from 31 March this year.
Any questions?
QUESTION:
Treasurer, is this an acknowledgement that the Port of Darwin should not have been sold to a Chinese company?
TREASURER:
These thresholds apply to investments above $250 million. They're the normal rules that apply for private investors. That was a set of processes that led to that decision under previous arrangements and I'm not here really to comment on those arrangements, they were considered under the framework that has been in place for some time.
QUESTION:
Just on that, would the Port of Darwin sale face extra scrutiny if this process…?
TREASURER:
The Port of Darwin is sold. It's not a matter that is coming up. I don't intend to engage in hypotheticals.
QUESTION:
If this occurred under these rules what would happen?
TREASURER:
Let me give you some more precise examples and about things that are actually coming up. The sort of things we are dealing with going forward are Ausgrid, that's expected value of over $10 billion, Utah Point to be over $1 billion, Port of Melbourne over $6 billion, Port of Fremantle around $1.1 billion, Endeavour, New South Wales electricity over $4 billion. Now, under the current arrangements none of those sales would have been subject to this process had it not been introduced by the Government. So, we're very much looking forward – that's the way you drive jobs and growth. You don't look in the rear view mirror, you look through the windscreen and you go forward and these arrangements are designed to support a more robust process going forward.
QUESTION:
Will you need legislation to put this into effect?
TREASURER:
No, it is done by regulation.
QUESTION:
Treasurer, could you go back to Paul's question, what would have been the process with the Port of Darwin?
TREASURER:
That's a retrospective that I don't intend to...
QUESTION:
Well, it's an important one because…
TREASURER:
What is important are the projects and sales that are likely to come before us in the future and I've just listed them. These are the measures, these are the projects, these are the sales which will now be subject. The Port of Darwin was a decision taken by the Northern Territory Government under their process, under the old rules – these are the new rules.
QUESTION:
Treasurer, does this send a confusing message particularly to Chinese investors that we're not quite open for business and there have been reports that there is [inaudible] and Chinese investors aren't as willing to come as they were?
TREASURER:
I'm not seeing that, Paul, so I'm not sure what you base the question on. You might want to elaborate.
QUESTION:
What about the other question of we're not quite open for business?
TREASURER:
What's the basis of that?
QUESTION:
The caveats you're putting may discourage some investors?
TREASURER:
Australia's foreign investment rules are sovereign, China's foreign investment rules are sovereign, the United States’ foreign investment rules are sovereign. Every country in the world has their own set of arrangements and it's up to every country to set those arrangements and investors and corporations and others are very familiar with this sovereignty that attaches to all of these arrangements. It is important that you run a process which is professional, which is competent, which is reasonable, which is consistent and that's what we do. We take decisions that are in accordance with that process, we put the right people on FIRB to ensure they have the expertise and they have the insights to be able to advise me, as Treasurer, appropriately on these matters and I don't see the hesitation that you're referring to because we engage all the time. We engage all the time, we communicate these decisions, people know what the rules are and we seek to make decisions consistently with those rules.
QUESTION:
Treasurer, is your Department looking at 30 year bonds in order to fund various things down the track?
TREASURER:
On something as sensitive as that you wouldn't expect the Treasurer to make comment on it other than to really engage the broader issue. That is when you're looking at funding infrastructure into the future you want as many options as you can available to you particularly when you're in a very constrained fiscal environment. Funding of infrastructure, supporting particularly infrastructure that has a real capacity to the boost productivity, is a high priority of this Government. That's why we're rolling out $50 billion on our national infrastructure plan. The national infrastructure plan is a central part of our plan for jobs and growth. It is a central part of our plan to successfully manage the transitioning economy. This is why I think Australians can have confidence that in this transitioning economy they have a Government that understands that infrastructure is part of that plan, foreign investment is part of that plan and innovation is part of that plan. All of these areas come together to drive and support the transition taking place in our economy. We'll have further things to say on any number of matters in the Budget that will further lay out that plan that we have been putting in place.
QUESTION:
Mr Morrison, are you deeply troubled by the issue of bracket creep as you told the Press Club last [inaudible]?
TREASURER:
This issue remains an issue. There are many issues that we have to address, as people know one of the reasons, in fact the key reason, why we were seeking to consider issues around the tax mix switch was to see if that was a way by which some relief in that area could be delivered. But a sensible Government does its homework, considers the implications and works out whether it will actually deliver on growth and jobs. We did that analysis as we all know and you all know that the answer on that analysis was that it didn’t deliver that benefit. So, I don't think the Australian people would expect us to go forward with a proposition that our own analysis showed was not going to deliver the outcome that we hoped it would achieve. That wouldn't be a well thought through proposition. I leave the ill thought through propositions to the Labor Party. We focus on our process and getting the decisions right, because in this transitioning economy you've got to get the decisions right. You've got to make sure that you're focussed on putting the ruler of jobs and growth across all of these decisions and that's exactly what we're doing. The best way, ultimately, to achieve those outcomes and to relieve the burden wherever you can is to drive growth. That is what is going to create the head room in the future to ensure that we can deliver on those objectives. I remain very committed to those objectives but you have to be able to deliver them and you have to be able to afford them, they have to be meaningful and you have to ensure that you focus your attention on the things that are going to best drive jobs and growth – and that's what this Budget will do.
QUESTION:
What about finding ways to get more workers into jobs or get people off welfare and into jobs? Is that part of what you're thinking about when you look at the tax system and income taxes in particular?
TREASURER:
It always has been part of our thinking is our first point. This is why we were so pleased to see yesterday the fall in the unemployment rate, we were very pleased to see the increase in the full-time jobs in particular in those latest figures. We were very pleased to see in particular the drop in the youth unemployment rate. Now, again below where it was at the last election and in the last six months it has fallen by 0.6 of a per cent. That's good news. We are seeing people going into jobs. We are seeing people in this transitioning economy being able to find those economic opportunities. I think the real heroes of that story on employment are one, the businesses that are providing those jobs – they are the ones who are providing those opportunities. And secondly, the young people who went out there and applied for that job and decided that they didn't want to be on welfare, that they wanted to be in a job. It's very pleasing as a Treasurer and part of a Government more generally to see those employment figures and employment growth running at over 2 per cent. They are figures that we would like to see continued and that’s why our focus is on growth to drive jobs.
QUESTION:
Treasurer, in this document released this week the Labor Party was arguing that increasing inequality is in itself a direct impediment to economic growth. What do you think about that?
TREASURER:
You've got to grow the economy to share the proceeds of the economy. That's what you have to do. It's one of the age old issues I think in economic management. You’ve got to grow the pie and you’ve got to share the pie. But if you're not growing the pie, there's not as much to be shared. As a Government we're seeking to do both, to get that balance right but growth and jobs is what is going to ensure that you're able to provide the services, that are necessary to ensure that we have the social safety net which is one of the most targeted and one of the best in the world but that doesn't mean there's a lot more work to do to pick up David's point. What we need to do, particularly in getting people off welfare and into work, is ensure the incentives are right, that the interface between the tax system and the transfer system is right. One of the big frustrations we have at the moment – and this goes a lot to what is happening up there in the Senate today – in the last Budget we wanted to put in place, we announced that we were seeking to put in place new arrangements to make child-care more affordable for families so they can go into work. So they can choose to be in work and one of the disincentives, one of the biggest disincentives for families to be in work was the cost of child-care. So, we had a plan to fix that and we had a plan to fund it and to fund it we were going to take Family Tax Benefit Part A and B Supplement – two bonus payments in July, welfare bonus payments in July – and we were going to terminate those at a saving of around a billion dollars a year, ultimately, and invest those savings in more affordable child-care. Now, that strikes me as a very sensible plan to deal with both the unaffordable cost of child-care as well as boosting participation particularly for women in the labour force and to provide those opportunities. The Senate and the Labor Party completely rejected that as a plan. So long as we have situations where sensible savings to better target the investment of taxpayer funds to drive important social and economic objectives like labour force participation and more affordable childcare and we have a Senate that is more interested in frankly protecting themselves and backroom deals rather than voting to support those sorts of sensible measures then I think this Australian people will be drawing really obvious conclusions about what we're seeing in the Senate today and the cynical nature of the Labor Party.
QUESTION:
[Inaudible] push and pull recently about whether or not there would be some sort of tax statement or tax package before the Budget on May 3 or May 10 whichever the case may be. Could you clear up once and for all, for example, Arthur Sinodinos was saying only two weeks ago that as soon as your package is ready you should just release it for discussion. Can you clear up now exactly what will happen? Is the tax package going to be announced before the Budget on May 3?
TREASURER:
Well the Budget is being handed down on May 10 and that is the scheduled date and I continue to work to that date. There's been no change to that. But the Budget is where the Government will set out its economic plan on these matters.
QUESTION:
When the Safe Schools review is released and that's possibly today – should that be the end of the matter as far as concerns and complaints?
TREASURER:
They're matters for the Education Minister and he's dealt with those and he is handling those for that Government and I'll continue to let him do that.
QUESTION:
Can I ask just ask one question about the FIRB changes?
TREASURER:
Sure, given that is what the press conference is about you're very welcome to.
QUESTION:
Does it require a referral from the State Government or can you and the FIRB or indeed yourselves just step in and say that this project fills the criteria?
TREASURER:
The rules require that process. So, for any one private investor, for a project that is above the relevant threshold, they would be required to make an application in order to complete that transaction.
QUESTION:
So it just lumps the state assets into this?
TREASURER:
Well, they're already there from the perspective of any SOE perspective investor but the gap was in the area of private investors and so what this does today is to ensure that private investors for state critical infrastructure assets are brought into line with the rules that apply more generally. So, the foreign investment system which understands the critical need for foreign investment to support jobs and growth but a foreign investment system that at the end of the day is always going to be sovereign and protect Australia's national interest.
Thank you for your time.