TREASURER:
I’m looking forward next week to bringing down a Budget which will be focused on growth and jobs. A stronger new economy that is going to provide a plan that Australians know the country needs to ensure we move from the mining investment boom to a more diversified, stronger, new economy. That is what the Budget will be about – focused on those Australians who are really driving our economy through what is a very difficult time. Globally things are difficult. Australians understand that but they're out there making it happen every day and the Budget I will hand down next week on behalf of the Turnbull Government, will be all about backing them in. Backing them in to keep that growth going, to keep the jobs going that is what they are looking for and that is what they will get in the Budget that we hand down next week.
This week there have also been some significant announcements including today from the Prime Minister which are also about jobs and growth, but what I particularly wanted to mention was the significant investment in our defence capability. That decision is as much about our economic strength and our economic future as it is about our defence and keeping Australians safe. Our defence investments provide the opportunity for high-tech jobs over decades. This is a very significant economic investment for the country. And, while, of course, it will be keenly felt in the shipyards of Adelaide and with the other defence procurement programs in Perth, and other parts of the country, specifically in that industry, the flow-over effects of the supply chain domestically in this country are significant. Yes, it's a very important defence announcement. But from the Treasury point of view, it is a very critical part of our national plan to drive jobs and growth.
Now, while the Budget preparations continue, the work of Treasury more generally also continues, and there are significant matters we have to deal with. I am going to read to you a prepare statement regarding my preliminary decision on the foreign investment application for the purchase of S Kidman and Co Ltd. I don't propose to take any questions specifically on this matter afterwards because of the nature of this process so I will confine my comments to what I say on these matters to what I've put in my statement. If you wish to address other matters after I have done that than I am happy to take any other questions.
As part of my long and careful deliberations regarding the acquisition by foreign investors of S Kidman and Co Ltd, consistent with the formal process required, I have today informed the investor that my preliminary view of the proposal has – that has been put to me is contrary to the national interest. Australia welcomes foreign investment, however, we must be confident this investment is not contrary to the national interest. Australians must have confidence in how we regulate foreign investment and the decisions we make, to ensure continued support for foreign investment that is critical to our economy, in providing jobs and growth and this is always a relevant consideration.
On 15 April, I exercised my statutory discretion to extend the period in which I have to review this application. I did this in order to provide me with sufficient time to consider this complex case. Without this extension, I would have been required to have made a decision that week. This additional time has assisted me in forming my preliminary view, and I stress preliminary view. The Kidman land portfolio is the largest private land holding in Australia and the Kidman portfolio holds approximately 1.3 per cent of Australia's total land area and 2.5 per cent of Australia's agricultural land. Even after the decision of Anna Creek and the peak property, Kidman will still be Australia's largest private land owner and hold over 1 per cent of Australia’s total land area and 2 per cent of Australia’s agricultural land. Given the size and significance of the Kidman portfolio I am concerned that the acquisition of an 80 per cent interest in S Kidman and Co Ltd by Dakang Australia Holdings Limited, which I will refer to as Dakang, may be contrary to the national interest.
I have today made my concerns known to the applicant and provided them with a natural justice period in which they may respond and consider how they wish to proceed. The applicant shall have until Tuesday, 3 May – Budget day – 2016 to respond. I have concerns that the form in which the Kidman portfolio has been offered as a single aggregated asset has rendered it difficult for Australian bidders to be able to make a competitive bid. The size of the asset makes it difficult for any single Australian group to acquire the entire operation.
On 20 April I commissioned an external and independent review of the Kidman sale process, that I announced here, to examine market integrity issues around the Kidman sale process so that I could be fully informed. The review conducted by Professor Graeme Samuel AC was tasked with providing advice on whether the competitive bid process offered fair opportunity to Australian businesses to participate. The review contained sensitive commercial-in-confidence material which precludes its release. While the review found the sale process followed a satisfactory commercial practice that offered opportunities to Australian parties to make an offer, the review also found there remained significant domestic interest in Kidman.
I outlined my concerns in my announcement and decision on Kidman on 19 November of last year on the original application. I noted then that the size and significance of the total portfolio of Kidman properties in the proposed form as a single composite property asset was not in the national interest. I am not yet satisfied these concerns have been addressed by the revised proposal that's been submitted to me. The size and the significance of the portfolio, combined with the impact the decision may have on broader Australian support for foreign investment in Australian agriculture, must also be taken into account in this case.
The Turnbull Government welcomes foreign investment, where it is consistent with our national interest. However, we must always ensure it is on our own terms. There are not too many jurisdictions anywhere in the world where foreign acquisition of land, large holdings of this nature would be permitted. As Treasurer, I have approved many significant foreign investment proposals and I consider each on its merits as I have done on this occasion. Foreign investment has underpinned the development of our nation and we must continue to attract the strong inflows of foreign capital that our economy requires. Without foreign capital and investment Australia's output, employment and standard of living would be lower. Foreign investment rules facilitate such investment while giving assurance to the community that the investment is being made in a way which ensures that Australia's national interest is protected. We will continue to welcome and support foreign investment that is not contrary to our national interest.
Questions? Phil.
QUESTION:
Not on the detail of what of you just announced but the timing. Weren’t we expecting this after the election in July?
TREASURER:
Just simply on the matter of process, the statutory extension period that I enacted would have, yes, taken it over that period. But I made no statement at that point about when I would be making a further decision. That was just simply a 90-day period and I have acted within that 90-day period at this stage. There are further stages in this process to go.
QUESTION:
Treasurer, you said many times that you want the Budget to be about promoting investment. How do you reconcile that with your attitude to foreign investment and turning down investment?
TREASURER:
Well, you are making a number of assumptions about my statement. I will just have to refer you to my statement for the reasons that I said to you before. I don't intend to compromise this process by adding to what I have already said on this matter.
QUESTION:
Treasurer, who are the people you want to back in in the Budget?
TREASURER:
Australians who are going out there and working hard every day, earning every day, running their businesses, building their businesses, growing their businesses, employing Australians every day. Those who are taking decisions, those who are taking risks, those who are putting themselves out there, those who are building the country, those who are making a contribution. That is a pretty long list.
QUESTION:
Are PAYE employees risk takers?
TREASURER:
Everyone who puts themselves out there every day to earn a dollar is taking a chance. They're backing themselves and we're keen to back those who go out there and back themselves in this economy.
QUESTION:
Treasurer, do you still believe there are excesses in the negative gearing area?
TREASURER:
Negative gearing is used by over a million Australians to provide for their future. As we look across the tax system and the way the tax system works we need to ensure that it's sustainable for the future and I will be making some further announcements about that next week in the Budget. What I do know, though, is you must preserve the opportunity for Australians to try and get ahead. The sorts of issues that you refer to or the enthusiasms that I referred to them on other occasions are very minimal, very small, and you don't want to do something that puts at risk the broader performance of the Australian property market. I think even those who are fans of changes to negative gearing know that Labor's proposal in its composition is confusing and would be disruptive to property markets and undermine the performance of those markets and thereby undermine the value of Australians' homes.
Let me say this about Australians' homes. Labor's proposal undermines the value of the Australian home because of the impact the changes will have on the property market. Now, that is bad enough. That is bad enough. But in this economy, which has been so dependent and driven by householder confidence – it's been household consumption that was one of the key factors in the December quarter national accounts that I talked about here a little while back. You don't go and undermine confidence in the value of the family home and think that is not going to have an impact on householder confidence. That is why what Labor is proposing with their housing tax will only work against the interests of jobs and growth, and that is why we don't support it.
QUESTION:
Treasurer, will the Budget contain all the initiatives that the Government intends to offer during the election? Or will there be more to come after Tuesday's Budget?
TREASURER:
You will know the answer to that question by the time we get to the election and once the Budget has been handed down.
QUESTION:
If there was to be an interest rate cut next week, the market is about 50/50. On that question, what would you say to the banks on the issue of whether they pass all of that on?
TREASURER:
I don't speculate on what the Reserve Bank should or shouldn't do. I have the upmost of confidence and respect for the Reserve Bank Governor Glenn Stevens. I have said this on a number of occasions since being in this role and before – he is really in the pantheon of great Reserve Bank Governors and they will always have important decisions to make next Tuesday, as indeed the Government has had to make important decisions for the Budget we hand down next Tuesday.
I know what Glenn Stevens will do, and the board, will be in the national interest, that is what they have always done and they need to make their decisions and their calls and the Government will make its decisions and its calls. Banks always need to make their decisions and their calls and they need to face their customers. That is the whole point about this discussion we've been having about the banking and financial system – that the banks need to be customer focused and they will have the opportunity every day in terms of how they address the needs of their customers. We have made announcements and decisions about the things the government is doing in this respect, particularly in relation to ASIC, but it is for the banks always to defend their decisions to their customers who keep them in business.
QUESTION:
This week's inflation figures were surprisingly low. Were you surprised at just how low they were and do you think it's pointing to weakness in the economy with some other factor going on?
TREASURER:
I am not a commentator on this sort of stuff. These figures are as they are and I will leave it to others to make the interpretations. How they're interpreted and how they impact on the parameter estimates for the Budget will be made clear next Tuesday. We have seen lots of movements in different indicators whether it's been stock market, oil prices, Tapis, iron ore prices, the world GDP forecasts from the IMF. There's been a lot of moving parts over the last several months, in particular. You will see next Tuesday how they have all reconciled when it comes to what Treasury has put forward in their view about the Australian economy.
One thing I think all Australians know is this is a tough economy to make our way in but despite the fact the economic performance of Australia is not evenly felt all around the country and we know that to be true - you represent media organisations from the tip of Cape York to Tasmania and to the West - it is not a consistent story across the country. But what is true is that, as a country, together, we are growing at a faster rate than the United Kingdom, the United States, Japan, Germany. We're growing as fast as South Korea. There were 300,000 jobs, thereabouts, created last year, the best we have seen since the Howard-Costello years. And, really importantly, 50,000 – more than 50,000 indeed jobs for young people in the last 18 months. Youth unemployment is now lower than it was at the last election. So, there are things to be positive about. But Australians I think are very wary of the economic world in which they live. They're not intimidated by it. They understand it. I think far better than most people give them credit for it because they are dealing with it every day and we respect their understanding of that and we will be producing a Budget which I think addresses the concerns and things that they believe need to be addressed in that plan that will be in our Budget.
QUESTION:
Treasurer, there will be competing demands on the Budget and on you personally on Tuesday, there is the need to reduce the deficit, there's the goal of reducing income tax burdens on workers. Which do you think takes the top priority there?
TREASURER:
My answers to those questions will be made very clear next Tuesday night. I thank all of you for your great wisdom and advice that you've been giving me on a daily basis over a long period of time. I am like Treasurers past in that respect and we have all greatly appreciated the great wisdom that has come from the Canberra Press Gallery. I am sure I don't need to encourage you to keep providing that advice in the future. But the point you make, David, is right – when you set out a Budget, as I will do next Tuesday, it is an economic plan. It is not a typical Budget. This is not a typical time in which to be bringing down a Budget. But the challenge is the same – to give Australians confidence that the Government's plan to deliver jobs and growth will be right for them.
QUESTION:
What is [inaudible]?
TREASURER:
Budgets often, in different cycles, are a list of measures. That is not what this Budget is. This is an economic plan for jobs and growth for a stronger, new economy. This is the path we're clearing so Australians can continue to make their way forward in this difficult global economy. And they are making their way and I think that is to their credit. So it's for the Government to back them in, in this Budget, which is what we will be doing. Mark?
QUESTION:
Treasurer, could you clear up an issue of tax avoidance? The Prime Minister this morning said that tax avoidance was legal, if undesirable. Bill Shorten says that’s giving his blessing to people to avoid tax. What is the status of tax avoidance?
TREASURER:
Sam Dastyari has also given his version of events. He says, which he said on April 8, 2015, “let us be clear about what the distinctions are in this. Tax avoidance is questionable moral behaviour but it's legal. But tax avoidance is illegal behaviour. “ So, that’s Sam Dastyari. Now, I ‘m not going to get into a lawyer’s picnic on this one. What I'm interested in and what Australians are interested in is what are the outcomes when it comes to multinational tax avoidance. What I know is that last year we had a bill in the Parliament and that was to crackdown on multinational tax avoidance, to ensure that the Australian Taxation Office as a bill from our Government would give them the powers to make sure that multinationals pay the tax they should pay in this country on the money they earn in this country. We voted for it. Bill Shorten and Chris Bowen voted against it. So, if you want to know what Bill Shorten and Chris Bowen think about multinational tax avoiders, look at their voting record in the Parliament. When asked the question in this Parliament they said, no, they are against cracking down on multinational tax avoidance.
Thanks.