Member for Isaacs

Sky News AM Agenda Kieran Gilbert 24 May 2010

24 May 2010

Subjects: Mining tax, Securency International, home insulation


MONDAY, 24 MAY 2010 

Subjects: Mining tax, Securency International, home insulation

KIERAN GILBERT: Thanks for being with us on AM Agenda. With me now our panel of politicians. Liberal
frontbencher Senator Mitch Fifield and Labor MP Mark Dreyfus. Gentlemen good morning to you.

MITCH FIFIELD: Good morning Kieran.

MARK DREYFUS: Good morning Kieran.

GILBERT: A big day ahead. A big week. It’s a fascinating time of the electoral cycle. Uncertainty a bit
on both sides after some back-flips on the government’s side, some issues for Mr Abbott last week. Now it’s all about the mining tax. Senator Fifield, first to you. The government says the big companies are paying much less company tax then what they should be. Isn’t that a fair enough argument that they’re putting at the moment. That the mining tax needs to be lifted at least to a degree.

FIFIELD: You can’t trust this government’s figures. They’re talking about effective company tax rates
of 13 percent and 17 percent. But what they’re deliberately leaving out are the royalties that
the miners pay. Not every industry pays royalties and if you’re going to be comparing like
with like, you’ve got to be straight with the figures and the government aren’t being.

GILBERT: But the mining companies are telling Wayne Swan apparently and the government that they
should be paying more. Behind the scenes they’re conceding, yes we should be paying more. Now if there is an agreement, won’t the Liberals be left in the lurch, left irrelevant to the debate if there is an agreement with the likes of Rio, BHP and so on?

FIFIELD: This tax, this so called super-profits tax, isn’t what the mining industry were arguing for. The
mining industry was saying, hey by all means take a fresh look at taxation. Look at taxing on a different basis. But that’s not what the government has done. The government haven’t consulted with the mining industry. The government have brought this super-profits tax out of the blue. It’s threatening investment. It’s threatening jobs and I’ve got to say, what I think is the most extraordinary feature of this whole debate is the fact that we have a Prime Minister and a Treasurer who are actually demonising a sector of the Australian economy. Who are demonising Australian citizens who happen to be mining executives or work in the mining
industry. I don’t think we’ve seen in recent Australian political history a government actually seek to demonise, denigrate and to impugn the motives of Australian business people and an Australian industry.

GILBERT: Julia Gillard yesterday was urging the mining sector to get around the table and to negotiate.
Let’s re-cap a bit of what the Deputy Prime Minister had to say.

JULIA GILLARD: There are a range of tax concessions that apply to mining companies, which enable them to reduce their burden of company tax and that's why we come out with these figures of effective company tax rates of 17% for domestic companies and 13% for multinational companies. That means, Laurie, that there's room for mining companies to pay a fair share of taxation and still make very good profits.

GILBERT: Clive Palmer, the Queensland mining magnate was on Sunday Business. He’ not going to
be negotiating at all. Let re-cap a bit of what he had to say to Helen Dalley.

CLIVE PALMER: I don’t want a socialist country. I don’t want a country were there are no jobs for people. Of course I don’t. And no one’s going to negotiate that. I’m not going to negotiate the jobs of my employees. I’m going to defend them. I’m going to make sure that they’re employed. I’m going to go to the High Court if I have to and do all I can to preserve the wealth that our industry have in Australia for the benefit of Australians. I’m not going to sell out the country. The Prime Minister and the Treasurer may do that if they want to. But I’m not going to do it.

GILBERT: Mark Dreyfus, what’s your response first of all to Mitch Fifield that the government is impugning the motives of some of the mining sector and also the prospects of the deal because if you listen to the likes of Clive Palmer, even Twiggy Forrest who says he’s a mate of Kevin Rudd’s, it doesn’t look likely at the moment.

DREYFUS: The only impugning that is going on here is the hysteria that’s coming from the Liberal Party.
The hysteria that’s coming from the main financial backer of the Liberal National party of Queensland. Clive Palmer, what nonsensical statements to make about a socialist country which is what we just had from Clive Palmer. The need is for this debate to be conducted in a measured way for the real facts to be used because we are talking here about the design of a tax that is a sensible tax. The OECD said over the weekend that it was an appropriate tax. Many miners as you’ve already said Kieran in your introduction accept that there should be a tax and that’s why the Deputy Prime Minister was absolutely hitting the nail on the head
yesterday when she spoke about the actual tax rate, the actual company tax that’s paid. Not the headline rate which some, some mining companies in their ads are seeking to confuse matters. But the actual tax that’s paid…

GILBERT: …But the government, has it sold it well enough to this point? Because it does seem confusion as to exactly the merits of this tax. It’s certainly split in the opinion polls as to whether or not it’s worthwhile or not.

DREYFUS: We’re in a middle of a debate. We expected that there would be opposition from some parts
of the mining industry just as there was when the petroleum resource rent tax was introduced 25 years ago. There will be opposition. As the Deputy Prime Minister said yesterday; no one likes to pay more tax. But there is an acceptance that this is an appropriate tax. It’s going to be an efficient tax and it gives a fair return to the Australian people on the resources that belong to all of us.

GILBERT: Mitch Fifield, that argument, the governments confident is going to have residence in this election year that it’s our resources, our dirt and materials and minerals. What do you think the politics of this situation at the moment? Are you confident the Liberals are on the right side of the political equation just months out from the next election?

FIFIELD: No one’s disputing that natural resources belong to the Australian people. No one’s disputing
that and no one’s disputing that there should be a fair return. What we are disputing is a tax which comes out of the blue without consultation that threatens jobs, that threatens investment. That’s our issue and that’s the issue of the mining industry. Mark talks about the push-back from the mining industry. Well why wouldn’t there be? You’re employing people, you’re seeking to run a business, you’re seeking to do that the best way you can and you see something come along that’s going to threaten that. Of course you’ll put your view.

GILBERT: Absolutely, but why shouldn’t they be on the same level playing field as the Petroleum
industry which has just seen the Gorgon development approved. It’s a similar sort of rentbased tax as opposed to a profit-based tax as opposed to a tonnage. Why don’t they, why aren’t they on the same playing field?

FIFIELD: Well for one thing there’s a massive retrospective element in what the government’s proposing. It’s not proposed to take affect for new investments, this will affect existing businesses. This will affect existing investment and companies and individuals that have made investments in good faith on the basis of tax laws as they exist and they’ve been changed. So that raises the whole concept of sovereign risk and whether foreign investors can trust Australian government’s to honour the arrangements they’ve put in place.

GILBERT:  Mark Dreyfus, a couple of fair points there. Your response.

DREYFUS: This is just more of the fear campaign, the scare campaign that the Liberal Party is trying to
drum up.

GILBERT: But why wouldn’t companies just say, ok we’ve got a better arrangement in Brazil than

DREYFUS:Because as OECD said over the weekend, what companies look at is not just tax regimes, they look at the resource. Whether it’s a mineable resource. They look at the employment conditions in the country that they’re proposing the project for. They look at whether there’s a skilled workforce. Whether there’s a stable country. All of those, there’s a great big tick for Australia and that’s why mining companies choose Australia. That’s why there’s activities in the mining sector in Australia and why the petroleum tax…

FIFIELD: …Chose Australia. Chose. We’re talking about the future…

DREYFUS: … This is the key one, why the petroleum tax has not in any sense acted as a break on
continued investment in petroleum and gas. The Gorgon project shows that in spades.

GILBERT: Ok Mark and Mitch just stay with us. We’re going to check the news headlines. We’ve got a
lot more to talk about of course, busy day in politics ahead. Stay with us; let’s get the news
headlines, the latest news headlines in the Sky News centre.

GILBERT: Thanks for being with us on AM Agenda. As we’ve been talking, the negotiations of course
with the mining tax are continuing. The resources Minister, Martin Ferguson keeping open the options of a compromise. Let’s here what he had to say yesterday on the Ten network.

MARTIN FERGUSON: That consultation committee has no capacity to negotiate or make changes. Any changes will be made by the Government because that is our responsibility, and we must get it right. But at the end of the day, unlike the Opposition, we actually believe the Australian community is entitled to a fair return on the development of its resources.

GILBERT: Barnaby Joyce, the Nationals frontbencher was on the Sunday Agenda program. He had
some interesting insights into the mining tax debate as it stands.

BARNABY JOYCE: they’re talking about conciliation because all of a sudden it’s bitten them on the backside and they’ve realised where this all leads. I haven’t seen anything as nutty as this until I read about Hugo Chavez in Venezuela in 2007. All the rhetoric that lunatic used is the rhetoric that our Prime Minister is using. That he was nationalising for the sake of the benefit of the wider people. His tax was 60 percent by the way.

GILBERT: Mark Dreyfus, there are reports this morning in The Australian that the government’s considered, going to be recommend from this consultation panel that it should scrap the right-off for 40 percent of losses and then possibly lift the threshold at which the super tax kicks in, which is super tax defines and that tax kicks in. What do you make of that speculation? Would it make sense to try and placate the industry in that way?

DREYFUS: I’m not involved in the detail of the negotiations Kieran. But I am certain that the man that
Tony Abbott chose as his finance spokesman then sacked his finance spokesman is not going to assist the debate with the kind of hysterical statement that we just heard from him. This is a consultation that is occurring on the fine detail of the resource super-profits tax and it also needs to be borne in mind in this debate is that it is a tax on super-profits. You are only going to be paying this tax if there is super-profitable activity going on. Of course the details need to be considered. Of course it needs to be insured that it’s a workable taxation regime. That’s why the consultation’s going on.

GILBERT: But there’s no, Mark, the government can’t back down on it can it? It’s got to stick to the 40
percent tax. It might get away with some change around the edges. But overall, you can’t afford another back-down surely.

DREYFUS: The government’s made it very clear that we are going to introduce a resource super-profits
tax. I’m looking forward to going to the next election in relation to the resource super-profits tax. All that we’ve had from the opposition as with so much else of the positive economic management and sound economic management that the government’s been engaging in is scrap it. Mitch said a moment ago that the opposition…

FIFIELD: We said scrap pink batts. You’ve done that now.

DREYFUS: Mitch said a moment ago that the opposition accepts that there should be a fair return on
mining, but of course it’s the position of Tony Abbott that the resource super-profits tax should be scrapped and the opposition is not suggesting some tax to replace it.

GILBERT: Let’s get Mitch’s response to a few of those points.

FIFIELD: Sure. It’s a dog of a tax. If you want to stop it the only way is to vote for the Coalition. Barnaby Joyce I think did actually make a pertinent observation with his reference to Hugo Chavez. Sure, at first blush it sounds like it might be stretching things a bit. But when you have a government that’s talking about super-profits, evil super-profits, that sounds a lot like Chavez. And also, a six percent return, that’s not a super-profit.

GILBERT: I don’t know if I’ve heard the term evil super-profits from…

FIFIELD: … That’s the undercurrent that these super-profits from these evil mining companies must
be hit for six. That’s the sentiment behind it.

GILBERT: Let’s get a few thoughts on a few other issues around today. The Reserve Bank currency
firm is being accused of this Securency, it’s subsidiary Securency International accused of bribing foreign government’s, foreign officials to get contracts. What do you make of this story?

FIFIELD: It’s a developing story and there’s never a justification for seeking to bribe in order to get a
commercial contract. There’s a bit of a success story I guess behind all this that Australia’s polymer note technology is world leading. It ensures that it is very difficult to counterfeit Australian money and that’s something a number of countries and central banks around the world have found attractive to use that technology. I assume the Federal Police are investigating these current allegations. They don’t sound good, but we’ll have to wait and see what the results are of any investigations.

GILBERT: Mark Dreyfus, they are concerning, the claims aren’t they.

DREYFUS: Of course and I’m not going to comment further. The Federal Police need to be investigating.
I would not want to say anything at all which would prejudice that investigation.

GILBERT: Ok let’s get your thoughts on another story. The insulation industry back in Canberra. Apparently are going to rally today. The Prime Minister said he was going to fix it a few months ago. Mark, he didn’t. You can understand their anger.

DREYFUS: The governments made it clear at all times since the 19th of February when the program was shut down that the governments concern in relation to insulation is safety. Ensuring the safety of Australian households. The particular concerns that seem to be being raised today are installers who are still waiting for payment. I can say very directly that there are some 50,000 claims. The government’s already paid 1.1 million claims in relations to installed insulation. There are 50,000 claims still awaiting processing. Every single one of those claims is one in respect of which there is a compliance concern or there was incomplete
information. The installers that are protesting outside today have been invited by the  government to meet with departmental officials to put their particular concerns. As I understand it they haven’t yet taken up that offer.

GILBERT: Ok, well one of the insulation representatives today Mark is quoted in The Australian said: “Mr Rudd has ruined an industry, getting away with it. I came to Canberra on February 24, where he met installers and promised them that he would fix it.” They’re obviously very disappointed in the way this government’s responded. They feel like a good industry has suffered because of the government’s mistakes.

DREYFUS: The government has acted on the report that Alan Hawke did for the government. Alan Hawke, very experienced governmental official and his report made it completely clear that the governments concern needed to be safety. For those reasons it wasn’t possible and he recommended against re-starting the program. The government’s concern remains safety. We are ensuring the safety of Australians.

GILBERT: Mitch Fifield, your thoughts.

FIFIELD: This whole scheme has been a debacle from beginning to end. When you artificially and quickly hyper-inflate any particular sector, you’re going to lead to dodgy operators coming in and you’re going to damage existing operators. That’s what we predicted and that’s exactly what happened. We’ve seen deaths, we’ve seen fires, we’ve seen businesses go bust. That’s been the result of this government’s scheme. Now the government belatedly and only after significant pressure, recognised and admitted that the scheme had been a complete debacle. They suspended the insulation scheme and the Prime Minister promised he would introduce a new scheme. He went out the front of Parliament House, as you said Kieran, and he met with insulation business operators and he said, I get it, I’m going to fix it. He promised a new scheme. Well the government did a back-flip on that. There is no new scheme and for the government now to be offering these businesses departmental discussions, that’s no solution. If it was good enough for the Prime Minister to go out and chat to them last time they were here, the Prime Minister should have the guts, go out, frontup and see them today. And I’ve just got to add, the people who are protesting today – they’re not protesting about payments which they haven’t received. They’re protesting about the fact that the government promised they would introduce a replacement scheme which  they haven’t done. There are a lot of good operators who were out there before this home insulation scheme who’ve done it tough and many have gone broke and the Prime Minister needs to go out the front of Parliament House and front-up today.

GILBERT: Should be front up Mark? Should someone from the government at least go out and say to these people, explain that it is safety as you say which is big priority.

DREYFUS: The government’s made its position very clear Kieran. There is an industry assistance
package. The industry assistance package is both to install the companies and an
assistance package for workers that’s some $57 million in total and again we’ve got phoney
outrage from the opposition. On the one hand complaining about the speed with which this
program was unfolded last year and the problems that may have been caused by the

FIFIELD: …It’s not phoney outrage, it’s real outrage…

DREYFUS: …And now calls for, calls for the program to be started up again. The governments concern
is safety.

FIFIELD: I didn’t say that. I’m saying the government made the commitment. It wasn’t the opposition
who said a new scheme should come into place. It was the government that did and the government went back on its word. I’m pointing out the government’s hypocrisy. This isn’t faux outrage, this is real outrage and the Prime Minister should have the guts to go out the front of the building.

DREYFUS: The opposition’s position that the program should not re-start. Because the concern is only
being expressed about process.

FIFIELD: We’re seeking to hold you to account.

GILBERT: Gentlemen, appreciate it as always. Great to see you. Have a good week. It’s going to be a
big week ahead here in Parliament. Thank you.

FIFIELD: Thanks Kieran.

DREYFUS: Thanks Kieran.