17-June-2010
Portfolio Media Releases, The Economy
Topics: Labor’s great big new tax on mining, taxation reform, Kevin Rudd’s authority challenged
E&OE
ROSS GREENWOOD:
Shadow Finance Minister Andrew Robb with us now. Hello Andrew.
ANDREW ROBB:
G’day Ross, nice to be here.
ROSS GREENWOOD:
First things first, it does appear as though the Government has got a problem on its hands. It can’t change that tax without putting a hole in its budget. If it puts a hole in its budget, its whole prospect of suggesting that they’re going to be able to pay off the debt in seven years and get back into budget surplus in three years, start being shot and falling apart.
ANDREW ROBB:
There’s no doubt about that Ross. The government has totally snookered itself I think on this issue. They are caught either way. If they do what they should do and that is scrap it, because it’s madness in terms of the future of our economy and our greatest economic strength is being taxed in this way to make us uncompetitive. I mean people overseas just can’t believe what’s going on here.
If they scrap it, they’ve got a huge hole in their budget and they’ll have to have a mini budget. If they don’t scrap it then they’ve got a real issue with our competitive position; the loss of hundreds-of-thousands-of-jobs over the next 20 years and billions of investment. So either way, they’ve got one hell of a problem.
ROSS GREENWOOD:
It seems when you get a problem like this, they should be actually pushing it out to a committee trying to get it on the backburners, so they can get to the election as quick as they can. There’s not too many committees at the moment they can push it out to.
ANDREW ROBB:
Well look, they at least could have had it considered constructively by cabinet. That’s a committee. I could guarantee to you, that 95 per cent of the cabinet read about this when you read about it. I know this for a fact, people have been privately saying out of cabinet, to others that they read about it and some of these people have got a vested interest in their portfolio responsibility.
This was clearly policy on-the-run. This was Kevin Rudd with a problem with his budget. This is Kevin Rudd who everyone thinks is a jelly back because of his back-flips on the emissions trading scheme and a whole host of other things. He sought to buy a fight and you could tell that from the language he used from the moment he announced this thing. He wanted to buy a fight with the top end of town to show that he was a man of steel and that’s why they want this thing to go on for 12 months. So it can go through an election and he can look like he’s standing up to the robber barons as he terms them.
This is playing politics in the most cynical way with the future of the country; he deserves not to be Prime Minister on this issue alone.
ROSS GREENWOOD:
But one point about this, is the Opposition, your party, has indicated that this tax will not come in any way shape of form. Do you stand by that?
ANDREW ROBB:
Absolutely …
ROSS GREENWOOD:
But hang on a minute, the miners themselves Andrew, the miners themselves wanted reform of this. The miners themselves had before hand approached the Federal Government to say look the current state-based system of royalties does not work. It is not the most efficient system, it is flawed and we want that changed. So what you are saying is you are not committed to the reform of something the miners themselves have sought change for.
ANDREW ROBB:
At this stage, what Kevin Rudd is putting up; there’s two points here Ross and you are making valid points about the theory of this. Firstly, Kevin Rudd said, and we agreed with it, he said over the last two years, as has Wayne Swan, that if we are to have tax reform and there is plenty to reform within our tax system, if we are to have tax reform, it has to be done in a total fashion.
That’s why he got the Henry Review to look across taxation in Australia, so that he could take a total view of things and not do something piecemeal, well this is a very piecemeal approach, totally piecemeal approach and it’s not reform, it’s a tax grab. See if it was reform, they would have just brought it in at a level which just would have replaced the revenue that’s coming from the royalties.
ROSS GREENWOOD:
But even some of the miners have acknowledged that as part of that reform of the royalties system they probably can pay a higher degree of tax, a greater share of taxation as a result of the improvement in the mining industry over a period of time.
ANDREW ROBB:
Well the royalty system allows for that. I mean while we’ve been having this debate over the last five weeks, the Western Australian government has increased the royalty by $300 million and the NSW government this week increased the royalty by 85 per cent, which is about $1 billion. So from about $900 million to I think about $1.8 (billion), it’s $980 million now I think for the NSW royalties that they get and they’ve increased it by 85 per cent. So there is a capacity already in terms of paying more tax, but the miners you will recall, made that request and put that opinion, that it could be improved, but in the context of an economy-wide review of taxation …
ROSS GREENWOOD:
Sure, but what I’m saying is though, is your party itself has always long been committed to tax reform, you right now have almost said steadfastly we will not change the mining tax. But what you are also saying to me here is that you would review the mining tax if you came to office because you would actually look to review the way in which these royalties work.
ANDREW ROBB:
We would only look at this tax, not in a piecemeal fashion like it has been put up, it’s just a tax grab, it’s not reform; we would look at taxation across the board and in that context we would look at what the miners have said and others have said in terms of improving the royalties system, whatever, but we will take this in a total sense.
You will recall, that the commission of inquiry that the Rudd government set up and said must be followed in terms of an overall look at taxation, came up with 138 recommendations, Kevin Rudd and Wayne Swan picked two-and-a-half of those, one of which they did the opposite of what the Henry Review said, the other one hundred and thirty five-and-a-half were put aside.
So this is clearly just an attempt to raise money because of the hole in their budget and you know I think you can observe that this has been a deliberate exercise to get under the skin of these mining companies and create some sort of conflict to change the image of the Prime Minister.
It is a totally political exercise this and in that context we’re not going to be drawn into some academic debate by the government about the merit of reform, when they are not reforming, they are just looking for more taxation …
ROSS GREENWOOD:
So what you are saying is if you were to win the next election you would pick up the Henry Review, blow the dust off it and potentially implement more than four of the 138 recommendations …
ANDREW ROBB:
Absolutely, absolutely, it’s our intention to have a wide-ranging look, there are lots of interesting things in that report, though there’s none of the workings, so it’s very hard to see how it falls out in terms of fairness and efficiency and all the rest.
ROSS GREENWOOD:
And given that Ken Henry is certainly public enemy number one according to Andrew ‘Twiggy’ Forrest, in what sort of esteem is he held by the Coalition, given of course that he was also the secretary of Treasury when you were in government as well?
ANDREW ROBB:
The thing is, our fight is with the government, I mean I think Ken Henry is a servant of the government, he does what he is asked to do by the government and we’re certainly not going to be drawn into, again by the government, who keep trailing their coat on this, we are not going to be drawn into commenting on their public servants.
They’re doing their job for the government at the beck and call of the government; our problem and I think the problem that many Australians should have is with the way in which Kevin Rudd is a one man band. You saw this with the illuminating interview that you ran at the start of this with Simon Crean.
I think, it’s by far, the first perhaps major split that we’re seeing in the cabinet. Mr Rudd’s authority is being challenged. Simon Crean’s experienced, he knows what he’s doing, he needn’t have made those comments and I think it’s about time his cabinet started to challenge him, he is a one man band and Australia is suffering as a consequence.
I bet Simon knew nothing about this policy and yet he’s the Trade Minister, until he read it in the paper.
ROSS GREENWOOD:
Andrew Robb, Shadow Finance Minister many thanks for joining us here on Money News.
ANDREW ROBB:
My pleasure, thanks Ross.