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Transcript of panel discussion with David Lipson: AM Agenda, Sky News: 23 December 2010: mining resources tax; Murray-Darling Basin; Disability Support Pension; 2011 outlook

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The Hon Richard Marles MP Parliamentary Secretary for Pacific Island Affairs

Panel discussion with David Lipson, AM Agenda, Sky News

Subjects: Mining resources tax; Murray-Darling Basin; Disability Support Pension, 2011 outlook.

Transcript, E&OE

23 December 2010

DAVID LIPSON: Hello and welcome to AM Agenda. I'm David Lipson.

As federal politicians start packing their swimmers and beach umbrellas after an incredibly arduous year in federal politics, there are still a few issues that will no doubt transcend the summer break and the mining tax is just one of them. The latest report claims a revenue shortfall in the MRRT will leave a multi-billion dollar black hole in the budget.

Well, this is just one of the issues that we will be discussing today with our panel. We have Parliamentary Secretary for Pacific Island Affairs Richard Marles. He's joining us in Melbourne.

Richard, thanks for your time.

RICHARD MARLES: Good morning David. How are you?

DAVID LIPSON: And Shadow Parliament — I'm well thank you — Shadow Parliamentary Secretary for the Murray-Darling Basin Simon Birmingham is with us in Adelaide. Simon, thanks for joining us.

SIMON BIRMINGHAM: Good morning David. G'day Richard.


DAVID LIPSON: First to you Richard. This report in the Australian Financial Review this morning on the mining tax warns of this possible black hole and it comes down to assumptions relating to the volumes and also the prices expected for commodities in the

future. How certain is your Government about the assumptions that have been made on volumes and prices?

RICHARD MARLES: Well the assumptions which underpin the costings that we've put in place in relation to the resources tax are done independently by Treasury. They are assumptions that have been very conservatively made. They were made in the pre-election fiscal outlook and most recently in the midyear fiscal outlook.

And so we're basing our work on that and I would make the point that since both of those — since both the pre-election fiscal outlook and MYEFO — if anything the spot prices on iron ore have increased. So we're confident about the funding assumptions that we've got underpinning the resources rent tax. I would say that, you know, the report that I've seen in the Fin[sic] this morning, you know, it's not a — it's an anonymous source rather and so it's not…

DAVID LIPSON: [Interrupts] But it is — it is a senior government figure quoted there. It's not — it's not just a source within Treasury.

RICHARD MARLES: Sure but it's easy to make those kind of comments, but I'd come back to the fact that the independent assumptions that have been made, the independent costings which underpin the MRRT have been done in a very conservative way. We're very confident of the figures that have come out from there. And if anything, from the time that they have

been made we've seen the spot prices on iron ore increase.

So we're confident about the assumptions that we've got there and we're confident about the revenue that will be raised through the Minerals Resources Rent Tax.

DAVID LIPSON: Simon Birmingham I'll get your response on that, but I also want to ask you Tony Abbott has said that he's going to try and stop this mining tax and rescind it if he ever gets into government. But even the miners have conceded that this form of tax rather than ral… than royalties is a much better system. What do you say to that?

SIMON BIRMINGHAM: Well David look, on the general issues of this tax, what we're seeing is that the process to date from the government is resembling something more like daytime soap opera than it is actually decent fundamental reform.

It's just going from saga to saga, and this latest one about costings. We need to remember there have already been multi-billion dollar variations in the costings of this government around its mining tax. We saw that between the Rudd model and the Gillard model, huge

changes, and now we're seeing the potential for a multi-billion black hole that will see Wayne Swan and Julia Gillard's budget blown to smithereens if they're getting this wrong.

Now we believe this is a bad tax and Tony Abbott has said that very clearly from day one. We think it's a bad tax that strikes very much at the heart of the key industry that is holding up the Australian economy, saw us through the global recession, ensures that Australia is in great shape for the future and it's an industry we need to be supporting and assisting to grow

into the future.

Now the government finds itself in a situation of having been at war with the miners on the one hand, now at war with state governments over this. It seems to be at significant dispute with their Coalition partners, the Greens; all of which of course throws into great doubt what version of this tax will still end up being presented to the Parliament if the government is having to compromise with the Greens along the way.

DAVID LIPSON: Richard Marles Rob Oakeshott…


DAVID LIPSON: …yesterday told me on this program that the government had been undertaking backroom handshake deals over this tax and he's talked about the need to have a full on public debate with some actual legislation out there on the table. Why is this being conducted, in a way, behind closed doors with the miners?

RICHARD MARLES: Well this hasn't been — I don't think this debate's been conducted behind closed doors. This has been one of the key debates this year.

DAVID LIPSON: But the negotiations — the nego… the process of negotiations.

RICHARD MARLES: Well I think they're — I think parties have a right to…

SIMON BIRMINGHAM: [Interrupts] With just a handful of miners.

RICHARD MARLES: …be able to have — well no, I think parties have a right to have in-confidence conversations with each other but this has been a very public debate throughout the course of this year.

And I would say that what this is, at the end of the day, is a significant reform process and reform processes are not easy by definition. What we had under the last government during the Howard years was a government which presided over a mining boom and basically sat on its hands and did absolutely nothing and so there was no dividend to the country which came through that mining boom.

We want to make sure that the mining boom mark two delivers a dividend to this country, so that we see better infrastructure, so that we see our national savings increase through superannuation, and so that we see the tax burden on companies reduced as a result.

Now Simon talks about being at war with the mining companies, far from it. We've got an argument with the major mining companies and we're moving forward on that. And we're confident we'll also get agreements with the states in the fullness of time.

But none of this stuff happens easily. The big difference between us and the Opposition is we're actually tackling the hard issues. We're going to — we're going to make the country better, so that there is a dividend from this mining boom. All we hear from the Opposition is carping and whinging and complaining and they offer not a single solution to how to take this country forward.


DAVID LIPSON: Any quick response to that Simon?

SIMON BIRMINGHAM: Look if Richard wants to contrast the record of the last government on tax reform with his government's plans for tax reform I'll do that any day. Just look at the sweeping package associated with the GST that was taken as a package to an election, that rolled back other taxes, that actually changed the fundamentals of the tax

system versus this government's proposal which is just for a new tax, a big new tax and nothing else.

DAVID LIPSON: Okay well let's take a very quick break…

RICHARD MARLES: Well you're talking about a tax which occurred…

DAVID LIPSON: Just — just — just very quickly.

RICHARD MARLES: …back in — 12 years ago which has, you know, this is a significant reform which will actually see a dividend from, you know, the country's — from the mining boom which, as you said, is a very important part of our national economy. You sat for 12

years on your hands and did nothing to connect that to the major needs of this country.

SIMON BIRMINGHAM: What — what — what taxes are you eliminating or cutting in place of this mining tax Richard? Name one.



RICHARD MARLES: …we're putting in place the resources tax so that what will happen is we will see a cut…

SIMON BIRMINGHAM: No it's just a big new tax.

RICHARD MARLES: We will see a cut to the company tax rate. Now what we got from the Opposition this year, the only kind of half costed idea…


RICHARD MARLES: …which came from the Opposition this year was in fact to increase the company tax to fund…

SIMON BIRMINGHAM: This is — this is…

RICHARD MARLES: …their version of the paid parental leave.

SIMON BIRMINGHAM: This is very minor stuff and this is — this is not fundamental tax reform.

RICHARD MARLES: I'd bear in mind that a paid parental leave scheme…

DAVID LIPSON: Okay gentlemen…

SIMON BIRMINGHAM: This is very minor.

RICHARD MARLES: …that's going to come in place in just over a week without a rise in the company tax.

DAVID LIPSON: All right. All right, let's wrap this up, because it's descending into a bit of chaos there.

We'll take a very quick break, take a quick breath as well, and we'll come back with some more issues including the Murray-Darling Basin, Australia's welfare system and what's in store for next year. So don't go away.

[Unrelated item — advertisement break]

Welcome back and welcome back to our panel Richard Marles in Melbourne, Simon Birmingham in Adelaide.

Simon Birmingham, freedom of information documents released today have put the government timeline for the Murray-Darling Basin plan in serious doubt. You've got your hands on those freedom of information documents. What exactly do they show?

SIMON BIRMINGHAM: Well David they make it very clear that the timeline the government has to adhere to, under the Water Act, is now just impossible thanks to the delays and stuff ups of the government in administering this process.

We're in at a situation now where the states are expected, under the Water Act, to implement new water sharing plans in compliance with the National Water Basin plan in 2014. And advice from the Murray-Darling Basin Authority, given to Tony Burke months ago now, shows that with the delays that are now in the process, those deadlines under the Water Act simply cannot be met. They cannot be met and yet we have Tony Burke and Julia Gillard out there presently saying the Water Act will not be subject to any amendment and timelines will be met.

Well the advice of the independent authority says otherwise and clearly this is a process that is going from one crisis to another. It is being mishandled in many different ways and this latest problem showing that the states will not be able to honour the legislated timelines of the Water Act, is a real problem that Tony Burke is going to have to come out and address and answer as to just how he is going to get it back on track and ensure we get a good plan, not just any plan, and a plan that can actually be implemented by state governments to give us a sustainable river system.

DAVID LIPSON: Richard Marles, can those timelines be met by the government? Do you still stand by that early 2012 declaration to get this Murray-Darling plan before parliament?

RICHARD MARLES: Yes David we do and we believe that we can get something before the parliament, in early 2012.

But as Simon said at the end, what is important here is to get a good plan, not just in terms of the health of the river, although that is fundamental to the ultimate outcome of everything here, but also making sure that we look at the health of the communities who live along the river. That's why we were very keen for the House of Representatives, under the stewardship of Tony Windsor, to have an inquiry into the social effects of the plan.

It's also very important that we make sure that food production can be maintained, so that the economic health of the Murray-Darling Basin is maintained as well. Now if it takes a bit of

extra time to achieve all of that, well then so be it, and that's why we're now looking at this going before the parliament in early 2012. But we think that that is a timeline which can be met and which can be met taking into account the outcome of Tony Windsor's inquiry.



DAVID LIPSON: …there are — there have been — just very quickly Simon, and just a very quick response please.

SIMON BIRMINGHAM: Yep. Yep, very quickly, the Murray-Darling Basin Authority says that if everything goes well, if everything goes to plan, it will take 40 to 50 weeks from the presentation of their draft to the finalisation of this. Now if the government are going to take into consideration Tony Windsor's findings of his report, which comes out in late May, that 40 to 50 weeks is going to push them well into the middle or the second half of 2012. Early 2012 just will not be possible.

DAVID LIPSON: And Richard, just anything finally to say [laughs] on that, to be fair?

RICHARD MARLES: Well no, we don't accept that. We think that — we think that we can take into account Tony Windsor's report and have this in the parliament in early 2012. That's the timeline that we're working on and we're…


RICHARD MARLES: …confident we'll meet it.

DAVID LIPSON: Okay, well let's move on. There have been some interesting parting words that have been delivered from Jeff Harmer who's the outgoing Secretary of the Department of Families, Housing and Indigenous Affairs — basically the department that looks after a lot of the welfare policy. He reckons that the Disability Support Pension has ballooned with

800,000 people now taking payments from that program, and should be tightened up.

Richard Marles, do you think that area of welfare has got a little bit too big?

RICHARD MARLES: Well, the first point here David is that I don't think that there is any more important program of the cov… in the Commonwealth Government, than the Disability Support Pension which really looks after some of the most vulnerable within our society.

And I guess the second point to make is that seeing increasing numbers of people with a disability, accessing a pension of this kind is not a problem which is unique to Australia; we're seeing this happen throughout the western world. We've already begun a reform process in relation to this. We do think that it's very important that the disability support pension is orientated, as much as possible, towards getting people into work, because without a shadow of a doubt, the best outcome for those concerned is if people with a disability are able to perform work that they can do.

Where — in non-clear cut cases, we're now going through a much more rigorous assessment process to look at what work can be undertaken by those people. But I might add, at the same time, for clear cut cases, we're actually fast-tracking their access to the DSP.

And so, we're already beginning that reform process. We think that from the beginning of January 2012, we'll see another 10,000 claimants not go through the TSP, but instead be referred to employment participation programs. And we're putting aside $85 million to support that. So, the reform process which Jeff Harmer is talking about is already in place.

But I come back to the first point, this is a very important program which does support some of the most vulnerable within our community.

DAVID LIPSON: Simon Birmingham, do you think — is it possible we're paying too much welfare? I know, politically, it's a difficult thing to say that sort of thing, but this report does point out some pretty — or these comments from Jeff Harmer du… do point out some pretty interesting facts, like 80 per cent of families with children under 15 actually get a family tax benefit. Eighty per cent. Wouldn't it make more sense just to tax — or further tax, increase taxes for the other 20 per cent?

SIMON BIRMINGHAM: Well David, look, firstly, can I say that, obviously, we all think that support for people with genuine disabilities, people who are in need in whatever circumstances is critical and it's one of the great things about Australia that we provide that support and it continues under whoever is in government.

We proposed towards the end of the Howard Government, under Joe Hockey as minister, welfare to work reforms, which were a process to try to kick-start the addressing of some of these issues.

It included reforms to try to get people off of the DSP where possible, and to actually get people back to work. And it really is the case that all the evidence in the world shows that if you can get people into work, that is the best outcome, not just for the tax system or the welfare system, but actually for the lives of those people and the lives of those families, and that's the goal we should all be striving for.

Now, at a personal level, I think there's some genuine need to look at the interaction of our welfare and tax systems and make sure that we minimise the churn of payments as much as possible, and make sure that in relation to disability support payments, we get people back into work as quickly as possible and tackle things like the effective marginal tax rates for that transition from welfare to work. And they're certainly the types of policies that I hope that we'll be looking at over the next couple of years, but we've done some hard yards there already. We took some clear policies to the last election in terms of getting people back to work and that's got to be the ultimate goal.

DAVID LIPSON: Mmm. Okay, look, we're almost out of time. I just wonder if we could just look ahead. In 20 seconds or less, Richard Marles, can you just deliver to us your picture, what you think is going to be the biggest issue or issues of next year?

RICHARD MARLES: I think we've got a couple of really big decisions looming in the course of 2011. One is in relation to putting a price on carbon within our economy; others are in relation to workforce participation.

In terms of decisions this year, there's a lot of delivery that needs to be done next year in terms of the national health and hospital plan and the National Broadband Network. It's going to be a big year.

DAVID LIPSON: A lot to do. Simon Birmingham, what about from your side of politics?

SIMON BIRMINGHAM: Look, next year for Australia is clearly going to be a clear choice between two sides. A side of politics in the government that is all about big taxes. And we just heard Richard mention a couple of them: carbon taxes, mining taxes, new taxes or a side of politics that believes you should keep government as small and efficient as possible while delivering the key services. And we'll be working hard, as Tony has said, on developing new policies to present a positive pitch to Australians whenever the next election comes around.

DAVID LIPSON: Shadow Parliamentary Secretary Simon Birmingham, thanks for your time. And Parliamentary Secretary Richard Marles, thank you as well. A merry Christmas to both of you.

RICHARD MARLES: Merry Christmas, David. Merry Christmas, Simon.


Media inquiries

• Parliamentary Secretary's Office: (02) 6277 4330 • Departmental Media Liaison: (02) 6261 1555