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Transcript of press conference: Canberra, ACT: 4 May 2018: levelling the playing field for craft brewers and distillers; immigration



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The Hon. Scott Morrison MP Treasurer

Senator the Hon. Mathias Cormann Minister for Finance

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TRANSCRIPT

JOINT DOORSTOP INTERVIEW, CANBERRA FRIDAY 4 MAY 2018

E&OE

Subjects: Levelling the playing field for craft brewers and distillers; immigration.

TREASURER: It’s great to be here with Dan from Capital Brewing and Andy, from back in The Shire actually from Hairyman Brewery back in the Southern Shire in Sydney. Now, believe it or not Mathias and I are not here for the beer today. What we are here for today is for small businesses and growing small businesses into large businesses. What we are announcing today is that we are changing the rules to ensure that small breweries like this and distillers all around the country can actually compete on the same level playing field as the big guys, multinationals and all the rest of them. This is a dynamic new industry that has been growing up in Australia over many years and they need to take the next big step. As you can see around me, there is serious investment going into these businesses. They should not be penalised for having to pay higher taxes on their products to ensure that they can just get on a level playing field with large businesses.

So, the changes that we are making today are twofold: one is to ensure that currently the excise that relates to this should be the same as relates to something smaller, which many of the smaller brewers actually use. We should not have to pay more just simply because they are putting it in a smaller keg. It makes no sense. It is a barrier to small-business growth and we are getting rid of it. The other thing we are doing is changing the offset that is allowed to go from $30,000 up to $100,000, through the scheme. That is also a good change because that is particularly supporting the smaller brewers and distillers all around the country.

Why are we doing is? Because it is an impediment to small-business growth. We are doing it also because this is an industry that not only creates jobs in places all around the country, in the city, in the towns, in rural Australia, but it is also a good thing for tourism around the country. Whether you are used to going to particular parts of the country and sampling the vineyards and the rest of it, as our international visitors do around the country when they come, and domestic business.

Now this is also part of that scene now. Whether it is distillers, on issues of ciders and so on, or beer itself. So it is all about producing a great product and supporting small businesses, small businesses become large businesses. I am going to ask Mathias to make a few comments about what we are also doing for small businesses and have been doing with our Enterprise Tax Plan. And then Andy and Dan might have a bit to say as well.

FINANCE MINISTER: Thank you very much Scott. It is great to be here with the Treasurer, with Dan and with Andy. To help working families across Australia to have the best possible opportunity to get

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ahead, we need to ensure that the businesses that employ them, that pay their wages, have the best possible opportunity to be successful and more profitable into the future. That is why we have continued to pursue reforms to make our tax system more growth friendly and to make it fair. Today is another instalment. Our plan is all about making sure that working families across Australia have the best opportunity to get ahead and helping small business have the best possible opportunity to be the bigger businesses and the big businesses of tomorrow, which means that they would hire more Australians. This is an important part of that. It is a great privilege to be here and looking forward to the Budget.

TREASURER: Thanks, very much Mathias. The businesses here will fall under our definition, the new definition we put in last year's Budget, businesses with a turn-over of up to $10 million. That means they were the first to get the tax cuts that we have already legislated. They are also the businesses that from last year in the Budget are getting the instant asset write-off, which has been such an important thing for small businesses. By increasing the threshold from $2 million to $10 million means that they have access to doing GST on a cash basis, pool depreciation, small-business tax incentives. What we are doing today is removing yet another barrier that is stopping these businesses from going ahead in leaps and bounds. Dan, we’re at your place mate, why don’t you tell us a little bit about what this will mean for your business and the people that work here?

DAN WATTERS (CAPITAL BREWING CO): This is a great step in the right direction for businesses such as ours. It will allow us to free up some capital and invest in more jobs in the industry and also invest more into our infrastructure to allow us to make more great beer.

TREASURER: Fantastic, and Andy no announcement on craft brewing, or brewing more generally is complete without having someone from The Shire here. Andy. Great for you to be here, the Hairyman himself.

ANDY ORRELL (HAIRYMAN BREWERS): Thanks very much, Scott. This announcement today is fantastic for the industry, for independent brewers, for independent distillers. It is going to allow us to invest in our growing businesses. It is a growth market and it is also going to allow us to employ more people. This is a dynamic growth industry and we thank the Government very much.

QUESTION: How much will prices of beer fall as a result of these changes?

TREASURER: What we do is set the taxes and the excise and we are changing that today. Ultimately what businesses charge is up to them and it is based on the quality of the product on their customers and how they run their own business plans. We don’t run their business plan, these guys do and it is up to them to decide how they price.

QUESTION: Is it likely that this will result in cheaper beer for the consumer?

ANDY ORRELL: Certainly there is an opportunity for the cost of beer to come down. It is up to the individual business owner themselves to make that decision. It is how the wholesalers of the product, the retailers of the product pass those savings on. I know in my case we will be investing in infrastructure and also jobs.

QUESTION: So no reduction in price?

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TREASURER: That is not what he is saying. What he is saying is that around here there is enormous equipment and investment to build their businesses. What this does is allow the business to invest more into their business and ultimately that is always good for consumers because it’s a better product and ultimately that is always good for consumers because it is a better product that is ultimately going to be produced at a better price.

QUESTION: Sorry can I ask you, will that result in a reduction of the price at the pub?

ANDY ORRELL: That is up to each individual brewer.

QUESTION: But for you specifically.

ANDY ORRELL: For me, probably not but that is to be borne out. It is 12 months before this initiative takes place.

QUESTION: Treasurer Joe Hockey celebrated his first Budget with a cigar. This Budget is very important to you. You must be concerned that you could be toasting your last. How important is this Budget?

TREASURER: This Budget is about providing a stronger economy and a stronger economy is built on businesses like this that invest. That is why we are making sure that we do everything in this Budget, as we have in previous Budgets, to ensure that Australian businesses will invest because that is what produces more jobs. Last year it produced 410,000 jobs, 75 per cent of those full-time jobs. So, this Budget is about more jobs, it is about guaranteeing essential services that Australia rely on, it’s about a Government that lives within its means. This is a Budget that is backing business to create more jobs whether it’s Dan or Andrew’s business, by removing tax arrangements that were basically holding them back. Why should their businesses be held back because of tax systems that are out of date? There are distortions and we are getting rid of them. We have already done that for small businesses, up to 10 million. People used to think a business was only a small if it had a turnover of $2 million and we got rid of that. Businesses up to $10 million are small businesses. Bill Shorten doesn't agree with me but the wind is blowing in Canberra today, he shouldn't come because he will change his mind again. What we are focused on is delivering the right set of conditions for businesses to grow, create jobs and provide wonderful products, as is done here or Andy’s place, or the hundreds and hundreds of craft brewers around the country, which are delivering a great experience from businesses to our nation.

FINANCE MINISTER: If I may just add to that. You talk about when we came into Government. Let me remind Australians what we inherited when we came into Government. When we came into Government, we inherited a weakening economy, rising unemployment and a Budget position that was rapidly deteriorating. A three billion dollar deterioration to the Budget bottom line per week in the 11 weeks from Labor's last Budget to the pre-election economic and fiscal outlook. Our plan, the plan that Scott Morrison and I have been working to implement, has put Australia on a stronger economic and fiscal foundation and trajectory for the future. We have stronger employment growth now and the Budget is now on a believable track back to surplus. Our plan is working. We are making progress and on Tuesday the Treasurer will be delivering the next instalment in a plan that is working. This is not the time for Australians to take a risk with flip-flop Bill Shorten, who does not know from one day to the next what his position is.

QUESTION: Treasurer, what is the revenue cost of this beer measure?

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TREASURER: $85 million over the forwards and tops out at about $30 million a year and that was basically tax that was being collected that was holding these businesses back. So, I'm taking the tax monkey off the brewer's back and the distiller's back all around the country because I want to see those businesses grow.

QUESTION: The brewers raise a very good point though, there are a lot of businesses who want to invest in new infrastructure, they want to employ more people if they can but doesn't that also suggest in terms of the corporate tax cuts that is where those savings are more likely to go rather than for example actually increasing people's wages?

TREASURER: These things are not mutually exclusive. A business that is growing, a business that is paying less tax to the government, is in a position to do a number of things, they can invest more in their business - which they will, they can invest more in their staff - which they will, they can invest more in better wages - which they will. And all of the surveys and all of the consultation that has been done backs that up. It is not an either or. I think we need to look at this a little more mutually and understand how businesses operate. It is not for the government to tell Dan and Andy how to run their business. I don't think that is a very good idea. I have tried their beer, I don’t think I could improve on it, I don’t think I could help with that. What I can help them with is making sure that they don't have to pay the government more. And if they don't have to pay the government more, then that means that they can invest in places like this and their staff and their wages more and it is as true for Andy and Dan as it is for larger companies as well.

QUESTION: So cheaper beer, a lot of people will be happy if that actually happens in some cases but why then is it silly for the Labor Party to say they should take the tax off tampons? Why take the tax off craft boutique beer but leave it on for tampons?

TREASURER: That is a matter for the states and territories. I mean, the states and Territories...

QUESTION: What is your personal view of the tampon tax?

TREASURER: The states and territories decide that issue and this Government already put it to the states and territories and they said no. And the Premier of New South Wales...

QUESTION: I dare say that all women...

TREASURER: …just said no just this week. So unless Bill Shorten and the Labor Party have come up with a way to get around Australian laws, that is an issue that has already being addressed by this government and has been rejected by the states and territories...

QUESTION: But I suspect that just as many women…

TREASURER: …so I have nothing more to add to it.

QUESTION: But why is it a silly issue?

TREASURER: I haven’t said it was. You just did.

QUESTION: Well, why is it then…

TREASURER: You just said it was a silly issue. I don’t think it is a silly issue.

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QUESTION: Ok, so should we take it off tampons then?

TREASURER: I would say the matter is moot because the states and territories don’t support it. I am focused on things that I can do. I'm not here to have a debate, what I'm here to do is to announce lower taxes for businesses to get ahead.

QUESTION: Why not go to the states and ask them?

TREASURER: We did and they said no.

QUESTION: But now you have an alternative revenue stream...

TREASURER: Last year we increase the GST base for the year coming by $1.9 billion, we have already done that. So the states have said no to a change in the base on that tax. So your question should be addressed to State and Territory Treasurers and Premiers. And I would encourage you to do that because here we are talking about lower taxes on beer.

QUESTION: On the surface, are we looking to be back into surplus, it is only $2.9, $2.6 billion deficit we are expecting?

TREASURER: You don't have long to wait to understand what the Budget will be, it is on Tuesday. I will see you then.

QUESTION: Would you like to deliver one early?

TREASURER: We have always, always been doing everything we can, Mathias and I, the Prime Minister, over successive budgets to ensure that we bring the Budget back into balance and we have been doing that methodically and we have been doing it principally through two ways, we’ve been getting expenditure under control and we have been growing the economy and one of the reasons we have been able to grow the economy is we are not looking to slug business with higher taxes. We are reducing their taxes, particularly small and medium-sized businesses. We are backing them to invest in this place and in small businesses all around the country. That is how you grow the economy. You do not grow the economy by increasing taxes. If you increase taxes, then all that does is invite the government to spend more money. Now, I don’t think our government should have a blank cheque on taxes. I don’t think our government should have a completely unfettered reign on expenditure and we haven't done that. I tell you who you don't want to give a blank check on taxes to and on spending and that is Bill Shorten, he will spend like there is no tomorrow and then he will tax you like there is no tomorrow, as they have done before and that just means everyone pays for higher taxes.

QUESTION: Speaking of that, you have set the target of 23.9 per cent of GDP as your target to keep taxes lower, is that more important than running surpluses for [inaudible] and if it is...

TREASURER: The Budget is on Tuesday night, I will see you there, I'm sure you won't miss it.

QUESTION: Labor has this 90 day Manus and Nauru policy…

FINANCE MINISTER: They do not actually. They do not actually. They back flipped on that within 24 hours. Flip-flop Shorten, he does not know what he says.

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QUESTION: You were the Minister when Operation Sovereign Borders came in, they talked about the resettlement deal, potentially with New Zealand, would you agree that there might be some room to move there?

TREASURER: All I know is under this Government people are not going into mandatory detention because we stopped the boats, that is how you ensure you do it. That is what we did, that is what we will continue to do and I have no idea what the Labor Party would do but I’m sure the people smugglers would love it. Thank you.

[ENDS]

Contacts: Andrew Carswell 0418 505 376, Kate Williams 0418 872 921, Sonia Gentile 0455 050 007 The Hon. Scott Morrison MP, Sydney