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Transcript of doorstop interview: Brisbane, QLD: 25 October 2012: NBN; Minerals Resource Rent Tax; Business Tax Working Group

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THE HON WAYNE SWAN MP Deputy Prime Minister Treasurer


25 October 2012


SUBJECTS: NBN, Minerals Resource Rent Tax, Business Tax Working Group

TREASURER: This is a historic day for Brisbane and particularly for the northern suburbs here and particularly for Aspley. This is the first roll out in Brisbane of the NBN. A great nation-building project which is going to turbocharge this city and this country in the 21st century. The services which will come from super-fast broadband into the home, into businesses are absolutely critical and I know Yvette D’Ath is thrilled that the roll-out is happening here in the northern suburbs as well. We’ve got Simon Penrose from Brisbane North Chamber of Commerce, he knows what it means for local business, particularly in this area where existing services are frankly not very good. As a local member around here for a number of years, I’ve always had constant complaints about the speed and reliability of broadband. Now with the NBN we are entering the 21st century with 21st century communications. This will make Australia much more competitive in the world and it will make all of our cities much more connected, not just to the country but to the world and in particular to our region. So what we can now do with the NBN when it comes to health services, when it comes to education services, when it comes to business is going to be simply fantastic for the future. But I might just throw to Yvette and to Simon and of course to Darren from the NBN just to give you some local stats.

D’ATH: Thanks Wayne. This is a fantastic day to see the NBN rolling

out on the Northside of Brisbane. This is important, it’s not just about households, but it’s also about education and it’s also about health and businesses. There’s a lot of people with the changing nature of business actually operating from home so this will make a real difference. One block from here we have the Apsley State High School - to think that the broadband is going to be at our schools in a matter of months in this local area is just fantastic and I know that it’s going to help the local businesses in this area as well. It’s great that Simon’s here from the North Brisbane Chamber of Commerce and it’s just fantastic that the guys from NBN Co are here rolling out this fibre today. The people in my electorate are not saying why are you doing this? They’re saying why can't we have this now in our area? It’s a big project, it takes time to roll it all out, but it’s started here and it’s going to go further across the Northside of Brisbane and we just can't wait for all of our communities to be reaping the benefits of the National Broadband Network.

PENROSE: It’s going to be fantastic for business in this area. At the end of the day I know what some of our services are like and some of them are only better than

ADSL 1, which isn’t much better than dial up so it’s certainly going to help businesses throughout this region to hit the ground running.

JOURNALIST: Can you give us an example of what it will actually do to help business?

PENROSE: Businesses in this area where they’re suffering where they can't actually get connectivity will actually have connectivity then be able to get along and do searches and be able to have social and also an internet presence. Whereas before they hadn’t been able to do a lot of things, uploading and downloading files, having VOIP services coming into their premises and connecting businesses together, all those sorts of things are going to help businesses dramatically throughout the country.

JOURNALIST: Does that have an economic impact not being able to do that?

PENROSE: It’s certainly having an economic impact on a lot of the other businesses we’re dealing with throughout the country. Where they can't actually get reasonable services, copper in the ground is starting to break down so therefore some of the businesses can't even get an ISBM or PSTN services in there because the coppers starting to break down in their areas.

DARREN RUDD (NBN): This is a very complex project, it will take us nine and a half years to run fibre around the country. What we’re signifying here today is that early next year we’ll be switching on parts of Aspley, 100,000 properties are currently under way across Brisbane, that’s schools and businesses and homes. By 2015, Australia will have 3.5 million homes, schools, and businesses either connected or underway. Some people in this state can't get access to services, we’re going to provide them with access that’s going to be reliable and we’re going to close the geographic gap and close that gap between us and other linear economies that already have their NBN in place.

JOURNALIST: There’s been criticism that it’s been a bit slow in coming?

DARREN RUDD: We’ve had to put the fundamentals in place so we can expedite the project over the longer term, the nine and a half years. You saw today we’re using existing infrastructure, we’re not digging up the street. It makes it easier to pull the fibre through and connect , so we’re expediting the project and we’re conscious that we’re saving money in doing so.

JOURNALIST: What’s the uptake been like in states where it already is?

DARREN RUDD: In Kiama we’re up to 48 per cent. Almost one in two people that have access to it have said ‘yes I want it’ and signed up. As we go around Townsville we’ve got one in four now signing and that’s growing as well. So pre the roll-out, on average 75 per cent said yes you can come and sign up and the numbers are growing to that now.

JOURNALIST: Is cost a reason why you’re not getting more?

DARREN RUDD: Not it’s awareness and it’s also availability. We're actually only starting on switch-on sites now. So the proof is in the pudding, until you have it on, you understand what it means, then you have that agitation to want to sign up. On the business model people will save money and will get that reliable access.

JOURNALIST: Can you just explain the roll-out (inaudible)

DARREN RUDD: What we do in every location is start - and we’re starting in several locations here - with our first fibre (inaudible) the blocks in which we design and build this is next to the exchange and then we fan out from there. Now that’s done for a lot of technical reasons, primarily redundancy, in case something goes wrong with the network. So it’s a very much engineering-driven process by design and construction. That’s consistent across the country at the moment

JOURNALIST: Timeframe?

DARREN RUDD: This first location will be activated early next year. Progressively all the sites we have across Brisbane will be coming online, they’re underway next year.

JOURNALIST: How early next year?

DARREN RUDD: It’ll be around a few months, so around February, March.

JOURNALIST: Why should people sign up to the NBN?

DARREN RUDD: They’re find the cost savings there and the reliability - even here in metro Brisbane close to the exchange they’re not getting the services they signed up for.

TREASURER: Over the years, particularly from this area, there have been lots of people who have not been able to access the service in a reliable way. It’s been one of those complaints, how can it be that so close to the city you can't get reliable broadband. Well that’s the case for so many parts of our city. Of course then when you go to regional Australia, it’s even worse. What the NBN is going to do is to put in place a universal pipeline across the whole country, giving everybody access to superfast broadband, this will be not just fantastic for business but it will also revolutionise how we deliver so many services. Like health services and so on. This is a nation building project, it’s a game changer for Australia, it means that we will catch up with the rest of the world when it comes to very basic technologies. It can't be underestimated in terms of its impact on economic growth, but also its impact on the way in which we live and do business in our homes and our suburbs.

JOURNALIST: Is there any impact on the installation for residents?

DARREN RUDD: Currently when people have come down the street, when they want it they’ll let us know (inaudible). They’ll place an order through their retail service provider then we’ve got to put some equipment in the home. We install that, there’s no charge to do that, we maintain it, we replace it and we repair it.

JOURNALIST: What about the construction though?

DARREN RUDD: That will happen. We notify people, there’s a lot of engagement with Councils and local stakeholders and as you can see here the safety perimeter is put up, but everyone is notified.

TREASURER: But what you’re seeing here is the benefit of the arrangement that NBN has reached with Telstra because what’s been used here is existing Telstra infrastructure and what it means is that the streets are not being dug up. The same infrastructure is being used, that’s the huge cost saving in terms of the project over a long period of time and it makes sense and you can see the benefit of it today. We’re not out here with a whole lot of diggers, existing infrastructure is being used.

JOURNALIST: (inaudible)

DARREN RUDD: In Townsville, I’m not sure, I think it’s around 3,000 at the moment. But bear in mind we’ve only got our first release site, that’s the first module, up and running. But as I said, 25 per cent currently, so one in four have signed up in that particular area. In Willunga in South Australia there up to about 48 per cent to activate it.

JOURNALIST: (inaudible)

TREASURER: First of all we are on track to come back to surplus. That’s why I delivered the mid-year budget update, that’s why the Government has made some tough decisions when it comes to spending. In the forecast that I delivered on Monday we wrote down resource rent taxes by about $7 billion, around $4 billion for the MRRT, because a profits-based tax is a tax which delivers revenue when prices are really high and when prices are really low it doesn’t deliver the revenue, that’s how profit-based taxation works. Iron ore after the budget through to September crashed by 35 per cent in terms of prices, coming back up again, and of course coal has come down substantially. I don't discuss the affairs of individual companies but when it comes to the MRRT we expect to receive [over the forward estimates] something like $9 billion from the MRRT.

JOURNALIST: (inaudible) massive write-down?

TREASURER: The design of a resource rent tax is such that it delivers the revenue when profits are high and in the case of commodities where prices are high and of course when they go down, it doesn't necessarily deliver the same amount of money. As I just said, in the past few months, we’ve had a real crash in commodity prices which has not only affected the resource rent taxes but it’s affected company tax as well. But we’re forecasting, in terms of the MRRT, to receive around $9 billion across the course of [the forward estimates]. Because you can't take one particular quarter and claim that it’s representative of the whole year.

JOURNALIST: So you’ve factored it in?

TREASURER: Absolutely.

JOURNALIST: So it’s not (inaudible)

TREASURER: No this was announced on Monday. There’s nothing new about that. The write-down for the MRRT was in the figures that were announced on Monday and the write-down was just over $4 billion.

JOURNALIST: Mr Hockey says you’re being deceitful (inaudible)

TREASURER: Mr Hockey’s behaving very strangely at the moment. This morning on television when he was asked, for example, for an answer about the Business Tax Working Group and what he thought about the report he said ‘you can't blame the Government, but I do’. That’s what he said in relation to the Business Tax Working Group. The Government is disappointed that the Business Tax Working Group didn't come to a conclusion about how we could fund from within the business tax revenue a cut for the overall company tax. But Mr Hockey to be critical in the way he was this morning when the Liberal Party is actually proposing to increase company taxes by over 1 per cent indicates that he has completely lost the plot.

JOURNALIST: So are you still fighting to reduce the company tax rate?

TREASURER: The Government shares the aspiration with the business community that over time we should bring down company taxation. But we’re not going to do that by hitting the battlers in the street. The terms of reference for the Business Tax Working Group were for them to look at savings in the business tax system to fund an overall cut to the company tax rate. I’m disappointed that they couldn't agree on how that should be done but nevertheless we will continue to work with the business community, but what we won’t do is what some want done which is to increase it by hitting those battlers in the street. We’re not going to do that, we’re a Labor Government and we will always stick up for low and middle income earners in this country.

JOURNALIST: (inaudible)

TREASURER: I’ve seen some reports but I haven’t seen the book so I’m not sure what the proposition is so I haven’t got anything really to add.

JOURNALIST: (inaudible)

TREASURER: No it wouldn't be an accurate account if that is the account that’s been given, I’m not sure that’s necessarily the account that's been given, but from my point of view, no that would not be accurate at all.

JOURNALIST: Does Julia Gillard support an ETS?

TREASURER: The Government has just implemented an ETS. The pricing of carbon has been a very big undertaking in reform by this Government and we got it done on 1 July this year. A big reform for Australia to make us competitive in the 21st century, along

with big reforms like the NBN that we’ve seen roll out here today. These are the nation-building projects which will ensure that Australia prospers in the 21st century, that’s what Julia Gillard and I are committed to.

JOURNALIST: Have you spoken to the miners, you know, about the prospect of getting a lot less money from the tax?

TREASURER: I don't talk to individual companies about their individual tax affairs, those are matters between the miners directly and the tax department.

JOURNALIST: (inaudible)

TREASURER: Well because the Treasury, in its normal, professional and methodical way consults broadly with the business community and individually when it comes to sector by sector, they are all discussions that the Treasury holds and they are commercial in confidence because they go to direct discussions between the department and individual businesses. The end result of all of that consultation is in our forecasts, we are forecasting $9 billion in revenue over the forward estimates for the MRRT and that’s what represents the Treasury’s best judgment of where those revenues are, collectively.