SUBJECTS: Inequality and vested interests; MRRT; productivity; military pensions; Newstart
Thank you very much Treasurer. We will move to the traditional questions now. The first one today from Phil Coorey.
Good afternoon Mr Swan. Phil Coorey from the Sydney Morning Herald. Could I put to you the observation about your claims about the vested interests that was in fact your government which set the precedent for this pattern of behaviour by folding in the face of the protest by the mining industry to the point where now a mining industry style campaign is now becoming part of the political vernacular and it has been cited as a precedent by other vested interests and other policies that are fought.
I think what it has provided is a stark illustration of the choices facing Australia because putting in place a resource rent tax was never going to be easy. It was always going to be subject to very considerable political opposition from business groups. Of that there was never any doubt whatsoever. In fact, if you wanted to know why, you had to go back sort of 25 years to when the PRRT came in and the same sort of claims that were made then were being made now about the RSPT/MRRT.
What is different between what occurred 25 years ago is precisely the subject of my essay: that there is a smaller group of vested interests with enormous wealth and power who are prepared not to sit down and discuss the national interest. Now, we resolved this issue of a resource rent tax in the national interest, sitting across the table with responsible mining companies who eventually came to the party and worked our way through the issues. It wasn't possible for some months for that to happen but it did happen. And as a consequence of that, we have a huge advance in public policy, very important for the country, very important for all of the reasons I have spoken about before.
But what we've seen, not just during that debate and even prior to the resolution of the issue, was the vested interests that I have talked about here today who have continued a really strong, vitriolic, well-funded, backed by enormous corporate manoeuvring from a group of people to try and sink this tax. It has continued. It hasn't worked yet. It's got to get through the Senate at some stage in the next couple of months. What it has shone a light on is the growing power of vested interests and simultaneously with this what we've seen is some of the dodgy, shonky campaigns that have been run against carbon pricing and the way which some of that has been reported, presented publicly, has not had the sort of analytical rigour applied to it as it has been put through to the public.
I could give you any number of instances in the campaign that has been run against carbon pricing by vested interests where we haven't seen what I would regard as the critical scrutiny that one would normally see of propositions put forward by vested interests in the public debate. So it isn't just the Minerals Resource Rent Tax, it's what's going on and what went on with carbon pricing and a whole lot of other things. Because essentially, some of these people don't think there ought to be a public purpose.
I was really disturbed and it made by stomach churn when I read Mr Palmer saying that his only responsibility, his only responsibility, was to his shareholders and to his workers and he had no public responsibility whatsoever. Well, what I say about people like Mr Palmer is they don't get rich on their own. The fact that they can make an enormous amount of money comes from the fact we live in a first world economy, with first world rule of law, with first world infrastructure and nobody out there does it all on their own.
We support entrepreneurship, we support wealth creation, we support businessmen doing well and I know many people who have done well in this country and are quite wealthy, but each and every one of those people thinks there is a public purpose as well. Each and every one of those people, even if we might disagree on public policy, comes to the table believing in making a better country. When I saw what Mr Palmer had to say, that he didn't think he had any public obligations whatsoever, that is a clear example of what I am talking about.
Paul Bonjourno, Ten News. Bob Brown is holding a news conference about now and, according to the release, he's saying Wayne Swan is right, now is the time for a decent mining tax. He'd like you to bridge the differential, I think it's around $40 billion over 10 years between the original proposal and what you're putting up now. He says there's still time for that. Are you persuaded by this given that the Liberals in WA and now in Queensland seem to be using your same basic argument about distributing the proceeds of the mining boom?
And today, in the papers Andrew Forrest has pointed out that his family had a meeting and they decided, rather than keeping all their wealth they would share $50 million, I think a year, for deserving causes. It hardly paints him as being completely greedy, does it?
No it doesn't but charity is not a substitute for paying tax. So I welcome the fantastic efforts of so many wealthy Australians who put an enormous amount of their personal resources into charitable causes. It is terrific. If you look at the likes of a number of very prominent people in this country and the good they do, but none of them necessarily is contesting the fact that we shouldn't have a mining resource rent tax like Mr Forrest.
So, terrific, good work, but it is not the reason why we shouldn't have a mining resource rent tax which benefits the majority of people right across the country. That's the basic point. So, you can't escape those sort of societal responsibilities. It is terrific they do so and many are doing even more and I admire what they do.
In terms of this nonsense argument that all of this revenue was lost by the change of the design from the RSPT to the MRRT, it is simply rubbish. It is based on 10-year projections which are unreliable. It is based on a whole set of assumptions. The fact is that when we sat down with the industry and went through the design, when we finally got a look at pricing and volumes, we were able to then, much better, go about doing what we wanted to do in the first place when we made the announcement which was sit down with industry and fine-tune it. That is what we did. But the sort of calculations that are floating around that it is $40 billion and $50 billion are nonsense. If that sort of approach to the tax was to occur, then some of the concerns from industry would be well and truly justified, that is it would have, in some instances, going down that road with that revenue intake, might have rendered some of them uncompetitive.
Mr Deputy Prime Minister, Phillip Hudson from the Herald Sun. You talk in your speech today quite a bit about the fair go. There is an honoured group in our society, veterans, many of whom might be watching today, who say they're not getting a fair go for their sacrifice. You may have noticed there was a group of vets protesting here when you arrived. Tony Abbott today has promised that he would index military super pensions in line with the aged pension. Labor had indicated before the 2007 election that it was looking at doing that and this hasn't happened. Could you explain to people today exactly what Labor's position is, why hasn't that happened, and will that be done, will you matching what Tony Abbott has announced?
Sorry, well there's a couple of errors in that and I'll try and pick it up as I go through. Tony Abbott is not in a position to deliver this to anybody because the claim on the budget, as is currently being put forward, will be simply unsustainable and Tony Abbott already has got a $70 billion hole.
So I don't think anyone out there thinks that Tony Abbott can deliver this change which is an enormous change, which has a big impact on the budget. Let me go back to the basic discussion here because this is a conversation that ought to happen and it is not one that falls into the prism that I have been talking about here today. This is the normal public debate about public policy, in this case retirement benefits for people in military superannuation and more broadly, people on defined benefit pensions provided by the Commonwealth. That's what it is really about.
Firstly, we said that we would have an inquiry in 2007 and we did have an inquiry into indexation and that inquiry knocked it back. It knocked it back on very sound grounds. I will take you through the reasons why it was knocked back on sound grounds by Mr Matthews. It is not true for people to assert, in the public debate, that we committed to something else other than that. We did not. That was the very clear commitment we made.
Essentially, what you're dealing with here is a group of people, particularly military veterans who, many of whom have made very big sacrifices for our country, but they do have a very good defined benefit superannuation scheme for which there is a very big public contribution.
It is as it should be, a far bigger public contribution for their scheme than there is for many other schemes in the country but that is how it is. I say this as the son of a war veteran, who when he died was a TPI pensioner. I have personal experience of this. I grew up in a war service home. My father's father was gassed on the western front, died of his injuries. The family was thrown off a soldier war settlement farm in the Great Depression. For me this is deeply emotional as well and the point is this, that our military superannuation, as it is with the public sector superannuation, compared to other schemes around the country, is very - is much more generous than many others.
But secondly, you can't compare a defined benefit scheme and its indexation arrangements with the indexation of the aged pension. Their claim is they should be indexed to wages not CPI. This has been rejected because that is not a valid comparison.
So their objection is that they should be getting what the aged pensioners are getting, which is basically the safety net scheme. The fact is there is a very significant public contribution to that scheme being indexed through an inflation mechanism that is entirely appropriate for those schemes.
Treasurer, Colin Brinsden from AAP. I am somewhat curious about the timing of your essay just being a few weeks away from the budget. You've already had a go at the banks and their leaders…
What's new about that?
…which could resume tomorrow after the RBA board. Now you're having a go at the big miners. I was just wondering if you're preparing the community, or more to the point, rich people and big business, for some nasties in the budget and whether you're sticking to giving the 1 per cent cut to big business as part of the MRRT?
No it's not in that context at all. The notion that this speech is somehow out of the box and not consistent with what I normally do isn't true either. The last time I was here at the Press Club was to speak on carbon pricing. I did spend some time during that address talking about the power of vested interests. So it's not about that, it is about what it is right around the world, rightly, and I believe should be here, a very substantial public debate because I think we are on the cusp of losing the essence of a fair go if we're not careful. Because the way in which I have watched some of these vested interests deploy their political power is in my view profoundly anti- democratic. And what I don't want to see is a change in influence lead to a change in income distribution and a lessening of mobility in this country. One of the fantastic things about Australia is that we are a young optimistic nation. And what's so important to that optimism is the very notion that virtually anyone, wherever they're born, whatever their circumstances, or family, has an opportunity to get ahead.
What you're actually witnessing elsewhere in the world is the reverse of that. You're witnessing greater income inequality on the back of massive unemployment. That is profoundly depressing and degrading for those economies and those societies. As we sit on the cusp of the biggest boom in our history, the opportunities that come this way need to be shared as fairly in the future as they have been in the past. So we can, not just be a young optimistic nation, we can be the fairest, fastest growing most prosperous developed economy in the world. We have the opportunity to do that if we keep our commitment to fairness, if we keep putting in place the sort of public policies that deliver a prosperous economy on the one hand, good fiscal policy, that deliver good mobility on the other, whether it is through education, housing, health or all of the other great enablers. That is what makes this country different.
We stand out in the world from the way in which we went through the global financial crisis and the global recession. They took notice again during the natural disasters last year in Queensland in particular. As I went overseas and talked to people, not only about our economic experience, but the social experience of the floods, people kept coming back to me and say it would never happen here, it couldn't happen there – the gumboot armies, the people walking out and helping, people flying across the country. There is something special here. It is something I am particularly attracted to and passionate about. I believe it is under threat and that's why I've made the speech. It's not the first time I have made it, and if you want to go back and have a look at my maiden speech you will find it there 19 years ago.
David Uren from The Australian, Treasurer. The introduction of the RSPT in May 2010 was a bruising period of public policy. According to the miners, one of the reasons for that was that they felt they had been given assurance by either you or your office that a resource tax proposal would be announced in concept but instead what happened was that it came out as a fully-fledged budget proposal and there was no scope whatsoever for negotiating on the major elements of it. The major parameters were, as you said at the time, set in stone and it was really only fine tuning that you were prepared to consider. So from the perspective of the miners, they felt that there had been a breach of faith. Do the miners have any grounds whatsoever for believing that you or your office had given them an assurance that it would not come out as a fully-fledged budget proposal?
They had no grounds at all for that. I don't wish to go back through all of those events because at the end of the day we sat down and we had a good discussion and we sorted it out but no such point was ever given by me or my office.
Louise Dodson from the Financial Review, Treasurer. You mentioned in your speech productivity and you sighted big investments in skills, NBN etc. When are we going to see – what's your best estimate of when we might see a return on that in terms of higher productivity? When will taxpayers see a return?
The thing about the long-term big reforms is they generally take a while to kick in. If you take the NBN, it's only in the early stages of its roll out. You see the big productivity boost that we got in this country in the 80s and the 90s came from very big economy-wide reforms, the floating of the dollar, competition policy, introduction of enterprise bargaining and the list goes on. You can only do them once. When you get down to a modern productivity agenda, yes it does include industrial relations, but it includes a big commitment to education and training, how it's delivered in the workplace, how it's delivered in terms of the structure of the education and training system, the infrastructure of which NBN is part, investment in roads and so on, the elements of competition policy, the list goes on.
So anyone who stands up and – we've had a bit of this in the press – somehow says that productivity should be up now because you did something last week or last year is just talking rubbish. The fact is we need to have a much more nuanced, sophisticated debate about the reasons why productivity has gone into structural decline in Australia and it has been in structural decline for many years under the previous government and what we are doing now, and what we can do over and above what we are doing now to lift it. Because I believe we've got a sweep of measures in education and training and skills of infrastructure and so on which will just take a long time to kick in.
You've also got to have a thorough appreciation of what the causes of the so-called reduction in productivity are. For example, at the moment the big investment phase that the mining sector is in, is a huge, if you like, pressure on the numbers because we're not seeing the production coming out of the investment. So when that works its way through the system we'll see much more production, we'll see an improvement in productivity coming from that. But that's not enough and I'm engaged in, and the Government is engaged in, I think, a sophisticated and good conversation with the business community about how we can figure out what are the areas we really need to focus our attention on in the years ahead. For example, the biggest employment growth in Australia in recent years has been in the services sector, it's been in health, it's been in education and it's been in community services. What is a productivity agenda for those sorts of sectors?
So it's a really complex question. We have a lot out there going directly into the education training and infrastructure area but we put our hand up for a more sophisticated analytical analysis of what needs to be done and where it needs to be done and that is what we're doing.
Peter Martin of The Age, Treasurer. You said that inequality matters. You've mentioned the pension, the Vets' pension. Newstart is $243 a week, one-third less than the pension. The most recent increase $19.50 per fortnight for the pension, $11.73 for Newstart. Projections show that by 2014 Newstart will be just half of the pension. That's if it goes on. How long should it go on? When will it be time to stop Newstart falling behind?
Well, because we've got a different indexation method, that's why it's fallen behind and this is the difference between CPI inflation on the one hand and wages-based indexation on the other. The Government has made it very clear, and particularly in our last budget, that our priority is to have people on benefits for the shortest possible period and our economic priority therefore has been to put as much and or as many resources as possible into getting people off benefits and into a job. That's why the last budget was choc-a-block with a whole range of initiatives to lift work force participation targeted particularly at the most disadvantaged in the labour market, to get them into work and earning a wage.
I said to someone in the Caucus the other day when I was asked this question that when we were dealing with the problems that came through the global financial crisis and the global recession, the first thing we didn't do was increase unemployment benefits. We went for work, we went for jobs and we did it successfully. Now there is a case about the gap that has opened up, but how we can deal with that in the longer term is a difficult one given the fiscal pressures and so on that Government is facing.
So my answer to your question is our priority remains getting those people into work and making the investments into the wage subsidies and all the other special assistance that we put in the last budget to get them up and into a job.
But for how long? Would you let it go on like it is for another 10 years with Newstart continuing to fall behind?
Well, I don't intend to give you a prediction. I have told you what I think of it and what the Government's priorities are. We are in a position where he have got a really tight labour market, notwithstanding the fact that sections of the labour market are doing it tough in some centres around the country and our priority has got to be with jobs coming out of this investment boom, to get as many of our people in whatever postcode they live into work as soon as we can.
G'day Treasurer, David Crowe from The Australian. You talked today of issues being decided by the strength of influence, rather than the strength of ideas and you also noted the donations from miners to the Coalition. What about the link between Labor and the unions? Aren't you just as beholden to a vested interest as others? And what's the difference?
Can I just say that I'm really proud of our link to the trade union movement and I don't resolve from that for one moment. They are working Australians who are bringing up families, go to work every day and because they have joined the trade union they lobby collectively for their rights. Good on them. Just like the people here today out there making their case, the veterans, good on them. They're just doing what normal lobby groups do, or interest groups do in our society. I believe in a pluralistic society. I believe in the rights of trade unions to organise. I believe in the rights of veterans to stand out there and do all these things. They just don't have the resources that some of the vested interests are using to try and manipulate outcomes.
Treasurer, Shane Wright from the West Australian. You're a very well-known Bruce Springsteen fan and later this week…
A new album, that's right.
That's right the new albums is out and the first single is called ‘We take care of our own'. Why can't Andrew Forrest argue on behalf of the problems that you created with the RSPT which Treasury found would have wiped out his company and those people who worked for him. You've just told us that you were going to fine tune the RSPT into what became the MRRT except that you got rid of almost every mineral except three. And that the huge changes were due in part because Treasury had vastly underestimated how much the RSPT was going to grab in revenue. A true Springsteen fan with tall the foibles of common man, why can't you admit that you and Treasury stuffed up with the RSPT and Andrew Forrest was well within his rights to call you on that?
Well, you should perhaps ask Heather Ridout something about this as well because the design was recommended to the Government and the design had at its core an issue of core refundability. And if we could have sat down in greater detail with the mining industry following our announcement and worked our way through those issues then we might have had a less bloody and bruising experience. The fact is that that wasn't possible and when refundability came out, the design of the tax had to change fundamentally.
The exclusion of other commodities wasn't a big hit on the revenues as you have implied at all. In fact it was always going to be because it's a super profits tax only really going to come from some of the super profitable commodities. So I reject the suggestion that somehow taking the rest of it out was some big hit on the revenue. But the real thing that meant that we could get it done was that when we sat down, we got for the first time from the companies, information that neither the Henry Inquiry nor the Treasury had, which was the real story about volumes and price.
Now I don't intend to go into the rest of that, except to say that I have got nothing but the highest regard for those people in the industry who decided to sit down in a mature and responsible way, work our way through the issues with the Government and design the MRRT and good on them. That showed the public purpose that I am arguing here for today. Of course I accept my role in that, as does everybody else who was around the table, but I don't resole from it because I think we got a really important reform in place for the future of the country and we got it in place at exactly the right time.
You see when I actually announced our response to the tax review with the then RSPT being at its centre, I outlined all of the issues to do with what the Government saw as being the Asian century and how it was going to lead to a really big increase in our terms of trade, how there was going to be a very big increase in the prices of commodities, that we were on the cusp of something really special and there were many people in this room who wrote stories about that all being pie in the sky at the time. And now of course that's become the conventional analysis of where we are now and that is a good thing and it just demonstrates what an important debate we had.
Shalailah Medhora from SBS. Treasurer, on the eve of International Women's Day, I wanted to ask you a question about inequality in the workplace. Your speech talked a lot about inequality but undoubtedly it exists in the workplace when it comes to participation rates and employment outcomes. Jobs traditionally considered women's work are amongst the lowest paid in the country. As Treasurer, how will you encourage change within big business to address this inequality and how much of an impact will your paid parental leave scheme have?
Okay, well there's a whole series of issues there. I mean, the whole area of work and family is critically important hence our commitment to a paid parental leave scheme, the first in our history. It's been a long time coming and it was very important that we delivered that.
The whole nature of the industrial relations system goes to the very core of work and family. The reliability of hours, when you get them, all those issues are ones that we had right to the top of our agenda. When you talk about the fundamental drivers of that inequality, they're far broader than the issues of just work and family. And there's a revolution going on out there. You see it in our education systems now. The sort of workforce experience that people say, of my generation and above, is not going to be the workforce experience of people below my generation. I see it with my two daughters. In schooling now, women are doing better than men and you're seeing it come out in all sorts of once male-dominated occupations. This is what is happening. It just takes a long time.
It's true to the point to the fact there are still a lot of women who are in those pink collar occupations who are lowly paid and generally don't have much super. It's one of the reasons we have moved on super. A lot of those women who left the work force, had a family, gone back, haven't really accumulated savings. They're the sorts of people that are still pretty disadvantaged in the labour market and are on relatively low wages and we've got to do more for them and we're looking at those issues all the time. It's why we're so committed to boosting super for low income workers. They're predominantly still women but the age profile further down is much vastly different these days than it was, say, for my generation and above.
(End of broadcast)