19 May 2015
Transcript - #2015131, 2015

Interview with Leon Byner, FIVE AA, Adelaide

TREASURER:

Good morning Leon.

LEON BYNER:

Thank you for joining us today. The North-South Corridor is getting a lot of coverage in the media. Seventy-eight kilometres of road. Why was no additional funding provided for the North-South Corridor upgrade?

TREASURER:

Well, we had received no final plan from the State Government even though we’d funded the plan, but we’d received no final plan with final indicative costings from the State Government until yesterday after our Budget. So, quite obviously you can’t put money in a Budget for something that you haven’t got any details on. I might say that we would hope to work with the South Australian Government to make this a reality. We’re certainly coming in a constructive fashion.

LEON BYNER:

Well, the Prime Minister has committed to delivering a non-stop corridor within ten years and I understand the Federal Government has had the report since December last year, however there has been no funding in the Budget?

TREASURER:

No, no. There was a draft report provided to the State Government. We funded the report right, but the South Australian Government ran it. They released a draft report at the end of last year which we got a copy of. We gave them feedback on it and we’ve been asking them to release the final report but they didn’t until yesterday. So we haven’t had any final indicative numbers and even then they’re still not final because it has to go to Infrastructure Australia. So, we haven’t controlled the process even though we’ve funded it.

LEON BYNER:

Well interestingly, because Infrastructure Australia’s priority list identifies the Northern Connector and the North-South Corridor project as a priority with a benefit-cost ratio of 8.5. Now this project was submitted by the State Government to Infrastructure Australia in 2012, surely this could have been considered for funding in the Federal Budget?

TREASURER:

Well, the thing is Leon, I’m not going to put numbers against projects that haven’t got definitive numbers right. I’m not going to appropriate money to something that isn’t in a form that ensures you don’t waste money. So, frankly if the South Australian Government doesn’t give us the information then it doesn’t get in. I was here before the Budget and I said I want the South Australian Government to give us the proposals, I said that on this program.

LEON BYNER:

Yes you did.

TREASURER:

I said give me the proposals. I’ve said it at meetings with the State Treasurer, I’ve said it numerous times, and then they give it to us after the Budget.

LEON BYNER:

Isn’t this the problem though, that if we get something up – let’s say you decide, yes Leon we’re going to put a better airport at Kangaroo Island and a runway for bigger aircraft, some of that money is going to come off the GST.

TREASURER:

Well, what happens is when there are individual projects that the Commonwealth Government contributes to in individual states, the rule of thumb is that there’s a 50/50 reduction in the GST for the extra dollars spent. Not a 100 per cent reduction, but a 50 per cent reduction and that applies to all the states. So, I don’t think South Australia could complain about the GST revenue they’re getting which is going up 36 per cent over the next…

LEON BYNER:

But it’s the loss that they would incur by having a project…

TREASURER:

But it would be less than the value of the project, or our contribution to the value of the project.

LEON BYNER:

Another proposal put forward by the State Government to Infrastructure Australia was to seal 426 kilometres of the Strzelecki Track, which as you would know is a vital link for the outback community and provides the only access through South Australia to the Cooper Basin oil and gas fields. Why provide $5 billion for the Northern Australia infrastructure, but no funding for the $450 million Strzelecki Track project?

TREASURER:

Look, I’ve got to admit that’s not a proposal I’m familiar with.

LEON BYNER:

You’re not?

TREASURER:

No I’m not. I [inaudible] honestly say I haven’t seen that proposal come to my desk, but the Northern Australia proposal is different and the flow-on benefits for South Australia are absolutely enormous…

LEON BYNER:

Like?

TREASURER:

Well for example, whenever the Northern Territory has done well, usually South Australia can benefit. Particularly with the continuous railway line between Adelaide and Darwin now. If Northern Australia becomes a food corridor, if it becomes a larger economic zone as a result of what we’re doing, that’s to the great benefit of South Australia. Because South Australia is a big service provider for Northern Australia.

LEON BYNER:

You agree don’t you, that food provision for us and export is a big deal for us…

TREASURER:

Oh it’s a huge opportunity, great opportunity.

LEON BYNER:

As you know…

TREASURER:

And you’re a great exporter, South Australia is a great exporter.

LEON BYNER:

Yeah, okay. So, the question’s connected to this – and that is that why don’t we put aside agricultural areas for agricultural purposes only? Because we’ve got this encroachment over time where we’re selling off land and encroaching into agricultural sectors and building housing and so on, when in fact the land to grow stuff. I mean, the biggest problem that the world’s got now is food shortage. So the more we can produce, the better it’s going to be. Why don’t we – like we have heritage areas for bush and for rivers and for the environment. We don’t seem to spend a lot of time worrying about the land we use to actually grow stuff, which we use ourselves and export.

TREASURER:

Well in the Budget on Budget night, I don’t know if you saw the speech, but I made reference to the fact that we are going for example, to make fencing 100 per cent tax deductible for farmers. Now, if farmers can improve the quality of their fencing not only do they keep out wild dogs and things, but importantly they can improve the productivity of the land they have through [inaudible]. We’re also going to give rapidly accelerated depreciation allowances for fodder storage and also water storage, which in the end not only helps to drought proof part of the country but importantly, helps to improve the productivity of the land. We’ve got an agricultural white paper which we’ll be releasing soon, a big discussion paper on agriculture which will be a plan for the future of agriculture in Australia and we’re going to have real money attached to that and that will be in the next couple of months.

LEON BYNER:

You’ve suggested a stamp duty be abolished and replaced with a land tax…

TREASURER:

No I didn’t suggest it. Hang on, I’m being misinterpreted and misinterpreted here...

LEON BYNER:

What did you suggest for the record?

TREASURER:

The fundamental point is that the Treasurer of South Australia said he is looking at tax changes, tax reform. We’re undertaking our own analysis of tax at a federal level…

LEON BYNER:

What is your opinion on this?

TREASURER:

And anything that can be done to lower taxes in South Australia I see as a good thing, because South Australia currently has the highest level of taxation of any state in Australia. Now, that is simply unsustainable. So if the Treasurer of South Australia is going to reduce or remove stamp duty or give new first home owners the chance – instead of paying stamp duty to pay off the liability over a period of time through a land tax on their property then fine. But if people have already paid stamp duty, they shouldn’t have to pay land tax as well, that’s…

LEON BYNER:

Well, are you in favour of taxing the family home, because I don’t know whether you’re aware of this…

TREASURER:

No, no, no I’m not…

LEON BYNER:

Through our sewerage charges we already pay land tax.

TREASURER:

Well that’s right, I mean you already pay rates and a range of other things. You pay council rates, you pay water rates and a range of other things, so you already pay costs associated with the family home and it’s extremely expensive to run a family home. So…

LEON BYNER:

So you’re not in favour of taxing the family home?

TREASURER:

Well, what tax are you suggesting Leon?

LEON BYNER:

Well it’s – the tax that’s being touted is land taxing the family home.

TREASURER:

I can honestly say Leon I haven’t seen any particular proposal. What I do know is that Steven Marshall went to the last election saying he was going to have proper tax reform and fairer and lower taxes in South Australia. I am very attracted to that. Now, if there’s a particular proposal or numerous proposals that the Treasurer of South Australia is putting up, that will be a matter for him.

LEON BYNER:

Are we saying no one is to attribute to you a view that you would be in favour, or you think it would be a good thing to tax the family home?

TREASURER:

Well again, it comes back to what the proposal is. As you say, the family home is already taxed with rates and a range of other things, isn’t it? So…

LEON BYNER:

Yes

TREASURER:

So, if it’s already taxed, then I’d go back to what the point is. If there is a proposal to say okay first home buyers don’t have to pay stamp duty but in fact they may well end up paying a form of land tax to make up for the stamp duty that they never paid and they’ve got a lower entry cost, I see lower entry costs for first home buyers as a really good initiative. So, otherwise, I’m not familiar with any other proposal and I can’t pass comment on any other proposal.

LEON BYNER:

Your Budget bottom line took a huge hit for the reduced price of iron ore. I know that you and the Prime Minister – and I think you’re right here, have flagged that there should be an inquiry just having a look at how ore, and how mining is handled in Australia. Now, there are some people we understand in your own Cabinet who don’t agree with this and have actually said that it will send the wrong message to our investors overseas. Have we decided yet on an inquiry?

TREASURER:

No, there’s been no decision made about an inquiry into iron ore, there’s been none made. Why? Because I think it’s important to consult with all the stakeholders which is what we’re doing, and we’re consulting with the Labor Party as well. I think that’s perfectly appropriate. Senator Xenophon I’ve spoken to and he was the one that was going to try and move it in the Senate. Also the iron ore companies and a range of others. I think no one should fear transparency given that iron ore is so important, so important to Australians. Having said that, there will be no way that we’re going to do anything that would harm Australia’s [inaudible].

LEON BYNER:

Do you agree with your colleagues like Andrew Robb who say this is going to send a very bad message to overseas investors?

TREASURER:

I’m not going to get into commentary on commentary other than to say in this instance that we carefully consider these things. We’ll consult with all of the stakeholders but there’s a lot of hyperventilation around at the moment about this issue…

LEON BYNER:

Given that Nick Xenophon came up with this proposal in the first place…

TREASURER:

Well I spoke to Senator Xenophon about this as well and I’ve been speaking to everyone about it Leon. But my priority is the Budget, my priority is explaining the great benefits of the Budget to the Australian people and…

LEON BYNER:

Well you could use that I mean couldn’t you, if you had the price of ore we had a few months ago you’d be…

TREASURER:

Terrific. I’d love to have iron ore prices higher, I’d love to. But the market’s the market. You understand that. Now as long as there’s transparency in the market and there’s proper accountability and everything is kosher, then so be it. But I’d just say to you, this is not the main game. The main game of course is the great benefits that we’re giving for families and small businesses in the Budget.

LEON BYNER:

When we in South Australia or any other state sell an asset, a state asset, they get money from the Feds don’t they?

TREASURER:

Correct, and the money that we give them as a bonus which is 15 per cent of the value, provided the money from the sale of the asset is redirected into new productive assets on the ground, that’s the key. We will give them a 15 per cent bonus and exclude 100 per cent of it from the GST.

LEON BYNER:

Alright. Now I want to drill down on this a little bit because the Government are about to sell the Motor Accident Commission. That’s worth a lot of money. Now, I don’t know what they’re going to do with the money…

TREASURER:

Well if they’re redeploying it into new productive infrastructure, such as the South Road and various other things, then that may well be a project that works and would attract our 15 per cent bonus. We would exclude that payment from the GST.

LEON BYNER:

So, so far we’ve sold a few assets in this state and for every one we sell we get money provided we don’t just put it on the Budget bottom line?

TREASURER:

That’s right. It has to go back into new assets.

LEON BYNER:

Okay, so are you still inviting the Treasurer of SA, Tom Koutsantonis, to come up with some shovel ready projects, when the first thing he’ll say to you is, I can’t afford to lose GST?

TREASURER:

Yes of course. But I come back to the point that whenever there is asset recycling as we just talked about, with the sale of Motor Accident Authority, whatever we give the state is totally excluded from any change to the GST, 100 per cent excluded, that’s the nature of the program. If they come to us about a second project and say look, we want you guys to help us to pay for this major road, it’s productive, it does all these great things for the South Australian economy. Whatever we give, we would have it 50/50. That is, whatever we contribute, we would reduce GST by around 50 per cent on dollar for dollar. So, that is what we’ve applied to all the other states. So wherever we give that money in Australia – and this is a longstanding principle from the previous Labor Government, previous Liberal Government and so on. Because they never ever gave money to any of the states. We’re trying to work with state governments to get these things built. So we’ve got a rule that applies to everyone so that it’s fairer for those states. Basically we want to give, we’re aiming to give, proportionally similar amounts of money to the states, it depends on the State Government having the projects ready.

LEON BYNER:

So, really, you’re inviting the Treasurer to put up for a project and see whether…

TREASURER:

Any project that is going to build the economy of South Australia I’m ready for. Tony Abbott is ready for. We are prepared to invest in South Australia, but these projects rely on the initiative of the South Australian Government. We’re not very good at building roads or building railways or anything like that, that’s why we want to work with the state governments who do this all the time.

LEON BYNER:

See, the toll issue is controversial because the state may consider a freight toll…

TREASURER:

A heavy vehicle toll, which would be the same as Western Australia. The Perth Freight Link in Western Australia, which we’ve put money into, has a heavy vehicle toll. Commercial enterprises get great value out of having faster…

LEON BYNER:

So I guess the question I’ve got is about this North-South project, because you’ve now put the fear of God under many people who have got houses or businesses on that seventy-eight kilometre corridor who will have to sell if this is to happen. Who’s going to blink first and put some money up?

TREASURER:

Well it’s not a case of blinking first, you want to work with the State Government. Look, it’s the same taxpayer Leon whether it’s the Federal Government or the State Government, it’s the same constituent. Ultimately, we want to work with the State Government on these sorts of projects. I’m ready to do it, the Prime Minister’s ready. Jamie Briggs as the Infrastructure Minister is ready…

LEON BYNER:

So you’re waiting for Tom to knock on your door and say…

TREASURER:

No, well we just received the final report yesterday. It was immediately sent by Minister Briggs to Infrastructure Australia to have a look at, so that we can check out whether it’s a kosher deal, if there’s economic benefits and if so, then it’s certainly something we’d look at.

LEON BYNER:

Now, as we are speaking, a high level South Australian delegation is spruiking the State’s ship building abilities in Europe this week.

TREASURER:

Good on them!

LEON BYNER:

Well, you know what I’m going to ask you on this don’t you? It’s not a trick question, but it’s a big thing for SA people.

TREASURER:

We are great believers in the South Australian ship building industry.

LEON BYNER:

Yeah.

TREASURER:

Absolutely.

LEON BYNER:

So, it’s the putting your money where your mouth is bit that’s the interesting bit that people want to know.

TREASURER:

Well, if we’re coming back to subs, it’s a bit like groundhog day. We have a process that we’re going through. Whatever the case, whatever the result of what we’re going through, there are going to be more jobs in South Australia associated with submarines into the future - significantly more.

LEON BYNER:

Where are you going to today?

TREASURER:

Well, I’m going with Matt Williams out to visit a small business, and then I’ve already…

LEON BYNER:

Just to check if they’ve written anything off yet? [laughter]

TREASURER:

To encourage them, to encourage them. We want business to get out there and have a go, we want them to employ. Wherever they’re located we want them to have a go, that’s what we want. We’re very excited about it and so are they which means they’re investing in jobs and thank god they’re having a go. Because you know what, we’re only going to build our prosperity. It’s not going to come to us on a silver platter, we’re going to build it, and the Government wants to be a partner with every small business out there to have a go, to get out there and employ more people.

LEON BYNER:

Thanks for coming in and good luck with the iron ore inquiry [laughter].

TREASURER:

Thank you very much Leon.