TRANSCRIPT: INTERVIEW WITH MICHAEL ROWLAND AND BEVERLEY O'CONNOR, ABC NEWS BREAKFAST
TRANSCRIPTION: PROOF COPY AND E & OE
DATE: 15 FEBRUARY 2013
TOPICS: MRRT; Ben Zygier.
BEVERLEY O'CONNOR: Joining us now in the studio is the Defence Minister Stephen Smith, and many thanks for joining us.
STEPHEN SMITH: A pleasure.
BEVERLEY O'CONNOR: There was quite a revelation yesterday in Peter Martin's piece about how the tax actually was discussed and debated, and the fact that there were no Treasury officials in the room at the time to really assess how this tax was going to work.
STEPHEN SMITH: I think you've got make a distinction between a number of things. Firstly, there are people out there who violently oppose the tax, have said there shouldn't be a tax because it would be a crushing blow to the minerals resources industry. Now out there, essentially complaining that it's not raising enough tax. You can't have it both ways. Let’s go back to some basic points here. Twenty-five years ago, we established a profit-based tax on petroleum resources. That's now raised between $25-$30 billion over that period of time. We're doing the same thing to a limited number of minerals resources: coal and iron ore. And the tax is now just starting. And with the start-up of the tax, we've seen a collapse in royalty prices, a collapse in commodity prices rather, for iron ore in particular. And because it's a profit-based tax, if your commodity price goes down then obviously the profit goes down.
So the tax is being bedded down. The discussion that we're now seeing is the discussion which arose yesterday out of Senate Estimates, where Treasury said the companies are entitled to make some valuations and baseline judgements about their starting point for the tax, as any taxpayer is about their own affairs.
BEVERLEY O'CONNOR: But weren't there serious-
STEPHEN SMITH: And that- in the end- that will be a matter for the Australian Tax Office, not Treasury, to make judgements about an individual company's taxation arrangements and their liability.
BEVERLEY O'CONNOR: And that's important because there's serious accus... serious suggestions that there were miscalculations made, and companies were allowed to really put their own ambit claims in before those valuations.
STEPHEN SMITH: The Treasury Secretary- the Treasury Secretary did not say miscalculation. What he said was - at the time these discussions were held between the Government and the mining companies, BHP, Rio, Xstrata and others, the companies indicated to the Government, to Treasury, to government officials what they regarded as being their baseline valuation measures. They were estimates. What had to occur was the passage of the legislation, the start-up date for the tax. What the Treasury Secretary said yesterday was that the companies are now entitled to make a legal judgement about what their baseline is and they did that, not two years ago, but they did it when the tax started up. Treasury said - the Secretary said yesterday, we don't have access to that, and nor should they, because that is an individual personal tax matter which is now a matter between the Australian tax office and those companies.
BEVERLEY O'CONNOR: As in those individual companies?
STEPHEN SMITH: Absolutely. And so for Treasury to have access to that, at the time the Treasury Secretary was speaking about it, would be the same as Treasury having access to your personal tax details or mine, which is not appropriate, indeed, unlawful.
MICHAEL ROWLAND: Okay. You're saying the Government's bedding the new tax in, but that doesn't absolve you from the $2 billion budgetary headache you have at the moment based on this current year. How are you going to fill the gap?
STEPHEN SMITH: Look, look, again, as the Treasurer has said repeatedly, there's been a collapse in commodity prices, a collapse in revenue. That's one of the reasons why we've said, we now can't make a surplus because we're being sensible and realistic about that. We're not the only ones. There's been a collapse of commodity prices around the world. But in our four-year budget estimates, we have still got a capacity in our view when we go to the next budget in May to deliver a sensible budget, to deliver a budget which will enable us to continue to meet our ongoing commitments. Whether its infrastructure, in my own town in Perth over the last two years we have committed ourselves to a billion dollar gateway project around the airport where we're funding two-thirds of that. Now that's in the Budget, so people are now starting to try and assert, because there's been a collapse in the estimates for the mineral resources rent tax, that things aren't in the budget. It's not the case and again I make this point where I started. All of these complaints are coming from effectively the Liberal party whose starting point is no tax at all, who don't believe that the Australian community should get a share of our minerals resources wealth.
MICHAEL ROWLAND: Wayne Swan's had a pretty bad week, I think you'd agree. He's been copping it on all sides about the mining tax, there are increasing reports about restless Caucus members within your own party about the way he's handled his job. He got the jobless rate figure wrong on the floor of Parliament yesterday. Is Wayne Swan cracking under the pressure?
STEPHEN SMITH: Absolutely not. I think over the time that he has been Treasurer, he has not been given the credit that he deserves for the way in which has managed our economy over a very difficult period, the collapse of the world economy with the Global Financial Crisis. Our response to that - his response to that which he led saw us not collapse into recession, saw us continue to see jobs and growth in our economy. So when you stand back, we continue to have jobs' growth, we continue to have a GDP which is respected and envied by the rest of the world. And so the most important things - jobs, interest rates going down. You're now paying if you have an average mortgage of about $300,000 about $3000-$4000 per year less than you were paying when we came to government. So the basic fundamentals, which is absolutely essential to look after working families and low and middle income earner are there and they're there for everyone.
BEVERLEY O'CONNOR: So before you go and I know time is pressing, but Ben Zygier, we've got Zygier, we've got this extraordinary revelations - where is that standing? I know you're probably working with the Minister, Bob Carr, on this issue. How're we going to get to the bottom of what happened?
STEPHEN SMITH: Well firstly, while I was Foreign Minister back in those days, it's a matter which we need to leave to the Foreign Minister. He and the Secretary of the Department of Foreign Affairs yesterday said that the Foreign Minister had given the Secretary of the department the job of doing an investigation to see precisely what had occurred. It's quite clear that this information came to us through intelligence sources, so just in the normal course of events I would be very careful about what I said about intelligence matters. But I'm not proposing to be drawn on these matters until we see the report that the Secretary of the Department of Foreign Affairs and Trade will bring down. He's given an interim report which was announced yesterday. He said that he expects to be able to be in a position by the end of next week to be able to report further to the Foreign Minister and I think we should just wait until then. In the meantime, it is of course, it's a tragedy for the family that they now have to relive these issues.
MICHAEL ROWLAND: Very quickly- you were Foreign Minister at the time. Were you briefed on this?
STEPHEN SMITH: Well I'm not - as I say, I'm not proposing to be drawn on any of the issues including and in some respects in particular on that until we've seen the report by the Secretary of the Department of Foreign Affairs and Trade. I'm absolutely confident he'll do a thorough and meticulous job. That may be well part of his report. I'm proposing just to wait until he does that before I'm drawn on it. But again in the first instance. I used to be the foreign minister but Bob Carr would be handling these matters and we expect to see a report from the Secretary of the department by the end of next week or early the week after.
BEVERLEY O'CONNOR: Stephen Smith, good to talk to you.
STEPHEN SMITH: Thank you, a pleasure.
