3 February 2016
Transcript - #2016012, 2016

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Questions and answers, National Press Club, Canberra

JOURNALIST:

Thank you Kelly and congratulations on a very well delivered first speech. I notice in the speech you talked about bracket creep and how a lot of small business owners actually pay personal income tax and how next year the average income earner will be in the second highest tax bracket. Can you promise that this will be the Budget that reverses that trend?

MINISTER O’DWYER: 

I have to thank you very much Eliza for inviting me to pre-empt the Treasurer and to make some Budget announcements here today at the Press Club. However kind your invitation I might decline it, but the reason I make this point about how important it is that we address this issue of bracket creep, is because we need a competitive economy. We need an economy that encourages people to work and rewards them for their effort. An economy that encourages participation in our economy. And we can only do this if we have a taxation system that rewards them. If we have bracket creep we know it provides a huge disincentive for those people. It's an issue that is at the forefront of our consideration. We know it is holding us back and so we will have more to say on this in the coming weeks and months ahead.

JOURNALIST:

Minister, thanks so much for your speech and I'll follow on from Eliza's question as well. What is the priority, is it tackling bracket creep or is it cutting the company tax rate? There's been a lot of helpful suggestions in the media about what the Government might be able to do with the revenue stream from an increased GST. What is the priority when it comes to those two and can either be done without an increase in the GST?

MINISTER O’DWYER: 

Thanks very much Laura for that question. I think a lot of people particularly those sitting at home and listening to the address here today would be very worried that whenever we talk about tax reform and changing the taxation system they get a bit worried. They start reaching for their pockets and they think this just means code for the Government putting their hand into my pocket even more. That's not the case. We are very much focussed on how we can make our economy more competitive. Because we need to grow our economy in order to create more jobs. We need to make sure that our taxation system is fit for purpose which is why we are having a national conversation about how we can achieve that. We have haven't ruled anything in or out at this stage because we think it is important to canvas all of those options, whether it be talking about bracket creep, whether it be talking about personal income tax, whether it be talking about company tax. We think it is all critically important in working out how we can make our taxation system better fit for purpose. So that's the criteria against which we judge tax reform and we are looking forward to the conversation continuing but I will say this – the Australian people will be very, very clear about our plans going into the next election. They will not be wondering what our plan is for a second term Government with tax changes. It will be clear and it will be documented but until then we encourage people to contribute to this discussion, because it is an important national conversation and one that has the capacity to set up Australia for the years to come to ensure that our 25 years of uninterrupted economic growth will continue well into the future, which will mean higher living standards for all Australians.

JOURNALIST:

You mentioned the Government's focus on post retirement products, now there's been a review of the regulation governing that ongoing I think for two years. Can you tell us what the holdup is there and perhaps provide an update?

MINISTER O’DWYER: 

Yes, well Joanna, you are absolutely right to say that there's a lot of work that's been going on in this area and this was one of the critical areas identified by David Murray in the Financial System Inquiry. He identified this in one of his recommendations, saying that we needed to get the regulation right so we could encourage these comprehensive retirement income products that would allow for people to maximise their income in retirement. We will be making some announcements on this later on this year. It is an area we are very focussed on – in ensuring we get it right. There is a lot of work as I said that's gone into this, and I didn't have the opportunity to talk about all of it in detail in my speech here today but in the not too distant future I will be giving a speech that will address this issue.

JOURNALIST:

Thank you for your address. As a female Cabinet Minister, I'm interested in your insights into a matter that Sheryl Sandberg the Facebook COO raised in her book Lean In. Why do you think it's a weakness for women to be perceived as being bossy and micro managing when those traits are sometimes celebrated as leadership material and competence in men?

MINISTER O’DWYER: 

Well, Lisa look, you know, it's a bit like beauty, it's in the eye of the beholder how you perceive these sorts of character traits. I think it's incredibly important that the people in public life and business life, they are who they are and that they focus on the job that they do and they do it to the very best of their ability. I know that for some people particularly in some industries that has been more challenging. It's no secret that some places can be pretty robust and the Parliament's one of those places that can be pretty robust. But as I look around the room and I see some of my the female colleagues who are here today I'd say that they're all pretty robust people too. You cannot let other people's perceptions shape you, you can't let them distract you, you need to get on with it and keep going, and where there are artificial barriers that might have been set up and put in place, you need to address those, but if it's simply a matter of other people's expectations, frankly my view it is their issue.

JOURNALIST:

Kelly, thank you very much for the speech. The big topic in the economy at the moment really is focussed on the GST. Will it be increased to 15 per cent and whether or not the base should change? What is your view about exemptions currently? What is the Government thinking about that, because clearly people are really wanting a timetable and an insight into your views and a second question if I can, because it's a women in media event, can you update us on Liberal Party preselections, are you happy with the number of women that look as though they'll be standing for election in your Party? Currently there are 16 women in the lower house for Liberal Party of 74 seats, are you happy with that? You've promoted targets rather than quotas, and on boards, is it time to look at quotas for the business world?

MINISTER O’DWYER: 

Catherine it's a very, very good question – both questions. I'm going to address your second question first. I do think it is critically important that we have more women in public life. I do think it's critically important. Women make up 50 per cent of our community and it's important that they are represented whether in business or around the Cabinet Table. In my own party I know that we have not always achieved our potential in this regard and it's something that I've spoken about for quite some time. Along with a number of my colleagues, we believe that targets can provide the right sort of motivation and focus that means that we will see an increase in the number of women, not only coming into Parliament, but also achieving at the very, very highest levels as well. The challenge I suppose for the Liberal Party is this –  we are not a political party that can tie up preselections through factional deals and union deals, we are a party that is very much a grassroots organisation, and so it comes down to the vote of members in those preselections. I think the more we talk about it, the more we focus on creating some change and the more that you have women in public life achieving, being role models for other women, the more it is accessible I think to those women as well. We can do better, I think we must do better, and I will work hard within my party to make sure that we do do better. On the question of the GST, look, again, I can confirm here today that our position will be made very, very clear on this very, very serious matter before the next election. People will be in no doubt what our position is on this particular issue but I am not here today at the National Press Club going to unveil our full taxation package, we are still discussing it with a range of stakeholders, important stakeholders. I know that the Treasurer has had many conversations with the State Treasurers and frankly it's more than just Treasurers talking to other Treasurers, it's a conversation with the Australian people. Everybody needs to come on the journey if we are to make significant change to our taxation system and until that point, we won't be in a position to announce a final package.

JOURNALIST:

I want to pick up on the timing issue. Will it still be in the form of a white paper your tax policy and will it be announced before the Budget?

MINISTER O’DWYER: 

It will be announced when it's announced, Eliza, and it will be announced before the election. It don't want to sound like a broken record on this but it will be announced before the next election and people will have a real opportunity to have a very close look at what we're proposing and by contrast what the Labor Party is proposing. The Labor Party has got very significant increased spending proposals that they're putting on the agenda. The Labor Party of course already has a big Budget black hole. There is a very significant contrast between what we are proposing in terms of prudent financial Budget management versus that that is proposed by our opponents.

JOURNALIST:

Fairness. You've been critical of Labor saying it's ignored intergenerational issues, their Budget focus is consistently on hitting the rich. Do you think there are issues of fairness in this distribution of superannuation concessions?

MINISTER O’DWYER: 

Well as I mentioned in my speech I think it's very important that you have concessions that are targeted. If you want to say that's an issue of fairness, I'm happy for you to characterise it like that. We need to make sure that when people are given a significant tax concession that it is in keeping with what is expected more broadly in the community. So that is one reason why we haven't ruled anything in or out on this. The taxation concessions around superannuation fall within the broader parameters of taxation change and whether or not that is something that would be incorporated in that and as I said before the next election we will be announcing our position on our tax policy.

JOURNALIST:

There are reports today that a so-called tax reform unit has been established to ease the concerns of Government backbenchers who are worried about having to go out and fight an election campaign that contains a GST. What are you doing and what is the Treasurer doing to allay those concerns and how can you reassure your own backbenchers, particularly those in marginal seats, that they won't lose their seats because you plan to take a GST to the next election?

MINISTER O’DWYER: 

Well, there are a few assumptions in that question. Let me first just tackle it by saying this – when you look at taxation reform you clearly have people who are working and focussing on the suite of options that may be available to you as a Government. There's nothing wildly controversial in that. I think, quite frankly, it would be far more controversial if you didn't have a lot of people thinking very, very seriously about these sorts of issues, in terms of your broader question about whether or not there has been consultation with backbenchers, with colleagues, with Ministers, there is always a constant conversation with colleagues about an important issue such as taxation reform, of course, my colleagues are at the coal face, that are talking to people every day, they bring to the Parliament their own expertise and experience. I think it would be ridiculous to think that you wouldn't be talking to your colleagues about taxation reform, so why don't I answer your question making those two points and say that I don't accept the other assumptions that are in your question.

JOURNALIST:

Thank you for your speech. Today we've seen Paul Keating come out backing a modest increase to the GST but not in support of one as high as 15 per cent. Are you heartened by his comments and secondly will the Government be looking at potentially that option, a modest increase, not 15 per cent?

MINISTER O’DWYER: 

I won't pretend to say I welcome the intervention of Paul Keating, but today he made some interesting points in the article that he wrote. One thing you haven't picked up on in your question is – because he said that frankly I couldn't disagree with, he said, I'll quote him directly, because I wouldn't want to misrepresent him. "We can't pretend we can go on spending as though nothing has happened. The world has trimmed us down, we now have to trim ourselves down. Trim our spending and not accommodate more of it by ever-more taxation." I think that was very clearly a message to the Leader of the Opposition, very clearly a message to the Shadow Treasurer and very clearly a statement of fact, a statement of fact that you need to be prudent economic managers and I think it's fair to say that he is someone who has some experience in this department and he's someone who the Labor Party should be paying close attention to.

JOURNALIST:

G’day Minister. You say we're in the middle of a conversation with the Australian people about tax. That conversation was going to be mediated by a green paper. It would have enabled all of the options, the Government’s – a short list of options to be set out clearly and measured against clearly-stated criteria. Do we still need a green paper, or is that now an optional extra?

MINISTER O’DWYER: 

Well, Peter, it's a good question and I know a number of you are very interested in whether there'll be a specific green paper. Let me say this, I don't think there is anybody sitting at home waiting for a green paper. What I do think they're waiting for is they're waiting for a very clear direction from Government on a range of issues to do with our taxation system. So we will make it very clear that our direction is going in a particular way on those range of issues. How we do that I will leave for the Treasurer to announce. This is obviously very much in his bailiwick, but I don't think there are a lot of people sitting at home waiting for a green paper. I think they're sitting at home waiting to see what the options are and I think there are a range of ways we can present them.

JOURNALIST:

G’day Minister, Shane Wright from the West Oz. Just at a philosophical level, is tax reform simply a change in the GST and a cut in company/personal income tax, or is it much broader than that?

MINISTER O’DWYER: 

In terms of the...

JOURNALIST:

The definition of tax reform.

MINISTER O’DWYER: 

When you think about taxation reform, I go back to the criteria that I referred to before, you actually need to make sure that you are helping to grow our economy. When we previously had tax reform announced under the Howard-Costello Government, it wasn't simply a matter of changing the tax mix for the sake of it, it was changing it to make it more efficient, so our economy could be more agile so that we could have growth in our economy that would encourage jobs. At the same time, they were able to cut a whole heap of inefficient taxes as well, again to that point about efficiency. This is one of the real reasons why it is critical that we have a sensible discussion with the State Treasurers as well. Because they themselves have control and power and direction over a whole range of taxes that frustrate people in small business and can sometimes frustrate our economy as well. So I think you need to consider that broad criteria and also the other criteria that we place upon it when we talk about taxation reform is that we do not want to increase the overall taxation burden. We think that is a drag on the economy. We want to make sure that we can make our economy more competitive and tax is one aspect of helping to ensure that.

JOURNALIST:

Hi Minister, I'll give you a break from the GST for a moment. I actually want to ask you about the wine equalisation tax.

MINISTER O’DWYER: 

A different tax.

JOURNALIST:

As you're aware, the industry was hoping for an overhaul of the tax arrangements, or for a decision to be made on an overhaul by last year and are continuing to wait. How much longer are they going to have to wait, is it something they may have to wait beyond the election for, or is it something that could potentially be next year?

MINISTER O’DWYER: 

It’s not something that they’re going to have to wait beyond the election for. We know there are significant problems with the wine equalisation tax rebate. We know that there are significant problems in some aspects of the rorting of that rebate. We need to make sure that it isn't rorted. We need to make sure that it returns to its original purpose. The Government is working on how we can achieve that in practice, and we are developing our policy that we can announce this year so that we can respond to the concerns that have been raised within industry and the broader integrity concerns which, of course, are something that concern us greatly.

JOURNALIST:

You've mentioned you hope to raise revenue of $700 million from multinational tax avoidance measures. If Rupert Murdoch paid his fair share of tax in this country he'd probably eclipse that four times over. Don't you think we need a wholesale reform of the Tax Act to encourage more taxpayers rather than just relying on enforcement measures and tough talk?

MINISTER O’DWYER: 

Well, it's not just tough talk. We have changed the law as I mentioned. We actually changed it so there are new powers that the Australian Taxation Office has as of the first of January this year, that we doubled the penalties for those that avoid tax so it's 100 per cent of the tax avoided, and that it is not possible for companies to artificially construct arrangements that mean that their profits are going offshore rather than being properly taxed here in Australia. So we actually have done what it is that you have suggested that we do, but you can't simply have laws and not be prepared to enforce those laws. Otherwise there is no point. You have to back up tough laws with tough enforcement, otherwise you are not serious. That is why we have changed the law and that is why we are enforcing the law.

JOURNALIST:

Minister, thank you for your speech. Two questions, again touching on the idea of a target, the Liberal executive of Women in Parliament received a report late last year recommending a stretch target for the party of 50 per cent of women –  is that do-able and how do you convince the membership that is a good thing for the Liberal Party to embrace? And I'm glad that you read out the Paul Keating quote today because I think that's a message not only for the Opposition, but the Government and taxpayers. He points out that the commodity price boom is over, that associated spending has not been reduced and the Parliamentary Budgetary Office has pointed out there's been a deterioration in the fiscal outlook nationally by something like $36 billion over the next 10 years. Given the hand brake that is the Senate, what else should be cut in Government spending to help improve that picture?

MINISTER O’DWYER: 

Thanks Sabra, for both of your questions. I'll start with your second question first. It is absolutely critical that we control spending, and as was announced by the Treasurer and the Finance Minister in the Mid-Year Economic and Fiscal Outlook last year, we have lowered the growth in spending. That is an essential first step on the path of Budget repair. We know you can't repair this overnight, but you need to start, and we have started. Glenn Stevens, Governor of the Reserve Bank said, and has been saying for many years, you have to start now the process of Budget repair because if you do not the impact going forward is so much more significant and the people who will truly be impacted going forward will be some of the most vulnerable people in our society. They will be the people who can't withstand what will be an added impost on them. So you're right to say we have to get spending under control. We haven't been announcing new spending measures that aren't offset. In fact, we did better than that, we made sure that we reduced it in the Mid-Year Economic and Fiscal Outlook. By contrast, the Labor Party have announced billions and billions of dollars of new spending, not one-off spending, but recurrent spending that will go up year on year. Now it just simply does not add up and it is not in the national interest, so we need to have a very real conversation with the Australian people about that. On your broader point about whether or not women in the Liberal Party, whether we can have a 50 per cent representation, whether it's in the Senate or the House, I do believe that we can get to that point. Do I believe that it will happen overnight? It probably won't, but we have seen some very significant improvements and changes in the way that our preselections are conducted, and I certainly know that in my home State of Victoria in a recent Senate preselection we have got a record number of women putting their hand up for that Senate spot, a winnable spot – both of them actually are winnable spots – the first and third spot, and I think that is a wonderful thing.

JOURNALIST:

My question is outside your portfolio, I am sure you have a view though you are now a Cabinet Minister.  The High Court ruling today upholding offshore processing means the Government can now send back to Nauru, some 267 asylum seekers who are here, that includes 91 children, 36 of them babies, 37 of them are at school in Australia, what’s your views on babies sent to Nauru?

MINISTER O’DWYER: 

Well look – and as you say David, the High Court has upheld the law, the Government’s position. What I would say is this – there is quite rightly a very strong focus on all of the individuals concerned and I don’t think anybody could say that they don’t feel strong empathy for those people but there are lots of other families, lots of other children who are sitting in refugee camps overseas who would also like to come to Australia, who would also like to build a life here and who don’t have the capacity to pay people smugglers to get on the boat and to come here. We are thinking about them too because at the moment they are the people who are the faceless and who are the voiceless. If we have a strong system with clear rules for the bringing of people to Australia it means that everyone has a fair opportunity to come to our wonderful and great country. We have a very, very generous resettlement scheme in Australia, and we should. We are a country that should have a generous resettlement scheme and we have increased it. We have increased it in our government. Unfortunately under the previous government we saw over 8,000 children arrive unauthorised by boat and just under 2,000 were in detention under the previous Prime Minister Julia Gillard. That has been reduced now by 95 per cent, I think that is a good thing. I don’t want to see children in detention and our policies help ensure that they are not.

JOURNALIST:

Let’s conclude on that note. Thank you, Kelly.