7 May 2018
Transcript - #2018022, 2018

In the role of: Minister for Revenue and Financial Services [19 July 2016 - 28 August 2018]

Interview with Patricia Karvelas, National Wrap

Subjects: Banking Royal Commission, gender equality, public service review, income tax cuts, crackdown on illegal tobacco, Newstart, jobs.

PATRICIA KARVELAS:

Kelly O'Dwyer welcome to National Wrap.

KELLY O'DWYER:

Great to be with you Patricia.

PATRICIA KARVELAS:

Let's start on the banks – will there be a compensation package for those who have been ripped off by the banks and financial institutions in this budget?

KELLY O'DWYER:

We are certainly not going to be prejudging the findings of the Royal Commission. As we know we have heard quite a lot of pretty shocking evidence to date but there are still more hearings to come and we don't expect the final report until early next year. So we will not pre-judge what it is that the Royal Commissioner will find. The Government though, as you know, has already done a huge amount of work around compensation.

We have set up a one-stop shop for consumer complaints – that will now provide compensation for those people who have a complaint against their financial institution up to $2 million in some circumstances and that will start from the first of November this year...(interrupted)

PATRICIA KARVELAS:

Do you think that the people who have been ripped off deserve a broader compensation package? We know that the Opposition Leader has written to Malcolm Turnbull calling for one – is that something you're still open to?

KELLY O'DWYER:

Well certainly we will be very very open to whatever it is that the Royal Commission finds and it may well have some recommendations regarding compensation payments. Obviously those compensation payments ought to be paid by those financial institutions that have done the wrong thing. We have already seen in some instances payments be made by financial institutions that have been forced pay them by the regulator that is to make good on some of the bad behaviour that has occurred. But there may well be recommendations regarding compensation and obviously the Government will assess that when those recommendations are made.

PATRICIA KARVELAS:

There has been criticism that women are being promoted to boards without the necessary experience, to fulfil essentially quotas, in the wake of the Royal Commission this has really come up quite a few times in the last couple of weeks. As Women's Minister what do you make of that criticism – is it true that women are being promoted beyond their experience?

KELLY O'DWYER:

Well the short answer to that is absolutely not. I've got to say Patricia I am really dismayed when I hear commentary around the fact the women don't deserve a place at the boardroom table. I mean I find it pretty shocking in today's day and age that there would be people who make that argument. There is no doubt we've heard some pretty extraordinary and pretty shocking things to come out of the Royal Commission but corporate failings are not gender specific. To try and draw out from the experience of one chairman and say that has a relationship for all other women I think is really quite preposterous, it would be just like drawing out the experience of a man CEO and suggesting that somehow that means that men are not appropriate CEOs – it's clearly a completely specious argument. There is no question that we have appropriately qualified women who absolutely deserve to sit around the boardroom table and they should sit around the boardroom table and I think it is entirely appropriate that we have got targets in place to try and ensure that those women of merit sit around the boardroom table. The Government has been trying to address these issues by having our own targets around appointments to Government boards. Originally it was set at 40 per cent we've exceeded that target, it's around about 44 per cent and we've said that we need to actually get to 50 per cent because let's face it – we've got 50/50 in the Australian community out there – men and women. We've got men and women of equal talent and ability and all men and women...(interrupted)

PATRICIA KARVELAS:

Do you think women are being judged to a different level, to a different standard than men?

KELLY O'DWYER:

Well look I find some of the commentary really quite dismaying as I've said, I find it extraordinary that there is somehow a suggestion that women don't deserve a place around the boardroom table. Now you can put whatever analysis you like on that. I frankly think it's pretty apparent that we have got many talented women out there, many talented women with a great deal of experience who quite rightly deserve the opportunity to sit around the boardroom table and frankly, who should.

PATRICIA KARVELAS:

Okay. On the review into the public service, the Community and Public Sector Union is concerned that the number of private sector appointees to the review indicates the Government's tendencies to increase contracting out. Do you want to contract out more? Is that the aim here?

KELLY O'DWYER:

No, that's not the aim of the review. The aim of the review is to actually for the first time basically since the 1970s conduct a proper review into the public service, to make sure it's fit for the 21st century, to make sure it is fulfilling the mandate that it has to service the Australian people and to serve the Australian Government. Now, one of the, I think, quite concerning things is that we don't have technology that is always fit and proper for today's age. We've got a very siloed approach to information technology right across the public service. It doesn't serve the public service it doesn't serve the government of the day and it certainly doesn't serve the Australian people. That's one aspect that obviously will be interrogated as part of this particular review, and we have got exceptional people who have agreed to be part of the panel, whether it's David Thodey, who's chairing it, right through to Vice Chancellors like Belinda Hutchinson and Glyn Davis.

PATRICIA KARVELAS:

Okay, but can you guarantee that there won't be any front-line service cuts as a consequence of this?

KELLY O'DWYER:

I'm not going to guarantee anything.

PATRICIA KARVELAS:

So that means we might see front-line services cut?

KELLY O'DWYER:

No, what I'm saying is actually let's have the review, let's see what it says, let's look at how we can have the very best public service.

PATRICIA KARVELAS:

And if that means cuts, would you embrace them if they recommend cuts?

KELLY O'DWYER:

No, let's not get ahead of ourselves here Patricia. What I'm saying is let's actually have the review before we actually leap to what the review's going to find, let's actually hear about what it does find and then let's examine that at the appropriate point in time. We've got people of diverse skills who have been put onto the panel to interrogate a range of issues, we've got many talented people in the public service, we want to make sure it's the very best it can be. And that is about improving it as well for those people who are currently in the public service.

PATRICIA KARVELAS:

Okay, let's move to the federal budget. It's on Tuesday, I'm sure that hasn't escaped you, me, or all of my viewers.

KELLY O'DWYER:

I'm aware of it.

PATRICIA KARVELAS:

Okay, if the tax cut people are going to get isn't mammoth, as the Treasurer says, possibly not even a milkshake, let's see if people will be able to afford it at the end of that. Why bother at all if you're not prepared to adequately and properly deal with bracket creep?

KELLY O'DWYER:

So, the point that the Treasurer has quite rightly made is that any decision taken by the Government does need to be affordable, the Government does need to be able to live within its means but we also have to understand that in providing tax cuts you are simply allowing people to keep more of their hard earned income. There isn't a great big money tree in Canberra. The money that is provided to the Government comes from the hardworking men and women of Australia.

PATRICIA KARVELAS:

If it's not a mammoth tax cut does that mean the Government may be prepared to offer more tax relief in an election campaign, so there would be something here and maybe something bigger later?

KELLY O'DWYER:

No, the Government will make an announcement on Tuesday when the Treasurer hands down his Budget about what is affordable now and into the future with respect to personal income tax cuts. Now it needs to be balanced, we need to ensure that we have got our budget priorities right, but also that people are not handing over more money than they need to to the Australian government in order to provide the services that Australians rely on. We will absolutely provide the services that Australians rely on, but we don't need to take one dollar more than we absolutely need to.

PATRICIA KARVELAS:

Today you've unveiled a plan to recover billions of dollars being lost to the Federal Government, essentially to Federal coffers, through a combination of undetected tobacco imports, illegal tobacco crops, black market tobacco, why has this illegal market grown like this?

KELLY O'DWYER:

Well certainly we know that illicit tobacco is something that organised crime gangs are very involved in. They use it fund their other illicit and illegal activities, and their criminal activities, and what the Government has announced today is a massive crackdown on that criminal activity which will see $3.6 billion in revenue raised as a result of establishing the Illicit Tobacco Taskforce that will ensure we actually change the way tax is applied so that it is at the border rather than when it is distributed from the warehouse. This will mean we have got more integrity in our taxation system which is what the Government has been focussed on from day one. We have been cracking down on multinational tax avoidance...(interrupted)

PATRICIA KARVELAS:

But are we seeing this increase in the black market on tobacco because of the fact that we've had all these tax hikes on tobacco and it cost more to buy cigarettes, is that the reason behind all of this?

KELLY O'DWYER:

Well we have always seen criminals involved in illicit tobacco, and certainly the cost of tobacco is one aspect of that but we take our advice in terms of the taxes that should be paid on tobacco products from organisations such as the World Health Organisation that recommend reasonably high levels of taxation on those tobacco products, and that is to discourage people from taking up the habit of smoking. We know that we will have a healthier population if they're not smoking, we know that we will have a healthier population if they don't have a tobacco habit. And so it's getting the balance right there, but we absolutely need to crackdown on the black economy, which is why the Government introduced the Black Economy Taskforce to actually provide a report to Government around the black economy and there will be more to say on Tuesday night in relation to that. One essential element of it that has been highlighted by the Black Economy Taskforce is the fact that the illicit tobacco is where criminal syndicates are involved and we need to crackdown on it and the Government's announcement today has demonstrated that we will do just that.

PATRICIA KARVELAS:

Could you live on $40 a day, that's what the Newstart payment is, could you live on that?

KELLY O'DWYER:

Well I think it's fair to say that the Newstart payment isn't a generous payment and the reason for that...(interrupted)

PATRICIA KARVELAS:

But could you live on it?

KELLY O'DWYER:

Well, you know, I'm not…

PATRICIA KARVELAS:

You can answer that – could you live on it? I couldn't.

KELLY O'DWYER:

I'm not going to personalise these things, but what I would say to you is that Newstart has never been about living on Newstart day in day out forever, it's been about helping people get back to work.

PATRICIA KARVELAS:

Business groups, the BCA, the AI Group who are going to be on the program a little later, they all say that actually, people can't get ready for work, they're not work ready when they're living on Newstart because it is such an appallingly low payment, so why not deal with that?

KELLY O'DWYER:

The Government's invested in making sure that people can get the skills they need to get back to work. Newstart is a payment designed to be a stopgap before people get a job because at the end of the day the best form of welfare is actually getting a job.

PATRICIA KARVELAS:

But at the end of the day you can't get a job, you can't even get yourself ready for a job on that kind of payment.

KELLY O'DWYER:

The Government has a balancing act here, we need to be able to provide support to those people who need it, we need to make sure that we don't take too much from those people who have worked incredibly hard for it. This is the balancing act of every single government and what we want to do, is we want to create the right economic framework to actually encourage more jobs in the economy, we've seen 415,000 new jobs created last year which is an extraordinary number of jobs created last year. We've seen more people get back into the workforce and Newstart is one of those payments that can support people while they are getting back to work.

PATRICIA KARVELAS:

Kelly O'Dwyer thanks for your time tonight.

KELLY O'DWYER:

Great pleasure Patricia.