17 March 2016
Transcript - #2016031, 2016

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

Interview with David Speers, Sky PM Agenda

SUBJECTS: The Government's changes to Section 46, 'backpackers tax', superannuation, Safe Schools Coalition Australia

DAVID SPEERS:

With me now is the Minister responsible for all this, the Assistant Treasurer, Kelly O'Dwyer. Thank you very much for joining me this afternoon.

MINISTER O'DWYER:

My pleasure.

SPEERS:

Can I ask you one of the key questions in this, will the effects test actually result in higher prices at the supermarket as some suggest?

MINISTER O'DWYER:

Well look, there has been a lot of speculation in relation to this matter but what I can say is that the change to the competition law to prevent anti-competitive conduct is guaranteed to be in the best interests of consumers and rigorous competition. Now we have had statements from Choice, a very well-known consumer group, the CEO Alan Kirkland who said that robust competition delivers lower prices when it works well and I think we can take from those statements, strong encouragement that these reforms are necessary, these reforms are in the best interests of consumers, and these reforms are in the best interests of competition which means that when you prohibit anti-competitive conduct, you are encouraging innovation and you are encouraging businesses to grow.

SPEERS:

Which would be great, if that happens, but a lot of critics fear it will stop Coles and Woollies, the big supermarkets, opening a store somewhere and offering milk for one dollar a litre and even Barnaby Joyce has said in his words "I obviously believe the proper price of milk is above a dollar". Do you agree with him?

MINISTER O'DWYER:

Well, I'll let Barnaby speak for himself. But what the ACCC…

SPEERS:

But he is obviously seeing this as a way to keep those prices higher to help the little guy.

MINISTER O'DWYER:

Well what the ACCC Commissioner has said in response to this speculation around prices is he said it is nonsense. You know, he has been very direct about that and he is the competition regulator who will be enforcing the law.

SPEERS:

So, is he right? Or is Barnaby Joyce right?

MINISTER O'DWYER:

Well I'm pretty confident that the competition regulator who is the expert in these matters, he is the guy who has the authoritative word on how the enforcement will work with the Competition and Consumer Act.

SPEERS:

Surely some of these companies have a good idea too. And I know Richard Goyder who is the CEO of Wesfarmers, the parent company of Coles. He says this will reduce competition, increase prices and end up in court.

MINISTER O'DWYER:

He also said that it's not going to stop his rigorous competition and he is going to keep prices low. But what I would say, is this idea that focussing on anti-competitive conduct through a substantial lessening of competition test, and actually looking at the effect of that, there is nothing new in that. This has been in the Competition and Consumer Act since 1974.

SPEERS:

Not for supermarkets though.

MINISTER O'DWYER:

No, in other provisions of the Act, in agreements and contracts, and Section 45 of the Act, that has been the test. Everybody has managed to work within that test up until now. So this idea that it's going to create a huge amount of uncertainty belies the fact that we already have in Section 45, Section 47 and Section 50, the exact test that people are talking about.

SPEERS:

So this whole campaign and concern that the business community has had is based on nothing?

MINISTER O'DWYER:

Well, what I would say is, you know, obviously there has been some very serious thought that has gone into this. Professor Ian Harper who is in fact the person who recommended this change in the Harper Review, he worked very hard on establishing facts as to whether or not Section 46 which is the misuse of market power provision within the competition laws, whether it was fit for purpose or whether in fact it was allowing anti-competitive conduct. Now, he found it was allowing anti-competitive conduct and it needed strengthening so he recommended changes - the changes that the Government has accepted and that the Government will put into effect. Now, there are eminent people who have come out in support of these changes. Certainly Russell Miller AM, who is the author of the text book…

SPEERS:

Sure, there are plenty who don't think it's a bad idea.

MINISTER O'DWYER:

…of competition law…

Spears: Your old boss, Peter Costello. He says this is helping less efficient consumers, which is why it has never been previously adopted.

MINISTER O'DWYER:

Well, we believe this is all about protecting competition and the competitive process, not particular competitors and I think there are particular competitors who are complaining very loudly about these particular changes. We want vigorous competition, vigorous competition is good for our economy and it is good for Australian business, particularly the 97 per cent of all business in Australia, which are small business. We've got two million small businesses in this country.

SPEERS:

We'll, they are very happy.

MINISTER O'DWYER:

They employ more than 4.7 million Australians. They are going to be able to vigorously compete. That is a good thing.

SPEERS:

Okay. A couple of other things. The other announcement yesterday on the backpackers' tax. The Government announced this last Budget was meant to raise $540 million over four years – a higher tax on those here on working visitor visas. It's now being reviewed. Why? Was this a mistake, or what's happened there?

MINISTER O'DWYER:

Well, the previous Treasurer obviously made these changes in the last Budget.

SPEERS:

Joe Hockey made a mistake?

MINISTER O'DWYER:

No, I'm saying that there have been concerns raised about the impact that this will have and so those concerns are being examined. There's nothing really particularly noteworthy in that. If concerns are raised, you examine them, you see whether or not there is any substance to them and then you see whether or not you need to make any changes. I would have thought that's prudent and good government, David.

SPEERS:

 Just with tax reform more generally, it is all a bit confusing at the moment. What is the government aiming to do with tax reform?

MINISTER O'DWYER:

I don't think it is confusing. I think there has been a wild amount of speculation which is pretty typical…

SPEERS:

Put that to one side for the moment. What's the Government trying to do?

MINISTER O'DWYER:

Well, the Government wants to see lower, fairer and more efficient taxes in this country.

SPEERS:

So taxes will be lower?

MINISTER O'DWYER:

We want to see lower, fairer and more efficient taxes in this country. We want to make sure that business can vigorously compete and there are some levers that we can pull in order to allow them to compete more effectively. Taxation, of course, is one of those levers. We have seen an announcement already around investment and encouraging investment, particularly new start-up businesses. That was last year in the National Innovation and Science Agenda.

SPEERS:

But this question about what you're trying to do, lower simpler fairer taxes, that would suggest lower taxes.

MINISTER O'DWYER:

We're trying to turbocharge the economy. We are trying to make sure that our taxation system will help boost growth and jobs. It is all about growth and jobs…

SPEERS:

So there will be a growth boost?

MINISTER O'DWYER:

We measure all of our changes against that.

SPEERS:

There will be a growth boost?

MINISTER O'DWYER:

That is what we are aiming to achieve.

SPEERS:

And it will presumably be bigger than the 0.3 per cent that the GST would have produced because that wasn't enough apparently.

MINISTER O'DWYER:

Whether or not the changes we make are going to have that impact, of boosting growth and jobs. We have already made some very good announcements that have clearly had a very positive impact. You only have to look at the 1.5 per cent company cut tax for small business, the five per cent discount for unincorporated entities, backing businesses to invest – particularly the small businesses through the instant asset write-off for assets up to $20,000, all of these things are having a very positive impact on the economy…

SPEERS:

A question in the superannuation space, which is your space, do you think workers over the age of 56 should be able to so-called churn their income, put it through their super funds so they're only paying 15 per cent tax on it?

MINISTER O'DWYER:

We're going to be announcing superannuation policy. We are looking right at the moment at the objective of the superannuation system. The Murray Financial System Inquiry said that it was pretty incredible that in 1992 when we legislated the superannuation guarantee we didn't actually legislate the objective for superannuation…

SPEERS:

Just on this churn of income those over 56, is that a problem at the moment?

MINISTER O'DWYER:

It's relevant to talk about the objective of superannuation because that is the framework against which you measure competing superannuation policies. The objective that David Murray suggested for superannuation was to provide retirement income that would substitute or supplement the Age Pension. We think that's a good definition. Tomorrow I'm hosting quite a significant roundtable with a number of stakeholders to actually look at this objective to see whether we can come to a landing before we legislate…

SPEERS:

Just getting back to this question, those over 56 who churn their income through their super to pay only 15 per cent tax – is that a problem?

MINISTER O'DWYER:

What I'm saying is let's be clear on the objective. Let us be very clear on the objective behind the superannuation system…

SPEERS:

We've heard the objective, I'm just asking if there is a problem there at the moment.

MINISTER O'DWYER:

We will announce our superannuation package…

SPEERS:

But right now with the way it operates?

MINISTER O'DWYER:

There are a lot of people who are identifying a range of issues in relation to superannuation. I'll let people who have got those issues comment on them…

SPEERS:

You're the Minister, I mean do you have a problem with the way it's working…

MINISTER O'DWYER:

We're examining superannuation policy against the broader objective. We are discussing the objective because we want to legislate. It is with that framework in place that we will be able to very clearly articulate the policy that we will bring forward before the next election in good time.

SPEERS:

But do you have a concern right now with that aspect?

MINISTER O'DWYER:

In good time. We will announce it in good time, David.

SPEERS:

Alright. I'm just wondering whether there is a problem that you need to start talking about and telling people there is an issue here.

MINISTER O'DWYER:

I will be very happy to talk to you about our superannuation policy when we release it.

SPEERS:

Where do you sit on this safe schools program and debate that's raging in the Government's ranks at the moment?

MINISTER O'DWYER:

I'm not sure that it's raging in the Government ranks as you would put it…

SPEERS:

43 of your colleagues have signed a petition to the Prime Minister. I'm not sure how often 43 of your colleagues sign a petition to the Prime Minister but maybe it happens all the time?

MINISTER O'DWYER:

I think we have a very robust Party Room and that's a great thing. We've got people with a whole range of views on a variety of issues. That's part of our strength as a Party. The Safe Schools Coalition program was brought in by the previous Labor Government in 2013. The idea behind it I think is a good one. The idea behind it was to make sure that we didn't have bullying in schools and schools could sign up to the program in consultation with parents to provide information to students. There have been concerns raised about this particular program and perhaps there might not be appropriate materials that have been provided. Those materials are being examined by the Education Minister. That's his job. He will look at that review, he will then make an announcement as to whether or not any changes are required.

SPEERS:

You didn't sign the petition though?

MINISTER O'DWYER:

I didn't even know there was a petition, David.

SPEERS:

I don't think it was for Cabinet Ministers anyway – I think it was just for backbenchers. We will see where they end up on that. Kelly O'Dwyer, thanks for your time.

MINISTER O'DWYER:

Great to be with you.