3 April 2016
Transcript - #2016036, 2016

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

Interview with Patricia Karvelas, Sky News

SUBJECTS: COAG, tax reform, same sex marriage, the Budget, Dennis Jensen

PATRICIA KARVELAS:

My first guest tonight is Kelly O'Dwyer. Welcome to the programme.

MINISTER O'DWYER:

Great pleasure to be with you, Patricia.

KARVELAS:

Malcolm Turnbull was on Sky this morning. I know we both watched this interview. He said many interesting things including that – he talked about the failure to get the state tax idea through and said now the – basically the State leaders had no excuse because they haven't raised the money themselves but can you realistically go into an election campaign blaming the states because it becomes another blame game then doesn't it?

MINISTER O'DWYER:

Well it's not a matter of blaming the States. In December when they last met, the communiqué reflected that there would be a discussion in the COAG that has just occurred around the tax sharing arrangement. It was originally put on the table I think by the South Australian Premier who said we want a portion of the income tax – now rather than simply just talk about giving away a portion of the income tax, without any potential reform and without any greater accountability, the Government put on the table that we would reduce potentially our income tax and have them take up that proportion of income tax – which is a growing revenue source – and that proportion would then be able to be spent on their areas of priority and that they would be more directly accountable for the money that was spent. Now a very sensible reform put to the State Premiers…

KARVELAS:

But they didn't have enough paperwork, they said in the meeting that they didn't have paperwork.

MINISTER O'DWYER:

It is simply not correct to say that the idea was not fully put to the State Premiers but anyway, leaving that to one side, that's history now. We have seen State Premiers reject, other than Colin Barnett I should hastily add, reject the idea that they should be responsible and accountable for a proportion of income tax. They would simply like the Commonwealth Government to continue to give them, them more and more money and not be accountable for that money and we've said no, you need to be responsible for the money that you spend. When you are responsible for the money that you spend you spend it more wisely and when you spend it more wisely, it means taxpayers have value for their money…

KARVELAS:

We know the economic theory behind it and perhaps it is a good idea. It's not really the point though, the execution didn't work. So somewhere there was a failure there – you can't blame the States on the execution. With the benefit of hindsight could the execution have been better?

MINISTER O'DWYER:

We're in the position now where the state Premiers are going to go away and speak with their counterparts, the Treasurers. The Treasurers are going to speak with the Federal Treasurer to talk about the sharing of income tax – a proportion of the income tax – for a reform in the untied grants so that they will in fact be more responsible for the money that they spend. We are happy to have a look at this idea. We haven't ruled it out because if you can get reform here that is important.

KARVELAS:

So let's talk about that. What type of untied grants are we talking about? Can you tell me…

MINISTER O'DWYER:

We've actually put it to the States to say, you tell us…

KARVELAS:

Can you give me some examples of what might be on the table?

MINISTER O'DWYER:

We've actually said to them, come back to us with the examples that you would actually like us to look at because there is around about $14 billion worth that they say they would like us to untie because of the regulation that is imposed upon them, the duplication, they would like to be able to better spend that money they say and we say if you are going to be accountable for it we are prepared to look at that idea.

KARVELAS:

So what sort of percentage could we get up to? 17.5 per cent of total income taxes is that potentially possible?

MINISTER O'DWYER:

It will depend a lot on what the State Premiers and Treasurers are prepared to put on the table and we're very open to having a look at the proposal that they put on the table.

KARVELAS:

So what sort of requirements might you put on them?

MINISTER O'DWYER:

We would want to be very confident that there is accountability for the money that was spent. For instance just recently out of the COAG that we have had, the Government has put an additional $2.9 billion on the table for hospitals over the next four years. Now we have done that on the basis that we are going to see the States comply with an efficient pricing mechanism and to see reform so that we don't have people going into hospitals in so far as we have better prevention and we have people outside of hospitals and being managed better for the chronic illnesses. We have been able to buy some reform with the States and Territories...

KARVELAS:

So what other kinds of reforms would you like to lock into this system?

MINISTER O'DWYER:

Well it depends on the tied grants that they would like to untie?

KARVELAS:

Would you like education to be one of them?

MINISTER O'DWYER:

Well education, it is very clear that the States are responsible for the schools themselves, they are responsible for the employment of teachers. It seems to make a lot of sense that the States should be fully accountable and responsible for education.

KARVELAS:

So how will you go into this election campaign and deal with it? What would be a very strong scare campaign from the Labor Party and the AEU on education that the feds want to withdraw from education funding. That is a pretty toxic campaign for you folks.

MINISTER O'DWYER:

Well what we're saying is that we are prepared to contemplate some significant reform with the Federation. We've got a huge education department up in Canberra. We're not saying that there shouldn't be standards set – we're saying that that's absolutely right – but in terms of who's responsible day-to-day for schools, that is in fact the States. Now the States should want to be accountable for their schools. They should want to not have blurred lines of accountability here – just as they don't have blurred lines of accountability when it comes to police. They should want to be able to front up to the electorate and say we are wholly responsible for the State school system – we fund it, we're responsible for it, if you like it give us credit for it, if you don't we are responsible for making changes.

KARVELAS:

17.5 per cent of the income tax could go to the – be put aside for states potentially?

MINISTER O'DWYER:

I'm not going to be putting figures on this tonight. We're saying that we are prepared to have a discussion…

KARVELAS:

But a significant slice?

MINISTER O'DWYER:

We're prepared to have a sensible discussion with the State Premiers and the State Treasurers in relation to a proportion of income tax being shared with the States…

KARVELAS:

How much more detail might we know before a July 2 election?

MINISTER O'DWYER:

I know that there are ongoing discussions with the State Treasurers and with the Premiers and there is an ongoing COAG process…

KARVELAS:

Do you think it's likely that you will get this fleshed out much before an election?

MINISTER O'DWYER:

I know that this is being set on the agenda for the next COAG meeting and I'm sure that there will be plenty of discussion before then and on that day.

KARVELAS:

I want to get to another issue, the Prime Minister talked about marriage equality this morning and I know that you have been advocates of this inside the Party Room of course your electorate is very much affected by this. He says there will be no detail about the plebiscite before you go to this election. Is that really something you can go to the election telling people that you can't tell them anything about this plebiscite?

MINISTER O'DWYER:

He didn't really say that, he said that we will deal with this…

KARVELAS:

After the election…

MINISTER O'DWYER:

As soon as practicable directly after the election. As you well know, I have advocated very strongly in the Party Room prior to a final decision being made that I believe that we had the ability to make a decision in the Parliament on these issues but we have resolved to allow everybody in Australia to have a national vote on this issue and frankly looking back on that that provides us with an opportunity as a nation, that provides us with an opportunity to unify…

KARVELAS:

You'll need some details. So one of the issues is these exemptions for cake shops on discrimination, you'll have no clarity about any of that going into the election.

MINISTER O'DWYER:

What we will be able to do is to be able to be very clear that the Australian people will have the opportunity to have a say on this very important social and national issue. And I think, frankly, when we saw the result of the Ireland referendum on this particular issue we saw a nation that was unified as a result of that and I think that that provides us with a similar sort of…

KARVELAS:

Going to your voters you won't have any detail.

MINISTER O'DWYER:

Well, we've said that…

KARVELAS:

that there's a plebiscite but we don't know if there's public funding for a yes and a no case yet. There's been no Cabinet decision.

MINISTER O'DWYER:

We've said as soon as practical after the election we will turn our attention to the plebiscite to make sure that we can have that at the earliest opportunity…

KARVELAS:

But the fact that you don't have more details will make it hard for you, won't it?

MINISTER O'DWYER:

Well not really because I think everyone understands exactly what we're going to be doing which is having a national vote on this issue. I think that is the threshold issue that people need to understand.

KARVELAS:

Another question will the $160 million price tag on this be in this Budget?

MINISTER O'DWYER:

Well, that's a figure that's been thrown about…

KARVELAS:

Whatever the money is will it be in this Budget?

MINISTER O'DWYER:

And you know, as you know on the third of May we will be delivering the Budget.

KARVELAS:

Help me out here, you are the Assistant Treasurer. You will have to factor in a sum of money like that, won't you?

MINISTER O'DWYER:

So, the Budget will take into account spending in the forward estimates period and the Budget will be announced on the third of May. I'm not going to pre-empt the Budget and I'm not going to pre-empt the figures, Patricia.

KARVELAS:

Well, lets get to the Budget. Is a company tax cut still on the agenda? Is it really possible to deliver something like that?

MINISTER O'DWYER:

Well, our Budget's going to be very much focused around growth, how we can grow our economy, how we can encourage investment in our economy and when we grow our economy, when we encourage that investment, when businesses grow then obviously that results in more jobs and we want to see in this country better jobs.

KARVELAS:

So a company tax cut then is still on the agenda?

MINISTER O'DWYER:

Well, we are not in the business of ruling in, ruling out before a Budget…

KARVELAS:

So you're not ruling it out?

MINISTER O'DWYER:

I'm not going to be here tonight announcing aspects of our Budget in advance of the Budget. The Treasurer is going to do that on the third of May and what I am simply saying to you is the parameters when we construct the Budget is all about how we can grow our economy, how we can encourage investment, we've already made announcements before now in terms of how we can encourage investment in our economy. The National Innovation and Science Agenda had a number of taxation concessions in that, that will allow a huge investment in particularly start up companies and fintech companies that will help to make our economy more agile and more nimble. Now these are just some of the measures that have been announced to date and obviously the Budget will have a number of other measures that will be within that that will have those same parameters.

KARVELAS:

Just before I let you go Dennis Jensen has lost pre-selection today – this is despite a letter from the Prime Minister suggesting he should win pre-selection, he had a reference, and he said there's been dirty tricks. Is he right?

MINISTER O'DWYER:

Well Dennis Jensen has lost pre-selection on I think two other occasions, including when John Howard was Prime Minister that was subsequently overturned by the State Council of the day…

KARVELAS:

Could that happen again?

MINISTER O'DWYER:

Well I understand that State Council is coming up and I'm sure the issue will be canvassed at the State Council...

KARVELAS:

But he got beaten pretty badly. Would that be fair?

MINISTER O'DWYER:

I don't pre-empt any outcomes made by pre-selectors but what I would say is this, is that in order to serve in the nation's Parliament, in order to represent your local community, you need the support of your pre-selectors and you need the support of your local community and where you lose that support your obviously not able to take up that very privileged position in representing your local community. Now Ben Morton who has been pre-selected is a very strong candidate for the people of Tangy and I am very confident that he will be a very valued member of the Turnbull Government.

KARVELAS:

Kelly O'Dwyer come again. It's been fun talking to you.

MINISTER O'DWYER:

Great fun talking to you too.