GENERAL News

MINERALS RESOURCES RENT TAX; G20; ASYLUM SEEKERS

02 July 2010 Prime Minister: Transcript of joint press conference Canberra
Subject(s): Minerals Resource Rent Tax; G20; Asylum seekers

PM: Well as you know the Government’s been engaged in detailed negotiations with the mining industry this week and I’m pleased to report to the Australian people that today we have a breakthrough agreement that moves Australia forward. It moves our mining industry forward with certainty. It moves our mining communities forward with new infrastructure. It moves things forward for the public, ensuring Australia gets a fair share for its non-renewable resources.

It moves things forward for Australians who will look forward to retirement one day with increased superannuation. It moves things forward whether you’re a coal miner in the Bowen Basin, a contractor in Karratha, and opal miner in Coober Pedy or a young worker in Sydney.
We’ve been stuck on this question as a nation for too long. Today we are moving forward together.

Last week I said we would be seeking consensus on the proposed resources super profits tax. I announced that the Government’s advertising campaign would cease. I asked the mining industry to do the same, and doing this I believed fostered good faith. I’m pleased to announce that we’ve been able to build on that good faith, and I’m very grateful for the hard work of the Deputy Prime Minister and Treasurer Wayne Swan and Martin Ferguson, the Minister for Resources, both of whom join me today, and I thank them for their work on behalf of the Australian people.

Today we’re seeing what happens when people address difficult questions in a spirit of mutual respect and with a shared commitment to move forward. Wayne, Martin and I have spoken to the mining industry leaders frankly and directly throughout the process. Last night we sat down to settle the final agreement, and I can now announce we’ve reached agreement on the basic structure of minerals taxation for the future.

There will be a negotiated profit based tax regime but there will be no resources super profits tax. Iron ore and coal will be subject to a new profits based Minerals Resource Rent Tax at a rate of 30 per cent. The uplift rate will be lifted to seven per cent about the long-term Government bond rate. New investment will be expensed immediately, and we’ve removed the refund ability that industry told us they didn’t want.

The Petroleum Resource Rent Tax regime will be extended to cover all oil, gas, and coal seam gas projects onshore and offshore at the rate of 40 per cent. More than 8 million Australians will benefit from a boost to their superannuation guarantee and while we were never relying on the resources tax revenues to return the Budget to surplus, under these revised arrangements we remain on course to return to surplus in 2013.

This will deliver better returns for the resources that all Australians own and that can only be dug up once. It will end uncertainty and division. It will invest a portion of the value of our resources into better superannuation for our people. It will allow us to move forward together as a nation. It will deliver the sustained investment in infrastructure that we need in mining and regional communities around the nation. It will maintain Australia’s standing as a competitive and attractive destination for investment and strengthen our economy for the future. And it will enable Australian businesses to grow by cutting taxes for businesses and reducing red tape for small business.

For business to flourish competitive tax rates are essential. It’s also essential we have stable and coherent Government and a positive basis for trust, and I believe we’ve established that this week. We know that some parts of the mining industry will still have their criticisms. But I believe we’ve struck the right balance. It takes industry concerns into account, it focuses on the most profitable resources and it offers generous arrangements to promote investment and jobs.

I’m delighted that last night we were able to sign a Heads of Agreement with some of our major mining companies. We will now be establishing a Policy Transition Group to consult with industry and advise the Government on the implementation of the new Mineral Resources Rent Tax and the Petroleum Resources Rent Tax. And I’m delighted that Don Argus, former chairman of BHP, has accepted my invitation to chair this process working alongside Minister Martin Ferguson.

Before I pass to the two Ministers with me, Wayne and Martin, I want to record that over the weekend the Treasurer and the Deputy Prime Minister was in Toronto, sitting at the table with the leaders of the G20 economies advancing Australia’s interests in important discussions. Just a few hours later, he was at a rather smaller table here in Canberra, once again with sleeves rolled up. And together we have achieved a breakthrough that keeps faith with the Government’s central policy goal. And that policy goal was that Australians are entitled to a fairer share of the mineral wealth in our grounds. And now we have a way forward for the Australian mining industry and the Australian people, so we can both prosper together and that is I think a great result.

With those words I’m going to turn to Deputy Prime Minister Wayne Swan and then to Martin Ferguson.

TREASURER: Thank you very much Prime Minister.

Could I just congratulate the Prime Minister on the role that she has played in this very important discussion and negotiation. I think it’s fair to say that her intervention changed the tone of this debate and has lead to this breakthrough.

This is a very good day for economic reform in Australia. We have achieved a profits based tax in the minerals sector, we’ve done that with consensus, I think that’s a very substantial achievement. I think in this room some weeks ago, when we released the response to the independent tax review, I said then that this would be a vigorous debate, that long-term economic reform in Australia is always hard fought and it has been no different on this occasion. But the intervention of the Prime Minister in the past week I think has made a great difference to the outcome. She gets things done and I think it’s obvious by the nature of this agreement.

So now the country can move forward, and our economy also moves forward. And we can get on with very important economic reforms. The Prime Minister ran through some of the design features of this profits based tax, this MRRT. I think it’s very important to note that this is going to be very good for new investment. We’ve had a debate about that in recent times. It is a better tax for the consultation.

It is a better tax for the negotiation that we have had in recent times. And I think it’s pretty fair to say that not every single company or every single individual is going to agree with this outcome. Not everybody will always embrace the idea of paying more tax. But I think what we have achieved here is a pretty strong consensus in a critical area as we go forward. So I’d say this is a very sensible outcome in terms of our national economic interest.

Now it will involve less revenue, less revenue to the tune of about $1.5 billion. So what we’ve had to do is to change slightly some of the arrangements that were announced originally. Because we’re collecting less revenue to the tune of $1.5 billion, the company tax rate will be cut to 29% from 2013-14 but will not be reduced further under current fiscal conditions. This rate cut will be provided early to small business from 2012-13 and we won’t have the resource exploration rebate either. That just means those costs will be deductable in the normal way. But of course as the Prime Minister said, the big reforms that were announced, the big reforms of boosting superannuation, investing in infrastructure, reforming and lowering the company tax rate still proceed. This is a pretty good outcome for the country.

As I said economic reform is always hard. It’s been a difficult debate, it’s been an untidy debate. But that has been true of all of the big reforms we’ve had in the country, that is the nature of democracy. I was talking to the Chairman of one of the companies last night and I made the point, and he agreed, that we have a big chance to unite behind this decision now, to move forward, to get more done in the national economic interest.

As a country we came together during the global recession, we all worked really well together. I think we can do that again because what we are about to experience is mining boom Mark II in the Asian century. The challenges that that poses for our economy are ones that we can meet if we embrace the reform challenge. That’s what this is all about, and that’s what we’ve put in place with this agreement today.

MINISTER FERGUSON: Tax reform is about generating change, and that’s what this package actually delivers for Australia. Firstly it puts in place a profits based tax system, it also builds Australia’s capacity to determine where we are in ten and twenty years time and to my mind was the main focus on what we had to achieve over the last couple of months and especially the last week. We reached a balance which means that the Australian community would get a fair return for the one off opportunity to actually develop its resources. Mind you those resources are 100% owned by each and every one of us.

It also means that we have created certainty and maintained an attractive investment horizon which will guarantee that we can continue to bring forward that pipeline of investments that will create wealth and a bigger economic cake for Australia. It will also mean that we’ve got job certainty, not only for this generation but for future generations as we go forward and in think about today’s package I just don’t think about the profits based outcome and the certainty in brings for investment to Australia, I also think about our associated needs to actually continue to invest in the skilling of Australia and the infrastructure required for our resource regions.

From a tourism perspective- I’m also Minister for Tourism- the changes on company taxation I must say the immediate write-off for equipment are exceptionally important to an industry for example that’s under huge pressure from the capacity of the resources sector at the moment. But I also look to the long-term requirements of Australia.

In 1996 when we lost Government we were on the verge of achieving 15 per cent superannuation for Australia, that was a lost opportunity. Labor in Government is about reform again, a profits based tax system, superannuation to go from 9 to 12 per cent, that will take further pressure off the Australian community in terms of servicing an aging population in the future, it also means we’ve got an even bigger savings portfolio to invest in Australia’s future reform. I simply say, this package is a balanced outcome, it’s a balanced outcome for the Australian community, and it’s a balanced outcome for the minerals and petroleum sector in Australia because it means that we have certainty and ongoing investment.

JOURNALIST: Prime Minister-

PM: Yes- Phil.

JOURNALIST: The Government has said on dozens of occasions since this tax was announced that the 40 per cent rate was not negotiable under any circumstances. What do you say today to people who say that any industry that yells loud enough and complains loud enough and advertises against the Government can bully you into changing your policy, or was the Government just arrogant in the first place?

PM: Well what I would say is we were determined to get a fairer share of the mineral wealth in our grounds for all Australians. We were determined to deliver our superannuation changes because it will make such a difference for Australian retirement incomes. We were determined to deliver more in infrastructure for mining communities. And we were determined to assist with balancing growth in our economy by better arrangements in company taxation and for small business. We’ve achieved those things through a hard, frank and respectful discussion with the mining industry and that’s the breakthrough that we’re announcing today which I believe will take this country forward working with the mining industry.

Yes- Lyndal.

JOURNALIST: You’ve got the breakthrough but it’s come at a not insubstantial cost to your Government. A fall in popularity, a change of Prime Minister, although it’s meant a promotion for you. What have you learnt, what has this taught you about pursuing tax reform in the future?

PM: Well what I was say I’ve learnt across my life is that you can work best if you get people around a table and have open, frank discussions. We this week, particularly Wayne and Martin, have sat for very long hours around a pretty small table-

TREASURER: Longer than the G20.

PM: In a windowless room with their sleeves rolled up working through issues of concern. Now at the end of the day, you will never please everybody. And we’re not suggesting that this package will please everybody. But I think what this is proving is the benefits of respectful conversations and frank talking. That’s the approach I brought as Deputy Prime Minister to many of the reforms that I drove and lead as Deputy Prime Minister. National Curriculum wasn’t an easy conversation. My School wasn’t an easy conversation. Uniform occ health and safety law, not an easy conversation. Fair Work Act, not an easy conversation. But you can take things forward if you get people talking and working together and that’s what we’ve done.

We’ll got to Andrew and then come back across. Andrew.

JOURNALIST: Prime Minister, further to Lyndal’s question, what does it say though about policy and the need for real world smell tests when it comes to issues like this and the acceptance- and the acceptance of advice that comes from airless rooms in Treasury.

PM: Well I don’t know about airless rooms in Treasury. I’m not sufficiently familiar with the Treasury building. But obviously we need advice from within the bureaucracy and you know, I believe we’ve got great people working alongside us as a Government. I think we need their advice, but of course our job as leaders, our job with particular responsibilities for the nation, is to get out and talk to people, it’s certainly my intention as Prime Minister to do that, and Wayne and Martin every day, every day, are in contact with people across industry, Martin particularly focussed on the resources and tourism industries, workers, unions, employers, industry associations to get the best of their real world advice.

Yes- David and then we’ll got to Laura.

JOURNALIST: Prime Minister, what do you say to the charge that after shelving the emissions trading scheme and now weakening this tax, this Government has a weak stomach for reform, and secondly, and you now ready to call an election?

PM: Well firstly I think as the new Prime Minister, former Deputy Prime Minister I’d be entitled to say scoreboard when it comes to the question of hard reform. This nation’s talked about national curriculum for 30 years. I delivered it. This nation talked about school transparency for the best part of 20 years. I’ve delivered My School. This nation talked about uniform occupational health and safety reform for so long, but when I struck that agreement at the Workplace Relations Ministerial Council there were public servants who cried because they’d spent all of their working life trying to achieve this reform. Fair Work Act, a profound reform. And of course, here we are today, with another major reform of meaning to Australians right around the country. It’s about moving forward on super, moving forward on infrastructure, moving forward with balanced development in our economy and taking the mining industry with us. We’ve been able to enter the Heads of Agreement with major mining industry representatives. This is how you get reform done. You think, you work, you consult, you talk, you have blunt conversations, and you take the nation forward.

Laura, and we’ll just, we’ll come back over to the boys I promise.

JOURNALIST: (inaudible)

PM: Look we’ve got more governing to do and my focus is on, obviously, delivering those things that matter to the Australian people and keep us moving forward. That’s what we’re doing today.

Laura.

JOURNALIST: Prime Minister, could I ask the Treasurer to walk us through the revenue revised figures. In particular what are the savings that you’ve managed to achieve, that come out of this package and what are the new costs and do these figures reflect any revision of your estimates of how much money you will actually raise from the same amount of production?

TREASURER: I’m happy to do all that. Can I just say this is a robust profits based tax, I think the question was raised about that before, this is a robust profits based tax that will bring in, over the forward estimates, $10.5 billion, and by the way Laura will circulate this later and I’ve got the figures in terms of the shades- because essentially the cost is $1.5 billion. You’ll recall that there was $12 billion over the forward estimates estimated previously. The cost now is $10.5 billion, the revenue previously was 12, so we’ve had to find savings of $1.5 billion.

We’ve found those across a range of areas, there’s a change to the growth dividend, which has an impact, but not proceeding with the 28% company tax rate saves $600 million. Not proceeding with the resource exploration rebate is 1.12, and also the early start on the company tax rate for small business is 350. So essentially we’re down by $1.5 billion and we’ve made up with that in saves.

We’ll circulate the piece of paper later on. It has as the Prime Minister said before, it has nothing new really to do with us coming back to surplus in 2013, we’re doing that, coming back earlier than any other advanced economy, coming back in three years. Three years early, that is the bedrock, the absolute bedrock of the Government’s economic policy. But someone was chasing over there before so we might, we might be able to stop yelling if we give him a question there.

PM: Malcolm.

JOURNALIST: The 2% company tax cut was intended to help the move to 12 % for super contribution. Won’t that be now significantly harder?

TREASURER: Well it goes to 29 cents in 13-14 and we said we would go to 28 cents the year after. We’re just staying at 29 until we have a further look at fiscal conditions. And also for small business, what we’re going is proceeding with the $5000 instant write-off, that proceeds. And also the early move for those incorporated business that pay company tax to 29 still happens, it just doesn’t go to 28.

JOURNALIST: (inaudible) super contribution to 12, won’t it be harder now for business to pay-

TREASURER: Well, but the company tax doesn’t necessarily go to 28 in the year that it was going to, and that would that that has been pared back, yes.

PM: We’ll go to Phil Coorey and then through the back, Phil Coorey.

JOURNALIST: Just an extension of Laura’s question have you, between the original tax and now what it’s become, have you changed any of the assumptions that underpin the revenue?

TREASURER: Well, it’s a different tax. And of course, therefore it produces revenue in different ways. Let’s just go through some of differences. This is a 30 cent rather than a 40 cent tax but this one does not have refundability. Refundability was a very big expense in the RSPT. It’s no longer there. This has got an uplift factor of 7 over the long-term bond rate. That is in place because refundability was why we were stuck at the long-term bond rate under the previous proposal. But also, we’ve got a different starting base. The industry was particularly keen on recognising market value, we are going to recognise market value but we are going to depreciate it up to 25 years.

So, there are swings and roundabouts. The swings and roundabouts of the MRRT compared to our previous proposal means that there is only $1.5 billion less in revenue. So that goes to the point that was raised over here. This is a robust tax which brings in a little less revenue over the forwards, which means we can do a little less in terms of our original proposals. But we are still proceeding with the great bulk of the original proposal.

PM: Alright, Dennis and Michelle, come across.

JOURNALIST: Prime Minister, all three of you this morning have mentioned how you’ve made so much progress in the last week, and as a result of consultation with the mining industry. All three of you were there when the process began. Why wasn’t this approach adopted from the beginning?

PM: Well Dennis, what I can say to that is, obviously, as Prime Minister, I’ve put my stamp on the approach that was taken here. And you know, from my past as Deputy Prime Minister and other things I’ve done during the course of my life we took an approach that I think sits well with me, and that is I’m a pretty frank person. I’m not afraid of a difficult conversation, but I believe you best take people with you if you sit around a table and work out how much you can agree, how much you have to have an argument about, and if it’s capable of being settled then you work through it, get the best job done, take things forward. That’s exactly what we’ve done.

Michelle.

JOURNALIST: Just to pursue the point that Malcolm was making, you’ve made quote a lot of your commitment to fairness, but isn’t it true that on the swings and roundabouts of these changes the better-off big miners are going to get substantial benefits out of this compromise and the, some of the pain of paying for that is going to be borne by smaller companies in other, less well-off sectors who don’t get the benefits, the full benefits they were promised?

PM: Well, I’ll get Wayne to address that.

TREASURER: The fact is that the smaller miners said that they didn’t want our proposals.

JOURNALIST: (inaudible) who would have benefitted from the full company tax cut?

TREASURER: Well, okay, alright, but first of all, in terms of the construction of this tax, one of the reasons we’ve moved is that many of the small players who would have been the bigger beneficiaries if you like of the previous proposal, didn’t want it.

What we actually have is a situation where the larger companies are going to be paying more tax – significantly more tax – and I think that needs to be understood. That is why this is still a robust tax, because essentially we are just looking at iron ore and coal and petroleum and gas, and of course most of the others are not in the net, so there is a very significant contribution to our national revenue coming from some of our largest companies. So I wanted to make that point.

And secondly, when it comes to the broader issue of tax reform across the economy, it is true that we’ve had to say that we can’t go to the 28 cent rate in ’14-’15. That will stop at 29, but we’ve commenced that process. And where we go will depend on fiscal conditions over the years, but let me just talk about our fiscal rules, because I think this is pretty important.
First of all, we’ve got our 2 per cent real spending cap in place which will stay in place until we come back to a surplus of 1 per cent of GDP, and we’ve also got our tax to GDP ratio. We don’t want to let tax go above 23.6%.

Now, if we were to have healthier revenues in future years, and it looked like that was going to happen, we would be able to move further on tax reform, both in terms of the company rate and in terms of personal income tax rates. So that’s the framework we operate within.

PM: We’ll go to, hang on, hang on, we’ll go to Katharine. Katharine was next. Katharine? Yep, we’ll come over. Katharine?

JOURNALIST: This is a question to all three of you- given that you’ve renamed the tax to a much more neutral name, given that you were prepared over recent days to choose diplomacy over force in terms of your negotiations with the mining companies, and given that you’ve been prepared to land here, did any of you specifically advise Kevin Rudd that picking a fight with the mining companies and calling this thing a super profits tax was a bad idea?

PM: Okay, well can I say to that what I’ve said to similar questions earlier, which is I don’t think it’s appropriate – and I won’t – go through conversations I had with Kevin Rudd as Deputy Prime Minister, nor conversations that have been had around the Cabinet table. But I have deliberately brought a new approach to working on this tax, and that new approach has seen us make the breakthrough agreement that we made last night, which now gives us the ability for people to work together and to keep going forward.

Yes, over here, we’ll come through. Yes, Mark?

JOURNALIST: Companies like OneSteel in Whyalla were said to have several thousand jobs on the line under the resource super profits tax. Where does that company sit now? I mean, it’s a matter of thousand jobs is an important matter, so why weren’t they involved in these negotiations and what do you have to say to them now?

PM: Martin knows a lot about that.

MINISTER FERGUSON: Well, just think about the structure of this tax. Firstly, this effectively carves out, with very little impact, Victoria, Tasmania and South Australia. It effectively means that from a petroleum point of view you’ve created a level playing field for both onshore and offshore development, which is what the industry wanted.

You then come back to iron ore, which is principally Western Australia with some smaller reserves in places such as Northern Territory, South Australia and Tasmania. You go to coal, you’re principally focussed on Queensland and New South Wales. So, we’re down to a couple of hundred companies, as against many thousands. For those reasons we have established a policy transition group to be lead by Don Argus and myself. In terms of any outstanding detail, it will be the responsibility of that committee to actually smooth the application of the proposed tax system.

With respect to OneSteel, the key point from day one has been where you establish the taxing point. We’ve actually taken it to mine gate. We then go to actually applying these principles, for example, to magnetite. In my opinion, on the basis of my reading of these principles, there is no danger to any jobs in South Australia. We’ll see the expansion of Olympic Dam which is going to create a huge economic opportunity for South Australia and the nation, and will secure the future of all those workers and their families who depend on OneSteel.

PM: Okay, we’ll go here and then I think we had Tim had his hand up before, and then to the back, yep.

JOURNALIST: Prime Minister, you’ve effectively broken a 2007 election commitment by dumping the resource exploration rebate, which replaced the flow-through share schemes that Labor offered in opposition. Now, isn’t this a classic case of the Government cowering to the big miners, the big noisy miners, at the expense of the small end of town?

PM: Okay, well I might let Martin answer that.

MINISTER FERGUSON: Well firstly, on the resource exploration incentives that we announced a couple of months ago – the industry decided they didn’t want it. We ditched it because the industry wanted it ditched, so let’s be a little bit factual about why it’s not on the table today.

In terms of where we go from here, it will be part of the consideration of any other possible system through the implementation committee chaired by Don Argus and myself.

PM: Tim?

JOURNALIST: On superannuation, I guess this is probably to the Treasurer. Ken Henry, in his appearance to the Senate Estimates committee last month said that increase in superannuation from 9% to 12% would ultimately come out of workers’ wages, and he was quite emphatic about that, that it would be offset by lower wage rises. Is that also your view, that essentially workers will in the end bear the cost of their own superannuation?

TREASURER: Well, it would depend upon wage negotiations. That’s not inevitable in my view. It will be something that will be sorted out at the workplace level. That’s entirely a matter for those negotiations between employers and employees, but what we have done through our super reforms is to make sure that the resources are delivered, particularly to those on the lowest incomes, to boost their adequacy. That’s a very, very important reform and goes to the core of what we’re on about in terms of economic reform.

It’s not just about adequacy and retirement incomes of people on low incomes. It’s also about building a national pool of savings which can assist this country to fund the economic prosperity and investment that we are going to experience through a mining boom Mark II. So boosting national savings is absolutely fundamental to maximising the opportunities, particularly the jobs and the wealth creation that will come through the higher terms of trade that we’re going to experience as a result of being in the Asian century.

PM: Right, now, I prefer a methodical approach to Government, including press conferences, so we’ll go here and then you haven’t had one yet, have you? No, so we’ll go here and then here and then move across.

JOURNALIST: Prime Minister, this is obviously a very different tax to the one you started with. Is this where the Government was moving to while Kevin Rudd was Prime Minister or has the change of leadership not just changed the tone of the debate but the fundamental negotiating point?

PM: Well look, I think Treasurer Wayne Swan’s best positioned to answer that.

TREASURER: I think Martin would agree with me that following the Prime Minister’s intervention there was a marked change of tone and willingness to discuss these issues. I’m not going to go into the conversations, but in the last two or three days we have come a lot further than we’ve come in a considerable period of time prior to that, and particularly that is the case in the last week.

It has been a difficult process in which we have all been involved, so I don’t say that in any way to apportion blame or responsibility to any particular individual or institution. We’ve all been involved in a very significant debate about the future of our economy and whether our children will receive good value for their mineral resources which are owned by us 100% and can only be dug up once.

That’s what it’s been about from our perspective, and of course, the mining industry does have legitimate concerns. And we recognise that. And that has been part of the discussion as well. So, we had a pretty vigorous and willing debate for some time. Well I can tell you is that in the last week particularly and most particularly in the last few days, there has been a marked change of attitude and we have all noticed it, who’ve been in that room, and that’s a good thing for the country.

PM: Yes?

JOURNALIST: (inaudible) and you know, time to take a breath, but you did nominate this as your top priority, so what’s next now? What’s the next top priority?

PM: Okay, well look, obviously as Prime Minister I said I would take a series of steps to get the Government back on track. I believe that the step that was taken last night in signing this agreement and announcing it today is a very, very significant step forward. I will have things to say in coming days about our future policy predispositions. I’ve obviously said I’m concerned about the question of asylum seekers. I understand that there are community concerns about these questions. And I understand that, I’ll be working my way through that. When I’ve got more to say, I will.

Lyndal.

JOURNALIST: Prime Minister, just to clarify a couple of things- is it the Government’s intention, the Government’s wish, to cut company tax to 28% and offer income tax cuts when you’ve got the money, when the Budget allows that? And talking about how you progress tax reform the in the future, or any reform in the future, is it better to have the consultations, the talks you talked about, first, before the policy’s finalised and announced?

PM: Well look, I’d echo exactly what the Treasurer has said. Obviously, as the Government, we’ve got a view that it’s appropriate now to deliver a reduction in company tax – and we do, through these arrangements that we’re announcing today.

We also, when there is the fiscal ability to do so, would look in the future to further reductions in company tax. Obviously there is always the question of income tax as well. Though I do note we delivered income tax cuts yesterday for hard-working Australians. So these are things that are on our mind for the future, but this directly delivers reduced company taxation and obviously benefits for small business that will make a difference.

Peter hasn’t had one, so we’ll go to Peter.

JOURNALIST: When do you intend to legislate these changes, and with whose support in the Senate? And secondly if I may, have the miners undertaken to you to keep their ads off the TV?

PM: Well, on the question of with whose support in the Senate, that may be a question you need to ask Tony Abbott, who seems to have substantially – indeed, without explanation – changed his position on the question of minerals taxation in the last 48 hours. On the question of the mechanics of the legislation, I’ll go to Wayne.

TREASURER: Well, the mechanics are that this takes quite a period of time. The normal process for a tax change of this size is for a very long technical consultation after you’ve had the discussion about the overall framework. And we’ve just about now settled now what you’d call the major elements of the framework, but the whole point of the Argus committee which will also be chaired by Martin is to further flesh out any other issues that arise from that.

You then go through draft exposure bills and so on, and a whole lot of technical discussion that occurs between Treasury officials and others in industry. That is the normal way these things are done. I don’t think you’d be seeing any legislation hitting a Senate this year. That would be very ambitious for any legislation of this type.

I understand Mr Hockey this morning has been on both sides of this cart. He’s on the one hand he’s called it, what did he call it? He called it a victory for commonsense or something like that, and then he said he’d rescind it. So I don’t quite know where the Opposition’s coming from on this debate, and I tell you what – there’s a big issue of business certainty here now for the federal Opposition, because what-

JOURNALIST: (inaudible)

JOURNALIST: Excuse me, sorry Treasurer, the second part of my question was whether the miners have undertaken to keep their ads off the TV.

TREASURER: Look, I don’t, we’re not in a position to answer for the mining companies, but we’re keeping ours off TV.

JOURNALIST: (inaudible) that’s been a big issue over the last few months. Now, I know that with the PRRT, when it was introduced, I mean, that was, that only affected, it allowed companies to effectively recoup the full cost of their project, and in some cases it meant that the tax wasn’t paid for 15 years. Now, I know that you’ve placed a market value assessment for projects. Does that in effect mean that BHP, Rio, Fortescue and so on will first recoup the full cost of building their projects before they pay tax, and what’s the earliest point at which they will pay tax?

TREASURER: Well, that is a very complex question, and let me answer it as simply as I can.

Because there has been this concern raised by the companies, as you’ve indicated, they wanted to move towards a market value approach rather than a book value approach. So we have moved to a market value approach but with depreciation over up 25 years. Now, they can however opt, if they wish, to go back to book value with I think depreciation over 5. So there’s an either-or there and that does have impacts on the revenue. And that’s how we actually came to deal with that very, very difficult issue, and that’s in addition to ditching refundability. That’s where we got to on that critical question, and that was a very important part of the breakthrough. But I can’t sort of, answer your question in great detail because it will vary across projects.

PM: Okay, we’ll just, we’ll just, hang on, we’ll just take a couple more. I can see in people’s eyes a certain yearning for a coffee that’s starting to break out amongst the group and I know normally at this stage of the morning you’d be doing precisely that. As I think we’ve seen some three more hands, we’ll take those. Now, you haven’t had a question, Sid.

JOURNALIST: Well, Mr Swan, what happens to state royalties? And secondly, does the Argus committee have-

TREASURER: (inaudible), not refundable.

JOURNALIST: Does the Argus committee have a reporting date?

MINISTER FERGUSON: I think you’re looking at a couple of hundred companies. We’ll clearly establish principles early on and go on an ongoing basis to apply those principles and bed down today’s announcements. The most important issue is the announcement today of the principles, because that guides the work of the Argus committee.

PM: Okay, now, you haven’t had a question, sp-

JOURNALIST: So, what is the nature of the Heads of Agreement that the miners signed up to last night? What have they actually committed to?

TREASURER: I think it’s been handed out, basically.

PM: You’ll actually be able to access a copy of that, okay. So that’ll be made transparent to you.

JOURNALIST: (inaudible) state royalties, and the potential rises-

PM: The Treasurer answered-

JOURNALIST: The Treasurer-

TREASURER: I just answered it.

PM: We just need to further explain it. Dennis almost ran to-

TREASURER: (inaudible) in terms of the future of state royalties is one of he issues that the committee that Martin and Don Argus are having a look at and will find a framework for that.

PM: Okay, okay, we’ll make this the last question, thanks.

JOURNALIST: In the last few days, everything changed. It all got wonderfully better. You all talked well, negotiations, sitting down – was the major change that allowed all this to happen- the fact that you decided at the weekend that the 40% was now on the table, whereas previously it wasn’t?

PM: Well look, I think a few very significant things changed. First and foremost I think we got goodwill back into a conversation that had been characterised to that point by a lot of heat and not much light. And as a result of getting goodwill back into that conversation we were able to get people together in the spirit of genuinely working through issues.Now, obviously, from our point of view, we’ve shown a preparedness to listen, to respond, to work with the mining industry to get an arrangement that is in the interests of this country for the long term and takes us forward.

Our, you know, ability to work with the mining industry, our preparedness to show goodwill, to be frank, to work through, I think was responded to by them – responded to well. And so, for example, the kinds of discussions that had not been possible in the weeks before became possible. And as a result we’ve had the breakthrough that we’ve seen last night. And I’m very pleased to be able to announce it today, because is certainly is an arrangement that takes us beyond some of the heat of the last few weeks, takes us forward with goodwill and importantly, takes us forward so that Australians get a fairer share of the mineral wealth that’s in their ground.

Thanks very much.

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