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Sky News Australian Agenda Bruce Billson 26 August 2012

Interview with Bruce Billson Australian Agenda program, 26 August 2012

Peter van Onselen: Welcome back. You're watching Australian Agenda. That was Opposition leader Tony Abbott there talking in the context of the non-expansion of Olympic Dam. And we're joined now to talk about this and wider issues in the economy by Bruce Billson, the Shadow Spokesperson for Small Business. Thanks very much for your company. Bruce Billson: Morning. Peter van Onselen: Let me just ask you this straight off the bat. Based on that, you know, sort of commentary as well as wider commentary by Tony Abbott, I mean, isn't he going too far trying to suggest that everything comes back to the carbon tax? At the end of the day Marius Kloppers made it pretty clear that not expanding the Olympic Dam had nothing to do with that. Bruce Billson: Well, I think Tony's absolutely correct in what he's saying. The carbon tax and other Government decisions create the investment environment, and let's bear in mind the Gillard Government wanted to take some momentum out of mining. That was the
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policy purpose, and the fact that that's happened to then suggest, well, there's no relation to Government policy is frankly naive in my view. Peter van Onselen: Okay, I mean there's clearly some relation but do you accept that Olympic Dam's - the expansion was not going to go ahead with or without the carbon tax? Bruce Billson: Well, the carbon tax may or may not have been the sole determinant but let's have a look at what's been said. BHP has made the point time and time again, you didn't need a clairvoyant to hear what they were saying. They've been saying for months, new taxes, uncertainty with the Government, the direction in which the economy more generally is going will have an impact on their investment decisions. The mining tax is affecting their balance sheet. They fund these projects off their balance sheet. The cost of construction: back in 2007 Australia was about 16% cheaper to get a coal mine off the ground compared to the construction costs in the United States. It's now 66% more expensive and the carbon tax will wash through on those construction costs as well. Peter van Onselen: But that's not actually answering my question though. My question is: do you accept that the expansion would not have gone ahead irrespective of the carbon tax, and frankly for that matter the mining tax? Bruce Billson: I don't think you could say that. I think the messages out of BHP are clear. We need a supportive, encouraging environment for mining. Decisions that are being made, including those taxes and also the point that was made earlier about tax uncertainty, BHP was listening to what the Greens were saying. They're the alliance partner of the Gillard Labor Government and what have they been saying? They've been saying extend the mining tax to include uranium and gold. So they're saying, well, this context
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is not conducive to the investment at this time. The Abbott team, we want to provide a pro investment supportive environment to give projects the best possible chance of getting off the ground, not making it more difficult which is what Government policy settings are doing right now. Paul Kelly: I don't think you've closed the circle here. Where is the evidence that this decision was driven by the carbon tax? Bruce Billson: Well, is that your question Paul, or are you asking that on behalf of somebody? Paul Kelly: No, I'm asking... Bruce Billson: Just so long as we're clear on that. Paul Kelly: No. Bruce Billson: We are clear, so that is your question? Paul Kelly: It is indeed, yes. Bruce Billson: The question is: where's the evidence?

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Paul Kelly: That's right. Bruce Billson: Well, the evidence is have a look at what BHP has been saying in the lead-up to this decision. They've been making it clear, that tax-related policy. Carbon, have a look at some of the statements as well as the mining tax and the broader economic climate are factors in this decision. That was a point that was made clear. What was released was a statement carefully crafted, mindful that Labor has this form of going after people if they say things that are critical. You saw that in South Australia. The South Australian Labor Government have said "Oh, BHP has got some work now to rebuild trust". I mean, that's the atmosphere these decisions are made in. We can't ignore the statements that were made earlier, and as I made the point during the week the Government wants you to actually look at this statement that was made during the week through a straw to look at nothing else, other than the words on that page, when BHP's consistently made the point that the environment is becoming more difficult and more challenging because of tax policy, not made more encouraging. Peter van Onselen: But Marius Kloppers was one of the earlier advocates for pricing carbon. I mean, he came out and spoke in favour of it not that long ago, and you've got them doing their statement, making it clear that the carbon tax was not a factor and, you know, this situation wrapped up, it sounds like what you're saying is that behind the scenes, you know, you hear different things from what you hear from some business executives in public. Bruce Billson: No, those business executives don't just make one statement and expect everything they've said before to have been forgotten about. BHP have made statements time and time again, Marius Kloppers, the chairman of BHP, about the environment within which
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a big decision with long-running implications needed to be made and they were pointing to factors that made that a more difficult decision for them to make with less supportive policy. That's why we want to get rid of the carbon tax, that's why we want to get rid of the mining tax, so that the mining projects have their best possible prospect of getting off the ground. Why? Because people can invest their moneys somewhere else. We'd rather them invest it here and there should be a welcoming and encouraging environment for that. Paul Kelly: Just taking that up, if you abolish the carbon tax, does that mean that Olympic Dam can then go ahead? Bruce Billson: Well, there are other points. There's the mining tax as well and you saw that this... Paul Kelly: Are you going to abolish the mining tax as well so does that mean that Olympic Dam can then go ahead? Bruce Billson: Well, that's one less obstacle Paul, one less obstacle. Paul Kelly: So do you think it will go ahead if there's a change of Government? Bruce Billson: No, my words are quite clear: that would be one less obstacle. They made other points about the global environment, a relevant point but remember we are competing for investment in Australia with other countries that have mineral resources just like we have. And we need to be competitive. I touched earlier on the point that was made
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about construction costs of these projects, an area directly affected by the carbon tax, directly affected by the industrial climate, directly affected by the absence of a strong cop on the beat in terms of the construction industry. All of those factors play against an investment in Australia compared to somewhere else. We want to make sure we've got the best possible chance for success of those projects and that's what we'd be doing. Simon Benson: What you're also saying which is pretty clear is that BHP, its executives and presumably other large mining companies are being intimidated by a Labor Government, and even in their statements to the market are couching their language very carefully because they're being intimidated by Government. Is that what you're saying? Bruce Billson: Well I'm saying they know that if they say things that the Government doesn't like, just as you know, just as you know if you make questions that are awkward for the Prime Minister or conclusions, and Peter's exempted himself by that, by being a bit of a suckhole at times, and that gives him a leave pass to make critical comments apparently, but you've seen the way the Government reacts. This is the way the Government - this is the way Labor behaves. Simon Benson: These people and these companies have a responsibility to the market more than anybody else and you're suggesting that they are not lying necessarily. Bruce Billson: No, no, no. Simon Benson: But they are...
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Bruce Billson: It's a carefully-crafted statement that talked about the construction costs, a carefully-crafted statement that talked about the broader environment. Now, what the Government would like you to do is steer away from its contribution to those construction costs and its contribution to an environment that makes a major investment like that that will last all of our adult life, makes that more challenging and that's why they've decided not to proceed at this time. Peter van Onselen: Why would they be intimidated though by this Government? They're a mile behind in the opinion polls, the Prime Minister's unpopular, the Labor brand, they just lost Government up in the Northern Territory, you know, why would they be intimidated by that side of politics when it looks like your side of politics is going to be in power everywhere very soon? Bruce Billson: For a start you know how warm I am, Peter, so that's not something you'd direct at me. But what you see is this pattern of the critics of Labor become the targets of their venom. Now you even saw in this Olympic Dam decision the State Labor Government come out almost with a hissy fit after the decision saying "Well, we're not even sure whether the approvals to date will run". In BHP the company was saying they might try to reshape the project. I mean, there's an ongoing need for a working relationship and they know if they say something that's viewed badly by Labor they'll be in the gun and that's the evidence that keeps reaffirming itself with events like these. Paul Kelly: I think one of the lessons of the week was that the Coalition got into trouble over this question of exaggerating the impact of the carbon tax. To what extent do you think you need to rethink your tactics here?
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Bruce Billson: I don't accept that proposition, Paul. I saw a week where time after time, example after example, small businesses were calling out for help, for understanding, for a recognition of how tough the climate is and how they are the intended victims of the carbon tax. Let's be clear on this, the carbon tax, you hear the Government say "Oh, small business can just pass the costs through". Yet there is example after example where that's simply not the case. We've seen record levels of insolvencies in small business. We've seen questions about viability, about a difficult trading environment, about job losses, about people's preparedness to invest because they don't see they're getting the support they need. On the carbon tax, small business has been the intended victim. No compensation, no recognition of their particular circumstances, told to suck it up or pass it on, when for many they can do neither. That was the message that came out and what the Government did every time practical examples were put to them was just swat it away as if it doesn't matter. Well, small business does matter. They are crucial to our economy and the viability and wellbeing of communities right across this vast continent. They deserve more consideration and they certainly warrant a lot more support than they're getting at the moment. Simon Benson: On your portfolio of small business you did make mention before when you came in here about the number of "Lease" signs up on buildings. It's almost preposterous to suggest that companies have gone, even small businesses have gone to the wall in eight weeks time... Bruce Billson: Just so we're clear on that, that wasn't the suggestion I was making. The point I'm making is that ever since the Government was elected they've talked a great game and done nothing to support small business

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Simon Benson: Okay well, and going back long before the carbon tax was even introduced there are other pressure points on small business which are far more significant, namely consumer confidence for one, and the high dollar as well. What would the Coalition do differently to support small business, irrespective of the carbon tax because clearly there are other issues that are facing small business that are longer running, or have been longer running and have a far greater impact. Bruce Billson: Well, we've outlined a 10-point plan to restore small business hope, reward and opportunity. It's about dealing with the issues that are of most concern to small business. The carbon tax does matter. That is a decision that's making an already difficult economic climate even more challenging. So I wouldn't just push that to one side. That is another cost impost that a small business competing with an overseas importer for instance, a small business that's a supplier to a bigger business, a small business doesn't have the market power to push their prices through or to tell their suppliers not to pass on the carbon tax to them, and it compounds at each step along the way, and small businesses invariably have longer supply chains and service systems. So you've got the carbon tax hitting them all the way through and then they're the ones facing those consumers that don't have the confidence to go and spend at the moment. They're very anxious about the economy, they're anxious about their own personal financial security and they're buttressing against that. Peter van Onselen: What are you going to do beyond repeal the carbon tax? Bruce Billson: Well, we've said we'll repeal the carbon tax, that's number one. We've also said you need the Small Business Minister in cabinet. I mean, the small business community...

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Peter van Onselen: They've done that. Bruce Billson: Well, they've done that after - this is the fourth Minister I've faced and they've finally done it after we've been saying here is a community that provides half the private sector employment in Australia. Here is a community that needs to make its own decisions about investing its own money to create opportunities for themselves and others. Peter van Onselen: But they already have them though, I mean, they've already put him into cabinet. Bruce Billson: Well, they've bolted it on to housing and homelessness and you can work out whether there's some purpose to that association. So we'd addressed that as well. We've also said the contractual framework needs to be looked at. Unfair contracts exemptions that are available for consumers should be available also - that relief should be available for small business. A root and branch review of the competition framework, incredibly important. The government making sure its tendering and procurement processes are small business friendly so they have a chance to compete for that work. Peter van Onselen: What about company tax cuts? Bruce Billson: Well this is the great furphy. Remember the big debate about the company tax cut and how that was great for small business? Well, only one third of Australian small businesses are structured as companies and of that one third only about half are profitable and a few still pay company tax. So for the vast majority of small businesses
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that was of no value to them whatsoever. But in the mining tax, what was significant in this mining tax supposedly designed to spread the benefits, you know, what are those benefits now given that expenditure's been locked in, the entrepreneur's tax offset, a 25% discount on 400,000 of Australia's smallest businesses was repealed, it was thrown out. So whether you were a sole trader, a partnership operating through a trust or a company, that modest incentive introduced by the Howard Government... Peter van Onselen: Do you want to bring that back? Bruce Billson: No, no, we've got to see what the budget looks like because one thing was certain and one thing that we've seen time and time again, what the Government says the budget will be at the end of the financial year when it makes those predictions before the start of the financial year or even midway through it, looks very different. So we've got to see what's possible, and living within our means is something small business understands and that's what they're looking for from their Government as well. Paul Kelly: Well, how much do you think a small business is adversely impacted by the industrial relations laws? Bruce Billson: Well, the feedback I get, Paul, is quite significantly for a couple of reasons. 96% of Australian businesses are small businesses, yet so much of the decision making and policy development process seems to be a big government talking to big business and big unions. A lot of that framework is impenetrable for a small business... Paul Kelly: Okay, if this is a major problem, what will you do about it?
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Bruce Billson: We've already identified the need to address the complexity, we've already identified the need to tackle the militancy issue that's affecting some small businesses and to focus on productivity. So we think an industrial relations system built largely on the framework that's in place now but sensitive to the capacity of small business where the business proprietor is the person dealing with the pay and workplace relations issues. They don't have 25 people in a human resource department. We need a framework that's accessible. We made that point in the lead-up to the review - this review that didn't actually look at its - at the framework's effectiveness... Paul Kelly: Yeah, but... Bruce Billson: And small business's input... Paul Kelly: Sure. Bruce Billson: You wouldn't even have known that they were part of the economy... Paul Kelly: Sure, but... Bruce Billson: ...been brushed aside. Paul Kelly:
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But let's get specific here in terms of the way the law's operating, in terms of unfair dismissals and so on, what are the specific changes you'll make? Bruce Billson: Okay, in unfair dismissals the Government promised a simple, a straightforward, a certain process that a small employer could follow and if they followed that process they wouldn't be subject to a claim for unfair dismissal. Now, that so-called fair dismissal code has proved to be absolutely useless. Now, simply making sure that there is a fair and just set of action steps that a small business could follow, confident that if they followed that they wouldn't be touched up for go-away money and dragged into a system where regardless of the merit of the claim of an unfair dismissal application, they'd been told "Well, pay the four and a half thousand bucks, pay some go-away money, that will be cheaper than if it's dragged before a hearing", that is not what small businesses need. So having a fair dismissal code that actually works, or even the Government doing what it promised it would do - again another broken promise to small business - that would be a huge step forward for the small business community. Peter van Onselen: What about tax reform? At the end of the day something like 10 taxes bring in 90% of the revenue. There's over 100 of smaller taxes, many of which hit small business which contribute to that smaller other 10%. Would you embrace or would you like to see large-scale tax reform being an agenda for the Coalition in Government? Bruce Billson: Well, our tax reform priorities are clear. We'll repeal and abolish the carbon tax. Peter van Onselen: Yeah, but I'm talking about that hundred plus set...tax. Bruce Billson:
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Some of our issues were addressed in the Henry Tax Review where the Australian taxpayer paid $22 million to model and analyse that work. Now, that analysis has been locked up in a vault somewhere, no-one can get near it. I was at a panel with the Greens leader and I said "Well, you're the alliance partner, you're talking about tax changes for small business, get your alliance partner, the Gillard Government to release the research so we can have a serious examination of these kinds of concepts, some of the ideas that are in the Henry Tax Review and the whole economy and community can be involved in that conversation". At the moment that analysis is just hidden from everybody and it makes it very hazardous and quite difficult to know what would work best and what the implications might be. Simon Benson: Mr Billson, you raise the issue of the budget and it's legitimate in the context of your portfolio, particularly considering Ken Henry and Martin Parkinson's recent comments about future budgets and how Governments are going to meet the rising demand for services, but also the diminishing revenues. One of the issues that was raised by Martin Parkinson particularly was the need for Governments to raise taxes to, you know, meet those revenue expectations. How are you going to deal with that in that sort of new reality? You're talking about abolishing taxes. Ken Henry and Martin Parkinson are talking about actually imposing taxes. And in any case, what Government has ever, ever dumped a tax? Bruce Billson: Well, if we're able to earn the support of the Australian public, the Abbott Government will dump a tax, in fact we'll dump two taxes. So I'm working hard to hopefully earn that opportunity for our team. The Government doesn't have a revenue problem; it has an expenditure problem. That's its problem. I mean, when the Howard Government... Peter van Onselen: So you'll slash...
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Bruce Billson: When the Howard Government left office the federal outlays were $270 billion. Simon Benson: With respect, can I go back to my point about Martin Parkinson. They're not saying there's an expenditure problem. They're saying there's only so much you can gouge out of the public service, only so many efficiencies you can get to as a Government. There will be a point where taxation and revenue have to become part of the driver of meeting those demands for services. Bruce Billson: Well, we've made it clear that we think the issue is on the expenditure side. $270 billion outlays when the Howard Government left office, now $372 billion. The so-called temporary and targeted stimulus package that Prime Minister Rudd introduced added about 40 billion to the outlays. They were neither temporary nor targeted. When that stimulus response disappeared, there was no ratcheting down, that just represented a new base so that kept going up and up. Simon Benson: You've got plenty of outlays coming on. You've got bigger expenditure of items coming on stream too: the paid parental scheme, there's a huge expenditure. Bruce Billson: We have a very disciplined approach to living within our means and our focus is very much on the expenditure side of the Commonwealth budget and we believe there are opportunities there to generate the savings that we need to fully fund and implement our election policies. Peter van Onselen:
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Can I ask you about Tony Abbott just before we finish up. Now, he is a nuanced man, he's a Rhodes scholar, he's been a Minister, a long-term Minister in the Howard Government, yet his performance as Opposition leader increasingly looks like a set of sound bites sticking to, you know, simple messaging. What's going on? Would you like to see him, you know, sort of open up and let the real Tony come out? Bruce Billson: Well, Tony Abbott's a very gifted and intelligent person. You're right about him being a Rhodes scholar, he's probably the most academically qualified economic mind in the parliament. He's also a journalist and you would know the discipline in your profession of taking complex ideas, analysing them, understanding them and then being able to communicate them to people that might not be as involved in the policy debate as we are. That's a great gift. Peter van Onselen: But then we saw him... Bruce Billson: That's a strength, not a weakness. Peter van Onselen: I can see that in a press conference... Bruce Billson: Yes. Peter van Onselen: ...where he will get his line up on the nightly news. But then there was the example that he did, the '7.30' interview during the week which he was pretty heavily criticised

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for where he was sort of sticking to these lines yet in a long-form interview and the consensus seemed to be that it hurt him. Bruce Billson: Yeah, no, that's not the sense I had of the interview during the week and certainly not the sense I have when you look at these very significant speeches that he's provided outlining his values, our mission, how we seek to implement the things that we think need to be done to rebuild this country and give it the kind of strong, purposeful and supportive Government that it needs. Have a look at some of that work. Even on the weekend down in Tasmania, at the Liberal Party conference, a terrific speech outlining, you know, 10 key strategy elements to get the country back on track and give the people of Tasmania some hope. So what journalists choose to report verse the material, and there's an abundance of it that's out there, that's a higher pay rate than me. I'm not a journalist but I know and I respect and value his intellect, his rigour, his discipline and also his focus on doing what's best for the country. Peter van Onselen: All right Bruce Billson, Shadow small business spokesperson for the Coalition, we appreciate you joining us on this episode of Australian Agenda. Thanks for your company. Bruce Billson: Thank you, and I trust that was your question as well. Simon Benson: It certainly was.

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