E&OE
Subjects: Minerals Resource Rent Tax, Coal Seam Gas, Indonesian Boat Tragedy, Qantas dispute
PRICE: Martin Ferguson the Minister is on the line, Martin thanks for your time
FERGUSON: Not a problem Steve
PRICE: Is it a failure to sell that idea that the mining boom is spreading out to all of us?
FERGUSON: I think it is a complex piece of tax legislation. It is now starting to, I suppose, get in people’s minds that this is appropriate. Just think about this, earnings from resource and energy exports have reached a new record of $175 billion in 2010-11 – that’s a 27 per cent increase. So we’ve got record commodity prices, and I might say, record profits.
PRICE: So that’s a 27 per cent increase year-on-year?
FERGUSON: On earnings, and we’ve got huge increases in profits, company by company. It’s about time to say once and for all we’ve got to have a new system of taxation, for these super-profit times, share the benefits with the whole Australian community. And that’s what this tax is about. Obviously some sections are doing exceptionally well, but the strength of the dollar which flows from the commodity prices at the moment and all the investment, puts pressure, for example, on the tourism sector, small businesses and a whole variety of other sectors in the community.
Hence we have taken what’s a pretty tough decision. I think it’s now been bedded down, there is a greater understanding and acceptance in the community, that this is necessary to try and cut company taxation, increase superannuation and to assist small businesses in purchasing new capital equipment.
PRICE: When you impose a new tax on a company, it has a result, it has an effect. The companies obviously don’t want to pay more tax, they want to pay as little tax as possible. We all want to pay as little tax as possible. Are you worried that this imposition is going to have an impact on employment and future development?
FERGUSON: Not at all, just think about what’s occurred since we announced this tax it’s our intention to legislate last year. We have a record pipeline of investment, at the moment we’ve got a planned or committed capital investment of $430 billion, only a couple of weeks ago I was involved in Western Australia in the Wheatstone LNG project the latest investment of $29 billion and I might say there’s more to come.
PRICE: But they’ve been in the pipeline a long time, haven’t they Minister, they’re not going to stop those projects dead because of this tax, I mean…
FERGUSON: No, the truth of the matter is a lot of work is done on projects from time to time but if there are any questions of difficulties of sovereign risk then those investments do not occur. The lead time on projects is extensive shoring up the exploration activities, trying to make sure that the capacity is there to deliver to long term contractual partners. But you don’t get these investments if there is any uncertainty about your tax regime, and more importantly, just think about the profits. FMG, 76 per cent surge in their profit last year, Rio a record profit of $14.32 billion, and then we’ve got BHP, was up 86 per cent. The rest of the community, they’re pleased these companies are making these profits, and so is the government, but we’ve got to spread the benefits to the broader Australian community.
PRICE: Now you’ve still got a lot of work to do to convince at least two of the independents to support this. I notice Tony Windsor says he’s quote “Not open to negotiation when it comes to support for these bills” he says he wants assurances on coal seam gas mining before he’ll support it. Is he going to get those assurances?
FERGUSON: Well the Treasurer is involved in some discussion. But firstly, coal seam methane gas is not new to the east coast of Australia. 30 per cent of our gas currently comes from coal seam methane and I might say in the Brisbane area its 90 per cent. What we’ve got is a huge growth in the industry in a very short period, and we’ve got to make sure that we determine these issues on the basis of a scientific approach, and that is what the government is doing. I am involved at the moment, through my department, with all state and territory governments, in putting in place potentially the most rigorous approach to how you handle the water issue, developed by the Minister for the Environment, Tony Burke, Australia-wide, and trying to get common understandings on which chemicals can and cannot be used, how industry better engages with the farming sector, because some companies have left a lot to be desired. We’re doing this because we are not the regulator. State and territory governments are the regulator. But I must say, state and territory governments have responded in a very positive way, they accept the leadership of the Commonwealth in trying to assist them to bed these issues down, and I have got a Ministerial Council on the 9th of December in Melbourne. There will be detailed reports about these issues, and I think we can make further progress in trying to bed down a lot of, I suppose, a lack of understanding about what really is going on in this industry.
PRICE: Tony Windsor says farmers are in a running battle with mining companies over proposals for coal and coal gas projects. I’m a bit puzzled by that. Didn’t he sell his farm property to a coal seam gas company?
FERGUSON: Ah no, he didn’t sell it to them. My recollection is that Tony didn’t sell his farm to a coal seam methane company, but he sold it to a coal mining company, ah some...
PRICE: That’s a bit hypocritical, isn’t it?
FERGUSON: Well that’s a question you have got to put to Tony. All I can say is, let’s just take the problem up on the Liverpool Plains at the moment, and the picket line against Santos. What we’ve got, approved by the Minister for the Environment, is a pilot appraisal drilling operation, to actually test the water table, taking a very small amount of water, for scientific reasons. To make sure that we can monitor the potential surface aquifer and any potential impact on the aquifer from the coal seam industry. You got to do this test drilling to make sure you have the scientific facts available to determine whether or not the coal seam methane industry should go ahead in that region. So you can’t go out there and argue you have got to have an independent, regulatory process managed by the Department of Environment completely at arms length to me as the Resources Minister and then say but oh, we’re not going to let you do the test drilling to do the proper appraisal of the site.
PRICE: Couple of other quick issues before I let you go. We have a tragedy overnight, there’s a boat that’s gone down off Java, 7 people are believed drowned, 20 missing. The opposition says that if the Government reverted to the former Howard Government’s offshore processing and temporary protection visas, these boats wouldn’t be coming, wouldn’t be sinking. I presume you’re going to say if the let you get the Malaysian legislation up to overturn the High Court’s decision then the boats wouldn’t be coming either. It’s a bit rich playing the blame game when people’s lives are at stake isn’t it?
FERGUSON: Look this is a great tragedy and I think the Minister for Immigration and I might say the Minister for Justice have done a media conference. I think the most important thing at the moment is to assess what has really occurred and try and work out how we avoid these tragedies in the future. The real issue is the role of the people smugglers. They are, you know, very very bad people. Now I think collectively across our parliament, irrespective of one’s political persuasion, we have got to try to work out how we avoid these situations in the future and I might say hold the people smugglers, and everyone associated with them, to account. You know, the way they are treating human beings as just opportunities to make money is just unacceptable to all of us irrespective of whether its Tony Abbott or Julia Gillard.
PRICE: Just briefly on the Qantas dispute and the grounding at the weekend, what were you trying to suggest yesterday by saying that Tony Abbott had prior knowledge to the Qantas grounding?
FERGUSON: My recollection, and Anthony Albanese did a media conference about this, evidently Tony Abbott earlier in the day had refused to answer a question about whether he had prior knowledge about the potential grounding of aircraft. On that basis Anthony Albanese raised the issue publicly and that’s the background to your question.
PRICE: I’m not in the habit of stalking senior politicians at race meetings on Saturdays, but you and I ran into each other at 2 o’clock when you were talking to Alan Joyce. It just so happened that I was standing next to Tony Abbott when he was told that Qantas had grounded its fleet. He was told by one of his advisers, he must be a very good actor if he was acting as surprised as he was.
FERGUSON: Look it’s not for me to talk for Tony Abbott. I did run into you at the races just after 2 o’clock. That’s when I was told by Alan Joyce that the fleet was to be grounded, it was to be announced at 5pm. I can only account for my own actions. That’s probably a question you had better put to Tony Abbott.
PRICE: And were Qantas briefing people in parliament last week that this situation was so dire that the grounding would be possible? I mean you’re the Tourism Minister, if they were briefing anyone surely they would have been briefing you?
FERGUSON: Firstly parliament didn’t meet last week, we were intimately involved in the success that CHOGM proved to be in Western Australia. I might say the previous week I was overseas on energy and resource related issues, but …
PRICE: So no one at Qantas had ever briefed you about the gravity of the situation?
FERGUSON: I think Anthony Albanese correctly indicated to parliament that some weeks ago, and I might say its in the public arena, Qantas had indicated as a result of the industrial action they had started grounding aircraft. And I must say that was prior to my Tourism Directions Conference being held in Canberra and I made comment on that at the Tourism Directions Conference but that was all related to safety, and that is out there in the public arena. And I might say Anthony Albanese is the primary Minister responsible for aviation, gave a detailed answer in the parliament about this issue on Monday.
PRICE: Thank you for your time as usual
FERGUSON: Thank you.