ABC 720 PERTH
TRANSCRIPT OF INTERVIEW WITH GEOFF HUTCHISON
HUTCHISON: Are you furious with Colin Barnett?
FERGUSON: No, look unfortunately it looks like WA is more interested in playing politics rather than attending to the national interest and I must say West Australian interests. I think the Treasurer explained it, this is almost as if it is too smart by half.
We will honour our agreement with the mining companies entered into in good faith because the outcome of the mining tax discussions is very good for Australia. I remind you that the mining industry actually wanted a profits based tax, because what Mr Barnett has done yesterday has in essence said is it doesn’t matter in good or bad times you are going to be paying higher royalties in Western Australia. Now that is going to send a shudder down the mining industry because I think there is general acceptance that the outcome of the federal mining discussions is good, in good times you will pay a bit more but they never wanted increases in state royalties as reflected in the Argus Ferguson report.
So it effectively means when there is a dip in our mining activity they are going to have to put their hand in their pocket every year because royalties are paid irrespective of whether they are good or bad times.
HUTCHISON: That point, and I do know the Association of Exploration and Mining Companies have expressed their extreme disappointment that Colin Barnett has introduced this royalty without consultation. However, Wayne Swan says that Colin Barnett has kicked an own goal on this, can you tell us this morning at what cost to Western Australia? Because this state has been promised a couple of billion dollars in infrastructure money, things like infrastructure improvements around Perth airport, Leach and Tonkin Highways, will we still get those benefits?
FERGUSON: The Federal Government is going to keep its word to the West Australian community. Firstly to the industry on the crediting of the royalties but also the airport roads are an absolute mess. Historically a WA responsibility but we were using the mining tax to step in with up to $480 million to fix those Gateway expressways, that’s a huge improvement in productivity for the whole of the Australian economy.
We will stand by our commitment to the WA community, but as Wayne Swan has explained on AM this morning we actually entered into a proposal with the Western Australian Government, I think it was discussed between the Premier and the Prime Minister, to actually act in good faith to review the way GST revenue is distributed. We announced an independent review of that, including a former NSW Liberal Party Premier Nick Greiner, to make sure it is all above board and has good integrity. Now as a result of their changes yesterday, there’s every likelihood that this will be an own goal. Western Australia is very likely to end up losing more in GST revenue than it gains in additional royalties.
HUTCHISON: Just before we go on, because you think the Commonwealth Grants Commission will determine, well if the Government has been able to squirrel another $1.9 billion out of mining companies then we don’t have to give it quite as much GST revenue?
FERGUSON: Well there is an independent Grants Commission process and what Colin Barnett has said to the Grants Commission yesterday is don’t worry about us we’ve got more than ample opportunity to raise revenue over here and there is no way the Commonwealth can interfere to basically say just ignore what the WA Government has done and dud every other State and Territory in Australia. And that’s what he has effectively done yesterday, but look, that’s for the processes to take place over time, but you know in terms of where we go forward. The mining industry is safe, we went through a process of discussion, and I must say it will be interesting to see how AMEC actually fights the WA Government because I think we all learnt last year the need to actually consult industry when you're talking about changes in taxation. I have learnt and the Treasurer has learnt but Colin Barnett has not learnt. There were a hasty number of phone calls on Tuesday evening trying to square off with companies saying we are going to increase your royalties but don’t get upset about it. Well they are upset about it and they should fight the WA Government like they fought the Commonwealth Government to get a fair outcome.
HUTCHISON: Mr Ferguson one last question. There is that broad political implication that you have no option really but to pay the miners this money, pack the miners this benefit, this was part of the deal of the resource rent tax, does it though blow a big hole in your Budget bottom line?
FERGUSON: Not at all, in actual fact it is interesting to see some of the headlines today. The WA budget is based on entirely different assumptions to the more conservative Federal assumptions in terms of where we are going with our Budget surplus, you know just massive exchange rate depreciations locked into the WA Budget assumptions. This will be proven over time, we are highly confident about our Budget assumptions and bringing the Budget back to surplus. I might also say everything we have done is about making sure in a patchwork economy we look after the sectors of the economy beyond the resources sector. Just think about Tourism and I am also Minister for Tourism, out of the resources tax we can cut company taxation, exceptionally important to small businesses struggling, new capital equipment write down of $5,000. They are the type of things that really benefit other sections of the economy struggling under the impact of the resources boom. In many ways Colin Barnett who says I am going to take what I can when I can from the resources sector and in essence to hell with the consequences over time to the broader Western Australia economy.