Joint Press Conference

Canberra

Thursday, 10 November 2005

12.15 pm

SUBJECTS: Commissioner of Taxation, Customs CEO, October labour force figures, industrial relations, executive remuneration, Australian Wheat Board, tax, Australian citizenship

TREASURER:

Ladies and gentlemen today I am announcing the appointment of a new Commissioner of Taxation from the 1^st of January 2006. Michael D’Ascenzo who is currently a Second Commissioner of Taxation will take the position of Commissioner replacing Michael Carmody. Michael Carmody from the 1^st of January 2006 will be taking up the position of Chief Executive Officer of Customs.

I want to pay tribute to the work that Mr Carmody has done over the last 13 years as Commissioner of Taxation. He has modernised the approach of the ATO, presided over the implementation of the largest tax reform in Australian history, he has implemented a structured approach to compliance and put the ATO at the forefront of government and international agencies in electronic remittances and the ability to deal with tax matters through electronic commerce.

Michael D’Ascenzo brings a great wealth of experience to the position of Commissioner of Taxation. As I said, he has been the Second Commissioner for some time, he has been the Chief Tax Counsel for the Australian Taxation Office and has extensive experience in revenue administration.

I have worked closely with Mike D’Ascenzo over recent years, he is a man of great integrity and capacity and I welcome this very significant appointment. I now invite Senator Ellison to say something about the position with Customs.

MINISTER:

Thank you. Today we are announcing the appointment of Michael Carmody as the new CEO of Customs. Mr Carmody comes to the job with a wealth of experience and rigour and expertise which will be well served in Customs. I have spoken to him and he is very much looking forward to the new job.

I want to place on record the Government’s deep appreciation of the efforts of Lionel Woodward. Lionel Woodward was the last Comptroller of Customs and the first CEO of Customs and has been in that position for over 10 years. Lionel’s position was due to finish at the end of this year, in fact, he graciously agreed to stay on an extra year at the request of the Government and has overseen a transformation in Customs. Some years ago when he came in, morale was low. Today you have a Customs Service which is highly professional, morale is good and it’s at the forefront of protecting Australia’s borders, fighting terrorism and of course it is the second major revenue collector in the land. And of course, Mr Carmody with his experience, will bring a great deal of expertise to that aspect of the job.

But we are very pleased that he has accepted the position and I am looking forward to working closely with Mr Carmody.

TREASURER:

Thank you. Any questions?

JOURNALIST:

(inaudible) seems to be a bit of a reversal of gravity because the ATO is obviously a more important body than Customs. Why is Mr Carmody taking this step?

TREASURER:

Well, he indicated to me that after 13 years of being Commissioner he was ready for a change of pace. He thought it was something that he would bring skills to in Customs because Customs of course does have a significant revenue collection function as Senator Ellison said. It was his initiative. He wanted a change of pace and after 13 years he felt that the organisation could also benefit from new leadership. And Michael D’Ascenzo, as I said, who has been the Second Commissioner for quite some time, is very, very highly regarded and eminently suitable to take the office. This also I believe enables Customs to get a reformist but experienced person at its head. So I think it will be good for Customs and good for the Australian Taxation Office.

JOURNALIST:

Minister Ellison will he be a trouble shooter for you? Will he clear the backlog on the wharves due to the computer problems?

MINISTER:

Well look, I think Michael Carmody is going to bring a new zeal to the job as the Treasurer has mentioned and of course he brings great experience to it. But as to what he has plans in the role of CEO I haven’t had a chance to discuss that in detail with him but certainly he is very keen to meet the challenges.

JOURNALIST:

(inaudible)

MINISTER:

Well certainly we want to put in place the new ICS Programme and see that working. We are working hard to achieve that now and of course that will be one of his first tasks. But we have the CMSO4 contract which is a billion dollar contract for coastal surveillance which we will be announcing shortly and that will have to be put into place. Of course you have to remember that Customs faces challenges in the new environment that we find ourselves, with border protection, working overseas, we have opened new Customs Offices in China and Indonesia. So Customs is in a very much different environment today than it was when Lionel Woodward was first appointed as Comptroller General.

JOURNALIST:

Does this represent a new approach for the Tax Office? Mr Carmody has won a reputation for being tough but communicating and building up a bit more of a relationship between the Tax Office and taxpayers and I note that the new Commissioner has got a lot of experience in the technical side of things and the Tax Office has also signalled it is going to get much tougher. Is this any sort of new approach?

TREASURER:

I am not sure that the Tax Office has signalled that it is going to get much tougher. I think it has been pretty tough to date. It has indicated recently that in areas where there are outstanding debts that it is going to look very carefully at recovering those debts but I think what Michael D’Ascenzo has experience in is in the rulings area. He has been the Chief Tax Counsel so he understands the tax law very, very well. What he will now do is move also into the administrative area and I think he brings great skills to that as well.

JOURNALIST:

Treasurer did you try and talk the Commissioner, Mr Carmody, into staying on, or could you understand that his deputy might be able to bring about a fresh approach to (inaudible)?

TREASURER:

Look, Customs was looking for somebody who could bring fresh vigour. Mr Carmody brought a very new approach to the Tax Office, particularly moving it into electronic lodgement and IT systems. To be frank I think that will be of use to Customs and he was looking for a new challenge after 13 years. He raised this with me, it seemed to me to be a perfect fit.

JOURNALIST:

Senator Ellison a number of small businesses are threatened by letters of demand from Customs (inaudible) are you going to consider waiving these demands?

MINISTER:

Well we put out a Customs notice that there would be a six month moratorium in relation to dealing with duty payable and we were working with the ATO in that regard. Now of course that is not a blank cheque to do nothing but we have said that we will look at legitimate circumstances where things have been beyond the control of the business concerned and that six month moratorium was announced on the 12^th of October running from the 12^th of April. It was something we put in place last year when we made the switch to exports so it is nothing unusual.

JOURNALIST:

I am talking about the (inaudible) letters of demand which was due to a Customs mistake and (inaudible) to as many as much as 755 (inaudible) from small businesses due to a Customs mistake.

MINISTER:

Well of course Customs has a duty under the FMA Act to collect revenue and it has a duty to proceed with that, I am talking to the CEO about that but look, I can’t say anything further at this stage, that is a matter which Customs handles and duties payable, well the responsibility rests with Customs to collect that.

JOURNALIST:

Mr Costello do you think the labour market has…

TREASURER:

Sorry I will take (inaudible) and then…

JOURNALIST:

…Mr Costello do you think that today’s labour force figures indicate that the employment market has peaked?

TREASURER:

Well the unemployment rate today for October was 5.2 per cent, marginally up on September which was 5.1 per cent. Of course this is the 26^th month where unemployment has been below 6 per cent and although the number of jobs measured for the month was down around 20,000 you do have to bear in mind over the last year 230,000 new jobs have been created in Australia. So, there has been extraordinary strength in the labour market over the last year and this moderation which you are seeing today, I believe, is consistent with a moderating economy. I have been talking for some time now about how the housing market is moderating, how the economy is switching from consumption to investment, employment as you know is a lagging indicator and I think you are now starting to see come through, in relation to employment, some part of that moderation. So can I say that overall unemployment at 5.2 per cent is still as low as we have seen it in 30 years. Senator Ellison may have to go now, sorry…

MINISTER:

Sorry, it is division time.

TREASURER:

…they love them and leave them those Senators. Overall unemployment is still at 30 year lows but it is a moderation that we are seeing in the labour market consistent with what I believe has been a moderation in the economy.

JOURNALIST:

Treasurer (inaudible) workplace relations changes through the Lower House today, how significant do you think those responses will be (inaudible)?

TREASURER:

Oh hugely significant. Now, they still have to go through the Senate so let’s acknowledge that point, but these laws I think will be hugely significant for Australia. They represent a substantial opening up of flexibility in the labour market in relation to employment practices, in relation to wage setting, in relation to negotiation. I would expect that in years to come we will look back and we will see this as a milestone of economic reform. I believe they will give the opportunity – all other things being equal – for more jobs to be created and to structurally lower unemployment in Australia. This is part of ongoing reform I first started arguing for labour market reform 20 years ago so it has been a long argument but this is certainly a milestone in that long journey.

JOURNALIST:

Treasurer over the last year our top four paid bank executives have earned more than $20 million and we have just learned that bank complaints have gone up by more than 4 per cent. Are you confident Australians are getting good value for money for the amount our bank executives are paid?

TREASURER:

Well I don’t set bank executives pay and they are not paid out of taxpayers dollars. They are paid by shareholders and we have provision in the law for shareholders to determine whether or not they like the remuneration packages. And I would say to shareholders you ought to be assessing these things, this is your money, are you confident that you are getting value for money. If you are, vote for them, if you are not, don’t. But the Government doesn’t set these salaries and you will observe that government salaries seem to be on a different scale to those of bank executives.

JOURNALIST:

Just on the ‘your money’ point, regardless of the ins and outs of who knew what and when, wasn’t it stupid for the Australian Wheat Board to ever think that they could do business with the Iraqi regime? Wasn’t that a bad starting point?

TREASURER:

Look hang on, people from all around the world were participating in a UN sponsored oil for food programme and wheat is food. And the object of this was to ensure that whatever the crimes of Saddam Hussein, ordinary Iraqi’s could still eat. Now, the object was to get food into Iraq but not in any way to give financial comfort to the regime and that is what the Wheat Board was participating in, supervised by the UN. Now, if something has happened that was in breach of the guidelines an inquiry will get to the bottom of it. But there was nothing wrong with being there, in fact being there was a big part of feeding the Iraqi people.

JOURNALIST:

Treasurer, could Mr D’Ascenzo, the new Tax Commissioner, be a new man for another new tax system? Do you foresee an overhaul of the personal tax system in the not too distant future?

TREASURER:

Well we have been overhauling the personal tax system since 2000. We cut taxes in 2000, in 2003, in 2004 and in 2005 and my principle has always been this: if you can balance your Budget, if you can pay for the security of the country, if you can finance the looming costs we know we have in health, if you can keep your Budget in surplus to keep interest rates down and have the capacity to do so, you ought to lower tax.

JOURNALIST:

No I didn’t ask about lowering tax, I asked about an overhaul of the system, as in another new tax system, as in proper reform?

TREASURER:

Well you have bamboozled me with the question.

JOURNALIST:

Treasurer, back in August you said that people who do not share Australia’s values shouldn’t come here, what do you make now of the debate in relation to potentially deporting duel citizens who are found guilty of training with a terrorist organisation or after they are convicted of a terror crime? Would you look at the idea of possibly deporting these people?

TREASURER:

Well, no, I refer you to the comments I made back in August and you might recall that they were in the wake of an interview on the 7.30 Report by someone.

JOURNALIST:

(inaudible) … by the Chairman of the Australian Securities…

TREASURER:

Well I am not going to say any more about that. But let me make the general proposition that if you are somebody who wants to live in an Islamic State governed by sharia law, you are not going to be happy in Australia, because Australia is not an Islamic State, will never be an Islamic State, and will never be governed by sharia law. We are a secular state under our Constitution. Our law is made by Parliament, elected in democratic elections. We do not derive our laws from religious instruction, and the point I made is this, that the people who are alienated by a secular state with a democratic system and independent courts and a equality for women, rather than try and change Australia from all those things into something else, might be better advised to find the something else, somewhere else. There are Islamic States around the world that practice sharia law, and if that is your object, you may well be much more at home in such a country than trying to turn Australia into one of those countries, because it is not going to happen. It is not going to happen under the Australian Constitution. The Australian Constitution is radically different, and it determines the kind of nation we are.

JOURNALIST:

(inaudible)

TREASURER:

Sorry, last question. Two last questions. You go first.

JOURNALIST:

Once the labour market reforms go through, do you have a figure where you think unemployment (inaudible)?

TREASURER:

Look there are two things. There is the cycle, and there is the structural unemployment. I believe we are at the peak of the cycle, that is, this is about as low cyclically as unemployment goes. Even at 5 per cent people would have said they could not have envisaged that previously. So I think if you want it to go lower, you have got to do structural reform. Now, what that means is over the course of the cycle if you do structural reform it will always be lower. It does not mean it will always be at this amount because of the cycle turns it will go up or down, but the capacity will always be lower. So I think with structural reform and if there were strong cyclical events to continue, yes it could go lower, but they are two very big ‘ifs’. Yes I am sorry. Yes two last ones.

JOURNALIST:

Mr Costello, if the jobless rate does start trending higher now, what are the ramifications for the bargaining power of employees, particularly in light of the industrial relations campaign?

TREASURER:

Well they are still better than they have been for practically thirty years. Whether it is 5.1 or 5.2, the bargaining position of employees is still better than it has been for thirty years. Strong. Sorry.

JOURNALIST:

In the Party Room this week some MP’s spoke up on behalf of exposing Qantas to all competition. You made some views of your own known on the public record. Do they remain the same, or do you feel as though Qantas has a legitimate right to (inaudible) protection from the Government?

TREASURER:

Well, as a general principle, I am always in favour of competition, because I think competition helps consumers, and it lowers costs and it leads to better services, so …

JOURNALIST:

(inaudible) … Qantas …

TREASURER:

Well that is my general proposition, and that is where I start from, and it has to be strong arguments to outweigh that starting point.

Thanks very much.