Joint Press Conference

The Hon John Howard MP

Treasury Place

Melbourne

Friday, 7 April 2006

SUBJECTS: Taskforce on Reducing the Regulatory Burden on Business; Indonesia; petrol prices; wind farms

PRIME MINISTER:

Ladies and gentlemen, the Treasurer and I have called this news conference to release the Banks Report on Red Tape and also to release the Government’s initial response. Our response will be in two stages. What we’re responding to in terms of today’s announcements and the second part of the response will be by the end of July this year. I think it’s fair to say that having commissioned the review on the 12 th October 2005 the Government is responding with great speed in relation to this. We’re responding to 86 of the 178 recommendations today and the remainder, many of which involve cooperation and coordination with the states and local government will be part of the next response.

The major initiatives that we are announcing today are firstly increasing the minor fringe benefits exemption threshold from $100 to $300 and an increase in the fringe benefits reporting exclusion threshold from $1000 to $2000, both of those measures because of the operation of the Fringe Benefits Tax accounting year will take effect on the 1 st of April 2007; a halving of the incorporation fee from $800 to $400 at an estimated cost of $216.4 million over the Budget forward estimates; and allowing companies to make annual reports available on the Internet with hard copies available only on request.

The Council of Australian Governments will be asked to look at and report on giving high priority to developing national consistency in occupational health and safety standards and we’ll be requesting a mid-year progress report; and directly overseeing the implementation of a national mine safety framework and work together to streamline eight different business regulation processes and to harmonise administration of a range of state and territory taxes and charges.

It is important to understand that further progress in this area has to involve the states and local government. Many of the regulatory burdens put particularly on small business come from state and local government and in preparing our final response the Government will look at improving the underlying causes of regulation.

I acknowledge the presence here of the Parliamentary Secretary to the Treasurer, and today as part of the process, he will release a consultation paper on corporate and financial regulation which will work alongside the process which flows out of the Banks Report. I’d like to invite the Treasurer to say a couple of things; can I before doing that thank those who worked on the Committee. Gary Banks, the Chairman of the Productivity Commission, Richard Humphry, the former Chairman of the Stock Exchange, Angela MacRae, a small business consultant in Melbourne and Rod Halstead, a well known corporate lawyer from Sydney who is a senior partner in Clayton Utz and Company. They all worked very, very assiduously, very quickly, and I am delighted that the whole process has moved so quickly.

And we’ll be releasing the report, we’ll be releasing a detailed statement of the Government’s responses to all of the recommendations and then there will be a further response delivered, the second part of the response delivered by the end of July. Treasurer.

TREASURER:

Thank you very much Prime Minister. Not only today are we announcing a downpayment on the reduction of red tape but this report also recommends a process, a framework by which new forms of regulation can be assessed and we can guard against new, excessive regulation being introduced in the future. And I think that process coming out of this report will be one of the long term structural reforms in relation to easing the business environment in Australia.

The Prime Minister has focussed on some of the tax and corporate changes, can I just point out to you that halving the incorporation fee from $800 to $400 is not only a 50 per cent reduction in costs, but the remaining $400 is tax deductible over a period of time. And can I also point out to you that a World Economic Forum competitiveness survey showed that Australia is the quickest place in the world to incorporate a company. It can be done in one day in Australia and we not only were the quickest, the ease of establishing a business in Australia according to the World Economic Forum rated us second in the world. So we’re already right up there. We’re cutting the fee and it is tax deductible. So for people that want to incorporate and to start a business in Australia, it’s as good as it’s ever been.

The Prime Minister also mentioned big changes in relation to Fringe Benefits Tax. They will reduce much of the complexity for business in relation to minor benefits and in relation to reporting. So that now instead of having to report benefits where you had $1000 or more, that will double and so for employers they will not have to report benefits that are $2000 or less.

Christopher Pearce the Parliamentary Secretary will be releasing his report separately this afternoon. Many of the things that he has focussed on, and I want to pay tribute to him for the wonderful work that he’s done, relate to financial sector regulation. And this is quite a complex area, you’ll see that his report and it goes into quite some detail to many of the requirements in relation to financial sector regulation. But the proposals that he’s put up for discussion will certainly ease compliance and some of the prickly areas for that.

So all in all, this is a very substantive report. A very substantive response, a very substantive new structure and a map forward for reducing red tape and making Australia one of the best places to do business throughout the world.

JOURNALIST:

Aside from being able to access the new industrial relations regime, what will the benefits of incorporating be for small business?

 PRIME MINISTER:

Well there are obviously, depending on taxation and other considerations, there are clear legal advantages in incorporation. They are advantages that have been there for a very long time but we don’t make any secret of the fact that one of the reasons why we are cutting the cost of incorporation is to encourage forms and partnerships that might not be covered by the industrial relations system that’s been introduced recently to make it more attractive for them to do so. The more that there can be incorporation, the better.

JOURNALIST:

Can I ask a couple of questions on Indonesia if I may? The daily question on whether you have spoken to the Indonesian President?

PRIME MINISTER:

I give you my normal response. It is my custom to talk to world leaders and speak afterwards of the conversation. I don’t normally, for reasons that you will understand, speculate in advance as to who I might talk to and when. I mean, that is bad manners, I think.

JOURNALIST:

One of the concerns that has been raised by the Indonesians is that as a close ally and friend that some special arrangements should have been considered in processing those 43. Would you envisage any future change to processing of unauthorised arrivals from West Papua in the light of that concern?

PRIME MINISTER:

We would not change our processes in relation to a particular expression of concern. We are in the wake of what has happened looking at the processes but we will continue to abide by our international obligations. This is a difficult issue. It is very important that we keep to our international obligations. It is also very important that we preserve a good relationship with Indonesia which I believe will remain the case despite the current difficulties. I think the relationship with Indonesia is very sound, it is very strong. I repeat what I said over the last few days. We regard the people of West Papua as citizens of the Republic of Indonesia and there won’t be any equivocation on that issue and we do not encourage them to come to Australia and we do not encourage Australian non-government organisations to encourage them to come to Australia. It is not in their interests that that happen. It is in the interests of everybody that the process of openness and the new approach which President Yudhoyono oversaw a few years ago continues in West Papua and that they feel fully and completely a part of Indonesian society.

JOURNALIST:

Mr Costello, petrol prices hit $1.40 in Melbourne today, does that concern you.

TREASURER:

Oh yes, petrol prices, high petrol prices do nobody any good. They don’t do consumers any good, they don’t do businesses any good, they are not good for inflation and unfortunately they are beyond our control because world oil prices drive petrol prices at the pump. We look forward to a time when world oil prices come back and deliver better prices for consumers at the pump but there are matters that are all to do with supply and demand on the world stage. Unfortunately matters that he Australian Government has no control over.

JOURNALIST:

Are you confident that service stations are not profiteering?

TREASURER:

We have no evidence at all. Look, we have the Australian Competition and Consumer Commission which investigates any allegation of collusion. They have taken a case which related to Ballarat and that is going through the courts. When they believe that there were grounds for a case, if they can find evidence of any collusion anywhere they will take a case believe me. But you can see what is causing the price jump today, because it’s the world oil price. When you see the world oil prices go up on international markets with a delay you will see petrol prices go up and when you see the world oil prices come down, with a delay, you will see it come down again.

JOURNALIST:

Prime Minister would you like to see all companies incorporate now that you’ve reduced that burden?

PRIME MINISTER:

Those who believe it is in their best commercial interest to do so, yes. What we have done with this reduction is, as far as can reasonably be expected, removed an impediment, a financial impediment to incorporation and provided an extra incentive. And the more companies, small companies that come within the reach of the Government’s industrial relation system, the better. We believe that it is a very good new system, we believe it is particularly beneficial to employers and employees in small firms and we want them to get under the umbrella of it, to get the benefits of it and to take advantage of it and they can only do that if they are incorporated. And the more, the better and we are providing a very strong incentive and the Treasurer has pointed out how quick the incorporation process is, it has now been cut in half, the cost, and the remaining few hundred dollars is tax deductible over time. So people can’t say, oh it is too complicated, it is too expensive it is too difficult. There will be other reasons why some of them won’t and we understand that, but the fewer companies, firms, that feel that they can’t take advantage of our system the better.

JOURNALIST:

Mr Prime Minister does this have any impact on the black economy as we see it?

 PRIME MINISTER:

I don’t know that this particular decision, cutting the incorporation fees, will.

JOURNALIST:

I mean encouraging people to incorporate rather than to act as a sole trader.

 PRIME MINISTER:

I think the Australian Business Number has had quite an impact on the black economy. I think it has struck a heavier blow on the black economy than any other single measure that has been introduced. One of the pluses of the Goods and Services Tax in Australia compared with other value added taxes around the world that has gone unremarked too frequently by commentators, is in fact that it was accompanied by the introduction of the Australian Business Number, which has really acted as a, how stall I, it is sort of a Geiger counter, if I can use a nuclear expression; a sort of black economy Geiger counter and it’s sort of found it and it’s been very, very effective.

TREASURER:

See when you start a business you can be a sole trader, you might decide to go into partnership with someone else, you might decide to do it through a trust, or you might decide to do it through a company. This makes it cheaper to do it through a company. But whether you are in anyone of those different vehicles you still need and Australian Business Number and you are still subject to taxation. So what this is doing is making it easier to take the advantage of that vehicle, but you are going to be scrutinised for taxation consequences whatever vehicle you choose.

JOURNALIST:

Prime Minister, just on the decision to block the wind farm because of concern about the parrot. Do you have any worries that that is going to damage business investment and foreign investment in alternative energy?

 PRIME MINISTER:

No I don’t. It was a decision taken by the minister on advice in exercise of his portfolio responsibilities and he has explained the reason. I don’t think because one single project is blocked on environmental grounds that suggests that this Government or this country is unfriendly to foreign investment.

JOURNALIST:

Prime Minister, so do you support then the Minister’s decision on that?

PRIME MINISTER:

I support the Minister’s decision, he made it on proper grounds.

JOURNALIST:

 Can I ask one more question on the West Papuans. A specific concern from the Indonesians seem to be that if a claim is made by people from Indonesian territory that the complaint of those people should be put to the Indonesians so they can put their side and if possible address the concerns. Is that something that you are sympathetic to in future cases?

PRIME MINISTER:

Well I won’t indicate at this stage that I am sympathetic to this or that possible change. We are looking at the process and it is sensible that we do so and that is obviously one of many issues that will be part of that review. But whatever comes out of that review you can be certain that we will continue to meet our international obligations, but we will also, as we should, pay proper regard to the importance of the relationship between Australia and Indonesia. Could I just have a message for those people who are particularly sympathetic to the West Papuan cause, the worst thing that could happen for the West Papuans would be fragmentation of Indonesia. The best path forward for West Papua is to be part of a more prosperous, more democratic Indonesia. The best guarantor of that is the maintenance of the outward looking, progressive views of the current administration in Indonesia, led by the best President that country has had since 1946 and a person who understands the need to modernise his country, to maintain the force of moderate Islam in the largest Islamic country in the world. I hope people understand just what we are dealing with, we are dealing here with the future of the largest Islamic country in the world and a moderate Islamic leadership and we have had endless discussion about terrorism and one of the greatest anti-terrorist blows that can be struck is a successful, progressive, democratic Indonesia and the best hope of that lies in the unity of that country and the success of the leadership of Bambang Yudhoyono. Thank you.