Interview with Andrew Geoghegan

8.05 am

SUBJECTS: James Hardie

GEOGHEGAN:

Mr Costello, welcome to the programme.

TREASURER:

Thank you.

GEOGHEGAN:

Well as we have heard the Tax Office has advised James Hardie that its payments to its special purpose fund to compensate asbestos victims would be tax deductible, yet its ruling that the fund will not be treated as a charity stands. Now those parties involved including the victims and the unions say they are confused by the two different rulings, what is your explanation?

TREASURER:

Well I think the situation has now been clarified and this is an enormous financial advantage for James Hardie – let’s get that clear. The money that it pays to the victims and the victims deserve every cent will be fully tax deductible. The effect of that of course is that after deducting tax at 30 cents, James Hardie will be paying 70 per cent of the compensation and will be getting a tax deduction for the remainder. That is of enormous financial advantage for James Hardie, it was granted under a law which the Government passed some years ago, if we hadn’t have passed that law James Hardie wouldn’t have been getting any tax deductibility and to get full tax deductibility to pay the victims now means James Hardie has no excuse, no excuse whatsoever but to make those payments.

GEOGHEGAN:

Yes James Hardie is saying just as far as the charity ruling is concerned the tax (inaudible) of the top marginal rate will undermine its capacity to fund those contributions, you are obviously disagreeing.

TREASURER:

James Hardie will be up every tax rort it can find. After trying to defeat the victims it has moved itself out to the Netherlands to get out of the Australian Tax System. It tried to cheat the victims then cheat the Tax Man, now that it has got an obligation to pay the victims with full tax deductibility, it has no excuse for not paying. Now, if it can get a few more tax benefits on the way through of course it will try, it is a multi-billion dollar Netherlands company. But it has full tax deductibility when it pays these victims. Now, James Hardie ought to acknowledge the fact that it has had a very big win under the black hole expenditure deduction provisions, it ought to stop the pretence, it ought to announce that having got full tax deductibility as good as any company in Australia gets, and bear in mind there are companies like BHP and CSR that paid their asbestos victims, they didn’t try and escape offshore like James Hardie, as good as any company in Australia gets and it ought to pay the victims and the victims are the people who deserve the money.

GEOGHEGAN:

So this is just bluff from James Hardie?

TREASURER:

Well it is a company trying to get the most advantageous tax rulings it possibly can and it is mounting a public campaign in order to do that. But it has now achieved fully what BHP and CSR had, it was lucky to achieve that because they paid out their victims without trying to move money offshore, it moved money offshore, it got itself into a terrible tax situation, it has just been rescued by the black hole legislation, it has full tax deductibility, it ought to pay regard for the victims and it ought to pay in full.

GEOGHEGAN:

Well I mean James Hardie has of course indicated it won’t go through with the deal unless the ATO come to the party fully.

TREASURER:

Well the ATO has come to the party fully. They have given them full tax deductibility. You can’t do better than that in Australia than get full tax deductibility.

GEOGHEGAN:

Well they want that ruling on the charity, do you feel as though the Government has any responsibility in showing this compensation package is realised?

TREASURER:

Well this Government passed black hole expenditure legislation a couple of years ago which has given full tax deductibility. You can’t do better than that. If we hadn’t have passed that by the way, because this company cheated by getting its money out of Australia, it wouldn’t have got tax deductibility. It is very lucky having tried to cheat, granted full tax deductibility, you can’t do better than that, it has got itself back in the situation of BHP and CSR. Would it like more tax rorts? Of course it would, but it has now no excuse whatsoever but to pay the victims and I would say to James Hardie now is the time to acknowledge that this is an extremely beneficial ruling for it and to get on and pay the victims.

GEOGHEGAN:

Mr Costello, thanks for joining us.

TREASURER:

Thank you.