Doorstop Interview

Illy’s Cake Shop
Elsternwick, Victoria

Monday, 13 November 2006
11 am

SUBJECTS: New small business framework, industrial relations, climate change, Victorian Budget

TREASURER:

Today the Federal Government is announcing a breakthrough to simplify taxation for small business.  We are going to harmonise the small business test turnover for all taxation purposes, such as the Simplified Taxation System, in relation to Fringe Benefits Tax, in relation to Capital Gains Tax rollovers.  And this simplification will mean that any small business with a turnover of $2 million or less will be eligible for all of the taxation concessions which are available in relation to simplified tax and Capital Gains Tax.  This will be delivering to the small business community of Australia, 96 per cent of whom will be covered by this measure, $277 million over four years.  A tax cut of $277 million over four years for 96 per cent of Australian small businesses.  It is simplification, it is tax reduction, it is an improvement for small business, it is something that will deliver real benefits and it is a Federal Government initiative which I am announcing today.

JOURNALIST:

How many businesses will that affect?

TREASURER:

This will affect 96 per cent of Australian small businesses.  We think 2 million businesses will get the advantage of this. They will now only have to answer one question:- if they have a turnover of $2 million or less, they will be getting all of the tax concessions in relation to Capital Gains Tax, simplified taxation system, GST, PAYG, Fringe Benefits Tax.  It will cut through complication, it will simplify, it will reduce account keeping and it is a $277 million benefit for the small businesses of Australia.

JOURNALIST:

$277 million per year or…?

TREASURER:

$277 million over the forward estimates.

JOURNALIST:

Treasurer, can we just get some comments from you regarding the workplace relations changes such as workers now being able to perhaps cash in sick leave entitlements?

TREASURER:

Well, under the Government’s industrial relations programme we want to ensure that there is flexibility, we want to ensure that nobody is hampered by that flexibility but employees have more productive outcomes.  And we have given the opportunity, subject to the Fair Pay minimum, for people to negotiate to protect entitlements and where they want to do so to get actual benefit increases in relation to entitlements that are not relevant.

JOURNALIST:

What sort of security can they be offered though if they can be stood down if due to unforseen circumstances (inaudible)?

TREASURER:

Well look, in relation to business it has always been the situation where if a company is hit by a strike workers can be stood down, it has always been the situation in Australia.  The most important thing of course is to make sure that you don’t have those stand downs, you don’t have industrial stoppages and business is profitable.

JOURNALIST:

But if it weren’t a strike action, if it were something like, I don’t know, a fire going through the business through no fault of an employee, they can be stood down because there is no work for them?

TREASURER:

Well I think under the old system you could.  I don’t think there has been anychanges.

JOURNALIST:

It is effectively treating full-time staff like casual staff, isn’t it?  If there is no work their boss could just ring up and say, you have been stood down until I need you to come back in. 

TREASURER:

That has been the situation in Australia for decades.  That is not a feature of the new industrial relations.  There has always been provisions under awards for stand down.

JOURNALIST:

So why the changes then (inaudible)?

TREASURER:

Well I am not sure that the stand down provisions are a change.  What we are doing is we are enhancing flexibility more jobs, better wages, we are making it clear that people are being protected by fair pay conditions and they will have maximum freedom.

JOURNALIST:

And Treasurer, regarding climate control, you are pushing fairly strongly on that aspect, can you say some words for us on that?

TREASURER:

Well I think over the longer term, the evidence is that there will be increases in temperature.  What most scientific evidence is talking about is an increase of say a degree or two over 50 years.  It won’t happen tomorrow, it won’t happen next week but it is something that we can begin preparing for.  And one of the ways that we will begin preparing for it is in relation to trading schemes.  If the world moves to a trading scheme, Australia will be part of it.  Australia won’t be able to stand outside a global agreement.  But the important thing is that there be a global agreement.  What is wrong with the current situation is there isn’t a global agreement.  You don’t have agreement from large economies such as China and India and so the important thing is to get first a comprehensive agreement. If it is part of a comprehensive agreement, a comprehensive carbon trading agreement, then Australia should be in there working to make sure that that is the best one available and one that is suited to Australia’s needs.

JOURNALIST:

Treasurer (inaudible)?

TREASURER:

Well Kyoto only takes effect from 2008-2012.  So what the negotiations are about in Kenya at the moment is what will happen after 2012.  That is what is being negotiated.  And Australia is a very active participant in relation to that and it is the shape of the post-Kyoto agreement, an agreement which has put emissions targets down to 2008-2012 so you are really talking about what is going to happen in the next decade. 

JOURNALIST:

You are not worried about our coal industry?

TREASURER:

Well Australia has got a very decent coal industry but I think it is important that we put investment into ways to actually improve its efficiency and reduce carbon emissions.  That is why I announced a demonstration plant for Hazelwood recently and I think there will be further initiatives in relation to coal in the weeks and the months ahead. 

JOURNALIST:

The Prime Minister says that…

TREASURER:

Last question.

JOURNALIST:

…honest budgets include capital expenditure when determining the surplus, would you agree with that?

TREASURER:

Absolutely. 

JOURNALIST:

The Federal Budget currently do?

TREASURER:

Absolutely. 

JOURNALIST:

Mr Brumby says it doesn’t.

TREASURER:

Well if Mr Brumby said that, he is wrong.  The fiscal balance, which includes capital and recurrent, shows Victoria in deficit.  The fiscal balance for the Commonwealth shows the Commonwealth in surplus.  Mr Brumby likes to report the operating balance because that is still positive but his fiscal balance is negative.  The Victorian Government is in deficit.  If the Commonwealth Government were to report, the financial position that Victoria is in, we would be reporting a deficit.  But the way in which we report which includes recurrent and capital expenditure shows the Commonwealth is in surplus, Victoria is in deficit.  There is no doubt about that. That is the Victorian Government’s own figures.  Okay thanks.