25 March 2015
Transcript - #2015032, 2015

Interview with Rafael Epstein, 774 ABC, Melbourne

SUBJECTS: Small business tax cut, bipartisanship, metadata

RAFAEL EPSTEIN:

In our Canberra studio making each other coffees and straightening each other’s ties – Mark Dreyfus who is the Shadow Attorney General and the Member for Isaacs, welcome Mark.

MARK DREYFUS:

Very good to be with you. Hello Bruce.

MINISTER BILLSON:

Hello Mark.

RAFAEL EPSTEIN:

And that is Bruce Billson. He is the Minister for Small Business, the Member for Dunkley. Bruce thanks for being here as well.

MINISTER BILLSON:

Raf great to be here and best wishes to your listeners.

RAFAEL EPSTEIN:

Look I want to start with you if I can.

As a Minister, I would contend that you are struggling for a budget narrative, but let us ask you about something directly in your portfolio. It looks like you are extending what you had offered as a small business tax cut.

Two questions on it – where does the money come from and who does it extend to?

MINISTER BILLSON:

Yes I think what you are talking about is the small business and jobs package that the Prime Minister announced at the National Press Club earlier in the year. He indicated an appetite for a 1.5% cut to the tax paid by small business companies as a starting point.

I have been working very hard and consulting widely about the range of measures that are needed Raf to energise enterprise, to support those courageous men and women that mortgage their houses, create jobs right across our country and your listening audience.

RAFAEL EPSTEIN:

It is something you have been talking about for a while as a government is it not?

MINISTER BILLSON:

We have actually been taking action.

I was hoping you would ask me about the employee share schemes today or the unfair contract terms changes we made last week or the Food and Grocery Code the week before that, or the right to repair for motor servicing businesses or the Franchising Code – there is a whole range of them Raf that are part of our comprehensive programme, but we know we need to generate more economic activity, to generate more jobs and small businesses.

Family enterprises are the engine room of the economy and that is where the drive will come from, so we have been developing a package that will energise enterprise to grow jobs and the economy and that is part of the key central plank of our Budget narrative.

RAFAEL EPSTEIN:

That original question, I am not sure if you can tell me who it might extend to? I might be wrong but it extends to those who run a small business as PAYE taxpayers, is that right or wrong?

MINISTER BILLSON:

There is a range of measures.

What the Prime Minister pointed to was the one in three small businesses that are structured as companies but for two thirds of other small businesses operating in our economy, they operate either as a sole trader, as a partnership or through trusts.

And what we are working to do is recognise that small businesses face a range of different challenges and therefore a range of different measures will be most useful in encouraging them to invest and grow and recover some of the 519,000 jobs lost in small business under the previous Labor administration.

It is a huge amount of jobs, hundreds of thousands of livelihoods we need to win those back and we can do that by giving incentives to small business encouraging their investment and entrepreneurship and continuing to remove red tape burdens.

RAFAEL EPSTEIN:

I will get to Mark Dreyfus in a moment but Bruce Billson that is a bit light on detail. I cannot expect you to give me everything from the Budget. My understanding though….

MINISTER BILLSON:

That is very kind of you Raf, but I will not be doing that.

RAFAEL EPSTEIN:

My understanding though is that if you offer with one hand, you need to take away as well. That is how Ministers present proposals to the Government. There has got to be some business pain, does it all come from the fact that the bigger companies will not receive the tax cut?

The money that was originally going to go to the paid parental leave scheme, is that where the money comes for the small businesses advances you would like to talk about?

MINISTER BILLSON:

That is the majority of it. We have to continue to repair the Budget and therefore identify priority areas that we can put targeted action in place that encourages that jobs and economic growth.

So the decision to not proceed with the enhanced paid parental leave scheme provides some Budget opportunities.

What I am doing is crafting a package that works within the available funding envelope, and as I said does all it can not only to recover those 519,000 jobs lost in small business under the Rudd Gillard Rudd years but actually go beyond that because if we think about what our economy looks like into the future, we are going to need that entrepreneurship, the innovation, the new products, the new services and the nimbleness and chance to build new markets and that is all about what the small businessmen and women do every day and we are getting behind them.

They are having a go. We want to make sure they have got a fair go and get the support and encouragement that they need.

RAFAEL EPSTEIN:

Mark Dreyfus I know there is not tons of detail there but surely you are in favour of advancements for small business?

MARK DREYFUS:

There is no detail there at all. Bruce is quoted in the Financial Review today as saying I am not ruling out anything. Having floated an idea of tax cuts and floated an idea of accelerated depreciation.

What Bruce needs to do as Small Business Minister is explain and probably apologise to the Australian small business community for the cuts in the last Budget.

In the 2014 Budget we saw a reduction of the instant asset tax write-off of $3.2 billion. We saw cuts of the tax loss carry back of $1.3 billion. We saw changes to special depreciation rules for motor vehicles which cost $550 million and on it goes. Cuts to all sorts of small business programmes, cuts to the investment in skills and training programmes- and I have not heard any of them being put back.

If in fact it is true, as Bruce seems to have floated in the Financial Review story that there may be some accelerated depreciation of assets under a small business package, let us hear it, but all that will be is restoring a massive cut to small business assistance that was in the 2014 Budget.

I hear what Bruce is doing, he is trying to get some small credit in advance for some small assistance that is going to be provided to small business, but unless he can be definite about it it is just words and regrettably that is what we have come to expect from this Government – just words and no real action.

RAFAEL EPSTEIN:

Bruce I will give you an opportunity to respond but Nicholas has called from Geelong and he has got a query, so if you can respond to both Nicholas and Mark Dreyfus and we will see what happens.

Nicholas go for it. Try and keep it brief if you can. Nicholas is not there. That is okay we will try and come back to him when we can.

Bruce Billson, Mark Dreyfus mentioned things like asset write-offs, depreciations on vehicles where small business lost in the last Budget. Will they gain in those areas?

MINISTER BILLSON:

I am not going to announce the package Raf, I think I have touched on the broad parameters of it.

But what Mark is talking about, the whole lot of sweeteners that were thrown out there for the nation to cop a mining tax.  And you know Labor also got rid of the entrepreneurs tax offset, there is a whole range of things they did all in the name of the mining tax that was supposed to have raised a whole mountain of money which it did not and therefore those measures were unfunded and so that is the real challenge we have got here.

Labor is yet to deal with the Budget basket case that it created, yet still wants to keep claiming it can spend money as if there is no need to pay for it. So those measures that Mark touched on were part of the mining tax package and we made it clear that the mining tax was not raising anywhere near the money that Labor promised.

It was harming our investment climate and damaging the real strength of our economy and therefore we would get rid of the carbon tax from the fictitious streams of revenue that Labor claimed would come.

Some of those programmes attached to it we could not afford at that time. 

That is why we are working to come up with a package that is sustainable, it can be funded, it is fair dinkum and it provides the support for enterprising men and women to grow the economy and provide more livelihood opportunities for our citizens.

MARK DREYFUS:

He is owning up to the cuts. That is good.

MINISTER BILLSON:

I am a straight shooter Mark.

RAFAEL EPSTEIN:

You might want to respond around the mining tax Mark Dreyfus, however there is one significant line that the Government seeks to use and perhaps with some good effect and that is that these are figures from the Intergenerational Report still, that they inherited spending growth at 3.5%, the costs to government were increasing 3.5%- they say they have reduced it to 1%.

That is significant. They have done the right thing and you left them a difficult mess to clean up did you not?

MARK DREYFUS:

No. The Government is using as its starting point its own first year November/December 2013 mini budget, so-called Midyear Economic and Financial Outlook, and that is not the right starting point.

The right starting point should be what was the state of the Budget as revealed by the Parliamentary Budget Office and by the Secretary of Treasury and the Secretary of Finance at the election- it is called PEFO. And since then, in its very first mini budget this Government doubled the deficit and they have continued to add to the deficit.

No one would know what this government is now on about because we have had a Prime Minister saying early last year that a ratio of debt to GDP of 13% was a dreadful state of affairs. Last week he said that a ratio of debt to GDP at about 50 or 60% is in the Prime Minister's own words a pretty good result.

Who would know how this Government is planning to run the economy, what they are planning to do. They seem to be all over the place. We have got Bruce floating ideas but not actually confirming anything, we have got the Treasurer floating ideas but not confirming anything. I am actually as concerned as David Murray, the former head of the Commonwealth Bank, who is quoted today in the Financial Review as saying because everyone is left guessing by this Government, our triple A credit rating is now at risk; vulnerable is his word.

It is a real concern that six weeks out from the next Budget we are still talking about the cuts and disastrous unfairness of the last Budget and I am very concerned for the Australian economy. We have had a tremendous loss of confidence caused by this Government. We have had chaos caused and as I say we are still talking about last year's Budget just out from the next Budget.

RAFAEL EPSTEIN:

Bruce Billson I am sure you want to address what Mark Dreyfus had to say however debt and deficit have increased under the Coalition since you got into government. Would it not be credible to accept that at least some of it is the Coalition's responsibility?

MINISTER BILLSON:

Raf this is a great conversation which assumes when the electorate votes out a government, a bad government which it did with the Rudd Gillard Rudd Government, that all of a sudden the slate is wiped clean. That is not the case. What Labor boasts about is how they hotwired and hardwired so many areas of government expenditure that even while they were no longer in government, locked into the forward expenditure commitments, were a whole range of spending that was not funded.

Mark talked about the starting position. They said there was an $18 billion deficit. It turned out to be $48 billion.

These are big numbers but 30 thousand millions of dollars is an extraordinary amount of money and an enormous black hole.

Why was that there? Because they had raided the Reserve Bank and pinched special dividends out so it did not have the resources it needed.

In my own area of the ACCC, the first conversation I had with Rod Sims was one of ‘Minister I am looking forward to working with you, we are technically insolvent because we have not been funded to carry out our operations’.

So where we had to restore those institutions so they could continue to function and then set about the task of dialling back forward expenditure commitments, hire purchase agreements if you will Raf, that are pretty easy to sign onto at the beginning but someone has got to pay the bills.

RAFAEL EPSTEIN:

So is none of the debt and the deficit the Coalition's fault? None of it?

MINISTER BILLSON:

We have had to make some changes to restore the Budget. We have slowed the rate of expenditure growth. That has been difficult.

In some areas we put other priority programmes in in accordance with commitments and replaced them for other programmes that were not delivering for the Australian community.

The debt trajectory, that is the course that had been mapped for this country under Labor, would have seen $667 billion worth of accumulated debt. We have halved that. We have got more work to do and one of the ways of doing that is to be very prudent about new spending commitments.

That is why the spending growth is a third of what it is and also to see what we can do to generate more growth and activity in the economy to deal with that side of the Budget.

These are complicated tasks but for Labor to complain about the job, that is like an arsonist complaining that the fire at the factory they lit was a bit hot for them.

Come on, this is an important priority and David Murray made the point that all sides of politics need to face up to this economic and Budget reality.

RAFAEL EPSTEIN:

Mark Dreyfus I am sure you want to respond but the same question to you, it is more credible is it not if you say yes some of the debt and deficit is our fault?

MARK DREYFUS:

Of course. Debt and deficit is a cumulative result of government decisions taken over decades. One of the things we did in government was cut back what has been described as middle-class welfare, being spending decisions taken by the Howard Government.

Seemingly Bruce is still not taking responsibility 18 months in for the Federal Budget and I just have to say to Bruce and all of his colleagues in the Government – you have been in government for 18 months and it does take a special kind of incompetence to increase debt and deficit the way this Liberal Government has and be unfair to families and pensioners at the same time.

It is a real concern that Bruce seemingly is not taking responsibility. I will just give you a single example. This Government in the first three months of its operations gave $9 billion to the Reserve Bank which we later found out the Reserve Bank had not asked for. That increased the deficit by $9 billion.

RAFAEL EPSTEIN:

Ok but that aside, all of the spending that has gone up that is on your policy settings not theirs.

MARK DREYFUS:

I do not accept that either. There is policy decisions taken by this Government for actual spending that they are responsible for and there is reduction of revenue decisions taken by this Government that they are responsible for.

This government gave back 7 to $8 billion a year to the companies in Australia who were paying their obligations under the carbon price at a direct reduction of revenue to the Commonwealth and decided to keep the assistance that Labor had given to families as part of that carbon price scheme.

What responsible government would do that? Give up all of the revenue from the carbon price scheme but keep the assistance that was there only because electricity prices were estimated to be likely to go up as a result of the carbon price scheme? If you leave all of your spending decisions, you leave the spending in place but give up the revenue.

I am just drawing attention to some of the things this Government has done. You give $9 billion to the Reserve Bank which they did not ask for seemingly so as to worsen the outcome in that first set of Budget decisions taken by this Government which they are now seeking to falsely attribute to the Labor Government.

RAFAEL EPSTEIN:

Bruce Billson I am sure you want to respond. I can see there is a caller or two who want to discuss the economy so I am going to ask you to reserve your comeback points until then. I want to give people a quick traffic check.

[Traffic report]

Bruce Billson from the Government, Mark Dreyfus from the Labor Party are in our Canberra studio and Dave has called from Kew. Dave go for it.

CALLER:

Hi my question is actually regarding metadata to the Shadow Attorney General Mr Dreyfus.

Given that the NSA has spent billions of dollars over years invading the privacy of Americans and were set the task by US Congress as to what they have actually gained from it, they could not find a single terrorist plot or a single criminal act detected or prevented through their own vast metadata program, how come Labor is giving the Liberals a free pass on spending hundreds of millions of dollars to invade the privacy of Australians on a programme modelled after the NSA which will have probably very similar results? None.

RAFAEL EPSTEIN:

Mark?

MARK DREYFUS:

I do not accept that Labor is giving the Government a free pass in any sense and that is why we worked incredibly hard to make improvements to what was an inadequate piece of legislation that the Government brought to the Parliament late last year.

Through the work of the intelligence committee, we made 38 very detailed recommendations that have tremendously improved safeguards, oversight and protections for the privacy of Australians in the context of a scheme which was for retention of telecommunications data and on its face, the Bill said nothing about the terms on which agencies are able to access telecommunications data of Australians.

RAFAEL EPSTEIN:

Although it looks like Anthony Albanese was very upset. There is reports today he thought you were giving them a free pass.

MARK DREYFUS:

Anthony Albanese supported Labor’s support for this Bill just to be very direct about it. I am not sure about the reports that you are referring to about the Shadow Cabinet and the caucus. Shadow Cabinet and the caucus supported Labor’s voting for this Bill with all of the improvements that Labor was insisting on and we fought hard for protection of journalists as well, something the Government did not want to do.

Back to Dave’s question, we have a quite different setup here in Australia than in the United States. In the United States, they have opted for the Government storing telecommunications data in huge storage facilities in Utah as I understand it. We have got a quite different system. Agencies and police forces, particularly police forces because the great bulk of use of telecommunications data is by police forces and not by security agencies…

RAFAEL EPSTEIN:

We are still handing over a whole lot of data to the NSA if you believe the things published by Edward Snowden. There are large troughs of our data being sent to the US.

MARK DREYFUS:

I am not going to comment on that, but just to go back to Dave’s question which is about the use of telecommunications data, Australian police forces, state and territory police forces and the Australian Federal Police have been accessing as part of general police work telecommunications data now for decades.

The Telecommunications Interception and Access Act under which they do it was passed in 1979 and I am on record as saying that without that telecommunications data, very much of our ordinary police work would grind to a halt. And I think there is ample material in the public domain where police forces, as recently as January giving evidence to the intelligence committee in public hearings, explain the use that is made of telecommunications data so I do not accept Dave's proposition that this telecommunications data is not of use. It is of tremendous use to our police forces.

RAFAEL EPSTEIN:

I want to try and give as many people a chance to have a say. Nav has called from William’s Landing. Hi Nav.

CALLER:

Hi Raf. How are you?

RAFAEL EPSTEIN:

Good.

CALLER:

With due respect to all the previous governments and the current Government, mistakes have been made by both sides of politics we know that, but what they are doing right now is blaming each other for each other's mistakes. But would it not be more professional dealing with these things. Why do not we just work together and get our whole country out of the mess so we get back on the business? Instead of just blaming each other – you did this, you did that. It is like two kids fighting for a piece of cake.

RAFAEL EPSTEIN:

So you want some bipartisanship on the economy effectively Nav?

CALLER:

Exactly. Both the parties, they have got really good economists working with them. All the Ministers are very qualified. I am sure they can sit back, work in a professional way and say ‘Here we are in this mess…what is the best way of dealing with this mess?’ -Instead of blaming each other to get the votes.

RAFAEL EPSTEIN:

I will try and formulate that into a briefer question. I will start with you Bruce Billson. Can you name an area of economic policy where there could be bipartisanship in the future do you think?

MINISTER BILLSON:

Yes I can and thank you Nav for the question.

I was just talking with Ed Husic just today actually Raf about the legislation that I had introduced to address employee share schemes. We are having a very good conversation about crowd sourced equity funding – these are particular policy measures that there is good exchange and collaboration because there is an agreement that something needs to be done about it.

In terms of the Budget repair task- Mark referred to David Murray's comments and he has been quite consistent in saying there is a fundamental, basic and essential recognition needed that a Budget repair task is required.

RAFAEL EPSTEIN:

Dull and boring Budget- doesn’t sound like Budget repair.

MINISTER BILLSON:

No, go back to your earlier point Raf. If you have got a spending problem and you keep adding 3% in real terms to your spending that is just making it even more challenging.

And that is why our rate of spending growth has been dialled back to a bit over 0.9 of 1%. And in terms of new ideas I may have as a Minister that have been raised with me by the community, by the electorate of Dunkley, by small business organisations and men and women engaged in enterprise. I have to be able to identify offsets, and the way in which a new idea can be presented as a better idea and then funded without adding to this expenditure challenge that whoever is in government would face after what we have inherited from the previous Government.

If there is an economic plan that Labor has, we cannot even find some common ground because they have not articulated any kind of plan. Even the $5 billion that Labor took to the last election as Budget cuts, they are now voting against that.

RAFAEL EPSTEIN:

If I can ask Mark to respond to that. And also Mark if you can nominate a bipartisan area of economic policy. I know Bruce has already nabbed one but you may have another.

MARK DREYFUS:

Thanks Nav for your question it is a good one. One of the problems is the media tend to report conflict rather than agreement but Labor has already supported from the 2014 Budget more than $20 billion of savings measures or cuts that the Government proposed, because we think they are good measures. Now that does not get attention. Unfortunately the default position of this Government and the Liberal Party seems to be attack Labor at all costs at all times.

Just today in Question Time we had the Prime Minister not wanting to give credit where it is due, due to the fact that on Labor’s watch when we were in charge of the economy, Australia was given a AAA credit rating by all three of the major credit rating agencies. That is a fact.

MINISTER BILLSON:

But it is not.

MARK DREYFUS:

There you go, Bruce is on about that too. The Government never wants to acknowledge that there is a global financial crisis in our recent history. The largest economic downturn in 75 years.

RAFAEL EPSTEIN:

Can I pick up the debating point Mark Dreyfus? The AAA credit rating was awarded during either Prime Minister Rudd or Prime Minister Gillard’s stewardship? When was it?

MARK DREYFUS:

By all three credit rating agencies.

RAFAEL EPSTEIN:

When was it? What year? Do we know?

MINISTER BILLSON:

Which is factually incorrect.

RAFAEL EPSTEIN:

Why is it incorrect Bruce?

MINISTER BILLSON:

Because under the Howard and Costello Government, Standard and Poor’s raised the credit rating in 2002, October 2002. Nothing of the kind that Mark is asserting, nothing of the kind at all and Moody’s did the same thing.

RAFAEL EPSTEIN:

Maintained under the Labor years I am assuming?

MINISTER BILLSON:

They did not lose it which was a contrast to what happened in the mid-80s and the late 80s and then in relation to Fitch, if I can help Mark out, there was an upgrade in Fitch’s credit rating.

So there is three agencies, two of them already gave the AAA…

MARK DREYFUS:

Yes that is right. Bruce and I are in heated agreement. All I am saying is that the Prime Minister was not prepared to accept that the third agency also gave a AAA credit rating.

RAFAEL EPSTEIN:

Gentleman I just wanted to try and iron out that wrinkle because I heard it myself and need to get to the weather.

Bruce Billson and Mark Dreyfus but I will leave it there. Thank you for your time.