PM: It's great to be here with Alannah and with Gary Gray, Parliamentary Secretary for the West, to talk about affordable housing. Affordable housing is a key concern of all working families, and here in the West it's a big challenge as well. That's why we want to make sure that we're doing everything possible to assist people who are looking for a decent house on decent land getting access to that.
Here, down at Armadale, what we're doing today is announcing this part of our $22.9 million investment in WA to unlock housing supply and bring new land to market. Nine housing projects, all the way from Mandurah to Broome, will now have reduced planning and infrastructure costs.
This $22.9 million investment will save WA homebuyers an average of about $16,000 on 1,323 new homes. It'll bring about 1,890 lots forward up to two years faster than would otherwise be the case, and here at Armadale, just to be very practical about it in terms of what's on the map in front of you - 59 homes will save almost $30,000 as a direct result of our investment here of $1.75 million. The funding will be used by the City of Armadale Council to re-locate powerlines, construct roads, drains and water, power, sewer and gas services in Armadale's Newhaven development.
This is really important. It's practical stuff. We're doing about nine projects here in the West out of the National Housing Affordability Fund, and the whole purpose is to make sure that through using this National Housing Affordability Fund, we can bring forward affordable housing for literally tens of thousands of Australians and take the price off some of those developments, like we're seeing here at Armadale.
Of course, nationwide we're doing this as well. A couple of days ago I was at Caboolture in South-East Queensland - a similar concept, different practical local challenges. There we were building a bridge over a railway line to bring on-stream a whole new development close to the existing CBD of Caboolture. Here, the challenges are different, but the funding mechanism that we're using is the same one - a Housing Affordability Fund for the future.
Just before turning to your questions today, could I also emphasize an announcement also being made here in the West today by Tony Burke, the Minister for Agriculture.
We're beginning a new era in our treatment of drought support here in the West. The Government and the West Australian Government today announced a 12-month WA trail of the dramatically new drought support measures. The trial will be held in a region covering almost half of Western Australia from Karratha to Esperance, and will go from 1 July 2010 to 30 June 2011. The new package of measures to be trialled on the West includes farm family support, farm social support, building farm businesses, farm planning, stronger rural communities, farm exit support and also a program entitled 'Beyond Farming'. About 6,000 farmers across this region will be trialling this, and trialling it nationwide.
So, what I'd like to emphasize is that we want to be partners with the farming community here in the West and trialling this new arrangement for drought which we've developed with the peak bodies nationwide, including the National Farmers Federation, but also here to talk about how we help those who live in urban areas with better housing affordability.
Over to you, folks.
JOURNALIST: On housing, particularly interest rates, Westpac's (inaudible) $2.8 billion in six months. Is that obscene, given the struggle (inaudible)
PM: I reckon there's a very simply message for the banks, which is those in particular who over the last 6-12 months have put their rates up in excess of any official rates change frankly need to have a long, hard look at themselves, look at their level of profitability and look at how that can be better passed onto homebuyers who are struggling with mortgage rates.
JOURNALIST: Do you consider it a super tax and therefore should be taxed (inaudible)
PM: -I think one of the challenges we face-
JOURNALIST: -(inaudible)
PM: -No, I understand your point. When it comes to the banking sector, we're always concerned about how things are passed on to the end consumer. I don't want to see anything which actually causes people who are currently paying home mortgage rates to have to pay anything more. We'll always be mindful of what the banks are up to themselves, and as I said before, those who have gone ahead of the pack over the last 6-12 months should have a long, hard look at themselves in terms of delivering the best outcome.
JOURNALIST: Why don't you tax them harder, then? Why don't you apply the 40 percent tax on-
PM: -Can I say what I'm concerned about is the actual mortgage rates being paid by, frankly, millions of Australians today and I am very concerned about any measure which would result in mortgage rates going up for working families.
You ask what the point of dissention is with something like the mining industry? The mining industry, the exports head to the rest of the world, and of course we want a successful mining industry, one which is profitable. I'm a strong supporter of the mining industry, but let me say this - all Australians, all West Australians, want a fair share of the mineral wealth of this country, mineral wealth which the Australian people own, because they want better ports, better roads, better rail, better infrastructure, better tax cuts for small business, better tax cuts for all companies. That's why we're doing it.
JOURNALIST: While you're in Perth some senior mining executives Tony Abbott's in Canberra meeting the heads of BHP and Rio. Is that a bit of a snub to you, that they're meeting (inaudible)
PM: Well, actually, I met very senior executives from BHP and Rio here last night in the West.
JOURNALIST: Not the likes of Marius Kloppers.
PM: Well, we've been talking to Marius for a long period of time, and as far as the Rio management, we'll be speaking to them as well. It's entirely normal that those sorts of discussions would occur. When I was the Leader of the Opposition we dealt with the heads of the big mining companies all the time. That's perfectly normal, and an understandable set of discussions will occur.
JOURNALIST: Prime Minister, have you been able to make some concessions to the mining industry, and secondly, if you were a bit more prudent in spending the stimulus package in schools and the insulation program, would you need to be raising taxes?
PM: Can I say that firstly in terms of the Super Profits Tax, what we want is a fair share for working families for better super, better taxes for better tax breaks for small business and better infrastructure right across West Australia - in fact, right across the nation. That's what we're doing.
Secondly, we had a good and robust exchange with the mining industry not just last night but also this morning in Perth as well. Good discussions all round. Obviously, a whole range of opinions were put, and we'll try and work though the detail of that and the individual discussions with individual companies and the Treasurer. Gary Gray was with me for those discussions this morning, as was Martin Ferguson.
On the question of the purposes to which this investment would be put, that is, the additional revenues coming from a Super Profits Tax, let me just say these are contained within themselves - that is, long term, creating a better tax environment for the 230,000 small businesses in Western Australia: up to $5,000 tax write off in a given year for their assets purchases; bringing down the company tax rate from 30 cents in the dollar to 28 cents in the dollar; but also on top of that again, making sure that we've got money for the future for a WA infrastructure fund to underpin the long-term infrastructure needs of this state. That's what we're on about, so what we've suggested is here is a revenue source, here is how it can be invested for the future. It's got nothing to do with, currently, the base of expenditure programs which already exist within the Australian budget.
JOURNALIST: (inaudible) people whose super funds have taken a hit because of your announcement?
PM: Well, can I say if you look at the changes which have occurred in mining stock prices over the last 1 month, 3 months, 6 months, 12 months, they will go up, they will go down. That's what's happened with the stock market volatility over a long period of time, particularly in the commodities sector.
I think it's important to place emphasis on the independent modelling by the Treasury which says that put all these factors together, EContec, the Treasury's modeller, projects that this industry will grow by something like 6.5% over the coming 5-10 years as a result of all these measures, and that as a result what you're going to see is a broader and more dynamic mining industry in the future.
Last thing on that - 20 years ago, people predicted doom and gloom when a regime like this was put into place call the Petroleum Resource Rent Tax to govern the taxation arrangements for offshore North West Shelf and regions associated with it. 20 years later that particular set of projects is booming. The Gorgon project, one of the biggest resource projects in the world, has taken off in the midst of that particular tax regime. There is not a whole lot different between the design of that scheme and what we're now seeking to apply to onshore developments here. So, it's inevitable that mining companies are going to complain - the big miners don't want to pay more tax, I understand that, they're right to get out there, they've got their right to get out there and argue, but you know something? Our national interest dictates that we use those resources for the Australian people. The Australian people deserve a fair share from the mining resources of this country because those resources are ultimately owned by the people-
JOURNALIST: -(inaudible)
PM: Can we just, I'll take them one at a time. Just over here and then I'll head down this way.
JOURNALIST: What about the self-funded retirees who have had tens of thousands of dollars wiped off their share portfolios and they now say it's affecting their income?
PM: If you look at the impact as I said on movements in stock prices over the last 3, 6, 12 months, there's been huge volatility. One of the reasons why the Australian market has in fact picked up over the last 12 months is because we've had strong, continued economic management in Australia. Compare the recovery and our equities markets in Australia over the last 12 months against what we've seen elsewhere in the world. Internataional markets have looked at Australia and said that here is an economy which has performed well - Combination of national stimulus strategy, combination of demand from China, combination also, of various measures taken, including in monetary policy.
Now, I think you had one here, then I'll come to you.
JOURNALIST: On the implementation of the tax, what aspects or what details (inaudible) negotiations been with the resource companies?
PM: Well, each of the companies in our discussions last night and this morning again, and Minister Ferguson and Parliamentary Secretary Gary Gray and I have spoken to many of them now, have raised different things. Some of them concern transitions; some of them concern implementation; some of them concern clarification, but each business, frankly, is a bit different because, they've got different questions to raise. So, we intend, through an extended consultation process, to work our way through it. It'll take time, but the reason we've come here, to talk to the miners direct, myself and the Minister for Resources, is to be there, be upfront, talk to them face to face and then make sure we've got a process for continuing that discussion through this implementation period.
JOURNALIST: (inadudible)
PM: On the one question which you asked me yesterday about, which is we think we've got that about right.
JOURNALIST: OK, it's not going to be just big miners that are affected. Small miners are obviously going to be affected as well. Is there scope to increase the rate of return factored into this Super Profits Tax?
PM: We think we've got the rate right, as I said in response to Geoff's question yesterday, but can I say this about small and medium miners - in the detail of what we've proposed, for small and medium miners who, frankly, maybe generating a pretty low levels of profitability early on, this package is a net winner for them. The reason being is that the current blunt instrument of the royalties regime, taxes them, often taxes the hell out of them, based on volume not their profitability, but the other thing is this-
JOURNALIST: -So, through the life of the mine though, what is, won't it-
PM: -Can I just finish my question and then take your follow-up? On the question of exploration companies, which ultimately decides how much resources we've got to develop in the future, the other thing I'd draw people's attention to is the strong emphasis that we have, now, on a $1.1 billion set of tax advantages which flow to the exploration industry for the first time. This will enormously assist various people in the exploration industry to bring on new resources for the future.
I go back to the modelling - put the Super Profits Tax together with the different treatment of companies who may not be earning profits early in their business cycle, and put that together with the exploration benefits that we have put into the package, Treasury's modelling demonstrates that over the next 5 to 10 years, in fact, we will see an overall significant increase in the level of mining activity, and I draw your attention again to the prophets of doom who were saying similar things 20 years ago when the Petroleum Resource Rent Tax was brought in, for those developments offshore.
Your follow up?
JOURNALIST: Two quick follow ups-
PM: I'll give you one then I'll go to someone else.
JOURNALIST: Analysts have said that the effective rate of tax for all mines, small, big, whatever, under this package, will go from about 42 percent currently to 55 percent or thereabouts over the full life of a mine. Given that that is an increase in tax, how can it not impact on jobs, especially in Western Australia, which produces more than 60 percent of the nation's mineral wealth?
PM: Well can I put it in these terms? Different companies will be affected differently. There are a whole bunch of employment opportunities out there at the moment with companies in the mining sector who are being penalised enourmously by the current royalties regime, which is a very blunt instrument.
What this does, in fact, is open up a further expansion in employment opportunities for them at a time in their business development when they are currently being whacked by the current tax arrangements.
Secondly, exploration companies, currently being, frankly, done in the eye by existing federal and state taxes, when it comes to their activities, now have a very significant new tax advantage for the future. They, too, will be employing more people.
And the last thing I'd say is, across the economy at large, bear this in mind as well, that here in Western Australia, and I was talking last night to the head of the WA Tourism Authority, the tourism industry and various other branches of industry here in the West are currently being whacked by the high dollar. It's really having a huge effect. One of the reasons we are using this Super Profits Tax to fund a drop in the company tax rate and a further tax break for small businesses is to make sure that those businesses maintain their competitiveness or their bottom line is helped at a time when, frankly, the dollar is affecting many of them very badly.
JOURNALIST: Are you concerned then, if you were to impose a Super Profits Tax on the banks, that they'd pass those costs onto consumers?
PM: Well, I'm always concerned about people in the home mortgage market, particularly when it comes to affordable housing like we're seeing here. That's why we, as a Government, are directly investing in these sorts of projects.
Can I also say that we must be very mindful, therefore, of any impacts which could flow through to those in the home mortgage market. People put a lot of investment into their own home. We've got to make sure that investment is protected to the greatest extent possible. That's why we need to make sure that those out there who have put a lot of their blood, sweat and tears into their home mortgages are supported to the greatest extent possible.
JOURNALIST: Are you concerned, though, that the backlash in WA could cost you the chance of picking up seats like Canning at the next election?
PM: Can I say that we have a fantastic candidate here in Canning who knows this area like the back of her hand in my experience, and my job as Prime Minister of the country is to make decisions which are in the national interest. Remember also, across Australia, and across West Australia- in West Australia there are 700,000 workers who will benefit from increasing their superannuation rates from 9 to 12 - 700,000 workers in WA.
Secondly, you've also got 230,000 small businesses who are going to benefit from the tax cuts that we've brought in.
And thirdly, if you look around at developments like this, I've never found a local authority anywhere who said I've got enough money for my local infrastructure - in fact, I've got too much. I've never found one. Never found one in the West, never found one in my own state of Queensland.
JOURNALIST: You don't believe-
PM: -Can I just go to it and that is you're going to hear a lot of complaints from people earning profits in the mining industry. That is understandable. No-one out there in the mining industry wants to pay more tax.
The Australian people however, the Western Australian people, deserve a fairer share of these super profits to help them with better super, to help small businesses with better tax breaks, and to help them with building infrastructure like this.
And having said that folks, I've really got to zip. Thanks very much.