- Unions, welfare groups, and economists signaled willingness to discuss traditionally difficult tax reform options like raising the GST and lowering the corporate tax rate if accompanied by cuts to tax breaks for high-income earners.
- Shadow Treasurer Chris Bowen and ACTU President Ged Kearney said they were open to lowering the corporate tax rate but did not want to immediately increase the GST without first addressing individual tax concessions.
- Business leaders argued the 30% corporate tax rate is too high given international competitors, but civil society groups want tax reform to also focus on equity and not just efficiency or competitiveness. Agreeing on specific reform measures remains politically challenging.
AFR tax reform summit - Phil Edmands - media coverage
1. Leteveryoneknowwhat's at stakein ataxoverhaul
Tax reform
Australia's tax
system will
neither create
thejobs of the
future, nor
efficiently
support a
social safety
net. The
public must be
engaged in
improving it.
Phil Edmands
IfI wereto nominate aguiding principle for
tax reform, itwould be "maximise
prosperity, minimise harm".
Alltaxes distort behaviour and impose an
economic dragin someway.Taxes are
levied becausewe need services and
infrastructure, and an adequate safety net
We alsoneed thetaxsystem tobefair, and to
incentivise desirable outcomes likehigh-
tech innovation and greater workforce
participation bywomen and older
Australians.
Butsubject to these things,we should
impose the lowest and most efficient taxes
possible- any overreach isgoing to pull
down economic activity- limiting growth,
innovation, productivityandjobs.
Despiteallthe talk about moving from a
conversation topractical proposals,weare"
yettogetthe conversation right Events
such astheAFRTaxReform Summit are
vital,but wecan't settleprinciples and then
tryto"sell"a consistent packageof
measures tothe broader community.
Wider Australian society needs to be
engaged in the formulation ofthat package.
Theywilllookfor assurance about the detail
but theyneed to understand the issues and
trade-offs, and tohave input into their
management
Theyneed toknowwhat'sat stake.They
need toknow why the economywillbe in
serious troublewithout taxreform and how
different measureswillaffect their regions
and them personally.
Australia faces unprecedented
technological disruption. The fundamental
imperative isto driveinnovative growth
becausewe need as many new high-tech
jobsas possible to replacejobs that
disappear-and we need them here rather •
than overseas.Tax reform iscentral to this
structural change.
Proper tax reform takestime.And though
wecan allowfor transitioning,we need to
bake in aplan that doesn't leave out
anything fundamental.
The tax system isjust that- a system- and
anything left outwill miss itsoffsets and so
missthe boat, possibly for a decade.
We must beambitious.In Britain, the
incoming government in 2010set out a five-
year taxreform blueprint and stuck to it,
despiteitsfiscal,budgetaryand debt
constraints.Asa result itstaxsystem and
businesses are more competitive and itis
better placed toattract business.
Australia's complicated taxsystem relies
on economically inefficient taxes.There is
heavy relianceon income and corporate
taxesand insufficient reliance on broad
based low-rate taxeslike the GSTand land
tax.Our payroll taxhas so many
exemptions and inconsistencies that its
economic efficiency is undermined.
Ultimately,Australia has too many taxes -
just 10 taxes raising 90 per cent of our
revenueand 110 taxesraisingthe rest
Addressingwhether personal taxation is
fitfor purpose - given the effect on labour
mobility and participation incentives- has
widespread acceptance. Perhaps less
universally accepted butjust as
fundamental islowering our high corporate
taxrate.Ironically, thisisrational from both
a business and a labour point ofview.
Theoptimum corporate tax ratewillbe
setbywhat our competitors are doing.
Britain ismovingto 18 per cent,theOECD
averages 25percentandAsia22percent.
On that basis,30percent long term isjust
too high.It dampens foreign investment
and damages the competitivenessof
Australian companies.
Treasury estimates that everyextra dollar
ofcorporate tax reduces our living
standards by50<tin the longrun, through
reduced investment
Treasury research also indicates that a
considerable burden of corporate tax falls
on Australian workers.
It reduces investment and labour
productivity- ultimately reducing real
wages.
Anot-insignificant amount ofthecostof
any reduction in the corporate tax rate
would be clawed back bypersonal tax on
dividends,butveryprogressively, as those
on higher taxthresholds paytop up
personal tax on those dividends.
The BusinessCouncil ofAustralia argues
for a rebalancing ofour tax system towards
more efficient broad-based lowrate taxes
liketheGST.
While each $1ofcorporate tax imposes a
50(teconomic cost,each $1ofGST is
estimated toimpose a 19<t economic cost.Of
course,anyGSTchanges require relief for
low-incomeAustralians, but again
ironically, greater reliance on GSTcould
improve our abilitytocompete and grow,
providing services and a strong safety net.
Everything needs tobein the mix,
including fairness issues raised in relation
totaxation ofsavingsand of
superannuation, aswellas integrity and
transparency. Butthese need tobe fact
based and proportionate.
Flyingin the face ofthis,and the high level
ofcompliance bythevast majority of
companies,arethosewho seektodistort the
debatefor their own ends and undermine
anysensible conversation.
In RioTinto's case,wepaid more than $6
billionin taxesand royalties inAustralia last
year- and $32 billion over the lastfiveyears
- asdetailed in our TaxesPaid reports.We
have alsoreceived confirmation from the
Australian Taxation Office that "RioTinto is
considered an engaged and transparent
taxpayer who isfundamentally compliant".
Australia's effective integrity measures
need tokeepup with changes in the way
international commerce isconducted. But
predictions ofrevenuegain from tightening
them are often wrong,and don't obviate the
need for fundamental tax reform.
Phil Edmands ismanagingdirector ofRio
TintoAustralia andaBusiness Council of
Australia boardmember.
AFR Tax Reform Summit
Page 1 of 2
23 Sep 2015
Australian Financial Review, Australia
Author: Phil Edmands • Section: General News • Article type : News Item
Audience : 57,243 • Page: 43 • Printed Size: 435.00cm² • Market: National
Country: Australia • ASR: AUD 7,606 • Words: 934 • Item ID: 469818494
Copyright Agency licensed copy (www.copyright.com.au)
2. Peter Davidson,Ged Kearney and Phil Edmands at the tax summit, PHOTO: LOUISE KENNERLEY
Page 2 of 2
23 Sep 2015
Australian Financial Review, Australia
Author: Phil Edmands • Section: General News • Article type : News Item
Audience : 57,243 • Page: 43 • Printed Size: 435.00cm² • Market: National
Country: Australia • ASR: AUD 7,606 • Words: 934 • Item ID: 469818494
Copyright Agency licensed copy (www.copyright.com.au)
3. • Unions,welfare groups, economists push to narrow personal income concessions,but don't rule out GSThikes
Companytaxcut- ataprice
Ben Potter
The Australian Council of Trade
Unions, the Australian Council of
Social Service and Labor have signalled
a willingness to talk about tough tax
reform options such as raising the GST
and lowering the corporate tax rate in
exchange for cuts to tax breaks used
by the rich.
The careful concession by the
nation's leading civil society groups
and the opposition at the AFR Tax
Reform Summit on Tuesday, marked a
advance in the stalled tax reform
debate.
It came a day after new Prime Minis-
ter Malcolm Turnbull declared all tax
reform options were back on the table
as he committed his government to
changes to spur growth and innovation
in the wake of the mining boom's
collapse.
But the civil society groups made it
clear the price for their participation in
the tax reform debate would be an
agreement from business to a winding
back of superannuation, capital gains,
housing and other income tax breaks
enjoyed bythe rich.
"Let's start by looking for solutions
that have stronger equityand efficiency
at the moment," said Peter Davidson,
senior policy adviser at the Australian
Council of Social Services.
"Then we can turn our attention to
issuessuch asthe GSTifwecan't get far
enough down that track."
On the first day of the summit,
hosted by The Australian Financial
Reviewand KPMG, top economist Saul
Eslake challenged business tooffer cuts
to a range of tax breaks such as super-
annuation, trusts, and capital gains.
Mr Eslake, a former chief economist
at Bank of America Merrill Lynch and
ANZ Banking Group, said it would be
"hypocritical" for business to urge the
government to broaden the base of the
GST without accepting the need to
broaden the base of income tax to
make space for cuts.
ACTU president Ged Kearney said
she was willing to be part of a debate
about whether the 30 per cent corpor-
ate tax rate was too high.
But she told the Tax Summit she did
not believe the tax reform discussion
should immediately leap to raising the
GSTto fund company tax cuts.
"Having said that perhaps it is too
high, I don't know - I'll be in the
argument there,"she said.
"But I do agree it has to be neutral.
We cannot decrease the tax base.
Under any changes it has to be neutral,
and Idon't think we need to leap imme-
diately to the GSTto do that."
Earlier, shadow treasurer Chris
Bowen said Labor accepted former
Treasury secretary Martin Parkinson's
argument that the burden of company
tax fell most heavily on workers and
that Labor would look to cut the rate to
25 per cent over time.
But, as reported in Tuesday's Finan-
cialReview, Mr Bowen said Labor did
not accept that raising the GSTwas the
best way to pay for cuts to company tax
or income tax.
Ms Kearney disagreed sharply with
Mr Parkinson on where the company
tax burden fell at last month's National
Reform Summit sponsored by The Fin-
ancialReview and rival newspaper The
Australian.
But on Tuesday the ACTU president
said she was willing to accept that it
could be true. "I think there's a danger
in saying the only thing that makes a
company competitive isacorporate tax
rate," Ms Kearney said.
She said other issues such as the
exchange rate, the imputation system,
played into decisions such as blood
products group CSL's decision to put a
new manufacturing plant in Switzer-
land rather than in Australia.
Mr Bowen said Mr Parkinson's state-
ment was "a statement of fact which I
agree with."
"Iwould like to see the corporate tax
rate come down over time.Ihave previ-
ously said the nation should be aiming
for a 25 per cent corporate tax rate,"
Mr Bowen said, adding that it would
not be easy to do. Rio Tinto Australia
managing director Phil Edmands told
the summit that CSL had been motiv-
ated bytax rates when it made thedeci-
sion earlier this year to locate the new
Continued next page
AFR Tax Reform Summit
Perhaps it is too
high, I don't know -
HI he in the
argument there.
Ged Kearney,ACTUpresident,
referring to the 30 per cent company
tax rate.
Page 1 of 2
23 Sep 2015
Australian Financial Review, Australia
Author: Ben Potter • Section: Supplements • Article type : News Item • Audience : 57,243
Page: 1 • Printed Size: 558.00cm² • Market: National • Country: Australia
ASR: AUD 9,757 • Words: 1036 • Item ID: 469833910
Copyright Agency licensed copy (www.copyright.com.au)
4. It'sjust not feasible
to maintain a
30 per cent rate.
It doesn't matter
what your
philosophical
position is.It'sjust
not practical.
PhilEdmands,
Rio Tinto managing director
I am stating as a
matter of principle
that you'd like to
see the corporate
tax rate come down
overtime.
Chris Bowen, shadowtreasurer
Wehave been
Australia's largest
taxpayer over the
past decade.
Wehave paid $65
billion in taxes and
royalties.
Jane Michie,
BHP Billiton head of group tax
PHOTO: SAHLAN HAYES, LOUISE KENNERLEY
From previous page
Company taxcut
-at a price
plant in Switzerland.
Hesaid it wasn't feasible to maintain a
company tax rate higher than rival
nations and regions, regardless of your
philosophy.
"Iguess what the business community
is saying is if the UK is moving towards
18per cent, the OECDis 25per cent, Asia
is moving to 22per cent, it'sjust not feas-
ible to maintain a 30 per cent rate,"
Mr Edmands said.
"It doesn't matter what your
philosophical position is. It's just not
practical."
Mr Edmands said that although Aus-
tralia had historically had a big advant-
age in political stability over other
resource-rich nations,some rival nations
were getting their political systems in
order and asthesebarriers to investment
reduced, "relative tax rates come
into play".
Former top Treasury tax official Greg
Smith suggested that the global fall in
corporate taxratesmeantthe 30per cent
company tax rate implemented in 2001
needed to fall to 25 per cent now to have
the same level of international competit-
iveness.
But he argued against financing any
cut in thecompany taxratebyincreasing
the rate of GST, saying that would not be
politicallysustainable.Instead, he agreed
with Mr Eslake about personal income
tax concessions.
"The personal income tax rate in Aus-
tralia has quite a few holes in it," said
Mr Smith,who nowchairs the Common-
wealth Grants Commission.
AFRGA1 T002
Page 2 of 2
23 Sep 2015
Australian Financial Review, Australia
Author: Ben Potter • Section: Supplements • Article type : News Item • Audience : 57,243
Page: 1 • Printed Size: 558.00cm² • Market: National • Country: Australia
ASR: AUD 9,757 • Words: 1036 • Item ID: 469833910
Copyright Agency licensed copy (www.copyright.com.au)
5. Jennifer Hewe
jhewett@afr.i
Talk'seasy,reform's nitty-grittylessso
There's nomistaking the new
enthusiasm inbusiness aboutthe
prospects oftax reform under a
Turnbull government.
Butasshadow treasurer Chris
Bowen points outattheAFRTax
Reform Summit, agreeing ontheneed
for taxreform isrelativelyeasy.
Agreeingonjust what that reform
should look likeisthehard part-
In hisprime ministerial honeymoon
phase,Malcolm Turnbull isnotruling
anything inoroutaspart ofhisdriveto
make theeconomy more innovative
and productive.
This openness isa deliberate
contrast tothecaution ofthe Abbott
government when faced with
politically contentious choices on tax.
Pollster Mark Textor says it'sfirst
necessary foragovernment to"jointhe
dots"- apolitical life skillthat Tony
Abbott andJoeHockeyproved unable
to master.
According toTextor, that includes
starting with anorganising principleso
that people understand the
relationship oftaxtoeconomic growth,
fairness and efficiency.
Voters arelike investors,hesays;
needingtofigure outthelikely risks
and rewards forthemselves andfor
the country.
Textor hashadplentyofexperience
inwhat makes sense tothepublic. He
was notonlypollster andstrategist
advising theHoward government
during theintroduction ofthe GST in
Australia,buthasalsoassisted the
Cameron government intheUKand
the Keygovernment inNew Zealand
with theirverysuccessful re-election
strategies andvarious economic
reforms, including taxchanges.
Butdespite thesudden eagerness for
a national conversation about tax,
Textor says itisstill necessaryto
eventually come upwith apackageof
measures that people canassesson
the merits.
And heargues thiswill inevitably
involveapolitical battle rather thanthe
fantasy - common inthebusiness
community-of any realbi-
partisanship.
LindsayTanner, former finance
minister intheLabor governmentand
nowwith Lazard Australia,waseven
blunter.
"Bipartisanship istheenemyof
accountability,"hedeclared attheAFR
Tax Summit. Inhisview,thereal issue
tobedealtwith istheneed to curb
spending rather than focusingon
changes tothetaxsystem.
Heranks increasing therateor
broadening thebaseof the GSTasa low
priority, forexample,compared with
the enormous structural changes going
on intheeconomy andinjobs- the
magnitude ofwhich hesaysisstillnot
well understood.
Such propositions areallcertain to
betested ahead ofthe next election,
especiallygiven Labor's resolute
rejection ofany increase intheoverall
rate orapplication ofthe GSTaspartof
any reform package.
That's despitegeneral acceptanceof
the need forcompensation forlower
income earners inexchange forany
change totheGST.
Itwould alsobelinked toa raft oftax
changes andtrade-offs rather than
anything tobeconsidered inisolation.
ScottMorrison didn't attend the
summit asheisstilltrying togetto
gripswith hisnewTreasury portfolio
(not tomention amost unhappy ex-
Prime Minister).
ButBowenwas happy toarguethe
alternative case.It'ssimplistic,he
insisted, toequate aGSTrisewithtax
reform, particularlywhen there are so
many different andmutually exclusive
rationales forwhat todowiththe
additional money.
These range from paying forstates'
health care costs toreducingthe
corporate taxrate toending bracket
creep topaying down thedeficit.
"It'slikewhen yougetaraise inyour
salary andyou think offivethingsyou'd
lovetodowith theextra money,but
deepdown,youknowyou canonlydo
one," Bowen said.
Nor isthere anyagreement onwhich
oneofthose should bethepriorityor
how thiscanallfittogether, especially
in atime ofindefinite budget deficits.
That doesn't translate into alotofspare
moneyto smooth over complaints
from those most directly affected.
The common view,forexample,is
that corporate andpersonal income
taxesaretoohigh and increasingly
internationally uncompetitive.
Bracket creepwas themain toolin
makingJoe Hockey'sbudget numbers
in future years lookeven slightly less
horrific.WillScott Morrison giveup
thatversion ofabudget safety net?
While dividend imputation reduces
theheadline corporate rate of30per
cent, even theACTUandtheALP can
agree that high corporate taxrates
hurts workers andjobs creationby
inhibiting investment. Bowen
concedes therate should comedownto
25percent overtime.
Butpersuading peoplethat a
corporate taxcutwill enduppayingfor
itself byincreasing economic activity
and productivity isstill atough sell.It
was notjust theACTTTspresident
Ged Kearney sayingso.
Expert taxacademics professor
Richard Vann expressed doubts a
reduction inthecorporate taxrate
is worth thecost,asopposed to
dealing with specific and more
limited problems.
Page 1 of 2
23 Sep 2015
Australian Financial Review, Australia
Author: Jennifer Hewett • Section: General News • Article type : News Item
Audience : 57,243 • Page: 2 • Printed Size: 386.00cm² • Market: National
Country: Australia • ASR: AUD 6,749 • Words: 968 • Item ID: 469798423
Copyright Agency licensed copy (www.copyright.com.au)
6. Phil Edmands,managing directorof
RioTinto, argued thecommunity
needs toknowwhy theeconomywill
beinserious troublewithouttax
reform, andthat theorganising
principle should betomaximise
prosperitywhile minimising harm.
Hequoted Treasury estimates that
each extra dollar ofcorporatetax
reduces livingstandards by504: inthe
long runbecauseofreduced
investment That's compared toan
estimate of19<t worth ofeconomic cost
for everydollar raised byaGST,
makingitmuch more efficient.
Yetalthough simplicityand
efficiency areregarded ascardinal
virtues intax,there's nowalso greater
interest incomplicating mattersby
offering taxbreaks toencourage
desirable typesofinvestmentand
innovation. Even thechairman ofthe
Board ofTax, Michael Andrew, said he
waxes andwanes onthis issue. Reform
doesn't come aseasyastalk ofit
The common view is
that corporateand
personal income
taxes are too high.
Page 2 of 2
23 Sep 2015
Australian Financial Review, Australia
Author: Jennifer Hewett • Section: General News • Article type : News Item
Audience : 57,243 • Page: 2 • Printed Size: 386.00cm² • Market: National
Country: Australia • ASR: AUD 6,749 • Words: 968 • Item ID: 469798423
Copyright Agency licensed copy (www.copyright.com.au)
7. Chanticleer.For crowing there was not his equal in all the land...
www.afr.com I Wednesday 23 September 2015
Atemplate fortaxreform
B
usiness representatives at
TheAustralian Financial
ReviewTax Reform
Summit in Sydneyon
Tuesdaywere under
intense pressure after
pollster and campaign
strategist Mark Textor claimed the
corporate sector lived with the delusion that
tax reform would come from political
bipartisanship.
"Foryears Ihave heard business saywe
need bipartisanship," he said during a panel
discussion ofthe ingredients for successful
tax reform. "Wehave an adversarial system
- harden up,get over it,its notgoing to
happen.
"Wehave an adversarial system that's a
system whereyou have this idea,Ihave that
idea, nowlet's have it out
"Itcomes down tonot fantasies, teenage
stylefantasies, about bipartisanshipon
reform but rather someone making the case
wellwith a tight package where someone
can make a decision on riskversus reward
decision - it'sprettysimple."
Textor's challengewas embraced by the
business representatives, Phil Edmands,
who ismanaging director ofRio Tinto
Australia, KateCarnell,who ischief
executive oftheAustralian Chamberof
Commerce and Industry, Peter Nash,who is
chairman ofKPMG,and Lisa Gropp,chief
economist at the BusinessCouncilof
Australia.
Theyput a strong casefor cutting the
corporate tax rate,an objective that was
supported byshadow Treasurer Chris
Bowen.TheTax Reform Summit, which
wassponsored byKPMG,provided a
template for attacking tax reform.
Itought to provide strong ammunition
for newTreasurer Scott Morrison.
Edmands put forward strong arguments
in favour ofcutting the corporate tax rate
from its current level of30per cent to
around 25per cent
"Whatwewant isthe lowest and most
efficient taxeswe can getbecause all
overreach isgoingtobeadrag on economic
activity,"he said.
"Ifsgoing tobea drag on growth, a drag
on productivity and a drag onjobs.
"Idon't think tax reform isabout wealth
distribution - ifyou redistribute wealth you
killthe incentive to create it."
Edmands pinpointed the key reason
discussion oftaxreform has been confined
tooccasional summits and a seriesof
government studies and white papers.
"Ithink the underlying problem isthat I
think theAustralian community has not
engaged in the underlying issuesand trade-
offs," he said.
Hesaysthe presentation ofreform as
beingaround general propositions such as
efficiency fairness, equityand simplicity are
not resonating in the community.
"Thecommunity need toknow why the
economy isin trouble,how it [tax reform]
will affect them personally," he said.
Hesaysitwould bea mistake to
outsource the reform package toabunch of
experts and present it asafait accompli.
"That willdrivedivision- and be seen as
cliches and slogans."
This analysiswas on the same page as the
comments made byACTUpresident Ged
Kearney, who said the organisation's
2 million members were cynical about tax
reform.
Shesaid there isa feeling there isgrowing
inequality, that a rise inthe GSTwill make
them paymore taxeswhile rich people
won't
Kearneysayswe need tochange the
narrative todiscusswhat taxesdo for
society.
"Ithinkthere isa danger in saying the
onlythingthat makes a company
ASRG01A044 MR
competitive isthe corporate tax rate,"she
said.But shelater said that the corporate tax
rate at 30per centwas perhaps "toohigh"."I
willbe inthe argument there,"she said.
Kearney said any changes totax rates had
tobe neutral.
Gropp said the starting point of any
discussion about corporate taxhad to
recognisethat everydollar oftaxwas a drag
on future investment, which was backed up
byTreasury modelling.
The assumptions underpinning that
modelling were questioned by Richard
Vann,Challis Professor ofLaw, University
ofSydney.Hisconcern isthat cutting the
corporate tax rate isa blunt instrument for
improving Australia's competitiveness.
Hebelievesone ofthe biggest
beneficiaries ofa corporate tax rate cut will
bethoseAustralians who have "money
stuffed in trustsand companies- you never
hear about them in thisdebate".
Nash saidAustralia had torealise itwas
operating in a "newworld"and that we
could no longer apply the same thinking
about taxthat has been applied inthe past
and which got the country relativelyhigh on
the GDPper capita leaguetable.
"Weare livingina time nowwhere we
have never had so much mobility in capital
and skills,"he said.
Hesaid capital willfindthe destination
that ismost friendly tothat capital.
Nash said KPMGisseeingthisin
operation all the time initsadvicetoclients.
"Weknow capital and investment is
critical toour growth and employment
aspirations,"he said. "Arewedoingall we
can toattract that capital toAustralia?"
Nash said that more than at any point in
time many countries around theworld are
using their corporate tax rate as an
economicweapon and Australia had to
respond.
Page 1 of 2
23 Sep 2015
Australian Financial Review, Australia
Section: General News • Article type : News Item • Audience : 57,243 • Page: 44
Printed Size: 574.00cm² • Market: National • Country: Australia • ASR: AUD 10,037
Words: 1166 • Item ID: 469827479
Copyright Agency licensed copy (www.copyright.com.au)
8. "Itisnaiveto believewedon't have tofight
firewithfire,"he said.
The person with the most experienceof
taxreform at the coal face was GregSmith,
who isa senior fellow at the Melbourne Law
School and chairman of the
Commonwealth Grants Commission.
Hehas been involved in tax reform since
1983and was personally amember of the
team that cut the corporate tax rate to39 per
cent in 1988and to 30per cent in 2000.
Smith saysthe tax system has served the
countrywellhaving "madeAustralia oneof
the most robust economies inthe world".
Buthequestions whether cutting the
corporate taxratewilldeliver as much
economicbenefits as expected.The reason
he isdoubtful isbecause the middle market
companies with revenue between
$10million and $250million account for
only17per cent ofour company tax base
while manufacturing isonly6per cent
These are the two typesof business
Australia wishes to stimulate.
In other words cuttingthe corporate tax
ratewould deliver the most benefits to
companies with location- or incumbency-
based rents.
Hesaid corporate tax cutsshould be done
gradually.
Healsowarned against tryingto match
the tax rates in countries like the UK
"There isnodoubt in mymind that
Australia cannot chase footloose
investment as itsstrategy.Todothat we
havetogetto15per cent [company tax rate]
basically.Yesyouwillgetagrowth rate.But
youwillblowyour political equation way
before that" he said.Also,he said that a rise
in the GSTwould not be a politically
sustainable waytogoabout paying for
corporate taxcuts.
TONYBOYD
Twitter. @TonyBoydAFR
Tony.boyd@afr.com.au
For years I haveheard
businesssay weneed
bipartisanship. We have
an adversarialsystem -
harden up,get over it,its
notgoing to happen.
Mark Textor, pollster and campaign
strategist.
Page 2 of 2
23 Sep 2015
Australian Financial Review, Australia
Section: General News • Article type : News Item • Audience : 57,243 • Page: 44
Printed Size: 574.00cm² • Market: National • Country: Australia • ASR: AUD 10,037
Words: 1166 • Item ID: 469827479
Copyright Agency licensed copy (www.copyright.com.au)
9. mm REVIEW
Taxsystem geared
for growth needed
A
fter last month's National Reform Summit,
the AFR Tax Summit has outlined a major
tax package that would help secure Austra-
lia's modern prosperity and that Malcolm
TurnbuU's new form of economic leader-
ship should be able to sell to voters.Over the
past two days, the key interest groups repre-
sented at last month's summit - business,
the unions,welfare and seniors - debated the issue with tax special-
ists from professional consultants, think tanks and academia
Unlike the National Reform Summit it did not come up with a final
agreed statement But also unlike the reform summit nor did any
individual interest group exercise effective veto.
Instead, the Tax Summit's unofficial conclusion stuck to the ini-
tialpremise:tax reform is needed to help revive productivity growth
and support living standards at a time when technological disrup-
tion is intensifying the competitive pressures on the Australian
economy. Australia's tax system is not fundamentally broken. But
it's been a decade and a half since the last serious reform effort
John Howard's 10per cent goods and services tax.
And, as former Victorian Labor premier John Brumby told the
summit yesterday, the tax system has since shifted back to an
incentive-dulling over-reliance on taxing income.Bracketcreepcon-
tinues to push more middle to lower income earners into higher tax
brackets and worsening work incentives by stealth, especially for
mothers seeking to re-enter the workforce.
Former Treasury secretary Martin Parkinson told last month's
reform summit itwas "indisputable" that the heavy reliance on tax-
ing income over consumption was undermining productivity.
Union and welfare groups at this week's summit sought to down-
play the need, outlined in the Abbott governments tax discussion
paper, for a tax mix switch towards consumption. But Mr Brumby
rejected this position, arguing it was "inevitable"the 10per centGST
rate would have to rise. The only debate, he said, was whether its
base should be broadened. He was supported by current SouthAus-
tralian Labor Premier Jay Weatherill and by former NSW Liberal
Premier Nick Greiner.
Moreover, there was perhaps a surprising degree of support at
this week's summit for cutting Australia's headline 30 per cent cor-
porate tax rate to 25 per cent or so in order to remain competitive
on global capital markets. Asthe federal Treasury estimates, cutting
company tax is one of the best options for taxreform.
At the same time, however, the union and welfare groups
gathered support for the idea that the personal income tax base is
Page 1 of 2
24 Sep 2015
Australian Financial Review, Australia
Section: Editorials • Article type : Editorial • Audience : 57,243 • Page: 54
Printed Size: 308.00cm² • Market: National • Country: Australia • ASR: AUD 5,385
Words: 686 • Item ID: 470316828
Copyright Agency licensed copy (www.copyright.com.au)
10. riddledwith unjustifiable concessions, like a block of Swiss cheese.
Economist Saul Eslake pointed to concessions for superannuation,
fringe benefits, negative gearing, capital gains and trusts. And ACT
chief minister Andrew Barr outlined how he is pioneering tax
reformbygetting rid of some of the worst taxes of all- stamp duties
on properly conveyancing and insurance taxes - by phasing in one
of the least-distorting taxes of all - land tax, even on the family plot
Like SA's Mr WeatherilL Mr Barr is getting out in front on tax
reform because he needs to attract outside capital that will grow his
economy and its taxbase.
In return, business signalled it is prepared to support narrowing
income tax concessions, including the most generous super breaks
for upper-income earners. "Superannuation is there to allow people
to provide for their retirement" said Rio Tinto managing director
Phil Edmands. "It is not a wealth accumulation vehicle".
The qualification is that on its own, closing income tax conces-
sions is unlikely to generate enough revenue to finance a serious
pro-growth tax reform package. The GST almost certainly needs to
be part of the mix because that"s where the money is. Cover it with
political wrapping that reinforces Turnbull-style themes of exploit-
ing disruption, incentivising start-ups and encouraging mothers
back towork, and this provides the outline of a tax package to grow
the economy, expand its tax base and generate good paying jobs.
The alternative of trying to tax wealth creators more almost cer-
tainly would be counter-productive.
There was surprising degree of support
at the summit for cutting Australia's
headline corporatetax rate to25per cent
Page 2 of 2
24 Sep 2015
Australian Financial Review, Australia
Section: Editorials • Article type : Editorial • Audience : 57,243 • Page: 54
Printed Size: 308.00cm² • Market: National • Country: Australia • ASR: AUD 5,385
Words: 686 • Item ID: 470316828
Copyright Agency licensed copy (www.copyright.com.au)
11. AFR Tax Reform Summit
HigherGST
inevitable,
saysBrumby
Jacob Greber and Ben Potter
One of the most successful state Labor
leaders and treasurers, John Brumby,
has challenged federal Labor and the
union movement's opposition to what
he regards is an "inevitable" expansion
of the goods and services tax.
Expressing regret about 15 years of
rising reliance on income taxes and the
falling relative GST take, Mr Brumby
called for a significant rebalancing of
the taxation system. Properly com-
pensating losers for any tax increases
could win over some of the biggest
opponents, he said.
The ACTUand federal shadow treas-
urer Chris Bowen have said they are
opposed to increasing the GST. Mr
Brumby suggested they might be pre-
pared to shift position.
"I don't know how vigorously that's
been tested," he said. "But a compensa-
tion package for low-income earners
would be a good way to test that atti-
tude. Ifyou look at all of the arguments
and all of the facts, it is inevitable that
we need to increase in the GST - the
only debate is really about the base
broadening."
Mr Brumby's remarks capped two
days of debate at TheAustralian Finan-
Continued p8
From pi
GST hikeinevitable,
saysLabor'sBrumby
FinancialReview's tax reform summit
in Sydney, where there was broad
recognition that 25 per cent should be
the "new 30 per cent" for company tax;
that the "swiss cheese nature" of con-
cessions across the income tax system
should be closed; and that superannu-
ation and capital gains concessions
should be cut
Phil Edmands, a Rio Tinto managing
director and Business Council of Aus-
tralia director, said the savings system
should not be used as a vehicle for
wealth creation.
"Superannuation is there to allow
people to provide for their retirement,"
he said. "I think business accepts that
the concessions need to be looked at"
South Australia Premier Jay Weath-
erill added weight to Mr Brumby's GST
call, but said debate on change
shouldn't be limited to a discussion
about the 10per cent rate, but also what
the tax applies to.
MrWeatherill challenged federal and
state leadersto show the "wit"and find a
mechanism to apply the GST to finan-
cial services, which he said would
impose a greater cost on the well-off
rather than the "regressive"approach of
charging the tax on food, and health-
care. Mr Brumby, who as treasurer and
premier of Victoria delivered budget
surpluses and pushed for a national
reform agenda to boost states' revenue
to fund health, education and skills,
said he wasn't a supporter of expand-
ing the GST completely and warned
against using such revenue to pay for
company tax cuts.
"It'svery difficult tobroaden the base
out on fresh food to 15 per cent and
thinkyou'll get that through the Senate,
especially if at the same time you're
using that revenue to cut company
tax," Mr Brumby said. "That's a hard
story for a politician to sell."
Mr Brumby presented his ideal tax
changes, which would raise an extra
$40 billion by increasing the GST to 15
per cent and "some" base broadening.
Some $5 billion could be used for tax
compensation; $15 billion would go to
the states,$5billion would be'used for a
company tax cut to 25per cent by2020;
and the remaining $15billion could be
used by the federal government for
income tax cuts.
"The reality is now that in the 15
years that the GST has been in place...
we've seen a shift back to reliance on
taxes on income, a significant shift," he
said. "So we need to rebalance the sys-
tem, reorient it towards consumption
and take the weight off bracket creep
on ordinary earners."
The second goal of tax reform is to
help states cope with their struggling
budgets and growing demands for ser-
vices.
"It's got to be a twin-edged effort on
the revenue side and the expenditure
side to bring that deficit down much
more quickly than it otherwise would
[come down] so this burden doesn't
just crush the next generation," he said.
John Daley, the chief executive
officer of the Grattan Institute, pro-
posed a similar package but said there
wasn't a "compelling argument" for
reducing corporate tax rates because
global interest rates are so low.
While tax theory suggests lower cor-
porate taxes would lead to more invest-
ment, with global interest rates at such
a low level that notion was more theor-
etical that practical, Dr Daley said.
Former NSW premier Nick Greiner
urged reformers to keep the options on
taxchange asbroad as possible and said
itwas "outrageous"newTreasurer Scott
Morrison to rule certain changes out
"Both sides of politics ought to grow
up," he said. "Malcolm [Turnbull] has
been mature and grown up and said
let's put everything on the table and
that"s the only way to go to get serious
tax reform."
Not least, Mr Greiner said, because
of the "massive issue" of funding the
national disability insurance scheme."I
think the NDIS is a really good idea
with huge support across the com-
munity, [but] is fundamentally
underfunded going out," he said. "I
think we should be honest about that"
ACT chief minister Andrew Barr
explained why the territory is replacing
property stamp duly by increasing
property taxes and cutting payroll
taxes. "We are prepared to expend
some political capital in order to get a
better tax system. For the ACT as a
small economy we need a comparative
advantage. That is how we'll get capital
flowsinto our jurisdiction."
Page 1 of 2
24 Sep 2015
Australian Financial Review, Australia
Author: Jacob Greber And Ben Potter • Section: General News • Article type : News Item
Audience : 57,243 • Page: 1 • Printed Size: 614.00cm² • Market: National
Country: Australia • ASR: AUD 10,736 • Words: 1086 • Item ID: 470339387
Copyright Agency licensed copy (www.copyright.com.au)
12. Tax incentives
John Brumby's proposed tax measures John Daley's top five tax measures
1 GSTto 15%,some base broadening
Compensation • $5b:
Revenue for states $15b :
Company tax cut 28%,to 25% by 2020 $5b :
Income tax cut • $15b
TOTAL -$40b j
2 Super reforms (the Bowen plan)
Increase super adequacy (LISC: Guarantee to 12%) • $1.5-$3b ;•
3 Restore carbon pricing
Incentives for R&D,startups, medical research i $3b
4 Limit negative gearing to new housing
Commonwealth deficit reduction $3b
5 Replace fuel excise with road user charges (revenue neutral)
It is inevitable that
we need to increase
theGST.
John Brumby
Former Victorian Premier & Treasur
$40b ;
Si.5-3.0b
53b
$3b•
1 Property tax at 0.4% of property value,
eliminate land tax and stamp duty
2 Reduce marginal income tax rates
particularly for lower income tax brackets:
15% from $18.2k; 28%from $37k; 34%
from $80k
3 Increase GST to 15%;use 20%of revenue to
over/compensate bogom 20% (Newstart);
provide $5b to States for health
4 Reduce CGTdiscount to 25%
5 Quarantine wage and salary income
from investment losses
No "compelling
argument" for
reducing corporate
tax rates.
John Daley Gratafl lnstitMp%
$7b
Sl9b
$30b
-Sllb
$3b
S6b
SOURCE: FINANCIAL REVIEW, PWC
Page 2 of 2
24 Sep 2015
Australian Financial Review, Australia
Author: Jacob Greber And Ben Potter • Section: General News • Article type : News Item
Audience : 57,243 • Page: 1 • Printed Size: 614.00cm² • Market: National
Country: Australia • ASR: AUD 10,736 • Words: 1086 • Item ID: 470339387
Copyright Agency licensed copy (www.copyright.com.au)
13. CALL FOR REFORM IN I.R. AND APPROVALS PROCESS
Sector lays out
its wishlist for
FrydenbergMATT CHAMBERS
PAUL GARVEY
RESOURCES
The resources sector had called
on its new minister Josh Fryden-
berg to drive change on industrial
relations and the nation’s com-
plex approvals process, now that
the industry once again has top
billingforacabinetminister.
The elevation of Mr Fryden-
berg from assistant treasurer to
Minister for Resources, Energy
and Northern Australia drew a
warm reaction from industry,
who hailed his economic back-
ground as a strong positive, de-
spite the respect for departing
ministerIanMacfarlane.
Mr Frydenberg received en-
dorsement from former Labor
resources minister Martin Fer-
guson, who is on the board of oil
and gas giant BG Group, is re-
source executive for Seven Group
Holdings and chairs an Austra-
lian Petroleum Production and
Exploration Association advisory
board.
“Josh has always taken an
interestinthisindustryandwhen-
ever APPEA met in Canberra, he
always attended and spoke open-
ly about his endeavours, as minis-
ter responsible for reducing the
regulatoryburden,abouthiscom-
mitment to doing something for
theindustry,”MrFergusonsaidin
Perthyesterday.“We’vehadopen
discussions about regulatory
reform, about trying to progress
the one-stop (regulatory) shop ...
and the question of industrial
relations, he’s been in those
discussionswithIan.”
APPEA chief executive Mal-
colm Roberts highlighted the
same issues. “The challenge for
industry and governments now is
to ensure that Australia stays
competitive in the increasingly
tough global market,” Mr Roberts
said. “Reforms to lift productivity
and cut regulatory costs are
essential.”
The return of resources and
energy to a lead role in Mr
Frydenberg’s portfolio, drew
applause from an industry that
had been concerned about it not
receiving separate billing under
Mr Macfarlane’s industry and
sciencebrief.
The nation’s biggest mining
and energy company, BHP Billit-
on, underlined this point in
welcomingMrFrydenberg.
“We acknowledge the govern-
ment’s move to separate resour-
ces and energy from the previous
portfolio and believe this demon-
strates the importance placed on
the industries and their contri-
bution to the nation,” BHP said in
astatementyesterday.
In following on from Mr Mac-
farlane, who was also resources
ministerunderJohnHoward,and
Mr Ferguson, Mr Frydenberg
faces an industry used to having
ministers it felt championed its
cause and represented the indus-
try strongly, especially in the face
of negative policies such as the
miningtaxes.
Fortescue Metals Group chief
Nev Power said Fortescue was
“really pleased” with the changes
to cabinet, both at the level of
resources minister and having
five ministers representing the
resource-richstateofWA.
“Overall the Abbott govern-
ment made a good start in terms
of building a foundation for the
future, and I think what we’re
seeingnowisastrongcabinetthat
willcontinuethatgreatwork,”Mr
PowersaidinPerthyesterday.
Mr Frydenberg is the lower-
house member for the traditional
Victorian Liberal stronghold of
Kooyong.
Rio Tinto Australia managing
director Phil Edmands said he
Page 1 of 2
22 Sep 2015
The Australian, Australia
Author: Matt Chambers • Section: Business News • Article type : News Item
Audience : 104,774 • Page: 19 • Printed Size: 396.00cm² • Market: National
Country: Australia • ASR: AUD 8,003 • Words: 749 • Item ID: 469047634
Copyright Agency licensed copy (www.copyright.com.au)
14. lookedforwardtoworkingclosely
withthenewminister.
“We acknowledge the strong
economic experience he brings to
theportfolio,”MrEdmandssaid.
The Chamber of Minerals and
Energy of Western Australia and
the Perth-based Association of
Mining and Exploration Com-
panies both added efforts to
encourage minerals exploration,
whichhasplungedinrecentyears,
to their wishlist for the new
minister.
“Minister Frydenberg should
maintain a focus on reducing the
cost of doing business and
increasingly exploration activity,”
CME chief executive Reg
Howard-Smithsaid.
AMEC chief Simon Bennison
said sourcing capital was ex-
tremely challenging for mid-tier
miners and explorers and that
Continued on Page 20
COAL FUTURE WARNING P20
Sector puts
wishlist to
Frydenberg
certainty was needed for busi-
nessdecisions.
“AMEC looks forward to
working with the new Prime
Minister, and his new cabinet
to refine the Exploration De-
velopment Incentive (explo-
ration tax breaks) and take a
whole of government ap-
proach to new infrastructure
developments to unlock
stranded assets,” Mr Bennison
said.
Mr Frydenberg acknowl-
edged the industry need for
greater productivity amid a
post-boompricecrash.
“We’ve come off the super-
cycle, where we saw record
demand and prices for our
resources, back to more cyclic
trends and that will be a chal-
lenge,” Mr Frydenberg told
ABCRadioyesterday.
“But if we can boost pro-
Continued from Page 19
ductivity here in our domestic
industries, if we can capitalise
onthe(China)freetradeagree-
ment ... and if we can capitalise
on the lower Australian dollar,
then the future for the sector is
prettybright.”
The new head of the World
Coal Association called for the
newcabinettoinvestmoreinto
technology around clean coal
technologies.
Page 2 of 2
22 Sep 2015
The Australian, Australia
Author: Matt Chambers • Section: Business News • Article type : News Item
Audience : 104,774 • Page: 19 • Printed Size: 396.00cm² • Market: National
Country: Australia • ASR: AUD 8,003 • Words: 749 • Item ID: 469047634
Copyright Agency licensed copy (www.copyright.com.au)
15. Turnbull faces the reform mountain Abbott feared
EXCLUSIVE
RICHARD GLUYAS
POLITICS
On Tuesday last week, an in-
triguingmixofoptimismanddeep
frustration swept the room as the
business community’s pin-up
politician, the reformist NSW
Premier Mike Baird, addressed a
Business Council of Australia
dinner at the Sofitel Wentworth
HotelinSydney.
The event, held under Chat-
hamHouserules,wasattendedby
about 100 chairs and chief execu-
tives of Australia’s top companies,
including BCA president and Tel-
stra chair Catherine Livingstone,
Wesfarmers chair Bob Every, Rio
Tinto Australia boss Phil Ed-
mands,Macquariechiefexecutive
Nicholas Moore, and Westpac
chief Brian Hartzer and his prede-
cessorGailKelly.
As Baird beguiled his audience
with a sermon about the GST and
restructuring the tax system,
spirits were briefly lifted, but exas-
perationabouttheAbbottgovern-
ment running dead on reform was
neverfaraway.
“There’s a six-month window
for reform and it’s closing fast
ahead of (next year’s) election, so
there’s an acute awareness of the
mountain we have to climb,” one
attendeesays.
“The Premier put up the case
for tax reform and talked about
the trade-offs and the options;
everyonewasveryimpressed.”
Only six days after the BCA
dinner, a political earthquake
ripped through Canberra, top-
pling Tony Abbott and installing
Malcolm Turnbull as the nation’s
sixthprimeministersince2007.
No one at the BCA dinner had
even the barest hint of what was
abouttounfold.
While Turnbull is well-con-
nected to the top end of town, the
former Goldman Sachs invest-
ment banker and successful inter-
net entrepreneur did not court
business to play an active role in
hischallenge.
Infact,withahandfulofexcep-
tions, the business community
was no better informed than a lot
of Abbott’s frontbench about the
timingofTurnbull’sputsch.
The primeminister’sdiabolical
position was well known, with
lines of communication crackling
between Canberra and coalition
sympathisers in the far-flung
commercial centres of Sydney
andMelbourne.
For example, there was wide-
spread talk of an electoral wipe-
out in Victoria. So bad was the
outlook that the blue-ribbon Lib-
eral Party seat of Higgins, now
Continued on Page 36
GLENDA KORPORAAL P36
Malcolm faces the reform mountain Abbott feared
held by Kelly O’Dwyer after the
2009 retirement of ex-treasurer
and current Future Fund chair-
man Peter Costello, was on a
knife’s edge. “The realisation
dawned that we were staring into
oblivion,” one insider says, adding
thatpreviouslyrusted-onsupport-
ers in a seat the party had never
lostweredeserting“indroves”.
“There was no real trigger; it
just started dawning on people
that something needed to be done,
andthatbecameanepidemic,”an-
other business/politics crossover
sourcesays.
Itwasn’talwaysthusunderAb-
bott. Some of the former PM’s
harshest critics in the business
community today are quite open
abouttheirinitialoptimism.
“The key difference between
Turnbull and Abbott is that Turn-
bull has this boundless intellectual
curiosity, whereas Abbott is just
looking for certainty — he wants
to find a rock and hang on to it,”
saysonebusinessleader.
“Abbott’sgotagreatcapacityto
Continued from Page 27 produce three-word slogans but
it’s all tactics and no strategy, and
his eyes glaze over when you talk
to him about a serious business
issue. He’s got no real interest,
understandingorinsight.”
It’s an excoriating analysis of
Abbott, but the same businessman
confesses to an initial attraction to
theformerPM’seclecticinterests.
“Generations of Liberal Party
leadershavebeenfarmers,lawyers
orinbusiness,”hesays.
“One of the interesting things
aboutAbbottisthathe’sgotadeep
interest in social policy. You won’t
find many past leaders who were
fascinatedbywelfaretraps.”
Former BCA president Tony
Shepherd, who was chair of the
Abbott government’s National
Commission of Audit, is one of the
few in elite business circles who
willtalkopenlyabouttheex-PM.
“Look, I think the government
did a better job than they’re given
creditfor,”hesays.
“The support from Joe Hockey
for the Commission of Audit was
first-class, but the way that the
government subsequently han-
Page 1 of 2
19 Sep 2015
Weekend Australian, Australia
Author: Richard Gluyas • Section: Business News • Article type : News Item
Audience : 225,206 • Page: 27 • Printed Size: 539.00cm² • Market: National
Country: Australia • ASR: AUD 17,602 • Words: 1487 • Item ID: 467643377
Copyright Agency licensed copy (www.copyright.com.au)
16. dleditwasregrettable.
“The budget is still in structural
deficitandit’sgotworsebecauseof
the slowdown in growth and the
declineinthetermsoftrade.”
The evaporation of business
supportforAbbottiscloselycorre-
latedtothegovernment’screeping
removal of options from the re-
form table. It started early with in-
dustrial relations, with Labor’s
kneejerk fear campaign about ex-
huming WorkChoices still work-
ing a treat, extended to the GST
and tax reform before an unlikely
alliance between Baird and South
Australian premier Jay Weatherill
put it back on the table, and in-
cludedtheprospectofanygenuine
repair-jobonthebudget.
Ask any business leader about
Abbott’s economic failures and
they will rattle off their short lists,
and quickly proceed to long lists.
Withouthesitation.
Australia, with its high costs
and relatively low productivity,
clearly must do something about
its uncompetitive company tax
rates, or it can bid farewell to its
world-class businesses as they are
lured to countries like Britain with
its18percentcorporaterate.
Thetransitiontoadigitalecon-
omy also offers hope of closing the
gaptomorecompetitivecountries,
but where is the vision on digital,
let alone a passing reference to the
threats and opportunities in an
occasionalstumpspeech?
OnMonday,therewasacollec-
tive sigh of relief in the business
community as Turnbull got to the
core of the issue when he
announced his intention to chal-
lenge. “It is not the fault of individ-
ualministers,ultimatelythePrime
Minister has not been capable of
providing the economic leader-
ship our nation needs; he has not
been capable of providing the
economic confidence that busi-
ness needs,” the soon-to-be-PM
said. “The big economic changes
that we’re living through here and
around the world offer enormous
challenges and enormous oppor-
tunities, and we need a different
styleofleadership.
“We need a style of leadership
that explains those challenges and
opportunities; explains the chal-
lenges and how to seize the oppor-
tunities. A style of leadership that
respects the people’s intelligence,
thatexplainsthesecomplexissues,
and then sets out the course of ac-
tion we believe we should take,
andmakesacaseforit.
“We need advocacy, not slo-
gans. We need to respect the intel-
ligenceoftheAustralianpeople.”
The budget remains key, be-
cause it sets the parameters for re-
form. As the BCA said in March
afterpublicationoftheintergener-
ational report, the starting point of
$245 billion in debt is weak, and
getting weaker. To make things
worse, the budget was in deficit by
$40bn, the economy growing at
2.8 per cent, and the report fore-
cast average spending growth of
3.1percentthroughto2055,taking
net commonwealth debt to 60 per
cent of GDP, or $2.6 trillion in
today’sdollars.
In Hong Kong on Tuesday,
ANZ chief executive Mike Smith,
whoalsoattendedtheBCAdinner
the week before, said Australia
needed spending restraint and fis-
cal discipline, because debt was
growingatanunsustainablerate.
For these and other reasons,
Turnbull’s withering, implicit cri-
tiqueofHockeyonMondayforhis
failure to provide economic lead-
ership was a message that echoed
throughthebusinesscommunity.
Thesenseofdriftissopervasive
that several business leaders con-
tacted by The Weekend Australian
seriously advance the argument
that prosecution of the govern-
ment’s economic case has default-
ed to Small Business Minister
Bruce Billson and the Minister for
Agriculture,BarnabyJoyce.
As evidence, they point to the
proposed crackdown on abuse of
market power through the intro-
ductionofaso-called“effectstest”.
The Harper review of compet-
itionpolicy,whichreportedtoBill-
son, argued for the new test, which
would prohibit a company with
substantial market power from
engaging in certain conduct likely
tosubstantiallylessencompetition
in any market. Supporters of the
proposed changes, including Aus-
tralian Competition & Consumer
Commission chair Rod Sims, have
said it’s extremely difficult to pros-
ecute abuses of market power
undertheexistinglegislation.
Big business, however, is out-
raged, saying prices will go up and
legitimate competitive actions will
inevitablygetcaughtinthenet.
Says one executive: “They’re
playing with competition policy in
the lead-up to an election when
the Greens and crossbenchers are
in control of the Senate. The out-
comecan’tbegood.”
Another executive fumes that
opposition Treasury spokesman
Chris Bowen is “rock-solid”
against it, and that 11 previous
reviewsofcompetitionpolicyhave
recommendedagainstit.
Abbott parked the issue in the
long grass, but Turnbull has put it
backinplayaspartofanewagree-
ment with coalition partner, the
Nationals. Business might have
got its man but, for some, the new
PM is on probation pending the
finaloutcomeoftheeffectstest.
“Malcolm’s an individual, not a
team player,” a former business
rival says. “He’s actually a bit like
Kevin Rudd — he can be aggress-
ive and a bit narcissistic. But he’s
whipsmartsolet’sjustseeifhecan
channelit.Seatbeltson.”
Page 2 of 2
19 Sep 2015
Weekend Australian, Australia
Author: Richard Gluyas • Section: Business News • Article type : News Item
Audience : 225,206 • Page: 27 • Printed Size: 539.00cm² • Market: National
Country: Australia • ASR: AUD 17,602 • Words: 1487 • Item ID: 467643377
Copyright Agency licensed copy (www.copyright.com.au)