Topics: Mining tax, education reforms, federal-state relations, health funding
Lyndal Curtis: Hello and welcome to Capital Hill, I’m Lyndal Curtis. With the House of Representatives away for another two weeks, it’s the Senate’s week in the sun and it marked the first question time with a Coalition motion of no confidence in the Government’s handling of the mining tax. It was also a motion designed to put some pressure on the Greens, testing their support for Labor after effectively ending the agreement the party signed after the 2010 election. Outside of the Parliament, the positioning ahead of the detail of the education funding reform numbers is continuing. Joining me to discuss the day are Labor Parliamentary Secretary David Feeney and Liberal Senator Scott Ryan. Welcome to you both.
We’ll start with what happened in the Senate. After only four sets of questions, Scott, your Coalition Senate Leader Eric Abetz moved a motion of no confidence in the Government’s handling of the mining tax. You lost that 31 votes to 36, was this only ever a stunt to put pressure on the Greens?
Senator Scott Ryan: This was bringing attention to the profound failure of the mining tax. We’ve had billions of dollars of public expenditure added to the national debt; a tax that has collected a miniscule amount of revenue; and what we saw with the Greens was, yet again, they went and voted with their cousins in the Labor party. It shows the sham of last week’s alleged break-up.
Curtis: But if you wanted to highlight the mining tax, couldn’t you have simply asked all your questions on it? That’s what happened in the House of Representatives.
Senator Ryan: Well our experience is we ask questions on the mining tax and we get answers on anything from football to the weather from some Labor ministers. This actually allowed a debate on the issue and it allowed a detailed debate on the failure of the mining tax to collect any revenue and all the expenditure – ongoing expenditure – which is just adding the size of our deficit.
Curtis: David, the mining tax is still a problem for the Government isn’t it, because you have spending that you have allocated against the proceeds of the mining tax but it is not raising enough revenue to fund it?
Senator David Feeney: Yes, but we’re in Government. We are bound, and subject ourselves, to a budget process. We saw the budget last year and we saw MYEFO at the end of last year and of course, we are going into a budget process in May, so ultimately Lyndal, we have to put all of our numbers and all of our calculations on the table in writing for the scrutiny of everybody. I guess that is a scrutiny we’d like to see applied to the other side because obviously now, we’re living in a political environment where our commitments, not withstanding we have to make them good in the budget, are being challenged by the Coalition and the Coalition has steadfastly refused to put anything substantial in detail.
Curtis: But it goes back to the problem doesn’t it, that the Labor party, your Government, committed a fixed set of spending measures against a tax that, even the Government Senate Leader Stephen Conroy was saying in the Senate, is a volatile one.
Senator Feeney: I think by the Government’s own admission this is a mining tax that will bring a harvest when commodity prices are very high. It was, you will remember, initially dubbed the super profits tax. So when those super profits return to the resource industry, the tax will realise revenue streams. Just to be technical for an instant, the revenues from that tax were not hypothecated. They go into consolidated revenue and the initiatives that were announced at the time that the super profits tax was introduced come out of the general budget. At the end of the day, the Government has to make this add up and at the end of the day, the Government is subject to a budget process, which is scrutinised.
Senator Ryan: From which nothing has ever added up. The Government called this package, ‘Spreading the benefits of the boom’. It actually said the mining tax was there to pay for it, the mining tax hasn’t paid for any of it and we have ongoing expenditure based on a volatile tax, which is the worst combination imaginable.
Curtis: There are other taxes that have long raised revenue for governments, including company tax, and we’ve seen the falls in revenue from the company tax so they are also volatile.
Senator Ryan: Revenue from company tax is going up, what’s happening is that the Government’s estimates of growth are not turning out to be quite as right. Taxes are going up, taxes have gone up every year consistently since this Government came to office.
Senator Feeney: The Liberal Party hated this tax when it was going to raise money, now they hate it because they say it hasn’t raised enough money.
Senator Ryan: It is a bad tax.
Senator Feeney: The only thing the Liberal Party has been consistent about here is that the resources industry should not pay additional taxes when their profits are in the super league. That’s the only consistency. They can’t, on the one hand, say ‘this is a tax that is going to break the Australian mining industry’, and then on the other hand say, ‘oh my goodness, here is a tax that isn’t raising any money’ and live on both sides of the argument.
Senator Ryan: You can say both. The first design of the tax was appalling; it tried to appropriate private property by making the Government a shareholder. You can criticise this tax and the previous version for exposing the Government to losses. What the Government won’t tell you is the billions of dollars of credits that these mining companies have generated are going to be offset against future tax, therefore leaving a tax hole for the future.
Curtis: Is it your position that mining companies shouldn’t have to pay another tax to what they were paying before the mining tax came in and you’re quite happy if the states continue to increase and increase their royalties?
Senator Ryan: That’s exactly the way it should operate. The royalties that states collect are actually used for the benefit of the people. The states employ nurses, police officers, teachers. Those royalties are then spread throughout all the states through our fiscal equalisation program. So every Victorian benefits when Western Australia increases its royalties. What this Government is trying to do …
Curtis: Is that because of the money that goes from Western Australia to the Commonwealth?
Senator Feeney: This is a Victorian senator arguing Western Australian state’s rights.
Senator Ryan: Because Victorian taxpayers are better off and the Victorian budget is better off when Western Australia increases its royalties because they are distributed through the pool that the Commonwealth distributes to states. The mining industry already pays some of the highest taxes in the world. We don’t believe that additional taxes on top of that help it maintain its competitive edge.
Curtis: We might move on now to another issue of the Commonwealth and the states. The Commonwealth and the states are continuing their positioning ahead of what will be the April COAG meeting to discuss the Gonski education reforms. The Federal Government has updated the modelling underpinning those reforms and will talk to the states and territories and non-government schools about that this week. The Prime Minister says she is determined to push the changes through.
<CLIP>
David, it is clear isn’t it, from the sort of position that we’re seeing from the states now, that it might be difficult to ask the states to stump up the sort of money the Commonwealth will need them to come up with to help them fund the education reforms?
Senator Feeney: That might be right. It might also be the very typical dance of a thousand veils as premiers and prime ministers begin the process of negotiating what their real position and their real bottom line will be. Obviously the Commonwealth Government, and the Prime Minister in particular, is very determined to make some headway in areas like literacy and to build Australia as an education nation and indeed an education destination for the region more generally. For some of our state governments that’s going to be a very difficult proposition because they’ve been taking money out of the education systems in their states. Victoria is perhaps the most spectacular example – $550 million over four years. Yes, it is going to be very tough, but I expect these reforms have always been very tough and premiers have always been notorious for hanging onto every dollar they have.
Curtis: You do, though, have a very tight timeframe. You need to get an agreement at the April COAG meeting, you need legislation through the Parliament before the end of June.
Senator Feeney: That’s true, but my understanding, primitive as it is, is that the Gonski report talks about a six-year timeframe for overall implementation. That obviously needs to start straight away, as you’ve described, but this is a plan that does understand that it is evolutionary.
Curtis: Scott, the states that are Coalition governed have some different positions on this. NSW does think the Gonski reforms are a good idea and it is actually implementing school reforms that are in-line with the Gonski reforms. This is not a block vote against the Government’s proposal, is it?
Senator Ryan: No, well what people have seen is that the states have different challenges. The states perform at different levels, the states have different education systems. In Victoria there is a very large independent, non-government and Catholic sector, which is very concerned about the Gonski threat hanging over their head. But if we talk about money being taken out of education, the Labor Government pulled $3.9 billion at MYEFO – the Labor Federal Government, only months ago. $3.9 billion over four years. So their criticisms of the states can’t be taken at face value.
Curtis: But we will see, won’t we, at least at the COAG meeting in April, what the Commonwealth is proposing for the funding round that starts in 2014?
Senator Ryan: Let’s have some time to look at it. They’ve had Gonski for well over a year. They’ve got model after model being dealt away with in private, but we actually want those exposed to public scrutiny and not just dumped on the table and told ‘sign up by the end of the meeting or leave’. That’s unreasonable because what we’ve seen with this Government is that the devil’s in the detail. Look at health funding, we had $107 million stripped retrospectively out of Victorian hospitals. The devil’s in the detail with this Government.
Senator Feeney: I’m happy to debate that issue as well.
Curtis: Well we might go to that. Isn’t one of the issues in a federal system, that the Commonwealth can decide what it wants to fund, but the states are allowed to decide their own priorities?
Senator Feeney: Sure. And states have their own prerogatives and have their own mandates. But let’s be crystal clear because it is now quite a long-standing tradition in the federation that when the Commonwealth sets a policy goal it can reward, if you like, state governments for achieving those policy goals with money. And that’s become quite a constant strategy since the 1970s. What we’re seeing now is the Commonwealth saying, ‘look, we want better results in literacy, better results in terms of adult reading and the fact we have got 8 million adults now who have trouble reading’. That’s not good enough, we want to hit those markets better and make sure states become part of the plan to get those results better – a perfectly legitimate, long-standing practice. If there are state conservative governments that don’t want to sign up because they don’t believe in the objective, or they say they can’t afford it, or they want to play politics with the Federal Labor Government, then they miss out on the money, it is as simple as that.
Senator Ryan: Or they don’t trust your plan. And the truth is, despite a 40 per cent increase in funding for education, we have now got the lowest primary school literacy rates in the English-speaking world. One report commissioned by a Labor Government with bad form in education results is not necessarily something you can say ‘take it or leave it’ to the people who actually run schools.
Curtis: But do you accept that the Coalition and Labor want the same aims? Do you want to improve teacher quality and teacher performance and do you want to improve literacy in schools, it is just how you go about it that you disagree?
Senator Ryan: Well there are real debates about how we go about it. We don’t believe, and we’ve set as a condition, there can’t be schools worse off and there can’t be a penalty for non-government schools or for private fundraising. Those are real threats under Gonski.
Curtis: But do all schools, all independent schools, need all the money they’re getting now?
Senator Ryan: If you say that independent schools are going to lose money that means fees are going up. Remember, there is no independent school that receives as much money as any public school.
Senator Feeney: This is just a tired old tactic from the Liberal Party whenever a serious health or education debate is on the table to try and find the angle for a scare campaign. The angle for a scare campaign here is for Liberal Party Senators and others to roll out to private schools and say ‘the Government is going to take money away from you’.
Curtis: Doesn’t though, a lack of information from the Commonwealth about exactly what it is proposing allow room for people to be worried?
Senator Feeney: I guess if what you’re saying to me is that scare campaigns are a fact of life, they are, but that doesn’t mean we have to enjoy them or accept them.
Senator Ryan: They had a hit list before so people are quite reasonably distrusting of Labor when it comes to non-government schools. In the Gonski proposals there is a proposal there to have a penalty for non-government schools and we don’t think that’s appropriate. We should be empowering parental choice, not discriminating against it and making it harder.
Senator Feeney: Which is why principals are backing this plan.
Curtis: We might just go to one final issue and that is the question of health reforms that you mentioned. David, has the Commonwealth’s decision to put some money back into the system eased the political pain you were getting in Victoria?
Senator Feeney: I think what it has done is untangle the Baillieu Government from attacking the Federal Government and I guess, on a pure political level, that’s mission accomplished. But there are deeper structural questions that arise out of this and of course, the fact is that the Victorian Government signed up to a funding formula that it itself decided it couldn’t honour and started to blame everybody but itself.
Senator Ryan: That is not true.
Curtis: We’re just running out of time, we might continue this discussion another day. I’m sure it won’t go away. David Feeney and Scott Ryan, thank you very much for your time.