SUBJECTS:  Company tax cuts; Barnaby Joyce; Private Health Insurance.

RAFAEL EPSTEIN, PRESENTER: It's been a bit of an unusual few Question Times actually. The atmosphere's been kind of interesting. Joining us in our Canberra studio, Steve Ciobo, Liberal Member for Moncrieff, Minister for Trade, Tourism and Investment, he is of course part of the Prime Minister's team. Good afternoon.

STEVEN CIOBO: Good afternoon Raf. Good to be with you.

EPSTEIN: And Tanya Plibersek joins us as well. She is Deputy Leader of the Opposition, Shadow Minister for Education and Shadow Minister for Women, part of Bill Shorten's team of course. Good afternoon.


EPSTEIN: I'm OK. Steve Ciobo can I start with you and company tax cuts. I don't know if you wish to hit for six Emma Alberici's entire analysis as the Prime Minister did, but I'll zero in on one thing and let you go where you wish.

CIOBO: Sure.

EPSTEIN: A fifth of Australia's biggest companies haven't actually paid tax for the last three years. Isn't that a significant argument to suggest they don't need a tax cut?

CIOBO: Well Raf let's look at one of those companies which is Qantas which I notice has been the focus of some discussion. Qantas lost billions of dollars, lost, not as hidden, not as put away or hidden under the couch. Lost money through loss-making operations. Now that means that they are perfectly entitled to carry those losses forward and you know what Raf, what I find incredibly bizarre frankly about this analysis of company tax and this suggestion that these big greedy corporates are somehow doing over the Australian public, you know who the shareholders are of that business? They're mum and dad Aussies. It's basically every single person with a superannuation fund, whether it's an industry superannuation fund or their own private superannuation fund. These are the people that own these companies that they're talking about. So before people start hyperventilating and suggesting that there's some grand conspiracy for making the suggestion that -

EPSTEIN: Can I stop you there Minister? 

CIOBO: Sure.

EPSTEIN: I'm not sure that, I mean I don't know about politicians, but I don't hear Emma Alberici hyperventilating. I'll ask the question again. I'm not sure that you've addressed it. If a fifth of the biggest companies are already not paying tax, isn't that a significant argument for the reason they may not need a tax cut?

CIOBO: I don't think you heard a word I just said. The reason they didn't pay tax, in Qantas' case, and I can't go into every single company, but I'll pick Qantas as the most iconic Australian business, is because they lost money. You don't pay tax when you lose money. I mean this is my point and what I was then broadening out to, and I mean I know you're saying I'm not answering your question, but I am very directly, I couldn't actually be more directly answering your question, what I'm making very clear is that this suggestion that companies are somehow cheating the Australian public, that they're not putting their shoulder to the wheel, they're not paying their fair share, the people who are beneficiaries of profitable Australian businesses are the shareholders and the shareholders aren't rich people living in Toorak, it's mum and dads -

EPSTEIN: Everybody (inaudible).

CIOBO: - who have superannuation funds. They're the ones who are the beneficiaries because this is what provides their retirement income.

EPSTEIN: Tanya Plibersek I'll ask you about the medium range tax cuts we've already got, but what do you make of what Steve Ciobo had to say?

PLIBERSEK: Well Steve's talking about mum and dad shareholders and we are, most Australian's are, shareholders through their superannuation, but most Australians are also taxpayers, and I think most Australians who are pay as you go ordinary income earners would be pretty surprised to know that Qantas hasn't paid any tax in 10 years. They'd be pretty surprised that one in five of our largest companies managed not to pay tax because most ordinary pay as you go taxpayers certainly have to and your ordinary taxpayer's facing a tax increase under this Government because of the increase in the Medicare levy. So we're going to have big companies given $65 billion worth of big business tax cuts, we've got people on more than $180,000 a year getting $19 billion worth of tax cuts over the next decade and we've got ordinary Australians paying $44 billion more tax over that same period. I think it's a bit rich. And I think it shows how superficial some of these comparisons have been, people saying that we need to drop our tax rate like the United States. First of all we know that most companies aren't paying the headline tax rate and secondly we know that in the US a lot of companies are paying tax at both a federal and a state level-

EPSTEIN: Yeah their tax structure. Can I just ask you though, about where this leaves Labor. Certainly there's going to be an election within 12 months if not within 6,7,8 months, at the moment you haven’t given a position on the tax cuts that are now there for companies with a turnover of up to $50 million, so if you, if you don't support the Government on giving a tax cut for businesses with a turnover of up to $50 million, you're voting for a tax increase on hundreds, if not thousands, of companies around the country, aren't you.

PLIBERSEK: We've made our position clear on companies with a turnover of up to $2 million and we'll be very clear before the election when it comes to other thresholds.

EPSTEIN: But you're kind of caught there aren't you? Because if you don't support the Government up to $50 million -

PLIBERSEK: Not really

EPSTEIN:  - you're voting for a tax increase.

PLIBERSEK: Well not really. I think most Australians understand that our priorities have to be with low and middle-income earners and at the moment we've got a Government that's proposing to hike taxes on low and middle income earners who've had no wages growth and do it in order that they can give people on very high incomes and big businesses a tax cut. I think most Australians see that as pretty unfair.

EPSTEIN: Let me give Phillipa a go in Sydenham on what companies do and don't pay when it comes to tax. Go for it Phillipa.

CALLER: Thank you for the opportunity. Having read Emma's brilliant piece and I miss her questions late at night, however, we'll have to deal with what the ABC gives us. There is a song at the moment 'The River's Run Dry'. When you have such grossly lax corporate tax laws with no auditing and no national ICAC and when you have the Murray Darling whole system going to rack and ruin -

EPSTEIN: Try and keep it narrow if you can Phillipa.

CALLER: - I wonder why this is happening under the Liberal watch? This worries me, and also who is checking on the defence systems and our hospitals-

EPSTEIN: Ok look Phillipa I'm going to cut you off their just because I want to try and keep it on corporate tax at the moment. Steve Ciobo I'll throw that at you, I mean, she clearly feels, Phillipa, that not nearly enough has been done to make sure that the bigger companies pay their fair share.

CIOBO: Well her statements were factually wrong. The suggestion that companies aren't audited is just plain wrong. Any company that's listed is required to be audited, there's actually an auditor’s report that's part of the annual report that a company does, so to say it's not audited is just a complete incorrect statement of fact. But I go back again - if companies aren't paying tax, and it was interesting to hear Tanya's comments because she tried to say something sympathetic about suggesting they should make more of an effort, but didn't actually commit to any action whatsoever. Because Tanya knows, either she's going to announce that Labor is going to deny companies the ability to deduct losses from income or they're going to stick with the status quo. And I can tell you that, I can tell you already, that they'll stick with the status quo, so Tanya's job today is just to make sympathetic sounds but commit to absolutely nothing. In terms of tax paid, as I said, the reason they're not paying tax in the case of Qantas is that they have made massive losses. Now they didn't tap into employees pockets to fund those losses. they didn't go back to shareholders and say let's rip money out of superannuation to pay for those losses, they had to carry those losses within the company and this is the sound management that has seen Qantas not only continue to function when for a while there we thought, let's be frank, we thought Qantas was going to go to the wall and that thousands of people would lose their jobs. So full credit to Allan Joyce and the board for the outstanding job that they did to steer Qantas through some pretty tough times to keep thousands and thousands of Australians employed in jobs and also now to deliver a direct dividend back to every mum and dad with a superannuation account, every single person with a superannuation account, income that they can rely on to pay for their retirement.

EPSTEIN: Tanya Plibersek I'll give you a chance to respond, but 1300 222 774 is the phone number. It’s 16 minutes past 5. Steve Ciobo's the Trade Minister; Tanya Plibersek is the Deputy Leader of the Opposition. We will get onto the future of the Deputy Prime Minister and also we've got a chronically low number of people buying private health insurance. Tanya Plibersek, if you can just respond to what Steve Ciobo had to say, but just, maybe people are fine with you only talking about tax cuts on businesses up to $50 million really close to the election, but don't you have tonnes of people in business around the country, I don't know how many small and medium businesses there are up to $50 million. You need to tell them what you're going to be doing with their taxes quite a bit before the election, don't you?

PLIBERSEK: Sure absolutely we will and we'll be very clear about that. But I thought it was pretty funny today to hear that one of the biggest advocates for corporate tax cuts, Allan Joyce, his company hasn't being paying any tax for decades, so a bit rich to have all this pressure from businesses that are not paying anywhere near the headline rate of tax. And I was just reminded by Phllippa's comments that in the first term of the Liberals' Government, in the first 19 months, 4,400 jobs were taken out of the Australian Tax Office. Now I think in many respects we do have strong laws to protect against avoidance. The resourcing of the Australian Tax Office to pursue people who are doing the wrong thing is very important and big companies are pretty good at moving their profits offshore and having their profits considered in other jurisdictions and so on. We need to close down those loopholes, and we know just as soon as we close them down that clever tax lawyers find new ones, so it is a process of constant vigilance. You have to have people in the ATO not just closing down the loopholes but policing the rules that we have in place.

EPSTEIN: Let me give a chance to Paul in Geelong. Go for it Paul.

CALLER: Yeah g'day Raf how are you going? 

EPSTEIN: Yeah good.

CALLER: Look I'm just a little bit, I'm just driving home at the moment, I'm somewhat bewildered by the lack of understanding of the tax system that I'm constantly hearing. That includes Tanya Plibersek from about 15 minutes ago, if I recall correctly I heard her referring to depreciation as a mechanism that companies use to minimise their tax and that's something that all taxpayers use to reduce their tax.

PLIBERSEK: I didn't say that actually, I don't know who you were listening to but that wasn't me.

CALLER: No, sorry Tanya no, no, Emma Alberici, sorry.

EPSTEIN: Oh that was before 5 o'clock.

CALLER: My mistake.

EPSTEIN: So you agree with the Government here or what's your point?

CALLER: To be honest I don't agree with tax cuts. I'm a public accountant so I know a bit about this space and I deal with companies that are in the sub-$20 million turnover.


CALLER: And I'm not supporting tax cuts but I find it very frustrating when I hear politicians and media experts discussing tax but not understanding how they work.

EPSTEIN: OK I can hear you frustration. Bill's in Stawell, what do you want to say Bill?

CALLER: I just want to say I agree entirely with what Steve has been saying. I'm a Qantas shareholder that bought them off the original float and I sold them last Friday because we've had one dividend in 10 years, it was a fairly low one, so I think that shows that they haven't been making a profit anyway just has he's saying, a $1 million loss  or whatever it was.

EPSTEIN: Yeah they've been making a loss, that's one of the reasons they haven't been paying tax. We'll get onto the other issues in a moment, wanted to get a traffic check with Simon Tackler. Hi Simon.

Traffic report

EPSTEIN: Trade Minister Steve Ciobo and the Oppositions’ Tanya Plibersek. Steve Ciobo if I can ask you about Barnaby Joyce? His current partner Vikki Campion had a number of jobs in Ministers' offices and MPs' offices. Is the government confident that her work in those offices had nothing to do with her on again off again relationship with Barnaby Joyce?

CIOBO: Raf, I mean I think this has been canvassed in the media and discussed frankly ad nauseum for the past 72 hours. I mean there's been nothing other than analysis around what the date was when she moved from this office to that office and what stage was she officially in a relationship with Barnaby. Frankly there's not a single skerrick that I can add to the already countless inches of newspaper columns and the countless hours of television commentary in relation to this issue. I mean, look, it comes back to this. At the core of this issue is prudent use of taxpayers funds and think people understandably and justifiably can ask questions about have taxpayers funds been spent appropriately. Around the issue though is a thousand hours worth of noise is about was it appropriate? Was it moral? Should this have happened? Should that have happened?

EPSTEIN: It's not that complicated though, the code of conduct says you can't get a job at a mates office if you're that mate's partner. I don't know that we have had a solid answer on whether or not she was -

CIOBO: He gave a whole statement on that Raf. You have had a complete and thorough answer on that because Barnaby Joyce yesterday morning gave a full statement that addressed exactly that issue that you're raising now. That's why I'm saying there is nothing that I can add to that nor do I intend to. To go back to my point though, I'm not going to get caught up in all the noise around this issue. I appreciate that everyone has an opinion about whether this is something to be ignored or something that should be taken into account. I do believe in prudent use of taxpayer funds - those questions are legitimate - but frankly on this issue about timing and shifting from the office he's given a full statement, there's been more analysis than any Australian can ever wade through and I have nothing further to add.

EPSTEIN: Tanya Plibersek don't you need to prove there was an issue with the code of conduct I'm not sure that any of your questions in Question Time have proven that there's been any breach of the code?

PLIBERSEK: Well Raf, I feel like Steve quite awkward discussing this because it’s very difficult not to invade people's privacy when we are discussing these issues. But I suppose you could ask the question this way: The jobs in the other Ministers offices that were created for this person, were those jobs necessary? Were they created because that work had to be done? Would they have been paid at that pay level in other circumstances if they didn't have a particular person in mind for the job?' And I think that any sensible analysis would suggest that neither of those things is the case. So as for prudent use of taxpayer money it's pretty hard to argue that these jobs were created and necessary to be paid at this level. There are of course other questions about the expenditure of travel allowance and there are further questions that we went to today in relation to whether a gift of a value of $14,000 approximately worth of rent was properly declared by the Deputy Prime Minister. All of these things are things that he should be able to account for and that the Prime Minister, who of course has ultimate responsibility for his Prime Ministerial code of conduct, should be confident that the Deputy Prime Minister has proper discharged his obligation to account for these things and to make proper decisions about taxpayers funds.

EPSTEIN: I'll just give Russel a go, calling from Middle Park, go for it Russel.

CALLER: Thanks Raf. Look I appreciate what Tanya has was saying just then but look I think that people are getting sick and tired of this issue, it's been going on for too long and it seems to me that it's a distraction from the job that the Deputy Prime Minister, Leader of the National Party is supposed to be doing, in fact, the whole government, they've taken their finger off the pulse and it seems just to be a big distraction. Now is this going to go on as long as the ABC, the great program they had on years ago, Blue Hills? It keeps going on and on and it seems...

PLIBERSEK: Well I think that was more fun to watch.

EPSTEIN: You make the point about it going on and on. Steve Ciobo I might ask you I guess about next week, the Prime Minister is travelling to the States to meet with President Donald Trump. Are you comfortable Steve Ciobo? I mean Barnaby Joyce will have to answer questions about this next week while being Acting Prime Minister

CIOBO: Well he is the Deputy Prime Minister of the country, I don't think anyone is seriously making or able to sustain the charge that this is in anyway impacting on his ability to be Deputy Prime Minister. People might say, as I said, some making suggestions it was inappropriate or whatnot historically but he's a guy who is on the public record over many, many years making a very significant contribution to governing Australia both in Government and in Opposition. He'll continue to do so.

PLIBERSEK: Well Steve, I mean, you were in Question Time this week the same as I was. Barnaby Joyce's answers on things in his portfolio were hopeless, he was talking about the inland rail when was talking about Tasmania and I mean he's just all over the place in his actual answers. You look at things that he's actually responsible for and he's not able to account for his performance in those areas either.

CIOBO: Well it's kind of ironic Tanya that you'd say that, I mean I think the Opposition had two questions ruled out of order today and you want to have a go about answers -

PLIBERSEK: And we’ve asked many questions about infrastructure and he hasn't been able to answer any of them. And Raf I'll just say this final thing, I think the most significant interventions have come the former Nationals leaders that out publicly now saying that his position is unsustainable.

EPSTEIN: Just a brief answer to this one Steve Ciobo. Are you confident Barnaby Joyce will be Leader of the Nationals at the next federal election?

CIOBO: Absolutely.

EPSTEIN: It's about 28 minutes past 5 o'clock on ABC Radio Melbourne. Let's just quickly sign off on the every growing problem around private health insurance. There are more people dropping out of private health insurance than there has been I think in the last seven years, there's the lowest proportion of the population covered since seven years ago. Can you actually fix that Steve Ciobo? Is something fundamentally broken there?

CIOBO: Well, first of all I recognise that there is a difference in approach on this between the Government and the Opposition. The Coalition is a firm believer in the value of private health insurance, we've introduced the largest reforms a decade. Its produced the lowest changes in seventeen years and frankly it's a stark contrast to when Labor was in power. Labor is very determined to effectively wipe out private health insurance. We are putting in place reforms to keep it as affordable as possible and that's why we've seen the lowest changes in seventeen years.

EPSTEIN: If all the changes you've done, Steve Ciobo, are as good as your say they are, surely we would be at a better place than having the lowest proportion of people insured in seven years, isn't there something major that needs to change?

CIOBO: Well in private health, if we want more people to have private health insurance it needs to continue to become more affordable. Full stop, it's that straightforward. Now if you put in place policies, like Labor’s proposing, which will see premiums increase, based on Deloitte modelling by 16 per cent, guess what that's going to do? That's going to see a further erosion of private health insurance coverage.

PLIBERSEK: So Raf, I guess there's two things to say and Steve says we were terrible in private health insurance. I don't think there's a single measure I introduced as Health Minister that his Government has reversed or changed in any way, so I'd be curious to know exactly what his criticism is and when his government is going to reverse the changes that we made. Secondly, the reason people aren't taking out health insurance, the reason they're dropping it, is because it’s poor value, it's expensive, it's risen in cost by a thousand dollars since the Liberals came to government, and people feel they are getting less value for it because the number of exclusions from private health insurance, the co-payments, continue to rise.

EPSTEIN: Do we need a significant fundamental change to ensure more people?

PLIBERSEK: Yeah we do, absolutely we do and that is why we are asking the Productivity Commission to do a thorough review of private health insurance. Private health insurers continue to be very profitable, they're getting very large public subsidies and they continue to put their prices up. The last change that Steve's boasting about was at twice the rate of inflation, they've gone up, as I said, by $1000 since the Liberals came to Government. So yes there needs root and branch review and that's why we've said we'll cap increases at two percent for two years while we are looking at  how we can assure that it’s a healthy industry.

EPSTEIN: Thanks to both of you for your time today, enjoy your final Question Time for a little while tomorrow.

CIOBO: Thanks, Raf.

PLIBERSEK: Thank you. See you.