12 April 2012




KIERAN GILBERT: Minister, thanks very much for your time.

WONG: Good to be with you again.

GILBERT: There’s been a lot of talk about the notion of ‘green tape’. How much scope is there on the issue of environmental regulation, or deregulation, to streamline overlapping rules across federal and state jurisdictions?

WONG: Business has been saying for some time there’s a lot of duplication and we’re certainly open to looking at how we can streamline, how we can fast track some of these processes. But just to take a step back about today’s Forum, because I think it’s important to understand it. This was an idea driven by business, and it’s an idea to which the Government’s responded because we do think the productivity challenge requires all governments to have a much deeper understanding of the business priorities when it comes to deregulation, and to come together to agree how we’re going to respond to those. So environmental assessments is one of the areas that’s been nominated by business, and we look forward to having these discussions.

GILBERT: I spoke to the head of the Chamber of Commerce and Industry this morning, Peter Anderson. One of the issues he’s raised is that if the nation’s going to have a carbon tax or a carbon price, as we will as of July 1, they want other measures, climate change initiatives, to be dumped. It makes sense doesn’t it, to have one efficient price and get rid of the rest?

WONG: There is a lot of logic to the position Peter’s putting, a lot of logic. If you have a price, as you say, that’s a price signal in the economy, that’s the most economically efficient way to get the signal to reduce pollution, that’s why we’ve put it in place. And there is scope, we believe, to look at what are the policy measures that don’t fit with a carbon price, that aren’t necessary, given that you’ve got this price in place.

GILBERT: Are there other policies that the Federal Government can lead the way and get rid of?

WONG: We have considered these issues and made some changes – in fact in the last term of Government in the context of the carbon price. But I think more broadly across the country what we do need to do is have a look at, in the world of a carbon price, what are the things that we currently have in place that we can set aside because they’re not as efficient.

GILBERT: The Greens leader Bob Brown isn’t happy with talk of relaxing some of the regulation, predictably I suppose, concerned that the mining sector wants to bulldoze decades of environmental law is the way that he puts it …

WONG: I don’t agree with that construction. And I think we need to understand what we’re talking about here. Regulation is put in place by governments often for very good reasons. But I think we need to distinguish between the policy reasons for regulation, worthy policy reasons such as ensuring we protect our environment, and an excessive compliance load associated with that regulation. And that’s what we’re talking about here.

I think it is possible for us to consider how it is we can achieve the outcomes that we want from regulation but remove some of the compliance load, for example from duplication, across a whole range of areas. And this is a key part of meeting the productivity challenge. That’s what today is all about – how is it that we can look at making doing business easier in order to improve productivity?

GILBERT: But in reducing the duplication and harmonising in the area of work safety, the Victorian Government has released a report they had commissioned by PricewaterhouseCoopers that shows that the costs on business is actually going to be quite large in transitioning to a national harmonised work safety regime. The Baillieu Government says it’s going to cost $3.4 billion to Victorian businesses over the next four years.

WONG: I’m pleased that the Premier has finally released this, or at least part of this report. We’ve been suggesting it would be useful for some time. But I think it’s important we get all the figures on the table, and also it’s important to remember the history. Do you know when harmonising health and safety laws was first recommended to a federal government? It was in 1996. It was in 1996. And it’s been subsequently recommended by other reports and by business for some time.

The Productivity Commission last year suggested – estimated – that the lessening of business costs would be about $350 million per annum. That’s a very substantial reduction in business costs. And if you look at the Commonwealth assessment which we have released you would see actually that in terms of what we call the ‘benefit-cost ratio’, that is how much benefit you get for the costs that are put in place, in fact Victoria stands to benefit the most of any state.

GILBERT: But does that also apply to small business? Because this PricewaterhouseCoopers analysis says that three-quarters of the cost is going to be felt, and the burden left, on small business?

WONG: We need to work through that and have a discussion about that. I haven’t seen the detail of the PricewaterhouseCoopers analysis. But I would say this: if they’re looking at the requirements to do some basic health and safety standards in small business then obviously that might be something the community would say we do need to do that because that’s not an unreasonable thing. But ultimately it is about the whole economy. And as I said, business has been calling for this for sixteen years now.

We have a Productivity Commission which tells us – a draft report which estimates very substantial cost reductions, or cost benefits. And we have a Commonwealth assessment which shows that Victoria stands to benefit the most. And let’s just take a commonsense approach. Do we really think it is efficient, that it will be more productive, to have different legislation and different regulation on health and safety across the country? Do we really think that’s good for the national economy or for any of the States’ economies?

GILBERT: On some other issues, BHP is apparently set to close its mine at Norwich Park in Queensland under the pressure of industrial action, various other things, including the Resources Council in Queensland says, the carbon price. And it warns that governments can’t keep imposing costs onto mining operations without consequences. Hundreds of jobs look like they’re going to go at this mine …

WONG: And if you look at what the company has said, this is a mine that hasn’t been profitable for some time. This is a mine that has obviously been affected by the floods. And they’ve made a decision to cease production there, and there are a number of factors in play. I think it’s important to remember that since the mining tax was announced and the carbon price was announced we’ve still seen a continued investment in mining. In fact over three years I think it’s gone from $47 billion to $120 billion projected in the current year or the next year. Now that’s a very substantial investment. And so it does fly in the face of people who suggest that these policy settings are deterring investment.

GILBERT: On the aged care reforms, there are reports today that the Government’s razor gang – of course of which you’re a key part – has decided to delay some of the introduction of Productivity Commission recommendations in this area. The Prime Minister’s said that it’s going to be a priority of her Government in the first term. If you don’t adopt all the recommendations, how can you say it’s your priority?

WONG: Kieran – first we’re not going to do the rule-in, rule-out on the Budget. Second, I don’t think it’s fair to suggest if we don’t do all of ‘x’ that we’re not acting – as a sort of general proposition I don’t agree with that. This is an important area, and it’s an important area not just for this Budget, it’s an important area for the next 20 years. Just over your and my lifetime, the number of working age people to support someone who has retired progressively diminishes. And so that’s a major policy challenge for the nation, and it manifests in lots of areas but it certainly manifests in aged care.

GILBERT: What do you think about the idea of allowing the elderly to unlock equity in their homes?

WONG: Well, I think you’re inviting me to make a policy response to the PC report. What we will do is work our way through our response through the work that Mark Butler is doing, very good work. He’s been engaged very closely with the industry and with consumers on this and has a very deep understanding of what’s required.

GILBERT: Apparently Treasury has baulked at the idea, worried that it’ll turn Government into a bank, or the nation’s largest bank. But Catholic HealthCare, they say that the Government already handles this sort of transaction – $22 billion through HECS.

WONG: Kieran, I’m not going to get into detailed discussion about which hypothetical is or isn’t a good idea. Aged care is important, it is a priority. We have continued to increase funding in aged care, but as Minister Butler has very eloquently said, it’s not just an issue of money. The system needs reform, and that’s what we’re working on.

GILBERT: Finally, on interest rates, yesterday we saw Paul Howes and the ACCI chief, Peter Anderson, really on the same page when came to interest rates. Do you empathise with where they’re coming from on that?

WONG: I certainly empathise with the experience of workers and businesses who find the high dollar a significant problem. And there is no doubt that the dollar, being where it is, has caused real strains for some sectors of the economy.

The question is, what is the right policy response? What you need to do is put in place the settings that support competitiveness. And they are things like putting in place the mining tax – to spread the benefits of the boom through tax cuts. And it’s also about bringing the budget back to surplus. Because, as I’ve said before, that does give the Reserve Bank the flexibility to move on interest rates, should they believe that’s necessary.

GILBERT: A busy day ahead for you. Finance Minister Penny Wong, thanks for your time.

WONG: Good to speak with you.