8.30AM THURSDAY
21 MAY 2009

ISSUES: MPs electoral allowances, MPs employing relatives, Employee Share Scheme, Cigarette Tax increase, Rudd’s post Budget tour.

ASHLEY GILLION: Welcome back to AM Agenda. Let’s go straight to our panel of politicians now. Joining me from Melbourne, the Minister for Employment Participation, Brendan O’Connor. Good morning.

BRENDAN O’CONNOR: Good morning, Ashley.

ASHLEY GILLION: And in Sydney, the Liberal MP, Bronwyn Bishop. Good morning to you as well.

BRONWYN BISHOP: Good morning Ashley.

ASHLEY GILLION: I want to start on the stories we’ve seen today about the electoral allowances that MPs receive. Each of you get more than $30 000 a year that you’re not required to explain what you spend that money on or, indeed, whether you keep it as taxable income. Minister, firstly to you; what do you use that money for in your electorate, and do you think that amount is justified? Is it enough, is it too much or is it just about right?

BRENDAN O’CONNOR: Look, as I understand, the allowance increased for the first time since the year 2000. It’s an electoral allowance for electorate purposes. I spend the money on matters to do with my electorate in terms of involving myself in community groups, providing support for community organisations; there’s expenditure on raffles and functions. It has been, for all the time I’ve been a member; I’m sure it was the case before I was a Member of Parliament, used for those purposes, determined by an independent tribunal, the Remuneration Tribunal, and therefore, I think it’s an adequate amount and each MP and senator must be accountable for that expenditure.

ASHLEY GILLION: Minister, have you ever kept any of those funds as taxable income? Do you think that’s something that a lot of MPs do?

BRENDAN O’CONNOR: Look, I’m not sure. I’m not aware of what other MPs do, but to my knowledge, I would expended the entire allowance for each and every year I’ve been a Member of Parliament on electoral purposes. The fact is that allowance is there to enable MPs to engage fully with community organisations and I think that’s a good thing. It’s there for that particular purpose, as you would know. It’s also, on a personal level, having to be accounted for by the Australian Taxation Office, so what each MP and senator must do is acquit themselves of that expenditure properly, and I’m sure MPs and senators do just that.

ASHLEY GILLION: The problem I guess though, is that there isn’t any sort of register for us to check about exactly how MPs are spending this money. Bronwyn Bishop, what’s your take on it? What do you spend the money on? Do you keep some as taxable income, and do you think the taxpayers should be able to access some sort of report, to see where those taxpayer dollars have gone?

BRONWYN BISHOP: Look, I certainly don’t keep any as taxable income. I spend more than the electorate allowance. You do have to acquit it to the Tax Office and I think the sorts of things that Brendan was talking about, that you spend on in the electorate, is the way in which it is spent. I think you’ve got one of two choices. The American system is they have global funding. They package up all the sorts of expenditure allowances that are made and then the member is responsible for all of that. There are no checks and balances in that system, but if you come to our system, we have a salary plus the allowance package and that is accountable. For instance, on many of the things that are paid, they’re tabled in the Parliament every six months, and quite frankly, I think most Members of Parliament, me included, earn the money that we are paid. In fact, if you’re not earning the money you shouldn’t be there, I guess. The bottom line is I think our system is better than the American system. I think there are more checks and balances. The Commissioner for Taxation is not known for leniency and having things acquitted. I do think that our system is better than the American system. I think it’s less likely to be subject to abuses.

ASHLEY GILLION: So, Bronwyn Bishop, you don’t think there’s any sort of need for an audit of these sorts of expenses? You don’t think that we could see any sorts of stories emerging here like we’ve seen unveiled in the British Parliament over recent weeks?

BRONWYN BISHOP: No, because you must acquit to the Commissioner for Taxation in accordance with his guidelines. Therefore, there is a check and balance, which quite clearly did not exist in the United Kingdom, and that’s why I say we’re very proud. We, as a Government, put a better system of checks and balances and regulations in place for our banking system in Australia than we did in other parts of the world. Well, I think we’ve got it better here in Australia on the question of the way in which we acquit and report to the Parliament, than other countries.

ASHLEY GILLION: Minister, the Daily Telegraph today has a list of MPs who have been employing relatives. Do you think there’s anything wrong with employing a spouse or some other family member?

BRENDAN O’CONNOR: When the Rudd Government was elected, we made clear that Ministers would not be in a position to employ family members. We introduced that to ensure that things were seen to be done properly, and done properly, and I think that’s a good measure for Ministers of the Crown. There are going to be occasions in which MPs may employ a family member, and I think that should be left, provided everything’s done properly and there is nothing untoward, that should be left to that individual MP.

ASHLEY GILLION: Bronwyn Bishop, do you agree with that one too?

BRONWYN BISHOP: I personally have never employed a family member, but that’s a decision that I’ve made. I guess there can be times when people decide that somebody that they’re related to has a special expertise that could serve their electorate. I can’t be judgemental in that sense, but I can simply say that that is my rule.

BRENDAN O’CONNOR: Can I say, Ashley, with respect to the comment just made by Bronwyn, I too haven’t employed anybody. I just make the point that there may be circumstances where it would be acceptable, provided they weren’t a member of the executive government.

ASHLEY GILLION: Okay. I’m glad you’ve both got that on the record. Yesterday, we learned that one of the job perks that some public servants are getting is that they can sign up to Weight Watchers and have the cost picked up by the tax payer. Yesterday the Prime Minister seemed pretty unimpressed by this. He’s asked for a please explain. He seems to think the taxpayer dollars could be better spent. Bronwyn Bishop, what do you think? Do you see that there is an argument that healthier and happier employees would lead to a more productive work environment?

BRONWYN BISHOP: Gosh. I think healthier and happier employees can come from a lot of things. I don’t think it would justify public expenditure on. There are two points to make, I think. I would put the question of weight reduction programs into private choice, and your private expenditure, but I guess it’s arisen because we have this whole industry out there who are beating up on people who are overweight, telling them they’re a burden on society, they’re terrible people, they’re this, they’re that, and I think this is probably a reaction to that. I personally feel very sorry for kids in the playground who are now being taunted by other kids in the playground; oh, you’re overweight, you’re this or you’re that. I think it’s really about time we got some balance into this argument, but I would say that if people want to lose weight and they’re in the public service or anywhere else, that’s their personal expenditure.

ASHLEY GILLION: Okay. Well, I’m sure there’s going to be a lot more focus on where taxpayer dollars are going, because of this climate and also because of what we’ve seen in the British Parliament, so we can look forward to that over the coming days. Let’s look at, though, some more fallout from the Budget. The Prime Minister will no doubt be donning the hard hat today.

BRONWYN BISHOP: He always does.

ASHLEY GILLION: He’s in Geraldton in Western Australia. It does appear like there’s one Budget measure that might be getting a re-write. Unions and business groups have slammed the changes the Government wanted to make to the employee share scheme. Brendan O’Connor, we’ve seen some hints that this might be changed .What sorts of changes do you think we should expect to see, perhaps in terms of the threshold where these changes kick in?

BRENDAN O’CONNOR: Can I say firstly, Ashley, that the Government and indeed, Labor, traditionally has supported employee share schemes. They’re a good way of involving employees more fully in a company and they can be very effective in both economic terms, and the way in which they draw in employees, working with management in a very constructive manner. Look, we do know that there’s been a capacity for tax avoidance at the top end in relation to the way in which the employee share scheme operated. We want to make sure that we protect the tax base of this country, ensure that people pay tax like every other worker, that there is no particular worker, say at the top end of town, who gets a free ride, and therefore we introduced measures to look at preventing such tax avoidance. The Government’s made clear that this proposal is subject to further consultation with stakeholders that may be affected by the measure, and of course we’ll look at things to see whether we can improve the proposal before it’s debated and enacted.

ASHLEY GILLION: Because the proposal that the Government put forward isn’t just going to be targeting the top end of town, as you say. A lot of companies have already signalled that they’re planning to end these schemes altogether, which of course would have a pretty severe impact on lower income earners as well. It seems like this proposal, perhaps, wasn’t fully thought out before it was put in the Budget.

BRENDAN O’CONNOR: Look, not all employees have an opportunity to access such an employee share scheme.

ASHLEY GILLION: There are about a million Australians who can though.

BRENDAN O’CONNOR: Yes, so 9 million that can’t, and therefore there are some equity issues around access to employee share schemes. There’s also the way in which the share schemes operate, in terms of whether in fact tax can be deferred for long periods or not, so there’s a whole range of issues. What we wanted to ensure is that the tax avoidance that’s occurred in the past, particularly at that higher end, was prevented so that all workers are in a position to pay their fair share of tax, and not a greater burden on some and less on others. As the Government’s made clear, we will continue to consult with stakeholders to make sure we get this absolutely right before it’s enacted.

ASHLEY GILLION: Bronwyn Bishop, what do you think needs to happen so this is fair for all workers?

BRONWYN BISHOP: Ashley, it sounded to me that Brendan’s opening words were getting ready for a backtrack from the Budget decision, and so it should be. If people are taking shares in the company for which they work for, then logically they’re going to work harder for that company because they want a return on their shares too, and we certainly approve, wholeheartedly, of people being shareholders and particularly, shareholders in the enterprise for which they work. This again sounds like a bit of ideological warfare, but what they’ve done, in thinking that they could get away with saying we’re only going to hit those terrible big earners, they’ve really hit little guys, the people that really; the workers who they purport to support and don’t. We’re the ones for the workers; we’re the ones who say we want workers to have an equity in their firm. These are people who are earning less than $60 000 for heaven’s sake.

BRENDAN O’CONNOR: What about Work Choices, what happened to that?

BRONWYN BISHOP: You’ve brought in your new IR laws. I was having a conversation yesterday with people who are trying to find placements for people who have lost their job because of what’s been happening with the Federal Government.

BRENDAN O’CONNOR: I think that’s more to do with the global recession.

ASHLEY GILLION: That’s a whole other kettle of fish that I really don’t want to go into this morning.

BRONWYN BISHOP: But it’s an important one. People are reluctant to give them jobs for the simple reason that they were scared stiff that they wouldn’t be able to retain.

BRENDAN O’CONNOR: There’s a global recession as well; you might want to acknowledge that.

ASHLEY GILLION: Bronwyn Bishop, I think that you seem to have some concerns about your own coalition policy that Malcolm Turnbull put forward in his Budget reply last week. You criticised his decision to put forward this plan to hike the tax on cigarettes. What’s so wrong with that idea?

BRONWYN BISHOP: Three points to make. First, the most important thing that Malcolm said in his reply was that we will fight against getting rid of the rebate for private health insurance. This is good public policy, it benefits so many people, it keeps the pressure off public hospitals, and we have to stand up for that. Secondly, on the question of tax, we in the Liberal Party are opposed to new taxes. I’m opposed to new taxes. If you’re increasing taxes, you look at it carefully. Now, the bottom line is, shall we ask Brendan, is he going to accept Malcolm’s offer in the executive, to introduce the increase in the cigarette tax, and therefore be able to take away that threat to take away the rebate for private health insurance? That’s the question that needs to be asked, or are they saving it up for the so-called [indecipherable].

ASHLEY GILLION: Bronwyn Bishop, I will ask the Minister in just one second, but criticising your leader just a couple of minutes after he finished his Budget reply isn’t a good look, is it? Does he have your full support? Was it fair, do you think, for your comments to get so much air time the next day when I would have assumed the coalition would much prefer to have all of the news coverage focused on the ideas he put forward?

BRONWYN BISHOP: Absolutely, and I wanted the news coverage to be on the fact that we were standing up against the rebate being abolished for private health insurance.

ASHLEY GILLION: But you didn’t help that, did you?

BRONWYN BISHOP: In fact, I did an interview on that too. Funny thing, it didn’t go to air.

ASHLEY GILLION: All right. Brendan O’Connor, let’s ask you that question that Bronwyn Bishop posed just a couple of minutes ago. Is the Government any closer in deciding what it will do with that measure in the Senate?

BRENDAN O’CONNOR: Can I say, we are the Government, we’ve announced the Budget last Tuesday week and of course, we expect the opposition to support the measures in the Budget. It is somewhat strange that Bronwyn wants to argue against the tax that the leader of the opposition proposes, the tax on cigarettes, and at the same time the leader of the opposition says we should reduce deficit and debt, but not identify one other measure, other than the tax on cigarettes, in how the opposition would be able to achieve that. No cuts to Government services, no savings there; no taxes on other measures, but somehow the opposition thinks they’ve got a magic pudding; they can avoid answering what they will do in terms of a strategy to manage the debt and deficit so we can confront the global recession, overcome the major problems that that causes our economy, and then puts us in a good position to be well-placed once we get through the harder times. The leader of the opposition has had not one plan, no plan. The leader of the opposition has had no plan, identifies no measures. Yes?

ASHLEY GILLION: Minister, Kevin Rudd’s been accused of avoiding the B word. He doesn’t seem to like to use the word billions. He’s been travelling around. We’re seeing him on television every night in yet another hard hat. Do you think that Australians really need to be seeing those sorts of pictures on the news every night to be convinced that the measures that you’ve taken in the Budget will actually see these infrastructure projects rolled out? You’ve been accused of being the Government of spin.

BRENDAN O’CONNOR: We have a Prime Minister who is totally engaged in nation building. He knows, as the Government knows collectively, that we need to stimulate the economy, as we’ve started to do from October last year, to support jobs. We’ve also ensured that the large proportion of the stimulus is nation building infrastructure initiatives, and the Prime Minister is taking a direct role in ensuring that those nation building initiatives are rolled out across the country so we create and support jobs.

ASHLEY GILLION: But does he personally have to be heading out to these construction sites to oversee them? Doesn’t he have better things to be doing, perhaps, back here in Canberra?

BRENDAN O’CONNOR: Well, he can do many things whether he’s in Canberra or not. The one thing the Government knows is that the font of all wisdom doesn’t occur only in Canberra, in Parliament. It’s very good to get out, across the country, talk to people, talk to small businesses, talk to medium and larger employees about what the Government can do in partnership with them to support jobs. In fact, that ‘s what the Government’s been about since October last year when we announced the economic security strategy, when we also, of course, provide support for depositors, and we’ve made further announcements and taken further action to support jobs, to support our economy. That’s exactly the proper approach to be taken by a responsible government, and the leader of the opposition has no plan whatsoever to tackle the largest recession in seventy years, globally.

ASHLEY GILLION: Brendan O’Connor, I’m going to cut you off because we are running out of time. Bronwyn Bishop, I want to give you the final word. There’s a suggestion that Kevin Rudd is avoiding using the word billions because he doesn’t want to give the Liberal Party a grab, a short sound bite, to use in the Liberal Party election campaign advertising. Is that what you guys are on the lookout for, a little yes, we’re in deficit by this much?

BRONWYN BISHOP: Us or anybody else. I mean, it is staggering that in 18 months, we’ve gone from a situation where we left a surplus of $20 billion, and we left a country with no debt. In 18 months, Kevin Rudd and his lot have managed to plunge us into debt, with a deficit from this Budget of $57 billion, and the word is billion that they won’t say, with a projected further deficit being looked at, of $300 billion and plenty of debt. So, deficits and debt are the second name of Labor, and that’s a hard lesson the Australian people have to learn.

BRENDAN O’CONNOR: The Opposition must support the same approach because they have not identified savings or any forms of taxation to change that.

BRONWYN BISHOP: Brendan, I gave you a go. I listened to that turgid stuff.

BRENDAN O’CONNOR: I’m just saying there’s no plan from the Opposition, no plan.

BRONWYN BISHOP: The bottom line is the only way this will be a temporary deficit is if it’s a temporary Government, and that’s what we’ll be working towards.

ASHLEY GILLION: On that note, Brendan O’Connor, Bronwyn Bishop, thank you for your insights this morning.

BRENDAN O’CONNOR: Good morning Ashley, morning Bronwyn.

ENDS.