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PETER SWITZER: Let's check in with him now standing by in our Canberra studio. How are you, Simon?

SIMON CREAN: Good, Peter, how are you?

PETER SWITZER: Very — I should actually check this out because we only learnt that you said there should be more consultation from a news — you know, from a media outlet. Can we trust that particular media outlet and that you actually did say more consultation should have been had?

SIMON CREAN: Yes, but I then went on to make the point, Peter, and this is critical: you can complain about what hasn't happened; the key question is what should happen now to address this issue. And that's when people should be getting down to serious discussions with the Government rather than, you know, public campaigns, outrageous statements, over-egging the problems. We've seen too much of that from the mining industry. Clive Palmer's over-stated his concerns, Xstrata has, Twiggy's gone over the top accusing the Chinese of no longer being Communist. I'm not too sure they'd be too happy about that, as one of his best customers. But seriously, we've got to sit down in the interests of the country and work out what's best going forward, and that's what we're involved in the process of now. And that's what we should get on with. As I understand it, those discussions are going very well at the moment.

PETER SWITZER: Simon, I guess, you've been in the political game for a long time. You were advised by one of the best public servants this country's ever seen, Ken Henry, but when you look at it, should there have been more consultation at his level with industry? Because the thing that surprised me most of all was that local Australian miners, like Fortescue, were going to be hit a lot harder than miners who are mining all around the world. And that kind of thing, I would have thought, should have been picked up before you guys then responded and then rolled it into your Budget. Is that your view as well?

SIMON CREAN: Two things: the consultations are occurring, and we should be using those to resolve the outstanding issues. Secondly, clearly there is advantage in the design of this tax in that it enables an upfront deduction before any profit is turned. The royalties that are currently required to be paid to the states, which, as it stands now, have to be paid before there's any profit. Now surely that's got to be of advantage to all mining companies. So for people to argue that there's nothing in the deduction side, I think is a bit disingenuous. But the whole purpose of the consultations are these: that if people don't believe the so-called benefits that are asserted are worth anything, argue that through and see what it results in terms of the negotiations. We've always said we're prepared to look at the transition arrangements, we're prepared to look at design, but the 40 per cent remains. Let's get on with the task of trying to sort those issues out.

PETER SWITZER: Now a few weeks ago when we were both in Shanghai you went to Beijing, you talked to the leaders of the Chinese Government. What was their view on the resource tax? Did they think it would have an implication on their attitude to investing in Australia?

SIMON CREAN: No not at all, nor in Japan, Peter, where I've also been recently. In fact when the tax is explained, and there's obviously a great desire on the part of both of those countries to learn more about how this applies. We explain to them that this will bring on more marginal projects, it will take out the upfront disincentives to investment, and this will see an increase in the supply side of the equation. Because the concern that China in particular expresses, and presumably all the resource demand countries, is price.What causes price to go up in the market is excess of demand over supply. We know there's an excess of demand over supply because we're currently experiencing the second wave of the resources boom and that's what saw that very positive monthly trade figure. But the best way to address that is to correct the balance between supply and demand, and the tax does that. So when they hear that explanation they're pleased with it. I must say those companies have got more concern about the lessening, in their eyes, of the competition and therefore impact upwardly on price of the merged facility arrangements between Rio and BHP. That's been a constant theme that they've raised over the past couple of years with me. But there's been no suggestion that this will impact on any of their investment decisions and they are very pleased when they hear the explanation that this, properly implemented, will see an increase in developments, increase in supply.

PETER SWITZER: Now my viewers listening to that answer would have to ask you this question, they would want me to ask this question, Simon. Okay, if the small miners will start maybe supplying more because of the tax the bigger miners are saying that they'll supply less, that mines won't go ahead. How do you respond to that?

SIMON CREAN: Well they won't be supplying less because the tax will only apply when they are making super profits. Now the question of that super profit is the subject of discussions as we speak, but the truth is when I saw a comparison in one of the papers the other day at a ten percent rate of return they would be paying less tax under the new arrangements than previously. And this argument that they'd be paying up to 53 per cent or 58 per cent, whatever the figure is, they have to be earning a 50 per cent return.

Now do people think it's unfair that companies that are making a 50 per cent return on the nation's assets shouldn't see a better distribution of return to the nation? It's not as if the mining companies own these resources, the nation owns the resources. And what we're trying to do out of this second wave resources boom is to get a more modern tax system that reflects the fact that there's huge demand for our resources. Our balance sheet has gone up. There needs to be a return all round, not just for the companies. There needs to be something in there for the nation whose resources they are.

PETER SWITZER: Okay, so basically what you're saying then is, through this consultation process, are we going to see a less effective rate of taxation on these companies, compared to what they say they will be hit by under the current arrangement? Because you — consultation must mean there's going to be some change, some ground that you guys give. Is there going to a ground, in terms of, maybe the six per cent going to a 10 per cent threshold, or something like that?

SIMON CREAN: Oh, look, I'm not going into the negotiations. You wouldn't expect me to — oh, I suppose you would expect me to…

PETER SWITZER: oh, I'd love you to, yes, most definitely.

SIMON CREAN: …but I won't. I won't be doing that on air. That's for those involved in the negotiations, the Prime Minister, the Treasurer, the Resources Minister. But I think that what we are seeking is a fairer return for the nation, for its assets, given that there's been a re-evaluation of those assets. But also greater fairness and greater design in the taxation system that encourages more investment in what the world is increasingly demanding. That's why we need to change the design of it. And ultimately all we're seeking to do here, Peter, is to take a resource-based rent tax that applies to resources offshore and apply one onshore. And I can't see anything fundamentally wrong with that, and I don't think that the majority of Australian people would disagree with that concept. Now getting the design right is what the negotiations are about. But accepting the principle that if we tax resources offshore at 40 per cent, why shouldn't we be taxing them onshore at the same rate? When the resource rent, and the deductions are properly taken into account.

PETER SWITZER: This is a comment I got from a disgruntled first-time Labor voter over the weekend, mate. He said: I just don't think Labor gets business. And the reason why he said, he said the batts insulation problem, the BER problems, the ETS — and this guy actually had geared up to be an ETS supplier. So he was going to be a small business in that space. And his reaction was Labor just doesn't get business. What would you say to someone like that, Simon?

SIMON CREAN: Well I think we do get business. We understand that the fundamental dynamic in terms of our economy is the importance of developing competition, competitiveness and opportunity in the private sector. That's why this package of measures that we're talking about isn't just the question of the nation getting a better return. It's how that return is distributed. And if you look at the way that's being applied, it's going to go into improved infrastructure around the country. It's going to go into reducing company tax rates, from 30 per cent to 28 per cent — the first time company taxes have been below 30 per cent ever. And significant upfront deduction for small businesses. As well as the extension of the superannuation entitlements.

Now all of those things are setting the nation up, not just for improved national savings, but more competitive opportunities for business generally. And it can afford to be paid for, because that which the nation owns — the resources — the world is revaluing upwards. And what we're saying is the nation should be able to get a better return for that upward valuation, as long as we understand the importance of distributing it back to business, back to competitiveness, back to making us a sustainable long-term growth economy. And that's what this package does.

PETER SWITZER: Okay, before I start talking about your baby, Australia Unlimited, is there any potential threat to the leadership of Kevin Rudd…

SIMON CREAN: No.

PETER SWITZER: … at the moment?

SIMON CREAN: No, none at all. He will lead us to the next election, whenever that's held. And I believe firmly that if we — when we get the clear air to campaign on our record, and our vision, our agenda, our commitment to the future, that we will again regain the trust of the Australian people. And that should see us re-elected.

PETER SWITZER: Okay, Australia Unlimited. This is a baby, or a project of yours that you're really proud of, but in a sense you've been tied up with a — an ad that has been bagged by the advertisers. Do you want to clarify the differences between what you're doing, and what the ad for tourism, the replacement for the Lara Bingle commercial, is all about?

SIMON CREAN: Well, Brand Australia is saying that Australia is much more than a tourist destination, Peter. That's in essence what it's about. Why did we do it? Because I've been struck in all the negotiations that I've been undertaking with two fundamental things. That when I go overseas and people say these are the sort… countries say these are the sorts of things we need, I'm struck by how much Australia has to offer, and can do competitively.

But I'm also struck on the other hand with the fact there isn't a proper appreciation of what Australia has to offer. The fact is that when Australia puts its mind to any range of goods or services, or commitment to attracting investment, we more than punch above our weight. But we can't be just passive operators in this.

The staying silent and hoping the rest of the world notices just won't cut it in the twenty-first century. So we have got to take what we know we're good at. That what we do is quality, that if we put a badge on it that says not I'm just made in Australia, but I am Australian, then it's good. People sit up and take notice. And that they know that what we're offering is quality. We have got that ability. What we've got to do is to market it more; present it better. That's what Brand Australia is. And it's saying to people don't just come here for a holiday; come here and set up your business; set up your global headquarters; set up your regional headquarters. This is the place to make your investments, because Australia is the place of unlimited opportunity. And we know it. What we've got to do is to market that much more effectively. That's what the Brand Australia does.

PETER SWITZER: Okay, well I hope you can change that resource tax to fit in with that very, very intelligent and lofty view on where Australia should be. Thanks for that, for joining us on the program.

SIMON CREAN: Okay, thank you very much Peter.

ENDS

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