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MINISTER SMITH: Thanks very much for turning up. I'm very pleased to be here with the Government's Leader in the Senate and Minister for Immigration, Chris Evans, and very pleased, of course, to welcome the Treasurer, Wayne Swan, who's visiting Western Australia, Perth, and also visiting my electorate. I'm very pleased about that.

We'll throw to Wayne to make some introductory remarks. Then I'll throw to Chris, who's got a couple of remarks to make about matters in his portfolio. And then I just wanted to make some remarks about a trip I'm heading off for this afternoon but also make some remarks about Thailand, and then we're happy to respond to your questions.

I think the Treasurer's got a lunch, so he's got to get out of here at about 11:40, so we've got about 20 minutes. So I'll throw to Wayne and then to Chris.

TREASURER: Thanks very much, Stephen. It's good to be here with you and Chris. It's great to be in Perth again. I've been a visitor here frequently over the years, and being a Queenslander, I'm always attracted to the great state of Western Australia.

I'm here to talk about the importance of Western Australia in terms of our national economy - the role that it plays in terms of wealth creation. I'm here to talk about also last week's Budget which I think is quite important to putting in place the settings as we move forward to maximise the opportunities for Western Australia and Australia as we go through the decades ahead.

Last week's Budget brings the surplus back in three years, three years early, and of course it halves peak debt. It puts in place the settings that we said we would put in place last year when we moved to protect the Australian economy from the impacts of the global recession.

But the other thing that this Budget really does is it deals with the challenges of mining boom mark II. And of course, to deal with those challenges requires us to get rid of the inefficient royalty regime, but it also requires us to deal with the capacity issues in our economy such as skill shortages, which Chris is going to say something about. But what we put together in the Budget last week was a comprehensive range of measures which will assist states like Western Australia and my home state of Queensland and the rest of the country to deal with the challenges of a two-speed economy which exists in Western Australia and in Queensland and right across the country.

We do have a very strong resources sector and it will grow as we go forward, but what we need to do is to modernise the taxation system and recognise that Australians deserve fair value from their 100 per cent ownership of our mineral resources. And of course Australians have not been getting fair value and those figures are there for all to see. At the beginning of the decade, $1 in $3 in terms of mining profits went to royalties. Now it's $1 in $7. The Australian people, the West Australian people, have been short changed.

We want to use some of the revenue from this new profits-based tax to support others in the economy, particularly here in Western Australia, that put investment, particularly infrastructure investment, into the mining regions where they have difficult challenges; to give a tax cut to small business in particular; to cut corporate taxes; and of course to invest in superannuation, which is so important to our national savings.

So, I'm here to have a constructive conversation with the business community. I've already met with a number of senior people from the business community and we're off to see some more of them for lunch - very much in the cart for a constructive discussion about how we move forward in the interests of Western Australia and in the interests of all Australians. Thank you.

MINISTER EVANS: Thanks very much. I just want to deal with two matters: firstly, following on from Wayne's introduction, to make the point that today we launched the new Skilled Occupation List which sets out the occupations which will be given priority in independent skilled migration to this country. It's a fundamental economic reform. It's a key plank of what we've been doing in the migration space, which is to move from a supply-driven system to a demand-driven system.

When we came to government we had a migration system that wasn't meeting our skills needs; that was based on a queue of people who'd applied and we were taking them in order. And I was finding under the system we'd inherited from the Howard Government that doctors, nurses, engineers were waiting in the queue behind less valuable skilled applicants. We had thousands of cooks and hairdressers in the queue who had been trained in Australia but weren't going to meet the desperate skills shortages we had, particularly in states like WA and Queensland.

So as part of those reforms today, the Skills List represents those skills of higher value that are required in the economy. There is a bias towards medical professions, towards engineering and constructions skills, to make sure we've got the skills we need to support expansion of the economy.

It is the case that this will have an impact on the education sector. We have seen a predominance of students coming to this country, studying with an expectation of a visa and permanent residency rather than coming for the sake of the education. We're very supportive of students coming here to study. We're very keen for them to take advantage of a top quality education system. But if students come here, they're coming to buy an education, not to buy a visa for permanent migrancy.

We'll continue to accept students who have higher skills who meet our skills needs, but it's about us saying these are the skills we need and making sure the migrants fit those skills, that they go straight into work and use those skills. And that's what Skills Australia has given us in terms of the list today - a list of the skills Australia's going to need, and we're going to match that with the people we need to come in, not just accept people who've applied because they'd like to live in Australia. We've got to actually make sure we're meeting the skills demands of the economy. So this is the next step in that regard.

Can I just quickly mention an important decision taken in relation to one particular ministerial intervention request. Some of you in Western Australia, it won't necessarily be that well known to you, but I've had a request from Dr Mansour Leghaei for me to intervene in his case seeking a visa to stay in Australia. I've decided not to intervene on behalf of Dr Leghaei, who is the subject of an adverse security assessment by the Australian Security Intelligence Organisation. I've considered his submissions carefully and determined that it's not appropriate for me to intervene under section 351 of the Migration Act and to grant him a visa.

So Dr Leghaei will be expected to leave Australia. The Department has spoken to him this morning and advised him that his wife and son have been granted visas on the basis of their long-term residence and their connection and integration in Australia, but because of the adverse security assessment on Dr Leghaei, he will not be granted a visa and I will not intervene on his behalf. So I just wanted to put that on the record because I know there's a lot of interest in that decision, particularly in Sydney.

MINISTER SMITH: Thanks Chris. Just two matters. Firstly, later this afternoon I'll leave Perth to visit China and Japan in the course of this week.

In China I'll go to Shanghai - my first visit to Shanghai as Foreign Minister - where I will visit the Expo in Shanghai and open the Australian Pavilion. China, of course, is one of our top two trading partners, so a very important economic relationship that we have with China. Originally, of course, minerals and petroleum resources, but now much larger and wider than that. So I'm very pleased to be attending the Expo and the Australian Pavilion, which will showcase the modern and contemporary Australia to an estimated seven million visitors in the course of Expo.

I will also visit Japan this week together with Defence Minister John Faulkner. While many people appreciate the strength of our economic relationship with Japan, we also have a comprehensive strategic and security partnership with Japan, and Defence Minister Faulkner and I will be conducting the third of the so-called 2+2 Meetings - meetings between Australia's Foreign Affairs and Defence Ministers and Japan's Foreign Affairs and Defence Ministers. This will be the first 2+2 Meeting that we've had with the Hatoyama Government, so I'm very pleased to be visiting two of our important economic partners, but also very pleased to be furthering our comprehensive economic, security and strategic relationship with Japan.

Can I just make some remarks on Thailand. Australia, of course, is a longstanding friend of Thailand. And we are a friend of Thailand in good times and in bad, in easy times and in difficult times, and this is a difficult time for Thailand.

Can I again urge restraint on the part of all parties. We have, of course, become particularly concerned about the number of deaths and injuries that we have seen in recent times. We re-urge all parties to resume and continue negotiations. This is a difficulty which needs to be settled in accordance with Thailand's parliamentary and democratic processes. So we continue to urge the parties to negotiate and seek to resolve these matters.

So far as Australians in or travelling to Thailand are concerned, you would be aware that on 23 April we increased our travel advisory to reconsider your need to travel. We have constantly reviewed and updated that travel advice since that time. Any Australians who are in Thailand, we urge them to avoid the site of demonstrations or protests or military cordons. And we particularly urge Australians to be vigilant about this matter. Sites of protests and military cordons can arise very quickly, and if Australians are inadvertently caught up in such matters, they need to very carefully follow the advice given to them by security authorities.

So this is a matter that we have become increasingly concerned about. I've been in regular contact with our Ambassador to Thailand over the last few weeks, including again this morning.

So we urge all Australians to carefully check our travel advice, to reconsider their need to travel to Thailand. At any given time we have some 20,000 Australians in Thailand, and over the last couple of years we've seen annual visits to Thailand from anywhere between 600,000 and 700,000 Australians. So Australians should very carefully follow our travel advice. Those who are, and remain, in Thailand should assiduously avoid any of the protest or demonstration sites.

So thanks very much for that. I'll hand back over to Wayne. I suspect most of your questions will be to him, but Chris and I are also happy to respond. Thanks.

JOURNALIST: Mr Swan, how are things going (inaudible) in your meetings you've had so far?

TREASURER: Well, I've had some frank and constructive discussions with representatives of the mining industry. It's as I expected it would be. The Government comes to those discussions in good faith. We have a consultative panel which is meeting with representatives of the mining industry in Canberra, but as always, I put a very high priority on talking to the business community.

This government has a strong relationship with the business community. It was forged during the height of the global recession when we worked very closely with senior representatives, not only of the resources sector but also the financial sector, the manufacturing sector, the services sector. So we come to the table with an understanding of each other and the challenges ahead.

But of course, when there is change and when there is fundamental reform, sometimes that's hard. Sometimes it's the hardest reforms that are the most worthwhile and bring the enduring gains. This is a reform which is required. We've not been getting fair value out of the royalty system. The independent committee concluded that conclusively in that figure I gave you before - from $1 in $3 to $1 in $7 means we have to update and modernise our royalty system, but also take on the challenges of mining boom mark II, which is precisely what we intend to do.

JOURNALIST: (Inaudible) the stock exchange this morning that it's paying its fair share - $6.3 billion in state and federal taxes.

TREASURER: Well, could I just unpack that a bit. I think this is really important for everybody to understand royalties have always been in the system to reflect the fact that mining companies are using the resources of the Australian people. These resources cannot be free. Other companies that operate in a normal way and pay company tax don't get access to free land. So, a royalty system has always existed alongside a company tax system when it comes to taxing our mining companies.

What we're talking about here is what the mining industry itself asked for in its submission to the independent tax review. They said: please update the royalty system, get rid of it, and put in place a profits-based tax, because having eight or nine regimes of different royalty regimes, even more, right around the country is inefficient.

A royalty regime, because it is flat and doesn't go on profits but goes on volume or value, is a very inefficient tax. It punishes investment. So all of these factors were taken into account by the independent review and they suggested a profits-based tax to replace it. And of course companies will pay company tax on top of that - they always have. So it's not quite accurate to try and join the two together because they are two very different issues.

What we're dealing with here when we're talking about the profits-based tax replacing royalties is recognition of the value of the mineral resources that every Australian owns.

JOURNALIST: Is there any room to move at all on the rates I guess - the percentage above the bond rate or of the super profits tax rate itself? You said that you were prepared to negotiate with the mining industry. Is there any room to move on (inaudible)?

TREASURER: Well, I outlined very clearly, and the Government outlined very clearly, when the package was produced over a week ago, that we were very much in the cart to discuss generous transitional provisions for existing projects - that we did want to have a mature discussion with the industry about their views of the tax and about how it impacted in their particular operations. We are doing that right now through the consultation arrangements that are going on within the Treasury - that is as it should be. I'm also willing to listen to what people have got to say. But in terms of the framework that we outlined when we announced the tax, that's the framework that we are working within.

JOURNALIST: (Inaudible) any reform proposal should be for new, not existing projects. Is there any room for movement there?

TREASURER: Well, that neglects the very fact that I went through before. We already have a royalty regime in place and that is what is being replaced. So the notion that somehow this can only go forward with new projects neglects the very fact that the royalty regime already exists and that is what is being replaced. So I think that reflects some sort of confusion, if you like, of a couple of separate issues.

JOURNALIST: Can you guarantee that the royalties will be rebated?

TREASURER: Yes. That was part of the framework that we outlined when the tax, when we made the announcement.

JOURNALIST: Premier Colin Barnett has flagged that he wants to increase iron ore royalties to the global rate of 7½ per cent. He flagged that before the Henry Review. Will you say yes or no to whether that 7½ per cent royalty rate (inaudible)?

TREASURER: Well, we'll have to establish in discussions with Premier Barnett the extent to which all of those increases were flagged prior to the publication of the review, and we'll do that in the normal way. The fact that Premier Barnett is looking at very substantial increases in the royalties demonstrates the point that I was making to you before - that these royalty regimes have not kept pace with the underlying value of the resource, which all Western Australians and Australians do own. So one of the reasons why the independent committee recommended this course of action is to get rid of the uncertainty which is created by increases in royalties from state to state. There are increases that have been talked about in other states as well.

They went to the independent committee and said: look, in the 21st century, in a globalised economy, you can't operate a system of charging for the non-renewable resources of the Australian people on eight or nine or ten different regimes where any of them can be going up or up again in different states at different times. That is precisely the case for putting in place a national regime.

JOURNALIST: Do you accept the political reality that this is likely to cost you votes in WA and that there's a concerted campaign over here that's being waged by mining companies that will probably cost you votes?

TREASURER: Well, I don't come at it from that perspective at all. This is one of those important, long-term reforms that Australia needs for the future if we're going to maximise the opportunities that will flow from the Asian century. And the Government doesn't come - and didn't come to our last Budget or to our response to the tax review - from any other perspective other than do the right thing by Australia. How could I, as Treasurer, receive this report that says that the Australian people are being short-changed and just sit down and say: oh, gee, it's all a bit difficult this year, we'll just forget about it and put it in the rubbish bin. That's not the right thing to do by the Australian people.

We've been given a piece of analysis which is quite compelling. People may want to debate about the design of the new tax, but what they can't deny is the fundamental conclusion that the Australian people have been short-changed and that that needs to be rectified. And we have moved not because of a political cycle, but because of what is right for this country in the short term, in the medium term and in the long term.

JOURNALIST: Who did you meet with last night, and what was (inaudible)?

TREASURER: I met with a number of people from companies, but it's not my purpose to outline private discussions that I have with individuals. I'm also speaking publicly today at a very large function which I think you're all attending. I have been in constant contact since I've been Treasurer with senior business leaders in this country across all of the sectors. And there's probably one sector I've probably had more contact with than most - it's the resources sector. So I talk to people in the resources sector regularly. It is what Treasurers should do...

JOURNALIST: Does the Government regret going down the Peter Dutton shares line on questions asked over your own (inaudible)?

TREASURER: Sorry, I don't think the Government asked that question. It was asked on a national television program. I see some assertions to the contrary. I just think it is interesting...

JOURNALIST: What about your wife being dragged into it?

TREASURER: It's got nothing to do with my wife, and the issue was entirely different if you actually have a good hard look at the facts. But the two situations are not comparable.

But I just make this point. Peter Dutton thought that when the Coalition was out there saying that this was going to destroy the industry, that it wasn't going to destroy the industry, and he went out and bought shares to back that judgement.

JOURNALIST: Have any Labor MPs that you're aware of traded shares?

TREASURER: I've got no idea.

JOURNALIST: Can I ask about the national wage case today. The unions are pushing for $27 a week increase. Do you think that's fair enough?

TREASURER: Well, as usual, I think everybody needs to recognise the circumstances that we're in at the moment and exercise a degree of restraint. I haven't seen the full details of what's been put out there today, so I'll suspend my judgement until I do. Thank you.

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