Finance and Small Business
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PORTFOLIO COMMITTEE NO. 1 – PREMIER AND FINANCE Tuesday 3 September 2019 Examination of proposed expenditure for the portfolio areas FINANCE AND SMALL BUSINESS UNCORRECTED The Committee met at 9:30 MEMBERS The Hon. Robert Borsak (Chair) Ms Abigail Boyd The Hon. Scott Farlow The Hon. Ben Franklin (Deputy Chair) The Hon. Courtney Houssos The Hon. Taylor Martin The Hon. Daniel Mookhey The Hon. Penny Sharpe Mr David Shoebridge The Hon. Natalie Ward PRESENT The Hon. Damien Tudehope, Minister for Finance and Small Business CORRECTIONS TO TRANSCRIPT OF COMMITTEE PROCEEDINGS Corrections should be marked on a photocopy of the proof and forwarded to: Budget Estimates secretariat Room 812 Parliament House Macquarie Street SYDNEY NSW 2000 Tuesday, 3 September 2019 Legislative Council Page 1 UNCORRECTED The CHAIR: Welcome to the public hearing for the inquiry into budget estimates 2019-2020. Before I commence I would like to acknowledge the Gadigal people who are the traditional custodians of this land. I would also like to pay respect to the elders past and present of the Eora nation and extend that respect to other Aboriginals present. I welcome Minister Damien Tudehope and accompanying officials to this hearing. Today the Committee will examine the proposed expenditure for the portfolio of Finance and Small Business. Today's hearing is open to the public and is being broadcast live via the Parliament's website. In accordance with broadcasting guidelines, while members of the media may film or record Committee members and witnesses, the people in the public gallery should not be the primary focus of any filming or photography. I also remind media representatives that you must take responsibility for what you publish about the Committee's proceedings. The guidelines for the broadcast of proceedings are available from the secretariat. All witnesses in budget estimates have a right to procedural fairness according to the procedural fairness resolution adopted by the House in 2018. There may be some questions that a witness could only answer if they had more time or with certain documents to hand. In these circumstances witnesses are advised that they can take them on notice and provide an answer within 21 days. Any messages from advisers or members' staff seated in the public gallery should be delivered through the Committee secretariat. Minister, I remind you that the officers accompanying you are free to pass notes and refer directly to your advisers seated at the table behind you. Transcripts of this hearing will be available on the web from tomorrow morning. Finally could everyone please turn their mobile phones to silent for the duration of the hearing. All witnesses from departments, statutory bodies or corporations will be sworn prior to giving evidence. Minister, I remind you that you do not need to be sworn as you have already sworn an oath to your office as a member of Parliament. PORTFOLIO COMMITTEE NO. 1 – PREMIER AND FINANCE Tuesday, 3 September 2019 Legislative Council Page 2 UNCORRECTED MICHAEL PRATT, AM, Secretary, NSW Treasury, on former oath JOANN WILKIE, Deputy Secretary, Economic Strategy and Productivity, NSW Treasury, on former oath PHILIP GARDNER, Deputy Secretary, Commercial, Commissioning and Procurement, NSW Treasury, on former oath STEPHEN BRADY, Deputy Secretary, Revenue NSW, sworn and examined The CHAIR: I declare the proposed expenditure for the portfolio of Finance and Small Business open for examination. Questioning of this portfolio will begin at 9.30 a.m. All witnesses, including the Minister, will be questioned in the morning session. After a lunch break we will continue questioning government witnesses. The Minister will not be questioned in the afternoon and evening sessions. As there is no provision for any witness to make an opening statement before the Committee commences questioning, we will begin with questions from the Opposition. The Hon. DANIEL MOOKHEY: Thank you, Mr Chair. Thank you, Minister, for your appearance. Greetings again to Secretary Pratt and deputy secretaries Wilkie and Gardner. It is good to see you again. And hello, Mr Brady, as well. Minister, can I just ask you straight away, in March 2018 Revenue NSW launched an investigation into Foodora with respect to State taxes payable, is that correct? The Hon. DAMIEN TUDEHOPE: Foodora being the gig economy company? The Hon. DANIEL MOOKHEY: Yes. The Hon. DAMIEN TUDEHOPE: Yes. The Hon. DANIEL MOOKHEY: And Revenue NSW determined that payments to delivery drivers qualified effectively as payments to employees and therefore there was a payroll tax liability, is that correct? The Hon. DAMIEN TUDEHOPE: Well, I take it Mr Brady would probably have more information in relation to that. That was certainly an issue before my time but I understand the issue that you are going to and it is certainly something relating to the status of people who are employed in or working in the gig economy. The Hon. DANIEL MOOKHEY: But it is the case that Revenue NSW issued an assessment to Foodora claiming $500,000 of outstanding payroll tax; that is correct? The Hon. DAMIEN TUDEHOPE: I will accept that that is. The Hon. DANIEL MOOKHEY: And Foodora has entered administration, hasn't it? The Hon. DAMIEN TUDEHOPE: I have no direct— The Hon. DANIEL MOOKHEY: Well, it has. It is on the public record. You accept that? The Hon. DAMIEN TUDEHOPE: I accept that if you are telling me that, yes. The Hon. DANIEL MOOKHEY: They entered administration last August. Have we received the money that is owing us? The Hon. DAMIEN TUDEHOPE: I will pass that to Mr Brady. Mr BRADY: I will have to take that question on notice. As far as I am aware the business is in administration and working through its arrangements with all of its creditors but I will come back to you with a definitive answer. The Hon. DAMIEN TUDEHOPE: In relation to that, though, you would be aware that in the administration of a company in terms of the payment of creditors there is a statutory order of payments of creditors and the Office of State Revenue if there is money owing— The Hon. DANIEL MOOKHEY: Has priority, yes. The Hon. DAMIEN TUDEHOPE: That would be paid in accordance with that order of priority. The Hon. DANIEL MOOKHEY: I accept that. But at the point of administration Foodora had $566,000 in total assets and total liabilities of $28 million. Minister, it is fair to say that the prospect of us being able to recover our money is pretty much nil, isn't it? The Hon. DAMIEN TUDEHOPE: You might know something I don't but— The Hon. DANIEL MOOKHEY: It is not a trick question. PORTFOLIO COMMITTEE NO. 1 – PREMIER AND FINANCE Tuesday, 3 September 2019 Legislative Council Page 3 UNCORRECTED The Hon. DAMIEN TUDEHOPE: If they are the disclosures on the public record in relation to the administration of that company, if there are circumstances where there are insufficient assets to pay the creditors, then the point that you are making is probably right. The Hon. DANIEL MOOKHEY: Has it been the case that Revenue NSW has already made a decision to write off the money? The Hon. DAMIEN TUDEHOPE: Again I will have to pass that to Mr Brady. Mr BRADY: I am not aware of any decision being taken to write off the money at this stage. We would generally wait until the outcome of the administration before making that decision. The Hon. DANIEL MOOKHEY: Are you able to provide us either now or on notice the total cost that Revenue NSW has incurred in investigating Foodora, which took place, to be fair, before you issued the assessment, and also the amount of money spent in pursuing the debt? Mr BRADY: Yes, we will take that on notice. The Hon. DANIEL MOOKHEY: Thank you very much. But you would agree with me, Minister, that it is absolutely outrageous that this company has been able to effectively disappear the moment that they get presented with a bill from Revenue NSW and the Australian Taxation Office [ATO] and it does look like they have deliberately chosen to put themselves into administration to effectively abscond from being able to pay their debts. The Hon. DAMIEN TUDEHOPE: Mr Mookhey, I agree with the sentiment that you are expressing that circumstances where companies deliberately place themselves in administration or in fact go into liquidation for the purposes of avoiding the payments of their debt is a circumstance which I think is unacceptable— The Hon. DANIEL MOOKHEY: Morally unconscionable? The Hon. DAMIEN TUDEHOPE: You use those words. This circumstance is not an unusual circumstance. I am not justifying this for one moment but what we need to be sure of here is there may be a whole range of circumstances which impact on a company going into liquidation and administration. You have in fact put it to me that they have deliberately done it. I do not know that. You may have information which says that they have deliberately done it for the purpose of avoiding paying creditors. The Hon. DANIEL MOOKHEY: To be clear, the information I am deriving is effectively from the public comments that have been made by Commonwealth regulatory agencies and, incidentally, the creditors investigation that has been undertaken by the administrator of that company. But I accept your point that you have to obviously wait and deal with the circumstances that are presented to you. The Hon. DAMIEN TUDEHOPE: And you would accept my point, of course, that I do not know necessarily the details of the administration of every company. The Hon. DANIEL MOOKHEY: Well, I am shocked! But I accept your point. Minister, it is the case that an enterprise must pay payroll tax if it meets the test for an employee or a relevant contractor provision and it exceeds the threshold; that is correct? The Hon.