Investor Relations. Corporate Communication NEW GOVERNMENT INSIGHTS OVERVIEW Tomorrow, the first Abbott Cabinet will be sworn in by Former Prime Minister Paul Keating rightly once said the Governor-General. While there are a few new faces, that when you change the government, you change the it is largely the same Shadow Cabinet which has been country. As much as governments may carry in place for the past three years, bringing to an end characteristics of those which have gone before them, what has seemed like the longest election campaign in each has its unique style, challenges and agenda. our nation’s history. On election night Tony Abbott told a television Though the September 7 election result delivered a audience that Australia was once again ‘open for solid victory for the Coalition, it was not the predicted business’ and smaller government and economic growth bloodbath that would have seen Tony Abbott secure a would be at the forefront of the first term policy majority in the Senate. The Coalition recorded a agenda. national swing of 3.5 per cent against Labor and is MAGNUS has summarised the key information for you currently forecast to win 90 seats in the House of and your business, to ensure you are on a positive Representatives to Labor’s 55 seats. The Coalition made footing to start building a relationship with the new significant gains in Tasmania and Victoria, but the administration. predicted sweep of seats in Western Sydney and Queensland failed to materialise. Regardless, the election of a majority government delivers greater political certainty. The incoming Government is made up of many former members of the Howard Government. Yet unlike that period of Coalition rule, there are a series of fiscal challenges which now confront the nation, such as declining revenue, partly due to some of the heat coming out of the mining boom. SYDNEY 1/71 Macquarie Street, East Circular Quay, Sydney NSW 2000 | +61 2 8999 1010 www.magnus.net.au PERTH Unit 13, Ground Floor, 38 Colin Street, West Perth WA 6005 | +61 8 6160 4900 1 Investor Relations. Corporate Communication THE ABBOTT APPROACH - Key Policy Initiatives Commission of Audit Exploration Development Incentive Scheme Top of the Abbott agenda will be the appointment of a The Government will introduce the Exploration ‘once-in-a-generation’ Commission of Audit to focus on Development Incentive Scheme (EDI), allowing public sector efficiencies. The audit will examine all investors to deduct expenses associated with mining aspects of the Commonwealth Government and exploration against their taxable income. The EDI will whether they can be done better and more commence in July 2014 and be capped at $100 million cost-effectively. While this process may bring over the forward estimates. A tax credit will be considerable angst in some quarters, it follows similar provided to Australian resident shareholders for ‘green processes which the private sector has undertaken in fields’ exploration expenditure in Australia. recent times, sending a strong message to the Company Tax Cut entrenched bureaucracy. The company tax rate will be cut by 1.5 per cent, which Repeal of Two Key Taxes will see Australian companies paying a new tax rate of In the coming weeks, the Government will also instruct 28.5 per cent from July 2015. This term the government the public service to prepare legislation to repeal the will also release a white paper on further tax reform. carbon tax. Within the first 100 days, this legislation will Infrastructure be presented to Parliament, along with legislation to abolish the mining tax. Whether they pass the upper Tony Abbott has declared he wants his legacy to be house is another matter. that of the ‘infrastructure Prime Minister’. The Coalition has mounted a case that the carbon tax Key initial priorities identified include the West Connex is a $9 billion a year impost on industry, detrimental to project in NSW, upgrading the Bruce Highway and the productivity and international competitiveness and has Gateway Motorway extension in Queensland, the East contributed to increases in gas and electricity prices West Link in Victoria and the Swan Bypass upgrade in across the country. Income tax cuts and fortnightly Western Australia. pension and benefit increases linked to the carbon tax The Coalition has also promised to strengthen the role will be retained and re-badged as ‘cost of living relief’. of Infrastructure Australia, including the appointment of The new Government remains committed to a 5 per a Chief Executive Officer and a requirement that all cent reduction in emissions by 2020 and will establish a Commonwealth Infrastructure exceeding $100 million $3 billion Emissions Reduction Fund for projects be subject to analysis by Infrastructure Australia, to test associated with achieving this goal. cost-effectiveness and financial viability. Repealing the mining tax aims to boost investor confidence and Australia’s sovereign risk profile, as well as reducing administrative and compliance costs for affected miners. The Minerals Resource Rent Tax on iron ore and coal profits has raised a fraction of what was forecast when first proposed. 2 Investor Relations. Corporate Communication Other First-term Priorities: • Introduction of a Paid Parental Leave Scheme granting • Introducing government-wide processes to reduce the working mothers six months' leave on full pay, capped cost of red and green tape, along with the at a salary of $150,000. The net cost of the scheme establishment of a ‘one-stop shop’ for environmental will be $6.1 billion, of which half will come from the approvals for major projects. 1.5 per cent levy on about 3000 Australian companies • Reinstatement of the Australian Building and earning more than $5 million in taxable income. This Construction Commission within three months. will be offset by a cut in company tax, from 30¢ in the • Commencing a Productivity Commission review into dollar to 28.5¢. the operation of Fair Work Laws within six months. • Reversing Labor’s recent tightening of fringe benefits • Reviewing current commercial progress for NBN Co tax rules related to novated car leases. and options to meet the Coalition’s broadband policy • Commencing a ‘root and branch’ review of Australia’s objectives, within six months. competition laws and frameworks within two months. EARLY CHALLENGES • With the Coalition falling short of a majority in the • When the new Senate takes effect from July next year, Senate, many of its flagship policies now face a the Coalition is likely to be forced to negotiate its potentially rough passage through the ‘House of legislative agenda with a collection of Review’. Despite a convincing win, Labor and the little-understood independents and minor parties, Greens appear to have rejected Tony Abbott’s claim including the Palmer United Party. Building positive of a mandate and have the ability to form a bloc, relations with these members as soon as possible will thwarting moves to repeal the carbon and mining be a top priority for the new Government. taxes. 3 Investor Relations. Corporate Communication KEY PLAYERS IN THE NEW CABINET Summarised below is information about some of the key Ministers in the new Cabinet. A full list of the new ministries is available by clicking here. TONY ABBOTT - Prime Minister • Tony Abbott has been the Leader of the Liberal Party since defeating Malcolm Turnbull in a leadership spill motion in December 2009. • First elected as Member for Warringah (NSW) at a by-election in 1994, he previously served in the Howard Government as the Federal Health and Ageing Minister from 2003 until 2007. • Before moving into politics, Mr Abbott worked as a journalist and was a feature writer for The Bulletin and The Australian. • A Rhodes Scholar, he holds a Bachelor of Law and Economics from the University of Sydney and a Masters of Politics and Philosophy from Oxford. An avid sportsman, Mr Abbott won two Blues in Boxing during his time at Oxford. • He was Executive Director of ‘Australians for Constitutional Monarchy’ from 1993-94. WARREN TRUSS - Deputy Prime Minister and Minister for Infrastructure & Regional Development • Mr Truss was elected to the Queensland seat of Widebay in 1990. • He served as a Minister in the Howard Government in a range of portfolios - Customs and Consumer Affairs, Community Services, Agriculture, Fisheries and Forestry, Transport, Regional Services and Trade. • Prior to entering Parliament, Mr Truss was a farmer. JULIE BISHOP - Minister for Foreign Affairs • Julie Bishop is the Deputy Leader of the Liberal Party and holds the seat of Curtin in WA. • Ms Bishop previously served in the Howard Government in the portfolios of Ageing, Education, Science and Training and Women’s Issues. • Ms Bishop was born and educated in South Australia, where she completed a Bachelor of Laws at the University of Adelaide. • In 1983 she moved to Perth where she practised as a commercial litigation solicitor; later becoming the managing partner of Clayton Utz's Perth Office. • Ms Bishop attended Harvard Business School in Boston and completed the Advanced Management Program for Senior Managers. 4 Investor Relations. Corporate Communication KEY PLAYERS IN THE NEW CABINET (continued) JOE HOCKEY - Treasurer • Joe Hockey was first elected to the seat of North Sydney (NSW) in 1996. • Mr Hockey served as a Minister in the Howard Government in portfolios which included Small Business, Tourism, Human Services, Employment and Workplace Relations. • Before entering Parliament, Mr Hockey was a banking and finance lawyer. • He holds degrees in Arts and Law. MALCOLM TURNBULL - Minister for Communications • Mr Turnbull was elected to the seat of Wentworth, NSW in 2004. • He served as the Minister for Environment and Natural Resources in the Howard Government and as Leader of the Opposition from September 2008 to November 2009. • Mr Turnbull’s qualifications include a Bachelor of Arts and Bachelor of Laws from the University of Sydney.