Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Good morning and welcome to the program. There has been much speculation this week that the Government is considering curbs to capital gains tax concessions as part of a housing affordability package in the upcoming May Budget. The Prime Minister was asked about the prospect of capital gains tax changes. He was asked five times yesterday in Question Time. By the fifth time he was definitive on it, saying the Government is not pursuing this. But it took five questions to get there. The Finance Minister, Mathias Cormann earlier, was much clearer and immediate in his response. There is no plan to change the capital gains tax concessions. The Finance Minister joins me now. Minister is there a difference of opinion within the Government on this, because clearly according to Phillip Coorey and others reporting this, the Government has been looking at it. You were very quick to shoot it down.
MATHIAS CORMANN: I like Phillip Coorey, but the story, his story in the Financial Review yesterday was wrong. He was asserting that certain things would be included in the May Budget. That was just a complete fabrication. There is no such proposal before the Government. The Government has no intention to make these sorts of changes to capital gains tax discounts as he was suggesting.
KIERAN GILBERT: So he wasn’t saying that this was going to be in the Budget.
MATHIAS CORMANN: He did.
KIERAN GILBERT: He was saying that the Government was looking at the prospect of it. He was saying it was possible.
MATHIAS CORMANN: You go back to the story. He did much more than that.
KIERAN GILBERT: Alright, let’s say then is it possible? Is there a prospect you make the change?
MATHIAS CORMANN: The Prime Minister, the Treasurer, myself we have all been very clear. There is only one party that wants to increase taxes on investment, that is the Labor party. We have no plans and no intentions to reduce the capital gains tax discount. We have been very clear.
KIERAN GILBERT: So that is a 100 per cent no.
MATHIAS CORMANN: I cannot be any clearer than what I have been. We have absolutely no plans, no intention, there is no proposal before the Government, this is just typical pre-Budget speculation. People put up kites and they go on fishing expeditions. The Budget is still more than two and a half months away. Normally this sort of speculation starts about four or five weeks before the Budget. The Budget will be delivered on the second Tuesday in May. All will be clear in terms of the Government’s efforts to continue to repair the Budget mess that we have inherited from the Labor party.
KIERAN GILBERT: So there are no differences of opinion that we are seeing at play here.
MATHIAS CORMANN: No.
KIERAN GILBERT: Okay, I want to ask you about Tony Abbott’s comments again, this time he says to James Massola this morning that Labor is the party that believes in taxing and spending. What is the point of a Coalition government if we fail to encourage risk takers, innovators, but penalise them with heavier taxes. Does it hamper the Government and the Cabinet when you have got a former Prime Minister constantly putting pressure in terms of where you should be heading on this stuff?
MATHIAS CORMANN: All of us this week have been very clear. We are the party of lower taxes. We do want taxes to be lower, so we can strengthen growth and create more jobs. We want to repair the Budget by implementing the spending reduction measures that are reflected in our Budget. There is still $13 billion worth of savings that need to be legislated through the Parliament. I have been the Finance Minister both through the Abbott and the Turnbull Governments. I was the Finance Minister when we re-introduced the fuel excise indexation in the Abbott era. I was there when we introduced the Budget repair levy and so on. Governments have to make judgements. Our focus, overwhelmingly, both in the Abbott Government and in the Turnbull Government has been on repairing the Budget by reducing expenditure. But in the end, you do have to make decisions from time to time without increasing the overall tax burden on how you can raise the necessary revenue for government in a better way.
KIERAN GILBERT: So should Mr Abbott then be giving you and those in the Expenditure Review Committee a bit more breathing space in that regard, given those examples you pointed to. The deficit levy and the fuel excise indexation, they were both done under his tenure.
MATHIAS CORMANN: Kieran, in the lead up to any Budget we always get a lot of public and private advice on what we should and should not be doing. This year’s lead up to the Budget is no different. What I can say is that the Turnbull Government is focused on implementing our national economic plan for jobs and growth. It is focused on doing everything that we need to do to continue to repair the Budget, put it on a stronger more sustainable trajectory for the future and make sure that the spending growth trajectory is lower, more affordable and more sustainable. I am quite relaxed about the fact that every year at this time of the cycle a lot of people give us public and private advice. That is fine.
KIERAN GILBERT: Okay, well one of the elements that has been a legacy from the Abbott years is that $13 billion or thereabouts in proposed savings that haven’t been passed by the Senate. Will the May Budget see the end of those one way or another?
MATHIAS CORMANN: The first point I would make is that since 2013, we have actually implemented budget improvement measures in net terms to the tune of about $250 billion over the medium term. There is about $13 billion worth of unlegislated Budget improvement measures left, you are right. The Government remains committed to all of them. We are pursuing, as you know, a second omnibus savings bill... interrupted
KIERAN GILBERT: Until the end of March...
MATHIAS CORMANN: We remain committed to them. We will seek to legislate all of them. As you know, we are pursuing the second omnibus savings bill through the Senate as we speak. We think that is very important that all of those spending reductions that we have reflected in the Budget and have left in the Budget are implemented in full.
KIERAN GILBERT: Medicare levy, speculation around that. Prime Minister was asked about it, wouldn’t rule it out last night. I know you don’t want to get into hypotheticals but that is the balancing act isn’t it? It goes to what we are talking about. If you are going to balance the Budget and you can’t get the saves through the likes of Nick Xenophon and co on the crossbench, you have got to look at something to raise the revenue.
MATHIAS CORMANN: Our priority is to reduce expenditure. Our priority is to get the Budget back into balance by putting the spending growth trajectory on a more affordable and sustainable trajectory over the medium and long term. That is what we are looking at every single day in terms of additional things that we sensibly can do.
KIERAN GILBERT: So the Medicare levy, not on the table in terms of an increase?
MATHIAS CORMANN: We are not planning on increasing taxes. We are planning on reducing expenditure. The Budget will be delivered on the second Tuesday in May.
KIERAN GILBERT: Okay, George Christensen this morning. He’s not in the Ministry. He is putting the heat on the Turnbull Government by saying, according to Sharri Markson in the Tele today that he had written the resignation letter, 2 pages, he was ready to go if not for a new code of conduct for the sugar cane industry. Has Cabinet dealt with this sufficiently, are you going to keep him in the tent?
MATHIAS CORMANN: George Christensen as Christopher Pyne said this morning is not going anywhere. He has made very clear that he is remaining in the Coalition. He is part of our leadership team in the House of Representatives in his capacity as a Whip. He is standing up for his electorate. He is advocating for his constituents. That is his job. We are a strong and united Liberal National Party Coalition. George Christensen is a valued member of that team.
KIERAN GILBERT: But he knows that he got the, well he is the Whip, but he also knows that he has got the whip hand doesn’t he with such a narrow margin in the Lower House.
MATHIAS CORMANN: George Christensen is standing up for his constituents but he is a loyal and committed member of the Coalition.
KIERAN GILBERT: Finally on the renewable energy target debate we have seen much movement on that this week. Labor are seeming to not be as definitive when it comes to that fifty per cent target, an ambition, a goal, however you want to describe it by 2030. Also Mark McGowan in WA scrapping plans to pursue a similar sort of initiative. Does this show that the Government is on some good ground here politically?
MATHIAS CORMANN: Nobody should believe for one second that Mark McGowan has scrapped his plan to introduce a fifty per cent renewable energy target in Western Australia should he be elected. What he has realised is that people in Western Australia and around Australia understand that a fifty per cent renewable energy target is crazy, that it would push up the cost of electricity, would put upward pressure on the cost of living, would hurt business, cost jobs. So he is now seeking to mislead people about his true intentions before the election. This week Mark McGowan said, literally there will be no state-based renewable energy target under any Government he leads. The last time we heard a sentence like that was from Julia Gillard before an election. Immediately after the election we got the carbon tax she promised she would not introduce. Nobody can believe a single word Mark McGowan is saying on this. He put his Shadow Energy Minister in witness protection. He has told him he is not going to be in his Cabinet. There is a deeply divided Labor party here in Western Australia.
KIERAN GILBERT: Alright then, just finally in terms of the target though, the Labor party does it have some justification in saying that the RET, which is the subsidised component of renewable energy which is at 23.5 per cent, that that is different to a broader goal of greater renewable energy component within the energy supply, which is not subsidised. Can you have the two different components of the same policy?
MATHIAS CORMANN: A fifty per cent renewable energy target is just crazy and completely reckless and irresponsible. It would drive up the cost of electricity, it would significantly reduce energy security. This is particularly relevant in Western Australia because we are an energy island. We are not part of the national electricity market. Western Australia has to be energy self-sufficient. There is no interconnector to come and save Western Australia should the wind not blow and we rely too much on wind farms.
KIERAN GILBERT: Mathias Cormann, Finance Minister, thanks for your time.