Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Finance Minister Mathias Cormann, thanks so much for your time. At least one major bank reportedly believes that Treasury has miscalculated the funds to be generated from the bank levy. What do you say in response to that?
MATHIAS CORMANN: That is just wrong. We stand by the estimates that are published in the Budget papers. This is an appropriate measure. As I have travelled around the country, let me tell you there has been broad support for the major bank levy both from people across Australia, as well as many of the senior corporate leaders.
KIERAN GILBERT: So do you think that this is just another attempt by the banks to try and discredit this new levy approach?
MATHIAS CORMANN: Some of the major banks have taken the view that they want to fight this. We maintain that there is a strong public policy case in favour of it. The major banks have got a particularly dominant and particularly profitable position on the back of the market structure and the regulatory position that they are in. It is entirely appropriate in our judgement for them to make this contribution to Budget repair. In the process we are helping to level the playing field and improve competition across the banking sector, because the smaller banks, the regional banks have been excluded from the scope of this levy.
KIERAN GILBERT: While we are talking about competition, Westpac for one wants international multinational banks who are operating here to also be charged this levy. It is also something that Labor is open to. Is the Government open to extending this levy to foreign multinationals here?
MATHIAS CORMANN: I would refer you back to Paul Keating who brought in foreign banks in order to put some additional competitive tension into the Australian market. What matters in terms of the application of the major bank levy is your size in Australia, the size of your bank under the Australian license. There is no foreign bank operating in Australia that would fall into the major bank category in Australia. All of the major banks that are operating on an Australian license in Australia are actually smaller banks competing with the major banks and helping through competitive tension to improve service and pricing arrangements for customers.
KIERAN GILBERT: Are you worried though that this puts our banks which are the pillars of our economy, the four pillars as we know plus Macquarie as well. Are you worried that this is going to put them at a competitive disadvantage given those foreign multinational banks will not face this particular levy?
MATHIAS CORMANN: No it does not. What matters is your size in the Australian market. The four major banks are very strong. They are very profitable. That is good. We need strong and profitable banks. They will continue to be very strong and very profitable after the major bank levy has come into effect. The point is this, in particular the four major banks have got a stronger, more profitable position than they otherwise would, courtesy of the market structure, the four pillars policy and all of the various regulatory arrangements that flow from that, the Government’s implicit guarantees and so on. They are more profitable than they otherwise would be and it is entirely appropriate in our judgement for the community to get a share out of that additional profitability courtesy of the regulatory protections and the regulatory arrangements that really are enshrining their dominance and additional profitability.
KIERAN GILBERT: Finance Minister it is the story that is dominating the Australian media over the last 24 hours. The scandal around the Tax Office, the Deputy Commissioner and the allegations made against his son involved allegedly in a fraud of $165 million. Are you worried about the reputational damage on the ATO as part of this scandal?
MATHIAS CORMANN: This is an ongoing investigation so there is not much I can say. What I will say though, and what the ATO has said is that this case proves that our systems are working. This was detected, it was investigated, it has been stopped and now a process is under way. We have zero tolerance for corruption and we take very strong and effective action and through a multi-agency approach we are fighting this effectively.
KIERAN GILBERT: But the allegations are mind boggling in terms of the numbers aren’t they?
MATHIAS CORMANN: It is an incredibly large alleged fraud. Which is why it is so good that the AFP and the ATO working together have gone so hard and so effectively in dealing with it. This is now an ongoing process and it will take its course.
KIERAN GILBERT: Tony Abbott spoke to Sky News last night from Israel where he is currently visiting. He reiterated his support for the Budget approach as a second best option, that there needs to be Senate reform to ensure good Government can be achieved in this country in the wake of his 2014 Budget, which he says was best practice being knocked down by the Senate. Without Senate reform he says, good Government is impossible.
MATHIAS CORMANN: A couple of points. It is true, for the last three and half years we have worked very hard to achieve as much Budget repair as possible by reducing expenditure. We did make significant progress through the Senate. There was about $14.7 billion worth of spending reductions that clearly the Senate was never going to pass and so we made some pragmatic judgements in this Budget on what we needed to do in order to maintain our trajectory back to a surplus by 2020-21. That has involved measures on the revenue side of the Budget. That was not our first preference, but that is what in our judgement had to be done. Now when it comes to the Senate, we have pursued Senate reform. About just over a year ago, we changed Senate voting arrangements. That has not yet properly kicked in, because we had a double dissolution election in the most recent election. But the point I would make is that the Senate we will have from here on in will be the Senate that reflects the will of the Australia people. That is the only thing that we can ask for as a Government, a Senate that reflects the will of the Australian people. There were problems with that in the past, where people were able to get themselves elected to the Senate through a quasi-lottery by making backroom deals on preference flows between minor parties and the like. That is no longer possible. People across Australia now have the power to direct more easily, not just their first preference but also their subsequent preference votes. That is a reform that we have successfully got through the Senate and I think we have got to let that play out over the next few elections.
KIERAN GILBERT: And finally, Anthony Albanese moving to differentiate himself from Bill Shorten in terms of his interpretation and response to the Budget, saying that it is an ideological surrender from the Coalition ,this Budget in relation to the key policies of Labor. What do you think of that analysis? He is certainly not alone in that view.
MATHIAS CORMANN: We made judgements on what we believe is in the best interest of Australia. We are making the right choices today for a better and stronger future. We are not taking an ideological view, we are taking a practical view. As far as Anthony Albanese is concerned, we all know that he is auditioning for the top job. He is trailing his coat. Every second day he is out there trailing his coat and as soon as there is too much speculation about when he is going to put his hand up, he says ‘no, no, no’. We know of course that he is after one job and one job only and that is Bill Shorten’s job. So I will leave the Labor Party to sort out their internal issues.
KIERAN GILBERT: Yeah he might be after another job as well, not just that one. But anyway Finance Minister I appreciate your time this morning from Darwin. Very early there, thanks very much for that.
MATHIAS CORMANN: Always good to talk to you.