Transcripts → 2013


Transcript of Interview - 2UE with Jason Morrison

Senator the Hon. Mathias Cormann
Minister for Finance


Date: Friday, 20 September 2013

Colin Barnett, GST, commission of audit, Budget

JASON MORRISON: Well, I'm pretty sure we had this discussion before the election. And the Coalition's position was absolutely clear, yes, there will be a review of the tax system in Australia - God knows we've had enough of them. Think the Henry Tax Review, how many elements of that did we get up? A couple, not many.

On the line is Senator Mathias Cormann, who is the brand new Minister for Finance. Senator, welcome to the show and congratulations on your appointment.

MATHIAS CORMANN: Thank you very much and good to be back.

JASON MORRISON: Now I wonder whether this is a little bit of Colin Barnett copping some local criticism for the downgrading of Western Australia's credit rating from a AAA by Standard & Poor's. Is he trying to spread the blame out here, do you think? What's the political reason for him making these comments at the moment?

MATHIAS CORMANN: Well look, Colin Barnett is a very good Premier here in my home state of Western Australia, but on this issue we disagree with him. Obviously what's been happening in recent times is that Western Australia has suffered from all of the additional burdens that Canberra has imposed on our state here with the carbon tax, the mining tax, massive additional red and green tape which has had implications for the mining industry, arguably at the worst possible time, given some of the economic developments both in our region and globally.

JASON MORRISON: Okay. Western Australian economy is largely riding off the back of the mining boom which has been going for a decade odd now. I'm struggling to think of any reason that the Western Australian economy, of all the state economies, would be struggling.

MATHIAS CORMANN: Well obviously Western Australia, as an export focused economy, is impacted, you know, comparatively more than others, when there are changes to the terms of trade and so on. And...

JASON MORRISON: Yes, but all those mining royalties Senator, I mean, you know, there's a lot of money going through Western Australia at the moment. The rents there, house prices are through the roof, the cost of living is fairly expensive. There's, you know, more stamp duty on houses et cetera. I mean the idea that Colin Barnett can be complaining about a lack of revenue streams here is astonishing. Surely this is a spending problem more so than anything.

MATHIAS CORMANN: Well, as a Federal Government we, of course, want to see the Western Australian economy and all state economies across Australia, and indeed the national economy as a whole, grow more strongly, which is why we have started to implement our clear agenda for stronger growth and more jobs. That's why we've started to initiate our plans to scrap the carbon tax, to scrap the mining tax...

JASON MORRISON: I understand.

MATHIAS CORMANN: ...cut unnecessary red tape...

JASON MORRISON: But it must irritate the hell out of you that the first person who's raised this issue so soon after the election is more or less known, not quite entirely but more or less - we've at least got a Government - it must grate something horribly amongst your colleagues that the - that a Liberal Premier has done this. You would kind of expect, for example, the Labor Chief Minister, Katy Gallagher, in the ACT to make those kind of noises, but coming out of a Liberal, come on.

MATHIAS CORMANN: Well, Colin Barnett is a very good Premier and he's done a great job over the last five years as the Premier of this state which is why he was re-elected with an increased majority earlier this year. But as I've said, on this occasion, we disagree with him. We could not have been more clear in the lead up to the election. We've made it very clear in the lead up to the election that under a Coalition Government there will be no change to the GST full stop, end of story.

Now I did listen to the, you know, opportunistic comments by one of the aspirants for the Labor Leadership, Bill Shorten...


MATHIAS CORMANN: ...and, of course, one, he was trying to relitigate an election that he lost. The Australian people clearly have passed judgement in relation to this. And secondly, as you've just pointed out, Katy Gallagher, the ACT Labor Chief Minister was actually, putting forwards an argument that was not dissimilar to the one prosecuted by Colin Barnett here out of Western Australia. But from a Federal point of view, you know, our position is very clear.

Our focus is on implementing the commitments that we've made in the lead up to the last election. Our focus is on growing the economy more strongly by cutting some of those bad taxes that Labor imposed over the last six years by getting rid of some of that red tape which has been pushing up the cost of doing business here in Australia and we will not be making any changes to the GST.

At some point during this term, of course, we will be starting a conversation with the Australian people about medium to long term tax reform priorities and it will all be focused on our objective, to deliver lower, simpler, more efficient taxes which, again, will help us facilitate stronger growth into the future.

JASON MORRISON: Okay. But you have indicated in the past - and let me just confirm that that's still the case - that the GST will be part of that broad taxation review you'll be conducting during the current Parliament?

MATHIAS CORMANN: Well, we have said that we will not stop people from raising whatever issues they intend to raise. But let me just say again, you know, the election of the Abbott Government  on 7 September means that we are committed to no changes to the GST full stop, end of story. Of course, there will be a tax review process which we think is important, because at all times we need to look for opportunities to make our tax system more efficient so that we can further enhance our economic growth prospects moving forward but...

JASON MORRISON: Okay. Look, if - and I know I'm asking you to speculate here a little bit but there are two ways, I guess, of looking at the GST by way of reviewing it. There is increasing the rate of the GST and leaving the base as is or you can widen the base and leave it at ten per cent. If your tax review came back and suggested that there was a valid argument being made by the state - so I notice for example that Victorian Premier, Denis Napthine, has said today that he only gets about ninety cents back for every dollar paid by Victorians in GST.

If there is a case made for increasing the gross amount of revenue generated by the GST which would you prefer, increasing the headline rate and leaving the base where it is or expanding the base and leaving the rate at ten per cent?

MATHIAS CORMANN: Well, you are inviting me to speculate in relation to something that is not on the table and I won't. We will be having a tax review and people will be free to raise whatever issues they want. But our position, which was clearly articulated in the lead up to the last election, is that there will be no change to the GST full stop, end of story.

JASON MORRISON: John Howard was one of the very few politicians anywhere on earth who has managed to be re-elected promising a new tax, which was the case with the GST. Should there be some valid case - and again, this is less speculation. But if there is a valid case made for increasing the gross revenue from the GST you will take that to the people as part of your policy platform, this is what we want to do and you would abide by the will of the people of the next election?

MATHIAS CORMANN: Well there are a couple of different elements to this. Firstly, John Howard did not just - you know, he did not just propose a new tax. What he did propose was the abolition of the wholesale sales tax and a whole series of inefficient State...

JASON MORRISON: Oh no, it's - I understand, but there are very few politicians who've ever been re-elected to high office who've gone out and promised a - one of the broadest taxes - other than, I'd argue, income tax - one of the broadest taxes ever imposed on the people.

MATHIAS CORMANN: Right, so the first point is, John Howard, of course, did pursue genuine and fair dinkum tax reform, which has helped lay the foundation for our economic prosperity since that time. But it involved both a significant tax cut and the abolition of a whole series of taxes, as well as introducing the GST as a more efficient tax base at the time.

Now moving forward, we've got a very clear agenda for this term. Our agenda for this term is to scrap the carbon tax, because that is the quickest way with which we can provide cost of living relief and also provide a boost to our competitiveness by bringing down the cost of doing business. We will scrap the mining tax, we will pursue a - we'll implement a one-point-five per cent cut in the company tax rate, we'll fund income tax cuts and pension increases without a carbon tax. And we'll start a conversation about our medium to long-term tax reform priorities.

Now, the commitment that we have made very clearly is that whatever recommendations come out of that tax review process that, as a government, we would want to adopt, we would put to the next election before implementing them. We think that that was one of the fundamental errors and breaches of faith that was conducted by the Labor Government, which did conduct the Henry Tax Review, and then of course imposed a mining tax and included the revenue of the mining tax into the budget, before having had any conversation with the Australian people about it whatsoever.

JASON MORRISON: Yes, and indeed spent it before the revenue even came in, yeah.

MATHIAS CORMANN: Spent it before the revenue came in. And of course it turns out that the revenue they thought would come in didn't come in, when the money was already all gone.

JASON MORRISON: When do you expect the beginning of the - this broad tax review?

MATHIAS CORMANN: Look - we're now at day two, the second full...

JASON MORRISON: I know it's early days yet, but you must have an ongoing plan, you've got a broad idea as to when it might start.

MATHIAS CORMANN: Indeed we do and obviously we're going through a methodical structured, proper process in terms of implementing all of our election commitments. Our first priority, of course, was to initiate the axing of the carbon tax and the mining tax then - and to get some of these processes underway. Joe Hockey, the Treasurer, and myself, we've also been getting extensive briefings from Treasury and Finance about the state of the budget. So we are obviously having to deal with all of that.

In good time, over the next little while, we'll be making some more announcements about the exact timetable for the tax review and other matters - our first priority right now is to get the commission of audits underway, which will be designed to ensure that taxpayers get proper value for money from the operations of government, to make sure that the operations of government are as efficient as possible, that we eliminate waste and stop duplication. Then of course, we'll tick one box after the other in a proper, methodical and structured way.

JASON MORRISON: It must be - when you sit down and look at what the revenue projections might be for a GST say at twelve-and-a-half per cent, when you're dealing with the hangover that Labor left you of a thirty-odd billion dollar budget black hole, and that's just this year, it's - it must be seriously tempting to think of - or to think of the GST as a mechanism, an existing taxation mechanism that you can just have a little bit of a tinker with, that would raise significant revenue.

Now, I know most of it - in fact all the GST revenue goes back to the states, but that could all - that could untie some of the other monies that you channel into the states, couldn't it? It would free up - it would free you up a lot to do a lot more things if you had that little bit of extra revenue flowing through the system.

MATHIAS CORMANN: Jason, I'm not sure in how many other ways I can put it to you, but there will be no change to the GST, full stop, end of story. And of course what we are doing at the moment is a focus very much on the expenditure side, of putting in place the plans which we announced in the lead up to the election...


MATHIAS CORMANN: ... to save cutting waste, to save on wasteful programs that the Labor Party has put in place over the current forward estimates. Of course our intention is to achieve savings of about six billion dollars over the forward estimates by doing just that.

JASON MORRISON: Mathias Cormann, Senator Mathias Cormann, the Minister for Finance, appreciate your time this afternoon, thank you.

MATHIAS CORMANN: Always good to talk to you.