Senator the Hon Mathias Cormann
Minister for Finance
Date: Thursday, 24 October 2013
KIM LANDERS – Introduction
The federal government has released the draft legislation to repeal Labor’s Mining Tax. Under this draft legislation the tax will no longer apply from July next year. For more on this our Political Editor, Lyndal Curtis, spoke to the Finance Minister, Mathias Cormann.
LYNDAL CURTIS: Mathias Cormann welcome to ABC News 24. You’ve announced today the process for a scoping study for the sale of Medibank Private. When would you like it sold by?
MATHIAS CORMANN: We’ve long been committed to the sale of Medibank Private. Medibank is a commercial business which operates in a highly competitive market with 34 health funds and the government as the regulator of the health insurance market as well as effectively one of the largest market participants has an inherent conflict of interest. We are committed to progress the sale of Medibank Private through a proper, methodical and structured process. The scoping study is step one and of course the purpose of the scoping study is to give us advice on the appropriate timetable and the appropriate structure and so on. We will only progress the sale of Medibank Private to its ultimate conclusion if market conditions are right and if we can get an appropriately good deal for tax payers.
LYNDAL CURTIS: You say there is a conflict of interest between the government being the regulator and also owning Medibank Private, but the Head of the Australian Medical Association, Steve Hambleton, says Medibank Private being in government hands has helped keep health insurance premiums down. Do you think that is the case?
MATHIAS CORMANN: We don’t agree with that. The ownership of Medibank Private is completely irrelevant when it comes to the setting of health insurance premiums. The truth is that right now today, Medibank Private like every other health fund operates in a highly competitive market and of course that will continue irrespective of who owns Medibank and that will keep downward pressure on premiums. Furthermore and more importantly, Medibank like any other health fund across Australia operates in a highly regulated market, highly regulated in terms of any premium change has to be approved, any premium change proposal is properly scrutinised by the Private Health Insurance Administration Council. We’re not proposing any changes whatsoever to any of these processes in the context of this sale.
LYNDAL CURTIS: What will you do with the proceeds when it’s sold?
MATHIAS CORMANN: Obviously the options that are available to government are to re-direct the sale proceeds, either into other policy priorities or to use those proceeds to pay off debt.
LYNDAL CURTIS: Joe Hockey said in 2010 and again in May this year that the Coalition would sell Medibank Private and use, what he said in 2010 was, every dollar from the proceeds to help sell down Labor’s debt. Is there the possibility that you might use it for other purposes?
MATHIAS CORMANN: We are getting way ahead of ourselves here. What we’ve said for a very long time is that the Coalition is committed to the sale of Medibank Private. Should the market conditions be right we would take it of course to its ultimate conclusion and the government in a proper orderly and methodical fashion will be able to consider how to best deploy the proceeds from any such sale.
LYNDAL CURTIS: But before the election when you seemed to be very concerned about debt and the Coalition was saying you would use the proceeds to pay down debt, now there’s the possibility that not all of the proceeds might be used for that.
MATHIAS CORMANN: All I’ve done in my statement today is make a statement of the obvious. Should Medibank Private be sold, and we would only sell it if market conditions are right, and if we can get an appropriately high return for taxpayers, but should the sale proceed then obviously the options that are available to government are to either re-direct the proceeds of that sale into other policy priorities or to use the proceeds of that sale to pay off debt. Now both of those options are available to the government and in good time once we have gone much further down the track in terms of all of the other decisions we have to make we will make a decision in relation to that as well.
LYNDAL CURTIS: Now you’ve also released the exposure draft of the legislation to repeal the Mining Tax and the spending associated with it. You will be ending the low income superannuation contribution. That is a respective change. Governments don’t usually like retrospective tax law, why is this ok?
MATHIAS CORMANN: We have very long been on the record as saying that we’ll get rid of the Mining Tax which is a bad tax for the economy, bad for jobs, bad for investment, which is tying up an important industry for our economic prospects into the future in massive red tape, while it doesn’t raise any meaningful revenue, while the Labor government had already spent all the money they thought it would raise and more. We’ve also said for a very long time that as well as getting rid of Labor’s bad Mining Tax we would get rid of all of the measures that Labor attached to it. The only exception we’ve made to that is the increase in compulsory superannuation from 9 to 12%, which we’ve said we would not rescind but which we would implement a bit more slowly, which would phase in over a slightly delayed period of time by two years. Now, none of this should come as a surprise to anyone. We are giving effect to the policies we took to the last election, nothing more, nothing less.
LYNDAL CURTIS: One final question, the legislation as all the measures in it, would you consider splitting the legislation at all if that made it easier to get through the parliament?
MATHIAS CORMANN: A couple of things here, the Labor party should support a piece of legislation which will remove unnecessary red tape from one of the most important industries in the Australian economy at a time when we need to strengthen the economy and secondly, the Labor party should support this legislation because it will help strengthen the Budget. Quite extraordinarily, getting rid of this bad complex Labor party tax will help us improve the Budget bottom line by $13.4 billion. That is important of course, given the massive debt and deficits that we have inherited from the Labor party. We have inherited a Budget in an absolute mess from the Labor party. We have started to repair the damage and this is an important part of that process.
LYNDAL CURTIS: Mathias Cormann, thank you very much for your time.
MATHIAS CORMANN: Always good to be here.