Senator the Hon Mathias Cormann
Minister for Finance
PATRICK CONDREN: Mathias Cormann is the Finance Minister. It is his job to go out and sell it today as well as the Treasurer Joe Hockey.
Senator Cormann, good morning. Thank you for your time this morning.
MATHIAS CORMANN: Good morning Patrick and good morning to your listeners.
PATRICK CONDREN: Was Tony Abbott loose with the truth when he said in 2012 ‘what you’ll get under us is tax cuts without new taxes’ or is the proposed deficit levy a broken promise?
MATHIAS CORMANN: Well we will be delivering tax cuts. We are scrapping the mining tax and the carbon tax. And scrapping the carbon tax will considerably bring down the cost of electricity and in turn the cost of living and the cost of doing business. Now obviously, we always want taxes to be as low as possible but the situation that we found on coming into Government and the Commission of Audit Report confirmed yesterday is that we are faced with a spending growth trajectory which is unsustainable and which has to be addressed. So on top of $123 billion worth of projected deficits, on top of Government debt heading for $667 billion, the previous Government locked in spending increases beyond the forward estimates that are unsustainable. Now that...interrupted
PATRICK CONDREN: So all that legitimises a broken promise?
MATHIAS CORMANN: Well we are focused on what we need to do in the national interest to strengthen our economy, to strengthen the country.
PATRICK CONDREN: Are you are prepared to break pre-election promises to do that?
MATHIAS CORMANN: We are committed to deliver on our pre-election promises. But what we are also committed to do is make decisions in the national interest. Now the Commission of Audit has made recommendations for structural reforms and structural savings. We will in the Budget implement structural reforms and structural savings. The thing about structural savings is that they start low and build over time. There is a need for an immediate short term special effort to get us into an appropriately strong starting position as we embark on this Budget repair job.
PATRICK CONDREN: Now all that legitimises breaking a pre-election promise does it?
MATHIAS CORMANN: We do not want to break pre-election promises. But by the same token, if we were to impose 100 percent of the Budget...interrupted
PATRICK CONDREN: Do you acknowledge that while you say that you do not want to break a pre-election promise, do you acknowledge that you will?
MATHIAS CORMANN: Well obviously you will have to wait for what is in the Budget. The point I am making today is that these are really the choices that we face. If we want to impose 100 percent of the Budget repair effort in the short term through spending cuts then inevitably we would have to target 100 percent of the effort on lower income earners. The only way you can ensure that higher income earners essentially do their fair share as part of the overall effort – I mean, higher income earners already pay a lot of tax, we recognise and we acknowledge that – but if we are looking at a special effort to essentially get us into a stronger position to start this Budget repair job and if we are committed to spread the effort fairly and equitably across the whole community, then in relation to people who are not receiving any payments from the Government, the only way you can ensure that they help fairly and equitably in the effort to fix the Budget is by considering measures through the tax system, as unhappy as we may be about that.
PATRICK CONDREN: So just on the issue of breaking an election promise and then maybe we can go to more specific details. Just in terms of broken promises, on 9 August at a Media Conference here in Brisbane, Tony Abbott said that ‘The only Party that is going to increase taxes after the election is the Labor Party.’ He also said in August 2013 at a Press Conference in Bondi Beach, he repeated that: ‘the only Party that is going to increase taxes after the election is the Labor Party.’ On August 6, he said ‘taxes will always be lower under a Coalition Government.’ He also said in 2012 ‘what you’ll get under us are tax cuts without new taxes.’ So with all that in mind and given what you have just outlined to the program listeners right now, do you acknowledge that you will be breaking pre-election pledges in order to do what you want to do?
MATHIAS CORMANN: Well you will have to wait for the Budget to see what it is exactly that we are proposing to do. What I am putting to you is that under the Coalition, taxes will always be lower than what they would have been under Labor. We are facing right now as a result of the Budget mismanagement of the previous Government a significant fiscal challenge. The country is facing a significant fiscal challenge. We will need to pursue structural reforms and structural savings in order to address that fiscal challenge. There will be significant savings in the Budget. But in terms of the special repair job in the short term, to get us into stronger starting position as we embark on that journey, in our view it would not be fair to impose all of that effort, 100 percent of that effort, on lower income earners alone. And the only way that you can spread the effort, the additional effort, fairly and equitably across the whole community is if you also consider on a time limited and well targeted basis, some measures through the tax system.
PATRICK CONDREN: For example? For example?
MATHIAS CORMANN: Well we will have to see, I mean...interrupted
PATRICK CONDREN: Well you obviously know about it Senator with all due respect, you can’t come on the radio and fly these kites when you do know specifically what you are talking about and then say well, you will have to find out in the Budget. Why can’t you tell the listeners what you are considering?
MATHIAS CORMANN: Well, we are currently mulling over, obviously, a whole number of options...interrupted
PATRICK CONDREN: Okay, well then what are the options? Run us through some of the options.
MATHIAS CORMANN: Once we have landed on a spot we will be announcing all of the detail in the Budget on the second Tuesday in May.
PATRICK CONDREN: Sure, then run us through some of the options you are mulling over.
MATHIAS CORMANN: Well as I just said, if we were to impose all of these short term efforts...interrupted
PATRICK CONDREN: Well run us though some of the specifics. You say that you want to spread the effort fairly, inevitably you do have to consider measures through the tax system, I heard you saying that on 7:30 last night, I have also heard you say it repeatedly here today. You have also told the listeners that you are mulling over some aspects of it. So what I want to do for the listeners is find out exactly what you are mulling over. Because you do obviously know it. You obviously do know what the specifics are but you’re opting not to tell us.
MATHIAS CORMANN: Well Patrick, it is very important for good Government in Australia that Cabinet processes remain confidential until such time as we have actually reached conclusions. Of course we will take people into our confidence once we have made a final decision and of course in the Budget it will be very clear what we are proposing to do and people will be able to make a judgement as to whether they think we have spread the additional special effort fairly. That is what we are committed to doing. That is what we are focused on doing. We are not doing this out of fun, Patrick...interrupted
PATRICK CONDREN: And no one is suggesting that you are Senator, absolutely. But people could be forgiven for thinking you are playing with them when it comes to certainly some of the welfare hikes that have been flown. People who ring in this program have been terrified about what has been suggested by some in the Government so far. I personally think it is unfair to string them along for your own politically gains until the Budget.
MATHIAS CORMANN: If I may just interrupt.
PATRICK CONDREN: Sure. Sure.
MATHIAS CORMANN: Firstly, I am not flying any kites. Joe Hockey is not flying any kites. What we are doing is we are taking people into our confidence about the challenges that we are facing and we are taking people into our confidence in terms of some of our thinking and why we are exploring particular avenues. We think it is very important that people understand the size of the fiscal challenge ahead of us. We think it is very important that people understand what it is we are trying to do in terms of building a stronger, more prosperous economy and why it is that we think it is important to replace the old age of entitlement with a new age of opportunity, giving people the opportunity to get ahead.
PATRICK CONDREN: Sure. Senator, I have been around politics long enough in order to know the process you are going through before the Budget. I understand what you are doing. Can I ask you something else? A lot of people that ring into us and email us and send us SMS messages want to what is happening with the post-political life entitlements for politicians. For example, the Gold Card and the money that is spent on politicians after they leave public office. Is that something you are considering?
MATHIAS CORMANN: Patrick, I can assure you and your listeners that we are looking very closely at what the so called entitlements of politicians are. And incidentally, politicians are among the high income earners across Australia who would not be making a contribution unless there are some measures through the tax system. So when Bill Shorten comes out and says that he rejects the proposition of any change to the tax system, what he is really saying is that pensioners and low income families should carry the burden.
PATRICK CONDREN: So what changes to the Gold Card are you considering?
MATHIAS CORMANN: Well, you will have to wait for the Budget. I am not in a position to make comment today about what measures will be in the Budget.
PATRICK CONDREN: Ok what about for example, a lot of people make the point to us that there are seven former Prime Ministers, five from the ALP and two Liberal ex-Prime Ministers still alive. In fact, we’ve got an email from Richard: I count five ALP and two Liberal ex-Prime Ministers free loading and Australia cannot survive on the never never debt as Greece and Spain etcetera have found out. So what do you say to Richard who has taken the time to email us about the ex-Prime Ministers and how much they are getting?
MATHIAS CORMANN: Well look, obviously we can go through a whole range of different scenarios and options. I am not going to be able to talk to you today about measures in the Budget. As far as ex-Prime Ministers are concerned, be they Labor or Liberal, I do think that they have a special place in our nation’s history and I do think it is appropriate that, given their service, Labor or Liberal, given their service to the nation, given that really they can never entirely go back to normal private life and that they continue to have a level of public service attached to them ongoing into their retirement, I don’t think it is inappropriate that they have some recognition of that in an ongoing way. But as far as Members of Parliament are concerned more generally, I do agree that there are some things that we can do to make sure that in the current fiscally constrained environment that things are more proportionate to what is appropriate.
PATRICK CONDREN: Ok Senator listen, thank you for your time, I appreciate it. There are plenty of people that want to put questions to the Federal Government. I hope I can do that on their behalf. We look forward to talking to you presumably or Joe Hockey after the Budget is handed in.
MATHIAS CORMANN: Of course, always good talking with you Patrick.