Senator the Hon Mathias Cormann
Minister for Finance
Date: Friday, 13 June 2014
CAMERON WILSON: I’m joined now by the Finance Minister, Senator Mathias Cormann. Senator, thank you for joining Bush Telegraph.
MATHIAS CORMANN: Good morning.
CAMERON WILSON: If the MRRT gets axed or is repealed later in the year as your Government promised to do, what will happen to low income people’s superannuation?
MATHIAS CORMANN: As we said in the lead up to the last election, we are going to scrap the mining tax and all of the unfunded promises the previous government attached to it. I was listening to the old favourite from Slim Dusty about the pub without beer, well the mining tax is a tax which doesn’t raise any money. There are a lot of things that if money was no object that we would like to be able to do, but we just can’t continue to borrow money in order to put it into initiatives that otherwise might be meritorious initiatives but if we haven’t got the money we can’t afford.
CAMERON WILSON: But how do you justify a change that sees the lowest income earners in Australia stripped of thousands of dollars in their superannuation account?
MATHIAS CORMANN: We don’t accept that. Firstly for the first twenty-odd years of compulsory super there was a tax rate that was applied across the board and 15 per cent tax on income that goes into superannuation is a very low level of tax. The truth is that there are a lot of things that we might want to be able to do, but the mining tax when it was first announced was supposed to raise $4 billion in year one. It raised 95 per cent less than that, $200 million and the $200 million it did raise we are now forced to refund to those mining companies because of the absolute dogs breakfast that Wayne Swan made of the mining tax. It’s actually now costing us money because we had to spend about $50 million administering a tax that hasn’t raised any revenue.
CAMERON WILSON: Okay, you say there are problems with the mining tax. Let’s take that as granted. But if you have a situation where the only group in Australia that does not get a tax break on their super savings is the lowest paid Australians you’ve got an equity problem don’t you?
MATHIAS CORMANN: Well we don’t. Somebody who is on the lowest income tax bracket all throughout their working life, which you’ve got to remember a lot of people might start in a lower income tax bracket and then move their way up the ladder, so to speak and start paying more tax as their career progresses. But for somebody who stays on the lowest income tax bracket for their whole working life, all the way through, I think you’ll find that they will have the ultimate safety net. They will be supported by the aged pension once they reach retirement. None other than Paul Keating made that point very eloquently on Lateline a couple of weeks ago, superannuation isn’t a welfare measure. Superannuation is about encouraging people to save more in order to help them look after their own needs in retirement. Those Australians who earn less than $18,200 all their working life, which means that they don’t pay any tax on their income, if that is their only income I can’t see a circumstance where with or without the lower income super contribution they would be able to rely on their superannuation to fund their retirement.
CAMERON WILSON: But they would be better off if the co-contribution remained in place surely?
MATHIAS CORMANN: Again, there are a lot of things that we might like to be able to do, but in the first five years of the previous government they delivered $191 billion of deficits. We’ve got a deficit this financial year of $49 billion. We were looking at projected deficits over the forward estimates of $123 billion when we came into Government and they introduced a tax, which was supposed to fund, among other things, this particular tax break, which isn’t raising any money. Now, we’ve got to think... interrupted
CAMERON WILSON: So who benefits from removing the MRRT? Who are the major winners?
MATHIAS CORMANN: The economy benefits from it, in particular, in rural and regional areas. Introducing the mining tax, again it is a tax, which isn’t raising any money. It is a tax, which created significant uncertainty for an important industry, which is generating a lot of jobs in rural and regional Australia.
CAMERON WILSON: The mining industry did not want the tax, so they stand to benefit surely?
MATHIAS CORMANN: The mining industry has to pay for the cost of compliance but they’re not paying the tax. So this is the worst possible of any taxes, it is not actually raising any revenue for the Government.
CAMERON WILSON: But aren’t you putting the interests of the big mining companies who make billions of dollars in profits over the lowest paid Australians, many of which are rural Australians and many females in part time work?
MATHIAS CORMANN: I completely reject that. We’re putting the interests of rural and regional communities first, who benefit from stronger economic growth and from job creation in rural and regional communities. At the end of the day, that’s what it’s about. A mining company which is more profitable pays more company tax and is able to make additional investment in further growth in employing more Australians. The money has to come from somewhere to fund all of the services that Government provides right across the board including and in particular in rural and regional Australia.
CAMERON WILSON: Very quickly if you could Senator, any prospect the low income superannuation contribution will be maintained in any form?
MATHIAS CORMANN: No, because as we made very clear in the lead up to the last election, we were very open and very transparent about it, the mining tax is a bad tax, which is bad for the economy and jobs and which will be scrapped and we will not be able to maintain any of the unfunded promises that the previous government irresponsibly attached to it.
CAMERON WILSON: Thanks for joining us Senator, appreciate it.
MATHIAS CORMANN: Good to talk to you.
CAMERON WILSON: Senator Mathias Cormann, who is the Minister for Finance.