Senator the Hon Mathias Cormann
Minister for Finance
Date: Wednesday, 3 September 2014
MICHAEL BRISSENDEN: A deal struck between the Government and the Palmer United Party to axe the mining tax will see the retirement incomes of ordinary Australians reduced by billions of dollars. Industry groups like the Financial Services Council estimate workers will lose $128 billion in superannuation contributions over the next ten years. And some of the other spending measures attached to the mining tax will be phased out over the long term. Mathias Cormann is the Finance Minister and he joins me now. Senator Cormann welcome.
MATHIAS CORMANN: Good morning.
MICHAEL BRISSENDEN: You have removed the mining tax as promised but you are still left with an unfunded liability of over $6 billion. The SchoolKids Bonus for instance will still be paid to families earning under $100,000. Is that correct?
MATHIAS CORMANN: We have removed the mining tax and we have removed all of the unfunded promises that were attached to it which we said we would remove. We have removed three of those measures later than we would have liked, including the SchoolKids Bonus. That does come at an expense of $6.5 billion over the forward estimates. It also means that we are locking in more than $10 billion in savings now and about $50 billion in savings over the next decade. The $6.5 billion in additional expense over the forward estimates we are recovering by the end of 2023 through the changes we have made to compulsory superannuation.
MICHAEL BRISSENDEN: Sure but for the moment that is an unfunded liability isn't it. That is still $6.5 billion that you didn't think you were going to have.
MATHIAS CORMANN: We have locked in more than $10 billion in savings. The alternative was no savings and the mining tax continuing to hold Australia back, preventing us from attracting more investment and creating more jobs. We focused on achieving the best deal that we could in the national interest.
MICHAEL BRISSENDEN: Now you blame the Labor Party for having to make these compromises but in effect you have done a deal with the Palmer United Party.
MATHIAS CORMANN: Supported by the Family First Party, the Liberal Democrats, and also the Australian Motoring Enthusiasts Party. Senator Madigan from the Democratic Labor Party also supported us resolving this issue yesterday.
MICHAEL BRISSENDEN: Okay but why not work with the Labor party for instance? For instance the BHP profit raised 23 per cent over the last year, more than $14 billion. Why not make that tax more efficient? The Labor party would have supported that.
MATHIAS CORMANN: We went to the last election very clearly making the commitment that we would get rid of the mining tax. The mining tax was always a bad tax. It targeted an important industry for Australia, it targeted an industry that we need to continue to be strong and stronger into the future in order to build a stronger, more prosperous economy.
MICHAEL BRISSENDEN: Sure but by your compromise you are taking the tax away from the mining companies and penalising people who earn less money.
MATHIAS CORMANN: Just remember that this is a tax which the Labor Party said would raise many billions of dollars is actually costing the Budget billions of dollars. Only the Labor party can be so bad to come up with a new tax that leaves the Budget billions and billions of dollars worse off. What we have done yesterday is scrap the mining tax to help build a stronger economy and we have also scrapped the unfunded promises Labor attached to it in order to repair the Budget mess that we have inherited from the Labor Party.
MICHAEL BRISSENDEN: This deal will cost somebody who is 30 for instance and is earning $100,000 a year almost $40,000 in retirement income. Now you said that as a Government, as Opposition before the election that there would be no adverse changes to superannuation in this term. That person would see this as a broken promise. And they would be right wouldn't they?
MATHIAS CORMANN: No they would not be right. Because this is not an adverse change to superannuation. What we have done yesterday is that...interrupted
MICHAEL BRISSENDEN: Yes it is for someone who is earning less than $100,000.
MATHIAS CORMANN: I think you're making some assumptions here Michael, because the truth is increases in compulsory super savings don't come out of thin air they come out of people's own pockets. They come out of worker's wages. Don't take my word for it. That is what Bill Shorten used to say when he was the Minister for Financial Services and Superannuation. What we have done is we have ensured that people have more of their own money available to them pre-retirement so that they can use it to deal with cost of living expenses or they can use it to pay off their mortgage faster or they can use it to save more through superannuation voluntarily.
MICHAEL BRISSENDEN: If you prosecute that argument though why have any superannuation liability? Why have superannuation at all?
MATHIAS CORMANN: We support superannuation and we also support compulsory super continuing to go up to 12 per cent by 2025. What we have done is put it on a more realistic trajectory given the additional costs that you have pointed out are the result of the amendments that were passed by the Senate yesterday.
MICHAEL BRISSENDEN: Okay well Clive Palmer has got a good deal hasn't he? He doesn't pay the mining tax and now he doesn't have to pay his superannuation liability increases to his employees.
MATHIAS CORMANN: Nobody across Australia at the end of the day paid the mining tax. We were told in year one it would raise $4 billion. In pre-payments it raised $200 million, 95 per cent less than Wayne Swan told us. And even that $200 million is being refunded because of the dodgy deal that Julia Gillard and Wayne Swan did in the shadow of the 2010 election. This was always a bad tax. It was bad for our reputation internationally, it was bad when it comes to attracting investments and it was costing jobs. Boosting economic growth, boosting jobs is actually good for Government revenue in the final analysis as well.
MICHAEL BRISSENDEN: Okay. Is this a sign that more deals are coming? For instance on the co-payment, the GP co-payment, Clive Palmer says he won't move on that. But he has offered a means tested option on it. Are you going to go down that road?
MATHIAS CORMANN: The Government has said all the way through, ever since we have delivered the Budget in May that we will continue to progress all of our Budget measures through an orderly and methodical process, sequentially and in a prioritised manner. We will continue to do that moving forward. Yesterday was another instalment and we will continue to work to deliver all of the Budget measures that we delivered in May.
MICHAEL BRISSENDEN: Have you rejected his offer of a means test for the GP co-payment?
MATHIAS CORMANN: I am not going to pre-empt where our discussions are going to take us. The GP co-payment is a very important structural reform. It will help make access to our high quality health care system sustainable over the medium to long term, which is very important for people across Australia who need timely, affordable access to quality health care.
MICHAEL BRISSENDEN: What about compromises on the wait for the dole for those under 30? There has been a lot of reports that the six months is too long that there is going to be movement there.
MATHIAS CORMANN: I am sure you would like me to conduct our negotiations with crossbench Senators through the media. I have resisted that temptation in the past, I resist that temptation now. We will continue to talk professionally and courteously behind closed doors to those represented in the Senate that are prepared to engage with the Government constructively on seeking consensus in the national interest.
MICHAEL BRISSENDEN: Mathias Cormann thanks very much for joining us.
MATHIAS CORMANN: Always good to talk to you.