Transcripts → 2015


5AA with Leon Byner

Senator the Hon Mathias Cormann
Minister for Finance
Senator for Western Australia


Date: Tuesday, 27 January 2015

Tax anti-avoidance laws, Budget, Senate, Higher Education reforms, Knighthood for Prince Philip

LEON BYNER: Let's talk in the meantime about Australia's finances, because we are all under the pump, because the Federal Government have talked about a trajectory of debt and a blow out, and trying to fix the state of the Budget. So let's talk and welcome, Happy New Year to the Finance Minister Senator Mathias Cormann. Mathias good morning.

MATHIAS CORMANN: Good morning and Happy New Year to you and your listeners.

LEON BYNER: Thank you. Now before we get on to some of the problems that you have in the Senate, one of the highly respected economic people, who happens to be on Labor's side but just because he is, doesn't mean he is right or wrong, but he makes the point that US tech giants like Apple, Google, Uber, Airbnb are not paying taxes or fair taxes in Australia and why don't the Abbott Government take the initiative and start getting the revenues to which they should deserve, thus putting less pressure on the average person to pay for the Budget?

MATHIAS CORMANN: We have taken the initiative and Andrew Leigh knows that. In Australia we have some of the toughest anti-avoidance tax laws in the world. There are some issues that we are dealing with internationally through the G20 in particular when it comes to making sure that multinational companies pay their fair share of tax in those countries where they generate their profits. That is something that is not easily done unilaterally in one jurisdiction on its own. It is something that we need to do working together with countries around the world facing similar challenges and that work is very much underway. We are totally committed to making sure that companies who generate profits in Australia pay their fair share of tax here in Australia.

LEON BYNER: So are you saying that we can't initiate first? We have to wait for, who do we have to wait for?

MATHIAS CORMANN: It is not a matter of having to wait. If you get this wrong, you end up hurting Australian businesses wanting to expand in other countries overseas. We want Australian businesses to be successful internationally in the same way that businesses from other parts of the world operate here in Australia. Now if we were to take unilateral action, it can have counter- productive effects on jobs and businesses here in Australia and that is what we are wanting to avoid.

LEON BYNER: Mathias, the fact is that you have got companies like Google and others, and Apple, who pay the tax rate of a middle to high end earner and that is crazy. Now I understand that you don't want to mute the opportunities of companies investing overseas but we are talking about massive giants here that have got no equal in Australia by a long shot.

MATHIAS CORMANN: Indeed and I totally agree with you and we are working to ensure that multinational companies, without talking about the tax affairs of individual taxpayers...interrupted

LEON BYNER: Yeah sure...

MATHIAS CORMANN: ...but that multinational businesses, generating profits here in Australia are required to pay their fair share of tax here in Australia.

LEON BYNER: So how long do you think it will be before you could go to the people and look down the barrel of a media camera and say: ladies and gentleman, we are now collecting X billion of dollars of taxes that we should be collecting?

MATHIAS CORMANN: All of the taxes that we should be collecting are being collected and that is of course the responsibility of the Tax Commissioner Mr Jordan who is doing a lot of very good work in relation to this. But the world doesn't stand still, there are always changes in business models, changes in technology, changes in all sorts of areas and indeed attempts to be creative, new attempts to avoid paying tax that ought to be paid. We do have, as I said, some of the toughest anti-avoidance tax laws in the world. We do have a very high quality tax administration, the Australian Tax Office and the Tax Commissioner Chris Jordan is right on top of this...interrupted

LEON BYNER: Yes, but he can't change the rules Mathias, you can.

MATHIAS CORMANN: And the rules already require businesses generating profits in Australia to pay tax in Australia. But there are some other things that we need to do in order to strengthen the legislative framework...interrupted

LEON BYNER: When will that happen?

MATHIAS CORMANN: Well that work is currently underway.

LEON BYNER: So it will happen soon?

MATHIAS CORMANN: It will happen as soon as possible because believe you me, we also want to generate the revenue that is rightfully ours here in Australia in order to fund the important services of Government.

LEON BYNER: Okay, well the media have pointed out today from Andrew Leigh's speech that there are quite a lot of companies, and big ones, very big ones, bigger than many in Australia, who are not paying a fair share. So do you think it will be this year that you will start to collect that or next year?

MATHIAS CORMANN: You shouldn't necessarily take everything as gospel that the Shadow Assistant Treasurer, the Labor Opposition spokesperson says about the tax affairs of individual taxpayers. What I am saying to you is that the Australian Government is absolutely, is totally committed to ensuring that businesses across Australia pay their fair share of tax on the profits generated here in Australia. Now we have a very strong legal framework in place already, we are looking at how that can be further strengthened and our Australian Tax Office under the leadership of Mr Chris Jordan is working very, very hard to ensure that every single taxpayer pays the tax that they have to pay.

LEON BYNER: See another issue, the reason I am pushing you a little bit on this Minister is because I think that everybody listening understands the basic tenant and that is that if you are getting revenue plentifully from other sources, then there is less pressure on the PAYE taxpayer to fess up more. So I think that is the basic construct of our conversation today. You see you know for example that a sovereign country can buy a business here and through various convenient arrangements which are quite legal which is called price transfer, they can send products back and there is no interaction with the ATO and your own Senate have heard this. So are we going to deal with that too?

MATHIAS CORMANN: Well transfer pricing is absolutely something that we are looking at in terms of making sure that we have got appropriately strong legal arrangements in place. But again, we already have got some of the toughest anti-avoidance laws in the world. Labor announced some half-baked changes in the lead up to the last election, didn't legislate them. When we came into Government, the advice from Treasury and the tax office to us was that those proposed changes were un-implementable. They were not practically able to be implemented and furthermore, there was significant risk that it would have negative consequences for Australian businesses wanting to grow in other parts of the world and generate revenue and jobs here in Australia in the process. So it is a matter of ensuring that we get the detail right and that we don't cut off our nose to spite our face.

LEON BYNER: You have had a number of problems with the Senate being able to get a lot of measures through, co-payments and others and now you have suggested previously last year that if you can't if you can't get permission from the Senate, you'll try and do things through regulation. Put us up to speed on this. What are you contemplating?

MATHIAS CORMANN: The problem that we have is not a problem with Senate. The problem that we have is a problem with the Labor Party refusing to take responsibility for the mess they made with the Budget during their period in Government. We did inherit a very bad Budget position. $123 billion worth of projected deficits and debt heading to $667 billion and growing beyond and a bad spending growth and debt growth trajectory, an unsustainable spending growth and debt growth trajectory. Now what we're doing is continuing to implement our plan. We are in a much stronger position now as a result of the difficult but necessary decisions that we made last year. There are some structural reforms in particular, in relation to our proposal to strengthen and to protect Medicare and in relation to our proposals to improve our higher education framework that are... interrupted

LEON BYNER: You haven't got that through the Senate though.

MATHIAS CORMANN: Our higher education reforms are not due to come into effect until early 2016. Towards the end of last year, in the Senate we were able to persuade four out of the six crossbench Senators that we needed to get them through, of the merits of our reforms. These are reforms to ensure that our universities are as competitive internationally as possible. That our students get the best possible university education, preparing them for their life in the workforce. We need to convince two more crossbench Senators. That is the job at hand and Christopher Pyne, the Minister for Education is working very hard to make sure we get there.

LEON BYNER: Minister, I want to talk briefly about the council rebate. Now the Federal Government have withdrawn a considerable amount of money which the other States have compensated for, where pensioners and others were getting a rebate of $190. But that's going to stop here as of 1 July in South Australia and the current Treasurer of this State, Tom Koutsantonis says the local Liberals should ring you up, or the Treasurer and say hey, or Tony Abbott, give us the money back.

MATHIAS CORMANN: After too many years of Labor State Governments in South Australia, the Labor State Government's Budget is in a complete mess. Arguably the Budget in South Australia is in the worse position in the history of the State of South Australia. That is a matter for the State Government in South Australia. Now the truth is that the Federal Government cannot afford to continue to fund a significant proportion of State Government concessions. These are concessions offered by State Governments. Up until last year, a proportion of those concessions were funded by the Federal Government. They were funded by the Federal Government with borrowed money. If State and Territory Governments take the view, and a number of State Governments around Australia have taken the view, that these concessions for pensioners and the like are important, then they should continue to provide them. But here was too much double up, too much overlap, too much money flow backwards and forwards. That was inefficient. But State Government concessions are a responsibility for State Governments. That is the way that it ought to work and that is the way we think it should work.

LEON BYNER: Alright, just quickly. Yesterday was Australia Day. There was an announcement that a Knighthood would go to Prince Philip. This has created a lot of controversy, not least of which from your side of politics. This has opened up the Prime Minister to more ridicule at a time where there are serious questions about his judgement that's been put out there. How do you react to this? What do you think about that?

MATHIAS CORMANN: The decision in relation to the Knighthood for Prince Philip was a decision of the Prime Minister. It wasn't a decision of the Government. I understand and appreciate that Prince Philip has made a significant contribution in Australia through the Duke of Edinburgh Award, which has had a significant positive impact on the lives of many young Australians over several decades. Having said that, I understand that there is a level of debate across the community in relation these matters, but from my point of view my focus is on working on doing the best I can, as part of a team, to help put Australia on a stronger foundation for the future.

LEON BYNER: Well, of course you would say that and that's obviously what you will do as a team player. But do you personally endorse that award?

MATHIAS CORMANN: I'm not a commentator. I'm somebody who's got a job to do ... interrupted

LEON BYNER: You're a member of Cabinet. You're a member of the Government that's getting, copping a lot of criticism. The reason I'm putting it to you Mathias is because other members on your side have been quite critical of this.

MATHIAS CORMANN: It wasn't a decision of Cabinet. It was a decision of the Prime Minister. The Prime Minister has explained why he thought that award was appropriate. I understand his perspective of it and I understand why he's made the decision. Prince Philip has made a significant contribution to Australia. Having said that, my focus is on the job at hand and the job at hand is to continue to implement our plan for a stronger, more prosperous economy where everyone has the best possible opportunity to get ahead.

LEON BYNER: One final question, if there was one thing you could do for South Australia to help it in its economic woes, what would you like it to be? What will it be?

MATHIAS CORMANN: We need to ensure that we remove some of the burden, some of the regulatory burdens that prevent some of the significant projects in South Australia to get off the ground. There are opportunities in South Australia, in particular in the resources sector, to strengthen economic growth into the future. We want to be part of making that happen.

LEON BYNER: Alright, Mathias Cormann thank you. That's the Finance Minister, Mathias Cormann, going through a few issues as we enter into a new year, which obviously will have its challenges in terms of the management of our country.