Senator the Hon Mathias Cormann
Minister for Finance
Date: Friday, 30 January 2015
TOM ELLIOTT: We are now joined by the Federal Government’s Finance Minister Mathias Cormann. Mr Cormann good afternoon.
MATHIAS CORMANN: Good afternoon Tom and good afternoon to your listeners.
TOM ELLIOTT: Thank you very much. Now Tony Abbott has today described himself as a good team captain. Do you agree?
MATHIAS CORMANN: I do. I believe that Tony Abbott is a very good captain. He forged a strongly united team in Opposition. He has led the charge now in Government on implementing our agenda for a stronger, more prosperous economy and to ensure that Australia is safe and secure. I believe that we have made significant progress under his leadership last year and there is of course much more work to be done, but...interrupted
TOM ELLIOTT: Okay, but I know of at least one MP, I won’t say which one, but it is one of your colleagues in the Federal Parliament, who has been getting upwards of 200 phone calls a day from concerned Liberal party members since the Prince Philip Knighthood was announced. That can’t be a good thing can it?
MATHIAS CORMANN: This week hasn’t been a good week. We are not kidding ourselves about that. The Prime Minister himself has acknowledged that his decision there was not very well received. Look, he has learnt his lesson. He has said that he would consult more widely in the future in relation to these sorts of matters and I do believe it is now time to move on. We do have to keep it in perspective. It was a decision that was not well received, but it is not in the whole scheme of things the most important issue that we have got in front of us here in Australia today. We need to really focus on what it is that we need to do to strengthen our economy, to secure our future...interrupted
TOM ELLIOTT: I do agree with you on that, I do think that we need to focus on the main game. Unfortunately, people are questioning the Prime Minister’s judgment. So just to put a line under this, from now on, Tony Abbott won’t make these sorts of decisions just by himself? He will talk to people like you and Joe Hockey and Malcolm Turnbull and Julie Bishop and all of the other people in the party?
MATHIAS CORMANN: I think he is very, very mindful about the implications of what has emerged this week. Certainly he has been very clear in saying that he has learnt his lesson and that he will consult more widely in the future on these sorts of issues.
TOM ELLIOTT: Okay, I want to ask you about tax reform now. Now earlier this week, I had a number of people ring up and they were very concerned that Apple had $6 billion of revenue in Australia in the last 12 months yet only paid $18 million of taxes, just a tiny fraction. Numbers are probably similar for big companies like Google and Amazon. And I came up with the idea that trying to chase down Apple for money is difficult but if we increase the GST that might actually get us some more of Apple’s revenue before it heads out of the country. Is that a possibility? Are you looking at increasing the rate of GST and maybe the Federal Government keeping some of that money?
MATHIAS CORMANN: There are different issues here. Firstly, obviously I am not at liberty to discuss the individual tax affairs of individual taxpayers. You wouldn’t want me to discuss your tax affairs and I am not at liberty to talk about individual taxpayer’s tax affairs...interrupted
TOM ELLIOTT: But the whole country, I am talking about the GST.
MATHIAS CORMANN: The second point is that every company, every business that generates profit in Australia has to pay their fair share of tax consistent with our laws in relation to their profits here in Australia. We do have very strong anti-avoidance tax laws here in Australia, but we are also looking at how that can be further strengthened in a way that doesn’t make it harder for Australian businesses to expand overseas. In relation to the GST, which is the final point, as you would be aware, we made a very clear commitment in the lead up to the last election that we would not be making any changes to the rate or the base of the GST in this term of Government. What we also said is that we would engage in a conversation with the Australian people this term through the Tax White Paper review process where we would look at how we can improve our tax system, how we can have lower, simpler, fairer, more efficient taxes so that the revenue of Government, to fund the services of Government, is raised in the most efficient way possible. People will make suggestions in relation to the GST. What I would say here though is that we will not be adopting any proposals in relation to the GST unless there is broad consensus across the community, broad consensus across the Parliament and unless all of the State and Territory Governments including the State Labor Government in Victoria agree with the proposals that have come forward.
TOM ELLIOTT: Okay, but again, you’ll only get that consensus if you put it out there. I mean, if you say righto, look we reckon this is what we have to do. Because I mean, I look at it and I say, okay, increasingly money that goes into digital transactions, you know, what Apple does a lot of the time, is getting harder and harder to tax in high tax jurisdictions like ours, because they can shift profits legally and easily. Secondly, you have got rid of the Carbon Tax; you got rid of the mining tax, which were both election promises, so no problems there. But again, that reduces the tax revenue available to the Australian Government. If the GST is off the agenda, what are you going to do to get more money to try and fix up the Budget?
MATHIAS CORMANN: Firstly, getting rid of the mining tax actually improves the Budget bottom line by $10 billion over the current forward estimates and $50 billion over the next decade. I know that sounds counter intuitive, but the previous Labor Government unbelievably came up with a tax which left the Budget worse off. Us scrapping the mining tax actually improved our Budget position. But in relation to the Carbon Tax, similarly, it was one big money-go-round. It wasn’t something that over time improved the Budget position, it weakened economic growth...interrupted
TOM ELLIOTT: No, but you kept a lot of the spending associated with the Carbon Tax and a lot of the subsidies that were given to people. So they have been left in place in many cases and yet the tax that at least paid for that spending and those subsidies is now gone.
MATHIAS CORMANN: Well we didn’t. What we did keep were the income tax cuts related to the Carbon Tax and the pension increases. All of the compensation that went to businesses, all of the compensation for the Carbon Tax that went to emissions intensive and trade exposed industries and the like, that all went. We have abolished all of that.
TOM ELLIOTT: Okay, so what are you going to do though? I agree the Budget is in a complete mess. Debt is going up, deficits are forecast to stay in place for at least the next four or five years. What are you going to do to fix this?
MATHIAS CORMANN: What we are going to do is make sure that we get spending under control. Our spending growth trajectory was unsustainable. Spending was increasing by too much. Then the second thing we need to do is once we have got our spending growth trajectory under control, we need to ensure that the revenue required to fund the important services of Government is raised in the most efficient, least economically distorting way possible...interrupted
TOM ELLIOTT: But these are generalities. I mean yes, get spending under control, yes, raise more revenue. But I mean...interrupted
MATHIAS CORMANN: Not raise more revenue, raise the revenue in the most efficient way possible.
TOM ELLIOTT: Oh, alright, well raise it efficiently. But I mean, okay, with spending we have tried to put in charges for going to see general practitioners, I mean, that has been knocked back I think three times now. You have got obviously a difficult Senate. But I mean, again, are there some new ideas that you have got to try and cut spending or increase fees or again do something?
MATHIAS CORMANN: Just to be clear in relation to what we are proposing on Medicare. So in relation to Medicare, what we are trying to achieve is to ensure that funding for Medicare is sustainable over the medium to long term, that we can protect Medicare for the long term. That we can ensure vulnerable patients, pensioners, concession card holders and the like can continue to have access to bulk billing but that those of us who can afford to pay a bit more when accessing a relevant medical service, we make a small contribution towards the cost of that...interrupted
TOM ELLIOTT: Alright but again that is a very general statement and we have heard it before. Does this mean, are we going to have, like a means tested fee for seeing the doctor for example?
MATHIAS CORMANN: That is not what we are talking about. What we are talking about is a price signal. What we are talking about is a small co-contribution by those that can afford to pay a little bit when they are accessing a relevant medical service. A small co-contribution as part – it is essentially a user charge where you are helping to fund a service which currently overall is taxpayer funded. I mean, none of these services are for free right ...interrupted
TOM ELLIOTT: No, no, I know that. But does this mean that the concept of a co-payment whether it is $5 or $7 or whatever it is to go see the doctor, is that still on the table, it hasn’t been taken away?
MATHIAS CORMANN: What we have announced before Christmas and what remains on the table is a $5 optional, up to $5, optional co-payment at the discretion of the doctor. So what we said we would do later this year, it’s supposed to come into effect later this year, is a reduction in the Medicare rebate for certain services, which the doctor at his or her discretion can recoup from the patient. We have excluded from the scope of that patients that are on concession cards, pensioners, children under sixteen and the like, so ...interrupted
TOM ELLIOTT: Okay.
MATHIAS CORMANN: There are millions of Australians that are excluded from this. But for those of us who can afford to make a small contribution, to help cover the cost of medical services, which are now available for free, which are currently fully funded by the taxpayer, then we think that is a sensible thing.
TOM ELLIOTT: Alright, just so I’ve absolutely got this clear, you got a concession card you won’t have to pay it but for everybody else the doctor will receive $5 less from Medicare. The doctor will have to decide whether to make up that $5 by charging the patient.
MATHIAS CORMANN: That’s right.
TOM ELLIOTT: Okay. Do you think this will get through the Senate?
MATHIAS CORMANN: The way that the Medicare Benefits are managed is through a Medicare Benefits Schedule, which is essentially a regulation that is reviewed by the Government once every year. That is the way the process has worked in the past. That is the way the process will continue to work in the future, consistent with the relevant legislation and the Senate will have the opportunity to pass judgment in the ordinary course of events.
TOM ELLIOTT: Well that will be interesting. Final question and I have always wondered this, what does a Finance Minister do that a Treasurer does not do? How is your job different from Joe Hockey’s?
MATHIAS CORMANN: Joe Hockey is the leader of the economic team in Government. He has got responsibility for macroeconomic matters, for the revenue side of the Budget and generally for the overall economic strategy of the Government. The Finance Minister is responsible for the expenditure side of the Budget and also for all the various microeconomic issues and Government Business Enterprises. For example, the sale of Medibank Private last year, which is part of the Government’s microeconomic reform agenda, that was my responsibility. And everything related to spending in the Budget is something that I’m responsible for. Making sure that we spend taxpayers’ money wisely and that the Government funding is as well targeted as possible.
TOM ELLIOTT: Mathias Cormann, Federal Finance Minister, thank you for your time.
MATHIAS CORMANN: Always good to talk to you.