Transcripts → 2015


2GB with Ben Fordham

Senator the Hon Mathias Cormann
Minister for Finance


Date: Wednesday, 15 April 2015

Budget, Tax White Paper, GST, 2016 election

BEN FORDHAM: Joining me in the studio right now, the Federal Finance Minister Mathias Cormann. Minister good afternoon to you sir. 

MATHIAS CORMANN: Good to be here. 

BEN FORDHAM: Thank you very much for coming in and having a chat. You’re less than a month away from the next Budget, the 12th of May I think it is. This is an important one for you. The last one was important for you but it didn’t quite work out the way it was supposed to. 

MATHIAS CORMANN: We have made a lot of progress since last year’s Budget and the second Budget, this year’s Budget, will build on the progress that we have made since last year in strengthening the economy, creating more jobs and in getting the Budget back on track. 

BEN FORDHAM: The Prime Minister Tony Abbott has held a business lunch today, you have had your own business lunch today. 

BEN FORDHAM: What have you got, duelling business lunches do you? We could have saved some money by having the one business lunch under one roof. 

MATHIAS CORMANN: Mine had been lined up some time ago and I have got to say, it is pretty hard to compete with the Prime Minister for attention. 

BEN FORDHAM: No doubt, but he has started to reveal some of what’s coming our way. You have dumped a planned tax cut for big business today? 
MATHIAS CORMANN: What we have said for some time now is that our priority when it comes to tax cuts will be small business. Small business is the engine room of the economy. There is obviously a balance to be achieved. We want to strengthen economic growth, we want to strengthen jobs growth. In the Budget there is only so much space right now, we would like to do more but what we have said for some time now is that the 1.5 per cent tax cut for business would be quarantined and targeted at small business. 

BEN FORDHAM: Okay, so it’s dead?  

MATHIAS CORMANN: No. This is as much as we can do at this point. We would like to do more later ...interrupted 

BEN FORDHAM: It is dead for now? 
MATHIAS CORMANN: It is not going to be pursued at this point in time. As soon as the economy is stronger, the Budget position is stronger, we will be able to do more. 

BEN FORDHAM: Minister, I am going to pronounce it dead, okay? It is dead, buried, cremated. The 1.5 per cent company tax cut for big business is gone, dead. 

MATHIAS CORMANN: It is a matter of what can be achieved now and what might be able to be achieved later when we are in a stronger position. 

BEN FORDHAM: But the good news is as you highlight, it remains for small business?   

MATHIAS CORMANN: It will be very much so targeted at small business. 

BEN FORDHAM: Okay, we need to underline as well, this tax cut was kind of to make up for the fact that big businesses were going to copping the levy. This is big business I am talking about now to pay for the Paid Parental Leave Scheme. There is no PPL anymore so it kind of balances out doesn’t it?  Is that the thinking? 

MATHIAS CORMANN: There will not be a Paid Parental Leave levy. We are not proceeding with the Paid Parental Leave Scheme so there won’t be a Paid Parental Leave levy for big business. That is right. 

BEN FORDHAM: Okay, so for small businesses, can you elaborate on that for a little bit at the moment? Just on how many people will be affected by that? When it kicks in? Can you give us some detail? 

MATHIAS CORMANN: The detail is yet to be announced and I will leave it to the Treasurer and the Small Business Minister and the Prime Minister to release the package in the next few weeks. 

BEN FORDHAM: While we are thinking of small business, penalty rates have been something that you guys have pushed onto the back burner for a while now. The line was for a while oh no, well the Productivity Commission is looking into penalty rates and then I think it might have been, was it Eric Abetz possibly who came out and said oh no, we won’t be doing anything with penalty rates. Is it fair to say we are not going to hear anything about penalty rates? 

MATHIAS CORMANN: We were very clear in the lead-up to the last election in relation to what we would and what we wouldn’t do in this term of Government. The Productivity Commission review, that wasn’t some time ago, that has only recently been initiated. That is yet to report. Whatever we might do in the second term of Parliament as a Government obviously we will be putting that to the Australian people before the next election. 

BEN FORDHAM: Okay, childcare. I’m just reading through some of Prime Minister, Tony Abbott’s speech today. It’s looking like the Government will scale back childcare packages until the finances are in a better position, is that fair to say?

MATHIAS CORMANN: What we’re doing with childcare and Scott Morrison is doing a lot of work in this space, is to ensure that the public investment is appropriately targeted to where we can get the biggest bang for our buck in terms of lifting work participation, in terms of making sure it helps families to get better access to affordable childcare, appropriately targeted to the right families and in a way that helps us lift workforce participation and strengthen economic growth.

BEN FORDHAM: Okay, the words from Mr Abbott today were as follows “our childcare initiative for families is contingent on the delivery of savings to pay for it because we can’t have the spending without the savings to make it sustainable.” So reading between the lines, there’s going to be some changes or some chopping going on there in childcare.

MATHIAS CORMANN: No, that’s not right. We actually want to help families with accessing affordable, high-quality childcare, but in order to pay for it, we do need to find savings elsewhere and there are a range of savings that are currently stuck in the Senate and I guess our message to the Labor Party, our message to the Senate is, if you want us to do more helping families accessing affordable, high quality childcare, then you’ve got to work with us in getting some of those savings through the Senate as well. 

BEN FORDHAM: Understand but … 

MATHIAS CORMANN: Well that is an important quid pro quo equation.

BEN FORDHAM: He is indicating though, isn’t he, the Prime Minister today that there might be something that will change as far as what you have been signalling as far as childcare is concerned and what is going to be coming on May 12th.

MATHIAS CORMANN: No, that’s not quite right. What the Prime Minister is saying is that we want to do more to help families access affordable, high-quality childcare, but in order to pay for it, we need to find savings elsewhere. There are a range of savings that are currently stuck in the Senate. There are a range of savings that we were putting forward in the context of the Budget and what we’re saying to the Labor Party, if you want to help us help families to get affordable access to high-quality childcare, then you’ve also got to work with us on getting some of these savings through the Senate that are currently stuck there.

BEN FORDHAM: Okay, so some of those savings that are stuck in the Senate at the moment, you’re still negotiating and discussing those with Labor and the other parties, will there be other savings? There will obviously be new other savings that will be introduced in this next Budget.

MATHIAS CORMANN: There will be other savings. Wherever there is new spending in this Budget on higher priority spending areas given the circumstance we’re in, there will be the offsets, offsetting savings on comparatively lower priority areas in the circumstances we find ourselves in. For example, in the context of a higher threat environment, national security related, there will be more expenditure, there have been announcements in recent months about additional expenditure in relation to securing Australia in the context of national security. There will be off-setting savings elsewhere to make up for that additional expenditure.

BEN FORDHAM: Well we, as a nation, we don’t seem to have much of an appetite for these Budget cuts do we, we know how serious the debt problem is and it’s adding up every single day, and we’re borrowing against it just to pay off the interest, but we don’t seem to have the appetite to stomach the medicine we desperately need.

MATHIAS CORMANN: We can’t keep growing our expenditure faster than our revenue. That is the situation we inherited. In last year’s Budget we were able to reduce spending growth to just 1 per cent above inflation, down from 3.6 per cent a year during the first five years of the previous government. We are bringing that spending growth trajectory down over the medium to long term, but there’s a bit more work to be done but we have made a lot of progress over the last 12 months.

BEN FORDHAM: GST, how seriously have discussions been held in levels of the Federal Government about expanding the GST, about increasing the GST. 

MATHIAS CORMANN: There hasn’t been a discussion along those lines at all…interrupted


MATHIAS CORMANN: What we have at the moment is a tax discussion paper about our tax system, a tax white paper review process that started a few weeks ago. There is a public conversation happening across the community on how our tax system can be improved…interrupted

BEN FORDHAM: So the public is discussing it, but you guys aren’t discussing it in Canberra?

MATHIAS CORMANN: We will be making some judgements at the end of the process. We went into this process on tax reform with an open mind, with no pre-emptive ideas or locked-in positions. We want the conversation to take place across Australia without being inhibited by the Government stating a position right up-front. At the end of that process, there will be a Green Paper and then a White Paper which will progressively sharpen the focus on what the Government is proposing to do and there will be lots of discussions and conversations about that, no doubt as well.

BEN FORDHAM: There’s lots of Green Papers and White Papers and discussions and conversations going on aren’t there?

MATHIAS CORMANN: Well it is very important, if you want to take the community with you in the context of important structural reform, difficult structural reform, to make sure that people understand the challenges we are facing, what we are trying to do to address them and why.

BEN FORDHAM: But in the end someone like John Howard for example stood up and said ‘I’m going to introduce a GST and you’re either going to vote for it or I’m going to be booted, so it is up to you guys,’ it’s going to take some conviction in the end for somebody to stand up and say that we are going to do it. No more Green Papers, no more White Papers or Pink Papers or discussions or conversations or debates or anything else, we are actually going to do it.

MATHIAS CORMANN: In the lead up to the last election we put forward a very strong policy agenda to strengthen growth and strengthen opportunity. In the lead up to the next election we will be putting forward our agenda for a second term and people will be able to pass judgment on whether they agree with it or whether they don’t.

BEN FORDHAM: We’d cop 12 per cent wouldn’t we? As a GST?

MATHIAS CORMANN: I think that you are getting way ahead of yourself…interrupted

BEN FORDHAM: What! We have to address this stuff! We have to have a conversation Minister.

MATHIAS CORMANN: Maybe you should run for parliament at the next election on the platform of wanting to push up the GST. What we have said very clearly, we won’t make any changes to the GST to either the rate or the base in the first term of an Abbott Government. There is a conversation about our tax system happening at the moment. Whatever change we make after the next election would require a broad community consensus. It would require the support of all of the States and Territories and obviously there is a long way to go in this process before we land on a final position.

BEN FORDHAM: Okay so we will just wait until the magicians…

MATHIAS CORMANN: We work our way through and see where the community consensus evolves.

BEN FORDHAM: Okay. We will wait with interest and thank you so much for coming into the studio.

MATHIAS CORMANN: Always good to be here, I’ll be back.

BEN FORDHAM: Thank you very much, Finance Minister Mathias Cormann.