Senator the Hon Mathias Cormann
Minister for Finance
DAVID SPEERS: You are watching PM agenda, as mentioned earlier the Shadow Treasurer was at the National Press Club today, giving his Budget reply. He has officially now ruled out any sort of mining tax being taken by Labor to the election, but there will be a detailed policy to put a price on Carbon. Beyond that, Labor is defending strongly its plans to increase the tax at the top end on superannuation, something that the Government says it will never do. Joining us now, the Finance Minister Mathias Cormann, thank you very much for your time this afternoon.
MATHIAS CORMANN: Good to be here.
DAVID SPEERS: Let me start with the mining tax. Do you welcome the fact that Chris Bowen is now saying that Labor won’t take any sort of mining tax to the election?
MATHIAS CORMANN: It is obviously good news. It is long overdue. It took them long enough to walk away from this Wayne Swan disaster. They should also walk away from their failed and job-destroying anti-competitive carbon tax. But by the sounds of it, Labor is desperate to put that burden back onto small business, back onto families and to hurt our economy and jobs again for no environmental benefit.
DAVID SPEERS: We’ll see I guess what they end up doing in relation to a price on carbon. Just on the mining industry though, what is your view now on whether we should have an inquiry into the iron ore sector?
MATHIAS CORMANN: I’ve never been in favour of an inquiry into the iron ore sector. We have got to just remember where all of this started. This started with Nick Xenophon initiating a motion to have a Committee in the Senate, chaired by Labor Senator Sam Dastyari inquire into various aspects of the iron ore market. I was not in favour of that at all. If there was to be an inquiry I always took the view that it had to be very sensible, it had to be based on identifying facts. In the end, I don’t think there is much that we don’t know. We know that there is a market that is operating freely, but I’m pretty relaxed. It is business as usual for parliamentary committees to look at issues of national interest. But it is always important for something as significant as this for that to be done in a sensible fashion by sensible people, if that is what the parliament decides to do.
DAVID SPEERS: Alright let me go back to Chris Bowen’s address today and his strong defence for their plans to introduce a tax on superannuation at the top end. Now, he says that your own Budget papers show the total cost of superannuation tax concessions will outweigh the total cost of the aged pension in just four years. Is that right and therefor is it something that should at least be looked at?
MATHIAS CORMANN: That is wrong. The problem with Chris Bowen and Labor is they don’t understand the difference between expenditure and tax. Tax is in relation to raising revenue from people. Taxing less is letting people have more of their own money. What Chris Bowen did today was formally launch Bill Shorten’s campaign to raid people’s superannuation piggy bank to pay for Labor’s $58 billion black hole. Labor has a big problem because they haven’t been able to come up with a single alternative spending reduction. They continue to oppose about $17 billion in savings and revenue measures that we have put forward. They continue to oppose $6.5 billion in savings and revenue measurers that they themselves initiated. They want us to restore about $31 billion worth of spending where we have already passed the savings and it just doesn’t add up. Where does the money come from?
DAVID SPEERS: There are a few assumptions there, we can pick those apart, just on the superannuation itself, even the Treasury Secretary John Fraser not that long ago, less than 3 months ago, was saying this is something that we should be looking at. Why isn’t it worth looking at?
MATHIAS CORMANN: It is very simple. The tax system incentivises people across Australia to work hard and to save so they can look after their own needs in retirement. We don’t think it is appropriate for the Government to look at people’s retirement savings as an ATM to pay for increased expenditure. The truth is that with Labor, they always end up spending too much and again in his Budget reply last week Bill Shorten made another $6.6 billion in unfunded spending and other promises and they don’t know how to pay for it. So the lazy and easy way they go is they look at people’s retirement savings and think that is the way to pay for their promises. We don’t think that that is appropriate.
DAVID SPEERS: So what is the point, if you are ruling out any change at all in superannuation, on the GST, on negative gearing, what is the point of the tax inquiry that the Government has promised?
MATHIAS CORMANN: What we are ruling out is increasing taxes on superannuation. Labor went to the election in 2007 promising to make no change and then imposed $9 billion worth of additional taxes on people’s retirement savings. Now they are saying they want to target so called rich people as part of a new class warfare effort by Bill Shorten and Chris Bowen. The truth is they are targeting Middle-Australia. They are proposing this $75,000 income threshold, supposedly, without indexing it, this is something that will capture every…interrupted
DAVID SPEERS: Is that Middle-Australia?
MATHIAS CORMANN: I think that you will find if you look at the net present value of the aged pension, if you look at the net present value of the savings that you will need and the income needed to generate and given the fact that Labor is not proposing to index that sort of threshold in any way shape or form, their plan is to introduce a new version of bracket creep. Here we had Bill Shorten complaining about bracket creep last Thursday and here he wants to introduce bracket creep on people across Australia who have worked hard to save for their retirement, to look after their own needs in retirement so that they don’t have to be a burden on the taxpayer.
DAVID SPEERS: Alright, you could use that argument I suppose against personal income tax rates as well. You are not indexing them so you are allowing bracket creep to continue for ordinary income earners.
MATHIAS CORMANN: We want to deliver income tax cuts. In order to pay for income tax cuts we have got to get spending reductions through the parliament. We have put spending reductions forward in the Budget, last week Bill Shorten was complaining that we hadn’t cut spending enough while continuing to oppose about $17 billion worth of measures improving the Budget bottom line while calling for $31 billion in spending to be restored from savings that we have already made while also making all sorts of other promises that he hasn’t funded. What we are doing, we are putting forward a plan that is actually funded with a Budget that is on a pathway back to surplus in a credible fashion.
DAVID SPEERS: I just want to pick up on this claim that a $58 billion black hole under Labor’s plans. You do include in that, quite a number of things where they are more aspirations from Labor like lowering the small business taxes to 25 per cent. The Government too has aspirations doesn’t it, things like building up defence spending to 2 per cent of GDP within a decade, getting rid of the means test on private health insurance rebate and yet you don’t include those measures in your own bottom line calculations.
MATHIAS CORMANN: So are you saying that Bill Shorten didn’t mean it when he said he wanted to reduce company tax for small business to 25 per cent?
DAVID SPEERS: No, I’m just saying that surely both sides are allowed to have aspirations as well as costed policies. If it is okay for you, it is ok for them, isn’t it?
MATHIAS CORMANN: Let’s be very clear. Before Bill Shorten got up last Thursday night, he already had a $52 billion black hole. That is because he had not identified a single alternative spending reduction. All he had done is identify about $3.6 billion worth of taxes, principally on peoples retirement savings. He was opposing $17 billion worth of Budget measures to improve the Budget bottom line that we have put forward. He was opposing $6.5 billion worth of Budget measures that the Labor Party had initiated and banked in their last Budget... interrupted
DAVID SPEERS: Sure, but in opposition you opposed things like getting rid of the means test on private health insurance, you opposed that for years and years.
MATHIAS CORMANN: This is the whole point. If you actually remember Tony Abbott’s Budget reply in the lead up to the 2013 election and even before that when he took a very constructive approach, what he said is that we didn’t like all of the savings put forward by the Labor Party but because we were focused on the national interest, because we understood the challenge that Australia was facing, we provided support for all of the savings that Labor put forward. Bill Shorten is clearly not able to get the Labor Party onside even to back their own savings and that is why he is going after people’s retirement savings. That is why he has asked his Shadow Treasurer today to formally launch a policy to raid people’s superannuation piggy banks.
DAVID SPEERS: So you stand by that $58 billion figure though, the claim that there is a $58 billion black hole for Labor?
MATHIAS CORMANN: Absolutely 100 per cent.
DAVID SPEERS: Alright, Finance Minister Mathias Cormann. Thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.