Sky News - Saturday Agenda

Senator the Hon Mathias Cormann
Minister for Finance


Date: Saturday, 1 August 2015

Parliamentary travel, negative gearing, Uber, GST, Tax White Paper, Browse project

DAVID LIPSON: But first the Finance Minister, Senator Mathias Cormann joins us from Perth. Thanks very much for your time this morning. Senator Cormann, two weeks ago from that chair you said that you would rather be talking things other than Bronwyn Bishop, the jobs, the economy, the things that matter to people. Again today, we see Bronwyn Bishop on the front page of the Daily Telegraph, headlines in other papers as well. And pretty much every day between a fortnight ago and today, this has completely sucked the oxygen out of any message that the Government would hope to put forward. This must be enormously frustrating for you.

MATHIAS CORMANN: My position hasn’t changed from what I said to you two weeks ago.

DAVID LIPSON: What, that you would rather be talking about other things?

MATHIAS CORMANN: All of my colleagues in Government we are all focused every day on doing the best we can to put Australia on a stronger foundation for the future, to implement our plan for stronger growth, more jobs and to ensure Australia is safe and secure. We continue to work towards that. That is what I am here to talk about.

DAVID LIPSON: The story in the News Corp papers today, suggest that $6000 was claimed on flights to Nowra on the New South Wales south coast. Just two weeks after that infamous helicopter ride and that Bronwyn Bishop attended a couple of Liberal party fundraisers there. Andrew Wilkie has just put out a media release today, saying that this is fraud, should be dealt with as a possible criminal matter. He’ll be moving a motion of no confidence in the Government. What’s your view?

MATHIAS CORMANN: We should be a bit careful with big language like that. There has been a serious error of judgement in relation to the helicopter ride to Geelong. The Speaker has recognised that. She has apologised for that. She has repaid the money. She has repaid the money with a twenty-five per cent loading, which is a penalty this Coalition Government introduced. At the same time, the Speaker also asked the Department of Finance to review a series of other claims that have been made in relation to travel in recent years. That is taking course as we speak. It is important to remember here that politicians on both sides have had to... interrupted

DAVID LIPSON: Just on that Finance Department enquiry, if I could just pull you up there. I know it is at arm’s length from you as Minister. Do you or have you been given any indication on when that will return its sort of findings, when it will decide on whether Bronwyn Bishop has done any wrong.

MATHIAS CORMANN: I’m not involved in that inquiry at all. This is a matter that is conducted at arm’s length by the Department of Finance. But let me just make the point here, given some of that excessive language that has been used. Politicians on both sides of Parliament over the years have had to repay money when errors have been made. Politicians on both sides over the years have made claims in the context of attending party events. Indeed, Julia Gillard, Wayne Swan, Penny Wong and others made travel claims in the context of attending the Light on the Hill fundraising event. There are various other Labor politicians, not least of whom Tony Burke, who have had to repay lots of money over the years. The important point here is this, as part of our job, politicians have to travel. It is not the best part of the job, but we do have to travel. Claims have to be made within the rules and where ever mistakes happen, and mistakes do happen, they should be fixed. On this occasion, that is exactly what has happened. There is an ongoing process now underway reviewing some of the other travel claims that have been made by the Speaker in recent times. That process will no doubt come to a conclusion ...interrupted

DAVID LIPSON: Would we be right to expect that those conclusions will come before Parliament returns in a week and a half?

MATHIAS CORMANN: I’m not going to speculate. That is a matter for the Department. The Department is running that independently.

DAVID LIPSON: So, does Bronwyn Bishop enjoy your support? Do you support her to remain in that Speaker’s chair?

MATHIAS CORMANN: Again, I’ll say to you what I said to you two weeks ago. I’m in the Senate, I don’t have a vote when it comes to the position of Speaker. I believe that Bronwyn Bishop has done a good job. As a friend and as a colleague, she certainly enjoys my support. But I’m in the Senate.

DAVID LIPSON: What about as Speaker? You say as a friend and colleague, but do you support her as Speaker. I mean I might be splitting hairs here.

MATHIAS CORMANN: I think you’re now trying to get into semantics. Yes, I think she has been a good Speaker and I support her as Speaker. The point I’m making, is I’m in the Senate. I’m not in the House of Representatives.

DAVID LIPSON: Okay, let’s get to some matters that are more close to the centre of your portfolio. Negative gearing, which is something that the Government has ruled out changing before the next election. We see analysis in The Australian newspaper today. More police offices use negative gearing than tax accountants for example. How are those figures been collated and what do they tell us?

MATHIAS CORMANN: This is based on statistics from the tax office. This supports an argument that we have made for some time and that is that negative gearing, so called, is something that is used by middle Australia as a way to get ahead. This is not a perk for the very rich across Australia, as Labor and others at various points in time as part of a class warfare effort have tried to suggest. This is something that middle Australians are using to get ahead. We have always got to remind ourselves what negative gearing actually is. It is the principle that when you invest in an investment property, or when you invest in any other investment that generates an income, expenses incurred in generating that assessable income are deductable from your overall income. That is what the colloquial description of negative gearing actually means. We think that is a long standing and very important principle in our tax system. That is why, unlike the Labor party, which always looks to tax people more, unlike the Labor party we are not proposing to make any changes to negative gearing.

DAVID LIPSON: But are you leaving open the possibility of making changes for example to the GST?

MATHIAS CORMANN: What we are currently involved in is a discussion around tax reform priorities over the medium to long term. We will between now and the election be releasing a tax reform white paper which will include all of the reform proposals that we propose to pursue as part of a second term agenda for the Abbott Government. But in the meantime there is a conversation that is ongoing. There have been some very good conversations in the context of the Leaders’ Retreat the other week. Let’s just see where it leads us.

DAVID LIPSON: Are you also ruling out changes or at least perhaps because this is largely a State issue, what’s your view of land tax as separate to negative gearing? Because for example the Henry Review back in 2008, suggested that economic growth would be higher if Government raised more revenue from land and less revenue from other tax bases, like stamp duty for example. What’s your view on land tax?

MATHIAS CORMANN: Taking a broader perspective, one of the key findings of the Henry Tax Review that didn’t get enough publicity at the time was the fact that we had 125 taxes across Australia at the time, when 10 of those taxes raised 90 per cent of the revenue. So there were 115 taxes, many of them inefficient and distorting, which raise just 10 per cent of the revenue. So the reform challenge for Australia is, how can we raise the necessary revenue for Government to fund the important and necessary services of Government in the most efficient, least distorting, simplest way. We should focus on raising as much as necessary and as little as possible. We should focus on raising less in tax overall, so we can make our economy more competitive internationally and strengthen economic growth moving forward. The reform challenge is how can we ensure that the revenue that is required to fund the important services of Government is raised in the most efficient, least distorting way, to least detract from our capacity to grow the economy moving forward. Now in that context, there are a lot of State taxes that should be or could be looked at in terms of removal, but whenever there is even an inefficient tax that raises revenue, you have got to work through the Federal State financial relations implications of that. That is why we are pursuing a Federation White Paper in parallel with a Tax Reform White Paper process.

DAVID LIPSON: The ride share app, Uber, which is similar to a taxi service but they argue not quite a taxi service, because you can’t for example hail them on the street, they’re not happy with the tax treatment that they are being ordered to comply with, that is collect GST on the first dollar that they earn, not from $75,000 onwards as many businesses are. Why is the Government and the tax office going after Uber from the first dollar that they earn?

MATHIAS CORMANN: We support the approach taken by the Australian Tax Office here. We do believe that Uber provides a service akin to a taxi service. Whether you call it through your app on your mobile phone or while standing on the side of the street or sitting at home. They compete directly with taxis. They provide a service that is akin to a taxi service. We can’t see any reason why their tax treatment should be anything else other than the tax treatment that applies to the taxi industry. There are some processes underway, I believe that there might be some testing of the tax office’s perspective on this through the courts. Let’s see how this plays out, but from the Government’s point of view we totally stand behind the approach taken by the Tax Commissioner.

DAVID LIPSON: Just finally, I did want to ask you about the Browse floating LNG project planned for your home state or offshore WA. Shell has signalled that the final go ahead next year is far from a certainty. What is your view of that, will this go ahead this project?

MATHIAS CORMANN: It is an incredibly exciting opportunity and it is very important that as a country we do everything we can to ensure that we are competitive and that we can ensure that the cost of these sorts of projects is competitive across the world so that we can attract the necessary investment to bring them to fruition. It is an exciting opportunity, there is some significant work that has been underway for some time now, these are commercial decisions by private businesses, but in the end, from a policy point of view, from a Government point of view, we are focussed on doing everything we can to ensure that we are as attractive an investment destination as we possibly can be so that these sorts of projects can go ahead.

DAVID LIPSON: Just briefly, two thirds of the royalties will go to WA. From a Commonwealth perspective as the Finance Minister Federally, was that disappointing, was the Commonwealth expecting more of that revenue to come into Federal Government coffers?

MATHIAS CORMANN: There are long standing rules and arrangements that govern these sorts of sharing arrangements based on the location of the resource, based on various other factors and we are quite comfortable with the way that works its way through the system in the usual way. Bear in mind that any increased revenue to WA from royalties will ultimately benefit the whole of Australia because it does have an effect through horizontal fiscal equalisation arrangements and the like. There is an economic growth effect that would be felt around the nation as well, which we would strongly welcome.

DAVID LIPSON: Finance Minister Mathias Cormann thanks for your time as always

MATHIAS CORMANN: Always good to talk to you.