Senator the Hon Mathias Cormann
Minister for Finance
Date: Tuesday, 1 September 2015
RAFAEL EPSTEIN: Senator Mathias Cormann is the Finance Minister in Tony Abbott’s Federal Coalition Government. Senator, good afternoon.
MATHIAS CORMANN: Good afternoon.
RAFAEL EPSTEIN: Why did you drop this bank levy, deposit tax?
MATHIAS CORMANN: This is a tax that was first announced and first banked in the Budget by the Labor party in their final months in government. We expressed our concern and our scepticism then. We said we would ask the Financial Systems Inquiry to consider this. The Financial Systems Inquiry did consider it and recommended against it. After some further consultations we have made a decision not to go ahead with this Labor tax on people’s bank account savings.
RAFAEL EPSTEIN: You, the Assistant Treasurer and the Treasurer are all reported to have been all for this tax and it is a saving you booked in the most recent Budget, so have you been rolled?
MATHIAS CORMANN: Those reports are wrong. So you should not always believe everything that you read in the newspaper. Secondly, it is not a saving. This is a Labor tax, which was included into the revenue base by the previous government. But ... interrupted
RAFAEL EPSTEIN: But it’s on the plus side of the ledger isn’t it? It’s extra money.
MATHIAS CORMANN: It’s not a saving.
RAFAEL EPSTEIN: Okay.
MATHIAS CORMANN: It was a revenue measure by the previous government. We had not made a decision one way or the other so far, until today, on how to proceed, because as we always said, we would ask the Financial Systems Inquiry to consider this. We would make our decision in the context of the Government’s response to the Financial Systems Inquiry recommendations. That is the announcement that we made today after Cabinet consideration.
RAFAEL EPSTEIN: Isn’t it a little cheeky though to book it as revenue in your most recent Budget when you’re really desperate for revenue and then dump it after?
MATHIAS CORMANN: We haven’t included this in our revenue at all. This was included into the revenue base by the previous government. Until such time as we made the decision ... interrupted
RAFAEL EPSTEIN: But didn’t you count it as revenue in the Budget paper covering the current financial year?
MATHIAS CORMANN: We did not make a decision one way or the other until today. You only reflect a change in policy once you’ve made a decision in relation to that policy. So the previous government initiated and banked this tax in their last budget update before the election. We said then that we would consider this in Government, in the context of the Financial Systems Inquiry recommendations. That’s what we’ve now done. So there is now a change. This will cost about $1.5 billion to our Budget bottom line, which otherwise would have come out of people’s bank accounts. That was the Labor approach. We made the decision that this was not the right way forward. We will now make up the difference between now and MYEFO by way of further savings.
RAFAEL EPSTEIN: Can I ask you about the income tax cuts that you clearly want to take to the next election. I think it’s fair enough to raise it without saying straight away how you’ll pay for it. However, would you commit to those income tax cuts but would you also commit to maintaining the deficit target that you had for say four years from May. Do you say that you’re going to still get to the same place?
MATHIAS CORMANN: We have a plan to strengthen growth, to create more jobs and to repair the Budget. We believe that we need to have further tax reform, to strengthen growth and strengthen opportunity for people to get ahead. Between now and the next election, any tax reform package will be put in some detail to the Australian people, including how much it will cost, including what the impact on the Budget would be. Our plan is there for all to see. We are on a credible path back to surplus. On current indications we are on track to get back to surplus by 2019-20. This is after having inherited a deteriorating Budget position from the previous government... interrupted
RAFAEL EPSTEIN: So do you maintain, I just wonder if you maintain the commitment over what’s called the forward years, those four years from the Budget date?
MATHIAS CORMANN: Absolutely. We are committed to the plan that is reflected in the Budget. But this is now in the...interrupted
RAFAEL EPSTEIN: But over four years, over one? I don’t, I suppose I’m just trying to get a measure of over what time period do you say you will pay for those income tax cuts. Is your projected deficit figure say, next May the same?
MATHIAS CORMANN: I’m not going to release the tax reform package on your show today. There’s some further consultation underway right as we speak.
RAFAEL EPSTEIN: Sure.
MATHIAS CORMANN: The point I am making is this. As part of strengthening our economy moving forward we do need to further reform our tax system. Having got rid of the carbon tax and the mining tax, having reduced company tax for small business, as we said we would do before the last election, the next focus for us is to ensure that we have the best possible tax mix. That the necessary revenue for Government is raised in the most efficient and least distorting way possible in the economy. We’re working hard to get spending growth under control, to give ourselves room to reduce income taxes. We’ve also already made assumptions in our most recent Budget about future income tax cuts to deal with bracket creep. Beyond that, whatever decisions we might make in the future, we will take them to the Australian people in good time before the next election. That will include, very clearly, setting out the detail on what that tax reform package would mean for the Budget ... interrupted.
RAFAEL EPSTEIN: But they’re all sentiments aren’t they, Minister?
MATHIAS CORMANN: No, they’re not sentiments. They’re very clear statements.
RAFAEL EPSTEIN: Well they are, unless you commit to say you know, two years from now we’re going to hit the same limited or reducing Budget deficit, they are sentiments. I mean the deficit’s doubled. You borrowed more in the last calendar year than any other government ever has. You’ve needed to because the economy’s growing.
MATHIAS CORMANN: With all due respect, you are going with Labor spin here. We inherited a very bad forward trajectory ... interrupted
RAFAEL EPSTEIN: It’s not Labor spin to point out a doubling of the deficit, one of the biggest debts ever in a single year.
MATHIAS CORMANN: That is manifestly wrong. That is just manifestly wrong. The Budget position that we inherited from Labor, when we came into Government was rapidly deteriorating. In the twelve weeks from the Budget in May 2013 to their last Budget update before the election, the Budget position deteriorated by $33 billion over the forward estimates. That is a matter of public record. When we came into Government, the projected deficits over the forward estimates were to the tune of about $123 billion. We inherited spending growth of about 3.7 per cent above inflation, which we have brought down to about 1.5 per cent above inflation. So yes, the position was deteriorating, but it is deteriorating much less than what it was. We are now in a stronger position than we would have been and we are working to improve that even further. Right now Government net debt is expected to peak next financial year before coming down.
RAFAEL EPSTEIN: I understand that.
MATHIAS CORMANN: Yes.
RAFAEL EPSTEIN: Can I ask you just about Peter Dutton, the Immigration Minister’s comments. I suspect maybe he regrets it, I’m not sure, but to accuse Fairfax of a jihad against the Government, that is precisely what Cabinet Ministers should not be saying. Isn’t it?
MATHIAS CORMANN: I’m not a commentator on my colleagues. I am focused every day on doing everything I can to help put Australia …interrupted
RAFAEL EPSTEIN: Your colleagues are commentating on Joe Hockey and then your other colleagues are commenting on media, it takes the Government drastically off message doesn’t it?
MATHIAS CORMANN: I am focused every single day on doing everything I can to help put Australia on a stronger economic and fiscal foundation for the future. I am always happy to explain to everyone and anyone what we are doing and why including on your show. That is the job that I am focused on.
RAFAEL EPSTEIN: Do you think you get a fair run in Fairfax?
MATHIAS CORMANN: We all have a job to do. My job is to do everything I can to help put Australia on a stronger economic and fiscal foundation for the future. That is what I am doing every day.
RAFAEL EPSTEIN: Do you think Arthur Sinodinos and Peter Dutton have done the right thing in terms of their public contributions?
MATHIAS CORMANN: You can ask me that question whatever way you want. My focus is on doing everything I can to help put Australia on a stronger economic and fiscal foundation for the future.
RAFAEL EPSTEIN: Just a quick query. Daniel Andrews the Premier here of course, has been asked about the China-Australia Free Trade Agreement, which he says he is supporting and in fact I think his first trip overseas is going to be to Beijing. That shows doesn’t it that Labor is all for free trade, they just want to make sure that there is no extra widening of the ability to bring in foreign workers?
MATHIAS CORMANN: No, it doesn’t show that at all. I certainly commend Premier Andrews for supporting the China-Australia Free Trade Agreement. It is a good deal for Australia. It is a good deal for Australian jobs. The CFMEU campaign against the China-Australia Free Trade Agreement is wrong. Their assertions about somehow Chinese companies being able to bring in lots of Chinese workers for their projects, without going through normal, usual processes including labour market testing, including making sure that Australians are offered jobs first when there are Australians with the appropriate level of skills in the market, they are all wrong. Bill Shorten, has been too weak so far, to stand up to the union movement.
RAFAEL EPSTEIN: Isn’t Daniel Andrews comment, I’ll repeat the question. They are for free trade. They are for the agreement. They just want to make sure that the tough restrictions on bringing in foreign workers remain, and they doubt that they are remaining.
MATHIAS CORMANN: Is that’s what Daniel Andrews’ is saying? I haven’t seen the comments that you are talking about, so I’m at a disadvantage.
RAFAEL EPSTEIN: He doesn’t mention, to be honest, he doesn’t mention the 457 criticism and I have.
MATHIAS CORMANN: Ah okay. Well there you go. So Bill Shorten quite frankly is trying to play a double game. If he is in favour of the China-Australia Free Trade Agreement he should say so. He shouldn’t try and hide behind some bogus, dishonest and inaccurate claims that are being peddled by a desperate CFMEU and other parts of the union movement. The China-Australia Free Trade Agreement is very good for Australia. It is very good for our economic growth and for jobs into the future. All of the safeguards for Australian jobs that are currently in place will continue to stay in place in the context of the China-Australia Free Trade Agreement. Companies out of China will not be able to bring in temporary skilled workers from China to take away Australian jobs in the context of these infrastructure projects as is being claimed by the union movement. These claims are completely false. It will be good if Bill Shorten, the same way as Bob Hawke has, the same way as Bob Carr has, the same way as Daniel Andrews as, could come out and unequivocally say that he is in favour of the China-Australia Free Trade Agreement, that he will support it in the Parliament. It is very good deal for Australians and in our national interest.
RAFAEL EPSTEIN: Just one more on your internal trouble. If Cabinet Ministers leak, should they be sacked?
MATHIAS CORMANN: As I’ve said to you, I’m not a commentator. I’m focused on doing everything I can to ... interrupted
RAFAEL EPSTEIN: Okay, but should they be sacked if they get found out leaking?
MATHIAS CORMANN: I’m focused every single day on doing everything I can to help put Australia on a stronger economic and fiscal foundation for the future. Beyond that, I will leave that sort of commentary, questions and analysis to you.
RAFAEL EPSTEIN: Okay, thanks for your time.
MATHIAS CORMANN: Good to talk to you.