Sky News – PM Agenda

Senator the Hon Mathias Cormann
Minister for Finance






Labor's budget black hole, tax reform

DAVID SPEERS: Well much has been said and written in the last couple of weeks about Malcolm Turnbull ushering in a new era of political discourse. Not everything changes though. Both sides will rightly go after each other when they believe their opponent is being reckless with taxpayers’ money. To that end, the Finance Minister Mathias Cormann is tonight delivering a speech to the Sydney Institute, where he will claim Labor is now racking up in terms of its commitments, a budget black hole of nearly $60 billion. Mathias Cormann joins us now from Sydney, thank you for your time Minister. How do you arrive at this figure? 

MATHIAS CORMANN: Good to be here. Well it is a figure that is drawn from information on the public record. There is about $3.6 billion worth of Labor’s own budget repair measures which they initiated and banked in their last budget, which under Bill Shorten’s leadership they now recklessly and irresponsibly oppose. There is about $13.6 billion worth of budget repair measures which Labor continues to oppose out of our first budget. About $1.1 billion in budget repair measures out of our second budget Labor is opposing. There is about $33 billion and a bit more in budget repair measures that the Parliament has passed and which either Bill Shorten or one of his shadow ministers have indicated they wanted to reverse. Then of course there is about $10 billion plus, in unfunded promises, which Labor has made since our budget in May this year. That is in excess of $62 billion worth of promises Labor made, or decisions that Labor has made, which leave our budget worse off to the tune of about $62 billion. On the other side of the ledger, all we’ve got is a $3.8 billion promise to increase taxes on people saving for their retirement and on multinationals in a way that Treasury says costs jobs and a dubious assertion that they would save money by abolishing the emissions reduction fund which of course over the forward estimates, by the time of the next election, will not have any money left to spend. 

DAVID SPEERS: Let me go to some specifics then because Labor says you are wildly exaggerating some of the things they have said and turning those into policy commitments. Just on the things we know they are opposed to, higher education deregulation, they are opposed to that. Are you saying the Government is still committed to it? 

MATHIAS CORMANN: The Government is committed to all of our policies that are reflected in the budget. As we have said all the way through, as the Prime Minister has said, as the Treasurer has said, we don’t take any policy off the table unless we replace it with another policy which will help us to achieve the same savings. In relation to Labor ...interrupted. 

DAVID SPEERS: So on higher education, if you decide to walk away from this, you will actually put forward an equal savings measure in higher education?

MATHIAS CORMANN: Well you’re making an assumption here. We have said that we remain committed to all of our policies that are reflected in our budget, unless we’ve taken them off the table. Moving forward, as we have said clearly all the way through, we are always prepared to negotiate with people in the Senate, with people in the Parliament, with people who want to work with us to strengthen growth, create more jobs and to repair the budget. But, for us to make adjustments to policy with a budget bottom line impact, we would want to see how any related savings can be achieved in another better way. 

DAVID SPEERS: Another measure that you identify there that Labor is opposed to, a savings measure, is the cut to family tax benefit when a family’s youngest child turns six. Again, is the Government still committed to that?  

MATHIAS CORMANN: The Treasurer in his previous role as Social Services Minister did very good work with the Senate crossbench to achieve structural reforms, to achieve structural savings and efficiencies in the social services space in a different better way. In the next few weeks we would expect that this will come before the Senate and will be dealt with by the Senate. Again, our expectation and certainly very much our intention is that this will be done in a way that is entirely budget neutral. What I would say on the Labor side, in terms of all of the savings measures and budget repair measures we have already implemented, which Labor now says we should reverse, that list has been out there in the public domain for a long time. I have released this list in an updated fashion on several occasions since May this year. Other than a broad brush dismissal, we’ve never actually had any specific public rebuttal by Labor in relation to the many things that are on that list which are unaffordable given our current budget settings. 

DAVID SPEERS: Let me ask you about another specific one then, because you do include in the list their commitment, or Bill Shorten’s budget reply night commitment to a five per cent cut in the company tax rate for small business. But he did only say “I invite you, the Government to work with me on a fair and fiscally responsible plan. Do it together, to bring down the company tax rate from 30 to 25 per cent”. Is that really a commitment to do it alone, without the Coalition’s help?  

MATHIAS CORMANN: So are you suggesting that it wasn’t actually any commitment at all? Are you suggesting that Bill shorten wasn’t serious when he said this in his budget reply speech ...interrupted

DAVID SPEERS: I’m just reading his words here and he said it a couple of times that he wanted to work with the Coalition on this. 

MATHIAS CORMANN: Well quite frankly that is a copout. If he doesn’t show us how he would pay for it, this is just completely meaningless. If he just makes a promise on the never-never, on the basis that he doesn’t really mean it, that he only means it if we help him, that he doesn’t mean it enough to actually show us how he would pay for it, well it’s not actually a commitment at all. If Bill Shorten is not committed to that particular tax cut, he should tell us.

DAVID SPEERS: What about the Coalition’s – and we heard Joe Hockey repeat this many times, that you wanted actually lower personal income tax rates to tackle bracket creep. Shouldn’t you show us your plans on that? 

MATHIAS CORMANN: We do want to do that and we will. In the lead up to the next election, very clearly, we will be releasing our policy agenda for a second term. Right now, very openly and very transparently we are involved in a public conversation with the Australian people on how our tax system can be improved. We have given an indication of the direction we would like to go into. Obviously, in the lead up to the next election, any policy commitments which we make in the context of the budget or otherwise, would have to be clearly funded and we would have to give a clear indication on how we would pay for them. My point is and our point is that Bill Shorten in making that commitment in his budget reply speech, did not show how he would pay for it. He just made a commitment that he didn’t really intend to follow through on. He just made a commitment that he didn’t know how to pay for.  

DAVID SPEERS: Well not disputing that there is a big question mark over how you would pay for that but again on your plans for tax reform, is it still your priority to do something about bracket creep and when will we see the actual detail on this?

MATHIAS CORMANN: A couple of things, our plan always was for our first term to remove the mining tax, remove the carbon tax, to reduce company tax for small business and we’ve done all of that. Of course we have indicated in our pre-election costings in the lead up to the last election how we would pay for it. Indeed, that is now reflected in our budget papers. The truth is Bill Shorten hasn’t done the same. In terms of moving forward, when it comes to personal income tax cuts, to deal with bracket creep, already in our budget papers right now, our revenue forecasts are based on an assumption that tax revenue as a share of GDP will not go above 23.9 per cent. That will of course already give us some scope to accommodate personal income tax cuts to deal with bracket creep down the track. There will have to be more of an effort and of course in the context of the tax reform discussion, that is exactly what we are focussing on. That is why we are working to repair the budget. That is why we are working to get Labor’s unsustainable spending growth trajectory under control. That is why we are focusing on how we can raise the necessary revenue for Government in a better more efficient way. To help people work more, save more and invest more as the Treasurer has indicated.  

DAVID SPEERS: Do you need to actually raise more revenue and in particular are you still opposed to doing anything about superannuation tax breaks for high income earners? You did say yourself earlier this year that Labor’s plans on superannuation were quote, “class war against Australians saving for their retirement”. Is that still your view?

MATHIAS CORMANN: Australia has a spending problem not a revenue problem. The conversation we need to have when it comes to tax, is how we can raise the necessary revenue for the important services and benefits provided by Government, as much as necessary but as little as possible, in the most efficient, least distorting way in the economy, to ensure that we least detract from economic growth opportunities into the future. To ensure that our tax system is as competitive internationally as possible, so we have got a strong foundation for further stronger growth and to create more opportunities for people to get ahead. I stand by my statement in relation to Labor’s policy on tax grabs targeting people saving for their retirement, so they can look after their own needs in retirement. That is what Labor did during their period in Government. They went after people who were doing the right thing again and again ...interrupted

DAVID SPEERS: So you won’t do anything about superannuation? 

MATHIAS CORMANN: What I said is I stand by my comments in relation to Labor’s policy on superannuation taxes. They would do in Government what they have done in their last period in Government. That is to go after people saving for their retirement ...interrupted

DAVID SPEERS: Ok but I am asking about you, will you do anything about superannuation taxes?

MATHIAS CORMANN: What I have indicated all the way through, is we will look at our tax system as a whole, to look at ways that we can improve our tax system. To look at ways we can raise the necessary revenue for Government in a more efficient less distorting way, without increasing the overall tax burden in the economy. In fact, with an aim to reduce the overall tax burden in the economy over time, so that we can improve our international competitiveness moving forward. 

DAVID SPEERS: A couple of other things, your new cabinet colleague Josh Frydenberg says Sunday penalty rates need to be looked at, the current system he says is costing jobs. Do you agree?

MATHIAS CORMANN: There is obviously a conversation underway. We did commission a review by the Productivity Commission to look into these issues. Obviously the Fair Work Commission has got the primary role and responsibility under the legislation to make decisions in relation to these matters. Certainly, the Fair Work Commission should very carefully consider how penalty rates on public holidays impact on our economy and on jobs and ...interrupted

DAVID SPEERS: And the Government won’t legislate on this? 

MATHIAS CORMANN: Well this is outside my area of responsibility. I look after the expenditure side of the budget. I will let Senator Cash the Minister for Employment answer questions in relation to this. 

DAVID SPEERS: Well it’s outside of Josh Frydenberg’s portfolio too, but you are all senior cabinet ministers, you must have a view on industrial relations. It’s hardly a trivial matter facing the Government?

MATHIAS CORMANN: And I always participate in all of the public policy discussions on these sorts of matters, including in portfolio areas looked after by some of my colleagues, inside the Cabinet and of course that is the appropriate way of doing it. 

DAVID SPEERS: Alright, final one, Maurice Newman, he hasn’t been reappointed by Malcolm Turnbull as the Chair of the Prime Minister’s Business Advisory Council. Is that disappointing for you? 

MATHIAS CORMANN: Appointments to the Prime Ministerial Advisory Council are entirely a matter for the Prime Minister.  

DAVID SPEERS: Was he of much help do you think in his role?

MATHIAS CORMANN: I’m not a commentator. I’ve had a lot of interaction with Maurice Newman in the past. It has always been a very good interaction, but as I have indicated, the appointments to the Prime Minister’s Business Advisory Council are entirely a matter for the Prime Minister and I leave it at that. 

DAVID SPEERS: Finance Minister Mathias Cormann thanks for joining us this afternoon.

MATHIAS CORMANN: Always good to talk to you. 


Senator the Hon Mathias Cormann, Minister for Finance, Perth