Senator the Hon Mathias Cormann
Minister for Finance
CHRIS UHLMANN: Prime Minister Malcolm Turnbull has called together some of the nation's peak business, union and welfare bodies to discuss reform in Canberra on Thursday. The Prime Minister says it's a rare opportunity to achieve consensus on the most pressing economic and social reform issues. To discuss that and other things, I spoke to the Finance Minister Mathias Cormann in Perth a short time ago. Mathias Cormann, welcome.
MATHIAS CORMANN: Good to be back.
CHRIS UHLMANN: Our former Prime Minister Tony Abbott says the only change in this government is one of style and not of substance, do you agree?
MATHIAS CORMANN: There is a level of continuity between the work that we've done over the past two years and the work that we will do between now and the next election and beyond. Malcolm Turnbull and Scott Morrison as the new Prime Minister and the new Treasurer both were very senior members of the Abbott Government. As a team we went to the last election with a plan for stronger growth, more jobs and to repair the Budget. You'd expect there to be a lot of continuity. But then I suspect that moving forward there will be a different approach in relation to a range of issues. As a Government, as issues arise, we will be dealing with them in the way that this Government will deal with them.
CHRIS UHLMANN: Well, Malcolm Turnbull is bringing business, union and welfare leaders to Canberra on Thursday. Do you expect matters of substance and change will be discussed there?
MATHIAS CORMANN: I'll be part of that meeting with our Prime Minister. There has been a national reform summit which has been hosted by The Australian and the Australian Financial Review, which reached a series of conclusions. It will be a great opportunity to listen to the perspectives of the leaders that participated in that summit, to hear their views about how we can best strengthen growth, create more jobs and ensure that we further build on our prosperity and on the way that the Government can provide leadership in our country.
CHRIS UHLMANN: Well, we do know some of those views because they did already hold that summit. This is a continuation of it. One of the things they want are a cut to the concessions to high income earners when it comes to superannuation. Now are you open to that?
MATHIAS CORMANN: We don't have any plans to increase taxes on superannuation. Unlike the Labor Party, which in government increased taxes on people saving for their retirement and are proposing to do even more in the future... interrupted
CHRIS UHLMANN: Sure you have no plans but would you consider it?
MATHIAS CORMANN: Right now and it is a matter of public record, we are involved in a conversation about future tax reform priorities. That is a process that started with Joe Hockey as Treasurer. The terms of reference for that review haven't changed. They continue to be the same. There will be a Green Paper with a set of draft proposals sometime in the next little while. Ultimately the intention is to have a set of specific policy proposals that we would take to the next election. I know that the media wants us to play this rule in-rule out game. We have all the way through been involved in a conversation looking at the tax system as a whole, assessing opportunities for us to improve our tax system, to ensure that it is more efficient, less distorting in the economy, that it is more competitive internationally and a foundation for stronger growth. As the Treasurer has clearly indicated, the only thing we are interested in when it comes to tax reform is reform which will encourage people to work harder, save more and invest more.
CHRIS UHLMANN: Minister, all of that is understood, I don't want to turn it into a game, but in fact this was ruled out by Tony Abbott so the only thing I'm asking is, are you prepared to consider these kinds of concessions when you are considering that entire package?
MATHIAS CORMANN: You can ask me the question whatever way you like. Unlike the Labor Party, we don't have any plans to increase taxes on superannuation. The Labor Party has got a very bad track record on this. Kevin Rudd back in 2007 said he would make no change, 'not one jot, not one tiddle' and then imposed $9 billion worth of additional taxes on people's retirement savings. Bill Shorten is at it again. He was the Minister for Superannuation in the Gillard Government that increased a lot of the taxes on people saving for their retirement. We understand the need for people saving for their retirement for stability in superannuation-related policy settings including tax policy settings. Having said that, retirement income arrangements have been part of the tax reform discussion paper all the way through. They were part of the tax reform discussion paper when Tony Abbott and Joe Hockey were Prime Minister and Treasurer and they continue to be part of that conversation now.
CHRIS UHLMANN: You came to this Government saying that you were going to make significant cuts to the amount of Government spending. In fact, the term that the Government had a spending problem and not a revenue problem was a charge that you levelled against the Rudd and Gillard Governments. Yet it turns out that this financial year, you will spend 26 per cent of GDP which is the spending that the Government had at the height of the global financial crisis. Now, why shouldn't people mark you down on those numbers?
MATHIAS CORMANN: It is less than it would have been if Labor had stayed in Government. The truth is ... interrupted
CHRIS UHLMANN: The highest it has been historically in a very long time. You have to go back to previous recessions to get figures higher than this.
MATHIAS CORMANN: It is too high, there is no doubt about it. But the point I make very firmly and very strongly, is it is lower than it would have been if Labor had stayed in government. You have got to remember - and you have to let me answer this question please - in the last years of the Labor government, when they already knew they were about to lose the election, they locked in permanent increases in government expenditure in the period in particular beyond the published Budget forward estimates at that time in legislation. Whether that was for more funding for State schools or hospitals or the NDIS, meritorious causes but without properly funding the legislated increases in government spending. When we came into Government, that expenditure growth over the medium to long-term was projected to run at 3.7 per cent above inflation. The Commission of Audit had indicated that government spending as a share of GDP was on track to reach 26.5 per cent within the decade. The Intergenerational Report shows over a few decades it would go to 37 per cent as a share of GDP if the Labor party’s policy settings stayed in place. We have slowed down the growth in expenditure from 3.7 per cent over the medium to long term to 1.5 per cent on average per year above inflation over the forward estimates and 2.7 per cent over the medium to long-term. That was very hard and politically very challenging. But the point I am making is spending growth is now lower than what it was. As such, spending as a share of GDP is lower than it would have been if Labor had stayed in government. But yes there is much more work to be done, we have to continue to pursue structural reform on the spending side of the Budget.
CHRIS UHLMANN: That's a very hard job, because you tried in the first budget to try to go harder, to cut government spending means there are losers so where do you look in future to make the savings without making a great many more enemies?
MATHIAS CORMANN: Firstly, about 80 per cent of the Budget repair measures we have initiated in our two Mid-Year Economic and Fiscal Outlooks and in our two Budgets, about 80 per cent of those measures have passed the Parliament and have been implemented to the tune of about $85 billion in improvements to our Budget bottom line. We have actually been making progress. We are in a stronger position than we would have been if we hadn't done all of that work. There is still a body of work to be done. There are still Budget repair measures before the Parliament, about 56 measures to reduce spending and about 14 measures or thereabouts to increase revenue. So there is still more work to be done. We are committed to doing that. In the context of our next half yearly Budget update, the Treasurer and I are working on how we can best achieve further efficiencies across Government program spending.
CHRIS UHLMANN: Okay Minister, finally and just briefly, we have gone through another bruising moment in Australian politics. What does the Turnbull Government do now to try and restore confidence in the Australian political system?
MATHIAS CORMANN: Every day we work to provide good and effective Government. Every day we work as a united team, focused on doing the right thing by Australia and focused on winning the next election. If we do that day in, day out, I think that over time people will have increasing confidence in the job we are doing.
CHRIS UHLMANN: Mathias Cormann, thank you.
MATHIAS CORMANN: Good to talk to you.