ABC News24 – The Business

Senator the Hon Mathias Cormann
Minister for Finance






National Reform Summit

ELISE MORGAN: Senator, thanks for joining the program.

MATHIAS CORMANN: Good to be here.

ELISE MORGAN: Was today's summit a PR stunt? We already know what each of these groups want, don't we?

MATHIAS CORMANN: Today was an opportunity for the leadership of the Government, the economic leadership of the Government, to listen to the perspectives of those leaders, community and economic leaders across Australia who participated in the National Reform Summit. It was a very good opportunity for us today to understand those areas where there is consensus and to better understand those areas where some more work is required in order to get the best possible way forward.

ELISE MORGAN: Is it different now? Because under Tony Abbott the party ruled out raising the GST, changes to negative gearing, superannuation tax concessions and now Malcolm Turnbull has said that everything is on the table?

MATHIAS CORMANN: The conversation today started with making sure that we were all on the same page when it came to our overall objective. There is consensus around the overall objective, which is that Australia needs stronger growth, needs to be more productive, more competitive and more innovative. We did have a very good conversation over three hours or so about some possible ways forward. It was a very open conversation. It was a very constructive conversation. We did commit to leaving everything on the table during the conversation, which doesn't meant that the Government committed itself to any particular way forward in terms of some specific proposals. This was the beginning of a process. There will be further meetings. There will be further engagement and ultimately there will be decisions, which will reflect that all of us want to achieve stronger growth, better opportunity for people to get ahead and ultimately, lift productivity, lift workforce participation and become more innovative as a country.

ELISE MORGAN: We've heard from the Prime Minister today and over the last week that he doesn't want to rule anything in or out. He doesn't want to be caught out by any gotcha moments. As the Finance Minister, what would you put as a priority for change?

MATHIAS CORMANN: The priority is to achieve stronger growth by making sure that Australia is the most productive we can be, by making sure that Australia is the most competitive internationally we can...interrupted

ELISE MORGAN: With what changes though, with what kind of changes?

MATHIAS CORMANN: That is the process that we're engaged in. We did quite a bit of work over the past two years to address all of those areas, to focus on increased productivity, increased competitiveness and the like. There is now a body of work to be done to take us to the next level and today was the beginning of a very important process. I'm not going to pre-empt the specific proposals that will come out of that process, except to say that we will continue to engage and that we will continue to engage with an open mind.

ELISE MORGAN: Talking about engaging, much of the changes need to come via the states, how does the new Government plan to get them on board because you failed under Tony Abbott to get the states to agree on GST?

MATHIAS CORMANN: Again, under the previous prime ministership of Tony Abbott, there was progress made in cooperation with the states around a range of areas. But we never stand still. There is more work to be done. Prime Minister Turnbull will engage with state and territory leaders, in particular through the Council of Australian Governments forum. One of the suggestions is that the Council of Australian Governments as a body where all State and Territory leaders are represented, where the head of the Local Government Association of Australia is represented as well as is the Prime Minister who leads the forum, that this forum might want to have a similar engagement with community and economic leaders across Australia in the same way as various Federal Ministers have done today.

ELISE MORGAN: Do you agree with the Treasurer, Scott Morrison, that we don't have a revenue problem?

MATHIAS CORMANN: I totally agree that Australia has a spending problem, not a revenue problem. There is a conversation ...interrupted

ELISE MORGAN: Why is that because your own Budget papers detail a massive shortfall in revenue, $20 billion alone from that is iron ore?

MATHIAS CORMANN: You're right that because of what's been happening in the global economy, because of what's been happening to our terms of trade, that we have been raising less revenue than had previously been anticipated. But the response to that is not more new taxes which slow down growth. The response to that is to focus on making sure that the taxes that we do raise, the revenue that is raised, is raised in the most efficient, least distorting and fairest way possible. We've got to make sure that we do get spending structurally under control. Right now, expenditure as a share of the economy sits at about 26 per cent. The last year of the Howard Government it was 23.1 per cent. It was about 24 per cent on average under the whole period of the Howard Government. Indeed former Prime Minister Keating cited as one of his key achievements as Treasurer in the Hawke Government being able to reduce Commonwealth Government expenditure down to 24 per cent as a share of GDP. We are currently running at about 26 per cent expenditure as a share of GDP. In the ordinary cause of events, as the economy strengthens revenue will increase. The question is whether we need to make decisions to raise the overall tax burden in the economy or whether we should focus on raising the necessary revenue in a better way. In our view, the Government's view, our instinct as a Coalition Government always is that the first focus should be on reducing expenditure growth, putting expenditure on a more sustainable footing and raising the revenue that we are currently raising in a better more efficient way.

ELISE MORGAN: Senator we will have to leave it there. Thank you very much for joining the program.

MATHIAS CORMANN: Always good to talk to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth