Senator the Hon Mathias Cormann
Minister for Finance
TRACEY HOLMES: Tax reform, including cuts and increases has emerged as a live option for the Turnbull Government in the wake of its mini-summit. It also seems clear that whatever the Government adopts from its discussions with business, union and community leaders will be taken to the next election. Mathias Cormann is the Finance Minister. He participated in yesterday’s mini-summit and he’s speaking now with Steve Chase.
STEVE CHASE: Mathias Cormann, good morning.
MATHIAS CORMANN: Good morning.
STEVE CHASE: Where to from here? Are you going to have another summit to tweak what you found out yesterday, or is there any time for a revisit of issues?
MATHIAS CORMANN: Yesterday was the beginning of a process. It was a very good conversation. It was a very positive and constructive engagement. We did indicate that there would be next steps, that the engagement would continue and that the discussions would continue. There are a range of areas for further work that have been identified and that will proceed in the next few weeks and months. Whenever we reach a clear landing point on something, we’ll be able to take action but for some of the more medium to long term reform directions, I suspect that there will be the need to do quite a bit more work.
STEVE CHASE: One of those issues that has emerged would be retirement income. There was a broad agreement was there, that you needed to some more work on this?
MATHIAS CORMANN: The agreement was that we needed to ensure that people had the opportunity to have adequate income in retirement. There is a policy framework in place. The fundamental architecture I think everybody agreed was the right architecture with the age pension as a safety net, with compulsory savings to a certain degree and incentives to encourage people to save more, to look after their own needs in retirement. The question is to what extent the current architecture can be improved. That is a conversation that will continue over the weeks and months ahead.
STEVE CHASE: Well you seem to be keeping your cards pretty close to your chest. But I suppose what the voters want to find out is if there is to be a budget before the next election, whenever that is, are we going to see measures in that budget reflective of what you have learned yesterday?
MATHIAS CORMANN: The next budget is due on the second Tuesday in May. The election is not due until the second half of next year, so you can expect that there will be another budget between now and the next election. What will be in the budget will be part of the budget process between now and May next year. What I can assure everyone of is that the only things that we will pursue are those that will help to strengthen growth, that will help to make Australia more productive, more competitive, more innovative and which will help encourage people to work more, save more and invest more. That is going to be our focus.
STEVE CHASE: And it’s quite clear too, some of the more contentious issues you’re actually going to take to the election as I understand it to get the imprimatur of voters on that, so and this is my interpretation, things like retirement incomes, tax increases etcetera they would be something that you would take to the next election?
MATHIAS CORMANN: Firstly I wouldn’t want you to think that there is this assumption that there will be tax increases. The conversation that we are currently having is how we can improve our tax system, how we can raise the necessary revenue for Government in a better way. How we can improve the tax mix. There isn’t a focus on increasing taxes in the economy overall. Indeed, our instinct would be to reduce the tax burden in the economy as a whole, but there is a conversation to be had on how we can do that better than what is currently taking place. Certainly, any fundamental change, any change that does not have an immediate clearly obvious broad consensus we would intend to take to the next election, yes.
STEVE CHASE: But there’s the trick. There’s the whole thing in a nutshell, that you’re fairly keen and the Government is fairly keen as is business not to increase the overall tax take. But what’s emerging this morning from commentary is that the reform could include cuts and increases. Technically you could argue that you’re not increasing the tax intake.
MATHIAS CORMANN: The key is that we continue to get spending under control. Spending at 26 per cent as a share of GDP is too high. It is at record levels in our history. We have got to work to continue to bring that down as a share of GDP. We were on an unsustainable spending growth trajectory when we came into Government. We are working as part of our effort to strengthen growth we are working to ensure that the budget position is more sustainable, that spending into the future is more sustainable, because we want to ensure that the important services provided by Government benefits as part of the social safety net provided by Government are affordable and sustainable into the future. Having said that, stronger growth will increase the level of revenue available to Government. So that is one of the reasons why stronger growth is important. But in terms of the tax conversation, it is very important that our tax system doesn’t detract from economic growth opportunities into the future. It is important to ensure that it is as efficient and as fair as possible so that we raise the necessary revenue for Government, as much as necessary but as little as possible, in the best, most efficient, least distorting way possible.
STEVE CHASE: One final question, the interview that Tony Abbott gave on radio yesterday, it’s not gone unnoticed that it was at the same time as you were sitting down to discuss all this. That on the face of it would appear to be the beginning of a destabilisation campaign.
MATHIAS CORMANN: I don’t agree with that at all. I think that our former prime minister has handled himself very well since just over two weeks ago...interrupted
STEVE CHASE: But the timing is extraordinary isn’t it?
MATHIAS CORMANN: I suspect that is just a coincidence. To be honest, what happened two or so weeks ago was very difficult for him personally. It was a very public and difficult change for him. I think that in all of the circumstances, firstly I think he has handled himself with a lot of class and a lot of distinction. Secondly, I think he actually has earned the right to be able to explain to the Australian people what it is he sought to do as their Prime Minister over the past two years. I think that we all should just cut him a bit of slack.
STEVE CHASE: Finally Mathias Cormann you’re from the West with Julie Bishop, big Eagles fans, who are you tipping for the grand final and by how much?
MATHIAS CORMANN: I’m certainly going to be in there backing the West Coast Eagles. I very much hope they are going to end up on top for sure.
STEVE CHASE: Mathias Cormann, thank you.
MATHIAS CORMANN: Always good to talk to you.