Senator the Hon Mathias Cormann
Minister for Finance
Date: Friday, 2 October 2015
MICHAEL ROWLAND: Now on the back of yesterday's reform summit in Canberra, we take you straight back to Parliament House. We are joined now by the Finance Minister Mathias Cormann. Senator Cormann, good morning.
MATHIAS CORMANN: Good morning. Good to be here.
MICHAEL ROWLAND: There seems to be consensus emerging from that gathering of all the key interest groups in Australia that something needs to be done to wind back superannuation tax concessions. Can we expect something of along those lines from the Government?
MATHIAS CORMANN: The most important consensus that emerged out of the very positive and constructive conversation yesterday morning is that all of us agreed that Australia needed stronger growth, needed to be more productive, needed to be more innovative and more competitive internationally. The conversation will continue in the weeks and months ahead on how that is best done from here.
MICHAEL ROWLAND: And also ways of making the tax system less distorted. I go back to the question, should superannuation tax concessions be considered at winding them back at as the Government looks at tax reform?
MATHIAS CORMANN: The Government yesterday didn't put forward any specific proposals. The Government yesterday was in listening mode. We were listening to the views and perspectives of the leaders of the national reform summit, the issues as they saw them. Our commitment is not to take anything off the table, to keep the conversation going and to explore issues with an open mind. When it comes to the tax system we understand that reform to the tax system is an important part of strengthening our economic growth into the future, improving productivity. We certainly are very keen to ensure that our tax system is more efficient and less distorting in the economy.
MICHAEL ROWLAND: You say the meeting was positive and constructive. That is a view shared uniformly by all the participants yesterday. Why has it taken this Government two years to have such a conversation?
MATHIAS CORMANN: We did have a lot on our plate over the past two years. One in fixing some of the problems the previous Labor Government had left behind. They did leave a series of burdens on our economy at the time of falling terms of trade, at a time when we were facing global economic headwinds, were making it more difficult for Australia to be successful. So we did have a pretty significant program over the past two years to strengthen growth and take costs out of the economy, reducing red tape costs for business, getting rid of the carbon tax and the mining tax and reducing company tax for small business, pursuing an ambitious free trade agrnda, pursuing an ambitious infrastructure program and so on. There has been a change in leadership for the Government. This was a good time, with a view to build on the progress that we've made over the past two years to take us to the next level.
MICHAEL ROWLAND: Does this consultation, this added more open consultation extend to other MPs, the crossbenchers including Clive Palmer, I noticed you had a nice meal with him in Canberra last night.
MATHIAS CORMANN: I talk to crossbenchers all the time. I don't know that there is anything newsworthy in that. Yes, I can confirm I did catch up with Clive Palmer last night in Canberra.
MICHAEL ROWLAND: And was that a positive and constructive meeting too?
MATHIAS CORMANN: All of my meetings are positive and constructive. There is always lots to discuss in our national interest.
MICHAEL ROWLAND: Now, university deregulation or the deregulation of fees was effectively dumped yesterday. What are the implications for the Budget's bottom line?
MATHIAS CORMANN: It wasn't effectively dumped. It was deferred by a year to allow more consultation... interrupted
MICHAEL ROWLAND: Realistically, will it ever be brought back given the controversy it's engaged?
MATHIAS CORMANN: We are not withdrawing the legislation. We consider this to be important reform. This is a very important reform package which the former Minister for Education Christopher Pyne put forward. He did do an outstanding job in making sure that the higher education sector was on board with pursuing this reform, which is designed to improve the international competitiveness of our higher education system. A timetable of implementation in January 2016 given that we are now September 2015 was no longer realistic, so it was a sensible decision and a pragmatic decision that Senator Birmingham announced yesterday. But there will now be further consultation and we are hopeful that we will be able to pursue important reforms in this space from 2017 onwards.
MICHAEL ROWLAND: In a speech earlier this week Minister, you made the point and a point you've been making a bit lately that spending in Australia is too high at 26 per cent of GDP. You would like it back to where it was under the Howard years of around 24 per cent. That would involve, though, pretty big spending cuts. How would you go about achieving that?
MATHIAS CORMANN: Or much stronger growth in the economy... interrupted
MICHAEL ROWLAND: And that is not coming with a growth rate of 2 per cent at the moment.
MATHIAS CORMANN: That is why it is so important that all of us around Australia pull together, community leaders, business leaders, union leaders and the community as a whole to do everything we can to strengthen growth and create more jobs. And it is not just during the Howard years that on average spending as a share of GDP was at 24 per cent. If you look at former Prime Minister Paul Keating's interviews with Kerry O'Brien on the ABC you will find in there he points out that one of his key achievements as Treasurer was to reduce Commonwealth Government expenditure as a share of GDP down to 24 per cent. That is something that ought to be pursued as a long term aspiration, sensibly with a realistic timetable. I am not saying this is something that should happen tomorrow. But 26 per cent Commonwealth expenditure is too high. We can't chase it by just continuously increasing the overall tax burden in the economy. The trajectory the previous Government left behind would have taken us to spending of in excess of 30 per cent if we hadn't made any changes to the policy settings. By the end of the forward estimates we are on track to reduce spending as share of GDP to 25.3 per cent or there abouts, but the point I'm making is we have to continue to work as part of our efforts to strengthen growth to put our budget in a more sustainable position for the future.
MICHAEL ROWLAND: A couple of quick questions before you go, Tony Abbott said as he left the top job that there will would be no wreck, under mining or sniping, wasn't he doing that in these two radio interviews this week?
MATHIAS CORMANN: Not at all. I thought they were very good interviews. The Liberal Party went through a difficult transition just over two weeks ago. I think that it is entirely appropriate for Tony Abbott to explain his perspective on what was a difficult event for him. I think he has been handling himself exceptionally well in all of the circumstances. I think that as a community we should give him the space to explain his perspective on what has been happening.
MICHAEL ROWLAND: Finally, getting to know one of the most important stories as we head into tomorrow. Mathias Cormann you are a fervent West Coast Eagles fan, are you worried though that Hawthorn is looking pretty good to win three on the trot?
MATHIAS CORMANN: Hawthorn is a very good team. I will be worried until the last second of the Grand Final tomorrow. I hope that the Eagles come out firing on all cylinders and that they will end up on top at the end of the day.
MICHAEL ROWLAND: Are you hoping to get to the match?
MATHIAS CORMANN: Yes.
MICHAEL ROWLAND: Have you got a tip? Eagles winning by a certain amount?
MATHIAS CORMANN: I am very much hoping that the Eagles win. A win is a win is a win. But let's make a prediction by 15 points.
MICHAEL ROWLAND: There you go, 15. I have got them winning by 30 or so. So we are on a unity ticket there. Mathias Cormann thank you for that.
MATHIAS CORMANN: Always good to talk to you.