Senator the Hon Mathias Cormann
Minister for Finance
ANDREW BOLT: Malcolm Turnbull keeps hinting he could raise the GST, maybe even apply it to food. But he still hasn't said what he would do with all that extra money, probably about $30 billion a year. The state premiers won't agree to any change unless they get billions more for schools and hospitals. The poor then have to be compensated. So there won't be much left over for the Government's plan to cut personal tax as well. Anyway, Labor and the Greens say they'll oppose any GST rise in the Senate.
BILL SHORTEN: Jacking up the GST to 15% is not innovative, not agile, nor creative. Increasing the GST is not tax reform, especially not when the extra revenue is already being spent in five different directions.
ANDREW BOLT: Joining me is the Government's financial hard-man, Finance Minister Mathias Cormann. Good to see you, Mathias. Bill Shorten is right though, isn't he? Once you've bought off the poor and the state premiers, how much will actually be left for cuts in personal taxes?
MATHIAS CORMANN: Bill Shorten is making all sorts of assumptions. Our focus is on how we can improve our tax system, how we can have a better tax mix, which facilitates stronger economic growth. Of course stronger economic growth as well as helping to lift living standards across the country, also helps to increase revenue for the Government. That's what we're focused on.
ANDREW BOLT: But the proposal in broad, that's so widely hinted at, proposed, talked about, is clearly; raise the GST and then use savings to cut by, apparently, an equivalent amount, personal and company tax rates. Now, isn't it simply a matter of fact that if you don't return every dollar from a rise in the GST in personal and company tax cuts then obviously the total tax take must go up?
MATHIAS CORMANN: Well, our focus is on pursuing tax reform which doesn't increase the overall tax burden in the economy. But obviously, if you improve the tax mix, if you make sure that your tax system is more efficient, less distorting in the economy, is focused on encouraging people to work more, save more and invest more, then the stronger growth will deliver a dividend to government which, of course, can then be invested in the important benefits and services provided by government. In the end, the reason government raises revenue through taxes is because we, of course, pay for important things like the social safety net, medical benefits, pharmaceutical benefits, schools, hospitals, our national security, defence, border security and so on. We have to raise as much as is necessary, as little as possible and spend it as efficiently and effectively as possible and we have to make sure that the revenue is raised in the best possible way, fairly, but in a way that doesn't detract from economic growth opportunities any more than necessary.
ANDREW BOLT: Now, music to my ears what you're saying there Mathias, but my point is really this. This feeding frenzy, this oinking that I'm hearing from the trough, about how this GST revenue will be spent - on health and schools, say the premiers, on reducing the deficit, on this, on this, on compensating the poor - it's clearly the way it's going, you raise the GST and the money is gone, a lot of it, before you get around to cutting personal taxes.
MATHIAS CORMANN: Firstly, at the moment, there is a public conversation about tax reform and that is a good thing, because that in itself helps to build a community consensus around the need for tax reform ...interrupted
ANDREW BOLT: No, I've got you on that. What I'm looking for is some reassurance that the total tax rate, from what's being talked about, is not going to go up, because it's got every marker right now of being just a tax grab.
MATHIAS CORMANN: Well, we don't want to chase increased levels of expenditure with increased taxes as a share of the economy. We want to improve the tax mix. We don't want to increase the tax burden on the economy, because we are focused on making sure that our economy is as productive and as competitive as possible. That is a key reason why we want to pursue tax reform.
ANDREW BOLT: I've got that. I've got that. But you're seeing all these people saying, "We want the money!" You’ve got to say - someone in the Government has got to say, "You ain't going to get it!"
MATHIAS CORMANN: The Government at the moment is working in good faith with all the states and territories and we're involved in a conversation with all the Australian people. We haven't reached a landing point yet. We obviously are carefully assessing all of the various contributions that are made to the debate. But our focus is on pursuing tax reform that will help us strengthen productivity, help us strengthen our competitiveness and help us strengthen the economy. Stronger growth will deliver better revenue flows for government without the need to increase taxes overall.
ANDREW BOLT: You just keep saying no tax rise overall. That's not what I'm hearing from some of your colleagues, I've got to tell you. The Reserve Bank last week - you talk about you want to unleash higher growth and from that will come the money for all the good stuff. The Reserve Bank last week actually cut its growth forecast to 2.25 per cent, that’s half a per cent lower than was forecast in just the May Budget. How much difference will that make to the expected deficit this year? $3 billion, say? More?
MATHIAS CORMANN: Firstly, the Reserve Bank growth forecasts haven't materially changed. They put out a range earlier in the year and they still remain within the range they put out earlier in the year. The good news in Australia is that our economy continues to grow. We are in our 25th continuous year of economic growth. We are facing, obviously, some challenges, with the biggest fall in our terms of trade in about 50 years. Even so, unlike other commodity-based economies, we continue to grow, now ...interrupted
ANDREW BOLT: But the Budget bottom line - what's happened there?
MATHIAS CORMANN: Well, the next update to the Budget bottom line will be the half-yearly Budget update in December in MYEFO...interrupted
ANDREW BOLT: Is it going to be ugly or good?
MATHIAS CORMANN: We are working through all of these things at the moment. The third quarter economic growth data will come through in the national accounts released on the second of December and we will be releasing the Mid Year Economic and Fiscal Outlook some time after that.
ANDREW BOLT: Well the $35 billion deficit predicted, is that going to go up or down?
MATHIAS CORMANN: These are the sorts of issues that we are working our way through at the moment. I'm sure you'd like me to release MYEFO here for you now on your program...interrupted
ANDREW BOLT: I would. Well no, just give me a gut, just give me a gut feeling. Are we travelling well or badly?
MATHIAS CORMANN: We are making sure we're travelling the best way possible.
ANDREW BOLT: Well I know you are. But I’m just wondering, all these bad signs are not great. For example, the budget in May predicted the growth would shoot up to 3.5 per cent in just two years from now. We've now got growth at 2.25 per cent. That's not going to happen, is it? It's simply not going to happen.
MATHIAS CORMANN: The first two years of the budget forward estimates periods are estimates and the final two years are so-called projection years. There is obviously a technical assumption at play there. There will be an update ...interrupted
ANDREW BOLT: Is "technical assumption" your lovely word for "fingers crossed"?
MATHIAS CORMANN: No. That's just the way it works. There is an assumption that you will return back to your long-term average.
ANDREW BOLT: The Government talks about restraining the growth in spending, but university reforms have been scrapped. That's a savings loss. You've given in to the public service wage claim. That's more savings gone. You've pared back the savings from the Family Tax Benefit B. Can you tell me one area since Turnbull became Prime Minister that you've actually been tough on spending?
MATHIAS CORMANN: Since we came into government in September 2013, we have passed about 80 per cent of all of the measures that we initiated to repair the budget ...interrupted
ANDREW BOLT: That's correct - I'm talking about since Turnbull has come in. All the moves which I've just listed have been for giving up on savings, not improving on them.
MATHIAS CORMANN: Well, in relation to higher education, we've deferred the implementation of these reforms by one year. That was a sensible, practical measure. By the time that Simon Birmingham as the Minister for Education announced that decision, in September, October 2015, we were obviously very close to the implementation date of January 2016, which was quite unrealistic by then. He is conducting further consultations. When it comes to the public sector wage claim, that doesn't hit the budget bottom line, because as we've said, this has got to be funded by individual departments without supplementation.
ANDREW BOLT: That's not bad. You give a higher wage increase without hitting the budget bottom line ...interrupted
MATHIAS CORMANN: They have to find internal efficiencies in order to pay for it.
ANDREW BOLT: The counsel assisting the Royal Commission into Union Corruption on Friday made no recommendation to consider charges against Bill Shorten over the deals he did as union boss. Does that convince you he's clean, end of story?
MATHIAS CORMANN: Well the Royal Commission hasn't issued its finding yet. My view on it - look, in the end, other people will comment on these things, but from where I sit, I just look at what Bill Shorten himself admitted. He admitted that he was involved in secret deals trading away conditions for workers and he admitted that he received an undeclared personal benefit from somebody who he was negotiating with on behalf of his members. People will pass their own judgements in relation to that.
ANDREW BOLT: They sure will. Mathias, thank you so much for your time.
MATHIAS CORMANN: Always good to talk to you.