Senator the Hon Mathias Cormann
Minister for Finance
PATRICIA KARVELAS: It’s been a big day for the news on the economy. Though you might be excused for missing the news amid all of this week’s political noise, which has kicked on today. GDP figures are out and revelations have been made about the Government’s past modelling of a GST hike. Mathias Cormann is the Finance Minister. Welcome back to RN Drive.
MATHIAS CORMANN: Good to be back.
PATRICIA KARVELAS: Now before we get to the economy, let’s talk about Mal Brough. It’s the biggest story today. The Opposition have interrogated him all week in Question Time. And no doubt they will do it again the same tomorrow. Are you comfortable having this hang over the Government’s head throughout the summer break?
MATHIAS CORMANN: There is a process underway. There is not really anything further that I can add. The Prime Minister and Minister Brough as you’ve indicated, have been answering questions in relation to this. They have addressed all of the issues extensively.
PATRICIA KARVELAS: Do you agree that Mister Brough told ’60 Minutes’ that he procured copies of Peter Slipper’s diary and then told the Parliament today that he didn’t, the opposite thing?
MATHIAS CORMANN: Minister Brough has been asked a series of questions. He has answered them. There is a process underway. There is not really anything that I can add to that.
PATRICIA KARVELAS: You recall Arthur Sinodinos standing down. Shouldn’t the same thing happen?
MATHIAS CORMANN: As I’ve indicated, there is a process underway. There is nothing really that I can add to that. I’ve been asked to come on to your show to talk about the economy and the National Accounts being released today. That’s what I’m very keen and very happy to talk to you about.
PATRICIA KARVELAS: We will get to it but there is a lot of politics and you are obviously in the Cabinet. So people are interested in these issues as well, given they are so dominant today. Tony Abbott has openly attacked Julie Bishop as well for telling falsehoods about his fall from the leadership. Does the Foreign Minister have a case to answer?
MATHIAS CORMANN: All of this from where I sit, is ancient history. It is in the past. The Government and the Australian people have moved on. I am focussed and the Government is focussed on doing our job. What I have been focussed on over the last few weeks and months is working closely with the Treasurer on putting our half yearly Budget update together, which is due to be released in the middle of December. The third quarter National Accounts data, which came out today, was the last ingredient for the Mid-Year Economic and Fiscal Outlook that we were waiting for. So my focus, along with Scott Morrison and the Cabinet and indeed the whole team has been on how we can best strengthen growth, create more and better jobs and deal with all of the other challenges for Australia that we are focussed on.
PATRICIA KARVELAS: Well, speaking of the National Accounts, Fairfax Media’s latest account of the demise of the Abbott Government focuses on former Treasurer Joe Hockey, his presentation of the changes to the GST. Where were you in all of this? What can you tell us about this proposal?
MATHIAS CORMANN: None of this is actually any secret. We have been involved in a good faith conversation with the States and Territories about how we can improve our tax system, how we can make our tax system more growth friendly. As part of that, the State and Territory governments asked us to model certain scenarios. The Commonwealth Government has at no point put a Commonwealth Government proposal on the table. We have though, decided, and that is all a matter of public record, to leave all of the options on the table to improve our tax system, so that we can provide the drivers to encourage people and to back people to work more, save more and invest more. So... interrupted
PATRICIA KARVELAS: So were you in those discussions to ask for the modelling on a GST hike?
MATHIAS CORMANN: I wasn’t in the meetings between the Commonwealth Treasurer and the State and Territory Treasurers. That is not a meeting that the Finance Minister attends. But all of the relevant meetings within the Commonwealth Government, you would expect me to be part of. Scott Morrison has indicated publicly as Treasurer for some time now, that we have been in a discover phase. That we have been making sure that we have all of the necessary information in front of us, so that we are going to be in the best possible position to make sensible decisions. In the end, the only thing that we are focussed on is on how we can facilitate stronger growth and stronger job creation. As part of that consideration, we are looking at how we can make our tax system more growth friendly.
PATRICIA KARVELAS: So did you support Joe Hockey’s vision for changes to the GST?
MATHIAS CORMANN: I don’t agree with your characterisation. Essentially what has happened up until this point is that we have been working in good faith with State and Territory governments about exploring how the tax system can be improved moving forward. In that context, a number of different scenarios were assessed. That is all a matter of public record. That has well and truly been publically ventilated well before this week.
PATRICIA KARVELAS: How about this proposal, the Australian Chamber of Commerce and Industry is urging the Government to release the modelling to the public to allow a proper debate on the idea of a 15 per cent GST. Now the story is out, why won’t you share the modelling so there can be, ACCI is saying without this modelling you can’t have a proper debate?
MATHIAS CORMANN: At the right time we should be releasing all of the relevant information of course.
PATRICIA KARVELAS: When might the right time be?
MATHIAS CORMANN: The right time will be when the Government has made a decision on a draft set of proposals. The way this process works is that we released some time ago a discussion paper on how our tax system might be able to be improved in order to facilitate stronger growth as we have always indicated. The next step will be a draft set of proposals in the form of a green paper. Ultimately the intention is to have a firm policy agenda, which we will take to the next election, which will be in the form of a tax reform white paper. There is a process underway. It is important to go through that process in an orderly and methodical fashion and that is exactly what we are doing.
PATRICIA KARVELAS: On RN Drive my guest is Finance Minister Mathias Cormann. Our number here 0418 226 576. Today’s growth figures, 0.9 per cent for the quarter and 2.5 per cent annually. Are they something to celebrate?
MATHIAS CORMANN: It is one of the strongest growth rates for the past quarter in the developed world. It is certainly stronger than any of the G7 countries. It is not as good than what we’ve been able to achieve in Australia in the past. What it does show is that we are making the transition successfully from the largest resource investment boom in our history to broader based growth. That is very encouraging and people across Australia should take a lot of confidence out of that in terms of how Australia is actually performing, given some of the external challenges that we’ve been facing in recent years.
PATRICIA KARVELAS: On Sky News this afternoon, Scott Morrison said the Government won’t chase revenue loss to factors like falling commodity prices. Here he is:
SCOTT MORRISON (EXTRACT): What you don’t do with these types of things, is you don’t chase those things down the hole. They are the perimeters of which you have very little control. What you do when you manage a budget is that you focus on the things that you can control and that is what we’re doing, and then you work through the rest.
PATRICIA KARVELAS: If you’re not going to make up for lost revenue, how big should we expect the Budget deficit to be?
MATHIAS CORMANN: Firstly, what the Treasurer has said is 100 per cent right. That is what I’ve been saying all the way through too. What our focus is, and the very important discipline for the Government is that, wherever we make policy decisions which have a negative impact on the Budget bottom line, because there is a high priority that we have to deal with, for example the decision of the Government to receive 12,000 additional refugees out of Syria, there is a cost attached to it, then the effort that we’ve made is to ensure that this is more than fully offset by policy decisions in other areas that have a positive impact on the Budget bottom line. It doesn’t help for us to chase down any reductions in revenue as a result of external economic parameters that are outside of our control. In the meantime though, what we must do, what we’re committed to do and what we are doing is to pursue a policy agenda here in Australia domestically that helps to ensure that we maximise economic growth so that revenue over time will again continue to increase above current trends.
PATRICIA KARVELAS: The Government isn’t going ahead with its reforms to superannuation fund boards because you couldn’t get it through the Senate. You wanted one third of all board directors to be independent. Will we be seeing that resurrected next year in any form?
MATHIAS CORMANN: You are quite wrong in suggesting that the Government is not going ahead with it. The legislation passed what is called the second reading stage in the Senate with the support of seven crossbenchers last week. This piece of legislation is currently before the Senate. We understand that four out of the necessary six crossbenchers support this legislation going through the third and final stage. We would expect that to happen early in the year.
PATRICIA KARVELAS: Just finally, what should we read into the Prime Minister’s karaoke of ‘Suspicious Minds’ at a Parliament House Christmas Party he was at. Were you at that same Christmas Party?
MATHIAS CORMANN: I wasn’t aware that the Prime Minister participated in a karaoke night. I thought the Prime Minister was flying back from Paris…interrupted
PATRICIA KARVELAS: The former Prime Minister, sorry. You got me there. You can’t blame me Mathias Cormann, you changed Prime Ministers on me in one term.
MATHIAS CORMANN: Firstly, no I wasn’t at the party. I would have thought that Christmas carols in the lead up to Christmas, there’s nothing out of the ordinary there.
PATRICIA KARVELAS: Do you have a song that you sing at karaoke?
MATHIAS CORMANN: I’m not a very good singer.
PATRICIA KARVELAS: Aren’t you?
MATHIAS CORMANN: No.
PATRICIA KARVELAS: I don’t believe it. Minister, thank you for your time.
MATHIAS CORMANN: Always good to talk to you.