Transcripts → 2016



Senator the Hon Mathias Cormann
Minister for Finance


Date: Monday, 8 February 2016

GST, Tax Reform

MICHAEL BRISSENDEN: I’m joined live in the studio by the Finance Minister Mathias Cormann. Senator Cormann welcome back to the program for the year.

MATHIAS CORMANN: Good to be back.

MICHAEL BRISSENDEN: What should we take then from the Prime Minister when he says he remains to be convinced or persuaded that a tax mix switch involving a change to the GST would give the Government the economic benefit that it would want. Is it on or off the table?

MATHIAS CORMANN: What we should take from that is that the Government today as it was last week and over the past few months, continues to be focused on stronger growth and more jobs. As part of that focus we have been working through how we can make our tax system more growth friendly and how we can make it more growth friendly in a way that is also fair. That continues to be our focus. No final decisions have been made. At some point between now and the Budget, we will be making some decisions. We will be reaching some landing points. In a good time before the next election people will be able to pass judgment on the economic reform agenda that we're putting forward for the next four years.

MICHAEL BRISSENDEN: Is he walking away from the GST, the GST increase?

MATHIAS CORMANN: All of us continue to be focused on making sure we make the right decisions to make our tax system more growth friendly. We've always said that in the end, our judgment will be driven on whether a change in the tax system, further improvements to the tax system, can help strengthen growth and whether we can do this in a way that is also fair.

MICHAEL BRISSENDEN: What about you, are you convinced?

MATHIAS CORMANN: Again, we continue the conversation. We continue to assess the evidence. We continue to consider carefully all of the arguments that are put forward. At the end of the day we will make a judgment. Right now, like the Prime Minster, all of us who are considering these issues, we haven't reached a final landing point. All of us remain to be convinced, because if we were convinced we would have made a decision by now.

MICHAEL BRISSENDEN: Malcolm Turnbull took the leadership promising more leadership in this area. He said we need advocacy, not slogans, we need a style of leadership that explains the challenges and opportunities and how to seize those opportunities. Are you in danger of being too safe here and not seizing these opportunities?

MATHIAS CORMANN: That is exactly what the Prime Minister is doing. Yesterday, during his Insiders interview, the Prime Minister very much took the Australian people into his confidence. He was very candid in explaining all the various things that are on his mind... interrupted

MICHAEL BRISSENDEN: We’re not seeing a lot of...

MATHIAS CORMANN: The very important thing that the Prime Minister has done is to ensure that we are having an open debate. That we are having all of these proposals on the table so that they can be properly fleshed out. At some point between now and the Budget, between now and the next election, we will be making some final decisions and by then, people will have a very clear indication of what it is that we've been considering all the way through.

MICHAEL BRISSENDEN: It's pretty clear, isn't it, that some in your own party are not too keen on the prospect of a GST increase and certainly anyone with a margin of less than 5 per cent would be pretty worried about it?

MATHIAS CORMANN: There is a diversity of views and as the Prime Minister indicated yesterday, there is a diversity of views inside the Labor Party with South Australian Premier Jay Weatherill promoting an increase in the GST, whereas Bill Shorten is opposing it. There's a diversity of views inside the Liberal Party. But that is what you need to have when you want to properly flesh out and properly debate issues so that in the end, you make the best possible decision for the future.

MICHAEL BRISSENDEN: The Prime Minister says he doesn't want to increase the overall tax take, you mentioned Jay Weatherill. The States have a big problem with the $80 billion that was taken out of their health and education funding in the 2014 Budget. Where are they going, how are they going the fill that hole?

MATHIAS CORMANN: Our position always has been that we wanted to improve the tax mix. That we wanted to ensure that the revenue raised for government is raised in the most efficient, least distorting way without increasing the overall tax burden. Our focus and our instinct, our policy instinct is to go for lower, simpler, fairer taxes

MICHAEL BRISSENDEN: We need advocacy, not slogans, though. 

MATHIAS CORMANN: We are pursuing advocacy not slogans. What we are very genuinely and sincerely focused on is how we can make our tax system more growth friendly. That is a body of work that has started when we came into Government in September 2013. That is why we got rid of the mining tax and the carbon tax. They were a drag on growth. That is why we delivered a company tax cut for small business, in order to facilitate stronger growth in particular by small business. 

MICHAEL BRISSENDEN: But back to the States, they've got a problem, haven't they? They've got $80 billion that was taken out of their education and health funding in the 2014 Budget. If you don't increase the overall tax take how do the States get the money back? They will have to increase taxes which is an increase in the overall tax take? 

MATHIAS CORMANN: Firstly, I don’t quite accept your characterisation. The truth is the previous Labor Government made an unfunded pie-in-the-sky promise on the never-never in the period beyond the published forward estimates which is when the supposed ramp up in spending from the Commonwealth was supposed to happen. It wasn't funded. It wasn't affordable. It was never realistic. What the Commonwealth has done in the 2014-15 budget is to... interrupted 

MICHAEL BRISSENDEN: But the States thought it was coming and budgeted accordingly... interrupted 

MATHIAS CORMANN: If you talk to some of the States privately they will tell you they never believed it would come. That they always understood that this was a pie-in-the-sky, unfunded promise. They're quite happy to take that sort of unfunded pie-in-the-sky promise from a Labor Government that wasn't worried about where the money would be coming from. You've got to remember, they made that promise when they knew they were about to lose the election. They never thought that they would have to pay for it. The truth is, it's up to the State and Territory governments, to focus on how they can ensure that ... interrupted 

MICHAEL BRISSENDEN: So they will have to increase taxes, which is an increase in the overall tax take I’d assume. 

MATHIAS CORMANN: They ultimately have to take responsibility for the efficient and effective running of State and Territory schools and hospitals, that's right. 

MICHAEL BRISSENDEN: Business leaders, as you heard, saying any hopes of personal income tax or corporate tax cuts essentially will be dashed if the Government doesn't include a GST as part of the mix. How do you deliver that sort of stuff without increasing the GST? 

MATHIAS CORMANN: These are the sorts of issues that we're currently working our way through. Our focus is on policies that deliver stronger growth and more jobs. As part of that focus, we're focused on how we can make the tax system more growth friendly and we want to do it in a way that is also fair. 

MICHAEL BRISSENDEN: So, well, sure, we've talked about a couple of the things, superannuation tax concessions, what else? 

MATHIAS CORMANN: You are talking there about a couple of things. We are considering all of the options that are currently on the table. At some point we'll make a judgment and we'll make those announcements either in the Budget or between now and the Budget, certainly in good time before the next election. 

MICHAEL BRISSENDEN: You're a Finance Minister, you know the numbers, can it be done? 

MATHIAS CORMANN: Well, that is exactly what we're currently working our way through. You would expect us to take our time to make sure that we get these things right. 

MICHAEL BRISSENDEN: So you can do it with superannuation changes, negative gearing changes, you can do it without increasing the GST, that's the question I'm asking? 

MATHIAS CORMANN: You might want me to pre-empt a decision in relation to work that hasn't been concluded yet. I won't do that. I will continue, with my colleagues, to work through these issues in a careful manner. Once we've reviewed all of the evidence and reviewed all of the information and we are in a position to make a sensible decision on how we can make the tax system more growth friendly in a way that is always fair, then we’ll make relevant announcements. 

MICHAEL BRISSENDEN: Okay, just quickly on another matter, is it acceptable for a Minister to make a visit to China with a friend and a Liberal party donor, a big one I understand, and meet communist party officials who I understand was finalising a lucrative mining deal with. 

MATHIAS CORMANN: I’m not aware of what you are referring to there. 

MICHAEL BRISSENDEN: Well Stuart Robert, there’s a story around today about Stuart Robert who went to China on a private capacity apparently, with a friend of his who was signing a deal. He went and met with the Chinese mining company who are members of the communist party. The website says he spoke on behalf of the Department of Defence. Is that proper behaviour? 

MATHIAS CORMANN: I am not aware of the detail. I suspect that you might want to ask Stuart Robert in relation to this, if this is a trip that he went on. Not something that I can assist with ... interrupted 

MICHAEL BRISSENDEN: Is it that in accordance with Ministerial guidelines really, is the point? 

MATHIAS CORMANN: I’m not aware of the details. Rather than to speculate on something that I am not across, I might just encourage you to talk to Stuart Robert about this. 

MICHAEL BRISSENDEN: Okay. Senator Cormann we’ll leave it there, thank you very much. 

MATHIAS CORMANN: Always good to talk to you.