ABC – 7:30

Senator the Hon Mathias Cormann
Minister for Finance
Special Minister of State






Senate voting reform, Tax reform, Bracket creep

MATT WORDSWORTH: Finance Minister Mathias Cormann joins me now from our Canberra studio. Minister, thanks very much for joining us.

MATHIAS CORMANN: Good evening.

MATT WORDSWORTH: Are these Senate reforms clearing the way for a double dissolution election in July?

MATHIAS CORMANN: No, these matters are not related. There is an election due in the second half of this year in the ordinary course of events. These reforms which we are putting forward today are designed to empower voters to determine what happens to their votes and to their preferences when they vote for the Senate. It is important for any election to reflect the will of the people, instead of having political parties determine what happens to voter preferences when they vote above the line. What our reforms will ensure is that it is the voter preference that determines how their vote is ultimately allocated to their first, second, third and subsequent preference.

MATT WORDSWORTH: Is a double dissolution still a live option then?

MATHIAS CORMANN: A double dissolution election is a live option for the Prime Minister to consider. In the end the timing of the election, in the national interest, and the form of the election, is entirely a matter for the Prime Minister. Irrespective of what form the election will take later this year, these reforms are very important reforms. We need to progress them now, because there is a need for the Australian Electoral Commission to ensure that there is an orderly implementation following passage of any legislation. Given that there is an election later this year, given that the recommendations, the unanimous recommendations from the cross-party committee of the Parliament that looked at these issues have been made some two years ago, it is now time for the Parliament to act.

MATT WORDSWORTH: One matter that you are intimately concerned with is the Budget, and going back to that double dissolution question, the Budget is supposed to be on May the 10th, the earliest time they can dissolve Parliament is May the 11th, so timing is a big issue. Fairfax Media is reporting talk in the Government of perhaps bringing forward the Budget by a week, any truth to that?

MATHIAS CORMANN: I don't comment on speculation. The Budget is scheduled to be delivered on the second Tuesday in May as it usually is. I leave that sort of speculation to the speculators. There is no proposal from the Government to change the timing of the budget.

MATT WORDSWORTH: The Senate changes also mean there won't be any counting of Senate votes on election night, doesn't it? Is that to save money?

MATHIAS CORMANN: No, that's not to save money. Clearly under the current arrangement with 97% of people voting in the Senate above the line at the last election, it is reasonably straightforward to count votes on the night. Now that there is an opportunity for people, for Australian voters, to determine their preferences above the line as well as below the line, that will be a bit more of an involved exercise. That is why the counting arrangements reflect the fact that there is a need to allocate preferences above the line as well as below the line.

MATT WORDSWORTH: Will it save any money?

MATHIAS CORMANN: Elections are, as we say in the trade, a demand driven program for the Electoral Commission. They cost as much as is necessary and as little as possible to run. We're obviously always focussed on running them as efficiently as possible, but there is always a cost involved in running elections.

MATT WORDSWORTH: How much money will it save by not doing this?

MATHIAS CORMANN: What is happening here is that the Australian people will be empowered to ensure that they determine what happens to their votes and to their preferences when they vote above the line instead of having political parties, through group voting ticketing arrangements, sometimes in different directions, direct voter preferences who have lost control of that vote.

MATT WORDSWORTH: OK. Today the Prime Minister also ruled out raising capital gains tax. How and when was that decision made?

MATHIAS CORMANN: I'm not going to get into the deliberative process of Cabinet. What the Government is doing, we are focusing on how we can continue to strengthen growth and to create more jobs in a way that is fair. As part of that process and as part of that focus, we are considering how we can continue to make our tax system more growth friendly. That is what we've been doing since we got elected to Government. That is why we abolished the mining tax and the carbon tax, which made us less competitive internationally. That's why we delivered tax cuts to small business in last year's Budget and that is why we are now considering the whole tax system for opportunities to make the tax system more efficient, less distorting and more growth friendly to facilitate stronger growth in the economy.

MATT WORDSWORTH: The reason I ask about this process is a GST increase was ruled out at a media conference last week in Rockhampton, the capital gains tax increase in an answer in question time today. Is this how it's going to be in the lead-up to the Budget, gradually narrowing what is left on table?

MATHIAS CORMANN: As the Finance Minister my focus is on controlling expenditure. The timing of the tax policy announcements are a matter for the Prime Minister and the Treasurer. What I can say, is that since Malcolm Turnbull became the Prime Minister and Scott Morrison became the Treasurer in September, our commitment has been to consider with an open mind all of the various options that have been put forward by various individuals and groups across the community. We are going through that process in an orderly and methodical fashion. As we form judgments and as we reach landing points in terms of the right way forward, then these announcements are made.

MATT WORDSWORTH: As you go forward, is negative gearing still on the table? The changes to superannuation?

MATHIAS CORMANN: I will let the Prime Minister and the Treasurer make relevant announcements on our tax policy agenda moving forward.

MATT WORDSWORTH: OK. One thing you have commented on is tackling bracket creep. You said last week that with wage inflation and inflation generally low, bracket creep is slightly less of a problem than it was. Are you backing away from bracket creep, that's been raised as part of this conversation?

MATHIAS CORMANN: That was a completely ridiculous characterisation of my interview on Radio National last week. What I said in that interview, very clearly, is that bracket creep is a problem. Bracket creep is a drag on growth. But I pointed out, the self-evident fact, that if wages grow more slowly than they did before and than previously anticipated, then people will move through the individual tax brackets at a slower pace. That doesn't mean bracket creep is not a problem, it is. That doesn't mean we don't want to address it, of course we do. What I said in that interview and what I think is a very sensible position, if I may say so, is that we will do, we will address bracket creep in the best possible way and in a way that is sensibly affordable for the Government, given the fiscal circumstances we're in.

MATT WORDSWORTH: Your colleague Assistant Treasurer Kelly O'Dwyer says, "we don't want a situation where people on modest incomes, $80,000, find themselves in the second tax bracket”. That sounds a lot more specific.

MATHIAS CORMANN: That is exactly right and I have said similar things on a number of occasions. We don't want middle income earners to end up in higher income tax brackets. The point I'm making is, bracket creep is a problem. Bracket creep is a drag on growth. We don't want middle-income earners to end up in the highest income tax brackets. But self-evidently, if wage inflation is lower than previously anticipated, the problem to the extent that it is a problem, and it is a problem, is slightly less of a problem than what it might have been in the past. It means that we can make some judgments on what is sensibly affordable to address it, through personal income tax cuts. Our aspiration is to do as much as possible and as much as we can sensibly afford.

MATT WORDSWORTH: Just before we run out of time, Newspoll today shows that you're neck and neck with Labor. Do you think that holding off on this major economic policy has been a factor in the electorate being confused about what you're offering?

MATHIAS CORMANN: I let commentators assess and comment on our performance. Our focus is on doing the best job we can for the Australian people every day. That's what we'll continue to do, every single day between now and election day.

MATT WORDSWORTH: Thank you very much for your time

MATHAIS CORMANN: Always good to talk to you.



Senator the Hon Mathias Cormann, Minister for Finance, Perth