Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Date: Tuesday, 1 March 2016
DAVID SPEERS: Today we have seen not only debate on the tax front but also on the Senate voting reforms the Government recently announced. It has been a brief Senate inquiry into these changes today with strong arguments for and against what the Government is proposing to do. The Minister responsible for these changes, our Special Minister of State, he’s also the Finance Minister is Mathias Cormann. He joins me now, thank you very much for your time Minister.
MATHIAS CORMANN: Good to be here.
DAVID SPEERS: Let’s start on the tax front before we talk about Senate voting reform. Can I just take you to what Tony Abbott argued in the party room meeting today, the Coalition party room meeting, that there should be no changes to negative gearing rules. Do you agree with him?
MATHIAS CORMANN: Firstly, I don’t talk about what is discussed in the party room. Today actually I was focussed on the Joint Standing Committee on Electoral Matters inquiry. By way of a general point, it is well understood that the Government is currently reviewing how the tax system can be further improved. That is a process which started under Tony Abbott and Joe Hockey. Indeed I worked with Joe Hockey as Treasurer when this process of review got underway. That was to build on the tax cuts for small business in last year’s Budget. It was to build on the abolition of the mining tax and the carbon tax and that process is ongoing under the Turnbull Government, with a view of making sure that our tax system is as growth friendly as possible.
DAVID SPEERS: But do you believe there are excesses in negative gearing right now?
MATHIAS CORMANN: I’m not going to provide a running commentary on the ins and outs of our tax system ...interrupted
DAVID SPEERS: It’s something that the Treasurer has said, is he right or wrong?
MATHIAS CORMANN: The Government is currently working through a process. We are currently reviewing options to improve our tax system ...interrupted
DAVID SPEERS: I know that, but I’m just asking whether there are excesses?
MATHIAS CORMANN: The Treasurer can talk for himself. I am the Finance Minister, I look after the expenditure side of the Budget ...interrupted
DAVID SPEERS: Surely you can say whether you agree with it?
MATHIAS CORMANN: I’m not going to give a running commentary on the options that are being considered by the Government. When there is an announcement to be made, that will be made.
DAVID SPEERS: It’s not about the options you are considering, it’s about whether there is a problem at the moment.
MATHIAS CORMANN: Right now, the Government is working very carefully on how our tax system can be improved. That is a process that I am part of. When we are in the position ...interrupted
DAVID SPEERS: What are you trying to tackle here, is there a problem with negative gearing?
MATHIAS CORMANN: What we are trying to tackle is to make sure that our tax system is as growth friendly as possible. That is why we have been working right across the board. That is a process that started with Tony Abbott and Joe Hockey. It is a process that has continued with Malcolm Turnbull and Scott Morrison. What we are looking at right now across the board is for opportunities ...interrupted
DAVID SPEERS: We know that, growth is what you want to do. But I’m just asking whether there is a problem at all with negative gearing right now. Not what you might do, just whether there is a problem.
MATHIAS CORMANN: You can ask me that question whatever way you like ...interrupted
DAVID SPEERS: So you’re not willing to say what the Treasurer has said?
MATHIAS CORMANN: The Treasurer speaks for himself. The Treasurer is responsible for the tax system. The Treasurer is also responsible for this process. I’m not going to give a running commentary in somebody else’s portfolio.
DAVID SPEERS: With respect you sit on the ERC, you are the Finance Minister, this is kind of your portfolio.
MATHIAS CORMANN: It is not my portfolio. Tax is actually the Treasurer and the Assistant Treasurer. My focus is on the expenditure side of the Budget. But, you are right, I am part of the Government. I am part of the process that is currently looking for opportunities to...interrupted
DAVID SPEERS: Negative gearing is a tax expenditure though isn’t it?
MATHIAS CORMANN: It is actually not a tax expenditure. Negative gearing doesn’t exist in the tax laws as a concept. It is a colloquial concept. What it describes is the fact that you can deduct from your gross income relevant costs incurred in generating income.
DAVID SPEERS: So not your portfolio?
MATHIAS CORMANN: It’s not my portfolio.
DAVID SPEERS: What about on the spending front then, Tony Abbott has also made a strong case, as others did today in the party room, that you need to refocus on reducing spending?
MATHIAS CORMANN: Our focus has continued undiminished. Since we came into Government in September 2013 we very much focused on getting expenditure under control. We inherited an unsustainable and unfunded spending growth trajectory from the previous Labor Government. We’ve made serious progress in the period of the Abbott Government. In the period of the Turnbull Government we have continued to build on the progress that we have made before.
DAVID SPEERS: Although Scott Morrison says that the $80 billion in savings you have spent about $70 billion.
MATHIAS CORMANN: That includes tax cuts. It also includes a redirection into higher quality investment in infrastructure. Deliberately, a lot of the savings and we said this at the time, a lot of the savings over the short term started low and slow. They were structural savings which built over time. So there was number one, savings build over time which is why there is a beneficial impact on the spending growth trajectory over the medium to long term. Secondly, a number of savings were redirected into higher quality investment in infrastructure, which helps to grow the economy more strongly and thirdly, a number of the decisions were made to reduce taxes which ...interrupted
DAVID SPEERS: Are you basically back to where you started?
MATHIAS CORMANN: No, we don’t accept that at all. We’re in a much stronger position now than when we started and we’re certainly in a much stronger position than we would’ve been if we hadn’t reversed some of the bad policy decisions made by the Labor Party in government. Indeed right now, Labor has got a $50 billion Budget black hole because they’ve made unfunded spending promises that are not funded even through their many tax increases that they’ve promoted in recent weeks.
DAVID SPEERS: Let’s go to Senate voting reform. There was the Committee that you mentioned today that heard evidence. One of the concerns that has been raised, you want to allow optional preferential voting above the line but not below the line, why not?
MATHIAS CORMANN: The problem that needs fixing is the fact that voters above the line, and there are about 97 per cent of people who voted above the line at the last election, lose control of their preferences as soon as they fill number 1 in the box above the line. They lose control of their preference to group voting ticket arrangements, which are non-transparent, which are opaque, which essentially are based on backroom deals by what the Labor National Secretary has previously described as preference manipulators. Below the line, it manifestly and self-evidently, the same problem doesn’t exist. Voters below the line do have the capacity to direct their preferences as they see fit, as they wish. Now we have listened very carefully to the evidence this morning. No doubt the Joint Standing Committee on Electoral Matters, having considered the evidence this morning, will make some recommendations. The Government will consider those recommendations and consider whether there are any more amendments that might be justified.
DAVID SPEERS: So, is that something you’d consider? Why not allow optional preferential voting below the line? Isn’t it a bit confusing if you say you can just vote 1 above the line, or 2 if you want or 3 or 6, but you have to number every box below the line.
MATHIAS CORMANN: The mischief that we are trying to fix and the mischief that the Joint Standing Committee on Electoral Matters unanimously asked us to fix two years ago was that, right now, voters do not have the capacity to direct what happens to their preferences above the line. Below the line, voters do have that capacity. Incidentally, the level of informal votes below the line is surprising low. It is already less than 2 per cent under our current system. With the improvements to the savings provision that we’ve proposed in our legislation, we would be able to, at the last election, there would have been less than 1 per cent. Having said that, some evidence was given today. The Joint Standing Committee on Electoral Matters will no doubt consider the evidence and make some recommendations. The Government will assess and no doubt other parties in the Parliament will assess those recommendations.
DAVID SPEERS: A final question on this. Would you consider a delayed start date to these reforms as some have suggested to avoid you going to a double dissolution and using these reforms to clean out the Senate. A delayed start date to August, for example?
MATHIAS CORMANN: This is completely unrelated to the timing or the form of the election. The truth is, the election in the ordinary course of events is due in August, September or October this year. Whenever the election takes place, whatever form it takes, it should reflect the will of the people. The election result in the Senate should reflect the will of the people. That is what these reforms are designed to achieve. The Electoral Commission has told us that it would take them about three months, a minimum of three months, from passage of the legislation to implementation of the legislation at an election. That is something that the Government will comply with as a piece of advice from the Electoral Commission. From that point of view, the earliest opportunity that this legislation could be implemented at an election is three months after its passage through the Parliament.
DAVID SPEERS: Finance Minister and Special Minister of State Mathias Cormann, thanks for joining us this afternoon.
MATHIAS CORMANN: Always good to talk to you.