Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
TOM CONNELL: Now we are going to cross over to Perth, to the Finance Minister Mathias Cormann who joins us on AM Agenda. Minister thanks for your time today. If I could start on this tobacco excise, it certainly seems to be something on the table, reported in Fairfax newspapers in fact as in the Budget.
MATHIAS CORMANN: The Budget will be delivered on the 3rd of May. There is always a lot of speculation in the lead up to any Budget, about what may or may not be in the Budget. I will not be adding to that speculation. I will let the Budget do the talking on the 3rd of May.
TOM CONNELL: When it comes though to at least the principle of this, if we look at what the Government has said about Labor’s plan of $47 billion over ten years, presumably any sort of principle of the Government moving on this would mean not a hike as big, so a smaller hike and not to be put towards specific spending, which has been a big criticism of the Government of what Labor is doing with the money they are going to raise.
MATHIAS CORMANN: Looking at the principle, Labor is proposing to tax more to spend more. They are proposing to tax more in a bad way generally, in a way which will hinder our successful transition from resource investment driven growth to broader drivers of growth. The Government is focused on taxing better, in a way that doesn’t increase the overall tax burden in the economy, so we can continue to successfully transition from resource investment driven growth to broader drivers of growth in a diversified new economy.
TOM CONNELL: When it comes the tobacco excise though can you at least tell voters it won’t be as big as the Labor’s, what Tony Abbott called Labor’s workers tax? And that it won’t be used to simply prop up spending because you’ve spoken about this, your Government, that it is meant to be money that is not going to be as big in future years because it will actually stop people smoking.
MATHIAS CORMANN: Again, I am not going to go into specific measures in the Budget. The Budget will be delivered on the 3rd of May. But what I can say is that our focus has been on strengthening growth and creating more jobs. As such our focus has been on improving the way we raise the necessary revenue for Government, not on increasing the overall tax burden in the economy. Because what we are seeking to do is by improving our tax mix, by making our tax system more growth friendly, we want to continue to maximise the successful transition that we are currently engaged in from resource investment driven growth to broader drivers of growth.
TOM CONNELL: Okay, moving onto worker entitlements, the $74 million that the Government is going to guarantee for workers of Queensland Nickel. Is there any concern, I know the Government will chase Clive Palmer for this money, but it lets him off that political pressure of the sight of workers not getting entitlements not getting paid out what they are entitled to.
MATHIAS CORMANN: The Government is very focused and very concerned about the fate of workers of Queensland Nickel, workers that have lost their jobs and on making sure that those workers do receive the entitlements that they are due. Minister Michaelia Cash the Employment Minister, will have something more to say about this in a very short time.
TOM CONNELL: Is it living within our means to have this record payment from this Fair Entitlements Guarantee.
MATHIAS CORMANN: There is a program that is set up for that purpose. It is not ideal to be in a situation where this has to happen. However, again, Minister Michaelia Cash will have some more to say about this in the next little while. But the whole purpose why we have the Fair Entitlements Guarantee as a program is to deal with the extreme circumstances where employers have not been making appropriate provisions to ensure that the entitlements of workers losing their jobs in these sorts of circumstances are taken care of.
TOM CONNELL: Okay, I might switch your attention to the Moodys, the words from the credit agency Moodys yesterday, a warning of sorts for your Government that the upcoming Budget and future ones need to focus not just on spending cuts, but raising revenue as well. Do you accept that if you can’t get the savings through you have spoken about, that you have aimed to get but the Senate has blocked, you will ultimately need to look at revenue raising more than you would like to?
MATHIAS CORMANN: Firstly, we have got most of our savings through. We continue to focus on controlling expenditure. That is an important part of our fiscal strategy. If you look at our Budget position as per the Mid-Year Economic and Fiscal Outlook released just before Christmas, our Budget position continues to improve. Our underlying cash balance is improving year on year over the forward estimates. There will be an update of those numbers now in the Budget on the 3rd of May. We have made some further decisions both on the revenue and on the expenditure side of the Budget. Our focus is on responsible Budget management. Our focus is on managing the Budget in a way that does protect our AAA credit rating. In the end what matters is that we continue to head in the right direction, on a credible pathway back to surplus as soon as possible. That is what we are doing.
TOM CONNELL: What Moodys seems to be saying, the long term is you either start raising more revenue or you won’t be getting back to credible surplus. If you ignore that warning you’re talking about possibly costing Australia in the long term a AAA credit rating aren’t you?
MATHIAS CORMANN: Our focus is to increase revenue on the back of stronger growth. To achieve stronger growth the worst thing that you could do is to increase the overall tax burden and to do some of the things that Labor is proposing to do, which is raise more tax in a bad way. To increase Capital Gains Tax will hurt investment, when what Australia needs to successfully transition our economy is to attract more investment. To look at Labor’s proposed approach on negative gearing, which will push down the value of housing, which will increase the cost of rent, which will reduce the level of investment in the economy, that is the wrong way to go. Our way is to raise the necessary revenue for Government in a better way without increasing the overall tax burden, because that strengthens growth and that will help to increase the level of revenue without increasing the overall tax burden.
TOM CONNELL: Just finally then, what are you saying to Moodys, thanks for the advice but you’re wrong in this case?
MATHIAS CORMANN: In the end Moodys can make their own assessment after the Budget has been released. I am sure they will. Our focus is on managing our Budget responsibly, on getting the Budget back into balance as soon as possible, but in a way that is economically responsible. Our focus very much, is on doing what needs to be done to continue to successfully transition the Australian economy to the new diversified economy of the future.
TOM CONNELL: Okay Mathias Cormann, I know it is a busy time for you with the preparation of that Budget so thanks for your time today on Sky News.
MATHIAS CORMANN: Always good to talk to you.