Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Joining me here in the Canberra studio as we return to our top story, is the Finance Minister Mathias Cormann. Minister, thanks very much for your time this morning. First of all to the story in the Fairfax papers today relating to the superannuation changes for high income earners. An interesting development. Labor would be restricted in terms of how it could criticise you for this given they have are already going in this direction themselves.
MATHIAS CORMANN: There is always a lot of pre-Budget speculation. The Budget of course will be delivered on the 3rd of May. If you are expecting me to confirm or deliver Budget measures for you here today, I am not going to be in a position to do that.
KIERAN GILBERT: Okay, but in terms of the superannuation idea, previously it has been, by the former Prime Minister it was ruled out. This is clearly something that is back on the table and would generate a lot of revenue. $2 billion a year according to the report today. I don’t expect you to confirm it but, in general terms, this is something that Labor is doing and clearly would be, they would be restricted as to how far they could go in terms of criticising your policy if you chose to do this.
MATHIAS CORMANN: In general terms what we have said for some time is that we want to make our tax system more growth friendly. We want to raise the necessary revenue for Government in a better, more efficient, less distorting way in the economy, but without increasing the overall tax burden. Whereas Labor just wants to tax more to spend more. Labor has already said that they would increase taxes by more than $100 billion over the next ten years, which would be bad for the economy, bad for economic growth, which will actually hinder and undermine our transition from resource investment driven growth to broader drivers of growth.
KIERAN GILBERT: And so, if there was a change in this regard, that would be I guess, a way to put more money in people’s pockets today.
MATHIAS CORMANN: I am not going to add to pre-Budget speculation. But what I can say is that our focus very much has been on how we can ensure that our tax system is designed such that it facilitates stronger growth, more job creation and that it continues to help us transition successfully from resource investment driven growth to broader drivers of growth in a more diversified economy.
KIERAN GILBERT: Sure, but you still want to encourage, obviously it is important to encourage low income earners to be putting money away. Now that has obviously got to be a focus of any government.
MATHIAS CORMANN: It is a very important public policy focus to encourage Australians to save in order to be able to look after their own needs in retirement as much as possible.
KIERAN GILBERT: And that would include those particularly at the lower end of the income scale. My colleague Paul Murray last night had an advertisement. I don’t expect you to confirm it, but a post-Budget ad with a script that included a focus on encouraging lower income earners to put money away.
MATHIAS CORMANN: As I say, I am not going to add to pre-Budget speculation. I was not aware of the particular scripts that Paul Murray was talking about. But what I can say in a generic sense is that yes of course, the public policy settings in Australia are designed to encourage people to save more for their retirement. So that as much as possible, people can look after their own needs in retirement or at least supplement their age pension.
KIERAN GILBERT: But as the Treasurer said it is also, he’s said in recent months that it can’t be just simply a way to have less tax in terms of a wealth creation tool.
MATHIAS CORMANN: The purpose of superannuation is in order to save to either replace or supplement your age pension. That is the objective. That is the context in which we have got to assess the appropriate policy and tax policy settings in superannuation.
KIERAN GILBERT: Let’s look at something else today, the Treasurer is going to be announcing a crackdown, or an empowering of ASIC, including a special prosecutor to target the finance sector and the banking sector in the wake of recent scandals, and also essentially charging the banks a tax to help beef up ASIC. I think voters will welcome that.
MATHIAS CORMANN: The Government has gone through a proper and considered policy development process. We initiated the Financial Systems Inquiry, which had of course a major focus on our banking system. Something Labor opposed. Bill Shorten then when we first promised this said that the banks were so well regulated there was no need for a Financial Systems Inquiry. In six years of Labor government they never looked at this whole area. We also then, as a result of recommendations from the Financial Systems Inquiry, conducted a capability review into ASIC, which came forward with some recommendations on how the arrangements for ASIC could be improved and we are taking action in relation to this. The Treasurer and the Assistant Treasurer will be making some announcements on this this morning.
KIERAN GILBERT: The electorate, as I say, you would think would welcome the fact that the banks themselves are going to be footing the bill, as opposed to voters who are members of the community who have so often borne the brunt of poor bank policies.
MATHIAS CORMANN: This is indeed a strengthening of the regulatory framework in Australia. We already have a very good regulatory framework when it comes to the regulation of the banks. This will strengthen it further and indeed, the additional costs incurred from this will be borne by the banks.
KIERAN GILBERT: Why do you think the banks have been able to establish this sort of culture, which has allowed their discrepancies, the scandals to emerge in recent months?
MATHIAS CORMANN: There have been some issues but we also need to recognise that the banks fulfil a central and very important role as a facilitator in our economy. Labor’s approach, Bill Shorten’s approach to the banking system has been quite reckless and irresponsible in that context. Our approach is to fix problems where they become apparent. There is a problem, which the Prime Minister identified some weeks ago at a lunch at Westpac. There is a problem that the Financial Systems Inquiry and various other inquiries through the Senate have identified. The Government is taking positive policy action instead of just running a political campaign.
KIERAN GILBERT: I want to ask you about comments made by the RBA Governor in New York last night, in which he said that there is only so much that monetary policy can do. Calling on governments to do more in the area particularly of infrastructure and pointing to the record low interest rates upon which governments can currently borrow. This seems to me to make a lot of sense and it seems to be where the Government might be heading, particularly in the context of possibly infrastructure bonds in this upcoming Budget. But the comments from Governor Stevens just two weeks out from the Budget were very pointed, that monetary policy can only do so much. That governments need to step up more in terms of infrastructure spends.
MATHIAS CORMANN: The Government does have a very ambitious infrastructure investment program. That is something that we have been rolling out over the last two and a half years. There will be further announcements in this Budget.
KIERAN GILBERT: And there could be much, much more substantial couldn’t it?
MATHIAS CORMANN: Again, I am not going to deliver the Budget here for you today. Our track record when it comes to infrastructure investment is a very strong and proud track record.
KIERAN GILBERT: Alright. Minister, thanks for your time, appreciate it.
MATHIAS CORMANN: Always good to talk to you.