Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 3 May 2016
CHRIS HAMMER: Minister, there is an election coming, does this Budget amount to an election manifesto?
MATHIAS CORMANN: This Budget is our national economic plan for jobs and growth. It is our plan to secure a successful transition from resource investment driven growth to broader drivers of growth in a strong and diversified economy. It is our plan to ensure that the Budget is on a sustainable foundation for the future.
CHRIS HAMMER: So is this what people should vote on, or is there going to be more coming?
MATHIAS CORMANN: People will make judgements on a whole range of things. This is our next instalment in our economic plan to ensure we are in the strongest possible position to take advantage of the opportunities coming our way and to be in the most resilient position possible to deal with the challenges coming our way.
CHRIS HAMMER: You mention jobs and growth, one of our economic editors, Ross Gittins from the Sydney Morning Herald, says he didn’t feel that this Budget does anything more for jobs and growth, didn’t say it was bad for jobs and growth, but said it didn’t really do much more than say today’s interest rates. Given that is the sort of criticism that’s likely to be in the paper, what would your reaction to that be?
MATHIAS CORMANN: We completely disagree with that. Our enterprise tax plan, our 10 year enterprise tax plan, reducing the corporate tax rate to 25 per cent will permanently add 1 per cent to the size of our economy. A more competitive corporate tax rate will help us attract more investment. It will help us lift our productivity. It will help us increase real wages and living standards across Australia. That is exactly what we are trying to do. Jobs and growth is what this is about and having a more growth friendly tax system is a significant part of that. There are of course other parts in this Budget, our innovation agenda, our defence industry plan, our ambitious infrastructure investment plan, our export trade agreements which help Australian businesses be more successful in overseas markets. All of that adds to jobs and growth.
CHRIS HAMMER: If there is pain for any particular group in this year’s Budget it’s probably the very wealthy and their superannuation concessions. You’ve brought those, reined those in quite tightly, explain that for us.
MATHIAS CORMANN: What we have been doing in this Budget is to maintain fiscal discipline to ensure that the Budget goes back into balance in a sensible fashion. The Budget bottom line is improving year on year in dollar terms and as a share of GDP. If you look at the individual measures, we’ve controlled expenditure, we’ve paid for any increase in spending with reductions in spending in other parts of the Budget. On the revenue side, what we have done is ensure that multinationals for example, pay their fair share of tax. We have made real, significant efforts to further reduce tax avoidance. We have also ensured that available tax concessions, in particular in the superannuation space, are better targeted. 96 per cent of Australians with superannuation will not be affected, or be better off as a result of the changes that we have made in this Budget. Less than 4 per cent of Australians with superannuation are affected by the changes that we have made. We considered that this was an important rebalancing to make the superannuation tax concessions that are available more fair and equitable.
CHRIS HAMMER: The rhetoric two Budgets ago, when you were Finance Minister was all about getting the Budget back into surplus, that’s still there. It’s some years away though, would you concede that it is very hard to predict a surplus that far out? It’s hostage to much more than government policy, it is hostage to the world economy, China etcetera.
MATHIAS CORMANN: When we came into Government we inherited a weakening economy, rising unemployment and a deteriorating Budget position. We have worked very hard on turning all of these trends around. The economy is now growing more strongly at 3 per cent. The unemployment rate is much lower than previously anticipated. Employment growth is much stronger than it was under the previous government. Indeed, the Budget position is on an improving trajectory. Spending has been brought under control, spending as a share of GDP is reducing over the forward estimates from 25.8 per cent to 25.2 per cent. If you look at the underlying cash balance it is improving year on year. The return to surplus is forecast to be in the same year as we estimated just before Christmas in the half yearly Budget update.
CHRIS HAMMER: Thank you very much.
MATHIAS CORMANN: Always good to talk to you.