Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 4 May 2016
NICOLE CHVASTEK: A national economic plan which will provide jobs and growth and a transition to a future economy, or is it a heartless Budget for millionaires. Regardless of what it is, there are two extremes of position in relation to the Budget that was handed down last night and it is also a Budget which has seen tempers fray quite dramatically in Question Time.
MATHIAS CORMANN: I have had to look at the worst Finance Minister in the history of the Commonwealth for six years. First on that side of the Chamber, now on this side of the Chamber and hopefully I can keep looking at her for another three years from this side of the Chamber.
PRESIDENT: On my left.
BILL HEFFERNAN: Can you shut up for a minute?
PRESIDENT: Senator Heffernan.
SENATOR HEFFERNAN: I think, and I think the view of anyone of anyone in the public that this chamber is out of order. To think the crap that’s going on in here now is being put on by people that are supposed to be running the bloody country!
MATHIAS CORMANN: Labor doesn’t know how to manage money. They know that they have made a mess of the Budget and the economy and they know that the Coalition Government has always got to fix the mess that you leave behind.
NICOLE CHVASTEK: That is the voice of Mathias Cormann, the Minister for Finance. Minister, good afternoon.
MATHIAS CORMANN: Good afternoon Nicole.
NICOLE CHVASTEK: Quite an unedifying experience there in the Parliament with Senator Heffernan, your own Senator, making the justifiable point that while you’re laughing at the Finance Minister on the other side, you’re supposed to be running the country.
MATHIAS CORMANN: He wasn’t having a go at me actually, he was having a go at the Labor Party. What you didn’t put into that clip was the question that was asked and the question that was asked had a bit of a personal crack at me so you’ve got to see all of that in context.
NICOLE CHVASTEK: The point is that while you and Labor are sniping at each other, people are doing it tough in regional Victoria.
MATHIAS CORMANN: And that is why the Government last night delivered our national economic plan for jobs and growth. That is why we’ve put forward our plan to transition the economy from resource investment driven growth to broader drivers of growth.
NICOLE CHVASTEK: What’s in it for regional Victorians?
MATHIAS CORMANN: Regional Victorians want to see more jobs and stronger growth. Regional Victorians will draw benefit from the export trade deals that are generating new business opportunities in key markets like China, Japan and South Korea. And of course right now our focus on entering into an export trade agreement with India and also with Europe. Regional Victorians will be interested in the tax cuts and incentives that we’re providing for small business and hardworking families across Australia. They will be interested in our efforts to crack down on tax avoidance and better targeting of tax concessions. They’ll be interested in the fact that we can guarantee funding for health, education and roads because our investment across all of these areas is paid for by savings and spending reductions in other parts of the Budget.
NICOLE CHVASTEK: In fact you are making cuts to the health budget. Catherine King was on Ballarat Mornings today saying that you are cutting $2.1 billion out of health and you are imposing further cuts to bulk billing.
MATHIAS CORMANN: You should not believe everything that the Labor Party has to say about our Budget. You would be aware that we’ve increased our investment for example, in hospitals across Australia by $2.9 billion... interrupted
NICOLE CHVASTEK: I’m aware that you pulled $80 billion out in the 2014 Budget.
MATHIAS CORMANN: That is actually not true either. In the 2014-15 Budget, what we did was not to proceed with the unfunded, unaffordable, unsustainable, pie in the sky promises that Labor tried to make in the lead up to the last election which were never reflected in any Budget. What we’ve done since then is to make sure that we have got a reasonable but also an affordable spending growth trajectory when it comes to Commonwealth funding for state hospitals and indeed when it comes to Commonwealth funding for state schools. We are paying for that by savings on the spending side of the Budget in other parts of the Budget, not as Labor is proposing to do, by increasing the overall tax burden on the economy by more than $100 billion.
NICOLE CHVASTEK: You’re giving high income earners a tax cut, but regional Victoria is home to some of the most profound districts of poverty and I understand that you’re also winding back welfare and pensions.
MATHIAS CORMANN: I don’t agree with your description of people earning $80,000 a year as high income earners.
NICOLE CHVASTEK: That’s only 25 per cent of the population, 75 per cent of the population don’t earn anywhere near $80,000.
MATHIAS CORMANN: What we’ve done in this Budget and we would have liked to have done more when it comes to tax cuts, but this is our third Budget. In our first Budget, we abolished the carbon tax, there were income tax cuts for low income earners attached to the carbon tax which once we abolished the carbon tax became genuine tax cuts instead of compensation. The tax free threshold for example just about tripled to $18,200 in that context. That is an ongoing tax cut that is available to low income earners.
NICOLE CHVASTEK: That’s not something that was announced in last night’s Budget though. You can’t cite old Budgets, I’m asking what you’re doing for regional Victoria in last night’s Budget.
MATHIAS CORMANN: I can cite what the Government has been doing over a three year period because every year the Budget builds on the progress that has been made in previous Budgets. This is an ongoing overall national economic plan and we’re focusing on what we need to do to drive stronger growth and stronger job creation. That is very much in the interests of low and middle income earners across regional Victoria and indeed across all of Australia. Low and middle income earners looking for opportunities to get ahead and to get into better paying jobs. That is why we have looked at making our tax system more growth friendly. That is why we’re investing in our 10 year enterprise tax plan. That is why we are also making sure that all of the tax changes that increase revenue are reinvested in tax cuts across the economy.
NICOLE CHVASTEK: So why are there tax cuts for people on $80,000 and above and not tax cuts for people who are on much lower incomes and need it more?
MATHIAS CORMANN: There are actually tax cuts for people on lower incomes. We are reducing tax for people who are earning less than $37,000 and putting their compulsory superannuation savings into their superannuation accounts. We’re making sure…interrupted
NICOLE CHVASTEK: But that’s only going to affect a couple of hundred thousand people.
MATHIAS CORMANN: It affects everyone earning less than $37,000 a year.
NICOLE CHVASTEK: That initiative though, is only going to affect a couple of hundred thousand people.
MATHIAS CORMANN: Hang on, you can’t have it both ways…interrupted
NICOLE CHVASTEK: We’re a country of 25 million people. You can’t cite that as a great social justice initiative.
MATHIAS CORMANN: You talk about low income earners. Every single low income earner, earning less than $37,000 a year is eligible for this low income super tax offset which will ensure that people don’t pay more tax on income going into superannuation than on income that they would take as take home pay. We are reducing the tax rate to zero for those low income earners.
NICOLE CHVASTEK: A third of Australia lives in regional areas. Your own Member for Murray, Sharman Stone has condemned the backpacker’s tax saying that there are a number of fruit growers and agricultural producers who are dependent on backpackers and these transient workers will disappear if you push through with this backpacker tax. Is that what you’re intending to do?
MATHIAS CORMANN: We don’t believe that transient workers will disappear. We want to see backpackers continuing to come to Australia and we expect that backpackers will continue to come.
NICOLE CHVASTEK: Your own side is telling you that they will disappear. Sharman Stone is a Liberal, she’s telling you that farmers will go broke and backpackers will disappear unless they have access to this sort labour.
MATHIAS CORMANN: I don’t believe that farmers will go broke and I don’t believe that backpackers will disappear. In last year’s Budget we made some judgements in relation to the equity of tax treatment between foreign workers in different categories. There are some further conversations underway in relation to this matter with colleagues and we will continue to explore whether there is a better way to deal with this. There is a very important principle here that people who come to Australia from overseas, to work here, do have to also pay their fair share of tax on an equitable basis.
NICOLE CHVASTEK: These aren’t giant multi-nationals though Minister, these are young men and women who go fruit picking during fruit picking seasons and are a great support and fill-up to the agricultural sector.
MATHIAS CORMANN: So are you suggesting that across Australia we should apply different income tax rates depending on where you work?
NICOLE CHVASTEK: I’m saying that you are changing a regime which is going to see backpackers who are an important fill-up to this labour force during harvesting disappear.
MATHIAS CORMANN: What we are doing is making sure that there is integrity in our tax system. As I have said to you, we are continuing the conversation with our backbench Members of Parliament, Liberal and National Party backbench Members of Parliament and we continue to explore whether there is a better way to achieve that equity and that integrity in our tax system.
NICOLE CHVASTEK: Phil from Merbein has texted in, he says “This rip-off is using the rural producer as a cash cow to deliver a tax cut to rich urban swing voters”.
MATHIAS CORMANN: Well I obviously don’t agree with that characterisation.
NICOLE CHVASTEK: Minister, Anglicare has described your Budget as heartless it says that there are two ways that you can help the poorest people, with higher incomes or better basic services and it says that your Budget fails on both counts.
MATHIAS CORMANN: That is wrong, because our plan for jobs and growth, the whole point is to actually over time increase real wages and increase living standards. That is the whole purpose of what we are working to achieve here. This is an overall economic plan which will help to drive stronger growth and stronger job creation and it has got different components to it. One component is the tax cuts and incentives for small business and for hardworking families. Now I know that you think that somebody earning $80,000 a year is a high income earner…interrupted
NICOLE CHVASTEK: Well when in Mildura the average wage is $40,000, yeah $80,000 is a high income earner.
MATHIAS CORMANN: You’re entitled to that view.
NICOLE CHVASTEK: No I am telling you what the stat is for Mildura.
MATHIAS CORMANN: I can tell you what the stat is, and that is that average full-time wage earners across Australia are earning just below $80,000 a year.
NICOLE CHVASTEK: A third of Australian’s aren’t full time workers.
MATHIAS CORMANN: Everybody who earns less than $80,000 would like to earn more than $80,000 and we are providing them the incentive to work harder and try to earn more, by keeping taxes low when they get into that higher tax bracket.
NICOLE CHVASTEK: Minister what it is in it for the agricultural sector in regional Victoria.
MATHIAS CORMANN: The work that we have been doing, in particular in entering into new export trade deals, as I have mentioned with China, South Korea and Japan, all of that has been very good news for the agricultural sector... interrupted
NICOLE CHVASTEK: Those trade deals were struck before last night’s Budget.
MATHIAS CORMANN: Again the Budget is one moment in time. We are implementing a national plan for jobs and growth. You can’t look at the Budget in isolation. We are implementing an overall economic plan.
NICOLE CHVASTEK: Is there any money for mobile black spots, any more money?
MATHIAS CORMANN: There is more money for mobile black spots but I would encourage you to talk to my friend and colleague the Minister responsible for this part of the Budget, which is Fiona Nash.
NICOLE CHVASTEK: Minister was that money for the mobile black spots announced in last night’s Budget?
MATHIAS CORMANN: I will let my colleague, Fiona Nash make relevant announcements in relation to that.
NICOLE CHVASTEK: Because I am reading from ABC Rural copy which says the 2016 Federal Budget has struck a conservative note this year with inland rail and wine tax being the big ticket items leaving hot issues such as mobile black spots and further changes to the backpacker tax off the agenda.
MATHIAS CORMANN: In our Budget, we have made significant allocations for some time into reducing the level of mobile black spots across Australia and the best Minister to provide you with specific details in relation to that would be Fiona Nash.
NICOLE CHVASTEK: Minister thank you so much for giving us your time this afternoon.
MATHIAS CORMANN: Good to talk to you.