Transcripts → 2016


CNBC TV - Squawk Box

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


MATT TAYLOR: It is going to be a really interesting election campaign because, sorry we were interrupted a little while ago, there was a very large protest contingent out here and when we had the Finance Minister Mathias Cormann out here with us out here they became very vocal and we had to move locations. But we do want to bring you that conversation now with the Finance Minister Mathias Cormann. I started by asking him about the package for small business in the Budget. We know that there is small and medium sized businesses being reclassified so that more can take advantage of a tax cut and also the Government moving to cut the corporate tax rate to 25 per cent over the next 10 years and that is what I started by asking him about.

MATHIAS CORMANN: The Budget we delivered last night is our plan for jobs and growth. Part of that is to make our tax system more growth friendly. We are reducing the corporate tax rate over a 10 year period to 25 per cent. That puts us back into the middle of the pack of OECD countries. A more competitive corporate tax rate helps us attract investment, helps us improve productivity, helps us increase employment growth and over time helps us increase real wages and living standard across Australia.

MATT TAYLOR: The opposition claims that over the next 10 years it is an unfunded promise that you announced. What is your response to that?

MATHIAS CORMANN: That is just completely wrong. The overall effect of policy decisions including this decision on the forward estimates is actually a net improvement of $1.7 billion. The cost of this measure is reflected in our medium term forecasts and it does not add to the deficit. In fact, we are returning to surplus on the same timetable as we previously announced in our half-yearly Budget update before Christmas.

MATT TAYLOR: Also some criticisms that the growth assumptions that are in the Budget are perhaps too optimistic, what is your response to that?

MATHIAS CORMANN: Well we do not agree with that at all. Firstly, they are based on expert advice from Treasury that are broadly in line with the growth assumptions of the Reserve Bank and other economic forecasters. In the most recently reported 12 month period, Australia achieved three per cent growth. That is double the rate of growth in Canada, it is higher than any of the G7 economies like the United States or the UK. Our plan for jobs and growth will build on that further.

MATT TAYLOR: A big feature of, I guess Budgets globally, has been a crackdown on multinational tax avoidance and that is something that you announced as well that is going to bring in about $3.7 billion, tell us about that announcement.

MATHIAS CORMANN: What we are seeking to do is to put our Budget on a sustainable foundation for the future. So we are controlling expenditure but we are also cracking down on tax avoidance and making sure that businesses generating profits in Australia pay their fair share of tax here in Australia.

MATT TAYLOR: The Reserve Bank yesterday cut interest rates by 25 basis points. Some suggesting that the Australian economy may not be doing as well as what assumptions suggest. What is your response to what the Reserve Bank did? Because it can’t solely be on that inflation read that we got in the first quarter.

MATHIAS CORMANN: Monetary policy and fiscal policy are working in the same direction. The Australian economy is transitioning from record resource investment driven growth to broader drivers of economic activity and growth. The Reserve Bank recognised that yesterday, that the economy of Australia continues to rebalance and what we are doing here, is to make sure that fiscal policy and monetary policies are working in the same direction.

MATT TAYLOR: Final question for you because we are about to enter the election campaign, what is going to be your message to the Australian voters?

MATHIAS CORMANN: Well our message is that we have a plan for more jobs and stronger growth and that we are taking Australia in the right direction, whereas Labor wants to tax more to spend more, which would make it harder for Australians to be successful in the years ahead.