Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
MATHIAS CORMANN: Tonight in his Budget reply speech, Bill Shorten will have to explain to the Australian people how his push for higher taxes is not going to hurt jobs and growth. How his push for higher taxes is not going to undermine our current successful transition from resource driven growth to broader drivers of growth in a stronger, more innovative and more diversified economy.
Tonight specifically, Bill Shorten must explain to the Australian people how he is proposing to pay for all his unfunded spending promises so far.
His Budget reply speech tonight comes at a time when we have learnt that already he has a $20 billion black hole in his costings of his tobacco excise measure. We also know that this comes on top of previous unfunded spending promises. Spending promises that we have reconciled.
Today we can confirm that Labor’s total Budget black hole now stands at more than $62 billion.
That is, under Labor the 2016-17 Budget bottom line would be at least $62 billion worse off over the forward estimates than under the Coalition.
Bill Shorten must take the opportunity of his Budget reply speech tonight to explain where that money is supposed to come from.
Does he stand by all of the spending promises he and his Shadow Ministers have made so far. Or has he changed his mind on any of them.
We have circulated a list, which we have circulated on many occasions now. Labor has had the opportunity to tell us which spending commitments they no longer stand by, which promises that they have previously made which they back down from, which savings measures the Government has put forward that they have previously opposed, which they now support. I know that my opposite number in the Labor Party at various times has argued that this list, which I have put to you, which outlines and substantiates the $62 billion Budget black hole is somehow just a list of every complaint that Labor has ever made and seeks to allocate a budget number against that.
Let me dispel that once and for all.
Firstly, we know that the $20 billion Budget black hole in Labor's costing of the tobacco excise measure, which is there for all to see. Let me take you very specifically to the next big spending commitment which is a black and white and iron clad spending commitment made by none other than the Deputy Leader of the Labor party Tanya Plibersek.
She was asked last year about the Government's savings in relation to foreign aid. She was asked the very explicit question on ABC Radio by Mr Paul Bevan, "So what would Labor do if re-elected next year in relation to the foreign aid cuts?" I'm now quoting her directly, "Well, we certainly wouldn't continue with the aid cuts that are scheduled by this Government". That is not grey. That is not, we will tell you what our policy is in the lead up to the next election, that is not, we have got to work out what we can afford and what we can’t afford. That is, we will not continue with the cuts that have been included in the Budget by the Government. The cost of this spending promise, which was made by the Deputy Leader of the Labor Party, over the 2016-17 forward estimates is just under $20 billion. The cost of that commitment is a cost of $19.27 billion over the current forward estimates. Bill Shorten tonight will have to tell us whether he stands by the firm spending commitment that his Deputy has made or whether he has changed his mind.
If he stands by his Deputy's firm spending commitment, will he pay for it with increased taxes or increased deficits and debt?
So to go back to the five questions that Mr Shorten will have to answer tonight:
Does he stand by all the spending promises he and his Shadow Ministers have made so far and if not, that is if Labor has changed their mind on any of them, he needs to come clean on that with the Australian people.
Second, how is Bill Shorten going to pay for those unfunded spending promises that remain on his books? Is he going to pay for them with higher taxes, which hurt jobs and growth or is he going to pay with them for higher deficits and debt, which will lead to higher taxes down the track, which will hurt jobs and growth?
Or, is he going to do what the Government has done in this Budget and in every other Budget that we have delivered since September 2013 and that is to pay for any increased spending with genuine savings, genuine spending reductions in other parts of the Budget?
If so, where will he do that, how will he do that? The Government on Tuesday, the Treasurer on Tuesday laid out our plan for jobs and growth. We laid out our plan to secure the successful transition of our economy to a stronger, more diversified economy. We laid out our plan to put the Budget on the sustainable foundation for the future. Tonight, Bill Shorten needs to explain how, in his view, his push for higher taxes is not going to hurt jobs and growth. How his push for higher taxes is not going to undermine the important transition in our economy that is taking place right now. Happy to take questions.
QUESTION: Minister, how is it that you can put a dollar figure on a ten year projection of tobacco tax but not a dollar figure on a ten year projection for the company tax cuts?
MATHIAS CORMANN: We have costed all of the measures in the Budget in the appropriate way, consistent with the costings conventions under the Charter of Budget Honesty.
The cost of our proposal to ensure the company tax rate becomes more competitive over a ten year period is reflected in the Budget paper. The cost over the forward estimates is $2.7 billion.
If I can refer you to, from memory, I think it is page 3-11 of Budget Paper 1, you will see there is a helpful graph there, showing the fiscal impact and the medium term directions of all of our policy decisions and other parameters feeding into the Budget. What you will see is that not only are we projected to return to surplus on the same timetable as in the half yearly Budget update before Christmas, namely in 2020-21, but that we are projected to remain in surplus all the way through to 2026-27.
The cost of the company tax cut that we have put forward as part of our Budget, as part of our plan for jobs and growth, is reflected in those medium term projections. I might refer you in this context to a quote that somebody recently brought to my attention from Senator Penny Wong when she was the Finance Minister. If you want to search it is on ABC 'Insiders' on 18 March 2012. She said "We don't release ten year costings".
In the context of the ccosting of the tobacco excise, information became available to Laurie Oakes. Laurie Oakes made the information publicly available. What that information showed is that Labor had a $20 billion Budget black hole in the ten year costings they chose to release.
As far as Budget papers are concerned, Budgets are four year estimates. The costs reflected in the Budget are four year costings.
As far as our ten year enterprise tax plan is concerned, it is fully costed, fully funded. It is fully funded from crackdowns on tax avoidance and other measures on the revenue side of the Budget.
QUESTION: But Minister, if you have got the ten year costings, if Treasury has done them and you know them, then why can't you tell us what they are?
MATHIAS CORMANN: As I just indicated to you, the costings are released in the Budget papers in the usual way.
QUESTION: But they are not there. Not over the ten years?
MATHIAS CORMANN: I see that on the day of the Budget reply you don't seem to be all that interested in the fact that there is a $62 billion Budget black hole in Labor's costings, because of the $20 billion Budget black hole in the tobacco excise costings and because of all of the unfunded, unaffordable spending promises that Bill Shorten and his Shadow Ministers have made since the last election.
I have just pointed you to the most expensive one, which is the promise by none other than the Shadow Foreign Minister and Deputy Leader, not to continue with the savings in the foreign aid budget that we have reflected in our Budget bottom line.
So I am very interested to hear tonight from Bill Shorten whether he stands by that promise.
QUESTION: In that same interview, is it not correct that the Shadow Foreign Minister said that they could not correct this in the short term and did she not tell Sky News last year that the $18 billion, which is the forward estimates impact of those foreign aid cuts, it would be impossible to bring those back straightaway. So she basically ruled out re-instituting them. Isn't this the same sort of jibber jab that every Government does on the day of every reply. That Labor used to do, they used to invent or manufacture or conflate things or attribute things to the Opposition that actually hadn't been promised and then present us with this wildly big number. Doesn't it insult the intelligence of voters out there that you are giving numbers that don't actually stack up? Labor did it to you and you are doing it to Labor.
MATHIAS CORMANN: Don't let Labor off the hook here because increased spending which is not funded leads to increased taxes which will hurt jobs and growth.
The specific answer to your question is no, that assertion is wrong. I will read you explicitly from the transcript, which I'm happy to send you a copy of. The first question was, in relation to the savings the Government has banked in our Budget out of the foreign aid budget "So what would Labor do if re-elected?" The answer was, "Well we wouldn't continue with the aid cuts that are scheduled by this Government". Full stop. That statement cost the Budget bottom line nearly $20 billion over the current forward estimates. The next question was, going to your question now, "Would you go 'beyond' restoring it to where it was?" "Would you go 'beyond' restoring it to where it was?" In response to that question the Shadow Foreign Minister said "It would be very difficult to do that in the short-term". She locked in the previous funding trajectory on foreign aid. She said they would have to think about spending beyond that. These statements together cost $20 billion.
The bottom line here is we assert that Bill Shorten right now, as a result of promises that he and his Shadow Ministers have made, has a $62 billion Budget black hole.
These are unfunded spending promises. He will have to explain to the Australian people today how he is going to pay for them. Given that we know that his push is to increase taxes, given that we know that wants to increase taxes by more than $100 billion over the next decade. He has to explain to the Australian people how increasing taxes to spend more, how increasing taxes by $100 billion to spend more is not going to hurt jobs and growth.
QUESTION: How can it be $100 billion if he’s taken a $20 billion black hole from the $100 billion. Is it an $80 billion tax increase over the next decade or $100 billion?
MATHIAS CORMANN: Labor themselves assert that they will raise $100 billion plus in new taxes over the next decade.
QUESTION: But that includes tobacco.
MATHIAS CORMANN: I am assuming that Labor will find a way to make up that $20 billion black hole in their costings this week. These are the sorts of things that Bill Shorten will have to explain to the Australian people today. Whatever way you look at it, whether he pays for his unfunded spending promises with more taxes or higher deficits, higher deficits over time lead to increased taxes which hurts jobs and growth.
Our plan on Tuesday, is a plan for jobs and growth. A plan to put the Budget on a sustainable foundation for the future. A plan where every new item of expenditure is fully paid for by spending reductions in other parts of the Budget, where we have not increased the overall tax burden, where we are paying for a more competitive enterprise tax rate by a crackdown on tax avoidance and other revenue measures. What is Labor ... interrupted
QUESTION: If Labor has as you say, a $20 billion black hole on the tobacco tax, what will they gain by not proceeding with your 5 per cent company tax cut for the big businesses?
MATHIAS CORMANN: Over the forward estimates the cost of our company tax cut is $2.7 billion... interrupted
QUESTION: But you’re talking about a $20 billion black hole over 10 years, on the same ten year front you are talking about.
MATHIAS CORMANN: I am putting the numbers that Labor has released in relation to their own costings against the numbers that are in the public domain about what it will actually raise over ten years. Consistent with what previous Finance Ministers and relevant Government ministers have said, Governments don’t release 10 year costings, but ... interrupted
QUESTION: Can I just pull you up on that. You were very critical, and probably rightly so under the former government, the Labor government, when they used to have big increases in spending beyond the forward estimates period. Why does that principle not apply to your company tax cut today?
MATHIAS CORMANN: So the $62 billion budget black hole that Labor has in their budget right now is over a 4 year estimates period. Labor right now over a 4 year period has a $62 billion budget black hole. That includes all of the things that are on this list. It includes the $20 billion cost of the commitment made by the Deputy Leader of the Labor Party in July last year on ABC radio.
Bill Shorten tonight has an opportunity to clear all of this up.
Bill Shorten tonight can say that he will support the savings measures that have been put forward by the Government.
Bill Shorten tonight can say that all of this additional spending will be paid for by spending reductions in other parts of the Budget. He will have to explain to us how he is proposing to do that.
Given that all we have heard from Labor so far is a push for higher taxes. We are entitled to ask, and he needs to explain to the Australian people, how is his push for higher taxes not going to hurt jobs and growth? How is it not going to hurt our current transition of the economy.