Transcripts → 2016


2GB - Money News

Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia


Date: Wednesday, 31 August 2016

Budget repair, multinational tax, negative gearing

ROSS GREENWOOD: Well it came up again today. In the very first Question Time of the 45th Parliament. 

PRIME MINISTER: Well, the honourable member opposite is reminding us of Senator Cormann’s wibble wobble song. I thought he would be better off not doing that, quite frankly. I thought it seemed to be a very good fit.

ROSS GREENWOOD: Well let’s go to the man who devised all of that in the very first place. The Finance Minister Mathias Cormann is on the line. Many thanks for your time, Mathias. 

MATHIAS CORMANN: Good evening. 

ROSS GREENWOOD: Alright, let’s go to the Parliament of the day. Now what we’ve got is the Omnibus Bill and there is no doubt that Labor has made much today of claims that the Omnibus Bill does not add up. $107 million short. And indeed the Labor party has said today that this is embarrassing for the Government. Embarrassing for the Treasurer. I do note also, late today that Treasury has also put its own statement out about this. 

MATHIAS CORMANN: The point is this, there is an Omnibus Savings Bill in the Parliament which presents $6 billion worth of savings. There is absolutely no argument about this. They are savings that both the Labor party and the Coalition took to the last election as savings that we would implement should we be successful at that election. The Labor party is trying to score political points, because out of twenty-four measures, the costings of one measure was not appropriately updated. That is an administrative error that has been corrected. We have always said there is about $6 billion worth of savings. Instead they are trying to hide and use every political trick to try and hide and avoid actually giving the Australian people a straight answer to the question, yes or no, will you support the savings that you took to the last election. The savings that you had opposed in the last Parliament but then banked at the last minute in your pre-election costings in order to limit the size of the Budget blowout, which as it was, was more than $16.5 billion under Labor.

ROSS GREENWOOD: So in this regard, is the $6 billion you have put before the Parliament enough to try and get the actual spending of the Government back down towards that 25 per cent that your own Treasurer and yourself have indicated should be the benchmark for Government spending?

MATHIAS CORMANN: The short answer is no it isn’t. But my point all the way through has been, the first thing we should do in this Parliament is legislate swiftly those savings that we all agree on. Given that the Labor party and the Coalition both took a whole series of savings to the last election and banked those savings in our pre-election costings, there should not even be any argument. We just pass those. Then we can focus, in terms of our conversation, in terms of the debate in Parliament, on working our way through those issues where there remains a level of disagreement where we need to do some more work to perhaps persuade other Members and Senators of the merits of what the Government is trying to do. The fundamental point is, there is a whole range of savings, $6 billion worth, which Labor opposed in the last Parliament, where they changed their mind in the shadow of an election, where they had to admit to a bigger deficit. Given that they admitted that those savings were necessary. Given they said to the Australian people before the election that they would support those savings, we are saying get on with it. Tell us straight, yes or no, will you stick to the promises that you made before the election and now act on them. 

ROSS GREENWOOD: Okay, now very shortly I will speak with the commissioner of competition from the European Union, that is Margrethe Vestager. You might have seen the press conference this morning when she issued the fine of some A$18 or 19 billion to Apple, because it is alleged that the system it had by washing its taxes through Ireland is illegal. And as a result they say that they should pay Ireland some A$19 billion. Does the way in which Apple as done this reflect in any way on the way in which their taxes have been paid in Australia and other multinationals. And has the Government done enough to try and collect the taxes from these companies.  

MATHIAS CORMANN: Australia has been leading the charge internationally on cracking down on international tax avoidance by multinationals. We have passed legislation to go after multinationals that seek to avoid tax. Increasing the powers of the Tax Commissioner to see through contrived arrangements and also increasing penalties. We have given the Australian Taxation Office another $670 million odd to better pursue those that would seek to avoid paying their fair share of tax here in Australia. We are also here in the Budget pursuing further measures to toughen and further crack down on tax avoidance, our diverted profits tax measure and the like. We are doing everything we can to ensure that businesses operating in Australia, businesses generating profits in Australia, pay their fair share of tax in Australia. Where there are any contrived arrangements, where there are any arrangements where the sole purpose of these arrangements is to seek to avoid paying tax that is otherwise payable in Australia, we are giving the powers and the resources to the Tax Commissioner to pursue those businesses to ensure that they pay the tax that is due in Australia.  

ROSS GREENWOOD: Okay a couple of other bits and pieces today I do notice a motion that was put up by Bill Shorten, seconded by Bob Katter in the Parliament today for a banking Royal Commission has failed. I also noticed that the Liberal National party backbencher George Christenson who in the past had been in favour of a Royal Commission had lead the Government push to block the Royal Commission. There where all sorts of acknowledgements in the Parliament about the behaviour of banks. 

MATHIAS CORMANN: We have always said that this is not the right approach. We went very clearly to the last election saying that we did not believe that a Royal Commission into the banks was warranted. In fact, our judgement is Bill Shortens approach to all of this is quite reckless. Well regulated, profitable and well capitalised banks are central to our economic success. As a country it is essential to the ongoing success of families across Australia. Yes it is important to have a robust regulatory framework in place. It is important to have an efficient process in place for dispute resolution. Where there are legitimate customer grievances, they ought to be addressed in an affordable and efficient way. We are looking at ways to further improve the processes that are currently in place. A Banking Royal Commission would not actually give any satisfaction to aggrieved banking customers with legitimate grievances. It will just essentially be another inquiry on top of several previous inquiries, that would be going on for some time without actually facilitating specific action in relation to specific issues that people might have from time to time. 

ROSS GREENWOOD: Okay can I just ask you to comment on the new book that has come out by Peter van Onselen and Wayne Errington called The Turnbull Gamble which suggests that you along with Peter Dutton, Josh Frydenberg and Christian Porter argued against any changes to negative gearing when Malcolm Turnbull and Scott Morrison were arguing for changes that were more considered and less extreme than Labor’s, but it was suggested that you might have convinced them otherwise. Is that a reasonable account of what took place? 

MATHIAS CORMANN: Firstly, I don’t talk about internal Cabinet processes. Not to book authors, not to journalists. The principle and the Westminster convention of Cabinet confidentiality is very important to ensure the best possible decisions are made by the Australian Government and by other governments. Now having said that.. interrupted 

ROSS GREENWOOD: I thought this wasn’t Cabinet. I thought this was the Expenditure Review Committee. Isn’t that different?

MATHIAS CORMANN: That is a sub-committee of Cabinet. The point that I was about to make was, let me just say that the story is wrong. The policy decision of the Government on negative gearing is very well known. The Government is opposed to Labor’s ill-thought out proposal to change negative gearing. The truth is that the capacity for families across Australia to leverage their existing income and existing assets to invest in income producing or appreciating assets is actually a very well established way for families across Australia to get ahead. The principle of being able to deduct relevant costs incurred in generating an income is a very long and well established and appropriate principle in our tax laws and one that we support and continue to support. That is a very well understood position of the Government. 

ROSS GREENWOOD: Okay last one before I let you go. You have had the first day in the Parliament and with Question Time and so forth. Is this Parliament do you believe more workable that the previous Parliament for the Government? 

MATHIAS CORMANN: This is the Parliament that the Australian people elected. We all have a responsibility to make it work. We all have a responsibility to achieve the best possible outcomes for people across Australia. 

ROSS GREENWOOD: Our Finance Minister Mathias Cormann, we appreciate your time as always. 

MATHIAS CORMANN: Always good to talk to you.