Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
FRAN KELLY: Federal Parliament today begins its final sitting fortnight for the year and the focus will be firmly on the Senate where the Turnbull Government will try to end this year on a political high, by crashing through its two key industrial relations bills, plus the backpackers tax, plus changes to the paid parental leave, plus the lifetime ban on refugees. A very, very crowded agenda for the red chamber. Mathias Cormann is the Finance Minister and Deputy Leader of the Government in the Senate. He is in our Parliament House studios. Minister, welcome back to Breakfast.
MATHIAS CORMANN: Good to be back.
FRAN KELLY: Before we come to the Senate, can I ask you about the latest Budget Monitor by Deloitte Access Economics? It is forecasting even bigger deficits. An extra $24 billion will be added to the deficit over the next four years, according to Deloitte’s. Slow jobs and wages growth the main culprit. Do you have any hope at all of balancing the Budget by 2021. Or has that goal, that dream gone for good.
MATHIAS CORMANN: The Government will be releasing our half yearly Budget update on the 19th of December. By that time we will have access to the September quarter National Accounts data to feed into our economic forecasts and our overall revenue assumptions. We will be making our update then. The general point, though that Deloitte is making, which is a point that the Government has made for some time is that lower wages growth and lower profits growth is reflected in and has an impact on our revenue. The same as lower commodity prices for our key commodity exports in the past, have had a significant impact on our revenue.
FRAN KELLY: The deteriorating budget position puts at risk our AAA credit rating and the ratings agencies were very clear about that a few months ago. The Treasurer is urging Labor and the Senate to back your $50 billion business tax cuts to try and fix quote, the earnings problem. But is this the wrong time to be cutting taxes? As Labor’s Shadow Treasurer Chris Bowen puts it such a tax cut would smash the Budget, when Australia could least afford it to quote him.
MATHIAS CORMANN: He is wrong. It is an important investment in our future economic growth. A more competitive company tax rate will help us boost investment, boost productivity, boost growth and over time, increase real wages, which will lead to increases in living standards and increases in revenue for Government. If you look at ... interrupted
FRAN KELLY: So we have to do it for the long term, but in the short term there would be a hit presumably?
MATHIAS CORMANN: You have got to remember that the net effect of all of the policy decisions that the Government has made, including on the tax front in terms of lower company tax rates actually improves the Budget bottom line. The net effect of all of our policy decisions on the spending and on the revenue side of the Budget is to improve the Budget bottom line. Over the medium term, as a result of the savings decisions that we have made, the Budget is about $250 billion better off over the medium term to 2026-27. But it is important that as an open trading economy, exposed to the global economy, competing for investment with other countries around the world that we keep an eye on the international competiveness of our business tax arrangements... interrupted
FRAN KELLY: Is that even more so given Donald Trump, one of his top pledges is to cut the US corporate tax rate from 35 per cent down to 15 per cent. Do you think that changes the argument?
MATHIAS CORMANN: It just reinforces the argument that we have been pursuing. At 30 per cent, we are at the higher end of international business taxation. If we reduce the business tax rate as we propose to do, to 25 per cent, that puts us into the middle of the pack of OECD countries. At 35 per cent the United States is particularly high. But even Australia these days has got an internationally uncompetitive business taxation arrangement.
FRAN KELLY: Let’s go to the work in the Senate this week. First amongst them will be the IR bills, the workplace bills that triggered the double dissolution election. Registered Organisations today. ABCC tomorrow. Now the Government was quite clear, you weren’t going to bring these on until you were confident they would pass. Does this mean you are confident, you have the numbers in the Senate from the crossbench to get these bills through?
MATHIAS CORMANN: We never take anything for granted until such time as it actually has passed. But my good friend and colleague, Michaela Cash has done a lot of work, worked very hard, engaged constructively with the Senate crossbench, both in relation to the important need for both of these bills and in relation to amendments. We are quietly confident that we are in the best possible position to successfully pass these bills, which have been on the table of course for a very long time.... interrupted
FRAN KELLY: What about the Registered Organisations Bill? It seems to be the one you’ve got the most chance of. And Labor, it looks as though you could even make some headway there. In fact the Minister sat down with Shadow Minister, Brendan O’Connor yesterday. Michaelia Cash met Brendan O’Connor. Labor wants some amendments to this. It wants ASIC to be the regulator. It wants better protection for whistleblowers. And it wants exemption for volunteers and disclosure laws changed for candidates, it wants the same laws for candidates for union elections as for MPs. Are you close to being able to give Labor what it wants?
MATHIAS CORMANN: Firstly, there is absolutely no reason and no excuse for Labor to vote against these bills. Registered Organisations which deal with a lot of money from their members and are responsible for $2.5 billion worth of assets on behalf of their members, they should comply with similar accountability and transparency standards as company directors.... interrupted
FRAN KELLY: And companies are governed by ASIC, that’s why Labor said these bills should ...
MATHIAS CORMANN: In relation to that specific point, the Royal Commission into union corruption actually assessed that particular proposition and recommended against giving this responsibility to ASIC, pointed to the need for a separate and independent registered organisations commission. The Government has accepted that recommendation of the Royal Commission. Labor just at this last minute, this debate has been going on literally for years and at the last minute, Labor is just throwing up a few red herrings trying to make themselves look reasonable, when quite frankly they are just looking for an excuse to continue to pursue their inexcusable opposition to what is a very important reform.
FRAN KELLY: What about Nick Xenophon? He commands three votes now in the Senate, so he is a key here. He wants greater protection for sub contractors in return for his vote. There is talk of some kind of security of payments regime being devised. Can you confirm this is possible to look at protecting sub contractors?
MATHIAS CORMANN: Again, Michaelia Cash has engaged with Senator Xenophon and all of the crossbench Senators and talked through all of the issues and pursued sensible amendments where that is appropriate. I will let Michaela Cash go through all of the specifics in good time. But suffice to say that we have engaged with crossbench Senators with a view of getting a majority for these important bills in the Senate.
FRAN KELLY: There is so much to ask you. I could ask you about paid parental leave. I could ask you about 457s. I could ask you about the immigration visa bill. I’m sure we will have other discussions about this, perhaps in the next fortnight. But just on the point of refugees. It does look as if a deal is in the offing with Malaysia. Labor saying if that happens, it wants an apology, because the Government blocked the Malaysia deal in 2011. Tony Abbott has already written once that he regretted killing off that agreement. Would the Government owe Labor and apology?
MATHIAS CORMANN: I think people are getting way ahead of themselves. The Prime Minister met with the Prime Minister of Malaysia in the margins of APEC, as he met with the President of the United States, as he met with the Prime Minister of Canada. These sorts of meetings are quite standard. We have always said that we talk to a whole range of countries in relation to potential resettlement options. If there is a specific announcement to be made I am sure that the Prime Minister and the relevant Minister will make it. I do not have anything specific to add at this point.
FRAN KELLY: Okay, and just one for all the women out there who may be preparing to give birth. On paid parental leave, the Government has improved itself around a stand. In return for ending the so called double dipping it has increased parental leave from 18 to 20 weeks, that is combined. If you get that through and I am sure you are not going to hazard a guess yet. If you get that through is there still a chance this could start on the 1st of January less than 40 days? Or has it been postponed, so that anyone that is pregnant now will not need to worry about the goal post changing?
MATHIAS CORMANN: Firstly, the Government has not actually changed the measure. What the Government is doing is engaging with the Senate crossbench, given that we have not got a majority in the Senate to explore how this measure could be successfully passed through the Senate. It is not on the program for this sitting fortnight so it clearly will not come into effect on 1 January 2017. The precise starting time for this measure will be a function of when a relevant agreement is being reached in order to get this measure through the Parliament.
FRAN KELLY: Minister, thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.