Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 31 January 2017
DAVID SPEERS: Well for more on all of this, the Finance Minister Mathias Cormann joins me now here in Canberra fresh from that Cabinet meeting. Thank you for joining me and welcome back for the 2017 political year. It is certainly in full swing this week. Both Bill Shorten and Malcolm Turnbull say jobs are the focus this year, which is great to hear. Bill Shorten did add one bit of detail today with his apprenticeship plan. One in every ten jobs on a federally funded project would have to be a local apprentice. Is that a good idea?
MATHIAS CORMANN: The problem with Bill Shorten is that he doesn’t understand, or he doesn’t accept, where jobs actually come from. Jobs don’t grow on trees. Jobs are created by successful and profitable businesses across Australia. Bill Shorten’s agenda is focused on making it harder for business to be successful, higher taxes, higher energy prices, more red tape and less trade, leading to fewer jobs and higher unemployment. Our agenda is focused on facilitating businesses being more successful and creating more jobs, by having a more competitive business tax rate, by providing better access to key markets around the world, investing in infrastructure, rolling out our defence industry plan, all areas that will help drive increased job creation.
DAVID SPEERS: But what is the evidence that the company tax cuts that you took to the election will increase jobs.
MATHIAS CORMANN: Every respected economist will tell you that a more competitive business tax rate will increase investment, will increase productivity, will lead to stronger growth and create more jobs. Don’t take our word for it. That is what Bill Shorten in government used to say. That is what Chris Bowen, the Shadow Treasurer in government used to say. That is what Ken Henry as the then Treasury Secretary in the Rudd Gillard Administration used to say.
DAVID SPEERS: Has it worked in practice though, anywhere in the world?
MATHIAS CORMANN: It does work in practice. The truth is that Australia .... interupted
DAVID SPEERS: Where has it worked in practice?
MATHIAS CORMANN: It has worked in Australia for starters. If you look at whether it is the Hawke and Keating, subsequently the Howard Governments, that is what previous governments in Australia have done. That is what governments in other parts of the world have done. The truth is that the business tax rate in Australia is now quite high by international standards. If the United States, which is obviously on the cards under the Trump Administration will bring their corporate tax rate down significantly, Australia really becomes an outlier, which means that we will be less competitive in attracting investment into Australia to generate stronger growth and more job opportunities into the future.
DAVID SPEERS: So you will put the company tax cut plan to the Senate by the end of March?
MATHIAS CORMANN: It is in the Parliament now. It has been introduced. We would like to see that legislated as soon as possible. That is right.
DAVID SPEERS: So, but is there any timeframe?
MATHIAS CORMANN: The expectation would be that between now and the end of March the Parliament would certainly be required to deal with it. These tax cuts, this ten year enterprise tax plan starts in the 2016-17 financial year. So we would expect that the Parliament would deal with this before we get into the next Budget process.
DAVID SPEERS: The numbers don’t appear to be there at the moment, do they?
MATHIAS CORMANN: People have speculated about all sorts of pieces of legislation, where the numbers supposedly were not there. In the first six months since the election, we were able to pass our historic reforms to superannuation, making superannuation fairer and more sustainable. People said that we didn’t have the numbers for that... interrupted
DAVID SPEERS: You had to negotiate for that. You had to make some big changes so ...
MATHIAS CORMANN: People said we didn’t have the numbers for the restoration of the Australian Building and Construction Commission.... interrupted
DAVID SPEERS: Yeah, but on super, and on both of those you had to make big changes. So will you have to do that here too?
MATHIAS CORMANN: I don’t accept that we had to make big changes. On super we made changes to less than ten per cent of the original package. Less than ten per cent, which ... interrupted
DAVID SPEERS: Alright, will you make big changes to this though?
MATHIAS CORMANN: We have introduced the legislation, the business tax cuts legislation in the way that we have promised it at the election. We have introduced it in the way that it is reflected in the Budget. Our Government is a realistic and pragmatic government. We are engaged with Members of Parliament from across the spectrum. We are looking for a majority to get as much of our agenda through as possible. But fundamentally, Australia needs a more internationally competitive business tax rate so that we can continue to generate the strong growth that creates strong job creation.
DAVID SPEERS: Here’s the thing, if you don’t get the full ten year tax plan through, would you then take that out of the Budget, because it is still in the Budget.
MATHIAS CORMANN: We have in the Budget reflected the fact that we have a ten year enterprise tax plan, which over a ten year period is designed to bring the corporate tax rate down to 25 per cent for all businesses ... interrupted
DAVID SPEERS: Is that going to get through?
MATHIAS CORMANN: That will bring us to the middle of the road ... interrupted
DAVID SPEERS: Okay, but if you can’t get it through, will you take it out of the Budget?
MATHIAS CORMANN: You are making an assumption here that we can’t get it through. We are .... interrupted
DAVID SPEERS: I am just going off what people have said. What Labor, the Greens, Nick Xenophon have said.
MATHIAS CORMANN: Again, people have said all sorts of things over the years. My experience in this business is what people say publicly and what might ultimately happen is not actually the same.
DAVID SPEERS: Alright fair enough. Alright, but at the moment we have got the economy based on the latest GDP figures, going backwards, unemployment rising, is there a plan B if you don’t get this through for jobs and growth?
MATHIAS CORMANN: Employment growth in Australia actually remains quite strong. Certainly the unemployment rate at 5.8 per cent is below where it had been anticipated it would be when we came into Government. It is below the OECD average. But yes, global economic conditions have been challenging. We have to make sure that we are in the strongest possible position as a country to take advantage of opportunities and to be as resilient as possible in the face of challenges ... interrupted
DAVID SPEERS: But if you want to get the company tax cuts through, will there be a jobs benefit? Has this been modelled? Are you able to say whether there will be a jobs boost if you can’t get the whole thing through?
MATHIAS CORMANN: We are committed to getting the whole thing through. We call on Labor and on the Parliament to support the Government’s economic plan. This is just one part of our overall national economic plan. It does include our infrastructure program. It does include our defence industry program. Our commitment to provide better access to key markets around the world through further export trade deals and the like. There are many facets to our economic plan. From Bill Shorten today we heard nothing about actual, tangible initiatives to deliver more jobs. That is because he fundamentally does not accept that jobs are created by successful, profitable business in Australia and we need to ensure that the policy conditions facilitate the best possible success of our Australian businesses selling Australian products and services in Australia and around the world.
DAVID SPEERS: Can I ask you about debt? Joe Hockey three years ago had to lift the debt ceiling to half a trillion dollars, are you going to have to lift it again?
MATHIAS CORMANN: The legislated debt ceiling was actually removed by the Parliament, you might remember. The debt projections over the forward estimates are there for all to see in the Budget and half-yearly Budget update… interrupted
DAVID SPEERS: It shows you are going to get very close to that ceiling so will you have to lift it again.
MATHIAS CORMANN: It is all there for everyone to see. The Treasurer will make decisions in the appropriate way at the appropriate time.
DAVID SPEERS: Okay, so it is the Treasurer’s call on that one.
MATHIAS CORMANN: Our numbers in terms of debt projections are reflected in the Budget. Everybody knows what the trajectory is. Everybody knows when we are projected to get back into surplus. Everybody understands when net debt is expected to peak. These are all matters of public record. The Treasurer in the ordinary cause of events will make the administrative decisions that need to be made in order to ensure that the Government continues to function in the appropriate way… interrupted
DAVID SPEERS: Is it awkward, or embarrassing that the debt ceiling set under the Abbott Government with Hockey as Treasurer three years ago, you might breach that?
MATHIAS CORMANN: You have to remember, under the Coalition we are in a stronger position than we would have been if Bill Shorten had been elected Prime Minister at the last election. By their own costings the Budget position over the forward estimates would have been $16.5 billion worse off over the forward estimates. Our Budget is in better shape than it would have been if Labor had been elected. Since the election we have made significant additional progress in repairing the Budget … interrupted
DAVID SPEERS: We do have a problem with debt, you know that, you have talked about it for a long time, why then can we still afford things like $30 million for an aluminium smelter, a $50 million loan to a steel maker? I mean how much of this can we really afford?
MATHIAS CORMANN: Governments always have to make judgements. You always have to make judgements on balance on what is in the national interest, what is in the public interest. These are judgements that the Government makes every single day. You prioritise expenditure. But what we have done as a Government since we came into Government, whenever we have made decisions because of the priorities involved to spend more we have paid for it by spending reductions in other parts of the Budget. It is not as if we, as a result of policy decisions, have increased the overall spending level.
DAVID SPEERS: Finally, how important is tomorrow for the Prime Minister?
MATHIAS CORMANN: We went to the last election under Malcolm Turnbull’s leadership presenting a plan for the economy, a plan for jobs and growth and a plan to keep Australia safe and secure. In the first six months we have made significant progress. Tomorrow the Prime Minister will present our priorities for 2017. He will provide an update on where we are at and lay out the direction …interrupted
DAVID SPEERS: As you well know, he is well behind in the polls, the economic data at the moment is not good, you have got Tony Abbott lobbing grenades on everything from renewable energy target and whether we should have a Senate, it is a tough moment for it.
MATHIAS CORMANN: There is always a lot of noise in politics. The Prime Minister, the Cabinet, the Coalition, we are totally focused on doing the best we can every single day to put Australia on the best possible economic and fiscal foundation for the future and to ensure that Australia is safe and secure.
DAVID SPEERS: Mathias Cormann, Finance Minister, thank you for joining us, look forward to talking more through 2017.
MATHIAS CORMANN: Good to talk to you.