Sky News – The Bolt Report

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






Labor’s politics of envy

ANDREW BOLT: Finance Minister Mathias Cormann last night stepped up his attack on Labor. He accused Labor leader Bill Shorten of peddling socialist policies of the kind that had destroyed communist Eastern Europe.

MATHIAS CORMANN [EXCERPT]: As he looks ahead to the next election, he has made the deliberate and cynical political judgement that enough Australians have forgotten the historical failure of socialism. 

The Berlin Wall came down 28 years ago, which means roughly 18 per cent of Australians enrolled to vote were born after the fall of the Berlin Wall and the failure of a system of government that destroyed the economies of Eastern Europe.

ANDREW BOLT: Labor though just laughed.

JIM CHALMERS [EXCERPT]: This is just the latest in a long line of pretty bizarre conspiracy theories from a Government that's getting more and more desperate because they're more and more divided and dysfunctional. Last week we were conspiring with the New Zealanders, this week we've got reds under the beds. 

ANDREW BOLT: But is the Finance Minister actually onto something here. Joining me is Mathias Cormann. Mathias thanks for your time. Look you accused Bill Shorten of returning to socialism. Socialist revision at its worst you called it. Why?

MATHIAS CORMANN: If you look at what Bill Shorten has been saying in recent times, sneering at so called millionaires, while proposing to increase taxes to nearly fifty per cent on an ongoing basis on people earning $180,000 a year. If you look at his rhetoric, if you look at his agenda, he clearly has decided to put a socialist agenda in front of the Australian people. He clearly believes that people have forgotten that socialism, the pursuit of equality of outcome rather than the pursuit of equality of opportunity, he has decided will propel him into The Lodge. He believes that people will have forgotten that the pursuit of equality of outcome leads to mediocre outcomes, leads to worse outcomes overall, reducing opportunity for everyone to be successful. Our view is that we should encourage success, that we should encourage opportunity, that we should encourage the opportunity for people to get ahead. That is best done by a system based on the free market, freedom, free enterprise, reward for effort, encouraging people to stretch themselves to be the best they can be, with an appropriate social safety net, an appropriately generous and well targeted social safety net. That has proven in countries around the world to deliver the best possible outcomes for individuals and for their families and for the communities they live in. Socialism and Bill Shorten is unashamedly, what ever he says, he is unashamedly pursuing a socialist agenda because he believes that at a time when people are anxious about the implications of slower global growth, they are anxious about the geo-political dynamics in the world, about the disruptive nature of rapid technological change and a whole range of things. A number of people are doing it tough and they are struggling through the transition. He believes that he can capture their vote by making them believe that by going after people that are more successful than them, by taking things away from people who are more successful than them, that he will somehow help them be better off. That is not true. History shows us that this sort of approach leads to less opportunity, to lower growth, fewer jobs, lower wages and generally lower living standards. 

ANDREW BOLT: Look, philosophically I am completely with you Mathias. Absolutely. Socialism does provide equality, except that it means you are all equally poor. You are absolutely right there. I am just wanting now to explore to what extent your charge fits. Whether Bill Shorten is guilty as charged. For a start, you say that Labor would raise $150 billion more in taxes over the next decade, which is a hell of a lot. But that includes $60 billion if he repeals your tax cuts for small and medium business. But Labor’s not decided yet whether it will or won’t has it? 

MATHIAS CORMANN: How do you know that. Labor has spent all of that money. You have got to remember, Labor went to the last election … interrupted

ANDREW BOLT: I know it hasn’t decided. 

MATHIAS CORMANN: I have never heard them say that they have changed their policy. Labor has opposed our efforts to lower the business tax rate to help increase investment, to help increase productivity and generate real increases in wages over time. They have opposed it every step of the way. In the lead up to the last election, they spent all of the money that they said would go to company tax cuts and more. They went to the last election with deficits that were $16.5 billion bigger than ours. That meant higher taxes down the track. So if it is not through higher company taxes, where else are they going to increase taxes in order to make up the difference. Because Labor has already committed all of that money in additional expenditure and more. So $150 billion is a very conservative estimate of the additional tax burden that Labor by their own statements has already locked in to their policy settings. If Bill Shorten now is saying we have convinced him and that he now supports lower taxes for small business and medium sized businesses he should tell us.

ANDREW BOLT: Okay, that is a challenge. That is fine.

MATHIAS CORMANN: The stated policy of the Labor party today, is that they would reverse more than $60 billion worth of business tax cuts, which would reduce the level of opportunity … interrupted

ANDREW BOLT: I think they disagree. But you are quite right, if they are going to stick by them, let them say so explicitly. You also point out that the top tax rate, personal tax rate promised by Bill Shorten will be 49.5 per cent for every extra dollar earned. My problem here, I agree with you, that is a real killer, in part because I have got to pay that. But that is just two percentage points higher than your planned top tax rate. And your second highest tax rate will be just half a percentage point behind Labor. Now is that really the difference between Labor’s socialism and the Liberals’ free enterprise?

MATHIAS CORMANN: When you get to 50 per cent and while Bill Shorten is sneering at millionaires and talking about imposing higher taxes on millionaires, what he is actually doing is targeting Australia’s aspirational middle class. Somebody who is earning $180,000 a year is not a millionaire. He is proposing to permanently increase their income tax rate to just under 50 per cent for every dollar above $180,000. That is completely inappropriate, something that we do not support and something that we do not believe Australians support. Our aspiration … interrupted

ANDREW BOLT: No, but it is just that the difference in the tax rates is, I agree, it is far too high. I agree. I am just saying that your top tax rate, the promised one should the Senate do what you want done with the Medicare Levy, is not that much lower and that is what disturbs me too.

MATHIAS CORMANN: Our aspiration is to reduce taxes and to ensure that the taxes in Australia are as low as they can be. We have imposed on ourselves a tax cap as a share of GDP of 23.9 per cent, which has been the same tax cap as a share of GDP in the first two Budgets of the Abbott Government and in the two Budgets now under the Turnbull Government. We are committed to maintaining the tax burden in the economy below 23.9 per cent as a share of GDP over the next decade and beyond. Labor is blowing that tax cap as a share of GDP out of the water. Labor is proposing to increase the overall tax burden in the economy. So instead of having a conversation about how the necessary revenue, as much as necessary but as little as possible, the necessary revenue for Government is best raised in the most efficient, least distorting and fairest way out of the economy, Labor is proposing to increase the overall tax burden, which will lead to less opportunity, it will lead to less investment, fewer jobs and lower wages. That is, absolutely, as clear as night follows day, that if you make it harder for people to be successful, there will be fewer successful people. If you reduce the incentive for people to work hard, people will either work hard elsewhere, where their effort is better rewarded, or they will make less of an effort here. The outcome … interrupted

ANDREW BOLT: You are right, I will probably give up one of my jobs next year and think, 'What the hell, why am I working so hard?’ You are quite right. The difference between socialism and free enterprise should not rest on a mere difference of two per cent on the top tax rate when we are talking personal income. That is my only point.

MATHIAS CORMANN: Andrew, no, you have to look across the board. He is attacking trusts, which is of course a structure that is used by small business. He is attacking the savers, the homeowners, the workers. He is attacking middle class, aspirational middle class Australia right across the board, with an analysis that there are some undeserving rich in Australia that are not paying their fair share back into the community. That somehow, if only those undeserving rich were prepared to share their resources more widely with people doing it tough, then everybody would be better off. The truth is that the people doing it tough would be the worst hit of them all, because the hardest effect of lower economic growth hits those on lower and middle incomes, because every respectable study will tell you that if the economy grows more slowly, the most disproportionate effect in terms of job security, in terms of level of income, is at the lower income level. That is why inequality would actually increase if Bill Shorten was able to implement the socialist agenda that he is promoting. That is the evidence right around the world. 

ANDREW BOLT: There is no doubt in my mind, I think you are right that he has jumped on the Jeremy Corbyn, Bernie Sanders bandwagon promising higher taxes …interrupted

MATHIAS CORMANN: And he doesn’t believe it, he is opportunistic.

ANDREW BOLT: I think you are right, but it really scares me that this stuff sells now Mathias. I mean you addressed that at the top of the show in your answers, but it really scares me this stuff somehow sells, particularly with a younger public …interrupted

MATHIAS CORMANN: That is why we have to take the debate on, head on. 

ANDREW BOLT: I agree with you. A Sky News Reachtell poll today Mathias showed 57 per cent support for banning the burqa, just 31 per cent against. It is interesting isn’t it, the whole political media class seem to be against banning the burqa, the public is the other way. What is your view?

MATHIAS CORMANN: We are not proposing to ban the burqa. I am not supporting proposals to ban the burqa …interrupted

ANDREW BOLT: No, no, your view.

MATHIAS CORMANN: My personal view is that I do not think that is an issue that I am focused on. I am focused on maximising opportunity for people across Australia to get ahead. I am focused on making sure that the policy settings in Australia continue to encourage and incentivise success so that families around Australia have the best possible opportunity to get ahead. I am not focused on that debate at all. 

ANDREW BOLT: Including women in burqas, that’s is fine. Just finally, you are probably bored to sobs with this and I will probably get the straight bat again, but same sex marriage Mathias. Last day to enrol to vote in the thingo. You are against it, why?

MATHIAS CORMANN: My view is on the public record. I am going to vote no. I will have one vote like every other Australian that is on the electoral roll and is eligible to vote. That is the beauty of this process. We had said before the last election that we would give every Australian the opportunity to have their say. There will be an outcome at the end of this process. The Parliament will respect whatever the outcome is. For me it goes to personal values. That just is my view. There is not really that much to it. 

ANDREW BOLT: Well, I thought there were a lot of arguments. I have written heaps about it, but anyway Mathias I really appreciate you coming on and thank you very much.

MATHIAS CORMANN: Always good to talk to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth