Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
KEIRAN GILBERT: Let us go live now to the Finance Minister, he joins us from Perth. Mathias Cormann, thanks so much for your time. Ahead of the first update on Tuesday from the Bureau of Stats on the same sex marriage survey and participation in that. This morning, this Sunday can you give us an update on how many people have voted, have participated?
MATHIAS CORMANN: No I cannot. The update will be provided by the ABS on Tuesday afternoon as they have indicated earlier in the week. Anecdotally, what I do know, talking to people in the community, friends, colleagues, it seems to me that a very large number of Australians has already immediately returned their survey form. There was a high level of enthusiasm from people to have their say and have their voices heard. I expect that it will be a credible participation rate when it is all said and done.
KEIRAN GILBERT: Sources close to the campaigns have told me that their tracking polling suggests it is around if not north of 50 per cent already participation. Does that sound right to you?
MATHIAS CORMANN: Two days from now the ABS will provide an official update. They will be providing an update every Tuesday in October. Then on 15 November when the final results are being released we will know what the final participation rate was. Right now what I can say to you, anecdotally, from moving around the community, I certainly have the impression that there will be a credible participation rate. Australians have enthusiastically embraced this opportunity to have their say on whether or not the law should be changed to allow same sex couples to marry.
PAUL KELLY: Minister we had the Final Budget outcome for the year just a few days ago, showing that outlays were down at 25 per cent. So there has been steady progress on the part of the Government in terms of spending restraint. To what extent do you think the Government over the next couple of years can continue with spending restraint and get that 25 per cent figure down further?
MATHIAS CORMANN: What the Final Budget outcome for 2016-17 is, it is essentially showing actual performance against Budget. When we released our Budget for 2016-17, that was our plan for the year and the out-years, the forward estimates period. We have now been able to show that not only were we able to meet our commitments in that plan, but we were able to do slightly better. The reason that is important, we have to remember that when we came into Government in 2013, in the 11 week period from the Budget to the pre-election economic and fiscal outlook, the Budget position under Labor, the bottom line under Labor deteriorated by $33 billion or $3 billion a week against what was put into the Budget just 11 weeks earlier. This Final Budget outcome, which is about $4.4 billion better than anticipated at Budget time, should give people a lot of confidence, when we say that on our current projections we believe that we can return the Budget to surplus by 2020-21.
PAUL KELLY: Well I appreciate that, but I guess the question I am asking is, to what extent can the Government, given this outcome, be somewhat more ambitious? I mean you are committed to spending restraint, spending is now down to 25 per cent of GDP. To what extend can you improve on that over the next couple of years before the election?
MATHIAS CORMANN: We will continue to be as ambitious as is appropriate and is sensible. When we came into Government, we inherited a spending growth trajectory that was taking spending as a share of GDP to 26.5 per cent within the decade at the time and rising. You are quite right, we have been able to bring that down. We will continue to work as hard as we can, both in terms of strengthening economic growth as well as making sure that spending as a share of GDP is as low as it can be.
KEIRAN GILBERT: In relation to the spend on what we started our conversation with and that is the survey. The estimates were that it was going to cost $120 million. Suggestions anecdotally at least, that there has been a blow out in that, is that right? Can you confirm how much has been spent thus far?
MATHIAS CORMANN: That is wrong. You might remember what we announced at the time is that the expenditure would be up to $122 million and I am very confident that we will be able to deliver this project in that envelope.
KEIRAN GILBERT: Do you think that the intervention, we have got the grand final today in the Rugby League, there is a ban on flags for the yes and no campaigns from the NRL and from the stadium concerned. At the weekend an intervention from the former Prime Minister John Howard in The Australian via an advertisement. He has copped some flak from Labor from that, saying it is unfortunate that he used his standing as a former Prime Minister to campaign like that. What is your response?
MATHIAS CORMANN: Well there is absolutely nothing wrong with John Howard expressing his view. He is entitled to express his view. I think any criticism of John Howard for expressing his view is entirely unwarranted and uncalled for. Everybody is entitled to their view. We are having a national conversation about whether or not the law should be changed to allow same sex couples to marry. People across Australia have the opportunity to have their say as to what their view is in relation to that question. Of course everybody is entitled to participate and express their views. We have said all the way through that we would expect people to do so with courtesy and respect and that is precisely the way John Howard is expressing his views…interrupted.
KEIRAN GILBERT: What about the grand final ban on the flags?
MATHIAS CORMANN: In terms of decisions of individual organisations, I will let them explain themselves, that is not a matter for me.
PAUL KELLY: Given this Budget outcome Minister, to what extent is the Government confident that it can maintain the Triple A credit rating which of course has been the subject of commentary from the rating agencies at various times over the course of the past year.
MATHIAS CORMANN: The Triple A credit rating is a matter for the ratings agencies. We continue to put our best foot forward. We continue to make decisions to put Australia on the strongest possible economic and fiscal foundation and trajectory for the future. What I would say is that in the lead up to every Budget and Budget update recently, the Labor Party was just about egging the ratings agencies on to take Australia’s triple A credit rating away from us. On each occasion the ratings agencies have confirmed Australia’s triple A credit rating rather swiftly . We continue to do the absolute best job we can to ensure that Australia is on the best possible foundation and trajectory for the future, but ultimately the decisions in relation to our credit rating are a matter for the ratings agencies. The final point I would make is that Labor, when they went to the last election, put policy settings forward that would have blown out the deficit by $16 billion over the forward estimates, which is of course precisely what would have put our Triple A credit rating at risk, as was said by respected economists around Australia. So, we continue to control expenditure, we continue to pursue a pro-growth, pro-opportunity agenda, and we continue to do whatever we can to put Australia on the strongest possible foundation for the future.
PAUL KELLY: This week we saw President Trump unveil a very ambitious agenda for tax reform in the United States, actually talking about reducing the United States' corporate rate to 20 per cent although, of course he may not, at the end of the day, be able to get that through the Congress. Can I ask you, in the context of this, how committed is the Government to stick by its corporate tax agenda, to return that Bill to the Parliament in order to try and secure the rest of those corporate tax cuts, and what is your judgement about the impact of the Trump initiative on the Government's aspirations?
MATHIAS CORMANN: Well we are totally committed to delivering on our Ten Year Enterprise Tax Plan, bringing the business tax rate for all businesses down to 25 per cent. The reason for that, Australia as an open, trading economy competes internationally for investment and if we want to continue to strengthen growth and strengthen opportunity for all Australians to get ahead, we need to ensure that we can attract more investment so that we can strengthen growth, create more jobs and, over time, increase real wages. 87 per cent of Australians work in the private sector and helping businesses employing those Australians be more successful, more profitable, helps to secure their jobs, helps to create more jobs, helps to deliver increases in real wages over time. Now, Australia's corporate tax rate at 30 per cent is high by international standards, the United Kingdom is already down to 19 per cent and looking at taking it down further, the US is now talking, well committing, to a corporate tax rate of 20 per cent. By resisting our efforts to lower the business tax rate to 25 per cent, Bill Shorten is wilfully damaging the Australian economy, he is wilfully damaging the opportunity for Australians to get ahead, he is wilfully damaging the ability for Australians to get higher wages, higher real wages over time. It is absolutely, critically important for our future economic success that the Senate passes the full business tax cut to 25 per cent for all businesses. That only puts us into the middle of the road of OECD countries, if we get down to that level. We really have to make sure that our taxation arrangements, our business tax arrangements, are internationally competitive, that we do not leave Australian businesses behind.
KEIRAN GILBERT: We will have more on the energy debate as well after the break, with the Finance Minister. Quick break, back in just a moment, stay with us.
Welcome back to Sunday Agenda with Paul Kelly and the Finance Minister, Mathias Cormann. We are talking about the corporate tax cuts announced by Donald Trump. One of the things that he mentioned in that speech in Indianapolis was a focus on the middle class. What is the scope for the Government to deliver individual, personal tax cuts? What is the headroom in the Budget for that over the next year or two, Minister?
MATHIAS CORMANN: We have delivered personal income tax cuts for middle-income earners over this past year. In every Budget, we always review what the opportunities are to lower the tax burden. We always want taxes to be as low as possible, as high as necessary but as low as possible. Importantly, unlike Labor, we have imposed a tax cap as a share of GDP on ourselves, in terms of our revenue forecasts, of 23.9 per cent. We know that Labor, with all of their promised tax increases so far, is blowing that tax cap as a share of GDP out of the water, hurting the economy, hurting investment, hurting growth and jobs opportunities into the future.
KEIRAN GILBERT: With the Crossbench unlikely to deliver on the full range of your corporate tax cuts, in addition to that cap as a percentage of revenue would you see scope there as well to divert that tax relief from the corporate sector to personal rates?
MATHIAS CORMANN: As I have said to you before, we remain 100 per cent committed to bringing down the business tax rate in Australia to 25 per cent. Having more profitable, more successful businesses enables them to hire more Australians and pay them better wages over time. But more importantly, we need to deliver the full business tax cut to 25 per cent to protect our economy, to protect business, to protect jobs, and if Bill Shorten and the Labor Party continue to resist lowering the business tax rate to 25 per cent, which is still not low by international standards, it is still just middle of the road, if Labor continues to resist lowering the tax rate to 25 per cent, they really are making a wilful decision to cause damage to the Australian economy and, really, Labor needs to change its mind on this.
PAUL KELLY: Would you agree Minister, that if the Government could go to the next election promising personal income tax cuts, that would in fact highlight the differences between the Government and the Labor Party?
MATHIAS CORMANN: Going to the next election, taxes will be lower under the Coalition than under Labor, there is no question about that. Labor has already indicated that they would massively increase the overall tax burden in the economy. That would lead to lower growth, fewer jobs, and lower wages. So, in the lead up to the next election, the choice that people in Australia will have in front of them is a choice between a pro-growth, pro-opportunity, pro-jobs Coalition Government or an anti-growth, anti-business, anti-opportunity, higher taxes, less investment, fewer jobs, lower wages alternative under Labor. That will be the choice going into the next election.
PAUL KELLY: So from what you have just said you clearly see differences on personal income tax policy as being pretty fundamental to the choice facing the Australian public at the next election?
MATHIAS CORMANN: What I have said very clearly is that, under Labor, the overall tax burden in the economy will be higher than under the Coalition. Under Labor, that would lead to less investment, less growth, fewer jobs, and lower wages. Under the Coalition, the tax burden in the economy would be lower than under Labor, we are pursuing reforms to our tax system to make it more growth friendly. We want to deliver more jobs and increases in real wages over time and that is why it is so important that we continue to take initiatives to help business be more successful, more profitable, so they can hire more Australians and pay them better wages over time. Labor wants to make it more difficult for business to be successful, which means that they can hire fewer Australians and pay them less. We want businesses to be more successful, more profitable, so they can hire more people and pay them better wages.
KEIRAN GILBERT: Minister, turning our attention to the energy debate, the Commonwealth Grants Commission linked the potential gas exploitation with the share of GST for the states. Is this a blunt warning to those states, like New South Wales and Victoria, to get on with it?
MATHIAS CORMANN: So there's two different things here. From the Government's point of view, we want all states and territories to develop their economies to their full potential. We want states like New South Wales, Victoria and the Northern Territory to step back from their moratorium on gas exploration and development and to allow the exploration and development of their resources. You would be aware that we commissioned a review by the Productivity Commission into the GST sharing arrangements to assess the national productivity and growth implications from the current set of GST sharing arrangements. That will report early next year and the Government will of course consider any recommendations coming out of that. But clearly there are levers available to the Federal Government, to ensure that the appropriate incentives are in place for state and territory jurisdictions to properly develop their economies to their full potential. Ultimately, that is in the national interest. We of course want to maximise national economic growth opportunities and that is why it is important that every individual state and territory jurisdiction puts their best foot forward. Clearly, we need to increase the domestic supply of gas and to have three key jurisdictions locking up their reserves is manifestly not in our national interest.
KEIRAN GILBERT: Does it frustrate you that you talk about some of your Liberal colleagues in the state of New South Wales particularly at the Narrabri Project is the one that the energy industry more broadly feels left the greatest hole within the nation's supply?
MATHIAS CORMANN: Well as I say, I could not be clearer, we want to see all three jurisdictions, Victoria, New South Wales and the Northern Territory step back from their moratorium on gas exploration and development. We want them to allow gas exploration and development to take place and we would like to see them maximise their development and growth opportunities.
PAUL KELLY: Minister you just said that the Commonwealth Government has levers available to it to ensure and to encourage the states properly develop their resources. What are those levers?
MATHIAS CORMANN: I was just answering a question in the context of the Commonwealth Grants Commission Discussion Paper that is being set out. GST sharing arrangements are a potential lever to encourage and incentivise the states and territories to develop their economies to their full potential. We have flagged when we released the terms of reference for the Productivity Commission Review into GST sharing arrangements that the key focus of that review is to assess to what extent the current GST sharing arrangements hinder or facilitate or could better facilitate the full economic growth potential of individual jurisdictions to contribute to maximum national economic growth.
PAUL KELLY: Apart from the operation of the Grants Commission and the GST revenue, are there any other measures that the Commonwealth could contemplate in terms of dealing with the states, working through COAG and so on, in terms of trying to get a reversal of State Government policies in relation to gas reserves?
MATHIAS CORMANN: The Prime Minister has shown great leadership, for example in relation to the decision by exporting gas businesses on the east coast diverting increased supply of gas into the domestic market. In the same way the Prime Minister and relevant ministers like the Deputy Prime Minister, Josh Frydenberg, are of course engaging with state colleagues on how we can get the best possible policy settings to ensure that our energy supplies are as affordable and as reliable as possible. That is our focus. We want to deliver more affordable, reliable energy supplies into the future.
KEIRAN GILBERT: Minister, with the gas companies, the exporters you alluded to that deal done between the Prime Minister and the Energy Minister this week. Obviously over the coming week, the focus will be on trying to get the detail right and the commitments very clear from those particular companies. Are they finally getting the picture, do you think?
MATHIAS CORMANN: There have been a series of meetings now, the Government has flagged that should no agreement be able to be reached, we would take decisions in relation to gas export controls, which was not our first preference. Our first preference was to get a voluntary agreement from the companies concerned. The Prime Minister was able to secure that and that means that the companies have committed themselves to fill the identified shortage in domestic gas supply for 2018 as identified by the ACCC and relevant regulators. I am very confident that the detail will now be worked out and yes, we are very grateful that the companies have come on board and engaged with us the way they have.
KEIRAN GILBERT: Well not all of them have, have they? In terms of AGL, you had them at their Annual Meeting giving no sign that they are willing to keep Liddell open or offload it and yet on the other hand you had Andy Vessey saying to senior ministers that he would be open to selling it. Which is it, from that company?
MATHIAS CORMANN: Well in relation to AGL and the question of the Liddell coal fired Power Station, let me just say that conversations are continuing. There is of course this 90 day deadline within which further advice will be provided to the Government. Our unequivocal focus is on taking every possible step to bring down the cost of electricity and to increase the reliability and stability of energy supplies and that is what we are focussed on. Wherever there is an opportunity for us to take sensible but necessary steps, we will do so.
PAUL KELLY: On AGL Minister, given the very strong repudiation we saw from AGL this week in terms of the Government's request that the Liddell Power Station be kept open or sold. Would the Government consider modifying or compromising its very firm position as far as Liddell's concerned?
MATHIAS CORMANN: Well our position is that it is in the public interest for the Liddell Power Station to stay open for longer. We believe it is manifestly in the public interest for the Liddell Power Station to remain open. You know there is a 90 day period that AGL has asked for, to come back with some alternative proposals. Let us see what that is and we will cross that bridge when we get there.
PAUL KELLY: Is there a concern that AGL is not honouring the statement that the Chief Executive made to Government Ministers, including the Prime Minister, a few weeks ago when he indicated that they were prepared to sell to a responsible party?
MATHIAS CORMANN: I am not going to provide a running commentary on our conversations. There is a next step in the process. I am very confident that when it is all said and done, we will get the best possible outcome in the public interest.
KEIRAN GILBERT: And just to wrap up if I can Minister before we let you go, and ending where we began. Can I get clarification from you with the result of this survey, when it is finally done and dusted, November 15, regardless of the participation rate, if there is a majority, 50 per cent or more, that would see same sex marriage legalised in this country, the numbers in terms of participation do not matter, the size of the margin will not matter?
MATHIAS CORMANN: Well that is what we have very clearly indicated. If there is a yes vote as a result of this survey, then the Government will facilitate consideration of a Private Members Bill in the final sitting fortnight by the end of the year to change the law to allow same sex couples to marry, that's right.
KEIRAN GILBERT: Minister, we are out of time, we will talk to you soon. Finance Minister Mathias Cormann.