Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
JOHANNA NICHOLSON: Well, the Prime Minister Malcolm Turnbull is to announce a Cabinet reshuffle soon, after the Attorney-General said he was moving to the UK to be the High Commissioner. The Finance Minister, Mathias Cormann, joins us now from Parliament House in Canberra. Thank you very much for joining us, Mathias Cormann.
MATHIAS CORMANN: Good morning. Good to be here.
JOHANNA NICHOLSON: This Cabinet reshuffle is tipped for later today. Do you expect to still be the Finance Minister at the end of today?
MATHIAS CORMANN: Look, I do not comment on reshuffle speculation. My future is in the hands of the Prime Minister, as for all of us who serve in his Government. These are entirely matters for the Prime Minister.
JOHANNA NICHOLSON: If the reshuffle does happen, is that the team the Government will be taking to the next election?
MATHIAS CORMANN: Well, we have a very strong team in the Parliament. All of us will work very hard to put us in the strongest possible position to win the support of the Australian people again at the next election.
JOHANNA NICHOLSON: Mathias Cormann, we had the mid-year Budget update yesterday. It has largely been received well. Does this strengthen the case for personal income tax cuts soon?
MATHIAS CORMANN: We do believe that personal income tax cuts are important. They are our next tax cut priority. We want to deliver both the full suite of business tax cuts, reducing the business tax rate to 25 per cent for all businesses and to provide tax relief for middle-income earners. This is part of our broader economic agenda, working to help ensure that all Australians have the best possible opportunity to get ahead.
JOHANNA NICHOLSON: When can we expect those income tax cuts and by how much?
MATHIAS CORMANN: We are working through these opportunities with the Prime Minister now and once we have been able to make all of the relevant decisions, appropriate announcements will be made.
JOHANNA NICHOLSON: The Budget is still in deficit. Can we afford more tax cuts or is that more about the politics rather than what is actually good for the economy?
MATHIAS CORMANN: It is entirely about what is good for the economy. Our focus is on jobs and growth and on working to help ensure that Australians have the best possible opportunity to get ahead. Our Budget is on a credible path back to surplus. In fact as of this year, we no longer have to borrow to pay for our day-to-day living expenses as a Government. That is the first time that has been the case since the global financial crisis. So we are making great progress when it comes to Budget repair. But of course, we are also focused on making sure that our economy and employment growth continues to be on the strongest possible trajectory for the future and we have already, for example, built into the medium-term trajectory in our Budget, revenue assumptions that accommodate future personal income tax cuts. We have imposed a tax cap as a share of GDP of 23.9 per cent, which means that future tax cuts are already assumed in the Budget. Beyond that, we are looking at further opportunities to ensure the tax burden can be as low as possible.
JOHANNA NICHOLSON: We have been hearing promises of a surplus for many years, even since Wayne Swan was the Treasurer. This is the fifth year of the Coalition government. Are you surprised that you are still presiding over these kinds of levels of debt?
MATHIAS CORMANN: Well, when we came into Government, we inherited a massively deteriorating Budget trajectory. In the 11 weeks to the 2013 election, for example ... interrupted
JOHANNA NICHOLSON: But you have had five years to address that.
MATHIAS CORMANN: If I may, in the 11 weeks to the 2013 Election the Budget position deteriorated by $33 billion or $3 billion a week. We have now had another improvement in the Budget bottom line of $9.3 billion over the current forward estimates period. The Final Budget Outcome we delivered in September for the 2016-17 financial year showed a $4 billion plus improvement to the Budget bottom line. We are on a believable path back to surplus, a stronger surplus now for 2020-21 of $10.2 billion. We have stuck to this timetable of a return to surplus by 2020-21 since the half-yearly Budget update in the 2015-16 Mid-Year Economic and Fiscal Outlook. So this is consistently what we have said for some time. We are now getting there more strongly than what we had previously anticipated, so we are making progress heading in the right direction.
JOHANNA NICHOLSON: How rock solid is the prediction of a surplus by 2020-21? Would you stake your career on that?
MATHIAS CORMANN: Based on all the information in front of us today, based on the fiscal impact of all of the decisions we have made to date, that is the projected return to surplus. We will continue to work to return the Budget to surplus as soon as possible, but also as soon as is responsible.
JOHANNA NICHOLSON: Wage growth is still quite lousy. What would you say to Australians who still have their wages stuck at the same level?
MATHIAS CORMANN: We are very keen to see stronger wages growth into the future and that is one of the key reasons why we believe the Senate must pass our business tax cuts in full for all businesses, because nine out of ten Australians work for a private sector business. Their future job security, their future career prospects and their future wages growth depends on the future success and profitability of private sector businesses across Australia. You know, at a time when the United States is moving to a 21 per cent corporate tax rate, the UK is heading towards 17 per cent, even France heading to 25 per cent, we cannot leave Australian workers behind. We have to ensure that the businesses employing Australian workers can be internationally competitive and that is why we will press ahead with that. Having said that, in the last quarter, the last national accounts quarterly data that has been released, wages growth was about 1.2 per cent over that quarter and 3 per cent over the year. It is starting to trend up. There are some good signs there, but we will have to continue to implement our whole plan for the economy and jobs, including all of our business tax cuts.
JOHANNA NICHOLSON: Alright. Mathias Cormann, thank you.
MATHIAS CORMANN: Always good to talk to you.