Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 2 February 2018
SABRA LANE: Politicians return to Canberra next week for the resumption of Parliament and in preparation, the Leaders of the major parties have delivered key speeches this week about what they will focus on this year. Bill Shorten says his priorities include easing cost of living pressures, boosting low wages and ensuring big multinationals pay more tax. Contrast that with Malcolm Turnbull’s promises of tax relief for low and middle-income earners and tax cuts for business, but he is emphasising small and medium sized companies need that relief to stay internationally competitive and create more jobs. The Finance Minister Mathias Cormann is also a key economy salesman for that pitch and he joins us now from Perth. Good morning Minister, welcome.
MATHIAS CORMANN: Good morning Sabra.
SABRA LANE: What will be the measure of success for this Coalition Government at the end of 2018?
MATHIAS CORMANN: We want to keep the economy growing more strongly, we want to create more jobs, we do want to relieve cost of living pressures for Australians and we want to get the Budget back into surplus as soon as possible. We have made significant progress on all of those fronts in recent years. Last year was a record year when it comes to the number of jobs created. More than 400,000 new jobs. We want to press ahead. There is more work to be done. This is not the time to change direction. This is not the time for Labor’s higher taxing, higher spending agenda, which would create lower growth, less investment, fewer jobs and lower wages.
SABRA LANE: Scott Morrison has been working on how to deliver tax cuts to middle-income earners. To be effective, how big does that financial relief have to be?
MATHIAS CORMANN: We are working through all of these issues now. Our commitment is to ensure that taxes, in particular personal income taxes, can be as low as possible. As high as necessary, but as low as possible. We are working our way through that and that will be announced at the right time when all of that work has been done. But I hasten to add here, we have already in our Budget revenue forecasts - an assumption of future tax cuts is already reflected in our revenue forecasts as we speak.
SABRA LANE: For workers who have been enduring five years of flat wages growth though, will it need to be more than a milkshake and a burger tax cut?
MATHIAS CORMANN: Wages growth has been lifting and as we continue to create more jobs and businesses have to compete for remaining workers in an economy where more jobs are being created, wages will continue to lift. That is why we have got to continue to implement our plan to help business be more profitable and be more successful, because more profitable and more successful businesses will hire more Australians and will be able to pay them better wages. Labor’s plan, which will make it harder for business to be successful will mean that businesses will only be able to hire fewer people and pay them less. That is of course the contrast between our two economic agendas. Now when it comes to tax cuts, again, they will be as high as we can responsibly afford.
SABRA LANE: Respected economist Chris Richardson is warning the Government against baking into the Budget permanent spending commitments that the nation cannot afford and passing the problem onto other generations to face it. How mindful are you about that?
MATHIAS CORMANN: A tax cut is not an expenditure. A tax cut is leaving Australians with more of their own money. Australians are better able to make judgements about how to spend their money on the things that they need and the Government has a responsibility to only raise as much as necessary in order to fund the important services of Government and that is something that we are committed to do. We have imposed on ourselves a tax as a share of the economy cap of 23.9 per cent in our Budget. So that is, our revenue forecast is based on an assumption that tax as a share of the economy is not going to go beyond 23.9 per cent. Contrast that with Bill Shorten who has already said that he would blow that out of the water, that he would increase the overall tax burden in the economy. Now the truth is, if Bill Shorten is able to increase the overall tax burden in the economy, it will mean lower growth, less investment, fewer jobs and lower wages and that is not what Australians need today.
SABRA LANE: Well Opposition frontbencher Brendan O’Connor says Labor is looking at how to lift the minimum wage. An idea is to peg the minimum wage to a certain proportion of the median wage. Is the Government considering equalling that?
MATHIAS CORMANN: No, Australia already has the highest hourly minimum wage rate in the world if you look at OECD data. The only sustainable and responsibly way to continue to increase wages is by helping to ensure that Australian businesses can be more successful and more profitable on a sustainable basis into the future. You have to remember, nine out of ten working Australians work for a private sector business. To artificially keep lifting a minimum wage rate, which is already the highest in the world, will actually cost jobs. But if you help business be more successful, more profitable by implementing a plan for stronger growth and more jobs and you force business to compete for a reducing number of potential workers in the Australian economy, that is how wages will grow in a way that is sustainable in the economy.
SABRA LANE: On the Cabinet files, the documents revealed the first Abbott Government razor gang considered cutting welfare to under 30s. You were part of that razor gang, why was it dropped?
MATHIAS CORMANN: Firstly, I do not talk about Cabinet deliberations. Secondly, it was actually a very old story which was circulated some years ago. Thirdly, by the reporting that took place by the ABC in relation to this, the reporting suggests that various options were considered in relation to a particular potential measure and a decision was made not to proceed. So I am not really sure where there is a story about discussing options in relation to something and to make a judgement not to proceed with a particular option that was put forward.
SABRA LANE: But it is illustrative of the philosophies at the time and also the language that was in those documents about job snobs.
MATHIAS CORMANN: Again, I am not going to talk about Cabinet deliberations. I am not going to confirm or deny various things that have been alleged, but let me just make the general point, Australians would expect their Australian Government to always consider options to strengthen the economy, to create more jobs and to ensure that we can live within our means when it comes to our budget.
SABRA LANE: Finance Minister, Mathias Cormann, we know it is early in Perth, thanks for joining us this morning.
MATHIAS CORMANN: Always good talk to you.