Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
PAUL MURRAY: The Finance Minister is Mathias Cormann. Back in Parliament, along with the rest of them. And he joins us now from our Canberra studio. Minister good evening. Happy new year. And congratulations on not just one, but two new Senators for the Liberal side of politics.
MATHIAS CORMANN: Good evening. Good to be back. Happy new year to you and your whole panel. Yes, the Liberal National Party Senate team has had a good start to the year.
PAUL MURRAY: So Lucy Gichuhi claims she worked out that she was a Liberal as she was giving her maiden speech. When did she tell anyone? And when was the conversation about starting to move her over? Because, I am sure that you are going to tell me that it was happening for some time. Putting a video out at eight o’clock on a Friday night makes it seem like you were rushing to get that information out.
MATHIAS CORMANN: The timing was appropriate given that we are starting the 2018 calendar year and the Parliament is coming back. So this was an appropriate time for Lucy Gichuhi to make that announcement. You have to remember that her party actually disappeared, in as much as they merged into the Australian Conservatives, Senator Bernardi’s party. She has been sitting as an independent. She has formed the view, which I welcome, which all of us in the Liberal National party welcome, that she feels most at home in the Liberal Party out of all the parties represented in the Australian Parliament.
PAUL MURRAY: Any chance of making some more room on the Government benches for Fraser Anning? I understand over the summer there was many a chat going his way.
MATHIAS CORMANN: I would not want to speculate in relation to any individual Senator. The general point I would make is that the door is always open for sensible contributors to public policy to make an approach to join the Liberal party. The Liberal party is a party that stands for freedom, for free enterprise, reward for effort, encouraging people to stretch themselves. It is the custodian of a set of policy values and principles that around the world has proven to deliver better outcomes for individuals, families and the communities they live in. We are always keen to attract new, enthusiastic and energetic talent.
PAUL MURRAY: So Nick McKim from the Greens need not apply.
MATHIAS CORMANN: I am sure he will self-select himself out of consideration.
PAUL MURRAY: He is out of the running before it even starts. Now back to what I mentioned at the start of the show. It is not insignificant what happened today, that the share market got a haircut. It lost between $20-30 billion, depending on where it was in the trading day. But as I said at the start of the show, those of us who watch this stuff, we understand but it is very difficult to explain to normal people, what went up, what went down, why it mattered, because it obviously doesn’t affect their lives instantly. Is this a bit of a metaphor for the company tax cut changes, because it is obvious to me if you pay attention why Australian companies should be paying equal or less tax than companies in countries around the world. But when the result of them having to pay that tax, is again, not seen to the twelve million people that actually have a job, it makes it very difficult to actually sell something.
MATHIAS CORMANN: Fundamentally, why is it important that businesses in Australia are internationally competitive in terms of their tax settings with businesses in other parts of the world? Nine out ten working Australians work for a private sector business. Their future jobs security, their future career prospects, their future wage increases depend on the future success and profitability of those businesses. Bill Shorten is working to make it harder for businesses to be successful. Nine out of ten working Australians working for a private sector business that is less successful will have less job security, their job will be at risk, they will be less likely to get a pay rise and it will be less likely that a less successful business will hire more Australians. We want Australian businesses to be more successful, unashamedly. That is why we are pursuing an internationally competitive business tax rate. That is why we are working to help Australian businesses get better access to key markets around the world. Because we know that more profitable businesses will be able to hire more Australians and pay them better wages. As employment growth continues to strengthen, as the excess supply in the labour market reduces, increased competition by businesses for the remaining potential workforce will drive wages up. That is the way it works.
PAUL MURRAY: Now I agree with you, but on Sunday night in their preparing for Parliament to come back piece, Chris Uhlmann over there at Channel 9 sent a camera out the front of Parliament House to ask tourists what they cared about the upcoming year. Hardly scientific but still. The grabs they decided to use over and over again and you have got to imagine, they were not fiddling the books but that is the reaction they got, were wages, wages, pay rise, wages, cost of living. It was not conversations about company tax cuts. Obviously one affects a greater number of people in terms of their take home pay, but politics is you have to convince fifty plus one per cent of Australians, not just 50.1 per cent of companies to eventually hand it on to Australians.
MATHIAS CORMANN: You are quite right. That is why we have to continue to engage in the conversation, including on august shows like yours and make the case. The truth is, if you make it harder for business to be successful, if you increase taxes on business, they will have less money to hire people, they will have less money to pay higher wages. If you want Australian businesses to hire more people and pay them better wages you need to ensure that they have got the opportunity to be more successful and more profitable into the future. Making sure that Australian businesses are not disadvantaged compared to businesses in the US, the UK, France, Ireland, Canada, you name it, when it comes to the tax they have to pay is an important part of that. We are an open trading economy, capital that can come into the Australian market can easily go somewhere else. If it is easier for businesses to make money in the US or the UK or France, they will go there. If we do not ensure that our business tax rate is internationally on par, is internationally competitive, we will lose jobs and investment to other parts of the world. There is no questions. We do not want to see that happen.
PAUL MURRAY: At the end of last year MYEFO showed that the Budget deficit was getting better. Your plans and predictions are for it to get even better and eventually surplus within a couple of years. All of that works of course on the Government cutting its spending, but also either increasing or maintaining its revenue. I love the idea of a personal tax cut for obvious reasons, it is my money, but if you do that, don’t you rob the Government of revenue at a time when we are already spending more than the revenue we currently have. Put simply, how the hell do you pay to keep the Budget deficits coming down if the revenue otherwise known as tax is disappearing?
MATHIAS CORMANN: Put simply, the first point is that we actually have already factored in personal income tax cuts into our medium term trajectory, that is to 2027-28. I will explain why. We have imposed a speeding limit on ourselves when it comes to the level of tax that we would raise out of the economy. In technical terms that is a tax as share of GDP cap of 23.9 per cent. We are not allowing taxes collected by the Federal Government to go above 23.9 per cent. If we do not implement personal income tax cuts in the future we will go past 23.9 per cent. We are projected to be in surplus right now from 2020-21 onwards over the medium term to 2027-28. That is after factoring in personal tax cuts at some point over the medium term. We would like to do something more immediately. That is something that the Prime Minister and the Treasurer have firmly put on the agenda. We are currently doing the work to ensure that those personal income tax cuts are affordable while still getting our Budget back to surplus on the projected trajectory.
PAUL MURRAY: Just promise me that everything is not on the table. I do not want another year of that, please, please, we cannot have it. Minister thank you, I look forward to seeing you again when I am in Canberra a little bit later and thank you for coming on our august show.