Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Monday, 5 February 2018
SARAH MARTIN: Hello and welcome to The West Australian’s Federal politics podcast, ‘The Whip’. My name is Sarah Martin. I am The West’s Federal political editor based here in Canberra. I am absolutely delighted to welcome for our first episode the Finance Minister, West Australia’s very own Senator, Mathias Cormann.
MATHIAS CORMANN: Good to be here.
SARAH MARTIN: Senator Cormann, welcome back for 2018. Did you miss it?
MATHIAS CORMANN: It is always a bit like getting back to boarding school when you come back to Canberra after a period away. A lot of excitement, but also a lot of new issues to deal with. But very much looking forward to the year ahead.
SARAH MARTIN: You are known as a bit of a workaholic. Do you find it hard to wind down over summer, or did you enjoy a good break?
MATHIAS CORMANN: I did have a nice break with my family. It was good to be able to recharge the batteries. But there is a lot of work to be done. I can’t wait to get stuck into it.
SARAH MARTIN: I gather I missed a wibble wobble performance in the Senate today.
MATHIAS CORMANN: Bill Shorten can’t make up his mind whether he supports the $16 billion Adani project, or whether he is opposed to it. Depending on what by-election he has to fight, or which journalist or which candidate is with him, he changes position. That is why I call him Mr Wibble Wobble. Australians need a Prime Minister that is strong, that knows what he stands for. That is clearly not Bill Shorten, when it comes to very important initiatives supporting our economy.
SARAH MARTIN: So obviously 2018 is back with a vengeance. Bill Shorten had his scene setting speech last week, which you said was a socialist, populist agenda. Do you concede that even though that might be the case though that he is tapping into a feeling of discontent among voters?
MATHIAS CORMANN: Bill Shorten is shifting to the left and prosecuting a populist, socialist, politics-of-envy type agenda, because he thinks it will win him votes. It is not because he believes it is the right thing to do. He has made a cynical judgement that this will help him win the next election, because he believes that he is tapping into anxiety in sections of our community on the back of a period of lower global growth, lower prices for our key commodity exports and sections of the community which are going through a transition on the back off rapid technological change and the like. He is trying to tap into this. But he knows that socialism does not work. He knows about the historical failures of socialism. He knows, or at least he should know, that if we want Australians to have the best possible chance to get ahead then the businesses that employ them have to have the best possible opportunity to be successful and to be profitable. All of our initiatives, all of the parts of our economic plan are designed to help business to be more successful, more profitable so that they can invest more, so they can hire more Australians and pay them better wages. That is unashamedly what we are focused on. Nine out of ten working Australians work in a private sector business. Clearly if you make it harder for those businesses to be successful, you will put jobs at risk, you will make it harder for these businesses to increase wages. If you make it easier for businesses to be successful, if you make it easier for business to be more profitable into the future, then they will invest, they will be more successful, they will be more profitable, they will be able to hire more Australians and be able to pay them better wages. That is what we want to see happen.
SARAH MARTIN: I will definitely come back to the tax cut package in a moment, but is there anything in what Bill Shorten outlined, particularly with the national integrity commission and, or capping private health rebates that you think are worth the Government having a look at?
MATHIAS CORMANN: Bill Shorten is desperate for distractions. He does not have a plan for jobs and growth. I put out a statement before his speech making the point that ‘it’s time’ for Labor’s plan for ‘jobs and growth’, joining two past campaign slogans into one. It is time for Labor to have a plan for jobs and growth. In the end, it is the economy stupid. Bill Shorten does not have a plan for the economy, so he wants to talk about everything and anything else. What he said about health insurance just again proves how far he has shifted to the left. He now is trying to make it harder for Australians who have paid for their health insurance all their lives to hold onto their health insurance when they most need it, to get appropriate access to high quality services with reasonable out of pocket expenses. If his latest thought bubble of capping premium increases at a certain level were to come into effect, while costs are going up more than that, then what he will do is, he will force people to pay more for their hospital care when they access a service, or they will see reductions in the coverage of items that are currently covered. Neither of those are in the interests of Australians needing affordable access to high quality health care.
SARAH MARTIN: So that is a definite no on the private health insurance premium cap. What about on the national integrity commission? Are you open to that?
MATHIAS CORMANN: He is such a shifty character. Because nobody can take him seriously when he talks about this. Labor voted against our bill to stop union corruption, secret payments received by unions from employers. He voted against the corrupting benefits bill, seeking to stop union corruption. He is not serious about this. He is just trying to grasp at anything that has got a modicum of potential popular appeal. The truth is, of course we are against corruption. Of course we want strong and effective action against any corruption. A lot of that work is done today by very effective agencies. We are always open to consider any suggestions for any improvements, but people should not take Bill Shorten seriously on this. He is hardly an anti-corruption campaigner. He is just desperately looking for distractions.
SARAH MARTIN: So Malcolm Turnbull began the year with his scene setter, doubling down on the Government’s corporate tax cut package. Now the Senate does not look like it is going to change its mind on that. If the legislation is again defeated for those companies above $50 million, what is the Government going to do?
MATHIAS CORMANN: That is a hypothetical …interrupted
SARAH MARTIN: Oh it is a pretty real hypothetical.
MATHIAS CORMANN: This time last year everybody was saying that there was no way that we would get any of the corporate tax cuts legislated. Then people said we would only get tax cuts up to a turnover of $10 million. In the end we were able to legislate the full three years of the first term of this ten year plan, reducing the corporate tax rate to 25 per cent for businesses with a turnover of up to $50 million. We believe that in the context of the US reducing their business tax rate to 21 per cent, the UK going down to 17 per cent by 2020, they have already gone down to 19 per cent, even France going down from 33 to 25 per cent, it is critically important to our future economic security that we pass our proposal to reduce business taxes for all businesses to 25 per cent in full. If we do not pass this in full it will damage our economy. It will damage jobs. The truth is that Australian businesses compete internationally for capital. They compete internationally for investment. It is important that our tax settings are internationally competitive. If we are out of whack, if our tax rates are materially higher than they are in other parts of the world, it will mean that investment and jobs will go to other parts of the world. The future job security, the future career prospects, the future wage increases of Australian workers working in private sector businesses depend on the future success and profitability of those businesses. Making sure that they have an internationally competitive corporate tax rate is a very important part of that.
SARAH MARTIN: The Treasurer was out today saying that tax cuts would lead to wage growth. Do you believe that and I guess, do you think business needs to do a bit more to show that they will do that if your package is successful?
MATHIAS CORMANN: Look at the evidence. In the US, the Trump Administration was able to legislate corporate tax cuts down to 21 per cent for all their businesses. The response was immediate, pay rises and additional bonuses. The truth is, in Australia we have been very successful in recent times, to strengthen employment growth. We have been able to create more than 400,000 jobs in the economy last year. There are fewer and fewer workers left that businesses can compete for and if the economy continues to grow, if businesses continue to be profitable and they have to compete for fewer and fewer surplus workers in the economy, then of course wages will go up. That is what happens. It is the basic law of supply and demand. That is what has happened in the past. That is what will happen in the future. The reason wages growth has been somewhat slower in recent years is because we have gone through a period of lower global growth and a serious transition in our economy on the back of lower prices for our key commodity exports and the like, adjustments in China that flowed through in Australia as well of course. Instead of having massive increases in unemployment we had a somewhat lower growth in wages. The alternative would have been a blowout in unemployment. The reason we have a flexible labour market is to ensure that we can work our way through these transitions without having massive increases in the unemployment queues.
SARAH MARTIN: Is it too slow a process, the connection between tax cuts and wages growth, when people are really looking for some cost of living relief now?
MATHIAS CORMANN: We have to ensure that we give people the best possible opportunity to get ahead and have a career and get better paid jobs in a way that is sustainable within the economy. We cannot cut corners here. The only way that people will be more secure in their jobs, will have the opportunity to get better jobs and get better paid jobs, is if the businesses that employ them can be more successful in the future. Bill Shorten’s approach of whacking increased taxes on businesses, making businesses less successful will lead to fewer jobs and lower wages. Does anyone really think that making it harder for business to be successful will lead to more investment, more jobs and higher wages? When nine out of ten workers in Australia work in a private sector business, how can they get a pay rise in any way other than by working for a successful, profitable business? We are trying to help set the environment where businesses can be more profitable so they can hire more Australians and pay them better wages. Bill Shorten is trying to make it harder for business to be successful, pursuing the politics of envy which inevitably would lead to less investment, lower growth, fewer jobs, high unemployment and lower wages.
SARAH MARTIN: So given you are so passionately in favour of these company tax cuts, do you envisage that if the Senate blocks them you will take them to the next election?
MATHIAS CORMANN: It is our policy. We are committed to it. We took it to the last election. We intend to legislate those tax cuts. We believe the Senate needs to pass them. It is our policy. We are absolutely and utterly committed to it.
SARAH MARTIN: Is there any way that any of that could be re-bundled into personal tax cuts?
MATHIAS CORMANN: We need to do both. We need to ensure that businesses employing nine out of ten working Australians can have an internationally competitive tax rate so that they can continue to invest, continue to be profitable and continue to employ all these Australians and pay them better wages over time. But we also as the Prime Minister has indicated, as the Treasurer has indicated, as I have indicated, we also are committed to ensure that we deliver personal income tax cuts, in particular for lower and middle income earners. That is work that is currently underway as we do the work for the 2018-19 Budget. Our commitment is to ensure that personal income taxes are as low as they can be, as high as they need to be in order to raise the necessary revenue for Government services that people expect, but as low as possible.
SARAH MARTIN: How generous can the Government afford to be? Is this going to be a milkshake and sandwich type of tax cut?
MATHIAS CORMANN: The numbers will be revealed in the Budget. The Budget will be on the second Tuesday in May. People will just have to wait for the outcome of our deliberations between now and then.
SARAH MARTIN: Just before Christmas, you got a promotion as Leader of the Government in the Senate. So obviously part of that job is in effect, herding the Senate cats, could you tell us a bit about that. How do you go about trying to wrangle the Senate when there are such different views on that crossbench?
MATHIAS CORMANN: I would never refer to my honourable colleagues as cats. I think that is a very disrespectful way of referring to them.
SARAH MARTIN: There is nothing wrong with cats.
MATHIAS CORMANN: I accept and respect the fact that every Senator in the Australian Senate comes to this place with an intention and a commitment to make a contribution to improve Australia and to make a positive contribution to our country and to the future of our nation. We have a diversity of views and in the end all of us go to an election representing our agenda. It is a matter of trying to find common ground on those areas where we can work together and sometimes there are changing majorities. Everybody knows the Government does not have the numbers in its own right in the Senate. Any legislation that is opposed by Labor and the Greens we need nine other non-government Senators in order to be able to secure passage of that legislation. That is no secret. We have been able to pass legislation with Labor, quite a lot of legislation, in fact. We have been able to pass some legislation with the Greens. We have been able to pass legislation with the crossbench. In the end it is a matter of working with people in good faith, with a straight bat, trying to find areas where common ground can be achieved. That is the way that I will continue to try and work it.
SARAH MARTIN: Are you worried, or have you noticed any change, with the Nick Xenophon Team being a little bit like a rudderless ship at the moment.
MATHIAS CORMANN: Not at all. We work very well with the Xenophon team as we work well with all Senators. We are all professionals. On occasions there are legitimate differences of view and legitimate differences of perspective. That is the way that the system is meant to work. We are very comfortable with the way all non-government Senators interact with us.
SARAH MARTIN: We have had a big change in the Senate given all the citizenship saga that has been ongoing since last August. Why won’t the Government use its numbers to refer Susan Lamb if they think there are serious questions to answer about her citizenship?
MATHIAS CORMANN: There are serious questions to answer. In fact the questions are so serious that Susan Lamb should resign. Her own lawyer has advised her that she remains a British citizen today. That is a clear breach of Section 44 of the Constitution. John Alexander resigned for less than that..David Feeney resigned for less than that. David Feeney, at least said that he thought he was no longer a British citizen. Susan Lamb has got it in black and white that she continues to be, as of today, a British citizen as well as an Australian citizen. It is a slam dunk. Any proposition that this even should be referred to the High Court for their consideration, when they have so clearly already adjudicated into these sorts of circumstances, would actually expose the High Court and the country to unnecessary expense. Susan Lamb should resign. Bill Shorten again, as he does, in his sort of shifty way, is trying to muddy the waters. He is trying to suggest that because there are a number of Labor people with genuine problems that somehow in order to even things out and out of fairness, Liberal National Members and Senators should also allow themselves to be referred even though they do not have a problem. That is not the way it works. Liberal and National Members and Senators in the second half of last year, if and when confronted with a problem in relation to their citizenship, took immediate action. They either took steps to refer themselves to the High Court, or to resign, or some of them have done both. Like Senator Parry, former Senate President Senator Parry. Bill Shorten, all the way through Coalition Members and Senators referring themselves to the High Court or resigning, said hey I do not have any problem. We have got this fantastic vetting process. Nothing wrong here. He was found out. He was caught out. He is now again casting around for any sort of distraction that somehow will avoid people focusing on his failings.
SARAH MARTIN: Do you think the Government could win Longman in a by-election?
MATHIAS CORMANN: It is a by-election that I would expect that we would contest. If Bill Shorten and Susan Lamb would finally do the right thing, the people of Longman will among other things have the opportunity to form judgement as to how long Susan Lamb held on to her seat even though she knew she wasn’t entitled to be there, given that she is clearly a dual citizen even today. We would go into any by-election presenting our record and presenting our vision for a stronger economy and more jobs. We would also point out all of the flaws in Labor’s increasingly socialist anti-jobs anti-opportunity agenda.
SARAH MARTIN: Today’s news polls shows the governments clawed back a little bit of ground. A good start to the Coalition or are you still weary given the Government will still lose on those numbers.
MATHIAS CORMANN: There is a long way to go to the next general election. We are getting on with the job. We are working hard. 2017 was a year where we made quite a lot of progress. We passed the first three years of our company tax cuts. We passed significant funding reforms in the schools sector. We passed a whole range of substantial reforms. More than 400,000 jobs were created. This year we will continue to implement our plan for the economy and jobs. We will continue to implement our plan to keep our country safe and secure. In the end, after three years, the Australian people have the opportunity to have their say. We will submit ourselves to their verdict at that time.
SARAH MARTIN: And finally Bill Shorten at the Press Club said he wanted to be better this year he wanted politics to be better for 2018, do you have any resolution to how you could make politics better this year?
MATHIAS CORMANN: I just continue to fulfil the job that I have to the best of my ability. It is not rocket science. There is a job to be done. Every single day, my colleagues and I try to do the best we can to take Australia forward, to put Australia on the strongest possible economic and fiscal foundation for the future. We will leave Bill Shorten to run his own commentary on himself.
SARAH MARTIN: And any personal new year’s resolutions?
MATHIAS CORMANN: Every year I have a resolution to be lighter at the end of the year than at the beginning of the year.
SARAH MARTIN: Don’t we all.
MATHIAS CORMANN: Last year I failed. So you know I will try to succeed this year.
SARAH MARTIN: Ok very good. Mathias Cormann, thank you so much for joining us on The Whip Podcast.
MATHIAS CORMANN: Always good to talk to you.