Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
DAVID SPEERS: First to the policy debate over how to boost wages. The Government hardened its stance on company tax cuts during the week, with the Prime Minister vowing to take them to them the next election in the likely event that the Senate again rejects the Coalition’s plan. My guest this morning is the Minister for Finance, Special Minister of State and Government Senate Leader, Mathias Cormann. Minister thank you very much for joining us this morning.
MATHIAS CORMANN: Good morning.
DAVID SPEERS: The Government’s tax cuts passed the House during the week, but the prospects in the Senate still look bleak. Both the Nick Xenophon Team and One Nation are opposed to giving tax cuts to businesses above a $50 million turnover. Are you willing to offer them any sort of compromise?
MATHIAS CORMANN: As you say, they have only just passed the House of Representatives. They have barely arrived in the Senate. The conversations are yet to get underway in earnest. Australia needs those business tax cuts. Australia needs an internationally competitive business tax rate if we do not want to lose investment and jobs to overseas. These business tax cuts were necessary at the last election. They are even more necessary now. They will be more necessary at the next election. When we go to the next election, our business tax rate in Australia would be nine per cent higher than in the United States. At the last election, out business tax rate was still lower. Yes, it is all about more jobs and higher wages. We want to secure more jobs and higher wages. More jobs and higher wages do not grow on trees. They are created and paid for by successful. profitable businesses. We need to ensure that our businesses can compete for investment with businesses around the world. To have a substantially higher tax rate in Australia is just going to make it that much harder for businesses here to be successful, which would mean that they can only hire fewer Australians and pay them lower wages. That is not what we want.
DAVID SPEERS: And I want to come to wages part of this. Just to get this back to the question about compromise, to get this through the Senate are you willing to actually compromise.
MATHIAS CORMANN: We want to pass the business tax rate reduction to twenty-five per cent for all businesses. But we always talk to non-Government Senators when we want to secure the passage of legislation. That is what will happen on this occasion. The Government does not have the numbers in the Senate. We have thirty out of seventy-six Senators. We need nine non-government Senators in order to secure the passage of legislation which Labor and the Greens oppose. Incidentally, the real outrage here is the decision by Bill Shorten to put politics ahead of the national interest. His decision to oppose business tax cuts when he actually knows that that is what we need in order to protect jobs and secure higher wages is reckless and irresponsible.
DAVID SPEERS: Okay, but are you willing to include or attach income tax cuts to these company tax cuts? Are you willing to perhaps to do more for small business which some of these crossbenchers want. I am just wondering how you possibly manage this through the Senate.
MATHIAS CORMANN: I am not going to run the conversations with my crossbench Senate colleagues through the media. I never do. As far as personal income tax cuts are concerned, the Prime Minister has already indicated that we are committed to personal income tax cuts. We are working on putting together a package which includes personal income tax cuts for the next Budget. In due course we will make relevant announcements.
DAVID SPEERS: So that will be in the next Budget?
MATHIAS CORMANN: That is what we are working towards. That is a matter of public record.
DAVID SPEERS: Will they have to, any income tax cuts in the May Budget, will they have to exceed the increase in the Medicare levy that workers are going to face from mid next year, to leave workers better off?
MATHIAS CORMANN: David, I know that you would like me to deliver the Budget today. As every year, the Budget will be delivered on the second Tuesday in May.
DAVID SPEERS: No, no. I appreciate that, but as a principle though. The Medicare levy is going up, this is going to raise the Government $8 billion. Income tax cuts would surely have to offset that at the very least.
MATHIAS CORMANN: As a principle, we are always focussed on making sure that taxes are as low as possible. As high has necessary to pay for the important services provided by Government, but also as low as possible. That is what we are doing on this occasion.
DAVID SPEERS: But do you take my point, that if workers are going to benefit from an income tax cuts, it will have to be more than they are going to pay through the increased Medicare levy.
MATHIAS CORMANN: As I have said to you, we are working to ensure that personal income taxes are as low as they possibly can be, as high as necessary, but as low as possible.
DAVID SPEERS: On the company tax cuts, can you confirm, the Prime Minister has said you would take them to the next election if you cannot get them through the Senate. Will the funding for them remain in the Budget papers?
MATHIAS CORMANN: Self evidently. As the Prime Minister has indicated, business tax cuts are even more important today. They will be even more important at the next election than they were at the last election because since then more countries have reduced their business tax rate. The United States have reduced their business tax rate down to 21 per cent. Even France is reducing their business tax rate now from 33 per cent down to 25 per cent by 2022. President Macron of France is hardly a trickle down, right wing ideologue. He was the economy minister in the most recent socialist administration in France. Countries around the world understand that they need to ensure that their businesses can be globally competitive. The only person, the only major leader that does not seem to understand, who seems to want to put politics ahead of the national interest, is Bill Shorten.
DAVID SPEERS: Just on that international experience, I was having a look in the US, a lot of companies have now actually, many of them gave a bonus of a thousand dollars to their workers. A one-off bonus, but others have made an increase in the actual wage or salary, and that includes WalMart, Target, CPS, JP Morgan Stanley, Starbucks, and so on. They did it very quick after the Congress passed the Trump tax cuts. Would you expect a similar thing to happen here and would you welcome business, and have you spoken to business about what they are going to do?
MATHIAS CORMANN: Firstly, the effect in the US was as dramatic as it was immediate. Massive amounts of investment went into the US pretty well immediately after the Congress reduced the business tax rate to 21 per cent. Yes, a long list of businesses immediately provided bonuses and higher wages to their employees.
DAVID SPEERS: It was a bigger tax cut, though, than you are suggesting here, to be fair.
MATHIAS CORMANN: We believe that 25 per cent is what is affordable and what is appropriate to make sure that we remain, essentially, at the OECD average.
DAVID SPEERS: So are you talking to business about what they would do, if you passed this? Whether they would be able to make some sort of commitment or announcement to boost wages?
MATHIAS CORMANN: If we let business have more of their own money, they will be able to invest more in their future success and profitability, which means that they will be able to hire more Australians. Now last year more than 400, 000 … interrupted
DAVID SPEERS: Should they be out there saying this?
MATHIAS CORMANN: If I may, last year more than 400,000 new jobs were created, which has led, also, to an increase in the participation rate. As business competes for workers, as business hires more workers and there is more competition for remaining workers, clearly that puts upward pressure on wages. That is what has happened in the US. That is what we would expect to happen in Australia now, as it has in years gone by. That is precisely why we are doing what we are doing, because stronger growth, more jobs, more competition by successful businesses for workers, means that they will have to pay more to those workers to secure their services. That is what it is all about.
DAVID SPEERS: But are you talking, Minister to business and urging them to get out there and make the case, and not just make the case generally, but spell out how they might be able to boost wages?
MATHIAS CORMANN: We talk to businesses all the time. What businesses are telling us is that if we have a more competitive business tax rate it will lead to more investment, it will lead to higher wages over time. That is the experience in the past. That is the experience around the world. That is what would happen in Australia should those business tax cuts be legislated. Bill Shorten is standing in the way of higher wages and more jobs. He is deliberately standing in the way of higher wages and more jobs.
DAVID SPEERS: Can I turn Minister to the Barnaby Joyce matter. Labor is now demanding answers from the Government as to whether special positions were created for his girlfriend Vikki Campion. Can you explain what happened there?
MATHIAS CORMANN: I am not going to go into the detail of all these matters. These are deeply personal matters. Barnaby Joyce has made himself available to explain himself. As far as staffing arrangements are concerned, I believe that relevant statements were released yesterday. This is a staffing position inside the National Party. These were decisions made by National Party Ministers. Everything is appropriate here. There were appropriate processes. She is clearly somebody who is qualified to do the job. She was hired in certain positions based on merit. There is nothing really further to add.
DAVID SPEERS: But just explain to us how that works. Leaving beside the matters with Barnaby Joyce, but staffing, it is the Finance Department that ultimately pays ministerial staff. Was a special position created in the office of Damian Drum, who, let’s be fair, probably doesn’t have the greatest media profile. I’m not sure many views would even know who he is. He had a media adviser already. Was a special position created for a senior media adviser for Vikki Campion?
MATHIAS CORMANN: I am not aware of the specific staffing circumstances of every single one of my colleagues. I am not aware of the specific payment arrangements for individual staff. There are appropriate processes. She clearly was an employee for National Party Ministers and Members of Parliament … interrupted
DAVID SPEERS: So the Nationals party can sort all of that out? You don’t have any involvement in that or the Prime Minister doesn’t have an involvement in that?
MATHIAS CORMANN: She held a position with National party Ministers for which she is eminently qualified and which she obtained on merit. There is not really much else that I can add to it.
DAVID SPEERS: So, you don't feel the need to further investigate, look at what happened there, make sure everything was above board?
MATHIAS CORMANN: All of my advice is that everything was absolutely above board. I am very surprised that the Labor party would go here I have to tell you.
DAVID SPEERS: Well, if it goes to special jobs being created for a minister’s girlfriend, that surely is worth exploring?
MATHIAS CORMANN: That is self-evidently not what happened. She had a position in Government on merit. What happened, happened. That is really all there is to it.
DAVID SPEERS: Finance Minister and Government Senate Leader Mathias Cormann, thank you very much for joining us this morning.
MATHIAS CORMANN: Always good to talk to you.