ABC TV – News Breakfast

Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia






National Party, Company tax cuts

MICHAEL ROWLAND: Nationals Leader Barnaby Joyce is facing another torrid day with his future very much uncertain, as some members of his party start deserting him. Nationals MPs, as we just heard, will send a delegation to see Mr Joyce sometime today to express concerns about his leadership.

VIRGINIA TRIOLI: But there is division over how to deal with the matter. Some MPs say urgent action is needed. Others believe that Mr Joyce can ride out this storm.

MICHAEL ROWLAND: Finance Minister Mathias Cormann joins us now from Canberra. Minister, good morning to you.

MATHIAS CORMANN: Good morning.

MICHAEL ROWLAND: Have you heard of this delegation that is going it see Barnaby Joyce today?

MATHIAS CORMANN: No. I have just heard the report on your show, but, no. The leadership of the National Party is very much a matter for the National Party. We are in a Coalition between the Liberal and National Parties. It is a very good, strong and united Coalition. We have been able to do some great work together for the country and we have a lot on our plate to do in the future, to ensure that our economy is as strong and as successful as possible and so that families around Australia can have the best possible opportunity to get ahead. So, it is entirely a matter for the National Party.

MICHAEL ROWLAND: It is a Coalition, you are absolutely correct about that, but a Coalition being damaged by the Barnaby Joyce affair. Is it time for Barnaby Joyce to go?

MATHIAS CORMANN: As I have just said, the leadership of the National Party is a matter for the National Party. I feel for Barnaby. I feel for all involved. His wife, his kids, his new partner for that matter. It must clearly be very distressing. It is distracting for the Government and the Australian people do not want us to be talking about our own personal affairs. They want us to talk about how we are planning to secure more jobs and higher wages and better opportunity for them to get ahead. How we will continue to keep our country safe and secure. They do not want us to talk about ourselves.

MICHAEL ROWLAND: If it is a distraction though, as you just say, isn't it best for any government to have that distraction dealt with?

MATHIAS CORMANN: Well, it has to be dealt with, but...interrupted.

MICHAEL ROWLAND: How would you like it to be dealt with?

MATHIAS CORMANN: Well, the leadership of the National Party is a matter for the National Party, as I just told you.

MICHAEL ROWLAND: If the worse comes for Barnaby Joyce and he resigns as Deputy Prime Minister, Julie Bishop is away at the moment, that means that you will be Acting Prime Minister next week when Malcolm Turnbull is overseas, are you prepared for that?

MATHIAS CORMANN: I think you are getting way ahead of yourself. The Acting Prime Minister usually and always, unless he is away, is the Deputy Prime Minister and I would expect that to be the case next week.

MICHAEL ROWLAND: Let us move onto the story broken by the ABC’s economics correspondent Emma Alberici this morning. She has revealed that Qantas, amongst some other big Australian companies, has not paid corporate tax for close to ten years, using legal loopholes. Is that situation acceptable?

MATHIAS CORMANN: Well, I think it is a misleading analysis. In periods of lower growth and lower profitability you pay less tax. Business taxes are charged on profits. If you do not make profits and if you go through a difficult period and you do not make profits, or you have to make significant investments, as in the case of Qantas, in new planes and so on, then that has a bearing on what your taxable income is. In Australia, we do not charge tax on turnover, we charge tax on profits and from their turnover, businesses pay wages, they pay for their equipment and all of the assets and infrastructure they require in order to do their business. So, it is an incredibly misleading and inaccurate piece of analysis.

MICHAEL ROWLAND: One in three, actually, one in five Australian companies not paying tax in five years, but do you agree this doesn't,  I've heard your arguments, look good for people out there, as they listen to your arguments about cutting the company tax rate?

MATHIAS CORMANN: Well, I disagree with that. We want more businesses to be more successful and more profitable, so they can hire more Australians, pay them better wages and pay more tax. Australian companies right now pay 30 per cent tax on their profits They do not pay 30 per cent tax on their turnover. It is incredibly misleading to suggest that somehow there is anything untoward if a company that does not make a profit in any particular year, is not paying tax in the circumstance of not making any profit. But in the end it is common sense logic. Jobs and higher wages and taxes paid to government from business do not grow on trees. Jobs are created, higher wages are paid for, business taxes are paid for, by more successful, more profitable businesses. If we want to get more jobs, higher wages and more tax revenue for government, we need to get more businesses be more successful and more profitable. Right now with the tax policy settings we have in Australia, we are holding Australian businesses back. When in the US they are now looking at a business tax rate of 21 per cent, the UK, they are moving towards 17 per cent. Even France is moving from 33 to 25 per cent. By making it more expensive for business, by proposing that government in Australia should take more money out of businesses than in other parts of the world, we are making it harder for business to be successful and more profitable. Which means that over time we will be shifting jobs, investment and tax revenue to other parts of the world.

MICHAEL ROWLAND: Do you concede it is going to be very politically difficult to get the new rounds of company tax cuts through the Senate? The One Nation bloc for one is saying it will not consider company tax cuts for companies earning more than $50 million.

MATHIAS CORMANN: We will continue to have conversations with all involved. But the person that is the most reckless and irresponsible person in all of this is Bill Shorten. He has had a long history of making public speeches, selling the virtues of lower business taxes in Australia to ensure that we are globally competitive. But he has made a cynical, political judgement trying to win votes on what he perceives to be a populist view against business. That is what he is doing. I mean he has given speeches even explaining why it was so important that business taxes apply to all businesses, not just to smaller businesses and he has turned his back on this. Not because he believes it is wrong to deliver lower business taxes, but because he is just focusing on his selfish political interests, rather than the national interests.

MICHAEL ROWLAND: Mathias Cormann, in Canberra, thank you very much for joining us this morning.

MATHIAS CORMANN: Always good to talk to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth