Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Joining me now is the Finance Minister Mathias Cormann. Thanks so much for your time.
MATHIAS CORMANN: Good morning.
KIERAN GILBERT: We know the criticism. We heard a bit of that from Christopher Pyne there in relation to low income earners and those who aren’t that wealthy being caught up in this. But if you were able to isolate the wealthier end of the people using this particular mechanism. Is there a way to rein in some expenditure here?
MATHIAS CORMANN: Kieran, this is completely unravelling now this latest tax attack by Bill Shorten. The reason it is unravelling is because he is wanting to steal people’s money that is not his. There is actually no loophole here. The fact that people on low incomes and the fact that people who do not have a personal income tax liability are able to get tax refund for tax paid on their behalf effectively by the company at a thirty per cent tax rate is a deliberate design feature. What Bill Shorten is essentially saying is that somebody who is earning more than $180,000 a year should be able to have the full thirty per cent of the tax paid by the company deducted from their tax liability but if you are somebody who earns less, who is on a lower income and pays less tax you should not be able to get that same tax refund. It is wrong in principle. There is absolutely no case for it. He is being found out over it, because he has not thought this through. He is now getting quite desperate in trying to defend himself putting lots of untruths into the public domain. He is trying to mislead the Australian people about what this is about. This is about targeting low income earners to fund his reckless spending.
KIERAN GILBERT: Well there have been some mistakes no doubt in terms of the way they have handled it and announced it. However, one they have got right is the trajectory of the spend. It is going to be very expensive within just a few years. $8 billion a year this outlay. Is that affordable? Is it sustainable?
MATHIAS CORMANN: The fundamental mistake and do not let yourself be misled by this Labor rhetoric. This is not a government spend. This is the government giving back money to people that belongs to those people. If somebody pays too much tax then the government needs to give that money back. This proposition somehow that the government giving back money that is not theirs, that belongs to taxpayers is an item of expenditure is wrong.
KIERAN GILBERT: So you believe it is directly comparable to say when a pay as you go earner gets tax back when they have over paid, this is the same in terms of the principle here?
MATHIAS CORMANN: That is how it applies for everyone with a personal marginal tax rate of more than thirty per cent. Every individual Australian who has shares is a part owner in that company. That company pays thirty per cent tax on their profits. In order to avoid double taxation what our dividend imputation system says is the tax already paid by the company is deducted from your personal income tax liability. If you earn so much that you have a personal income tax rate above thirty per cent, then that comes off that tax liability. But if you have a personal income of less, then what Labor is saying is that you should not be able to get that same repayment of overpaid tax. He is essentially suggesting that somebody who is on an income of less than $18,200 and therefore pays zero per cent tax should not be able to get the same tax refund as somebody earning more than $180,000. He wants pensioners to pay thirty per cent effectively on their income from dividends. He wants them to pay … interrupted
KIERAN GILBERT: Do you believe that there is a fundamental disparity though, in a broader sense between the treatment of those in the pension phase and those in terms of superannuation nest eggs, on occasion with millions of dollars in assets not paying tax, and yet a pay as you go earner, someone on a very modest income still paying a good chunk of their wage in terms of tax.
MATHIAS CORMANN: Kieran and again, this is where Bill Shorten is blatantly lying to the Australian people, because he knows that the extreme example that he is using has already been addressed. In the 2016-17 Budget we put a cap, effectively, on the amount of earnings that you can draw out of your superfund tax free. We have put in a $1.6 million cap in terms of the capital from which you can draw tax free earnings. So this proposition that in the future you can get zero per cent income tax on the back of $2.5 million worth of earnings is false and Bill Shorten knows it to be false. He is lying to the Australian people in order to try and justify a dud policy. They got this wrong and the sooner they drop this overboard the better.
KIERAN GILBERT: With $59 billion to spend, their argument is, I think certainly their planning is along the lines of they be able to not just see your income tax cuts, not just match them, but out do them once you deliver those come the May Budget.
MATHIAS CORMANN: He is trying to put his hands into the pockets of pensioners and self-funded retirees and then hand the money out again. Let me tell you, this is not the Government’s money. This is money that belongs to those individual taxpayers and they are much better at spending it in the economy than a Labor government would be. Let me also remind you and your viewers, in the lead up to the last election Bill Shorten made so many promises, so many spending promises, that even after more than $100 billion in additional tax hikes then, he still went to the election with a worse budget bottom line than the Coalition. He went with more than $16 billion in higher deficits to the last election after hitting people with massive additional taxes. We are now at more than $200 billion in higher taxes under Labor. You know what, he will spend it all and more. The country will be weaker for it. Pensioners and self-funded retirees across Australia will have less income to deal with their cost of living expenses.
KIERAN GILBERT: Simon Benson and Joe Kelly have this breakdown on the front page of The Australian today, in terms of the marginal seats, Labor and Liberal, where thousands of people will look like to lose thousands of dollars. Do you feel that this is a political misjudgement electorally as well for Shorten that is going to help you?
MATHIAS CORMANN: What I would say to the Labor Members in the House of Representatives is stand up. Stand up for the pensioners and the self-funded retirees in your electorate and tell Bill Shorten that this is just not good enough. Stand up for the people that you represent and stop this madness. What Bill Shorten is doing here is wrong. It is reckless. There is no justification for it. He did not think it through. He did not think through the real life consequences for real people and he needs to back off.
KIERAN GILBERT: And just quickly before I let you go, their idea of that instant asset write off, the 20 per cent of assets, over $20,000 in terms of cost for businesses. Is this a good initiative, do you welcome that?
MATHIAS CORMANN: He is just playing catch up. We have had instant asset write off policy arrangements in our last couple of Budgets. We will have some more to say about what we intend to do in terms of continuing to support growth, support business, support jobs and growth in the next Budget. What I would say though … interrupted
KIERAN GILBERT: So over $20,000, that looks likely for you as well?
MATHIAS CORMANN: What I would say to Bill Shorten and to the Labor party, if you want to support growth and jobs now, back in our business tax cuts for all businesses around Australia. Right now businesses with a turnover of more than $50 million will be seriously disadvantaged compared to the businesses they have to compete with from all around the world, who are able to get much lower business tax rates in their respective countries. So if Bill Shorten is genuinely interested in more jobs, higher wages, more investment, stronger growth, he would vote for our business tax cuts in the Senate over the next fortnight.
KIERAN GILBERT: We will see how you go with that. You are leading the charge in terms of negotiating. We will be monitoring that as well. Mathias Cormann thanks so much for that, appreciate it.