Transcript

2GB - Alan Jones Show

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

Transcription: 

PROOF COPY E & OE

Date: 

22/3/2018

Topic(s): 

Victorian Labor party, business tax cuts, Labor’s tax grab

ALAN JONES: Mathias Cormann has got his hands full. He may be nearly over the line on company tax. Senator Cormann good morning.

MATHIAS CORMANN: Good morning Alan. Good morning to your listeners.

ALAN JONES: Thank you. Look can I just raise this other issue with you before we go any further. Here is the story now from the Victorian Ombudsman, my listeners are furious, I have got people ringing me from Victoria, that Andrews has won an election down there in 2014, spending almost half a million dollars of taxpayers’ money on the Labor campaign. He has been found out. He has spent a million dollars trying to prevent the Ombudsman from investigating the matter to enable us to find out. Why isn’t Matthew Guy, the Liberal leader in Victoria, we have tried to make contact with him, totally unsuccessfully, calling for this outfit to be resigned. The Governor should sack this government and allow the public to have another say. 

MATHIAS CORMANN: It is very difficult for me to comment without being across all of the facts at a State level in Victoria. But certainly from what I have read on the media, they are very, very serious matters that have been raised, very serious questions that need to be answered. Certainly the government in Victoria ought to be under lots of pressure to provide those answers. They should cooperate with any inquiries into what on the face of it is highly improper conduct. 

ALAN JONES: But if on the face of it, and Deborah Glass has proven this, on the face of it almost $400,000 of taxpayers’ money has been spent on the Labor party campaign by deceptively arguing they were electorate staff, when they were in fact campaign workers. Then another million was spent, firstly on court challenges going right to the High Court to prevent the Victorian voter from knowing this happened. If that is to use your words, on the face of it correct and that is what Deborah Glass has found, shouldn’t this government be sacked? 

MATHIAS CORMANN: I have seen the reports. I am not across the facts myself. On the face of it, you are right, what has been reported is very serious. Certainly there ought to be very serious consequences. I am sure that Matthew Guy and his team are prosecuting that case vigorously in Victoria.

ALAN JONES: They had a chance to talk to do it on this program, to go to seventy-seven stations across Australia today and we can’t even make contact with them. It is a funny office. Back to you, back to you, now I know you have been working night and day on this company tax issue. Are you going to run out of time? I just want to make the time issue, because Parliament rises what, at the end of next week.

MATHIAS CORMANN: We are certainly making lots of progress. You would have seen yesterday that the new Senator for Tasmania, Steve Martin has come out to officially confirm that he will be supporting our business tax cuts, which is great, because it will lead to more investment, more jobs and higher wages. We continue to work with the remaining five crossbenchers. The Xenophon Team have indicated that they will be opposed no matter what. So we are working with the remaining five. Everybody knows the maths. The Government needs nine crossbench Senators to support our legislation when Labor and the Greens are opposed, which they are on this occasion, quite recklessly and irresponsibly. So we just keep talking ... interrupted  

ALAN JONES: I know you don’t want to show your hand. But on my maths here, it appears as though today as I speak to you, you may only be one short. It does appear as though One Nation and Derryn Hinch are going to come to the party. Is that a fair thing to say?

MATHIAS CORMANN: I am not a commentator. I do not make it my business to speak on behalf of others. I can only observe that there are only four that have officially confirmed their position in favour. 

ALAN JONES: And you need nine. 

MATHIAS CORMANN: I need nine. I am continuing to work with all of those remaining five. Hopefully, we will be able to convince them of the merits of the Government’s arguments. That is our objective.

ALAN JONES: To convince them, I guess the good old Business Council, you know better than anybody and again, you can’t comment, but I can, you can rarely get them out of the stall to support anything at all. But the Business Council have come out and given a commitment I understand to the Senate that they in fact will invest in jobs and push a lot of this money back into employment. Now, are they the sorts of concessions that you believe will help get people like Senator Hinch and Pauline Hanson over the line. 

MATHIAS CORMANN: I thought the intervention by senior business leaders around Australia, some of the biggest employers around Australia yesterday was very significant. What they confirmed is that if the Senate were to pass our business tax cuts in full, they will invest more in Australia, which would lead to more jobs and higher wages as the tax cuts take effect. If we do not pass the tax cuts, what we really would be doing, we would be putting our businesses at a competitive disadvantage ... interrupted

ALAN JONES: It would be hopeless, hopeless.

MATHIAS CORMANN: Bill Shorten keeps running this class warfare rhetoric of big end of town and the undeserving rich. The truth is that the big businesses in Australia today have all started as a small business. Qantas started with three employees in Longreach in 1922. BHP started as a small business. You name it. All of the big businesses of today, they are now the Australian champion businesses competing on the global stage. If they are more successful, that means more jobs for Australians. It means better job security for Australians. It means career opportunities in Australia. It also means more business opportunities for small and medium sized businesses ...  interrupted 

ALAN JONES: But it is common sense isn’t it. If America are offering 21 cents in the dollar or Asia around about 21 cents in the dollar and our companies have got to pay 30 cents, well they will relocate somewhere else. It is going to cost jobs.

MATHIAS CORMANN: That is precisely right. If we keep our business tax rate for the bigger businesses at thirty per cent, we will lose investment, we will lose jobs and it will be bad for working families across Australia. My very strong argument is that the working families of Australia need their Senate to vote for those business tax cuts in full, so that we can continue to give families the best possible opportunity to get ahead. 

ALAN JONES: Can I just make this point again and this is the final point that I made to you last time that we spoke, because I keep making the very simple point, that you can’t have a profitable employee without a profitable employer.

MATHIAS CORMANN: Precisely.

ALAN JONES: So the cut in the company tax makes the employer more profitable. Wouldn’t you think therefore, if the unions genuinely represent the worker they actually should be advocating a cut in the company tax to make business more profitable and thereby making their union members more profitable. I don’t understand where the union movement is here. 

MATHIAS CORMANN: I can explain that to you. Alan. Some of the most succinct and most eloquent arguments in favour of a business tax cut over the years have come from the Labor party, from Bill Shorten, from Chris Bowen, from Penny Wong. The only reason they are opposing it now is because they think it is in their political interest to make it hard for the Government to get our economic agenda through the Parliament. This is part of a political tactic. It fits in to his broader socialist rhetoric now of anti-business, anti-opportunity, anti-people who are successful. The truth is this, if we make it harder for our bigger businesses to succeed by putting them at a competitive disadvantage, a less successful business will hire fewer people and will only be able to pay them less. If we want people to get more jobs, better jobs, which we do and get better wages, which we do, we need to ensure that the businesses that have to create those jobs and pay those wages can be more profitable … interrupted 

ALAN JONES: Alright, let me just make a comment here, to our listeners here that sounds like a political comment and they would say “oh well Mathias Cormann would say that”, but I am sorry, it is not political comment, that is a factual comment. In the past Bill Shorten, Chris Bowen and Penny Wong have all been very, very strong advocates of a reduction in company tax. They are now playing a political game. If I could then move to the next issue where politics has intervened, I must say this is on the Labor announcement last week about tax refunds and superannuation. Mathias, I think one of the problems here about trying to win the debate is the convoluted language. I mean when you talk about dividend imputation and franking credits and so on, people sort of “oh God, what is all of that about”. In relation into the very benefit they are now trying to withdraw, namely the franking credit which has led to a tax refund and I will come to that in a moment. That also was very, very strongly supported by the Labor party … interrupted 

MATHIAS CORMANN: Absolutely.

ALAN JONES: …by people like Peter Cook and others.

MATHIAS CORMANN: Not only that, I have informed the Senate this week of a Labor party policy document in 1998 under Kim Beazley, which they took to the 1998 election, where they were promising to introduce precisely the system that has been in place for the last 20 years. They were pointing out how beneficial this would be for pensioners and self-funded retirees on low incomes. Kim Beazley actually used to care about pensioners and low income earners and self-funded retirees, way more than Bill Shorten clearly does. He uses class war rhetoric and technical language to bamboozle people because he hopes that as he is talking about targeting the rich, he hopes that they do not realise that he is coming after them. He is putting his hands into the pockets of low and middle income Australians in order to fund his reckless spending sprees.  

ALAN JONES: If I could just though, be a little critical here, I do think though to win, not that you need advice from me, but to win this argument you do have to try to explain to people about the detail. If I could just say here, the franking credit is a simple principle. Why they call it that I have got no idea. But basically if you have shares, then your company and it is fully franked, that means that is paying the full company tax, 30 cents in the dollar. So therefore, if you then get a dividend from that, that is regarded as income and you will pay tax on that as well. So if you pay the company tax share and the tax on the income from the distribution of the profit that comes your way because you are a shareholder, you could be paying 60-65 cents in the dollar. So the person investing will say “bugger this, I am not going to put money into shares, I will put it somewhere else, this is extortionate” and consequently the capitalisation of companies is eroded significantly. So hence the franking credit. So the franking credit is equal to the company tax and that is added to the income tax that is paid on that and where the franking credit exits, it is then deducted from the tax liability. I know that also most probably sounds complicated, but it is that deduction that they are going to take away. So if isn’t the argument, if there is a group of people, which there is, who are tax exempt, that is the pensioner is tax exempt, he might have a few bob in shares, even though he is only on a little bit of money, then you have got the person on a superannuation fund of less than $1.6 billion, that income is tax exempt. So if that is tax exempt, there is nothing to take the franking credit away from to reduce tax, they are not paying tax, but you are going to take the franking credit away and that sometimes can be $4,000, $5,000, $6,000, $7,000, $8,000. They are suddenly going to have to say under Bill Shorten you are getting eight thousand bucks less. I get the impression Mathias, I am sorry, that there are many people in the Government who do not even understand the issue. 

MATHIAS CORMANN: I have been out there talking about it uphill and down dale. The truth is what you have said is 100 per cent correct. What is called a franking credit is essentially an income tax refund. Every shareholder is a part owner in a company. The company when there is a fully franked credit has paid 30 per cent tax as you say. This whole system has been set up to avoid double taxation. Bill Shorten wants to bring back double taxation. What he is actually saying is that if you earn more than $180,000 a year and you are on the top marginal tax rate of 47 cents in the dollar, then you should be able to deduct the full 30 per cent. But if you are a pensioner or if you are somebody on a lower income and you pay zero per cent tax on your personal income, you should not be able to get the same deduction … interrupted 

ALAN JONES: No you cannot reduce your tax because you are not paying any tax.

MATHIAS CORMANN: So he wants pensioners to effectively pay 30 per cent tax on their income from dividends. That is entirely inappropriate and that is … interrupted 

ALAN JONES: Can I just go to the other side of things though, where you may have a problem, if I could respectfully suggest, supposing I have got $10 million in a super fund or $6 million, $5 million, well 1.6 of that income is tax exempt … interrupted

MATHIAS CORMANN: No, income from $1.6 million in capital is tax exempt.

ALAN JONES: Tax exempt, yes that is right. So then if I then invest the other stuff, I have an opportunity to reduce my tax with the franking credit. Now should, given that the money in superannuation is already there because you are getting a concessional income tax rate, you are not paying the margin rate of 47 cents if you have a got a superannuation fund of $5 million, you are paying 15 cents, given that it has gone in there on a reduced taxation obligation, should people with that kind of, given that we are broke, we have got debt, should we be providing refunds to those people? 

MATHIAS CORMANN: This is an income tax refund. So this is a refund of overpaid tax. So of course we should be providing a refund in that circumstance. Bill Shorten quite dishonestly made the assertion that somebody gets a $2.5 million credit refund through their superannuation. He knows under the system as we have amended it, that is no longer possible because we have put in that $1.6 million cap in terms of the capital from which you can draw investment returns tax free. So for him to say that somebody can get $2.5 million income tax free returns through their superannuation fund today is false.  

ALAN JONES: Okay, well you and I have both most probably confused people a little bit this morning, but we will leave it there and resume it next week. It will still be with us, won’t it?

MATHIAS CORMANN: Yes indeed.

ALAN JONES: Good to talk to you.

MATHIAS CORMANN: Yes. Talk soon.

[ENDS]

Senator the Hon Mathias Cormann, Minister for Finance and the Public Service, Perth