Sky News – AM Agenda

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






Company tax cuts

KIERAN GILBERT: There could be a deal on the Government’s company tax cut plan before Easter. It is still in limbo though. With me now, the chief negotiator for the Government, the Leader of the Government in the Senate, Mathias Cormann and Finance Minister. Thanks for your time, will you get a deal?

MATHIAS CORMANN: The Government continues to work with crossbench Senators to put the case. We believe it is very important for working families around Australia that the Senate passes the business tax cuts in full. Given that Bill Shorten has taken such a reckless and irresponsible position on business tax cuts that he used to passionately support, we will need to continue to engage with the crossbench. Everybody knows the maths, we have 30 seats in the Senate, we need 39. So we need to persuade nine out of the 11 crossbenchers to join us. They have engaged with us very constructively. They understand that the future opportunities, the future jobs, the future job security, the future career opportunities and the future wage increases for all Australians depend on the future success and profitability of Australian businesses. If we make it harder for business to be successful, if we put them at a disadvantage compared to businesses in other parts of the world who pay less tax, then there will be less investment, fewer jobs and ultimately lower wages on the back of higher unemployment.

KIERAN GILBERT: Many had written this chance off though hadn’t they, in terms of getting the full $65 billion worth of tax cuts through? But now you are a real chance with only a couple of Senators holding out in terms of Hinch and Senator Storer by the looks of things.

MATHIAS CORMANN: Our Government never gets distracted by the commentary from time to time. There is always a similar pattern. There is always a lot of commentary in the media that we are not able to get this or that important economic or social or national security reform through the Parliament. Our Government just continues to patiently work away and make our argument.

KIERAN GILBERT: One of the arguments made in this studio yesterday by Derryn Hinch was that the banks should be excluded from the company tax cuts. He says why are you having a royal commission at the same time as you are going to give them a tax cut?

MATHIAS CORMANN: We do not ever conduct our discussions with the crossbench through the media. But what I would say on this, we do not support that particular proposition. As you would be aware, we already introduced the major bank levy last year and effectively the major bank levy cancels out the effect of the corporate tax cut, the business tax cut, for the banks already and we do not think it is appropriate to add to that further. We are sympathetic to the arguments that all of the crossbenchers have raised with us and we are engaging in good faith. We would like to see this legislation passed and we will continue to work to find a consensus. 

KIERAN GILBERT: You might not support that Hinch proposal but it goes to the challenge doesn’t it, of what you are doing here in terms of the balancing act between placating the likes of Derryn Hinch and Pauline Hanson, but yet not aggravating Leyonhjelm to the point that he pulls out.

MATHIAS CORMANN: It is not about placating people, it is about finding common ground and it is about finding a way for all of us together to advance the public interest. In the end, why are we doing this? We are doing this because we want more jobs, we want better jobs, we want higher wages and we want Australians today and in the future, we want our kids and grandkids, to have the best possible career opportunities in Australia. The only way we are going to be able to achieve that is if Australian businesses have the best possible opportunity to be successful and to prosper. If we put them at a competitive disadvantage deliberately, by imposing a materially higher tax rate here in Australia than is faced by their competitors in other parts of the world, then they will be less successful, there will be less opportunity, there will be fewer jobs, less…interrupted

KIERAN GILBERT: You will likely have to spend more won’t you to get these votes, like you did with the $60 million pilot program on apprentices for Pauline Hanson? You would not have otherwise done that program? $60 million. 

MATHIAS CORMANN: I know that that is a clever way for you to try and get me to confirm speculation in the media. I have not announced any particular proposals that have been or have not been pursued in the context of our discussions with the crossbench. What I would say, in the end we are focused on getting this legislation through the Senate because we believe it is very important for our future economic prosperity, it is very important for the future opportunities for working families around Australia…interrupted

KIERAN GILBERT: But you are willing to spend some money in order to get this bigger benefit as you see it?

MATHIAS CORMANN: We are focused on achieving a consensus across the Senate, we are focused on getting this through the Parliament. Given Bill Shorten has made a decision to vote against jobs, against wage increases, against better opportunities for Australian families to get ahead, we are working and engaging with the crossbench, who have taken a much more responsible approach, who are actually focused on the public interest and who are prepared to work with the Government to get into a sensible position. 

KIERAN GILBERT: One of the criticisms that is levelled at this plan by your critics is that this is going to flow to foreign investors. That the big chunk of this is going to flow to foreign investors and there is no guarantee that the money will come back into investment and jobs in this country.

MATHIAS CORMANN: It is a very ignorant proposition. The truth is that our economic prosperity into the future depends on attracting additional investment, including and in particular additional foreign investment. That is the driver of business growth, that is the driver of future opportunity. Unless we can attract investment to improve our productivity, to improve our economic capability, then we will not have the job growth that we believe we need in order to ensure that all Australians have the best possible opportunity to get ahead. The prospect of getting a return and the prospect of getting a better return is what attracts investors to invest in the first place. Some people and this is really a structural concern about the political conversation in Australia today, Bill Shorten used to understand that attracting investment into Australia is actually a good thing and it is important for economic prosperity. He has literally just dropped all economic common sense and he has allowed himself to be captured by misguided socialists like the new Secretary General of the ACTU, who has always been misguided. At least people like Bob Hawke and Paul Keating used to stay above this sort of misguided left-wing socialist, misguided ideological mantra. Bill Shorten has been completely captured and if he was allowed to get into the Lodge, it would hurt our economy, it would kill jobs and it would be bad for working families around Australia.

KIERAN GILBERT: Is there room though, for the companies to give a more definitive statement because it was a very broad statement released this week by the Business Council. Can they be more definitive in terms of commitments for investment, for jobs, for wages growth?

MATHIAS CORMANN: Well it was a very strong statement that the most senior business leaders in Australia and the biggest employers in Australia made. They made a commitment to the Senate and through the Senate to the Australian people that if this business tax cut is passed in full, they will invest more in Australia, which would lead to more employment and which would lead to stronger wages growth as the tax cuts take effect. That is precisely what we want to achieve. That is precisely why the Government is pursuing this. Now some people are suggesting that we should in some socialist and dictatorial way be very interventionist in prescribing what every business in every part of Australia should be doing. Well, that actually would be counterproductive. This sort of planned economy style approach has been tried. It has been tried in Eastern Europe and it led to lower living standards, it led to mediocrity and this is not what we want for Australia. We want Australians to have the best possible opportunity to get ahead…interrupted

KIERAN GILBERT: That is a big stretch though, to go from that to socialism.

MATHIAS CORMANN: The thing is, I am giving you the extreme, this is very much a socialist approach. I am giving you the extreme because that is where these sorts of suggestions are tending us to and that is not how we get the best outcomes out of our economy.

KIERAN GILBERT: The other argument that has been made or question that has been raised is how can those companies make that commitment when a number of them in recent years have paid no corporate tax? Obviously the general argument around this and we have seen it controversially, businesses do not pay tax when they are investing in their infrastructure, investing in their business.

MATHIAS CORMANN: There is so much ignorance in this debate and some of it from people, quite frankly who should know better. Qantas is a business that has been singled out at various times. Qantas started as small business with three employees in regional Queensland. Today it is a global brand, it is a magnificent Australian business success story. But they are operating in a fiercely globally competitive environment. Over a number of years, they made $3 billion worth of losses, which had a serious impact on the job security of people working at Qantas, had a serious impact on the small and medium sized businesses supplying goods to them. It is a great credit to Alan Joyce and his team at Qantas that they have been able to turn this around and they are now profitable. They will pay tax once the effect of the losses has worked its way through the system. Of course they will pay tax. But if we force a business like Qantas to be less competitive than they should be, if we force them into a competitive disadvantage compared to businesses they compete with in other parts of the world. Not only is that bad for the job security of the 30,000 people working for them, it is also bad for the small and medium sized businesses, the 3,000 businesses providing goods and services for them. It Is bad for future generations of Australians who would want to join Qantas and work for them. If we want everyone to have the best possible opportunity to get ahead, the champion businesses in Australia, the big businesses in Australia that are on the frontline of global competition, like Qantas, like BHP and others, we need to ensure that they can continue to succeed so that everybody else that works for them directly or provides goods and services to them has the best possible opportunity to succeed. 

KIERAN GILBERT: Because it is not just the investments that have been spent or the losses made, businesses are making investments today on a future trajectory.

MATHIAS CORMANN: Business pays tax on profit. Now various socialists and various misguided commentators are trying to fudge this proposition and they are trying to imply that businesses somehow should be paying tax on their turnover. Businesses do not pay tax on their turnover. They should not pay tax on their turnover. There is a very good policy rationale as to why you apply tax on profits. If we were to go down to the logical conclusion of some of these arguments, it would be disastrous for the Australian economy. 

KIERAN GILBERT: Just in relation to that turnover question, would you be willing to compromise again in terms of taking another incremental step here? You have done it to one point in terms of the businesses, medium sized business now. Would you nudge this up to say a $500 million turnover?

MATHIAS CORMANN: We want to and we need to pass this legislation in full…interrupted

KIERAN GILBERT: So no more incremental steps?

MATHIAS CORMANN: No and I will tell you why. Because since we had the initial three years of our ten year plan legislated last year, the need for our business tax cuts to 2026-27 incidentally, it is going to take another eight years before we get to the 25 per cent rate. But the need for the tax cuts has become more urgent and more important. Because since then, the US has reduced their tax rate to 21 per cent. Since then France has decided to reduce their tax rate from 33 per cent to 25 per cent. If we do not act now and if we do not give business certainty now about the pathway to a more competitive business tax rate now, we will be putting our economy and jobs at risk and quite frankly Bill Shorten should reflect on that. 

KIERAN GILBERT: Finally, as you go into these key negotiations over the next few days, what is your mindset? How do you approach it, given you have get a disparate range of individuals you have got to deal with? Some would say like herding cats.

MATHIAS CORMANN: My mindset is one of great respect for my Senate colleagues on the crossbench. All of them have been elected in their own right and they are absolutely entitled to put to me what is important to them. We will continue to engage in good faith and hopefully we will be able to reach a landing point in the national interest.

KIERAN GILBERT: Finance Minister, thanks for your time, as always appreciate. Talk to you soon.

Senator the Hon Mathias Cormann, Minister for Finance, Perth


Senator the Hon Mathias Cormann, Minister for Finance, Perth