Doorstop – Mural Hall

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






Business tax cuts, Labor’s tax grab backflip

QUESTION: Can you give us an update on the negotiations with Tim Storer and Derryn Hinch please?

MATHIAS CORMANN: At the beginning of this fortnight we had three non-Government Senators supporting our important business tax cuts, which are designed to ensure that working families across Australia have the best possible opportunity to get ahead, to get a job, to get a better job, to pursue a career, to secure better wages. As of now seven non-Government Senators have declared their support for our legislation. We need two more. We continue to talk to everyone who is prepared to talk to us. We are hopeful that we will be able to persuade the necessary nine non-Government Senators to support our legislation.

QUESTION: You say you are willing to talk to everyone, is there anyone that is not talking? Who is not coming to the negotiating table?

MATHIAS CORMANN: We are talking to everyone on the crossbench, as you would expect us to do. Those talks are continuing.

QUESTION: What is Tim Storer and Derryn Hinch holding out for? We have got a bit of an idea with what Derryn Hinch wants, but Tim Storer seems to be a lot more quiet about what he is demanding in exchange for his vote? 

MATHIAS CORMANN: I never talk on behalf of others. I can only talk on behalf of the Government and myself. I will leave it to my Senate colleagues to explain their position if and as they see fit it. 

QUESTION: Just confirming, you have been able to meet with Tim Storer, recently?

MATHIAS CORMANN: I have met with all crossbench Senators, including Senator Storer.

QUESTION: Now Pauline Hanson last night said that one of things that she has received assurances from is that the Government will offer income tax cuts in the May Budget and that was one of the reasons that she decided to support the company tax cuts. Is that the case? Will the Government be offering income tax cuts in the May Budget?

MATHIAS CORMANN: That is a matter of public record. The Prime Minister and the Treasurer, myself and others have indicated for some time that we would be pursuing income tax cuts in the Budget. That is not new.  

QUESTION: So there will be income tax cuts in the Budget. Hasn’t the Government been saying for the most part that you will only deliver income tax cuts if the Budget permits.

MATHIAS CORMANN: We have said for some time that we will be delivering income tax cuts in the Budget. The extent of those tax cuts is going to be based on what is affordable in the Budget. 

QUESTION: Could the Senate be forced to sit longer this week in order to get this through?

MATHIAS CORMANN: I am hoping that the Senate will support our business tax cuts in an efficient and timely fashion.

QUESTION: Can you assure Australians that if these tax cuts get through that they will see an increase in their wages?

MATHIAS CORMANN: What I can assure Australians is that if these tax cuts come through, we will ensure that businesses around Australia are in the best possible position to compete with businesses around the world who have the benefit of lower taxes. If we continue to put our businesses at a competitive disadvantage, business in Australia will be less successful, less profitable. Less successful and less profitable businesses will hire fewer Australians. As they hire fewer Australians, unemployment would go up and wages could go down. That is not what we want to happen. We want there to be stronger wages growth. The way to secure stronger wages growth is by making sure that businesses around Australia have the best possible opportunity to grow, to be more successful and more profitable into the future, because that means they will hire more Australians. As they hire more Australians the competition for workers around Australia increases. Increased competition for workers is the key driver of stronger wages growth. That is the reason why we are pursuing these business tax cuts. We do not want businesses around Australia to be disadvantaged compared to businesses in other parts of the world who have the benefit of lower taxes in their jurisdictions, because we know that if we make it harder for Australian business to compete, fewer Australians will have a job, fewer Australians will have the opportunity to pursue a career in Australia, fewer Australians would be able to secure well paid and better paid jobs. 

QUESTION: But you can’t provide any guarantee that wages will go up. There’s no direct guarantee, is there?

MATHIAS CORMANN: This is the market at work. The reason we are pursuing economic reform is to ensure that people in Australia have the best possible opportunity to get a job and get a better paid job. If your question is, is the Government running every single business in Australia, no we are not. It is just common sense that people do not expect the Government to run every private sector business in Australia. We want the private sector businesses of Australia who employ nine out of ten working Australians to have the best possible opportunity to be successful and more profitable into the future. Because we know that more successful more profitable businesses will invest in their future growth and expansion. As they invest in their future growth and expansion they will hire more Australians than they otherwise would. As they hire more Australians than they otherwise would, competition for workers increases. That is what has happened in the last twelve months. More than 420,000 new jobs were created over the last twelve months. In 2017 ... interrupted

QUESTION: But wage growth hasn’t gone up in that time.

MATHIAS CORMANN: You are quite wrong. You are quite wrong. Wages growth has gone up. I would encourage you to look at the data. Not only has there been wages growth, wages growth has actually strengthened. We want it to strengthen by more. What has happened over the 2017 calendar year is employment growth of 3.3 per cent. That compares to a forecast of employment growth in the 2016-17 Budget of one per cent and actual performance in 2016-17 of 1.9 per cent. 3.3 per cent employment growth in 2017 is very strong performance indeed. As the excess supply in the labour market reduces and competition for workers increases, that is what drives up wages. That is precisely what drives up wages. If we were to just prescribe increases in wages by a Government determination without helping business be more successful and more profitable into the future, increasing the cost of doing business would actually lead to increased unemployment. The fundamental laws of the market have not stopped operating just because the Labor party has made an opportunistic political decision to oppose business tax cuts, which only recently they were calling for. 

QUESTION: Senator it seems the Business Council of Australia’s members disagree with you though because only 20 per cent of them or so are saying that they will pass this on to a wage increase.

MATHIAS CORMANN: That is a misrepresentation of what it says. In any event … interrupted

QUESTION: Can you explain you explain the reasoning? 

MATHIAS CORMANN: It actually does not matter what intuitively somebody wants to do, what matters is what they have to do. This is the whole point. Businesses will want to maximise their profits, but if businesses have to hire people, they will have to pay what the market needs them to pay. If there is increased competition for workers, business will have to pay more to secure the services of those workers. That is the way the market works. 

QUESTION: Senator, just very quickly, Labor it appears is going to change part of its tax imputation policy this morning. Suppose low income retirees 200,000, 300,000 will not be affected by the policy. Your response? 

MATHIAS CORMANN: Bill Shorten either does not understand what he is doing or he is lying to the Australian people. He is saying that every pensioner will be exempted from his tax attack now through his changes of the dividend imputation policy. That is not true. If you look at not even the fine print of the policy, if you look at page three of the document he released yesterday, it says there in black and white with emphasis that if you are self-managed super fund with at least one pensioner in that self-managed super fund before 28 March 2018, then you will be exempt. Which clearly spells out for everyone that if you are self-managed super fund with at least one pensioner after 29 March, you will be hit. If you are a self-managed super fund with at least one pensioner coming into the pension phase as of Thursday, Labor will come after you and will try to pursue you for your savings. They will pursue you for your tax attack. What Bill Shorten is saying again is not what he is doing. With Bill Shorten, never look at what he says, look at what he is doing.

QUESTION: Taking you back a little bit, have you explicitly linked a decrease in income tax to the company tax cuts in your discussions with the Senators? 

MATHIAS CORMANN: It is a matter of public record for some time now that we intend to pursue personal income tax cuts in the Budget. That is not a new development.

QUESTION: But the question is, have you been saying to them we can only do that if we pass the company tax cuts? 

MATHIAS CORMANN: It is a matter of public record for some time that we will be pursing personal income tax cuts in the Budget.

QUESTION: You still haven’t answered my question Senator.

MATHIAS CORMANN: If you want me to talk about private conversations, I am not talking about private conversations. There is no such explicit link. Let me tell you again we have been on the record for some time, this is not news, that in the Budget we will be pursing personal income tax cuts.

Thank you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth