Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
ALAN JONES: Senator Mathias Cormann is on the line, but before I go to him, let me just say this, this is where people lose faith absolutely in politics and they just say, look it is useless, it is a waste of time, the system is broken. Mathias Cormann has worked his butt off on this company tax stuff, I would not have a clue how many hours. Day in, day out, hour after hour after hour and let us put it bluntly, he has failed. Why has he failed? Well there is a bloke from South Australia who has been in the Parliament for five minutes, I mean five minutes, I think he was sworn in last week. He got 189 votes at the last election. Population of this country heading towards 23 million, I think it might be 24 million. He got 189 votes, but he is holding out and he wants something from Mathias Cormann, so that he will have hairs on his chest when he goes back to South Australia. The whole of the country, the whole of the corporate world, employment, income, incentive, all held to ransom and Mathias Cormann, well he is not the kind of bloke to put his tail between his legs, but he will not express because he is a gentleman and I am not, he will not express the frustration. It is off the books now, he will have to start again in May.
Mathias Cormann good morning.
MATHIAS CORMANN: Good Morning Alan. Good morning to your listeners.
ALAN JONES: Thank you for your time, you still sound enthusiastic. Goodness me, well you failed, you know what I mean? These people out here they have got their hands out.
MATHIAS CORMANN: I do not think that we failed at all. We made a lot of progress these last two weeks. At the beginning of the fortnight 33 Senators were supporting our very important plan to reduce our business tax rate so that we can create more jobs and drive stronger wages growth. At the end of the fortnight we got to 37. People never thought that we would get this far. We have still got two Senators we need to convince…interrupted
ALAN JONES: It is not democracy though is it? That is what people are saying Mathias. It is not democracy when a bloke who has been there for five minutes with a 189 votes is telling you, this is what I want. I hope you are not going to yield to this bloke.
MATHIAS CORMANN: It is democracy, because Senator Storer was elected under our system and the High Court has determined that as a result of… interrupted
ALAN JONES: He was not really elected was he?
MATHIAS CORMANN: The former Senator Kakoschke-Moore was not eligible to stand and as such he was the next one…interrupted
ALAN JONES: In the line.
MATHIAS CORMANN: Yeah, sure. We have to respect our Constitution. In a democracy it is very important that we all abide by the rules and respect the rules that are underpinning our democracy and I absolutely respect that Senator Storer is… interrupted
ALAN JONES: I know what you are saying and you have to say that. Everyone says oh, didn’t John Key do a wonderful job in New Zealand and the economic growth was fantastic, dah, dah, dah. But John Key did not have the Upper House, basically they made decisions as a Government and if people did not like the decisions they voted him out. Now that should happen here. You are elected, this is what you elected to do, do something about company tax, if they do not like it, they can vote you out. But you cannot even get the things that you are elected on through the Parliament because of our system.
MATHIAS CORMANN: As the one who on behalf of the Government is putting forward what we believe is very important economic reform, I wish that every Senator would just spontaneously embrace our policy proposals. But our founding fathers, the way they set up the system with checks and balances, including the Senate, on Government power, we have to work harder to convince people, including on the crossbench, if that is the way the cookie crumbles… interrupted
ALAN JONES: But you can only convince them with money, see they want money. That is the point, it is borrowed money. Now Hinch wants, he is positioning himself to get re-elected so he is going to do something for pensioners, as if you aren’t and he is going to do something for housing, as if you aren’t. You are doing your best to do something about making housing more affordable. He wants to quote “help people put a roof over their head”, in other words Mathias Cormann does not. So what I have got to say to Mathias Cormann, I have got to give him a bit of a lesson here and I need a bit of money. I mean it is just ridiculous, seriously.
MATHIAS CORMANN: In terms of the 37 Senators that are supporting our business tax cuts so far, including the four additional on the crossbench that we have secured this past fortnight, I am very comfortable with the basis on which… interrupted
ALAN JONES: Will they hold by May?
MATHIAS CORMANN: All of the indications that I have from all of them is that yes, they have been persuaded and on the basis of the discussions that we have had and the agreements that we have reached, we have secured a consensus with seven Senators on the crossbench in support of our company tax cuts. We will keep working, I am hopeful that we will be able to persuade another two in order to get there in time for the next sitting week in May.
ALAN JONES: But see I have a difficulty with getting the Gonski proposals through because to get them through the Senate you had to give $5 billion to the Greens and I just think that is absolutely over the top. What deal did you have to do with One Nation to get them on side?
MATHIAS CORMANN: In relation to One Nation, it is a matter of public record that we agreed to run a pilot for about a thousand apprentices with a wage subsidy from the Government to see whether that is a better way to encourage and to facilitate more successful apprenticeships around Australia, with a particular focus on rural and regional Australia. There are a few other things that will be discussed if the legislation can progress further and that is a matter that will play out in the next few weeks.
ALAN JONES: Just turn the coin over a bit here because the business about $65 billion going to the big end of town and so on, which is the Labor Party campaign and they are going to prosecute….interrupted
MATHIAS CORMANN: That is a lie.
ALAN JONES: Yes quite. But I am saying they are prosecuting that and it is a very difficult case out there in the public place to win and you are struggling to win it. Have a look at the polls, I mean Shorten is a mile in front and so on. I am turning the page over here, I was looking at Treasury modelling last night which was arguing that the cut in company tax and I am sure this has been presented to you as well, would only cause the level of real GDP to be one per cent higher than it otherwise would be in the long term and that after tax, wages would only be 0.4 of a per cent higher. Now that is the counter position. I think Malcolm Turnbull has made a mistake here by saying that a company tax reduction will automatically flow to higher wages, that is a politically risky thing to say. How can you explain to the public that there will be a significant wage benefit as a result of the company tax reduction or will that just go into profits?
MATHIAS CORMANN: There are two aspects to this and they are both very, very important. Firstly, if we make sure that our businesses can be more successful and more profitable into the future, there will be more investment into their future growth and expansion. As there is more investment, they will hire more people than they otherwise would. As more businesses are more profitable and hire more Australians, there is more competition for workers in the Australian economy. As there is more competition, business will have to pay more to secure their services. That is the way wages growth has been driven sustainably in the economy forever and ever. This is absolute economic orthodoxy… interrupted
ALAN JONES: You cannot have a profitable employee without a profitable employer, that is the biggest issue.
MATHIAS CORMANN: But there is a second side to this. People focus on ‘well how much additional growth is this going to give us’ and one per cent additional growth in GDP is quite sizable. But as important, if not more important, if we do not do this and if we continue to put our businesses at a competitive disadvantage, if you force them to compete with businesses in other parts of the world who have the benefit of lower business taxes, we will lose investment, we will lose growth, we will lose jobs. So it is not just looking at what we might be able to get on the upside, it is also making sure that we protect ourselves from the downside, which is real. The downside risk is real if we do not do it.
ALAN JONES: Now if I could just say to my listeners over Senator Cormann, that is a very, very powerful point and I do not think Australians understand the gravity of that point that has just been made. We have the highest company tax rate out of the 33 OECD countries, the highest, 30 per cent. The United States, Britain and France are cutting their company tax rate, so what Mathias Cormann has said, the companies will go where they can get a better return on their money. That has a massive impact on employment, on revenue and all the rest of it. So look, do you think, you will start all again in May do you?
MATHIAS CORMANN: Over the last few months, it is a matter of public record, that I spent a lot of time talking to Pauline Hanson and let me tell you it was a very positive and constructive process. Pauline Hanson engaged with us, she listened, she allowed herself to be persuaded and she put a few issues on the table that were important to her and we were able to reach a consensus. Now, six weeks ago nobody thought that was possible. We will never give up. We believe this is important for Australia. We believe that it is important for working families across Australia that we get this up. The Labor Party actually knows this. Chris Bowen as late as September 2015 used to say that the Labor Party accepts that a higher company tax rate hurts workers the most, falls most heavily on workers not on wealthy shareholders. They know that the right thing to do is to lower the business tax rate in Australia to ensure that our businesses can be globally competitive. This is something that we directly control. There are always a whole range of factors that people take into account when making investment decisions, but the tax rate is very visible and it is something that we directly control.
ALAN JONES: Absolutely. Has your attention been drawn, I mean you are the Finance Minister, this banking Royal Commission, from the point of view of my correspondence, has caused tremendous anxiety that Westpac, it has been established last week, signed off on car loans on the basis of information provided by the people who were selling the cars. Westpac treated that information as gospel and the Commission was told that Westpac does not check the income of its borrowers. Then you have got NAB with this introducers program, so someone who is not employed by the bank is an interface between the bank and the potential borrower. The Royal Commission heard that this program was characterise by inappropriate loans, false documents, fake signatures, over the counter cash bribes in white envelopes and in return you get the loan based on fake documents. Should there be legal proceedings against people who behave in the finance world like this?
MATHIAS CORMANN: It is very difficult for me to make a generic comment in relation to specific issues that have arisen. If somebody has broken the law then yes there should be appropriate action taken of course, always. The Royal Commission is underway. They are assessing…interrupted
ALAN JONES: They are disturbing conclusions though.
MATHIAS CORMANN: On the face of it, they are very disturbing, but all of these things need to be tested. The Royal Commission will determine what is what and there will be findings and recommendations at the end of it.
ALAN JONES: I have got very significant problems as you know about foreign ownership as opposed to foreign investment. I am very much in favour of foreign investment, but ownership of agricultural land, our water, our dairy farms, our beef farms and all the rest of it. I have a view that our superannuation money should be going into that not foreign money, because if you do not own the place, it does not really matter much who runs it. But Scott Morison is the Treasurer, you are the Finance Minister, he is on record as saying that electricity assets are “critical national assets” and yet the Government seems to be saying this week that they would not have a problem with the Chinese buying the Liddell Power Station. How do you square this up, do you actually think that foreign entities should own “critical national assets”?
MATHIAS CORMANN: Whenever the national interest is at stake, there is a process through the Foreign Investment Review Board where various investment proposals are scrutinised to ensure they are not contrary to the national interest. Again, it is very difficult to make a blanket statement that would apply across the board. You have really got to consider these things on a case by case basis. The most sensitive the asset, the more stringent the… interrupted
ALAN JONES: Would energy and electricity, which affects everything, be sensitive?
MATHIAS CORMANN: They can be, of course… interrupted
ALAN JONES: Can be or are Mathias?
MATHIAS CORMANN: It depends, there are various screening thresholds that apply in relation to agricultural land, in relation to media, in relation to various other assets. These decisions are made as a consequence of the assessment process that is done in the Treasurer’s portfolio.
ALAN JONES: But what I am concerned about is that the Government seems to be making a statement this week that they did not have a problem about Chinese interests buying Liddell Power Station, yet earlier this year, the Foreign Investment Review Board were given new powers, security powers, to investigate proposed sales of Australian electricity assets to foreigners. I am just wondering whether the Government has forgotten its own legislation. Why then if it is given these new security powers wouldn’t you simply say, we cannot answer this, it has got to go to the Foreign Investment Review Board first.
MATHIAS CORMANN: Any relevant proposal for foreign investment that triggers national interest considerations does get considered by the Foreign Investment Review Board to ensure it is not contrary to the national interest. You are asking me to make a blanket generic statement without having gone through a process of assessment, I am not in a position to do that.
ALAN JONES: Industrial relations, we are running out of time, this is very disturbing to the corporate world that the merger of CFMEU, the Maritime Union and the Textile, Clothing and Footwear Union, approved by the Fair Work Commission on March 6. Julia Gillard took out of the legislation the public interest test. Your Government was trying to reinstate it. The Minister did not even present the legislation for a Senate vote. Wouldn’t politically, the right thing to do, would be to present it, I said this to you last time, Present it for a vote, let these vandals vote against it and you have got a powerful political tool to belt the Opposition with. But you do not even give the Senate the chance to vote.
MATHIAS CORMANN: Well Alan, that sounds all very straight forward but something like this… interrupted
ALAN JONES: It is.
MATHIAS CORMANN: No, it is not actually that straightforward. Let me explain it to you. We could have put that to the Senate and we would have spent two weeks arguing just about that and at the end of it would not have gotten anywhere because the numbers were not there for it… interrupted
ALAN JONES: Let them vote against it.
MATHIAS CORMANN: Let me finish. We would not have been able to pass $370 million worth of welfare savings. We would not have been able to pass other things. Essentially we would not have done anything other than having a conversation about something… interrupted
ALAN JONES: Than guillotine the debate and take a vote. Guillotine the debate and take a vote.
MATHIAS CORMANN: The Government does not have the numbers in the Senate to... interrupted
ALAN JONES: I know.
MATHIAS CORMANN: ...So we cannot guillotine the debate. That is the point.
ALAN JONES: Okay, then you tell them, we tried to put it to the vote and they would not allow it and you have got a political, look we have got to go as we always do. We will see you next Thursday. In the meantime, have a happy Easter.
MATHIAS CORMANN: Same to you. Looking forward to it.