Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Monday, 23 April 2018
MIRANDA DEVINE: The Banking Royal Commission is filling our media the last few days and it has not been a great look for the banks. So here to talk to us about it from Berlin is the Finance Minister Mathias Cormann. Good afternoon.
MATHIAS CORMANN: Good afternoon.
MIRANDA DEVINE: Now what are you doing in Berlin?
MATHIAS CORMANN: I am in Berlin with the Prime Minister promoting the conclusion of a European-Australia free trade agreement. We are having a meeting with Chancellor Merkel tonight. We are very keen to negotiate a free trade agreement with the European Union so that we can get better access for Australian exporting businesses to the European market.
MIRANDA DEVINE: So that is very good news isn’t it. You will then be going off to France for the opening for the Sir John Monash Centre?
MATHIAS CORMANN: The Prime Minister will be. I will be travelling back to Perth. I have been on the road … interrupted
MIRANDA DEVINE: You missed out.
MATHIAS CORMANN: That is it.
MIRANDA DEVINE: Now look the Banking Royal Commission of course has been all the news since you have been gone and I will ask you the same question that Kelly O’Dwyer was asked and I know the Prime Minister was. Was it a mistake to resist this Royal Commission?
MATHIAS CORMANN: We were motivated by doing the right thing. This is a matter of public record. Being entirely candid about it, we were sincerely of the view that there had been enough inquiries and that it was time for action. With the benefit of hindsight, given what has emerged in the Royal Commission so far, which we called by us with a Commissioner we selected and appointed, clearly there have been some very concerning revelations coming out of this process so far. So with the benefit of hindsight, yes sure, people can make those comments and run that sort of commentary. With the benefit of hindsight, we probably should have gone there earlier.
MIRANDA DEVINE: With all the bad publicity do you think the company tax, you might as well just forget about it, it is not going to make it?
MATHIAS CORMANN: No. It is incredibly important for workers across Australia that the business tax cuts pass the Senate in full. Nine out of ten working Australians work in a private sector business. Right now, because Australia has one of the highest business tax rates in the world, with countries around the world lowering their business tax rates, we are putting our businesses at a serious competitive disadvantage. We are making it harder for our businesses to compete with businesses from other parts of the world. The people that will hurt most if we do not address this will be working families around Australia, who depend for their future job security, for their future job opportunities, for their future wage increases on the future success and profitability of the businesses that employ them. What is happening with the banks and all of the revelations coming out of the Royal Commission, they will have to be addressed. Any wrongdoing will have to be addressed. Compensation will have to be provided wherever there has been clear wrongdoing, where victims ought to be compensated. We have to keep discussion on the appropriate tax policy settings quite separate. Business tax cuts is not about giving a benefit to business. Business tax cuts is about making sure that our economy stays strong, about making sure that we can continue to successfully compete with countries in other parts of the world and that we can continue to protect investment and jobs in Australia and create more new jobs and drive stronger wages growth into the future.
MIRANDA DEVINE: It makes sense. But politically it is a very tough sell when Bill Shorten is using this Royal Commission to characterise your Government, run that narrative that he loves, portraying you, particularly Malcolm Turnbull as an out of touch elitist banker, just helping out the big end of town. Wouldn’t it be better to use that money on personal income tax cuts?
MATHIAS CORMANN: Politically it is a tough sell, but that does not make it any less necessary. The truth is, if we continue to put Australian businesses at a disadvantage compared to businesses in other parts of the world, people in Australia will lose their jobs. People in Australia will end up with lower wages than they otherwise would. This is all about protecting jobs, providing the opportunity to create more new jobs and making sure that people across Australia can secure higher wage increases. If we make it harder for business to be successful, Bill Shorten runs on an anti-business, anti-investment, anti-jobs agenda. If we make it harder for business to be successful and profitable, there will be fewer jobs and higher unemployment. As there is higher unemployment, people will end up getting lower wages. It is as simple as that. Now the politics are easy for Bill Shorten, that is quite right. Over time good policy is good politics. We are standing up for what we believe to be right.
MIRANDA DEVINE: So Bill Shorten is pushing for an extension of the Royal Commission which would push it further into the election cycle. Would you agree to that?
MATHIAS CORMANN: This is not a matter for political decision-making. We are on the public record, I am on the public record, I have previously indicated if the Royal Commissioner, if Justice Hayne comes to the Government and provides advice that he needs more time, then of course we would act on that. We are really in his hands. He is in the best placed to make a judgement on how much more time he needs or if he needs additional time and we will be acting on his advice.
MIRANDA DEVINE: So have you formed any view of what went wrong. ASIC seems to have really dropped the ball. We have got Tony Abbott today saying that ASIC should be sacked, people at ASIC should be sacked. What sort of action, is that too extreme?
MATHIAS CORMANN: In the last few years, the Government has been giving additional powers and resources to ASIC and certainly our focus has been on giving the regulator more powers and more resources. As it turns out, clearly there are issues that are now emerging out of the Royal Commission process. I think it is important for us to let the Royal Commission do its work before we jump to responses. I do not think it would be useful for us to provide a running commentary on a daily basis with initiatives in response to the latest revelation out of the Royal Commission. I think we need to let the Royal Commission do its work, consider all of the information, all of the evidence. Some of it will be contested. Ultimately the Royal Commission will form a view. They will present some findings and make some recommendations to the Government, which the Government will then consider and act on as appropriate. I think we have to make sure that we do conduct this process in an orderly way from here.
MIRANDA DEVINE: But politically how do you limit the damage to your reputation. How do you stop Bill Shorten being able to cement that narrative that you just are there for the big end of town because the bank’s Royal Commission just sort of re-enforces that every day.
MATHIAS CORMANN: I do not agree. Bill Shorten will say what he says and whatever. When you pare it all down, our focus is on pursuing an economic policy agenda that helps families get ahead. We want families around Australia to have the best possible opportunity to get ahead. That is why we want more investment, stronger growth, more jobs. As more jobs are created and unemployment lowers and there is more competition for workers, wages will rise. Now the alternative, which is Bill Shorten’s agenda is one of higher taxes, higher energy prices, less trade. Over time that will lead to lower growth, less investment, fewer jobs, higher unemployment and lower wages. We will continue to pursue the argument. He is quite dishonest in relation to a lot of the things that he says. He talks about a $65 billion giveaway to the big end of town when it comes to company tax cuts. He knows that $30 billion of that, which has already been legislated is going to small and medium sized businesses. He knows that, yet he continues to talk about it as if the $65 billion is all going to the banks, which is entirely dishonest and untrue. The truth is, that under our ten year enterprise tax plan, none of the major banks would get a business tax cut at all for another five years. They would only get the full benefit of the business tax cuts under our plan in eight years. This proposition that somehow the banks are major beneficiaries is false. Over the next Budget forward estimates period, they will not get any tax cuts at all. He is being quite dishonest in relation to all these matters.
MIRANDA DEVINE: So have you been surprised by some of the human stories from the victims that have come out in this Royal Commission?
MATHIAS CORMANN: There have been a whole series of inquiries in the past, including a very comprehensive Senate inquiry, which gave a lot of people opportunity to present their stories. What I have been surprised in more recent times are the revelations of what some of the organisations did. I have to say, that has taken me by surprise …interrupted
MIRANDA DEVINE: Outright lies, yeah.
MATHIAS CORMANN: I would not have thought that some of the things that have emerged would be possible at the senior levels of corporate Australia. There is a process underway. Some of the allegations are contested. I think we have to let the process take its course and for the Royal Commissioner to ultimately form a judgement on what is what.
MIRANDA DEVINE: And what about another thing that Bill Shorten is pushing for is compensation for victims immediately.
MATHIAS CORMANN: This is not something that Bill Shorten is pushing for. The truth is, any victim that has been on the receiving end of any wrongdoing must be compensated. The Government has put in place, this has been one of the actions that we have pursued. We have established a one-stop shop, financial complaints authority, which will help facilitate swift and efficient resolution of any relevant complaints. This is not a matter of Bill Shorten pushing for anything. This is a matter of making sure that people get what is rightfully theirs. If there is wrongdoing, if somebody has been wronged by the banks, then of course there ought to be appropriate compensation to compensate for any such wrongdoing.
MIRANDA DEVINE: Now last week, you would have seen that Scott Morrison, the Treasurer was portrayed as Santa Claus by Michael McCormack who was then Acting Prime Minister, the Nationals Leader. Then he of course said no he was not going to be Santa Claus giving away freebies in the Budget and so we portrayed on him the front page as bad Santa. You are sort of sitting outside that a little bit. You are the Finance Minister though and I know you do a lot of work going up to the budget. Are you going to be bad Santa or good Santa?
MATHIAS CORMANN: Neither. We are going to be focused on making the right decisions to put Australia on the strongest possible economic and fiscal foundation and trajectory for the future. We are focused on making sure that families around Australia have the best possible opportunity to get ahead. That people can get a job, a good job, a better job, build a career in Australia, get better pay. We are focused on making sure that we can fund all of the essential services that Australians expect in health, welfare and so on as well as making sure that we have all of the necessary investment going into our national security. We are making judgments on what needs to be done to put Australia on the strongest possible foundation and trajectory for the future. That is what we do in the lead up to every Budget. That is what we are doing on this occasion.
MIRANDA DEVINE: And will the personal income tax cuts be significant, will they be more than a milkshake’s worth?
MATHIAS CORMANN: I will leave it to the commentators to assess what they think, what their characterisation is after we have announced them. Relevant announcements will be made on the second Tuesday in May by the Treasurer.
MIRANDA DEVINE: But we haven’t really had any proper income tax cuts or significant ones since the Howard and Costello days. So can people be looking forward to a bit more economic sunshine coming up?
MATHIAS CORMANN: We did cut income tax for middle-income earners in a recent Budget. You are right, this time round as the Prime Minister said, we are looking at personal income tax cuts as a significant feature of the Budget. The detail will be in the Budget. How people want to characterise them once they see what the detail is going to be a matter for them.
MIRANDA DEVINE: And you are getting the Budget back into a situation where we can get into surplus at some foreseeable future?
MATHIAS CORMANN: Consistently now, since the half yearly Budget update in December 2015, consistently now, ever since, we have projected a return to surplus by 2020-21. That has been the case in the most recent half yearly Budget update in December 2017. There will be an update in the Budget on the second Tuesday in May. If you look at the monthly financial data, which I release on a regular basis, you will be able to see that our Budget position has been improving on the back of both stronger revenue and lower expenditure. The Government having inherited a position where the Budget bottom line was deteriorating at a rapid rate by $33 billion in the 11 weeks between Labor’s last Budget and the pre-election economic and fiscal outlook before the 2013 election, we are now in a position where we are on a credible path back to surplus.
MIRANDA DEVINE: And do you think that might be reflected in the slightly better Newspoll standing today, 49-51 two party preferred, that is not a bad position to be in this far out from an election.
MATHIAS CORMANN: We are not going to get ahead of ourselves. I would just observe as I have in the past that in between elections it is not unusual for incumbent governments to be behind in the polls. Our focus is on dong the best job we can so we can go to the next election with a strong record of achievement as well as our plan for the future and our explanation why it is not in Australia’s interest to take a risk on the alternative, which is Bill Shorten. Because Bill Shorten will deliver higher taxes, more red tape, higher energy prices, less trade and ultimately that would lead to less growth, less investment and indeed fewer jobs and lower wages. That is not what Australia needs.
MIRANDA DEVINE: We have a question from a listener Josh, he says ‘please ask why doesn’t Australia get out of the nation destroying Paris climate scam as it achieves nothing but hardships on average citizens, the taxpayer and business and when will the Government reduce migrations’. That is two questions really.
MATHIAS CORMANN: The first answer is, we have to ensure that we can have enough investment into energy generation and supply so that we can bring electricity prices down. Unless we have an energy policy framework, linked to our climate policy framework that has the confidence of investors, we will continue to have a problem moving forward. That is really what we are trying to achieve. We have locked into very sensible emissions reduction targets in Paris. Incidentally the decision to lock into those emissions reduction targets was made during the period of the Abbott Government. I was a Minister in the Abbott Government when we decided on the targets that we would agree to and these are the targets that we signed on to when it was formalised in the relevant Paris meeting. When it comes to immigration levels, well immigration levels are really a function of what the needs are in the economy. When it comes to temporary migration, the strongest growth in temporary migration has been students and tourists and both of them generate money for us. International education is now our third largest export earner after iron ore and coal. Tourism is an important part of our economic growth story, diversifying out economy. When it comes to permanent migration, it is less than what it has been in the past, but it is a matter of making sure that we attract the right type of migrant with the right attitude and the capacity to contribute to making our country an even better country into the future.
MIRANDA DEVINE: Some one just like you Minister, I might say.
MATHIAS CORMANN: Thank you that is very generous.
MIRANDA DEVINE: Where are you having dinner with Angela Merkel tonight?
MATHIAS CORMANN: At her office.
MIRANDA DEVINE: In the middle of Berlin?
MATHIAS CORMANN: In Berlin, yeah.
MIRANDA DEVINE: Well good luck and thank you for your time. I know it is very early in the morning for you so we appreciate you getting up for us.
MATHIAS CORMANN: No worries, thank you Miranda.