Sky News – Speers

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






Royal Commission into financial services, business tax cuts, Australia-Germany relationship, EU FTA

DAVID SPEERS: Well for more on this and the Prime Minister’s visit here in Berlin, I am joined now by the Finance Minister Mathias Cormann, the Government’s best German speaker. We will do this in English though if that is alright. Great to see you in Berlin. 

MATHIAS CORMANN: Good to be here.

DAVID SPEERS: We will get to all things in terms of the relationship with Germany in a moment. But just on the Banking Royal Commission, do the banks given what we have found out over the course of this inquiry so far, do they still deserve a company tax cut? 

MATHIAS CORMANN: It is not a matter of what they deserve. To the extent that the banks have done wrongdoing, it has got to be fixed. They have got to compensate any victims. Of course there will be a policy response in response to any findings and recommendations out of the Royal Commission. The banks under our Government are now paying a major bank levy. Under our ten year enterprise tax plan they will not get any tax cut for another five years. The full tax cuts will not apply to the banks for eight years. When it is all said and done and when the work of the Royal Commission is done and all of the recommendations have been appropriately addressed, Australia still needs strong and profitable and stable banks. It is still in our national interest for us to have strong banks underpinning future growth in our economy. 

DAVID SPEERS: And no doubt about that, but do you understand a lot of people looking at this are appalled by the banks behaviour and say well why should we give them a tax cut?

MATHIAS CORMANN: I understand why people are appalled by the banks behaviour, but we are not going to have a corporate tax rate that applies to different sectors of the economy in different ways. That would be very bad economic policy … interrupted

DAVID SPEERS: You rule it out, you are not going to…

MATHIAS CORMANN: We have been very clear about this. As far as we are concerned Australia absolutely needs to lower our corporate tax rate for all businesses to 25 per cent, to ensure it is globally more competitive. If we do not do so, our economy will be harmed, we will lose investment and jobs to other parts of the world. As we lose jobs to other parts of the world, unemployment will rise and wages will be lower than they otherwise would be. We absolutely must …interrupted

DAVID SPEERS: Derryn Hinch seems to be pretty adamant they should not get the tax cut. Have you spoken to him about it?

MATHIAS CORMANN: I speak to all of my Senate colleagues on the crossbench on a regular basis. These conversations are continuing. But I will not be conducting them through the media …interrupted

DAVID SPEERS: But you are not budging on that in principle? 

MATHIAS CORMANN: Our opposition on this has been clear. We believe it is absolutely imperative for Australia’s future economic prosperity, for the future job opportunities for nine out of ten working Australians working in a private sector business that we pass our tax cuts in full. If we do not do so, businesses in Australia will be seriously disadvantaged compared to businesses in other parts of the world. There will be workers around Australia who will pay the price with fewer jobs and lower wages if we do not pass our tax cuts. 

DAVID SPEERS: Sure, but again, it comes back to the point the banks have ripped off people, they have charged them for services they did not get, they have charged fees to dead people, they have misled the corporate regulator.

MATHIAS CORMANN: Firstly, you cannot make a blanket statement across the board. The Royal Commission is working through what is what and who has done what. To the extent there has been wrongdoing then people have to have the book thrown at them. But you have to keep that separate from the appropriate tax policy setting for a country. From time to time there are businesses in other industries that might do the wrong thing. Wherever anybody has broken the law you go after them. That is necessary and appropriate. But you do not then increase the tax burden on a whole sector because some businesses in that sector are doing the wrong thing. 

DAVID SPEERS: Just on what we have seen come out of the Royal Commission, has it surprised you?

MATHIAS CORMANN: I have to say I have been surprised. I have to admit some of the revelations in recent times, I have been surprised. 

DAVID SPEERS: What surprised you?

MATHIAS CORMANN: I would not have expected that some of the things, they are still being tested and they are still being pursued, so I will be circumspect with my commentary, but I have been surprised by the extent, by some of the revelations that have come out. 

DAVID SPEERS: Were you wrong then for your part to say that this Royal Commission would not lead to any public interest benefit at all? 

MATHIAS CORMANN: My public statements are on the public record. We as a Government made judgments based on information in front of us. We believed, genuinely believed that there had been enough inquiries, that it was time for action, that we needed to ensure that clients of the banks and other financial …interrupted

DAVID SPEERS: In hindsight though, given you have been surprised.

MATHIAS CORMANN: That is what I am saying. With the benefit of hindsight, clearly there is a benefit from the inquiry that is taking place. We have put it in place …interrupted

DAVID SPEERS: You were wrong to resist it? 

MATHIAS CORMANN: I know why you are asking me the question …interrupted

DAVID SPEERS: Well these people expect politicians now and then to at least say I was wrong. 

MATHIAS CORMANN: We have already made that very clear. With the benefit of hindsight of course we should have …interrupted

DAVID SPEERS: With respect, no you have not. 

MATHIAS CORMANN: With the benefit of hindsight we should have gone earlier for this inquiry. I am just explaining to you quite candidly that we were motivated absolutely by doing the right thing, by forming the view, which is a matter of public record that it was time for action rather than for more inquiries. As it turns out, this inquiry has come up with some significant revelations already …interrupted

DAVID SPEERS: And this is an important point that you just made.

MATHIAS CORMANN: I would just like to make the point, it is the Government that called the inquiry in the end. We set up the terms of reference, broader than what Labor and the Greens suggested. We chose the Royal Commission Justice Hayne, who is by all accounts doing an outstanding job.

DAVID SPEERS: But what you have said is substantial. The Prime Minister has argued that you would have been politically better off to go early. You have just acknowledged you should have done it earlier. 

MATHIAS CORMANN: With the benefit of hindsight. Again, what I am saying is and this is a very genuine comment. The Government very carefully considered this over an extended period. We were genuinely of the view that it was time for action rather than for more inquiries. As it turns out, this inquiry is having an impact. Let’s let the inquiry do its job. 

DAVID SPEERS: Tony Abbott said that the regulator should be sacked and replaced. Do you have any sympathy with that? 

MATHIAS CORMANN: There is going to be lots of calls now for us to do this and that. My view is that we should let the Royal Commission do its work. The Royal Commission is going to assess all of the information, all of the evidence and some of the information and some of the evidence will be contested. At the end of it, it will make recommendations. The Government will wait for the recommendations from the Royal Commission. We will make considered judgements at the end of the process rather than to now provide a running response to things as they emerge. 

DAVID SPEERS: Let’s turn to the reason for this visit to Germany. The Prime Minister is giving a speech today on the trade front. He is meeting Angela Merkel, you will be there for both of those. Why is this relationship so important right now? 

MATHIAS CORMANN: The European Union is a very significant market. The European Union as a bloc is one of our biggest trading partners. It is one of biggest sources for foreign investment into Australia …interrupted

DAVID SPEERS: It is the second biggest.

MATHIAS CORMANN: Indeed. With the United Kingdom leaving the European Union, it is incredibly important that we have good friends on the continent. Germany and France are two particularly important friends. That is why the Prime Minister and the Government as a whole, we have invested a lot of effort into these relationships.

DAVID SPEERS: It is, securing a free trade deal and the Prime Minister is obviously very keen for this and keen he says to get it done as soon as possible. You would know this well though, it is not easy with Europe given there is a lot of farm tariffs that some countries want to keep in place. There are also names like fetta, parmesan, prosecco that they want stop others using. Is this going to be harder than it sounds? 

MATHIAS CORMANN: We have gone through the pre-negotiation exercise faster than had been anticipated. We are very keen now to get into the negotiations proper as soon as possible and these are all matters that will be canvassed through that process. Canada has been able to secure a free trade agreement with the European Union. We believe that that is certainly a very good starting point for a free trade agreement with Australia. There is a lot of work to be done, but ultimately we believe it is in the interest of exporting businesses in Australia to get better access to the European market. It is in the interest of Australia consumers to get cheaper access to European products that are of value in Australia. 

DAVID SPEERS: And is it not just on the trade front, but strategically, given Russia’s rogue behaviour lately on a few fronts. It is strategically important for Australia to build stronger ties here? 

MATHIAS CORMANN: Australia and Germany and Australia and Europe more generally, we have got shared values and common interests. There certainly is scope for us to do more together with each other and more together into our respective regions. I believe that Australia and Germany together and Australia and Germany into Asia and Australia and Germany into Europe can do much more together. Certainly strategically that brings benefits as well. Bringing Europe and Asia closer together in the context of all of the geo-political dynamics that are currently playing out, having people with shared values and interests talking to each other more often is a good thing. 

DAVID SPEERS: Finally, we are on the other side of the world, but the opinion poll, I am sure you have seen the numbers. Are you happier to be where you are? 

MATHIAS CORMANN: We just keep working. The election is in the first half of next year. By then we will seek to convince the majority of people in a majority of seats that our plan for the future is better than the alternative and that is what we are focused on. 

DAVID SPEERS: Finance Minister, Mathias Cormann, appreciate you joining us here in Berlin. Have a good time, I am sure you will. 

MATHIAS CORMANN: Always good to talk to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth