Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Saturday, 5 May 2018
QUESTION: What can we expect from Tuesday’s Budget?
MATHIAS CORMANN: On Tuesday, the Treasurer will deliver the next instalment in our plan for the economy and to put the Budget on the strongest possible foundation and trajectory for the future. People will see the progress that we have made in strengthening the economy, creating more jobs, putting the Budget on a believable track back to surplus, making sure that all of the services that Australians expect their Government to deliver are fully funded and guaranteed.
QUESTION: Can Australians expect a return to surplus earlier than was previously forecast?
MATHIAS CORMANN: The Treasurer will be delivering the Budget at 7:30pm on Tuesday night. All will be revealed. Not much longer to wait.
QUESTION: We are expecting income tax cuts, will they be targeted at low to middle income earners as is suggested in the papers today?
MATHIAS CORMANN: The Government has made very clear that when it comes to personal income tax cuts, our first priority is to provide tax relief to low and middle income earners. That is good for them and it is good for the economy. The detail and the specifics will be part of the Budget on Tuesday.
QUESTION: Does the economy really need it though? It seems to be performing pretty well.
MATHIAS CORMANN: It is very important that we stick to the speed limit when it comes to the level of tax that we take out of the economy. If we increased the tax burden on the economy beyond what is reflected in our Budget, then it would hurt the economy, it would hurt jobs, it would lead to less investment, lower growth, fewer jobs, higher unemployment and over time, lower wages. The contrast between our approach and Labor's approach is that we focus on keeping taxes as low as possible so that the economy can be as strong as possible, so that as many jobs as possible can be created. As there is more competition for workers, that is the key ingredient for stronger wages growth. On the other hand, Bill Shorten, as Labor did in their last period in government, Bill Shorten is pursuing a high taxing and high spending agenda, which would lead to less investment, lower growth, fewer jobs and lower wages. The Australian people at the next election will have a choice between a pro-jobs, pro-growth, pro-higher wages agenda, which is our agenda, or Labor's agenda for higher taxes, less investment, lower growth, fewer jobs and lower wages.
QUESTION: Why should those in the top tax bracket get any relief in terms of tax cuts, even if it may not be for a number of years?
MATHIAS CORMANN: Again, it is very important that we keep our tax policy settings competitive. It is important that we ensure that all Australians today and into the future have the best possible opportunity to get ahead. We will be prioritising low and middle income earners when it comes to tax relief. But it is important that the tax policy settings are appropriate overall. If you look at some of the data that was released today you will see that higher income earners overwhelmingly carry the heaviest tax burden in our economy today. If we want to ensure that Australians are incentivised and encouraged to work hard, to stretch themselves and be the best they can be, then there has to be appropriate reward for effort as well.
QUESTION: I spoke with Steve Koukoulas and Chris Richardson today. One said no tax cuts, the other said bank the money and described the Government as spraying money like a fire hose. Why don’t you show more fiscal restraint and pay down our enormous debt sooner?
MATHIAS CORMANN: Let us just remind ourselves what we inherited. Labor when they were last in government, Bill Shorten and Chris Bowen, when they lost government, they left behind a weakening economy, rising unemployment, a Budget position that was rapidly deteriorating. The Budget bottom line deteriorated by $3 billion a week in 11 weeks between Labor’s last Budget and the pre-election economic and fiscal outlook in 2013. What you see now is a stronger economic growth outlook, much stronger employment growth, a Budget that is on track back to surplus. The specific trajectory will be revealed in the Budget on Tuesday. But it is always very important for us to focus on both, keeping the economy strong, while also making sure that we may all of the necessary decisions to ensure that the government lives within its means. We are doing all of that.
QUESTION: In response to that now is your time to show that you are truly conservative in your fiscal outlook, that you are not following Labor’s lead and that you are going to pay down that ghastly debt and do the thing that everyone wants, get us back to where we were many years ago? Which is what the Coalition is supposed to be all about fiscal responsibility and restraint. You can show that now and not give the sugar hit in this election and try and look like you are buying up votes.
MATHIAS CORMANN: You, like the Labor party, are making the case for higher taxes. We remain committed to keeping taxes at a reasonable level so that we don't harm our economy, so that we don't harm investment, so that we don't harm jobs. Some people, the Labor party is arguing and you are arguing ... interrupted
QUESTION: No I am asking a question.
MATHIAS CORMANN: You are arguing effectively that we should increase the overall tax burden in the economy beyond the 23.9 per cent, which is the long-term average. What we are saying is that that would come at a cost to the economy. It would come at a cost to the opportunity for Australians to get ahead. It would come at a cost to jobs and investment. That is not something that we are prepared to do. So we are making the necessary judgements to ensure that our Budget gets back into surplus as soon as possible in a responsible fashion. We are making the necessary judgements to ensure the economy remains strong and that Australians today and into the future have the best possible opportunities to get ahead. That is what the Australian people expect us to do.
QUESTION: Are you targeting low to middle income earners because they are perhaps struggling most with stagnant wage growth. How much does that issue worry the Government? The fact that the economy is going well but perhaps Australians aren’t really feeling the benefits.
MATHIAS CORMANN: We are making judgements based on what we believe to be the right way forward. Economic growth is looking better moving forward. Employment growth has been much stronger under us than it had been under the previous Labor government. 420,000 new jobs in the twelve months to the end of February 2018. As more jobs are created that is the ingredient that helps to drive wages growth up more strongly. But we do recognise that at the low and middle income earner end in particular people have not yet seen the level of dividend that they would like to see. So clearly, a personal income tax cut that prioritises low and middle income earners in the first instance is good for them and it is good for the economy.
QUESTION: Why are you pushing ahead with the corporate tax cut given that the Senate seems less willing to pass it now than it did a few weeks ago?
MATHIAS CORMANN: I will tell you why. Because our number one economic priority is to ensure that Australians today and into the future have the best possible opportunity to get ahead. We understand that higher company taxes are taxes on jobs. We understand that if you put Australian businesses at a disadvantage with businesses in other parts of the world, what that means is less job security for Australian workers. What that means is less opportunity for more jobs being created. What that means is as less jobs are created, lower wages for Australian workers. The reason we are pressing ahead with making sure that all businesses around Australia have access to a globally competitive business tax rate is because we want them to be more successful and more profitable into the future, so they can hire more Australians and as they hire more Australians they help drive up wages.
QUESTION: Chris Richardson says that a government which is behind in the polls but has a pocket full of money is a dangerous government coming into an election.
MATHIAS CORMANN: I disagree with that. We are making judgements. Look at our track record. We inherited from Labor a weakening economy, rising unemployment, a Budget position that was rapidly deteriorating. A very significant reason why they left this sort of situation behind is because they pursued a high taxing, high spending, reckless economic policy agenda. Bill Shorten is proposing the same prescription again. Bill Shorten wants to go back to the discredited Rudd- Gillard Labor approach, high taxing and high spending. We have inherited a bad situation from Labor. We have turned that situation around. We continue to make decisions to put Australia on the strongest possible economic and fiscal foundation and trajectory for the future, because we want all Australians today and into the future to have the best possible opportunity to get ahead. That is what we are doing.
QUESTION: Will this Budget help improve the Government’s popularity though?
MATHIAS CORMANN: This Budget, like every other budget, is about making the right decisions for Australia. It is about making the right decisions to help ensure that Australians today and into the future have the best possible opportunity to get ahead. We need to ensure that our economy can be as strong as possible. We need to ensure that as many jobs as possible can be created in the economy. We have got to make sure that the services that Australians expect their Government to provide can be fully funded on a sustainable basis, that funding is guaranteed. We are making sure of all of these things and we are making sure the Government can live within its means. Because we having inherited a rapidly deteriorating Budget position, we have turned that situation around. We are now on a believable track back to surplus.
QUESTION: Are you confident though that it will be well received by public, surely.
MATHIAS CORMANN: I will leave it to commentators to assess the Budget. We have made decisions over the last few months now, having reviewed all the information, having reviewed all of the data, having reviewed all of the various proposals that are put to Government from time to time, we have made decisions we will believe will put Australia on the strongest possible economic and fiscal foundation for the future. That is what the Australian people expect us to do.
QUESTION: Do you have an opinion on the story in the Telegraph that apparently Bill Shorten has snubbed the troops to go shopping?
MATHIAS CORMANN: It is up to Bill Shorten to explain why he went shopping rather than have dinner with the troops. I see that Scott Ryan apologised. No doubt Bill Shorten eventually will too.