Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
DEAN CLAIR: And the Finance Minister is on the line to talk about it, Mathias Cormann good morning and thanks for your time.
MATHIAS CORMANN: Good morning.
KYMBA CAHILL: Ah now, Mr Cormann I mean the main thing that seems to be talked about in the Budget is this $530 going back to families, about ten dollars a week if you are within that certain bracket. Now there is a lot of talk about the light tax cut for families and the average Joe, is this a bit of a cover up so we don’t ask how much the big corporations are being taxed? How much are their tax increases?
MATHIAS CORMANN: We are working to a plan. We are working to a plan to ensure the economy is as strong as it can be, that more jobs are being created, that funding for all of the essential services people rely on can be guaranteed within the Budget and that the budget will get back into surplus, that the Government lives within its means. Beyond that, where there is opportunity to provide income tax relief, we believe it is important and appropriate to do so, to help people with their cost of living pressures but also to ensure bracket creep is addressed, because bracket creep is a drag on economic growth moving forward. That is what we are doing in this Budget. We are prioritising low and middle income earners and we are then working our way through a seven year plan to provide income tax relief across the board.
MATT DYKTYNSKI: Mr Cormann your party always says that it is the party for fiscal responsibility and that may or may not be true and…interrupted
MATHIAS CORMANN: It’s true.
MATT DYKTYNSKI: Well ok cool and there is a lot of sweet deals in this and people are talking about it as a pre-election Budget. But a lot of these things are reliant on many cards falling into place over the coming decade in the world economy. How confident can you be that you can deliver on these promises?
MATHIAS CORMANN: Well look at our track record. When we came into Government four and a half years ago, the economy was weakening, unemployment was rising and the Budget was rapidly deteriorating by three billion dollars a week. We have worked very hard implementing our plan for a stronger economy and more jobs and to get the Budget back into surplus. We have made significant progress. Economic growth in Australia is now stronger. Employment growth is much stronger. 415,000 new jobs were created in the economy last year. The budget is now back on track to surplus in 2019-20. As of this financial year, we no longer having to borrow to fund our recurrent services as a Government, to fund our day to day living expenses as a Government. Government net debt is being paid down, $230 billion plus in Government net debt is being paid down over the next ten years.
DEAN CLAIR: Mathias Cormann, the Finance Minister is with us this morning talking about the Federal Budget at 8:43. Mr Cormann, I just want to know for a Mum and Dad who are sitting out their listening today to the radio, dropping their kids at school or whatever, on a day-to-day, what is in this, in layman’s terms for them, how does this make a difference. They are struggling, you know they are queuing up to get petrol on Monday in Perth, how does this make a difference?
MATHIAS CORMANN: Well this is how it makes a difference. We want Australians today, we want them and their children and grandchildren, to have the best possible opportunity to get ahead. In order to ensure that that can happen we need a strong economy. We need more jobs being created and we need to make sure that all of the services and all of the benefits that people expect their Government to provide can be fully funded within the Budget on a sustainable basis. That is what we are doing. We were in a situation where unemployment was rising and rising unemployment means lower wages over time. Now employment is growing, the unemployment rate is going down. That is a key ingredient to ensure wages go up. But in the meantime, we are providing income tax relief to low and middle income earners, which will help relieve cost of living pressure. We are doing a whole range of other things to help ensure that Australians today and into the future have the best possible opportunity to get ahead.
KYMBA CAHILL: And there has always been a suggestion too that if you tax companies, the big companies, if you tax them higher that will mean less jobs for people and then that will affect our economy…interrupted
MATHIAS CORMANN: That’s a reality. Higher tax on companies is a higher tax on jobs, because nine out of ten working Australians, nine out of ten people in Western Australia work for a private sector business. If we put businesses that employ them at a disadvantage with businesses in other parts of the world who pay lower wages, significant lower wages, we will send investment and jobs overseas…interrupted
KYMBA CAHILL: And that may be the case for small businesses absolutely, but bigger businesses, I mean they are not just going to just, you know, looking at mining taxes for example, they are not going pick up and start mining in a different country, what we have here is what we have here and they are our resources…interrupted
MATHIAS CORMANN: You are quite wrong and this is a very important argument. Capital investment is mobile. If you put businesses in Australia at a competitive disadvantage, the investment will go to other places around the world where there are equally resources available to be exploited. In many ways, the bigger companies, a company like Qantas, is a big company in Australia and they work on the frontline of global competition. They are operating in a fiercely competitive global industry. When we make it harder for them to be successful, when we put them at a disadvantage, it impacts on the job security of the people working for Qantas. 30 000 people across Australia. It impacts on the job security of those working for small and medium sized businesses, which supply goods and services to them. There are about 3,000 businesses across Australia who would supply goods and services to a big business like Qantas. If we hold Qantas back, if we make it harder for Qantas to succeed, all of the businesses that supply products and services to them find it harder to succeed and the people working for all of those businesses, all of a sudden are in a worse position. BHP, FMG, Rio Tinto, you name it, I mean all of these big businesses, they are the small businesses of the past which have been successful. If we make it harder for them to be successful in the future, they will hire fewer people and they will buy fewer products and services from businesses around Australia.
MATT DYKTYNSKI: And Mr Cormann and just briefly, I had a message from one of our listeners who is one of the 3.2 million small to medium businesses in this country and they claim that one of their biggest impediments to being competitive is the $1,000 import thresholds, they are paying GST on anything over $1,000. Do you sympathise with that issue and are you looking to do anything about that?
MATHIAS CORMANN: Well we have addressed that. We have reduced the low value threshold when it comes to imports. We now do apply GST, as of the next financial year onwards, we will be applying GST to lower value imports.
MATT DYKTYNSKI: I think that is his problem though, is the importing is costing him more, but is that just the way it is.
MATHIAS CORMANN: That is just the level playing field. It is the same tax that is applied to businesses here in Australia.
DEAN CLAIR: Ok Minister Cormann, thank you for your time this morning. You have a busy day ahead of you.
MATHIAS CORMANN: Always good to talk to you.