Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
LEON BYNER: I am joined now by a bloke who was at a local breakfast this morning. He is the Federal Finance Minister. They call him the governator, well in politics. Mathias Cormann how are you?
MATHIAS CORMANN: Good morning. Good to be here.
LEON BYNER: Why are you in Adelaide?
MATHIAS CORMANN: It is a week after the Budget and all of us, the Prime Minister, the Treasurer, myself, we are travelling around the country to explain what it is that we are trying to achieve with our plan for a stronger economy, for more jobs and to ensure that all of the essential services provided by Government are fully funded.
LEON BYNER: I want to try and keep away from a lot of jargon and try and give people a real clear picture of what it is going on between you and the other party that want to be in Government, that is Labor. Now, it is claimed that this Government is controlling spending, this was in the Treasurer’s speech, it is claimed that this Government is controlling spending better than any other Government in the last 40 years, yet the debt is half a trillion. Surely, we can do better.
MATHIAS CORMANN: We inherited a forward trajectory when it comes to expenditure growth and debt. We inherited spending growth of about four per cent above inflation year on year. We have more than halved that. Over the last 50 years, no Government has controlled expenditure better than us. Over the current forward estimates, we have controlled it down to 1.6 per cent per year on average above inflation. To compare that to the Howard years - John Howard and Peter Costello ran a very good economy and a very good Budget, it was 3.3 per cent under the Howard Government. It is 1.6 per cent now. We are bringing spending as a share of the economy down below the 30 year long-term average. On the spending side of the Budget we certainly have worked very hard to get on top of it. On the revenue side, in the early days, there was quite a bit of headwind because of what was happening to commodity prices, but on the back of stronger employment growth in particular, the revenue has been picking up and all up, we are now in much stronger position than we were when we got into Government.
LEON BYNER: Bill Shorten is getting some momentum from pitching Labor’s policies financially, to give to the not well off and the less fortunate and the less higher earning salary earners as opposed to big business. Whom one can argue, that the profits are getting better but the wages are not going up, they are pretty flat. So what it is in your view, the essential difference between your Budget and that of Labor’s, bearing in mind that in 2024 you want to have a flat rate up to $200,000, which Bill Shorten is saying that is terribly unfair.
MATHIAS CORMANN: Firstly, our mission is to ensure that Australians today and into the future have the best possible opportunity to get ahead. Our plan is focused on making sure the economy is as strong as it can be, that as many jobs as possible are created and that working families around Australia have the right incentive, the right encouragement and the right reward for working hard. Now when it comes to our income tax plan, which you have mentioned, we have a seven year plan to provide income tax relief to working families. In the first instance, that is focused on providing cost of living pressure relief to low and middle-income earners. We are prioritising low and middle-income earners. We also believe that it is very important to address bracket creep and to simplify the tax system. If we do not address bracket creep, then people earning above $87,000 a year will end up in the higher income tax brackets and they will go backwards. That is not good for them and it is not good for the economy. We think it is important to provide the right encouragement, the right incentive, the right reward to encourage people to work harder and if they work harder and work more, they should be able to get an appropriate share of that reward for that effort for themselves.
LEON BYNER: For what we know, Labor is going to deliver a Press Club lunch speech today from their Shadow Treasurer. They are saying they are going to deliver bigger surpluses than you.
MATHIAS CORMANN: That is just not true. Look at their track record. Firstly, when Chris Bowen was last the Treasurer, when he lost Government in 2013, the economy was weakening, unemployment was rising and the Budget position was deteriorating by a staggering three billion a week, three billion a week. In the lead up to the last election, Labor promised more than a hundred billion dollars in additional taxes and yet went with $16.5 billion in higher deficits according to their own costings to the last election. So far, they have already announced more than $200 billion in higher taxes on electricity, on small and family business, on investment, on income, on housing, on retirees. What we say to the Australian people is, if we increase the tax burden on the economy to that extent, it would hurt the economy, it would hurt families and it would cost jobs.
LEON BYNER: I am talking with the Federal Finance Minister Mathias Cormann, he has offered to take calls from you. This is a really good opportunity to ask the questions that matter to you and I am going to pick one now, that is away from all the economics, it is the NDIS. First of all, yes or no, is it fully funded?
MATHIAS CORMANN: Yes.
LEON BYNER: It is. The question then is, how are you going to keep the lid on NDIS costs because there are different diagnostic protocols in different states. Isn’t this a national scheme?
MATHIAS CORMANN: It is a national scheme and it is delivered in partnership with the States. With all programs that are run by the Government, you have always got to ensure that it is run as efficiently and as effectively as possible, that it provides the appropriate support to those in need of support. You have to always make sure that you spend as much as necessary, but not any more.
LEON BYNER: Well we have got a situation now where I am getting feedback from a lot of people that they cannot get access to any money for NDIS and they have got to wait for months.
MATHIAS CORMANN: If you have some specific instances, I am quite happy to take that on notice and follow that through.
LEON BYNER: You will?
MATHIAS CORMANN: Yes sure, absolutely.
LEON BYNER: When people hear that this is fully funded, they will say to themselves, if I need NDIS assistance, for which I qualify, I will be able to get it reasonably quickly. We are getting feedback that is not necessarily the case.
MATHIAS CORMANN: I would be very concerned if somebody who is eligible was not able to access it in the appropriate time. If there are examples along those lines, I am quite happy to take those cases up.
LEON BYNER: Australia has a greater dependence on personal income tax than any other of the top 20 global economies. Is it time to revisit this whole tax cut business?
MATHIAS CORMANN: It is always important to get the balance right. What we have done in this Budget, we have imposed a tax speed limit on ourselves because if you increase the overall tax burden on the economy, it leads to less investment, which leads to lower growth and fewer jobs, which over time leads to lower wages. Then you have to make sure that you raise the necessary money to fund the services provided by Government in the most efficient, least distorting and appropriately equitable way. That is what we are setting out to do. We think it is very important that we ensure that businesses around Australia are not put at an ongoing competitive disadvantage with businesses in other parts of the world, by forcing them to pay more tax, because if we do, it will send jobs and investment overseas.
LEON BYNER: I am talking with the Federal Finance Minister Mathias Cormann, he is happy to take calls. We will be back after this.
It is a quarter to ten, we are in the studio with the Federal Finance Minister Mathias Cormann. Susan, meet the Minister.
CALLER: Good morning Minister, thank you for taking my call and good morning Leon.
LEON BYNER: Morning.
CALLER: I would just like to ask the Minister, in the past few weeks, the Federal Government has been claiming that they have created so much employment, I mean we are talking hundreds of thousands of jobs here. I would just like to know a little bit more on that if you could, where these jobs have been created, what industries perhaps and has this actually just been that the 457 visas have been closed down, you know?
LEON BYNER: Okay, what is the answer?
MATHIAS CORMANN: Thank you very much for that question. In 2017 the Australian Bureau of Statistics will tell you that 415,000 new jobs were created in the economy, about 70 per cent of them full-time, about 70 per cent of them in the private sector, so that is right across the board. What you are talking about relates to skilled migration and whether or not we are bringing in additional workers from other parts of the world to fill skills gaps. We did make changes to the 457 visa arrangements. We replaced them with…interrupted
LEON BYNER: Are they in effect now?
MATHIAS CORMANN: They are in effect now. We replaced them with a better-targeted scheme to deal with the most urgent skills shortages in Australia. There is no direct relation between the number of jobs that has been created and what you are asking about. You are essentially asking what is happening to our immigration program and the immigration program is limited to a cap of 190,000 permanent new migrants every year, which is a ceiling and not a target.
LEON BYNER: Can I just mention something that people often say to me, when you talk about jobs created, that is fine. But you have to, surely, take away the jobs lost and the real figure is the net, isn’t it?
MATHIAS CORMANN: The 415,000 is the net figure. This is 415,000 net new jobs that have been added to the economy in 2017.
LEON BYNER: Because see, the definition of a job at the moment, is an hour a week. Now I am not saying that everybody in those…interrupted
MATHIAS CORMANN: As I said 70 per cent of these 415,000 net new jobs were full-time jobs.
LEON BYNER: All right, let us talk to Diane. Diane you are talking with Mathias Cormann.
CALLER: Thank you Leon. I feel a bit like John Hewson, it is a politically stunt of a Budget, there is nothing in there for middle Australia at all and I feel that the big end of town are really going to gain out of this Budget, particularly in the long-run and even in the short-run. You think of the Royal Commission that is going on now and what is coming out of the Royal Commission. Now I know for a fact that next Monday is the business side of the Royal Commission has started. If you reckon you have heard anything bad about the Finance stuff, which we have, which has been disgraceful and unbelievable, you have heard nothing yet. It is only going to get worse from here on. I think there should have been something in the Budget that they said, because Morrison has said that taxpayers are not going to pay back the people who have had their money stolen from these dodgy, corrupt bankers. Somehow, they get millions of dollars a year plus bonuses. There is something wrong here that the Liberal Government keeps protecting the big end of town and there is nothing for middle Australia. As I said, with this Royal Commission that is going to get worse on Monday, something needs to be done now, particularly as the Liberal Government was brought kicking and screaming and in denial, which they knew all along with all the inquiries, all the letters I know I have personally sent to Mathias Cormann, Scott Morrison, Bill Shorten, everyone. They know that it has been dodgy, corrupt, fraudulent behaviour on behalf of all the banks and something needs to be done. People are sick of it.
LEON BYNER: Okay, what do you say Mathias?
MATHIAS CORMANN: Our Budget is all about middle Australia. Our Budget is about helping ensure that families around Australia today and into the future have the best possible opportunity to get ahead. Central to that is a stronger economy, is creating more jobs, is making sure that the essential services Australians rely on are fully funded, which they are and that government lives within its means. When it comes to business, you have to remember, nine out of ten working Australians work for a private sector business. If we put the businesses that employ nine out of ten working Australians at a disadvantage with businesses in other parts of the world, we put Australian workers at a disadvantage. That is why we are trying to help business be more successful into the future, because we want them to be able to hire more people and pay them better wages over time.
LEON BYNER: Can I just ask you one more question? I know you have to go. Yesterday, Josh Frydenberg announced a very important investigation into these distribution energy companies, who were overstating their tax liability. But today, The Age published in Melbourne some information which says that in 2015 your Government was told about this and it appears you did not do anything about it.
MATHIAS CORMANN: This is in Josh Frydenberg’s area so I am not across the specifics. What I would say by way of general point is that whenever any business does the wrong thing, whether that is a bank or whether it is an energy business, the same as when any individual Australian does the wrong thing, that has got to be addressed, that has got to be dealt with. But we cannot throw the baby out with the bathwater. A stronger economy depends on having stronger, more successful businesses into the future. In the end, the future success and opportunity for all Australians depends on the future success and opportunities of the businesses that employ them.
LEON BYNER: But it has got to be within the rules.
MATHIAS CORMANN: 100 per cent. Of course.
LEON BYNER: Where do you go to from here?
MATHIAS CORMANN: I am here in Adelaide for the day and then I am travelling onto New South Wales. I will be speaking at a function in Cook tonight and at a breakfast in Penrith in the morning.
LEON BYNER: Mathias thank you for coming in.
MATHIAS CORMANN: Always good to talk to you.