Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
LINDA MOTTRAM: So a big win for the Turnbull Government and a bit of relief perhaps for the Finance Minister Mathias Cormann. Testing times in the Senate. Minister, welcome to PM.
MATHIAS CORMANN: Good evening. Good to be here.
LINDA MOTTRAM: It’s Labor’s line, but some voters will probably share the cynicism and say that you have given yourselves a $7,000 tax cut. In other words you are favouring the wealthier. How do you counter the appearance of favouring the better off?
MATHIAS CORMANN: What the Senate did today was to deliver income tax relief for all working Australians who pay tax. Our long term plan to provide income tax relief prioritises low and middle income earners, but yes it provides income tax relief to all working Australians who pay tax. We have been quite up front. It is about making sure that we address bracket creep, to ensure that working Australians do not go backwards. We do not want to see middle income Australians pushed into higher tax brackets. We want to ensure that all Australians have the right incentive, the right encouragement, the right reward for effort. Labor was always going to run a populist, politics of envy type agenda. We are focused on making the right decisions for all Australians. We are focused on making the right decisions for families and for our economy.
LINDA MOTTRAM: Why do people though on $200,000 a year deserve a tax cut, rather than putting that tax take into services like health and education?
MATHIAS CORMANN: It is not a matter of what people deserve. It is a matter of making sure that we make the right decisions for our future economic growth. People well understand that letting bracket creep continue to run rampant without it being addressed is a drag on economic growth. If economic growth is less, the first people to hurt are low income earners. If we do not take steps to address bracket creep, what would end up happening is that the resulting lower growth would lead to fewer jobs and higher unemployment. The people that would find it hardest to get into the workforce, or to get additional hours work, or would generally be most adversely affected would be low income earners. These are the people who Labor, day in and day out is selling out.
LINDA MOTTRAM: But, my question was about people of $200,000 a year, why give them a tax cut? Fair enough down the other end, but that is wealthy people you are giving a tax cut to.
MATHIAS CORMANN: Somebody on $30,000 a year gets an 8.3 per cent tax cut, every year over the next four years. Somebody on $200,000 a year gets a 0.2 per cent tax cut, every year over the next four years.
LINDA MOTTRAM: But that is still, sorry Minister, but that is still money taking money out of the Budget for well of people that you could be spending on services.
MATHIAS CORMANN: We are making sure that all working Australians have the right incentive, the right encouragement, the right reward for effort. We do not subscribe to Labor’s agenda based on the politics of envy. We are pursuing policies to support aspiration. We are absolutely unequivocally supporting policies that support aspiration, because we know that that is good for all Australians. If every Australian has the right incentive to be the best they can be that lifts the economy overall and provides better opportunity for all Australians at all income levels to get ahead.
LINDA MOTTRAM: On the question on aspiration, your opponents makes the point that no one earning $40,000 is going to turn down a $20,000 pay rise because there is an extra tax rate in it, in the current system. It is a furphy to suggest that that is a brake on aspiration.
MATHIAS CORMANN: It is not a furphy at all. If every bit of additional effort leads to higher taxes, then of course, people will make less effort over time, certainly in aggregate. Do not take my word for it. That is what any credible economist will tell you. At the end of our tax plan coming into full effect, the top twenty per cent of income earners around Australia will continue to pay more than sixty per cent of income tax revenue generated in Australia. Precisely what it is today. In fact, those Australians on the highest income tax bracket, pay about thirty per cent of income tax generated today. At the end of the period, they will be generating 36 per cent of income tax revenue generated. Already, high income earners will be paying an increasing share, but it is just a matter of making sure that the system remains fair overall. That the system continues to provide the appropriate incentive, the right encouragement and the right reward for effort, so that the economy as a whole continues to grow as strongly as possible.
LINDA MOTTRAM: But there is no guarantee is there as Chris Richardson observed in Stephanie’s package earlier, if the economy turns bad and the Budget can’t afford it, would you as a responsible government have to sacrifice, second and third stage cuts?
MATHIAS CORMANN: The economy will be stronger as a result of our $144 billion in income tax relief for hard working Australians ... interrupted
LINDA MOTTRAM: But it is an uncertain world out there Minister.
MATHIAS CORMANN: Our Government stands for lower taxes and stronger growth. Labor stands for higher taxes, which would lead to weaker growth, fewer jobs, higher unemployment and lower wages.
LINDA MOTTRAM:But wouldn’t a responsible government have to be willing to reconsider its plans if the economy changes?
MATHIAS CORMANN: We are a responsible Government. We have implemented a long term plan to provide income tax relief to hard working Australians, prioritising low and middle income earners, so that they receive cost of living pressure relief but also making sure that we address bracket creep and simplify our tax system. Taxes are now lower, simpler and fairer as a result of the vote in the Senate today. That will be good for growth, it will be good for families, it will be good for jobs, it will be good for wages into the future.
LINDA MOTTRAM: Income tax cuts are a big achievement for the Government from its policy objectives. Now there is corporate tax cuts, but there is little prospect that you will get those through the Senate. Realistically is that now off the table until after a Federal election?
MATHIAS CORMANN: I will let you and others in the media speculate as to what will and will not be supported. I am surprised, earlier this week a lot of your colleagues here in Canberra were telling me that we had no chance at all of getting personal income tax cuts through the Senate. The Senate has voted, the Parliament has voted to support working families providing them income tax relief. Working families around Australia need their Parliament, need their Senate to support a lower, globally more competitive business tax rate for Australia, because if we do not, we are helping businesses in other parts of the world paying less tax to take business, jobs and investment away from Australian workers. Putting businesses in Australia at a competitive disadvantage with businesses in other parts of the world, is putting Australian workers at a competitive disadvantage with workers in other parts of the world.
LINDA MOTTRAM: But there are fewer of your colleagues in the Parliament who agree with you and you are not likely to get the corporate tax cuts through are you.
MATHIAS CORMANN: That is your assertion.
LINDA MOTTRAM: It is a question.
MATHIAS CORMANN: It was not a question. It was your assertion just now. We continue to work to make our case. We do as we always do, that is to make the argument as to why a lower, globally more competitive business tax rate is so important to the future success and opportunity of working families around Australia. We have thirty-one Coalition Senators in the Senate. We need thirty-nine to pass legislation. We continue to work to secure the necessary eight votes. The eight votes from non-Government Senators in order to get very important reform through, very important reform for working families around Australia.
LINDA MOTTRAM: Mathias Cormann, thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.