Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Thursday, 21 June 2018
TOM CONNELL: I have got with me the Finance Minister Mathias Cormann here with me in the studio. We may as well start on that new arrival. It is a pretty interesting moment isn’t it, a sitting Prime Minister having a child, a bit of inspiration for working mothers out there, aspiring working mothers. I know aspiration is the word of the week.
MATHIAS CORMANN: It is beautiful. Our best wishes and congratulations to Jacinda Ardern and her family, her partner. It is always beautiful when a new child is born. Our very best wishes to mum, dad and the beautiful baby girl.
TOM CONNELL: Surprisingly enough we got you on to talk about tax rather than Jacinda Ardern’s child. Do you think this is the biggest achievement of the Turnbull Government so far?
MATHIAS CORMANN: This is a big win for working families around Australia. The Senate today decided to support income tax relief for millions and millions of working Australians, much needed income tax relief. It will help low and middle-income earners with cost of living pressures and it also will ensure that we address bracket creep. Bracket creep means that Australian working families go backwards as their income increases, either through inflation or because they work more, do over time, or get a better a job. We do not want to see more and more middle-income Australians pushed into those higher income tax brackets. We know that bracket creep is a drag on economic growth and to that extent it is bad for all Australians. The income tax relief that was passed by the Senate today, will not only be good news for families around Australia who get to keep more of their own money. It is also good for the economy, because it will help generate stronger growth, because we are providing better incentive, better encouragement, better reward for effort to all these working families around Australia who want to get ahead.
TOM CONNELL: Now, I completely understand all the arguments based on bracket creep and for example, higher income earners paying more of the overall share, even at the end of this, not even all of the bracket creep is given back indeed over the plan. But the optics argument that Labor is going to put, is it going to be a little bit tricky to push back against, for example you are on $200,000, you get $7,000 back a year versus say someone on $60,000 under Labor’s plan, they get $928 versus $530 for yours.
MATHIAS CORMANN: Labor is all about higher taxes. Labor voted over the last two days in the Australian Senate to impose $70 billion in higher taxes on working families around Australia. That would have been bad for them. It would have been bad for the Australian economy. Overall, Labor wants to impose more than $200 billion in higher taxes if they were elected to Government at the next election. That would hurt our economy, it would hurt families, it would cost jobs. We let Labor run all of the arguments that they want to run to the next election. That they stand for higher taxes. We stand for lower taxes. They stand for lower growth. We stand for stronger growth. They stand for fewer jobs. We stand for more jobs. They stand for higher unemployment. We stand for lower unemployment. They stand for lower wages. We stand for higher wages. That is what all of this is about.
TOM CONNELL: That is one of the harder bits of the argument though isn’t it? Economists say hey, a lot of them will say this makes sense, that is the sort of everyday retail politics. It is a bit tricky that way…interrupted
MATHIAS CORMANN: I will leave the commentary to you. We do know that Bill Shorten is all about the politics. He is all about pursuing a populist, politics of envy agenda, because he thinks it will win him votes. The Turnbull Government is about doing the right thing. Doing the right thing by all working families around Australia. We want to ensure that all working families around Australia have the right incentive, the right encouragement, the right reward for effort, while prioritising low and middle-income earners in the first instance. This is a well-considered, long term, seven-year plan. Labor is not interested in a plan, they just want short term populist politics. We are all about doing the right thing by the country, the right thing by working families around Australia.
TOM CONNELL: There is a lot of pain to get this through, with the crossbench. Why not look to something, where you would factor in inflation into the tax brackets, so the Governments do not have to constantly go back and get permission, because you have already got a handbrake on the overall tax take. Could you have legislation that means whatever inflation is and whatever wage growth is, that brackets adjust and have it automatic?
MATHIAS CORMANN: I do not agree with you at all. There was not a lot of pain involved at all. I loved every minute of engaging with my colleagues on the Senate crossbench…interrupted
TOM CONNELL: But it is not always easy for the Government to get tax cuts passed.
MATHIAS CORMANN: The media provides all sorts of commentary. There was a lot of commentary how there was no chance at all of this income tax relief passing the Senate. Clearly, that is not true. Working families around Australia today are very grateful to their Senate, they are particularly grateful to those Senators on the crossbench that joined with the Government in supporting income tax relief for them. Now, of course it is appropriate for the Parliament to consider any proposal by the Government in relation to tax proposals…interrupted
TOM CONNELL: But you get my point though because at the moment we have this sort of catch up game where wages go up, bracket creep happens and then the Government gives relief. You have already got a handbrake on the tax take. Could we not set something up where bracket creep adjusts automatically?
MATHIAS CORMANN: Our Government stands for lower taxes, the Labor Party stands for higher taxes. We will always ensure that taxes are as low as possible. We do believe it is important for the Parliament to make conscious decisions about the level of income tax that is…interrupted
TOM CONNELL: But it is a no to that plan, you do not think it would be a good idea?
MATHIAS CORMANN: That is not something we are proposing. We have provided $144 billion worth of income tax relief to working families around Australia. Bill Shorten wants to increase income taxes on Australian families. He wants to take more of their money out of their pocket and spend it on things that Australians know would be a complete waste of money.
TOM CONNELL: The negotiation process, how heavily was Scott Morrison involved?
MATHIAS CORMANN: Scott Morrison, the Prime Minister and I, we work as a team. We are all involved doing our bit. Scott Morrison is the leader of our economic team in our Government…interrupted
TOM CONNELL: Did he take up more of the negotiations in the past week or so?
MATHIAS CORMANN: I am the Leader of the Government in the Senate, so I take responsibilities in the Senate. Scott Morrison is the leader of our economic team. He was the leader who helped put this plan together, together with the Prime Minister and the Expenditure Review Committee. We are a team. Everybody does what they can best contribute to the ultimate outcome. That is what we have done on this occasion. You know what, working families around Australia are the winners out of us working as an effective team together.
TOM CONNELL: And the deal, not the deal, but the agreement from Pauline Hanson, there is absolutely no quid pro quo in that, just to clarify?
MATHIAS CORMANN: We have engaged with every crossbencher that was prepared to engage with us. We are very grateful…interrupted
TOM CONNELL: But…interrupted
MATHIAS CORMANN: Let me finish, you have asked the question. We are very grateful that all crossbenchers have agreed with the merit of our arguments. What we always do, we have an ongoing engagement with all crossbenchers, always. In fact, we have an ongoing engagement with every Senator and Member who wants to engage with us about good policy ideas. Senator Hanson, who you referenced, she has, in the course of conversations over a number of months now put a number of ideas to us. Specifically she has put the idea to us in relation to a trial to explore better ways to support apprentices, in particular in…interrupted
TOM CONNELL: And you are open to that at the moment?
MATHIAS CORMANN: … If I may finish my answer. In particular across regional areas. What the Government has said to Senator Hanson is that we are very happy to consider her ideas. In due course we will make a decision.
TOM CONNELL: So just to clarify, a one-word answer, there is no deal on this?
MATHIAS CORMANN: There is no deal…interrupted
TOM CONNELL: No exchange?
MATHIAS CORMANN: ...the way you are describing it. There was an agreement, ultimately, that what the Government is trying to do for working families around Australia was good public policy. There was an agreement with nine out of ten crossbench Senators that we are pursuing good public policy in the national interest. Policy that will provide income tax relief, much needed income tax relief to millions and millions working families around Australia.
TOM CONNELL: Company tax cut, Pauline Hansen says the absolute line in the sand is that you would have to raise billions more for a multinational. She pulled out a figure of $100 billion. Now I know you have some plans at the moment. Are you open at all to having more policies in place that get more from multinationals?
MATHIAS CORMANN: Well firstly we have done a lot to ensure that multinationals pay their fair share of tax here in Australia. In fact the Tax Commissioner at Senate Estimates recently advised the Senate that about $10 billion in additional income will be generated from multinationals this year as a result of, including and in particular in part as a result of the additional efforts that the Government has made and that the tax office is making. Now just to put that number, that you have just referenced into perspective, the minerals resource rent tax, the very infamous failed mining tax of Julia Gillard and Wayne Swan, was meant to raise $38 billion over a decade. So a $100 billion number, you know is an incredibly high number…interrupted
TOM CONNELL: Well it is more than the company tax cuts costs.
MATHIAS CORMANN: I will not conduct negotiations with the crossbenches through the media, but let me just say it is very, very important for working families around Australia that we lower our company tax rate to ensure it is globally competitive. If we do not, if Bill Shorten continues to stand against a lower globally more competitive business tax rate, we are helping businesses in other parts of the world, in the US, in the UK, in France and other parts of the world, all of whom have lower business tax rates, take jobs and investment away from Australia. If we continue to put business in Australia at a disadvantage with business in other parts of the world, we put workers in Australia at a disadvantage with workers in other parts of the world.
TOM CONNELL: And so on the Pauline Hanson plan, you are pretty comfortable with what you are doing right now with multinationals, rather than take further action?
MATHIAS CORMANN: We are always prepared to engage with all of our colleagues on the crossbench and we are always prepared to have conversations about their ideas, their views and we will continue that conversation. With the greatest respect to my friends at Sky News, I will not be conducting those conversations through the media.
TOM CONNELL: Look we have Centre Alliance coming in next, so maybe you will figure out something on the way through. I want to ask you about frank dividends. $10 billion was the Government, they were saying earlier this week, the Labor policy was $10 billion short. Do you stand by that?
MATHIAS CORMANN: We stand by the numbers as identified by Treasury.
TOM CONNELL: The PBO put out a release saying they stand behind the PBO estimates. Part of the reason given was behavioural changes. I just want read another quote from them, the PBO confirms that it “always takes into account current and future policy commitments as well as behavioural changes in its policy costings and it assumed significant behavioural changes”. Do you accept that from the PBO?
MATHIAS CORMANN: Well the PBO is just describing their methodology. The Labor party is continuing to hide the assumptions that they have given to the Parliamentary Budget Office and they are continuing to hide any caveats that the Parliamentary Budget Office might have put on their costing that they have provided to the Labor Party. If the Labor Party has nothing to hide, why are they not releasing publicly, the costing that the Parliamentary Budget Office provided to them, so that everybody can see what are the assumptions that the Labor Party imposed on the costing and what are the caveats the Parliamentary Budget Office provided.
TOM CONNELL: And we do ask that, but I am asking you at the moment, around the PBO, because they also say that the Treasury, they draw upon similar information in forming the judgements, that is the PBO and the Treasury. They are saying they assume behavioural changes. What else could there be that is not being factored in? Behavioural changes is the one big difference between…interrupted
MATHIAS CORMANN: Behavioural changes is just the overall headline. You have got to actually see what it is that the Labor Party has told the Parliamentary Budget Office they must assume. You actually have got to see what it is that the Parliamentary Budget Office has said in terms of caveats. The reason the Labor Party is not releasing that information is because they have got something to hide. You have got to remember they have got form. I mean they have made all sorts of assumptions on how much money the mining tax would raise, they spent all the money they thought it would rise and more. The of course, the whole thing collapsed in a big hole, because they go their numbers wrong.
TOM CONNELL: But on this one, you are saying, well what do they feed in, the PBO say it “the PBO always takes into account current and future policy commitments, as well as behavioural changes”. What they are saying in this release is that they are not being told by Labor, ‘assume this’. They are making their own assumptions.
MATHIAS CORMANN: That is not what they are saying with the greatest of respect…interrupted
TOM CONNELL: Well hang on, it says the PBO confirms that it “always takes into account current and future policy commitments, as well as behavioural changes”. You are saying they are not saying that?
MATHIAS CORMANN: You have verballed what they have said. Our argument is not with the Parliamentary Budget Office, our argument is with the Labor Party. The Labor Party is not coming clean with the assumptions that they have imposed on the Parliamentary Budget Office to forward their costing. You are pointing to the Parliamentary…interrupted
TOM CONNELL: Yeah, but you are saying assumptions imposed…interrupted
MATHIAS CORMANN: Let me finish. You are pointing to a Parliamentary Budget Office Release. If the Labor Party’s costing information is 100 per cent consistent with the Parliamentary Budget Office release, why are they not releasing it? Why are they hiding it?
TOM CONNELL: We always ask them that. When you say imposed upon them, this says the PBO ‘explicitly assumed that there would be significant behavioural changes’. Therefore, they are not saying Labor has imposed that upon them, the behavioural changes.
MATHIAS CORMANN: With the greatest of respect, you are ignoring my key point, you are deliberately ignoring my key point. My key point is this, for any policy, what matters are the assumptions that are imposed and there are a lot of assumptions…interrupted
TOM CONNELL: You are saying assumptions imposed and I am saying, the PBO is saying that they are not assumptions imposed…interrupted
MATHIAS CORMANN: That is not what they are saying.
TOM CONNELL: Well they are saying that there would be significant behavioural changes that they assumed, the PBO explicitly assumed, not that Labor told them to assume.
MATHIAS CORMANN: The PBO makes some assumptions, the Labor Party would have imposed some assumptions on them and the Parliamentary Budget Office, most likely would have put a caveat around the validity or the reliability of their costing. If Labor had nothing to hide, they would be releasing the costing they received. The fact that they are not releasing the costing means that it is not consistent with what they are trying to interpret this release to mean.
TOM CONNELL: We keep asking them as well, we always do. Mathias Cormann, a good day for the Government. Thanks for your time today.
MATHIAS CORMANN: Always good to talk to you.