Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
CRAIG ZONCA: You could end up with more money in your pocket after the personal income tax cuts were passed through Parliament yesterday. Said to be a cut of $144 billion over the next seven years. Malcolm Turnbull describes it as thoroughly fair, the Opposition says the Coalition is addicted to unfairness. The Finance Minister is Mathias Cormann. Minister, good morning to you.
MATHIAS CORMANN: Good morning.
CRAIG ZONCA: You would be one of those who benefits the most from this as a high-income earner. You will get the biggest tax cut. Is that really fair?
MATHIAS CORMANN: Actually, our long-term plan for income tax relief does prioritise low and middle-income earners. Somebody on $30,000 a year will get an 8.3 per cent tax cut as of 1 July. Those earning between $48,000 and $90,000 a year will get a tax cut of $530 every year over the next four years. Somebody on $200,000 gets a 0.2 per cent tax cut. This is a package that prioritises low and middle-income earners in terms of tax relief, to help low and middle-income earners with cost of living pressure relief, but it also does address bracket creep right across the board, to ensure that working Australians who pay tax do not go backwards as a result of inflation or as a result of doing overtime, or getting a better job. We want to ensure that all Australians have the right incentive, the right encouragement, the right reward for effort. As a result of the plan that the Parliament legislated yesterday, about 94 per cent of working Australians by 2024-25 will not pay more than 32.5 cents in the dollar on any of their income.
REBECCA LIVINGSTONE: Mathias Cormann what services will be compromised in order to give people these tax cuts?
MATHIAS CORMANN: None. The cost of this personal income tax relief plan is fully reflected in the Budget bottom line. The cost starts in 2019-20, which is the year when we are forecast to return to surplus and we are forecast and projected to remain in surplus all the way over the medium term, all the way to 2028-29. In fact, by 2026-27, we are projected to exceed a surplus of one per cent as a share of GDP. The cost of all of our expenditure across all of the essential services Australians rely on is guaranteed within the Budget. We have also been able, on the back of good economic and good fiscal management, on the back of stronger growth, stronger employment growth and getting expenditure growth under control, we have been able to provide this income tax relief to hard working families.
CRAIG ZONCA: What if the economy does not perform as predicted and there is not that surplus that you have forecast in the Federal Budget?
MATHIAS CORMANN: The economy will be stronger as a result of the Parliament having legislated those income tax cuts in full. That is an important part of our plan for stronger growth and more jobs. All of our forecast assumptions are there for all to see. They are prudent, they are conservative, they are in line with the economic forecasts of independent institutions like the Reserve Bank, the International Monetary Fund. In fact, in some parts they are more conservative than the economic parameter assumptions from those institutions.
REBECCA LIVINGSTONE: Mathias Cormann, last night the richest people around the country participated in the CEO sleep out and we had a chat to one of those this morning. I actually said to him, “much discussion about the personal income tax cuts” and he said “no, no, no”. But the reality is, around the world, in economies like ours, the gap between the rich and poor is growing…interrupted
MATHIAS CORMANN: Well, not in Australia, that is just not right…interrupted
REBECCA LIVINGSTONE: Really?
MATHIAS CORMANN: Let me just say in 2015-16, Australians on the top income tax bracket, the top income tax bracket generated about 30 per cent of income tax revenue generated across Australia. Once this income tax relief package has been legislated in full, Australians on the top income tax bracket will be responsible for 36 per cent of income tax revenue generated across Australia. The proportion of income tax revenue generated by the highest income earners is actually growing. In fact, the top 20 per cent of income tax earners right now are generating about 60 per cent of all of the income tax revenue generated in Australia and that proportion will continue to be in place by the time we get to 2024-25. This is about making sure that Australians do not go backwards. That we do not put in disincentives for people to work harder, to get ahead. If we provide the right incentives for all individual Australians to get ahead, that is the right thing to do for the economy as a whole, which then helps to provide the best possible opportunity for everyone.
REBECCA LIVINGSTONE: A tax cut as an incentive, no one is going to say no to earning more, with or without tax cuts are they?
MATHIAS CORMANN: Not sure what happened here, I am not hearing you.
CRAIG ZONCA: We have just dropped out to Mathias Cormann at half past seven, which is smack bang on the dot. He is the Finance Minister.