Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
VIRGINIA TRIOLI: Buoyed by his success in getting his income tax package through Parliament, the Prime Minister, Malcolm Turnbull, is now setting his sights on the Government's stalled company tax plans. Now, you will know the Senate yesterday passed that $144 billion income tax plan. It will eventually see most workers pay no more than 33 cents in the dollar.
MICHAEL ROWLAND: The win on tax has also given the Government an important psychological boost as it steps up campaigning for next month's Super Saturday by-elections. We are joined now by the Government's chief negotiator with the Senate crossbench, a very busy job, the Finance Minister, Mathias Cormann. Minister, good morning to you.
MATHIAS CORMANN: Good morning.
MICHAEL ROWLAND: Are you expecting voters to reward you for these tax cuts?
MATHIAS CORMANN: The decision by the Parliament yesterday to provide income tax relief to hardworking families was a win for Australians wanting to get ahead. From that point of view, we are very pleased that we were able to deliver on our long-term plan to provide income tax relief, helping low and middle-income earners in the first instance with cost-of-living pressure relief, but also to address bracket creep for all working Australians who pay tax, so that they have the right incentive, the right encouragement and the right reward for effort.
MICHAEL ROWLAND: Low-income earners, of course, receive that $530 rebate at the end of the financial year, but, Mathias Cormann, what do they get beyond that, looking forward to stage two and stage three?
MATHIAS CORMANN: We are then progressively lifting the income tax thresholds until we get to 2024-25 and remove the 37 cents in the dollar tax bracket all together. We also will be lifting the income tax threshold from $180,000 to $200,000 at that point. So, we progressively will be ensuring that we address bracket creep, prioritising middle-income earners, lifting the income tax threshold for the 32.5 cents tax bracket from $90,000 to $120,000 and then abolishing a tax bracket altogether. All of that will ensure that 94 per cent of Australians will not pay more than 32.5 cents in the dollar on any of their income.
MICHAEL ROWLAND: But how does that help, I will ask the question again, low-income earners beyond that rebate at the end of the next financial year, those right at the bottom of the tax scales?
MATHIAS CORMANN: Bracket creep is a drag on economic growth. Slower economic growth means fewer jobs. The people that are most negatively impacted by slower economic growth are low and middle-income earners, those wanting to get into the jobs market, those wanting to work more hours, those wanting to move from part-time to full-time. It is well established that stronger growth has the most beneficial impact proportionally speaking on low and middle-income earners. We want all Australians right across the community to have the best opportunity to get ahead. We want low and middle income earners to continue to move up that income scale. But we do not want Australians, just because either through inflation or through additional overtime, or because they have got a better job, we do not want them to just continuously be pushed into higher income tax brackets, which is a disincentive and which would take them backwards.
MICHAEL ROWLAND: Pauline Hanson's two votes, were of course, critical force the package to get through the Senate. What did she get in return?
MATHIAS CORMANN: She got lower income taxes for low and middle-income earners.
MICHAEL ROWLAND: Yes, she's got that. There was no quid pro quo on any other policy?
MATHIAS CORMANN: We were able to persuade Senator Hanson and her team to support income tax cuts, prioritising low and middle-income earners. We have engaged with Senator Hanson, we have engaged with all Senators on the crossbench for some time. From time to time, and that is a matter of public record, they raise ideas with us that they have on how certain things can be dealt with in a better way ... interrupted
MICHAEL ROWLAND: And excuse the interruption, you often come to the table with something in return. You're saying she's got absolutely nothing in return?
MATHIAS CORMANN: I was about to get to it. She got the passage of lower, fairer, simpler taxes for working Australians in return, which is a huge achievement that she contributed to. But what I was about to say and it's a matter of public record that Senator Hanson has approached us, for example, with an idea on how we could, through a trial, test providing better, more effective support to apprentices, in particular across regional areas. She has asked us to consider that. And the Government has agreed to consider that.
MICHAEL ROWLAND: OK, now, looking forward to next week, will you put your company tax package to a vote in the Senate, even though it's looking, at this stage at least, unlikely it will pass?
MATHIAS CORMANN: I note that you do what journalists always do and that is speculate that things will fail. Our intention is to see our business tax cuts legislated in full next week. We do believe it is in our national interest for us to reduce our business tax rate to ensure it is globally more competitive. Because if we keep taxes on business in Australia high, when most other countries are lowering theirs, we are putting businesses in Australia at a competitive disadvantage with businesses in other parts of the world. That means that we are putting workers in Australia at a competitive disadvantage with workers in other parts of the world. We would be helping businesses in other parts of the world take investment and jobs away from Australia. Yes, we absolutely remain committed. Yes, it is our intention to deal with that very important economic reform through the Senate next week.
MICHAEL ROWLAND: I wasn't speculating, I was just reading the situation in the Senate at the moment. Pauline Hanson, at this stage, what she's saying, of course, she flip-flopped on income tax, but she's saying at the moment she is unlikely to support those company tax cuts?
MATHIAS CORMANN: I will let you do the speculation. As far as I am concerned, I know what the job is in front of us. The job in front of us is to ensure that we can convince at least eight Senators on the crossbench to support the Government's proposal for a lower, globally more competitive business tax rate, because nine out of 10 working Australians work for a private sector business. Their future employment, job security, career prospects and wage increases depend on the future success of the businesses that employ them. If we continue to put the businesses that employ nine out of ten working Australians at a competitive disadvantage with businesses in other parts of the world, we will be hurting those nine out of 10 working Australians. That is not something that we want to do. We want all Australians to have the best possible opportunity to get ahead.
MICHAEL ROWLAND: Mathias Cormann, Finance Minister, thank you so much for joining us on News Breakfast.
MATHIAS CORMANN: Always good to talk to you.