Sky News – First Edition

Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia






Future frigates, Business tax cuts

KIERAN GILBERT: Good morning, welcome to First Edition. Joining us this morning here in Canberra is the Finance Minister Mathias Cormann. Finance Minister thanks very much for your time. Lots to talk about this Friday morning. First of all the frigate announcement in Adelaide. Can you give our viewers and update of where that is at? 

MATHIAS CORMANN: We have locked in to the BAE Systems design for the next generation of frigates. The next generation of frigates will be built by ASC Shipbuilding in Adelaide. This will deliver one of the world’s most advanced anti-submarine warfare frigates and create about 4,000 jobs in … interrupted

KIERAN GILBERT: Minister, my apologies, let me just interrupt. I am just going get Amy to just give a read on that particular frigate story. We will just sort out the audio and we will be back with the Finance Minister in just a moment. 


Okay, let’s go back to Mathias Cormann. We’ll start again, very early this Friday morning but this frigate announcement that is going to be confirmed this morning. Some interesting elements as well that will see the Australian Submarine Corporation become a subsidiary of the winning bid. 

MATHIAS CORMANN: The Government has decided on the BAE Systems design for our next generation of frigates. ASC Shipbuilding out of Adelaide will build those nine Hunter Class frigates. This will deliver for Australia one of the world’s most advanced anti-submarine warfare frigates. It will create about 4,000 jobs. It will secure a sovereign naval shipbuilding industry here in Australia for decades to come. It will be the case that ASC Shipbuilding will be a subsidiary of BAE during the build. This will help ensure that BAE is fully responsible and accountable for the delivery of the program on time and on budget. At the conclusion of the program, ASC Shipbuilding will return into Commonwealth ownership. We will retain a sovereign share all the way through the build. At the conclusion of the build, the IP, the capability, the entity itself will return to Commonwealth ownership. 

KIERAN GILBERT: What are the benefits of becoming a subsidiary of BAE during the build and then reverting back to full ownership? Can you explain that?

MATHIAS CORMANN: During the build it is very important that BAE is fully accountable for the delivery of the program, which is a multi-billion dollar program, a $35 billion build program. It is very important that BAE as the designer is fully accountable for the delivery, on time and on budget of this program. The learnings out of the Air Warfare Destroyer program were, that was very, very important as a structural feature. But all the way through, the Commonwealth will maintain a sovereign share in ASC Shipbuilding, which means that we have certain rights to protect the strategic interests of the Commonwealth. But also at the end of the build, the entire entity, the IP, the workforce, the skilled workforce, will return into public ownership. 

KIERAN GILBERT: Why was BAE the preferred bidder over the other Italian and Spanish bids?

MATHIAS CORMANN: There was a very thorough, competitive evaluation process which was conducted by the experts who are very focussed on what is in our national interest, what is required in the context of our naval ship requirements. 

KIERAN GILBERT: When you look at $35 billion, it is a big spend. How soon can we expect to see completion of these frigates?

MATHIAS CORMANN: The actual build will start in 2020. The first ship will be delivered, or is expected to be delivered by 2027. The whole program will take all the way to 2040. 

KIERAN GILBERT: So jobs and a presence there in Adelaide for decades to come. Let’s look at the big tax cut plan, which has been shelved now, at least for the winter break. The Financial Review reports this morning, Phillip Coorey, that Bill Shorten is going to back down on the whole thing, and go back to a $50 million threshold for the turnovers for small and medium sized business. So back to where it has been legislated thus far. Would you welcome that?

MATHIAS CORMANN: It looks to me like another Bill Shorten wibble wobble. People across Australia cannot trust Bill Shorten. He wants to impose higher taxes on business, on families, on electricity, on retirees, on anyone who moves. Higher taxes are bad for the economy, bad for families, bad for jobs. Even the Labor caucus is concerned about Bill Shorten’s plans for higher taxes. It looks as if people inside the Labor party have been giving Bill Shorten a hard time about going too far with his high taxing agenda. We would certainly welcome a decision by the Labor party to rein Bill Shorten’s high taxing agenda in somewhat and to force him to back the Government’s plan for lower taxes for small and medium-sized business … interrupted 

KIERAN GILBERT: Isn’t it better though that he recognises as these sources from Labor have told the Fin Review, they take one day of pain, today in terms of back flipping and get back to that $50 million turnover for business. That is a good development from your perspective?

MATHIAS CORMANN: Bill Shorten is shifty. People cannot trust Bill Shorten. The only reason he is doing this is because he is scared that people in Longman and Braddon will send him a message against his high taxing agenda. He has already come out with more than $200 billion in higher taxes, on family business, on small and medium sized business, on families around Australia, on electricity, on retirees, on investment, on housing. There is nothing that Bill Shorten will not tax if he gets the opportunity. What we say to the people of Longman and Braddon, if you vote for Bill Shorten, he will see that as a endorsement for his high taxing agenda. If you want to see lower taxes, send Labor a message, put Labor last.

KIERAN GILBERT: But at least in the short term he has neutralised that because the legislated tax cuts for business at $50 million turnover a year, he looks like, according to this report today, he and Labor are going to back flip on that.

MATHIAS CORMANN: You are speculating. Let us assume it …interrupted.

KIERAN GILBERT: Sounds pretty certain.

MATHIAS CORMANN: I do not know what it sounds like because quite frankly, Bill Shorten is all over the place. One day he says we are going to be opposed to lower business taxes on businesses above $2 million, because that is how they voted in the Parliament. Then he says we are going to impose higher taxes on businesses above $10 million. Let us see what happens. The truth is, Bill Shorten should back in a lower, globally more competitive business tax rate for all business in Australia, because that is what we need to attract investment, to secure stronger growth, more jobs and higher wages over time. 

KIERAN GILBERT: But when you have got, they say an $80 billion cost for the big end of town versus their spend on services, that is their economic divide, that is their political argument. 

MATHIAS CORMANN: But Kieran, that is another Bill Shorten lie. Bill Shorten when he talks about an $80 billion tax giveaway to the big end of town, knows that that is not true, Half that cost, nearly half that cost relates to a lower tax rate for small and medium sized businesses, the businesses with a turnover of up to $50 million. When we legislated this business tax rate, it was very obvious, out of a $65 billion cost over a decade, just under $30 billion was to deliver a lower tax rate for businesses with a turnover of up to $50 million, which is what you are now saying that he may back in today. The cost of the remaining business tax cuts is just over half that cost. I have never seen anyone who is as shameless as Bill Shorten when it comes to lying to the Australian people about what it is that our Government is doing.

KIERAN GILBERT: But it looks like your argument is proving potent, if Labor is going to backtrack, it looks like it is winning the political debate, at least this week it has. 

MATHIAS CORMANN: Bill Shorten needs to go all the way. He needs to back a lower, globally more competitive business tax rate for all business around Australia because if we keep …interrupted.

KIERAN GILBERT: But that is not going to happen, what this does…interrupted.

MATHIAS CORMANN: You say that. Hang on, earlier in the week you would have said he is not going to back flip on his proposal to increases taxes on small and medium sized business. He must...interrupted.

KIERAN GILBERT: True, but this is about sharpening up their criticism of the tax cut for the big end of town, for the banks and so on. 

MATHIAS CORMANN: Let me finish my sentence for once. Bill Shorten must back in business tax cuts for all businesses across Australia because if we lock in a higher business tax rate for any business in Australia than what is faced by business in other parts of the world, we are locking in a competitive disadvantage for businesses in Australia. That means we are putting workers in Australia working for those businesses at a competitive disadvantage. If Bill Shorten says it is good for businesses below $50 million to have a lower business tax rate, it is good for the same reason for every other business, among them employing millions of Australians.  

KIERAN GILBERT: Have you done a secret deal with Pauline Hanson to be revealed after the by-elections?

MATHIAS CORMANN: No. I do not think it is any secret that we will continue to work hard to persuade Pauline Hanson and others of the importance of a lower, globally more competitive business tax rate for all businesses across Australia, because we want to attract more investment, to generate stronger growth, create more jobs and to secure higher wages over time. 

KIERAN GILBERT: So no other wink and a nod that something will be delivered?

MATHIAS CORMANN:No. There is no secret deal. That is just another Bill Shorten, Labor desperate conspiracy theory. 

KIERAN GILBERT: But you will bring it back after the winter break? Still hopeful?

MATHIAS CORMANN: This is very important economic reform for working families across Australia. We want to ensure that working families across Australia have the best possible opportunity to get ahead, so we need to ensure that the businesses that employ them can be competitive, viable and profitable into the future. So yes, we will continue to do what is right. We will continue to work very hard to secure the passage of this important reform through the Parliament. 

KIERAN GILBERT: Finance Minister, as always, appreciate your time.

MATHIAS CORMANN: Always good to talk to you. 


Senator the Hon Mathias Cormann, Minister for Finance, Perth