Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
FRAN KELLY: Well the man in charge of getting this legislation through the Senate is Finance Minister and Senate Leader Mathias Cormann. Senator Cormann welcome back to Breakfast.
MATHIAS CORMANN: Good morning. Good to be back
FRAN KELLY: You have promised the tax cuts would be put to the Upper House in August, they are not listed on the Senate agenda for when Parliament resumes today. Labor says that means you are preparing to dump the plan. Are you?
MATHIAS CORMANN: No. There is a sitting fortnight coming up. Three out of the four days this week have been earmarked by the Senate, not on our wishes but at the Senate’s insistence to deal with Senator Leyonhjelm’s euthanasia legislation. There is not that much Government business time available this week. So it really depends on how quickly the Senate deals with the euthanasia legislation as to whether or not we will be able to bring it on this week or whether it is next week, but it will certainly be dealt with this sitting fortnight.
FRAN KELLY: And when you say it will be dealt with, will it be introduced, debated and brought to a vote even if you are not sure you have got the numbers to pass it?
MATHIAS CORMANN: It has long been introduced. It will definitely be put to a vote this fortnight.
FRAN KELLY: Even if you do not have the numbers?
MATHIAS CORMANN: It will be put to a vote this fortnight. But obviously we are working to secure the passage of what is very important reform for working families around Australia. We want families around Australia to have the best possible opportunity to get ahead, which is why we need to ensure that the businesses that employ them and pay their wages have the best possible opportunity to be viable, to be competitive, to be profitable into the future.
FRAN KELLY: And how much compromise are you prepared to consider to do that? We know that Senator Hinch for instance, will back you if you limit the tax cut to businesses under $500 million, which would carve out the big banks.
MATHIAS CORMANN: We do not negotiate with crossbencher Senators through the media. In relation to that particular proposition what we have pointed out is the argument that Bill Shorten used to prosecute very forcefully and that is if you put such a cap in place you provide a perverse incentive to business to downsize and in worst-case scenarios to lay off people. We…interrupted
FRAN KELLY: So that is a no?
MATHIAS CORMANN: What we are saying is we want to provide incentives for smaller businesses to become bigger businesses, so they hire more people, rather than to provide an incentive to bigger businesses to become smaller businesses. The truth is that our largest corporations here out of Australia are on the front line of global competition. They hire many Australians directly, they buy products and services from small and medium sized businesses. If we weaken our bigger businesses, then that weakens the economy as a whole and costs jobs.
FRAN KELLY: What about strengthening the smaller businesses by bringing on the tax cuts and more quickly, more speedily getting them to their 25 per cent tax cut? You could use the money saved on dumping the cuts to the big end of town for that. Is that on the table?
MATHIAS CORMANN: What is on the table is that we want to pass our ten year plan to ensure all businesses around Australia employing more than ten million Australians have the best possible opportunity to be successful and profitable into the future so they can hire more people and pay them better wages over time…interrupted
FRAN KELLY: Sure, but you have watered down the National Energy Guarantee in a bid to get it over the line. Will you consider changing and adapting your corporate tax cuts?
MATHIAS CORMANN: Again, there is a ten year plan that is on the table. We will continue to have the conversations with the crossbench and over this fortnight, it will be dealt with through the Senate.
FRAN KELLY: Home Affairs Minister Peter Dutton has said Labor has used the tax cuts against the Coalition in the Longman by-election. He said we should not give them the ammunition to throw back at us. We heard Michelle Landry earlier. How do you plan to convince the crossbench when some of your own colleagues do not believe in this policy.
MATHIAS CORMANN: All of our colleagues believe in delivering on our plan for a stronger economy and more jobs. What our colleagues are saying is that if you cannot get it through the Senate, then obviously that is a problem. I readily concede that. We have got a fortnight coming up. This is very important for working families around Australia. If we put businesses in Australia at a competitive disadvantage with businesses in other parts of the world by imposing higher taxes here, we are putting workers here in Australia at a competitive disadvantage. We all want to be able to provide more support across a whole range of important public policy areas. The basis on which you can do that is on the back of a stronger economy generating more revenue for Government.
FRAN KELLY: Well just on that, because you have struggled, I think, to win that argument. That is what the Longman by-election would suggest. Economist Saul Eslake says the Coalition has not presented a persuasive argument to Parliamentarians or to the public on how this would benefit the Australian economy. Let us have a listen.
SAUL ESLAKE [EXCERPT]: People are pointing to the US as an example, but in reality, there does not seem to have been any lift in business investment since the Trump Administration’s tax cuts came in. In other countries like the UK and Canada, which have been cutting corporate taxes for much longer, there is no evidence at all that they have done anything to boost employment growth or business investment or productivity or innovation.
FRAN KELLY: That is economist Saul Eslake on the Talking Business podcast a few days ago. No evidence at all.
MATHIAS CORMANN: That is actually wrong. If you look at the economic data in the US in the second quarter post the Trump tax cuts, the US is recording in excess of four per cent growth on an annualised basis. Their unemployment rate now has a three in front of it and wages growth in the US is the strongest it has been in a very long time…interrupted
FRAN KELLY: And what is investment growth?
MATHIAS CORMANN: Massive capital investment has been returned to the United States. The evidence on the ground is very clear, the Trump tax cuts have led to stronger investment, to stronger growth, to a lower unemployment rate and to higher wages.
FRAN KELLY: Before we finish this, if the legislation goes to a vote in the Upper House this fortnight, as you have said it will and it fails, will the Government abandon this policy or take it to the next election?
MATHIAS CORMANN: I am focused on behalf of the Government to secure the best possible outcome through the Senate. I am not in charge of the Government on my own…interrupted
FRAN KELLY: What would your view be? Go to the next election with it?
MATHIAS CORMANN: My view is that we should try and secure the passage of this legislation this sitting fortnight. It is very important reform for working families around Australia.
FRAN KELLY: You are listening to RN Breakfast, our guest is the Federal Finance Minister Mathias Cormann. Also on the top priority list for this year, the National Energy Guarantee, it goes to the Coalition party room tomorrow. How would you describe the level of support in the party room for the NEG?
MATHIAS CORMANN: When it was last discussed as a policy there was strong and overwhelming support. A lot of work has been done by Josh Frydenberg in particular since then. This is a policy which is designed to bring down electricity prices, to improve reliability. It has got the strong support of consumer groups, of small business, of the manufacturing sector…interrupted
FRAN KELLY: Has it got the strong support of your Party? Will it get the green light tomorrow?
MATHIAS CORMANN: I certainly hope so. This will come in front of the party room and will be discussed at the appropriate time. I hope that as it did last time that there will be strong and overwhelming support for what is a very important reform to bring down electricity prices and improve the reliability and stability of our electricity system.
FRAN KELLY: We understand the Prime Minister will guarantee tomorrow to sign up for what has become known as NEG plus, the ACCC recommendation that the Government becomes the buyer of last resort of new dispatchable power projects to ensure they get financing. Now the ACCC did not specify coal, but it has been seen as a way for the Government to underwrite new coal-fired power generation should it come to the table to win the support of wavering MPs. Is that the plan?
MATHIAS CORMANN: The ACCC has made relevant recommendations on how the National Energy Guarantee can be further strengthened and the Government is accelerating consideration of a number of recommendations put forward by the ACCC. The Treasurer and the Environment Minister have written to the Prime Minister proposing to develop options to ensure that that can happen. This is in a technology neutral fashion, but it is designed to further provide certainty to investors to put additional investment into in particular dispatchable power generation.
FRAN KELLY: Barnaby Joyce has apparently named his price for his support for the NEG according to Fairfax Media. If the Guarantee does not bring down prices as promised, then the Government goes to plan b, which is a divestment threat to break up the big energy firms that control energy production and retail. Would you wield that big stick?
MATHIAS CORMANN: That is not something that we are looking at. This is all going to be part of the internal conversation. At the right time Josh Frydenberg as the responsible Minister will continue to make public statements about our plans moving forward.
FRAN KELLY: Let us move to another topic now, you are the Federal Finance Minister. The Government has been under pressure over the allocation of almost half a billion dollars to the Great Barrier Reef Foundation without a request from that organisation or a competitive tender process. As the nation’s Finance Minister, are you comfortable with the fact that a substantial amount of money was paid out in a lump sum, six years funding, with no tender to a private charity with only six full time staff and no clear plan for how it will be spent? Is that best practice?
MATHIAS CORMANN: Yes I am comfortable. It is a very significant investment into the future health of the Great Barrier Reef. This is something that the Parliament, including the Labor Party has voted to support. The only Senator from recollection that asked questions about this in Senate Estimates was Senator Leyonhjelm. This is something that Labor has sort of jumped on in very recent times. This is a very substantial and important investment into the future health of a very significant Australian asset.
FRAN KELLY: And just finally, later this morning we will be speaking with David Leyonhjelm. His Private Member’s Bill on the Territory’s legislation for euthanasia is due to be debated, as you said, in the Senate this week. He has said he will not guarantee future support for the Government because he claims the Prime Minister has reneged on a deal to allow a vote in both Houses if it is successful in the Senate. Did you think that the Prime Minister had promised a conscience vote in both Houses? What was you understanding?
MATHIAS CORMANN: The Prime Minister has denied that and…interrupted
FRAN KELLY: What was you understanding?
MATHIAS CORMANN: I was not part of any of the conversations. All I can say is that the Prime Minister…interrupted
FRAN KELLY: You are the Leader of the Government in the Senate.
MATHIAS CORMANN: Indeed, I am and I was not part of any conversations in which such a commitment was made. The Prime Minister himself has also denied that such a commitment was made. Indeed, in the Senate this week, this is being discussed not because the Government facilitated this, but because the Labor Party, the Greens and a sufficient number of crossbenchers voted to make that happen. The Senate is in charge of its own destiny. We will be debating this legislation this week. The Coalition, as is appropriate will have a conscience vote in relation to this. Let us just see what the Senate ultimately decides.
FRAN KELLY: Okay Mathias Cormann thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.