Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
PATRICIA KARVELAS: The Federal Government has revealed it will bring forward company tax cuts for businesses with a turnover of up to $50 million a year. The move would mean the effective tax rate for eligible businesses would be cut to 25 per cent immediately. The news comes as Prime Minister Scott Morrison continues his efforts to articulate the Coalition’s economic vision ahead of the next election. I caught up with Finance Minister Mathias Cormann a short time ago.
Minister welcome to RN Drive.
MATHIAS CORMANN: Good to be back.
PATRICIA KARVELAS: You have costed this measure at $3.2 billion, will it be offset by savings measures?
MATHIAS CORMANN: This is not a spending item. This is not an item where you need to reduce expenditure because of higher spending on other higher priority areas. This is a reduction in taxes, which is treated slightly differently and has been treated slightly differently in previous budgets, including in the last Budget when we delivered a net reduction in tax as a result of policy decisions. Yes, it will cost the Budget bottom line about $3.2 billion over the forwards, but over the medium term it will cost the Budget significantly less than the measure that it has replaced.
PATRICIA KARVELAS: It is looking as though One Nation Leader Pauline Hanson will get the casting vote on this. She says she doesn’t like it. How will you get her onside?
MATHIAS CORMANN: We will put this plan to the Senate. If the Senate does not want to support small business and seven million working Australians working for small and medium sized businesses then we will ask the Australian people to decide.
PATRICIA KARVELAS: So you want to take it to the election?
MATHIAS CORMANN: No, we want to legislate it. But we will not be doing any horse trading. This is an important policy for the future economic opportunities of Australia families. There are seven million Australians or thereabouts who work for about 3.3 million small and medium sized businesses. We will put this to the Senate. We will engage with Labor, the Greens, the crossbench in a courteous fashion as always. We would urge Labor and the Greens and all crossbenchers to support this as an important measure to boost investment, boost growth, create more jobs and create better opportunities for families around Australia to get ahead.
PATRICIA KARVELAS: Pauline Hanson has proposed cutting payroll taxes, obviously you would have to work with the State governments to do that instead. She says that would work better perhaps. Is that something you should consider as well?
MATHIAS CORMANN: We do not have jurisdiction over payroll taxes. So we can have an academic argument about something that we have not got the Constitutional power to do. Or we can actually make a practical, tangible difference to millions of small and medium sized businesses around Australia and the seven million Australians who work for them.
PATRICIA KARVELAS: The Prime Minister Scott Morrison says voters need to understand what a Government has in his heart not just in its head. Do you believe he is doing a better job of explaining that than Malcolm Turnbull did?
MATHIAS CORMANN: I think that Scott Morrison is doing an outstanding job. Our Government over the last five years having inherited a weakening economy, rising unemployment and a rapidly deteriorating Budget positon has worked very hard to turn that situation around. But … interrupted
PATRICIA KARVELAS: But the question was about the way he was doing it, compared to Malcolm Turnbull.
MATHIAS CORMANN: I am not going to provide comparative commentary. I had a very good working relationship with Malcolm Turnbull. I was a senior member of his team. I did the best I could to help make him and his Government as successful for the Australian people as we possibly could be. I believe that Scott Morrison is doing a great job. He is selling our economic message very well.
PATRICIA KARVELAS: According to Mark Riley from Channel 7, you are one of the top people on Malcolm Turnbull’s hit list, so to speak. I am being a little bit over the top, but he is not happy with you. Have you had any interactions with him since he has left?
MATHIAS CORMANN: We have not spoken since the events of that week. I understand... interrupted
PATRICIA KARVELAS: Have you reached out?
MATHIAS CORMANN: ...I understand that he would be disappointed. But I have explained my decisions and I do not really have anything further to add.
PATRICIA KARVELAS: But have you reached out?
MATHIAS CORMANN: I am not going to provide commentary on these things.
PATRICIA KARVELAS: Would you like to reconcile?
MATHIAS CORMANN: These are matters for down the track. I am focused on the job that I have for the Australian people, which is to help make Australia stronger, help create a stronger economy with more jobs and better opportunities for Australian families to get ahead.
PATRICIA KARVELAS: Peter Costello, who is of course a very long serving Treasurer for a Coalition Government says you are operating in a parallel universe, promising to deliver economic policy over ten years. Is that a parallel universe?
MATHIAS CORMANN: No. I disagree with him. In this job there are a lot of commentators…interrupted
PATRICIA KARVELAS: He knows a bit about the economy, he is not really a commentator, he has been a Treasurer.
MATHIAS CORMANN: He is a commentator now. He is not the Treasurer now. He is expressing an opinion. He is entitled to his opinion. What I would say is that we are not promising personal income tax cuts over an eight year period, we have legislated personal income tax cuts. Indeed, we have legislated income tax relief for hardworking families, prioritising low and middle income earners, but also making sure that all working Australians receive the right incentive and the right encouragement and the right reward for effort, in particular by making sure that bracket creep does not continue to take Australians backwards.
PATRICIA KARVELAS: Many Australians would probably argue that they key issue facing them, in terms of the economy is the fact that their wages are not going up very fast, that they remain stagnant despite better than expected growth. Why aren’t wages growing faster?
MATHIAS CORMANN: When we came into Government, we inherited a weakening economy and rising unemployment. If we had not implemented our plan for a stronger economy and more jobs, wages would be lower today. As the economy continues to strengthen, as more jobs continue to be created and competition for workers in the economy continues to increase and the excess supply in the labour market continues to reduce, wages will go up by more. That is basic economics. If we had not turned the situation around that we inherited from Labor, wages today would be lower because unemployment would be higher and the economy would be weaker. If Labor was elected at the next election and got to implement $200 billion worth of higher taxes on families, savings, investment, housing, small and medium sized business, you name it, the economy would be weaker because there would be less investment and there would be fewer jobs, higher unemployment and lower wages over time. There is no question …interrupted
PATRICIA KARVELAS: The IMF says growth will peak this year and then start to fall. Will you take responsibility for that too?
MATHIAS CORMANN: We will continue to ensure that the Australian economy is as strong as it possibly can be. Yes, from time to time, we will have to deal with global economic headwinds. From time to time we need to ensure that we are in the best possible position to deal with challenges. But that is not a reason not to do everything we can to be as competitive as we can be. Higher taxes will make it more difficult for us to be successful in the context of a more difficult global economic environment.
PATRICIA KARVELAS: If you are just tuning in the Finance Minister Mathias Cormann is my guest. We are obviously talking about small business tax cuts coming forward and few other issues. The Australian share market lost around two per cent of its value today after markets fell heavily on Wall Street, underpinning all this are concerns about rising US interest rates and the impact of the trade war between the US and China. Is this just market panic or something more serious?
MATHIAS CORMANN: I am not a market commentator. The reality is that equity markets go up and down. You have to look at these things over the medium to long term and you have to look at the economic fundamentals. The economic fundamentals for Australia and indeed for the United States and more generally in the global economy are better today than what they have been for some time. On a daily or weekly basis there will be fluctuations. That is just the normal course of the operation of markets.
PATRICIA KARVELAS: Minister, have you seen the report from the review of religious freedoms chaired by Phillip Ruddock?
MATHIAS CORMANN: Personally I have not, no.
PATRICIA KARVELAS: Should it be released?
MATHIAS CORMANN: It will be released after the Cabinet has concluded its deliberations. It will be released together with the Government’s response to the report.
PATRICIA KARVELAS: Okay, but given some of it was leaked and we have been having a debate, kind of, stabbing a little bit in the dark with parts of the report that have been released, doesn’t it make sense to have a full, proper, informed debate?
MATHIAS CORMANN: We will have a full and proper and informed debate after the Government has concluded its deliberative processes, after the Cabinet has concluded its deliberative processes and is in a position to release its considered response and its considered decisions in relation to the way forward, at the same time as it releases an input into its consideration of these matters.
PATRICIA KARVELAS: Scott Morrison is calling for religion to be protected in the same way as gender and race. Do you want to see that too?
MATHIAS CORMANN: There is actually already legislation in place now which is Labor Party legislation, which provides protections against discrimination on religious grounds to various educational institutions established for a religious purpose. I am looking here at the Explanatory Memorandum of the Bill which was put forward by Labor in 2013 which said very clearly that … interrupted
PATRICIA KARVELAS: And you support that? Yes it does, you are right, absolutely. So do you support it?
MATHIAS CORMANN: Do I support what?
PATRICIA KARVELAS: That discrimination, that it builds into that legislation.
MATHIAS CORMANN: I am just pointing to the hypocrisy of Labor given some of the statements that I have heard from Bill Shorten and Penny Wong and others … interrupted
PATRICIA KARVELAS: Sure but I just want to know your view, do you support it?
MATHIAS CORMANN: We have not made the final decision on the best way forward. These are sensitive issues. We have asked for a review by an expert panel which was chaired by Phillip Ruddock, which has delivered its report to the Government in May. There is now a deliberative process underway and at the … interrupted
PATRICIA KARVELAS: I know all that, but just you Mathias Cormann, you are a senior member of the Government, do you think it is okay that schools retain this right to kick out students on the basis of their sexuality?
MATHIAS CORMANN: This is something that was legislated by Labor in 2013.
PATRICIA KARVELAS: But do you, Mathias Cormann, support it?
MATHIAS CORMANN: I am not just an individual, I am a member of a Cabinet which is currently considering these issues. These are very important, very sensitive issues. The reason that …interrupted
PATRICIA KARVELAS: That is why I am asking you.
MATHIAS CORMANN: That is why I am quite happy to answer all of those questions after the Cabinet has concluded its deliberative processes and formed a final view. I am not going to provide a running commentary on something that... interrupted
PATRICIA KARVELAS: But that existing discrimination, through exemption, do you think it is fair?
MATHIAS CORMANN: I note that there is a law which was introduced by the Labor Party which will provide … interrupted
PATRICIA KARVELAS: And do you think it is fair?
MATHIAS CORMANN: I am not going to, you can ask me that question whichever way you want … interrupted
PATRICIA KARVELAS: You either think it is fair or you don’t.
MATHIAS CORMANN: It is the current law. It is the current law … interrupted
PATRICIA KARVELAS: And is it a fair law?
MATHIAS CORMANN: We are currently considering, as a Cabinet, if and how this should be adjusted or whether, and to what extent any recommendations that the Ruddock Review has made in relation to this should be adopted and if so in what way.
PATRICIA KARVELAS: So you do not have a view about the current law?
MATHIAS CORMANN: I will not express a view until such time as, part of the team, the Cabinet team of the Morrison Government, we have concluded our deliberations in relation to these matters.
PATRICIA KARVELAS: Mathias Cormann thanks so much for your time.
MATHIAS CORMANN: Always good to talk to you.