Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
QUESTION: Minister, what do you think of the timing of Labor’s energy announcement?
MATHIAS CORMANN: It is a matter for them.
QUESTION: You don’t think they’re trying to overshadow the Budget?
MATHIAS CORMANN: What Labor has announced would make the economy weaker, would cost jobs, would harm families around Australia. It is up to them when they want to demonstrate to the Australian people again that under a Shorten Labor government the economy would be weaker, the country would be weaker and Australians would be poorer.
QUESTION: You don’t have a defined policy in this area. Have you left the door open for Labor to make this move?
MATHIAS CORMANN: I completely disagree with you. Our track record is there for all to see. We have a very clear policy to meet the emissions reduction target that we have signed onto in Paris. People need to remember that when Labor lost government in September 2013, they actually were running behind meeting the 2020 emissions reduction targets signed onto in Kyoto by about 755 million tonnes of CO2. We are now on track to exceed the 2020 emissions reduction target committed to in Kyoto by 367 million tonnes of CO2. The Labor party is obsessed with harming the Australian economy, with harming Australian families in the pursuit of an ideological and misguided agenda. We are taking practical measures to do the right thing by the environment in a way that is economically responsible. If Bill Shorten wants to go back to where Kevin Rudd and Julia Gillard have been in the past and that is pursue an agenda that will harm the economy, cost jobs, harm families, then he still has a lot of explaining to do. A bit more detail is out there today, but he is still not explaining to families how much it is going to cost them. He is still note explaining to people how much of their money he wants to send overseas to buy international carbon permits. So there is still a lot of explaining to do.
QUESTION: So are you saying that it amounts to a carbon tax?
MATHIAS CORMANN: Bill Shorten and the Labor party want to send tens of billions of dollars in Australian money overseas, to spend overseas on carbon permits overseas when that money would be much better spent in the Australian economy, generating economic growth in Australia, generating jobs growth in Australia. That is our position. Our position is that we are able to meet the emissions reduction target that Australia has signed onto in Paris, by 2030, using the policy settings that we have already announced, including, our Emissions Reduction Fund and our overall package of climate change polices. As we are on track to meet and indeed exceed the 2020 emissions reduction target signed onto in Kyoto.
QUESTION: But is it a carbon tax?
MATHIAS CORMANN: It clearly is a carbon tax. Because Bill Shorten is going back to the discredited Shorten Gillard way of the past. He will say, like Julia Gillard did, there will be no carbon tax under a government I lead, but the Australian people know better than that. The Australian people know that if Bill Shorten was able to get into government, he would hit the economy, he would hit jobs, he would hit families with higher electricity prices and he will harm the economy.
QUESTION: Now Labor says that your suggestion amounts to nothing more than a predictable scare campaign. What is your answer to that?
MATHIAS CORMANN: I am not going to provide commentary on commentary. I think it is there for all to see. Bill Shorten by his own admission wants to send tens of billions of dollars in Australian money overseas to spend on international carbon permits, when that money is much better invested here in Australia, much better spent here in Australia, to help grow the Australian economy. That is by Labor’s own admission. That is not a scare campaign. It is just pointing out the facts.
QUESTION: Just on the Budget, we have seen another cash splash of $1 billion into infrastructure. Is it wise to be spending so much off the back of short term revenue gains?
There are a couple of things that I reject in that question. Firstly, what you refer to as a cash splash is a $1 billion investment in productive and productivity enhancing economic infrastructure across regional Australia, which will help get Australian products to market more safely, more efficiently and at a lower cost. We are an open trading economy. We need to be internationally competitive in getting our products to market efficiently and at the lowest possible cost. That is an important part of our economic strategy into the future. Now in relation to revenue gains, I am quite bemused by this. It is a ridiculous proposition, because the iron ore price for example today is running at about $80 a tonne. When we came into Government, when Labor lost government it was running at $120 a tonne. So it is $40 a tonne lower. The only thing that is different now, is that Labor always assumed as part of their revenue forecasts, that high commodity prices would continue forever and ever, they spent all the money they thought they would raise. When the inevitable happened they ran out of cash. They ended up in a massive deficit position and in a deteriorating budget position. We have been very prudent with our revenue forecasts. We have been very prudent with our commodity price assumptions. For example for some time now we have assumed that iron ore price would be $55 a tonne. Well its $80 a tonne. So that is better than what has been assumed in the Budget. But the proposition that somehow that we have got a revenue windfall, when the iron ore price for example is $40 less than what is was and we are assuming that it could be as much as $65 less than it was when we came into Government is just wrong. Metallurgical coal we have assumed that it would go down to about $120 a tonne by the September quarter. Now as it happens its running at about $200 a tonne. We have made, cautious, realistic and careful assumptions. So when you talk about windfalls they are windfalls compared to our cautious and realistic assumptions rather than against what we inherited in the past.
QUESTION: Senator, what is more important as a Budget rule? Meeting and sustaining the tax to GDP cap or putting revenue spikes against debt?
MATHIAS CORMANN: Again, I reject the proposition of revenue spikes. I completely reject the proposition of revenue spikes. Again, the fact that we have a 23.9 per cent tax as a share of GDP tax cap in itself, puts a level of stability into the assumed revenue projections, which is also why we have been able to deliver significant income tax relief for hardworking families in the past. It is why we have been able to deliver a more competitive business tax rate for businesses with a turnover of up to $50 million, reducing their corporate tax rate down to 25 per cent, which has already been legislated. The truth is in order to keep the economy strong, in order to ensure employment growth as strong as possible, and remember, we have been able to create more than 1.2 million new jobs in the economy during our period in government. A very important component of that is to ensure that we have our tax policy settings right. A very important component of that is to ensure that the overall tax burden in the economy from a federal level is not more than 23.9 per cent as a share of GDP. Labor has already said that they would hit the Australian economy with more than $200 billion in higher taxes that would harm investment. It would hurt growth. It would cost jobs. It would lead to higher unemployment and higher unemployment would lead to lower wages over time. Whereas under the Coalition, our agenda demonstrably has delivered stronger growth, stronger employment growth, lower unemployment which over time will lead to stronger wages growth.
QUESTION: Sorry, just a follow up, in MYEFO that tax cap was pushed out to 2025-26, can we safely assume it has come forward since then?
MATHIAS CORMANN: The Budget will be delivered by the Treasurer tomorrow night…. Interrupted
QUESTION: Due to the non-existent revenue spikes?
MATHIAS CORMANN: The Budget will be delivered by the Treasurer tomorrow night.
QUESTION: Economists do say there is a revenue spike off the back of higher company tax receipts. Are you saying that there isn’t that in the Budget this week?
MATHIAS CORMANN: People are making assessments based on our prudent assumptions. Compared to our prudent assumptions it is true that in more recent times revenue has, and I release monthly financial statements every month and what people have been able to see in recent years is that compared to our prudent assumptions, revenue has been tracking higher, which is why in 2016-17 and 2017-18, the two last financial years for which there are Final Budget Outcomes, the Budget bottom line was about four billion dollars better than anticipated at Budget time in 2016-17 and about $19.3 billion better, in 2017-18 than assumed at Budget time. But the point I am making is this. The proposition that somehow we have been the beneficiaries of revenue windfalls when we had to write down $180 billion worth of revenue that Labor had previously assumed out of our Budgets is ridiculous. If people refer to commodity prices, commodity prices continue to be lower. Key commodity prices like iron ore continue to be significantly lower than they were when we came into Government. That is the point I am making.
QUESTION: Minister, why is the Government committing half a billion dollars to upgrade the M1 in Queensland?
MATHIAS CORMANN: You know that we are committed to productivity-enhancing infrastructure. We are committed to infrastructure investment that helps get families back home faster and more safely. We are committed to congestion-busting, productivity-enhancing economic infrastructure. The Treasurer will have more to say about all of that tomorrow.
QUESTION: Minister, modelling shows today that low to middle income earners would get just up to four dollars a week under your tax package, income tax package. Can you rule out bringing forward some of those changes?
MATHIAS CORMANN:Again the Budget will be delivered Tuesday, tomorrow night. One more sleep and you will be able to see what is in the Budget tomorrow night.
QUESTION: An Ipsos poll out today has found that only 13 per cent of respondents believe the Government is doing a good job on climate change. If that is the way voters are feeling have you dropped the ball on this?
MATHIAS CORMANN: I completely disagree with the premise of your question. We are doing what we said we would do. We signed onto a 26 per cent emissions reduction target in Paris. If you look at it on a per capita basis we have more than halved emissions in Australia. We are on track to halve emissions in Australia. Our emissions reduction achievements on a per capita basis is among the best in the world. We have made our commitments. The Labor party today has announced a series of measures which would harm the economy, which would cost jobs, which would drive up unemployment, which would be bad for hard-working families around Australia. They can go to the next election and explain to hard-working families why it is a good idea to weaken the economy, weaken the country and make them poorer and to send tens of billions of dollars of their money overseas.
QUESTION: Minister, just on those Budget assumptions again. How can Australians trust the forecasts for wages growth in tomorrow’s Budget given that it has been overestimated in each of the past five?
MATHIAS CORMANN: We pride ourselves in making very careful, very prudent forecasting assumptions based on advice. But we also report against our Budget forecasts. If you look at our performance against Budget forecasts you will see that in 2016-17 and 2017-18 we have well and truly outperformed our Budget forecasts. We are on track to outperform our Budget forecasts in 2018-19 again. But you know there are always a lot of moving parts. These are estimates. In the end I think that people can see that compared to our predecessors, we are actually delivering better outcomes than forecast when Wayne Swan in every Budget that he delivered, the ultimate outcome was invariably worse than what he anticipated.
Thank you very much.