Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Joining us now Laura is the Leader of the Government in the Senate, Finance Minister Mathias Cormann. Let us move on from that issue, we have heard a lot about that from the Prime Minister today. I want to ask you specifically about the Budget reply, a $2.3 billion initiative to support cancer patients and their families, that is going to be very well received isn’t it?
MATHIAS CORMANN: We have already committed $9 billion in funding over the forward estimates for about 130 cancer treating drugs on the PBS. We have made decisions right across the health portfolio to boost funding, to ensure that patients across Australia can have more timely and affordable access to high quality health care, whether that is stopping Labor’s freeze of Medicare benefits schedule indexation, whether that is boosting funding for diagnostic imaging or whether it is listing about 2,000 new medicines on the Pharmaceuticals Benefits Scheme. What we got from Bill Shorten yesterday was not a plan for a stronger economy, but essentially a proposed agenda for $200 billion in higher taxes. Higher taxes, which would harm the economy, which would put jobs at risk and which would hurt families. The truth is, a strong economy is actually central to everything, A strong economy is what will help us fund all of the important services that we provide as a Government, including and in particular in health.
LAURA JAYES: Labor is also promising to automatically list any drugs on the PBS that are approved by the committee, I think there is about 18 at the moment. Why haven’t you done that and do you think they are doing the wrong thing here by declaring that they will list it anyway and do they lose any negotiating power with the drug companies?
MATHIAS CORMANN: Laura, we actually have done that. Labor is playing catch up. It is quite cynical and hypocritical for Labor to say this now, because when Labor was last in Government, they stopped doing it. Labor had made such a mess of the Budget, they had created such a deterioration of the Budget bottom line, that they stopped listing medicines on the PBS even though they had been recommended by the independent pharmaceutical benefits advisory committee as being clinically effective and cost effective. They had stopped listing them, saying the listing would be delayed until such time as fiscal circumstances would permit. That was the direct impact of Labor’s mismanagement of the Budget…interrupted
KIERAN GILBERT: Labor denies that, Labor says that it might not have got to some of those recommendations before they lost office, but prior to that everything was listed.
MATHIAS CORMANN: They made explicit statements and I am happy to refer you to documentary evidence in their Budget papers, all the way back to 2011, that they had made decisions to delay listings of medicines, which had been recommended for listing on the PBS because they had run out of money. They had run out of money. They had made such a mess of the Budget. Now, in our period of Government, when the PBS recommended medicines for listing, we have listed them. We have listed 2,000 new medicines at a cost of about $10 billion to the Budget. That is what you can get on the back of a stronger economy and on the back of better management of the Budget, getting your expenditure growth across the Budget as a whole under control.
LAURA JAYES: Minister, low paid workers will also get a further tax cut under Bill Shorten, he made that explicitly clear in his Budget reply last night. Is this essentially a tax cut for people who are net beneficiaries of the tax system anyway?
MATHIAS CORMANN: Bill Shorten misled the Australian people last night. Anyone who earns more than $45,000 will actually be worse off under Bill Shorten’s plan. Bill Shorten last night, in the fine print, opposed $143 billion worth of income tax relief that is locked into our Budget forward estimates and medium term projections. $143 billion worth of income tax relief opposed by Bill Shorten last night and we have already got more than $200 billion worth of higher taxes under Bill Shorten, which would be imposed if he was successful, whether that is on retirees, low income earners, housing, on investment, on income, on small and family business, on electricity, you name it. If Bill Shorten was elected at the next election, the economy would be worse off, families would be worse off and jobs would be put at risk.
KIERAN GILBERT: The Budget might not be worse off though because in terms of the revenue, you might be critical of the ways he is going about it, in terms of the tax approach for higher income earners, in terms of dividend imputations and so on, but it gives them a lot more wriggle room and he and Chris Bowen are saying there will be a better Budget bottom line. So while you might look to the history of six years ago, now their approach is to say that they will have a better Budget bottom line than you do.
MATHIAS CORMANN: They might try and claim that today, but that is because they are using the economic parameter information based on our stronger economic growth and our stronger employment growth. But they are ignoring the fact that more than $200 billion in higher taxes, a $200 billion higher tax burden on the economy, will lead to less investment, lower growth, fewer jobs, higher unemployment and not only does that drive wages down across the economy, it also drives Government revenue down compared to what would be the circumstance under stronger economic growth and stronger employment growth. One of the reasons why our Budget position has improved in recent years is because we had stronger than anticipated employment growth, which means there are more Australians paying income tax, there are fewer Australians on welfare. Bill Shorten and the Labor Party made this mistake last time. This is the sort of high taxing and high spending approach they took last time and that is why they lost control of the Budget. A higher tax burden on the economy will drive down economic growth, which will mean that over time the Government will end up with less money and less capacity to fund the important services Australians rely on.
LAURA JAYES: Do you think a 49 per cent highest marginal tax rate will drive down economic growth as well because we are talking about people on $300,000, $400,000 $1,000,000 a year being taxed at that rate. Does that really have a huge economic effect?
MATHIAS CORMANN: Under our plan, by 2024, 94 per cent of Australians would not pay more than 30 cents in a dollar in tax. That is a very important incentive and encouragement for people to work hard and to allow them to keep more of their own money.
KIERAN GILBERT: Mathias Cormann you have got to go to Senate Estimates. We will talk to you soon, appreciate that.