Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
ROSS GREENWOOD: I want to take you now to those income tax cuts that are due from July 1. As you know they are part of three stage theory by the Government to try and bring them in. 2022 is the next date and then 2024 comes after that. Now the important part about this is to try and get them through. The Government has said that we want them all to go in one block. In my opinion the real great tax reform that is coming is the later tax cuts. The ones where people between $46,000 a year and $200,000 a year end up with a rate of just 30 cents in the dollar. Now if you want people to work harder, that is something that gives them real inspiration to work a bit harder and to make a few extra dollars. But the fact of the matter is right now, the Government doesn’t have the numbers on the Senate floor to be able to pass these income tax cuts in full. Now last night on the program we had Senator Rex Patrick from the Centre Alliance. And they seem to be key in trying to get this through the Senate. But that they want is things such as more certainty over energy prices. Even some are suggesting, Pauline Hanson for one, says I think having a coal-fired power station is more important. The person who has got to try and navigate this through the Senate is our Finance Minister, Mathias Cormann, who joins me on the line right now. Mathias, many thanks for your time.
MATHIAS CORMANN: Good to be back.
ROSS GREENWOOD: Okay, it is certainly after the election. And congratulations on that victory. But I just want to take you to this because, this is a cornerstone of the Government’s policy, these tax cuts. You took them to the election and right now it seems you might have to do a bit of horse trading in order to be able to get them through the Senate. Is that the way in which you see it right now?
MATHIAS CORMANN: No that is not the way I see it. There is a very straight forward way for this income tax relief to be legislated by the Parliament very swiftly and that is for Anthony Albanese and the Labor party to respect the verdict of the Australian people at the last election. At the last election, the Australian people voted in favour for our plan for income tax relief. They voted in favour of our plan to build a stronger economy, to secure our future on the back of a lower tax burden on working families. They voted against the politics of envy and the class warfare agenda of higher taxes targeting higher income earners, the so called top end of town. They voted against that because Australians understood that that sort of agenda would make our country weaker and would make Australians poorer. So this is really the first major test for Anthony Albanese. Has he learned the lesson from this election …interrupted
ROSS GREENWOOD: Okay, I was going to ask you about that, I want to jump in there if that’s okay because one of the things I have spoken with both Jim Chalmers, the Shadow Treasurer, plus also Josh Frydenberg about this. I just asked about whether on both sides there is any sense of a possibility of an agreement with the Labor party. In other words, there is a bit of pragmatism to try and push the country forward to get these tax cuts through, which ultimately the majority of Australians have voted for at the election. Do you believe that there is any give in the Labor party that could see these tax cuts go through in total?
MATHIAS CORMANN: I would like to see the Labor party embrace policies supporting opportunity and aspiration. I would like to think that the Labor party will listen and learn from the experience at the last election and decide to back our tax plan in full. Our tax plan prioritises low and middle income earners in the first instance, but it also does pursue structural reform addressing bracket creep, simplifying our tax system and as you say, making sure that those earning between $45,000 and $200,000 a year do not face any more than 30 per cent tax on any of their income, which does provide better reward for effort and incentive for people to work harder. That is good for the economy overall. Anything that is good for the economy overall is particularly good for low income earners who want to get ahead.
ROSS GREENWOOD: Okay, let’s go to another aspect of this. Pauline Hanson, has said she won’t back the tax cuts because she thinks things such as the Government building a coal fired power station is more important. This Government is not going to build a coal fired power station. You are going to leave that to private enterprise to do that, I would imagine. Is that reasonable or not?
MATHIAS CORMANN: The most important thing that we can do as a Parliament is to ensure that we have a strong economy into the future. A strong economy is central to everything. That is where the jobs come from. That is what gives families the opportunities to get ahead. That is where the tax revenue comes from to fund our funding for health and education, infrastructure, you name it. We do have a commitment as a Government, to bring electricity prices down. We have committed ourselves to a 25-30 per cent electricity price reduction target by the end of 2021. We have already, as part of our agenda to bring electricity prices down, announced a whole range of measures, including …interrupted
ROSS GREENWOOD: But that doesn’t involve building a coal-fired power station, does it?
MATHIAS CORMANN: There is a range of things that we have done. We have moved on the price safety net. We pursued measures to stop price gouging, which come into effect from 1 July 2019. We have taken measures. We have taken steps to increase gas supplies into the national electricity market. We have also pursued our program to underwrite new generation investment, which is assessing about twelve potential projects to increase energy supply into the national electricity market, including one upgrade of a coal fired power station. We have funded a feasibility study under that program into a potential coal fired power station in central Queensland … interrupted
ROSS GREENWOOD: So are you telling me that maybe the Government could in some way assist the construction of a coal fired power station if that meant Pauline Hanson flick these two votes your way and help to get these tax cuts through?
MATHIAS CORMANN: That is not what I am saying. What I am saying is that we have a long-standing agenda to bring electricity prices down. We have a long-standing agenda to boost the energy supplies into the national electricity market. As we have announced well before the election, back in March in fact, we are pursuing a feasibility study into a potential new HELE coal fired power station in Collinsville to deal in particular with energy supply issues in Central and North Queensland. These are things that are already on the public record ….interrupted
ROSS GREENWOOD: And you have got a long-standing policy to get these tax cuts through as well. They are the most important things for Australians right now, is that you get this through our Parliament.
MATHIAS CORMANN: What I would say is that this is really a test, as I have indicated, for Anthony Albanese. Does he want to just continue to pursue the politics of envy that were pursued by Bill Shorten and which were so comprehensively rejected by the Australian people? Does he just want to pick up where Bill Shorten left off as if there has been no change, as if there was no election? Or does he actually listen and respect the mandate that the Australian people have given to this Parliament to pass our plan for lower income taxes in full? You have to remember, people raise this proposition, oh well this does not come into effect until 2024-25. This change of the income tax rate from 32.5 per cent to 30 per cent for people earning between $45,000 and $200,000. That is true. We have prioritised low and middle income earners in the first instance with additional income tax relief, but we are phasing this in because we want to ensure that we pursue this reform, this important reform to strengthen our economy, in a way that is affordable within the Budget. We are phasing it in because we want to ensure that we can boost funding for health and education and infrastructure at the same time. We want to ensure that we can phase these tax cuts in at the same time as maintaining a Budget surplus …interrupted
ROSS GREENWOOD: Okay, I want to pick you up on that bit because that is something that you are well acknowledged as having been highly successful at. As the Finance Minister you have cut government departments, you have cut the fat out of much of our Government and infrastructure and so forth. But as you are well aware right now, these latest national accounts figures show that Australia’s economy, our economic growth is slowing. So let us say for example the last quarter, 0.4 per cent, economic growth for the year 1.8 per cent. The slowest since the global financial crisis. Some such as Rex Patrick, or let us say Jim Chalmers say well actually is the economy is starting to slow, does the Government really have the money long term to fund and commit to those tax cuts? It is a reasonable point at least to ask as to whether, they do not want to see services having to be cut in order to be able to afford these tax cuts.
MATHIAS CORMANN: Services do not have to be cut. We have been candid for some time that there were downside risks domestically in the Australian economy, that we were facing global economic headwinds and downside risk in the domestic economy. The Budget was framed against that background. Our Budget is a pro-growth Budget. It is a Budget that sees significantly boosts in funding for hospitals, schools and infrastructure for that matter, investment into productivity enhancing infrastructure. At the same time as maintaining the Budget in surplus, as well as providing income tax relief. The point that we would make is we actually do not have an option but to pursue lower taxes into the future if we want to ensure that our economy can continue to be strong and continue to perform at its best possible potential. This is all about making sure that we are as strong and as resilient as possible domestically. That Australians have the appropriate incentive and reward for effort, so that all Australians have the right incentive to be the best they can be, which is good for the economy overall and which is good in terms of creating opportunities, as I say in particular for low income earners who are working hard to get ahead.
ROSS GREENWOOD: I tell you what, I can’t leave you with one final question, we have had a bit of a hobby horse on this program in regards to older Australians, those people who are affected by pensioner deeming rates. Now the Government, despite the fact of criticising banks for not having fully passed on the Reserve Bank’s interest rate cuts last week has not cut the deeming rate for those pensioners, which is as high as 3.25 per cent for singles who have more than $80,000 in assets. Now you are the Finance Minister, you have got to do the numbers on this. But why is it that the Government would not be as generous as you want the banks to be when it comes to these pensioner deeming rates?
MATHIAS CORMANN: As I am advised, these are matters on which the Minister for Families and Social Services has sought advice from her department. There will be judgements made at the appropriate time once that advice has been considered.
ROSS GREENWOOD: So in other words, you are not saying yes but you are not saying no to this, because it does not seem fair, that is my point. If you are an ordinary person you can barely get two per cent in the bank at the moment and yet you are deemed as actually potentially earning 3.25 per cent and this reduces a person’s pension. The issue of the fair go, the fairness test in Australia, that does not seem to wash to me.
MATHIAS CORMANN: Any movement in the official cash rate, as we experienced the other week triggers a review, advice from the department to the Minister. As I understand it that advice is being obtained. There will be decisions in that context that will be made. Once these decisions are made, there will be relevant announcements.
ROSS GREENWOOD: Okay, how long do you reckon weeks or months?
MATHIAS CORMANN: It will be in the next few weeks I am sure.
ROSS GREENWOOD: Excellent, I will tell you what, always good to have you on the program. Mathias Cormann is our Finance Minister, great to have you on the program as always. Mathias, many thanks for your time.
MATHIAS CORMANN: Always good to talk to you.