Senator the Hon. Mathias Cormann
Minister for Finance
Special Minister of State
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 12 June 2019
CHRIS KENNY: Let’s flip over to the other side of the country now and catch up with Finance Minister Mathias Cormann. Thanks for joining us Mathias. First up the Queensland State Budget, you must find this a bit of a worry when you are dealing with the national economy. Your prescription has been to lower taxes, including on business. You must be worried that a tax increase like this on the crucial resources sector might actually have the opposite, might actually be an inhibitor on national economic growth.
MATHIAS CORMANN: Higher taxes increasing the tax burden on business weakens our economy and ultimately leaves everyone worse off. Because it lowers opportunity for business to create more jobs. It lowers the opportunity for people to get ahead. Yes, as we have said in the election campaign we stand for lower taxes, stronger growth, better opportunity for Australians to get ahead. Where as Labor is the party of higher taxes and making our country weaker.
CHRIS KENNY: Yeah there has been a lot of debate post election about what went wrong for the Labor party, especially their myriad of supporters in the media who all thought that Labor was sweeping to a victory all along. But surely it’s pretty simple. I have got to say, I was writing this for months, if not years before the election. It is very difficult to sell a raft of increased taxes. Now as a Coalition you have not been immune. You have got into political trouble when you have increased taxes. You must have seen this from a long way out as exactly what the election was going to be about. Your policies of reducing taxes versus Labor’s big sweep of increased taxes.
MATHIAS CORMANN: We legislated $144 billion worth of income tax cuts last year. We have legislated substantial tax relief for small and medium sized business. We got rid of the mining tax and the carbon tax. So we have got a very strong track record when it comes to making decisions to lower the tax burden on the economy. Right now, we are working to deliver on our promise to deliver income tax relief for all working families which is what the Australian people voted for at the most recent election. That is because people understood that our agenda would help build a stronger economy with more jobs and better opportunity for Australians to get ahead. Whereas the alternative, the high taxing, anti-business, politics of envy agenda that Labor was prosecuting in the lead up to the election would have made our country weaker, would have made Australians poorer, would have left all Australians worse off. People understood that we were facing global economic headwinds. We were facing some downside risks in the domestic economy as it was. This was the worst possible time to go back to a high taxing agenda which would have put us in a worse position.
CHRIS KENNY: I suppose there are two points about my observation. One is just the election was much less of a surprise and much simpler to diagnose because it is very difficult to get Australians to endorse a big range of increased taxes. But flowing on from that, then you must feel that you have got a clear mandate because the election contest was fought very largely around those two opposite prescriptions for economic growth. The higher taxing one versus the lower taxing one. So you must feel that you have a mandate for your entire tax reduction package.
MATHIAS CORMANN: We do have a very clear mandate. We took our plan, our whole plan to provide income tax relief to all working Australians to the election. The Australian people voted in favour of it. Gave it their tick of approval. Labor put forward an alternative. They heavily criticised what we were putting forward. The Australian people voted against that. This is really an opportunity for Anthony Albanese to show that he has listened and that he has learned the lessons from this election verdict. We are putting forward a plan to provide income tax relief for all working Australians which prioritises low and middle income earners, but which also addresses bracket creep, which is a drag on the economy, which holds the economy back and which continues to simplify our tax system, which provides better reward for effort and incentive for all Australians to be the best they can be. Because that is good for the economy overall. Stronger growth overall is good for low income earners.
CHRIS KENNY: So you don’t have to run those arguments again. You won the election. We heard those arguments and voters responded. The point though is, if you had such a clear mandate why are we starting to hear discussion about horse trading with the crossbenchers on this issue or that issue. Pauline Hanson wants action on power prices or water storage. Rex Patrick and Centre Alliance want action for pensioners. You have a clear mandate. Shouldn’t you be insisting that the Senate approve it. How far are you prepared to go to enforce that package you have?
MATHIAS CORMANN: Firstly, what individual Senators say and advocate for is a matter for them. That is the way our system operates. What I can say from our point of view is that we absolutely will be putting forward the legislation to deliver on our entire plan for income tax relief in full. We will be asking … interrupted
CHRIS KENNY: There is no chance you will split off stage two and three. No chance at all?
MATHIAS CORMANN: There is absolutely no chance at all that we will split off any part. This is … interrupted
CHRIS KENNY: So you are prepared to see the Senate reject this tax package in its entirety?
MATHIAS CORMANN: People make all sorts of assumptions. I have gone through this debate, precisely the same debate in 2018…interrupted
CHRIS KENNY: Sure, we have all seen this movie a few times before.
MATHIAS CORMANN: Sure. Let me just make this point, everyone in the media t every press conference I attended was literally urging me to split the plan and to just deal with stage one first, given that there was support for that and leave everything else for later. We did not do that. Contrary to all of the predictions, the Parliament did vote in favour of our entire income tax relief plan back last year. What we are saying to the Parliament is this. We are phasing income tax relief for all working Australians in a way that is fiscally responsible, that is affordable within the Budget. I heard Anthony Albanese on your show the other day say well why should we be making judgements now about 2024-25. The reason we have phased in income tax relief is because we have made a deliberate decision to prioritise low and middle income earners in the first instance. But we did want to provide income tax relief to all working Australians. We did say at the election that we would legislate the whole plan in full, in one go. That is because we are phasing it on over the medium term period because we want to ensure that we can provide income tax relief while we are boosting funding for hospitals, for schools and infrastructure as well as keeping the Budget in surplus all the way through. It is easy to play politics with these things. But if you look at the income level for the top marginal tax rate, the $180,000 income level for the top marginal tax rate to kick in, that was set in 2008. If that had been indexed by CPI since then and all the way to 2024-25, that would be a threshold of $254,000 by then. If it had been indexed by the wage price index it would be a threshold of about $284,000…interrupted
CHRIS KENNY: There is a lot of bracket creep there. There’s just a couple of other issues I want to get to quickly Mathias Cormann. One of the key Senators in getting that package through will be Senator Rex Patrick, Centre Alliance Senator. Now he has made outlandish claims against the Government. He has said that Peter Dutton and his Department head Mike Pezzullo hate media scrutiny and that the AFP raids on Annika Smethurst and the ABC were a deliberate attempt to stymie media scrutiny. Yet he provides no evidence to support that. How can you tolerate a Senator making such widely unsubstantiated claims? Don’t they actually undermined confidence in our police system and the separation of powers?
MATHIAS CORMANN: I think his comments were wrong. They are uncalled for. They do imply that somehow there was inappropriate political interference in the decision making by our police. That is of course not the case. The AFP is an independent agency, which makes independent decisions as an independent law enforcement agency. There was no politics interference of any kind. So from that point of view those comments are inaccurate. I would reject them.
CHRIS KENNY: Does he need to retract them though. You will see an interview that I recorded with him later and suggested he needs to provide some evidence if he is going to keep making these claims. He provides no evidence, yet he does not resile from them at all.
MATHIAS CORMANN: I have made my position clear. I disagree with his comments. He is a big boy. He can talk for himself. He is going to have to defend his assertions as all of us have to defend our assertions. But it is very, very clear that the AFP has the job as a law enforcement agency to enforce our laws. They are acting independently from Government, as they should and as they must. That is a very important feature of our system. That is what has happened on this occasion.
CHRIS KENNY: Alright, just to another matter. I want to talk about John Setka. Now, he has been a pretty embarrassing and odious figure for the Labor movement for a long while. The Labor Party has often had to apologise for him I suppose. You would have to give Anthony Albanese credit now wouldn’t you for moving to expel him from the Labor Party because he cannot do much about removing him as the head of the CFMMEU.
MATHIAS CORMANN: Over my twelve years in the Senate, I have made it a habit of not commenting on the internal affairs of other political parties. My focus is on doing my job, which is to deliver much needed income tax relief for hardworking Australians, which we promised at the election and which our economy needs and which working families around Australia rely on. I will leave the internal matters of the Labor Party and the union movement to them
CHRIS KENNY: Oh come on. Here’s your chance to give a bipartisan slap on the back to Anthony Albanese for doing something good for the Labor movement and maybe for Australian democracy.
MATHIAS CORMANN: I wish Anthony Albanese all the very best as the Leader of the Opposition.
CHRIS KENNY: Okay, thanks very much for joining us Mathias Cormann.
MATHIAS CORMANN: Always good to talk to you.