Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
LAURA JAYES: Joining me now is the Finance Minister Mathias Cormann. Good morning to you Minister. Is that fair enough Anthony Albanese is taking his time? We are not back in Parliament yet?
MATHIAS CORMANN: It is great to see that more and more Labor MPs are standing up for what is right inside the Labor party when it comes to income tax cuts that the Australian people voted for. This is about putting more money into workers pockets, taking the bracket creep monkey off peoples backs and getting more people into jobs with lower taxes stimulating the economy. It is a plan which provides income tax relief in the short term to low and middle income earners, but which phases in structural reform over time to ensure that we address the silent thief that is bracket creep, which if left unaddressed undermines aspiration and weakens the economy over time. I welcome the fact that a growing number of Labor Members of Parliament are standing up for what is right within the Labor party. But it is now high time for Anthony Albanese, Jim Chalmers and others to follow their courageous lead.
LAURA JAYES: Are you still negotiating with the crossbench or does it all come down to Labor in your view?
MATHIAS CORMANN: We have had this conversation last week. We are not going to do any special deals or horse-trading when it comes to a very important economic reform, which is in the national interest and which has been endorsed by the Australian people at an election just over a month ago. This was at the core of the plan to build a stronger economy that we took to the last election. We said to the Australian people we stand for lower income taxes. We will provide immediate income tax relief to low and middle income earners, but we will address bracket creep over time, phase that structural reform in, in a way that is affordable within the Budget. Australians voted in favour of income tax relief, in favour of aspiration. They voted against the high taxing politics of envy agenda that Labor took to the last election. I cannot see why Anthony Albanese would allow himself to be tied down to a losing pre-election agenda that the Australian people rejected.
LAURA JAYES: So you are not even bothering to lobby the crossbench anymore. I know you said no deals. But does this all come down to Labor. Have you provided that extra information that they have requested?
MATHIAS CORMANN: Firstly, we have said for some time that this is squarely a matter for the Labor party. Will they stand in the way of income tax relief, of more money in workers pockets by persisting with a losing pre-election argument that the Australian people rejected. Or will they accept the verdict of the Australian people that the plan that we put forward is in the national interest, will help working families with cost of living pressures and will help to build a stronger economy. Of course we are talking to the crossbench. As I have said on your program last week, we are always prepared to talk to non-government Senators who want to raise issues with us. We are always prepared to engage constructively and in good faith with them on issues that they want to raise with us. But any such discussions have to be held on their own merits. Any judgements in relation to unrelated policy issues have to be addressed on their own merits. That is what we will continue to do with those non-Government Senators who are keen to raise issues with us. My door is always open. That is what we have been doing. In relation to the information that Labor has requested, all of the information, all of the necessary information is in the Budget papers. We have provided the cost of the fiscal impact for each individual stage. Labor knows that the third stage, which they are arguing about is $95 billion over the medium term. That is to reduce the tax rate from 32.5 per cent to 30 per cent for incomes between $45,000 to $200,000 from 2024-25 onwards. You have to remember, Australia has not indexed, has not adjusted our income threshold for the top marginal tax rate of $180,000 since 2008. If it was adjusted to wage inflation it would be more than $284,000 by 2024-25. The implication of what some people in the Labor party seem to be arguing for in standing in the way of our reform, is that you should never be able to address bracket creep at the higher income end. That you should allow middle income earners to be pushed into those higher income brackets even though the Labor party would know that that harms them and it harms the economy. We are not going to stand for that.
LAURA JAYES: The information though that Labor said is not in the Budget is separating out how much it would cost for high income earners alone. So those earning above $180,000, $200,000. There has also been a little addition to that with Labor suggesting they want to know how many men versus women will benefit from this.
MATHIAS CORMANN: This is a complete distraction. This goes to the core of the politics of envy agenda that the Labor party prosecuted in the lead up to the election, which was firmly rejected by the Australian people. Policy measures do not get assessed on that basis. In relation to men and women, the tax system is absolutely gender blind. It is a complete furphy to make that argument. The tax system is gender blind. The only relevant consideration in terms of how much tax you pay is how much taxable income you earn. On the basis of that flawed argument which has been advanced in some crazy suggestions, if you take that flawed argument to its logical conclusion you would say that the tax system favours women because women, if you look at the data overall in aggregate pay less income tax. That is also wrong to suggest. The tax system is gender blind, as it should be. The only relevant consideration is how much tax you pay. When it comes to the proportion of tax paid by high income earners, as we have said ad nauseum and as is published in our Budget papers, the top one per cent of income earners will pay slightly more tax as a proportion of overall income tax paid under our plan. The top five, the top ten, the top 20 per cent will pay about the same proportion of income tax after our plan has been implemented in full.
LAURA JAYES: Okay the RBA has said that the interest rate cuts are not the only way to boost the economy. You have seen really unprecedented language from Philip Lowe urging the Government to do more. Outside of income tax cuts and infrastructure is there a plan for the Government to do more beyond those things, is it necessary to stimulate the economy.
MATHIAS CORMANN: Our Budget is a pro-growth budget. Our Budget completely aligns with what the Reserve Bank Governor has been suggesting. We have a $100 billion infrastructure plan, with about half of that investment over the forward estimates. We have an income tax relief plan, which has both a short term focus and which has a longer term structural component to it. We are proposing to put more money into workers pockets immediately, now. We are proposing to phase in structural reform over time to take that bracket creep monkey off peoples back because that is necessary to ensure that we put ourselves in the strongest position to keep our economy strong.
LAURA JAYES: Business are desperate for some kind of reform though aren’t they. The previous government wasn’t able to deliver the company tax cuts as promised in the last term. Are you offering business any alternative?
MATHIAS CORMANN: We have done a lot to lower the tax burden on business in the economy. We have delivered a five per cent reduction in corporate taxes for businesses with a turnover of up to $50 million. We have boosted the instant asset write-off with now making that available for investments of up to $30,000 for businesses with a turnover of up to $50 million. We will continue to consider what is affordable, what is sensible and what is required to continue to build a stronger economy to secure our future. We had a Budget on 2 April. That is our plan for the next four years. But these plans get adjusted every six months at the half-yearly Budget update and at subsequent Budgets. That is what we will continue to do as we have done in the past.
LAURA JAYES: Will you be downgrading the growth forecast because the last quarter of growth showed, I think 1.8 per cent and that was not in line with what put in the Budget.
MATHIAS CORMANN: I reject that. We stand by the growth forecasts in our Budget papers. But they do get adjusted on a regular basis. The next update is the half-yearly budget update in December. We do not provide a running commentary on our forecasting assumptions in between those updates.
LAURA JAYES: Okay, interest rates, are they at emergency levels? How would you characterise it at the moment?
MATHIAS CORMANN: I am not going to provide commentary on the official cash rate. These are entirely matters for the Reserve Bank of Australia to decide independently based on their assessment of the economic data and other relevant information in front of them. That is a very important feature of our system that these are independent decisions by the RBA and do not have a political overlay.
LAURA JAYES: Do you accept that the monetary levers though are now few, there is not many that the RBA can pull on, meaning that the fiscal levers that the Government call pull on need to, I guess be more plentiful?
MATHIAS CORMANN: Laura, that is precisely what we are doing. We legislated $144 billion worth of income tax relief last year. We are proposing to legislate another $158 billion worth of income tax relief. That is $302 billion worth of income tax relief in two financial years. That is a massive economic stimulus by letting Australians keep more of their own money. You have to remember this is not the Government’s money. This is the Government making a decision about letting Australians who have worked hard for that money keep more of their own money so that they can spend it in the economy on their priorities. That is precisely what this is about. If we did not do this Australians would go backwards. That is why the position by some in the Labor party, it looks like a shrinking number of people in the Labor party who hold this position, but nevertheless by standing in the way of income tax cuts they are actually standing in the way of making life easier and better for working families around Australia.
LAURA JAYES: Just finally, would you like to see the CFMMEU de-registered?
MATHIAS CORMANN: These are not judgements for me to make. I think that there are proper processes under the law. I am actually not aware and across all of the relevant details that would need to be fulfilled in order to meet whatever thresholds there are. That is not a political judgement. That is a legal judgement.
LAURA JAYES: The Industrial Relations Minister Christian Porter has said this morning in the AFR that the CFMMEU should be de-registered and returning that integrity bill, bringing it back to Parliament is the way to do it.
MATHIAS CORMANN: He is the first law officer of the land as well as the Industrial Relations Minister. It is in his portfolio. It is not in mine. That is why I am saying that it is not a matter for me to comment on. That is a matter for the Attorney-General and the Minister for Industrial Relations or relevant bodies within the broader Commonwealth to make judgements on.
LAURA JAYES: But you might have to vote on it Minister?
MATHIAS CORMANN: There is a relevant Minister that will make appropriate recommendations. If that is the view that is ultimately adopted I will part of those discussions at the appropriate time.
LAURA JAYES: Minister Cormann, appreciate your time.
MATHIAS CORMANN: Always good to talk to you.