Transcripts → 2019


ABC RN Breakfast

Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia


Date: Monday, 1 July 2019

Personal income tax cuts, Penalty rates

FRAN KELLY: The top priority for the re-elected Morrison Government will be to pass the $158 billion personal tax cut package to try and stimulate a flagging economy. It will fall to the Coalition’s chief negotiator Mathias Cormann to try and round up the extra votes needed in the Senate for the Government to pass all parts of this package. Labor so far suggesting it will vote against the third stage. But Mathias Cormann’s credibility as a honest broker could be diminished by new claims in a book just released about his role in the removal of Malcolm Turnbull as Prime Minister, with colleague Julie Bishop accusing the Finance Minister of being a most disloyal man and the ultimate betrayer. The ill feeling and bad blood from this leadership coup of last August still reverberates. Mathias Cormann is the Finance Minister and Leader of the Government in the Senate. He is in our Parliament House studios. Minister, welcome back to Breakfast.

MATHIAS CORMANN: Good morning. Good to be back.

FRAN KELLY: The claims against you are damming in Nikki Sava’s book. Essentially, claims are you were up to your neck in the plot to install Peter Dutton as Prime Minster and your decision to withdraw support for Malcolm Turnbull was deliberately, quote, staged and timed to help your good friend. Were you the commander in chief of the Dutton leadership coup as some Peter Dutton supporters have described you in this book?

MATHIAS CORMANN: No that is just not true. Let me just say, this is well in the past. The Australian people do not want us to continue to dwell on events well in the past. They want us to focus on the job at hand. Let me also say, I did not speak to Nikki Sava for this book. I have not read the whole book, but the bits that I have read, mostly, as far as they relate to me are inaccurate, either inaccurate or one-sided. Many of the events that are described plainly did not happen that way. That is really all there is to it. I am not going to go into a blow by blow, forensic analysis of every aspect of that book. It is in the past. We are looking forward.

FRAN KELLY: It is in the past, but while you may not have spoken to Nikki Sava, plenty of others did and it is fact I think to say when you defected the day before the party room ballot that installed Scott Morrison as Prime Minister, that really was the death knell for Malcolm Turnbull’s leadership. That was plain for everyone to see. Julie Bishop was quoted in this book, Plots and Prayers, saying, “I told all of you years ago this is the most disloyal man and someone you couldn’t trust”. She was talking about you. She described you to Nikki Sava as the ultimate seducer and betrayer. Julie Bishop thought you betrayed Malcolm Turnbull. Malcolm Turnbull appears to blame you even more than Peter Dutton for his political demise. You have this reputation here now as a political Judas. How does that sit with you?

MATHIAS CORMANN: It was a difficult week, but what I can say is that I made the decisions based on what I felt was right, on the basis of what I felt was necessary, and in the best interests of the country, the Government and the Liberal Party. These were difficult times. It has all been canvassed in some detail. There is not really much more that I can add to it.

FRAN KELLY: Well, Julie Bishop and Malcolm Turnbull were two of your most senior colleagues in politics. If they did not trust you, the question that comes over into the 46th Parliament is why should others, including the current crossbenches you need to work with in the Senate to pass legislation, including income tax cuts?

MATHIAS CORMANN: I leave the commentary to others, I just continue to do my job to the best of my ability every single day and I will continue to do that job for as long as I have the confidence of the Prime Minister in this role and for as long as I have the confidence at elections as a Senator.

FRAN KELLY: The tax cuts will hit the Senate on Thursday. You have already missed the July 1 start date that was promised by the Government during the election campaign. Will you have the four extra votes in the Senate you need to pass this tax package by the end of the week?

MATHIAS CORMANN: The Labor Party should respect the verdict of the Australian people at the last election. The Australian people voted in favour of income tax relief for all working Australians. They voted against the higher taxing politics of envy agenda of the Labor Party. Anthony Albanese and Jim Chalmers ought to demonstrate that they have listened to the Australian people, that they accept their verdict. They should respect it and vote accordingly.

FRAN KELLY: Forty eight per cent of the country did not vote for your tax package. Let me just redo one of the comments from one of our listeners, Mark, today. He says: “Mr Cormann, can you explain how passing the third tier of the tax package, which overwhelmingly benefits the well off and which does not come into play for five years, is your Government’s priority?

MATHIAS CORMANN: Our priority is to deliver income tax relief to low and middle-income earners in the first instance…interrupted

FRAN KELLY: Which is what Labor wants to help you with.

MATHIAS CORMANN: We are providing overall income tax relief. We have both a short-term and a longer term structural focus. We are phasing in income tax relief for all working Australians in a way that is affordable within the Budget, after we have also delivered record funding for hospitals, schools and infrastructure. After we have ensured that the Budget is and remains in surplus and we are proving income tax relief, phasing it in, prioritising low and middle income earners in a way that is affordable and responsible within the Budget.

FRAN KELLY: But phasing it in in five years’ time when it is actually impossible to know what the Budget will be doing. The Grattan Institute has run the ruler over your tax cuts, as has the PBO. The Grattan Institute found that two thirds of the unlegislated stage three will flow to the top 20 per cent of income earners, they will make the tax system less progressive and will be inconsistent with your plan to run Budget surpluses and they could make other substantial reforms harder to achieve.

MATHIAS CORMANN: We reject that. The Grattan Institute was campaigning against our plan for income tax relief for all working Australians in the lead up to the election. That argument has been had. The Labor Party…interrupted

FRAN KELLY: The Parliamentary Budget Office says a third of these tax cuts go to the top ten percent.

MATHIAS CORMANN: Let me just correct your assertion that it makes the tax system less progressive. After our plan has been fully legislated, the top one per cent of income earners will actually pay a slightly higher proportion of income tax. The top 20 per cent of income earners will continue to pay about 60 per cent of all income tax revenue generated across Australia. In fact, if we do not legislate our tax plan, over time people will go backwards. This is about making sure that we provide income tax relief to low and middle income earners in the first instance, but that we also take the bracket creep monkey off people’s back, because if we do not address bracket creep, over time it undermines aspiration and weakens the economy, which is bad for everyone, including low and middle income earners.

FRAN KELLY: Let us go back to how you might get it through because Centre Alliance commands two of the four votes you need. Senator Rex Patrick from Centre Alliance wants to address some final concerns with you and the Party wants a new gas reserve policy to push down power prices. What have you come up with?

MATHIAS CORMANN: I am not going to speak for other non-Government Senators…interrupted

FRAN KELLY: No I am asking you what the Government has come up with on that front.

MATHIAS CORMANN: What the Government has come up with is a plan to provide income tax relief to all working Australians, which we took to the election, which is in the national interest, which is in the interest of our economy, which is in the interest of making sure that all Australians have the best possible opportunity to get ahead today and into the future. That is what we will be putting to the Parliament. If Anthony Albanese and Jim Chalmers respected the verdict of the Australian people at the last election they would vote in favour of it.

FRAN KELLY: Centre Alliance also wants a Senate Inquiry into the jobs that former Ministers take up when they leave Parliament sparked by Christopher Pyne’s new position with a consulting firm EY. Until last month he was the Defence Minister now he is helping with EY’s defence related business. Does this pass the pub test?

MATHIAS CORMANN: I will let…interrupted

FRAN KELLY: What is your view on it?

MATHIAS CORMANN: All of us know what the requirements in the Ministerial Code of Standards are. Christopher Pyne has made very clear that he understands what the requirements are and that he is acting accordingly. When Members of Parliament leave Parliament they have to continue to work and not everyone can end up working as a commentator on television.

FRAN KELLY: Yes, but should you be working in the area directly related to your last Cabinet Ministerial position?

MATHIAS CORMANN: What is important is that if you leave the job as a Minister and you go back into the private sector that you comply with the requirements in the Ministerial Code and I am advised that is precisely what Christopher Pyne is doing.

FRAN KELLY: You are listening to RN Breakfast, it is quarter to eight, our guest is the Finance Minister and Leader of the Government in the Senate Mathias Cormann. The Reserve Bank board meets tomorrow Minister, the markets have factored in a 70 per cent chance of another rate cut. The world’s peak banking authority, the Bank of International Settlements has weighed in, calling on Governments around the globe to stop relying on lower interest rates to do all the heavy lifting. He wants countries like Australia to pull the other levers, higher government spending, difficult structural reform to combat the slowdown.

MATHIAS CORMANN: That is precisely what we are doing. Our Budget was framed in the context of all of the economic information in front of us. That is why we are putting forward another $158 billion worth of income tax relief, more than $300 billion worth of income tax relief that we put before the Parliament over a two year period. That is why we are pursuing a $100 billion infrastructure investment program. That is why we are doing all of the things we are doing, including providing record funding for hospitals and schools and all of the other essential services Australians rely on, you name it. We are very focused on making sure that we continue to deliver a pro-growth agenda. It is what is reflected in our Budget and it is what we will continue to do into the future. It is what the Australian people voted for.

FRAN KELLY: Minister, today the first of July, workers across four sectors will see a cut to their penalty rates. 700,000 Australian worker in retail, fast food, chemist shops will suffer another cut to their Sunday penalty rates. Isn’t a penalty rate cut completely at adds with an interest rate cut and at adds with a slowing economy, that needs stimulus from spending as the ACTU President Michele O'Neil reminded us earlier, not tightening from wage cuts?

MATHIAS CORMANN: Firstly, the Fair Work Commission, like the Reserve Bank acts independently reviewing all of the relevant economic information and data in front of them. They were set up that way. The Gillard Labor Government ensured that there was no capacity for the Government of the day to interfere with whatever judgements the Fair Work Commission made. When it comes to wage rises, if you look at the most recent wage price index, it shows a wage rise of 2.4 per cent in the context of inflation of 1.3 per cent…interrupted

FRAN KELLY: Not for people relying on their penalty rates.

MATHIAS CORMANN: …and if you look at the minimum wage decision it has delivered an increase of three per cent in the minimum wage. If you look across the wage price index the most recent wage price index data shows an increase of 2.4 per cent across…interrupted

FRAN KELLY: My question was does it make sense to you at this moment, when stimulus is required, that is what the Reserve Bank Governor keeps telling us, that we are cutting the wages of 700,000 Australian workers?

MATHIAS CORMANN: We are putting more money into workers pockets by delivering income tax relief. The Labor Party is standing in the way of rapid income tax relief into the pockets of low and middle income earners. The truth is, Australians for the 2018-19 financial year could only start lodging their tax returns from 1 July. If our income tax cuts are passed by the end of this week, as we would want them to be, people will be able to start getting their tax refunds into their bank accounts by the end of next week. That is why Labor should vote in favour of this, this week, swiftly

FRAN KELLY: Minister, thank you very much for joining us.

MATHIAS CORMANN: Always good to talk to you.