Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
JOHN STANLEY: Let’s talk to Mathias Cormann who’s the Finance Minister, who is thinking well that’s good, I don’t want to talk about that stuff either. Good morning to you Mr Cormann.
MATHIAS CORMANN: Good morning. Good morning to your listeners.
JOHN STANLEY: You are back of course with this new session of Parliament. You are in your job as Finance Minister. These tax cuts, if you get the numbers, either from the Labor party or the crossbench or both, when would you expect them to go through?
MATHIAS CORMANN: We are intending to secure their passage by the end of this week, which would ensure that Australians can get their tax refunds by the end of next week.
JOHN STANLEY: Okay, so just to explain that, if it goes through and let’s say it goes through Thursday night. So someone then puts their tax in electronically over the weekend, then their refund would come through and they would be getting I think it is up to $1080 for single people, up to $2160 for dual income people in that band of income. Is that right?
MATHIAS CORMANN: That’s right.
JOHN STANLEY: And we are talking about a band of $48,000 to $90,000 if you are a single person, you get that $1080 extra that you will be getting in your tax return.
MATHIAS CORMANN: Yes. Taxpayers earning up to $126,000 a year will receive a tax cut in fact. But the highest tax cut that a single income earner can get is $1080. And as you say, dual income families up to $2160.
JOHN STANLEY: And it tapers up to $126,000.
MATHIAS CORMANN: That is right.
JOHN STANLEY: So that is what we are calling the second stage of tax cuts…
MATHIAS CORMANN: No, this is the first stage of the legislation that is in the front of the Parliament now … interrupted
JOHN STANLEY: Oh, that is the first stage.
MATHIAS CORMANN: You have to remember that we have already passed income tax relief last year of about $144 billion worth. We are now proposing to pass another $158 billion worth of income tax relief in three stages. The stage that is attracting most of the discussion is the third stage, where we are proposing to reduce the income tax rate from those earning between $45,000 and $200,000 from 32.5 per cent to 30 per cent, which is a great initiative to provide additional incentive and reward for effort for people right across Australia.
JOHN STANLEY: Yeah, that is a flattening of the tax system, a lot of people have been called for that for a long time. So you say, someone earning, say $100,000 a year they know that if they go and do overtime they might earn another twenty grand a year they are only going to be paying that 30 cents in the dollar, that goes all the way up what $180,000?
MATHIAS CORMANN: $200,000.
JOHN STANLEY: To $200,000. So that doesn’t come in though does it until 2023-24?
MATHIAS CORMANN: No. That comes in from 1 July 2024. The reason we are phasing it in that way is because we need to ensure that our plan is affordable within the Budget. So we are prioritising low and middle income earners in the first instance and then phasing in further tax relief for all other working Australians over time. We are having to deal with a number of competing objectives. We are boosting funding for hospitals and schools and infrastructure. We are wanting to ensure that our Budget returns and remains in surplus all the way through. We are keen to provide income tax relief, provide that additional incentive for people to work harder. At the end of our plan being fully implemented, 94 per cent of Australians will not pay more than 30 per cent tax on any of their income, which we believe is a real boost to future economic success and opportunity.
JOHN STANLEY: Sure. 2024, mid-2024 the possibility, perhaps the likelihood is there would be two elections before then. I know the argument might be hypothetical, because it looks like it is going to get passed now. The argument is, why lock in such significant tax cuts when we don’t know what the economic conditions will be in two, three, four years’ time?
MATHIAS CORMANN: Firstly, we do believe that Australia needs a medium to long term plan. We pursue medium to long term plans across a whole range of policy areas. We believe that in terms of tax policy, that is an important feature as well. There is one election between now and then in the ordinary course of events which will be 2022. If Labor believes that in the context of what they suggest could be a weakening economy, that higher taxes are the right way to go, they could take that to the next election. If they want to go to another election, to campaign in favour of, argue in favour of higher taxes, they could make that case to the Australian people. If they receive a mandate from the Australian people at the next election for an agenda like that, that is something they could pursue in the Parliament at that point in time. Our argument is that to ensure that our economy is as strong as it can be and continues to strengthen into the future, income tax relief for all working Australians, including addressing bracket creep, taking that bracket creep monkey off people’s backs, is an important part of our economic plan. If bracket creep is left unaddressed, it undermines aspiration, it weakens the economy over time. By doing what we are doing and by locking it into legislation in a way that is affordable in the Budget in the medium term, that is a responsible course of action.
JOHN STANLEY: Okay, if we leave aside the suggestions this morning that Labor will eventually wave the tax cuts through, you’re in the Senate, you’ve got to negotiate these things, what’s your read on getting the numbers from the crossbench and, in particular, what the Centre Alliance Senators want? They’re talking about some concessions in the area of gas.
MATHIAS CORMANN: I never provide a running commentary on my discussions. What we have said is that we want to persuade all non-Government senators on the merits of the plan we took to the last election, which the Australian people endorsed. We are always open to discussions with non-Government senators in relation to issues that are important to them and where there might be some consensus around the way forward. As we have always said, these are matters that have to be assessed on their own merit. They have got to be decided on their own merit. Clearly, our plan for income tax relief is important for the economy, it is important for working Australians. But beyond that, we are always open to talking about other issues.
JOHN STANLEY: You would be aware that there would be people howling over the issue of gas prices and they’re getting their bills and they’re not happy about it. What can you do about that?
MATHIAS CORMANN: We have already taken a whole series of measures to bring energy prices down and with some success, including through increasing the supply of gas into the domestic market. We are open to discussing other measures and in the ordinary course of events we are exploring and assessing other measures that we might sensibly be able to pursue. We share the objective of bringing electricity prices down. We share the objective of boosting gas supplies into the domestic market. We are always open to talking to colleagues across the political divide around sensible measures to make that happen.
JOHN STANLEY: The other one is, as the Finance Minister, you look after the finances of the Commonwealth. In the homes of people listening to us right now, when interest rates go down and it’s possible, even likely, it’ll happen again today, they find themselves really stuck in terms of how they live on fixed incomes. Is there anything you can do for them?
MATHIAS CORMANN: We are very mindful of the impact on older Australians on fixed incomes when the official rate is adjusted. This is one of the issues in the context of the deeming rate in particular that we are currently considering on how best to respond. The Minister for Families and Social Services, Anne Ruston, is bringing a recommendation to the Expenditure Review Committee in relation to that precise matter.
JOHN STANLEY: Yep. We are all human beings, is there are part of you sitting there today at the ceremonies at the beginning thinking, I can’t believe I’m here? Because you must have been thinking it’s possible you’d be sitting on the other side.
MATHIAS CORMANN: Every election in Australia is close. No election is un-losable and no election is un-winnable. We believed very firmly that there was a pathway to victory because we believe that us continuing to provide good government to Australia and to continue to implement our plan for a strong economy was in Australia’s best interest. We also believed, strongly, that the alternative would have made our country weaker and would have made Australians poorer. We worked very hard to win people’s confidence at this election. We never take anything for granted. But we also never give up. That is our job.
JOHN STANLEY: Alright well, have a good week and we’ll look forward to hearing more from you. Thank you for your time today.
MATHIAS CORMANN: Thank you so much.