Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 3 July 2019
LAURA JAYES: We’re joined by Finance Minister Mathias Cormann. Let’s start on rates. The RBA hasn’t cut rates to one per cent because the economy is healthy, has it?
MATHIAS CORMANN: The RBA makes these decision independently. They assess all of the relevant economic information. They have made a judgement that they feel the rate cut was justified. That is their job.
LAURA JAYES: They’re concerned about where the economy is headed. The global headwinds. Also, employment. Are you concerned about the same thing?
MATHIAS CORMANN: Employment growth remains strong and the RBA noted that as well. But we are facing global economic headwinds. We have been dealing with some downside risks in the domestic economy from floods to drought, you name it. That is why it is so important that Parliament swiftly passes our plan for lower income taxes. We are kicking in the same direction as the Reserve Bank to ensure that we continue to build a stronger economy and can continue to create more jobs. That is what this is all about. We are pursuing a pro-growth agenda, which is enshrined in our Budget that we delivered on 2 April.
LAURA JAYES: The RBA is almost unprecedently begging at the Government to do more and do more quickly, calling on structural reform. What is in your immediate plans for structural reform besides the tax cuts, but also the infrastructure agenda? Yes, you’ve got a hundred billion dollar agenda, but can you fast-track some of the smaller projects that would give those immediate this to the economy?
MATHIAS CORMANN: Firstly, our Budget was put together in the context of all of the economic information that the Reserve Bank is acting on as well. It is a pro-growth budget. The income tax plan, the whole point of it is that it does provide both short-term cost of living pressure relief and a short-term stimulus focusing on low and middle income earners, but it also provides structural reform by taking the bracket creep monkey off people’s backs by providing structural reform for income tax rates over the medium term. We are also continuing to pursue a very ambitious free trade agenda to ensure that our exporting businesses get better access to markets around the world. We are focusing on, for example, our free trade agreement with the European Union. At the end of this term, our intention is for more than 90 per cent of our exports to be covered by free trade agreements for better access to markets around the world. We are rolling out our ambitious infrastructure investment plan. We are pursuing reform to bring down the cost of electricity across Australia. These are all things designed to make our economy more competitive, to give Australians better opportunity to get ahead.
LAURA JAYES: With these tax cuts likely to pass the House and the Senate by the end of the week, Josh Frydenberg sat here yesterday in that very spot and told us that people will start to see this money, $1080, in their bank accounts next week if they do their tax return. The RBA’s historic low of one per cent, that is two back-to-back rate cuts. When should we expect to start to see the effect of those two things in the economy? Does it take a couple of months? Does it take a couple of weeks?
MATHIAS CORMANN: Firstly, it is time for Labor to get out of the way of millions of Australians getting a tax refund from next week. As soon as the tax refunds hit the economy you expect that to have an effect on consumption. We will be reviewing the economic data over the months ahead. There will be an update in terms of our assessment of the economy in our half yearly Budget update as we usually do.
LAURA JAYES: A couple of weeks, then?
MATHIAS CORMANN: There are regular updates on how the economy is tracking through our quarterly national accounts data and in our half yearly Budget update there will be a formal review from the Government’s point of view.
LAURA JAYES: Does the Budget still stand? You put the Budget together in May, but hasn’t the economy really deteriorated since then? The expectations for growth are well below what you put in the Budget.
MATHIAS CORMANN: The financial year data is not to a close yet. I do not agree with your characterisation there. In between every budget and budget update, the Government makes further decisions. The Government continues to monitor and assess the way things are tracking. All of that is reconciled in the half yearly budget update later this year. The Budget is a moment in time. That is where we present our plan for the next four years and show the projections of the impact of our plans over the medium-term period. Of course the Government continues to make judgements. Of course the Government continues to make assessments on what needs to be done.
LAURA JAYES: You’ll deliver a surplus no matter what?
MATHIAS CORMANN: This is a surplus year. This is a year when the Budget returns to surplus. If you look at our performance, our actual performance against Budget for the last three financial years, we have been materially better in terms of our fiscal performance compared to Budget. If you look at the 2018-19 financial year, which just finished, in the monthly financial statements that I release it shows you that we are bringing in more revenue than anticipated and spending less than anticipated.
LAURA JAYES: Tax cuts go to Senate when? And are you still negotiating with the crossbench?
MATHIAS CORMANN: Today is the day that is dedicated for the condolence motion for distinguished former Prime Minister Bob Hawke. The debate on income tax cuts is due to start in the Senate on Thursday. We have lodged a motion to ensure the Senate will not rise until such time as the tax cuts legislation has been dealt with. If the Senate were to amend our income tax cut plan, it would go back to the House of Representatives where the Government would reject any amendment and would send it back to the Senate immediately. The Senate would have to remain behind to deal with it. In that scenario, the choice for Labor becomes a choice of whether they want to vote against tax cuts for everyone. They would have to decide if the Senate were to amend our tax cut legislation, Labor in the end would have to decide whether they want to stand in the way of tax refunds of up to $1080 for millions of Australians from next week.
LAURA JAYES: What’s your sense of things after what happened in the House last night? Labor is likely to support your package in the end?
MATHIAS CORMANN: Labor has been playing games. Labor is clearly deeply divided. The sense that I am getting is that Anthony Albanese knows the right thing to do. I think he knows he should vote in favour of our income tax relief package in full, but people are not letting him. He is not able to get his way. That would be my reading of what has been happening. It is completely unbelievable that the Labor party would want to stand in the way of lower income taxes for millions of Australians when that is what the Australian people voted for. More money into workers’ pockets, more jobs on the back of the economic stimulus that that would create. It is unbelievable that the Labor party would so arrogantly stand in the way of what the Australian people voted for at an election just a few months ago.
LAURA JAYES: Finally, our documentary Bad Blood went to air again last night. I’m sure that was uncomfortable for everyone in the building. Why won’t you confirm whether Malcolm Turnbull did offer Peter Dutton the deputy leadership? Was it your idea?
MATHIAS CORMANN: Absolutely not. I have already indicated that I am not speaking about private conversations. I will stick to that.
LAURA JAYES: Mathias Cormann, appreciate your time.
MATHIAS CORMANN: Thank you.