Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Joining us now is the Finance Minister Mathias Cormann on this big story of the day. Minister you have copped a bit of flak it has to be said since August of last year and your role in all of that. Some people said you’ve been damaged by it. What do you say to your critics this morning after that big win in the Senate?
MATHIAS CORMANN: At all times in this job I always seek to do the right thing for the right reasons in the right way. That is what I did in August last year. I did not bring on the surprise leadership spill. But I certainly was in a unique position to help resolve the mess that we were in at that time to ensure that the Government was in the best possible position to successfully contest the subsequent election, which we did. In this game you always have a lot of commentators. You always have a lot of people throwing rocks at you from the sidelines. But in the end, in yourself, you have to know that whatever decision you make that you are motivated by doing the right thing for the right reasons in the right way for the Australian people. That is what I did then. That is what I will continue to try and do every single day.
KIERAN GILBERT: This is a big win, $158 billion tax plan. The signature policy item of the election. You have the crossbench across the line in the Senate. It must feel pretty sweet this Friday morning.
MATHIAS CORMANN: We are very grateful to Senators Bernardi, Lambie, Patrick and Griff for having supported our plan for lower income taxes for all working Australians. It is a plan that we took to the election. It is a plan that is in our national interest. It is a plan that the Australian people endorsed and wanted to see passed. This will now put more money into workers pockets from the end of next week, prioritising low and middle income earners in the first instance. But it also means that we are phasing in structural reform to our tax system to take the bracket creep monkey off peoples back. Because if you leave bracket creep unaddressed it does undermine aspiration and it does weaken the economy over time. Everybody knows that bracket creep is a drag on the economy. But for some reason, the Labor party and some others seem to think that there is no circumstance in which we should do anything about it.
KIERAN GILBERT: I think Labor’s point though is, and I am interested to get your thoughts on the economic merits of this argument, because when you deal with and resolve bracket creep as you say, it is in a few years from now. We don’t know what the economy is going to look like. There are enormous trade tensions right now. You yourself have said that there are global headwinds. Are you sure that that later stage, the third stage, is sustainable?
MATHIAS CORMANN: Labor’s position has been all over the place and completely and utterly inconsistent. In the campaign they were arguing for $387 billion in higher taxes, even though we knew about global economic headwinds then. Now they have said that we should bring forward tax cuts to help the economy given our global economic headwinds. The implication of the argument that you have just put to me is that if the headwinds persist in five or six years from now that somehow we should increase taxes again. That is obviously not the case. In order to ensure that our economy remains strong and resilient in the context of the challenges that we face in a global environment, but also in the context of the opportunities that we can seize, we need to ensure that our tax system incentivises effort and hard work, rewards effort and hard work. Ensuring that Australians get to keep more of the money they earn and are not penalised and pushed into the higher income tax bracket is a very important part of our plan to keep the economy strong. So the proposition somehow that if the economy was facing headwinds in five years’ time that this would mean that we should increase taxes is just ludicrous. It is completely inconsistent with what Labor has been arguing this past week that we should do right now. If Labor really is intent on increasing taxes again, they have the option to go to the next election and campaign for higher income taxes again. If they can persuade the Australian people that higher income taxes are a good idea when we all know that it would weaken the economy and lessen opportunity for Australians to get ahead, they can go their hardest.
KIERAN GILBERT: Can you reassure our viewers this morning that your fiscal policy, your Government’s economic and budgetary policy is in tune with the RBA’s monetary policy? Are you doing enough in terms of stimulus particularly I am thinking in terms of infrastructure spending, in terms of industrial relations reform. Is there enough being done right now given the softening nature of the economy?
MATHIAS CORMANN: Kieran, monetary policy and fiscal policy in Australia is absolutely heading in the same direction. Over the last two years we have legislated $302 billion worth of income tax cuts, which provide a massive stimulus into the economy. We are rolling out a $100 billion infrastructure investment pipeline. We are pursuing an ambitious free trade agenda. At the end of this term we are working to ensure that more than 90 per cent of all of our exports are covered through free trade agreements, which help us protect and improve our market access in markets around the world. Of course we are focused on making sure that we put the economy on the strongest possible foundation and trajectory for the future. Our Budget is a pro-growth Budget. Our Budget was put together in the context of reviewing the same sort of information that the Reserve Bank of Australia has been reviewing as they make their decisions on monetary policy. We are absolutely heading in the same direction. We will continue to execute our plan for a stronger economy which we took to the last election.
KIERAN GILBERT: Your colleague Josh Frydenberg and yourself, the Prime Minister as well, have spoken a lot about the $100 billion infrastructure plan. Is there room to expedite some of that to heed the warning of Governor Lowe this week, the RBA Governor?
MATHIAS CORMANN: To be honest, I think his comments have been over interpreted, I would say. We have a $100 billion infrastructure investment pipeline, about half of that over the forward estimates. All measures are always under review. As I have said on a number of occasions now, between every budget and budget update, the Government continues to monitor all of the economic data, all of the relevant information that comes out of the economy. We continue to make judgements. That is what we have always done. That is what we always will do and every six months you have a further formal update or once a year you have another budget. The Government will continue to make policy decisions to ensure that Australia is on the strongest possible economic and fiscal foundation and trajectory for the future so that Australians have the best possible opportunity to get ahead today and into the future.
KIERAN GILBERT: So you’re flexible on that front in terms of applying the policies appropriate the economic situation? Are you also flexible when it comes to industrial relations because this is an area where it’s been off limits for some time? The Prime Minister has said he’s going to look at it. What sort of things can be done do you think without spooking, creating concern among those that have been your critics in the past?
MATHIAS CORMANN: I disagree that it has been off limits for some time. We have passed substantial reforms in the last Parliament, including the restoration of the Australian Building and Construction Commission and the establishment of the Registered Organisations Commission and a whole series of other reforms that were passed through the Parliament in the last term of Government. This is not my area of portfolio responsibility. This is very much the area of responsibility for Christian Porter, our Attorney-General and Minister for Industrial Relations. I will let him spell out our agenda for the future in those areas.
KIERAN GILBERT: I’ve had a bit of feedback in the last 24 hours when the Centre Alliance announced that they had done a deal with you on gas. Some concern from the industry that this might enter the realm of sovereign risk. Can you reassure those in those relevant companies that this won’t adversely affect supply contracts that they’ve already entered into in export markets in terms of their gas supply?
MATHIAS CORMANN: The first point to make is that our Government has a long-standing commitment to bring down the cost of electricity. We have a long-standing commitment to bring down the cost of gas and to boost the supply of gas into the domestic market. We have announced various measures in the past. For example the ADGSM, which is designed to ensure appropriate supplies of gas into the domestic market, on the east coast in particular. That was established a little while ago now. There is a scheduled review on it. None of these things should come as a surprise. Of course we are committed to pursuing policies in the public interest which will help bring down the cost of electricity, which will help bring down the price of gas. We have worked together and we have exchanged a lot of information with Centre Alliance in recent weeks at various meetings that have been publicly canvassed in the past. Centre Alliance is clearly very comfortable with where the Government is heading. We will continue to engage with them in good faith in terms of some of the reforms that the Government is already considering. This is business as usual. This is what we have been doing. That is what we’re going to continue to do… interrupted
KIERAN GILBERT: What about for the companies?
MATHIAS CORMANN: Sorry?
KIERAN GILBERT: Will this potentially adversely impact contracts that they’ve already entered into in export markets?
MATHIAS CORMANN: We have not made any further policy decisions. We are exploring options on how we can continue to pursue our long-standing and well established objective and policy commitment to bring down the cost of electricity and to bring down the price of gas on the east coast and to boost the supply of gas into the domestic market. As these processes … interrupted
KIERAN GILBERT: And could it affect contracts?
MATHIAS CORMANN: As these processes play out, any reviews of policy change and the like will be subject to scrutiny and will be explored through processes and be openly and transparently canvassed at that time.
KIERAN GILBERT: Are you worried about the sovereign risk message if you do impact the export supply contracts already entered into?
MATHIAS CORMANN: Kieran, if you look back at what we have done over the last three of four years in this space, we have changed policy and some people will say, some people have raised a series of questions as we did those things. But we pursued them in the public interest in order to bring electricity prices down, in order to bring the price of gas down. The price of gas is well below where it had been at its peak, but we do believe there is further opportunity to do more. We will continue to work in good faith with all interested parties to help achieve that. Now, there have been conversations along the way … interrupted
KIERAN GILBERT: No sovereign risk issue?
MATHIAS CORMANN: Your definition there, the implication of your proposition there is that governments should never ever assess potential policy change in the public interest in order to achieve, for example, a reduction in the price of electricity and a reduction in the price of gas. If your proposition is that any consideration of policy change in the public interest causes sovereign risk issues well that is a very expansive interpretation on your part.
KIERAN GILBERT: It’s not so much that, it’s more about the retrospective nature of some of the application of those policies.
MATHIAS CORMANN: I think that you are getting way ahead of yourself. The Government’s policy right now has been announced and publicly stated in the past. But there is a process for us to consider further reforms to ensure that we secure even better outcomes. That is business as usual for the Government. In the context of this process, we have engaged with Centre Alliance over the last three or four weeks, in particular, to explain what we have been doing and the impact that that has had including to explain what we were considering and were we were thinking of going. There is still a lot of water to go under the bridge to make some of those judgements. As those judgements are made people will be able to ask all of those questions at that point.
KIERAN GILBERT: Minister, appreciated your time as always and congrats, a big win in the Parliament this week.
MATHIAS CORMANN: It was a great win for the Australian people.