Senator the Hon Mathias Cormann

FRAN KELLY: Federal Parliament is sitting for a final fortnight before the Budget in May and with the search for savings well underway, most attention is on the Senate this week where the Government has been blocked from repealing the Carbon and the Mining Taxes. Legislation to scrap the carbon price has been stuck in the red chamber for more than 100 days now, while a Bill to get rid of the Minerals Resource Rent Tax and a range of related measures is due for a vote this week. The Government is warning Labor and The Greens their obstruction will cost the Budget billions. Almost $14 billion by blocking the Mining Tax alone. Finance Minister Mathias Cormann joins us in our Parliament House studios. Minister good morning, welcome to Breakfast. 

MATHIAS CORMANN: Good morning Fran.

FRAN KELLY: Minister, before we get to the Mining Tax, the ICAC corruption hearings in New South Wales, have you heard that your colleague Arthur Sinodinos stood to make up to $20 million personal profit through a company with links to Eddie Obeid and this occurred before Arthur Sinodinos entered the Parliament, but he was the State Liberal Party Treasurer at the time. Do you agree that this is not a great look for the man who is now Assistant Treasurer?

MATHIAS CORMANN: Arthur Sinodinos is doing an outstanding job as Assistant Treasurer. He has made a full statement to the Senate some time ago and of course he is cooperating fully with the inquiry.

FRAN KELLY: He is indeed, but the inquiry, the opening of the ICAC yesterday, we heard that he was appointed to the board Australian Water Holdings in 2008, quote according to the enquiry “to open lines of communication with the Liberal Party”. Again given the sum of money that he stood to profit from if this deal had gone through and it didn’t, is it appropriate for political office holders within the Liberal Party, he was New South Wales State Treasurer, to use their political contacts for such extraordinary potential gain?

MATHIAS CORMANN: I’m not going to give a running commentary on the inquiry that is currently taking place. These are matters that are currently being assessed and Senator Sinodinos is fully cooperating with the inquiry.

FRAN KELLY: Should he stand down in the meantime while this inquiry is heard?

MATHIAS CORMANN: Absolutely not.

FRAN KELLY: To other matters now, you are claiming a net saving of $13.8 billion if the mining tax is scrapped, Labor and The Greens are holding out. You really only have to wait a few extra months for the new Senate to be installed and you will get your mining tax scrapped, won’t you? You’ll get the mining tax scrapped.

MATHIAS CORMANN: Only the Labor Party can be so incompetent to come up with a massive new tax targeting an important industry for Australia, the mining industry, and leave the budget worse off. The fact that scrapping the mining tax would actually improve the budget position by $13.8 billion tells you everything you need to know about the mining tax. The fact that Labor under Bill Shorten’s leadership is standing in the way of us fixing up what is one of the many messes that we have inherited from the Labor Party just shows that he hasn’t learnt anything from the election result in September last year.

FRAN KELLY: Labor disputes the $13.8 billion figure but in terms of fixing it up, why don’t you consider fixing it up rather than scrapping it because mining companies under the current design of the tax get their deductions upfront and that’s the big reason it’s only delivered $232 million last financial year, far below Labor said it would. But once those deductions run out, this tax could be a big earner couldn’t it?

MATHIAS CORMANN: Well the fundamental premise of this tax is wrong. It is based on the premise that the mining industry doesn’t pay its fair share of tax. Now the truth is that the more profitable you are as a mining company, the more company tax you pay. The higher the commodity prices are, the more you pay in royalties on those resources. That is an appropriate system to ensure that the community receives a fair share from the extraction of our non-renewable resources. Now we’ve always said that the underlying premise of the mining tax was wrong. It was designed by Labor as a tax on Western Australia. As it turns out, it has raised less than 10% than what Labor predicted it would raise. Even though they had already spent all the money they thought it would raise, extraordinarily. But nearly 100% of the revenue that it has raised would have come out of Western Australia. So to have one national tax target one single State like that and for Bill Shorten to go into Western Australia and create the impression that somehow he is having second thoughts, but here in Canberra continuing to vote to keep a tax which is a tax on WA, just shows the complete confusion that reigns in the Labor Party these days.

FRAN KELLY: But aren’t you trying to confuse things, the mining tax was never just a tax on WA, you pushing this ahead of the WA Senate re-run?

MATHIAS CORMANN: We’ve always said that the mining tax is a tax on WA…interrupted

FRAN KELLY: But it’s not, it’s a tax on mining companies wherever they are, not just WA.

MATHIAS CORMANN: Well that is actually not true. If you look at where 99% of the iron ore production…interrupted

FRAN KELLY: BHP Billiton is not just in WA though.

MATHIAS CORMANN: The mining tax was designed as a tax on iron ore and coal. When it was initially designed, you will find that Treasury officials told Senate Estimates that 80% of the revenue was expected to come from iron ore production and about 20% from coal production. As it turns out, nearly 100% of the mining tax revenue comes from iron ore production and nearly 100% of iron ore production in Australia takes places in Western Australia. It absolutely is a tax on Western Australia. The Labor Party in government under Kevin Rudd and Julia Gillard was anti-West Australian and Bill Shorten is persisting with the anti-Western Australian eastern States centric attitude of the Labor Party.

FRAN KELLY: Now the tax was meant to fund a range of measures, as I mentioned it’s brought in far less than it ever thought it would and you’re scrapping the measures it was meant to fund that are already there in our Budget. One of those is the income support payment paid to children of war veterans either killed or seriously wounded, that bonus is worth $211 a year to help with cost of living expenses, and you are cutting it, that’s pretty tough isn’t it, pretty hard hearted?

MATHIAS CORMANN: Well we have inherited $123 billion worth of projected deficits over the forward estimates. Government debt is heading for $667 billion. There are a lot of meritorious causes, but when they are not funded they are not funded. It was quite cruel for Labor to give people the impression that somehow they were able to fund things on the back of the mining tax when the mining tax actually wasn’t going to raise any meaningful revenue, because Wayne Swan was so incompetent in the way he designed this tax. He told us that this year it would raise $6.5 billion. The latest prediction is that it would be about $500 million this year. Less than 10% of what he said when he announced it, it would raise. Wayne Swan went out there, spending all this money that he didn’t have. Does that mean that we’ve got to make some tough decisions along the way? Of course. We announced these decisions in the lead up to the last election, before the last election. We were very transparent before the election that we would scrap the mining tax and that we would scrap all of the unfunded spending promises that Labor attached to their failed mining tax with the exception of the increase in compulsory super which we said that we would delay by two years.

FRAN KELLY: Yes, you might have been clear about it, but as Government’s keep telling us, Budgets are about choices and in this Budget you are choosing to scrap a payment of $211 a year to 1200 kids that costs about $260,000 a year. As Labor pointed out, with that kind of money, four women under Tony Abbott’s Paid Parental Leave Scheme could be denied and you’d be paying for it, where’s the equity in this? It’s a choice isn’t it?

MATHIAS CORMANN: I’m not announcing the Budget here today. The Budget will be delivered on the second Tuesday in May. What I am confirming though is what we’ve said for a long time, including in the lead up to the last election and that is that we are committed to scrap Labor’s job destroying mining tax because that will help us build a stronger economy, create more jobs and ultimately deliver stronger revenue for Government. And we are committed to scrap all of the unfunded spending promises that Labor irresponsibly and fiscally recklessly attached to this failed tax. That is what we need to do in order to start repairing the Budget mess we have inherited from the Labor Party.

FRAN KELLY: And just briefly on another issue, the WA Senate Election does loom, I’m sure you’re very well aware of that in your State. There is a record 77 candidates on the ballot paper, will this work against the major parties again do you think and what do you think of this number of micro parties again that have come out for this election?

MATHIAS CORMANN: We are focused on running our campaign. We have got a strong and experienced Liberal Senate team in Western Australia, which has a track record of standing up for WA and delivering a better deal for WA. We will campaign on our track record and on our commitment to continue to deliver a better deal for Western Australia into the future.

FRAN KELLY: And is the Government holding onto the Commission of Audit until after the WA election? You’ve had it for some weeks now, you’re the Finance Minister, have you seen that Commission of Audit?

MATHIAS CORMANN: I have seen the Commission of Audit report as you would expect me to…interrupted

FRAN KELLY: So why can’t we?

MATHIAS CORMANN: This is normal Government process. It is completely unrelated to the election timetables and what you would expect us to do in the lead up to a Budget. I say again that the Budget is due to be delivered on the second Tuesday in May. We are going through an orderly methodical process where we are assessing a range of inputs into our Budget considerations including the Commission of Audit report. We are just getting on with the job carefully and methodically, making judgements which will be reflected in the Budget later this year.

FRAN KELLY: Mathias Cormann thank you very much for joining us.

MATHIAS CORMANN: Always good to be here.