Senator the Hon Mathias Cormann

PATRICIA KARVELAS: Now let’s get to that story of the day. All within regulations but not passing the ever important sniff test. The Speaker of the House Bronwyn Bishop says she will reimburse taxpayers for a helicopter trip from Melbourne to Geelong to attend a Liberal fundraiser. That’s more than $5,000 plus a 25 per cent loading. It’s just one of several of the Speaker’s expenses that raised eyebrows and it has prompted calls for an overhaul of Parliamentary entitlements. In other news the Federal Government is adamant that it won’t touch negative gearing on property despite pressure from the Reserve Bank to review the tax break. Let’s get down to business with Federal Finance Minister Mathias Cormann. Good evening.

MATHIAS CORMANN: Good evening.

PATRICIA KARVELAS: Do you agree with Joe Hockey that Bronwyn Bishop’s helicopter ride did not pass the so called sniff test? 

MATHIAS CORMANN: The system that is in place in relation to Parliamentary travel is clearly working. All of the travel is regularly and transparently reported, on a regular basis available for scrutiny and clearly it is being scrutinised ... interrupted

PATRICIA KARVELAS: No hang on a minute, how can you say it is clearly working? She spent $5000 on a helicopter ride that takes fifty minutes on the road.

MATHIAS CORMANN: And she has announced that she is reimbursing it, as you have said in your introduction. 

PATRICIA KARVELAS: Based on media scrutiny, coverage, and pressure. So it was the fourth estate that did it. 

MATHIAS CORMANN: So you see, that is my point exactly Patricia. That is why I am saying the system is working. As Members of Parliament we have to travel. It is not the most enjoyable part of the job as somebody from Western Australia I can tell you. But, as part of our job we have to travel. The travel that we undertake as Members of Parliament is publicly reported. Every six months there is an exhaustive list of all of the travel undertaken at taxpayer’s expense. That travel record is available for scrutiny by journalists, by the Opposition, by anyone who wants to review it. Questions are being asked whenever there is a question mark. The system has worked on this occasion.

PATRICIA KARVELAS: Well, I’m really questioning how you can say that it has worked, as it has happened after the fact and in delay. Isn’t it a better system to have an independent system that looks independently? A body that looks independently at travel, that MPs and politicians can go to keep it completely transparent so we don’t see these sorts of things happening?

MATHIAS CORMANN: The thing is, I was asked about this some months ago, when I had only just recently come out of Opposition. What I would say to you is that Opposition Members of Parliament do a lot of travel in the context of scrutinising the activities of Government, which is a very important part of our democratic system. It isn’t always practical, to be honest, for Opposition Members of Parliament for example to provide a running commentary and provide transparent and immediate advice on every one of their movements as they are doing their day-to-day job... interrupted

PATRICIA KARVELAS: But if it is an independent body that can assess it, there wouldn’t be a running anything. It would be independently decided based on guidelines.

MATHIAS CORMANN: To be honest I think Members of Parliament as part of their job have to be able to travel and have to be able to go to certain meetings without having to provide a commentary to anyone about what it is they are doing, other than to make sure that whatever public expense is incurred is incurred in the right way, subject to all of the rules and entitlements, which is currently being managed through the Department of Finance. Having said all of this, as I have indicated to you before, the system is actually working. There is transparent and regular reporting of all of the travel that is undertaken. There is scrutiny that happens after the event. As a practicality it is very difficult to do it any other way than to report after the travel has happened …interrupted

PATRICIA KARVELAS: She was also travelling for a Liberal Party event. Is that fair?

MATHIAS CORMANN: I don’t know what her diary was at the time. All I can say is that there was a public report of the travel that was undertaken, some questions were raised and the Speaker has decided to reimburse the travel expense.

PATRICIA KARVELAS: As a Government wouldn’t you be keen to avoid problems like this? You have lost two days of what I imagine, you would prefer to be on the front foot talking about other issues, not on this issue. Wouldn’t you prefer a more transparent process that took the politics and all the accusations, I can tell you from the text messages I am getting Mathias Cormann, people don’t think the system is fair. You might say it is, but that is not the way people see it.

MATHIAS CORMANN: What I am saying is that the system is working. It has worked on this occasion.

PATRICIA KARVELAS: But is it fair?

MATHIAS CORMANN: What do you mean is it fair?

PATRICIA KARVELAS: Well. Exactly what I mean. Do you think it is a fair, transparent system?

MATHIAS CORMANN: It is a system where Members of Parliament as part of doing their job have to travel. That is not necessarily the most enjoyable part of the job. But Members of Parliament, when you have got a country that goes from Perth to Sydney, from Darwin to Adelaide, where you have got the Federal Parliament in Canberra and you have duties across the country, there is a level of travel involved. It is important that all of that travel that is undertaken officially is undertaken within the rules. There is a process where Members of Parliament have to account for the travel that is undertaken, that is a …interrupted

PATRICIA KARVELAS: So you have no appetite for changing the system we have got.

MATHIAS CORMANN: I think the system that is currently in place is pretty transparent and it offers the opportunity for pretty robust scrutiny. Where there are questions that can be raised, these questions inevitably are raised and corrective action taken. As has happened on this occasion.

PATRICIA KARVELAS: Do you concede this has been embarrassing for the Government?

MATHIAS CORMANN: We would much rather talk about the issues that are important to the country, strengthening growth, creating more jobs and helping to ensure that Australia is safe and secure.

PATRICIA KARVELAS: How about Bronwyn Bishop’s ongoing position as Speaker? Is she safe?

MATHIAS CORMANN: That is not for me to comment about. That is a matter for the House of Representatives.

PATRICIA KARVELAS: Do you think she is doing a good job?

MATHIAS CORMANN: I am in the Senate. From all that I can see, I think she is doing an outstanding job. 

PATRICIA KARVELAS: Alright, let’s move on to another issue. Let’s go to the negative gearing debate which has ramped up with the Reserve Bank’s submission calling on your Government to review the tax break. Will you?

MATHIAS CORMANN: No we won’t. We disagree with the Reserve Bank. These are matters of public policy that are appropriately the province of the Government. We have absolutely no plan to remove negative gearing and it would, in our judgement, be a bad policy to do so. Let’s just remind ourselves of what this is all about. The underpinning principle is that you pay tax on your net income. You are able to deduct any legitimate expenses incurred in generating your income to determine your taxable income. That includes costs of financing relevant investments generating an income. That is a well established principle in our tax system, to allow deductions for expenses incurred in the earning of assessable income and that is not something as a matter of general principle that we believe ought to be changed.

PATRICIA KARVELAS: But you now have the Reserve Bank suggest otherwise. How can you ignore the advice of the Reserve Bank to look at this system?

MATHIAS CORMANN: The Reserve Bank is responsible for various matters, principally the setting of the official cash rate. The Government is responsible for certain other matters and the tax laws for example are a matter for the Government.

PATRICIA KARVELAS: So you will not listen to any of their advice?

MATHIAS CORMANN: We will certainly not make any changes to remove negative gearing. We’ve been very clear about that. I’ve actually heard the Shadow Treasurer say today that Labor is not intending to abolish negative gearing either. The truth is, this is something that has been tried before with bad consequences. If negative gearing, which is a colloquial term to essentially describe the proposition that you can deduct expenses incurred in generating an income. If negative gearing was removed, you would reduce the supply of rental accommodation and all other things being equal, you’d push up the cost of rent. That is not something that in our view is desirable and it’s not something that we will do.

PATRICIA KARVELAS: This is not an academic or an analyst or a lobby group but it’s the country’s central bank calling for this review, won’t voters expect you to heed the Bank’s advice given its central role in our economy?

MATHIAS CORMANN: We have great respect for the Reserve Bank. We’ve got great respect for their independence to make judgements on the things they are responsible for. Our tax laws are a matter for the Government. It’s important to remember that negative gearing, it’s often the perception that this is something that is accessed by the very rich to avoid paying tax. The truth is that this is an opportunity that is being used by middle income earners to get ahead. If you look at the tax office data and who actually takes advantage of negative gearing, they’re police officers, they’re nurses, they’re teachers. This is something that is being used by middle income earners to get ahead.

PATRICIA KARVELAS: On RN Drive, my guest is the nation’s Finance Minister, Mathias Cormann. What do you make of the Government’s position that it doesn’t want to change ... interrupted 

MATHIAS CORMANN: ... and the Opposition’s position incidentally.

PATRICIA KARVELAS: Your position at least, Mathias Cormann, that the Government’s position on not changing the Parliamentary entitlement system and also negative gearing. 0418226576 is our number or you can tweet us @RNDrive. I want to read out a statement to you that I received from the BCA. It’s from the BCA’s President Catherine Livingstone and she says yesterday marked a low point for political leadership in Australia. Within hours of the Treasurer outlining a compelling case for fundamental tax reform and rebalancing of the tax mix both major parties began ruling out key elements of sensible tax reform including changes to the GST. Minister, why is that you, that your Government floats these things and then moves back from them within the same day?

MATHIAS CORMANN: I don’t agree with your proposition at all. It is what ...interrupted

PATRICIA KARVELAS: Well it’s the BCA’s proposition. 

MATHIAS CORMANN: You’ve just put that proposition to me, so I don’t agree with that at all. The Treasurer yesterday provided a very comprehensive speech about the need for tax reform and some of the directions the Government is considering. That conversation is ongoing. Later this year we will be releasing a Green Paper and then a White Paper with the proposals for tax reform that we will take to the next election. In the meantime, there is a community debate going on, which ultimately will result in some community consensus around various reforms proposals. That is as it should be. 

PATRICIA KARVELAS: You’re in Perth Minister, what’s your response to the Shadow Treasurer, Chris Bowen’s call for a Treasury department office to be set up in the West to help business and investment? Will you support the move?

MATHIAS CORMANN: I don’t know that Western Australia would be better off with more Treasury officials in Perth. Clearly Chris Bowen doesn’t have a lot of confidence in the capacity of WA Labor Members of Parliament to advocate on behalf of WA’s interest. In recent years, the problem that we’ve had with Labor governments, is that they have pursued anti-WA Labor tax grabs, like the mining tax and the carbon tax. We don’t need more bureaucrats in Perth, what we need is Labor to back away from their anti-WA policies. 

PATRICIA KARVELAS: I want to revisit, just before I let you go, only because I’m being inundated by text messages about it, so you know, in the interest of giving my listeners a fair go, I want to put it to you again. Is it fair to make the comparison between what Bronwyn Bishop did and Peter Slipper in this situation. In Opposition you absolutely hammered the case about Peter Slipper and the taxis and the way he exploited the Parliamentary system. Why is it okay for Bronwyn Bishop to do it and you know, she pays it back and everyone is meant to go quiet about it?

MATHIAS CORMANN: Again, you’re testing my memory a bit. But from memory ... interrupted

PATRICIA KARVELAS: Oh God, you can remember that period. 

MATHIAS CORMANN: From memory, Peter Slipper was alleged to have taken ComCars to visit various wineries and things of that nature. Bronwyn Bishop is clearly conducting official functions and she is clearly pursuing her duties as a Member of Parliament. But having said that, all of us as Members of Parliament, we need to ensure that all of our travel is done within the rules, is done within entitlement and there is a process in place to ensure that all of our travel records are publicly reported, transparently available for scrutiny. And they are scrutinised. The reason we are having this conversation is because this particular trip by the Speaker was publicly reported and that is why the scrutiny has resulted in the level of conversation and today the Speaker has announced that she is reimbursing the expense incurred. 

PATRICIA KARVELAS: Mathias Cormann it has been lovely to talk to you. Thanks for joining us. 

MATHIAS CORMANN: Always good to talk to you.

PATRICIA KARVELAS: And that’s the Finance Minister, Mathias Cormann joining us from Perth.