Senator the Hon Mathias Cormann

FRAN KELLY: Well the New South Wales Liberal Government is turning up the heat on the Turnbull Government over the need for far-reaching tax reform, Premier Mike Baird unveiling a revised plan to lift the GST to 15 per cent. The Premier says the $100 billion in extra revenue should be used to cut income and corporate taxes, compensate low income earners and provide the States with more money for health and education. But this blueprint for change comes on the same day that new polling shows that the majority of voters are still opposed to paying a higher GST. The Finance Minister Mathias Cormann joins us on this first official day back of Parliament for this election year, Mathias Cormann welcome back to Breakfast.  

MATHIAS CORMANN: Good morning. Good to be back.

FRAN KELLY: Premier Mike Baird’s plan is to increase the GST but not broaden it. That would raise an extra $32 billion a year according to his figuring. How close is this to what the Government is working on when it comes to tax reform?

MATHIAS CORMANN: The Federal Government is involved in a conversation with State and Territory Governments and indeed the community as a whole, on how our tax system can be improved. Our focus is on how we can make our tax system more growth friendly, because in the end our focus is on strengthening growth and creating more jobs. Over time that will lead to increased revenue for both the Commonwealth and State and Territory Governments.

FRAN KELLY: And Mike Baird’s plan would fit in with that wouldn’t it? It’s raising some more revenue by hiking up the GST but is using that to cut company taxes and income taxes which you and the Treasurer and the Prime Minister say is all about trying to kick-start growth, so you like it on the face of it.

MATHIAS CORMANN: The Federal Government wants to increase revenue on the back of stronger growth. We don’t want to increase the overall tax burden in the economy. What we are focussed on is improving the tax mix because we want to make our tax system overall more growth friendly. Having said all of this, we welcome the fact that Premier Baird and Premier Weatherill in particular have very constructively engaged in the conversation with us about how the tax system can be improved. We will continue in good faith to talk to all the State and Territory Governments and continue to engage in the conversation with the community about how our tax system can be improved.

FRAN KELLY: So is it still the Federal Government’s position that any increase in the GST would have to all go to make up for – or to compensate for – taxes cut, like income taxes and company taxes, because the two States that are giving you any heart at all on backing you on increasing the GST – South Australia and New South Wales, are both saying; money has to be there – extra money – for schools and hospitals. Jay Weatherill’s plan is slightly different, he wants a fixed 17.5 per cent share of income taxes to be the flow to the States for schools and hospitals and that is the offset for the Federal Government getting the increased GST.

MATHIAS CORMANN: Our position is that we want to strengthen growth, create more jobs and create the best possible opportunity for people across Australia to get ahead. As part of that conversation we want to – as part of that focus – we want to of course ensure that the tax system is as growth friendly as possible. Over time, stronger growth will deliver among other things, stronger revenue flows for Government, both at a Federal and State level. That is what we are focussed on.

FRAN KELLY: Yes, but the States of course are focussed on trying to fund the funding gap they say that your Government created in health and education. We’ve got Labor promising more money for Gonski, the States will not come easily to a table that doesn’t offer them something on health and education. Do you accept that or are you prepared to go it alone? The COAG Leaders Meeting is in late March, if the States don’t agree will the Federal Government go it alone?

MATHIAS CORMANN: What we have seen from Labor again last week is an unfunded spending promise. South Australian Premier Jay Weatherill ... interrupted  

FRAN KELLY: I’m talking about the States’ plans now.

MATHIAS CORMANN: You asked me about Labor’s announcement last week in relation to Gonski funding. South Australian Premier Jay Weatherill completely belled the cat on this. Labor doesn’t have a plan on how to fund this. As a country we are still working our way through Labor’s last spending binge. We are still working to digest Labor’s last spending binge. We can’t afford another unfunded Labor spending binge. Our focus is very clearly on pursuing policies to strengthen growth, create more jobs and we are also working on getting the budget back into balance as soon as possible.

FRAN KELLY: But Minister, with respect, from what we know your Government doesn’t have a plan for this either, because you won’t tell us it. So do you have a plan for kick-starting growth and funding schools and hospitals properly as the States say they need it?

MATHIAS CORMANN: We do have a plan to kick start growth. Our plan is reflected in the Budget. When it comes to making our tax system more growth friendly, the first things we did was we got rid of the mining tax and the carbon tax, we reduced company tax for small business, we’ve pursued a whole range of other tax improvements in the last Budget. What we’ve always said is that between now and the next election, we would engage in a conversation with the State and Territory Governments and with the community about how the tax system could be further improved and we would expect, and our intention is very much between now and the next election to reach a landing point in relation to this and all of the relevant announcements will be made in good time before the next election so that people can pass judgement on them.

FRAN KELLY: I guess that’s it, it’s timing isn’t it? The Prime Minister has told us on Friday that the changes to the GST are certainly ‘being actively considered by the Government’. Today’s Newspoll show it is going to be a tough sell. 37 per cent of voters support increasing the GST, but 54 per cent are against it, even with compensation. How are you going to turn that around?

MATHIAS CORMANN: The GST is part of the tax system. So of course the GST is being considered as you are having a conversation about how our tax system can be improved. The important point here is that we haven’t reached a landing point yet on an overall package. Once we have reached a landing point on an overall package, we would put that to the Australian people. We would explain how we believe this would help strengthen growth and create better opportunity for people across Australia to get ahead. At that in point in time, we would be hopeful that we could win the trust and the confidence of the Australian people for any such proposed reform package.

FRAN KELLY: I think obviously State Premiers are getting more interested in everyone starting to prosecute this case, certainly those that are in favour of a higher GST. The Government’s tax changes, when will we see them because the Government is all, but perhaps you could confirm for us today, the Government has dumped the Tax Reform White Paper process. When will we see the tax changes that you’ll take to the election. Will we see them before or in the Budget?

MATHIAS CORMANN: It will be very clear to people as we go to the next election as to what a Turnbull Government would be proposing to do in a second term to improve our tax system, to make our tax system more growth friendly. We have done a lot of work in relation to tax reform already over the last two years and a bit. There will be a next instalment to making our tax system more growth friendly in our next term. In good time before the next election, people will be very clear on what it is that a Turnbull Government would do as opposed to what a Shorten Labor Opposition puts forward.

FRAN KELLY: In good time, it’s always hard to nail what that means exactly. You’re listening to RN Breakfast, it’s 16 to 8. Our guest is the Federal Finance Minister Mathias Cormann. Mathias Cormann, late last week the Prime Minister also warned of a tough May Budget. He said that it will certainly be a tight Budget, there are tight financial times. I wonder then, given that on the issue of same-sex marriage, according to the Australian Marriage Equality group, there is now a working majority in both the Reps and the Senate to pass the same-sex marriage bill, that you would be advising the Prime Minister to save the $160 million that’s going to be spent on the plebiscite, on the grounds that there are better things that the money could be spent on.

MATHIAS CORMANN: I support the policy that was adopted by the Coalition party room some time ago, I support the proposition to put this to a plebiscite after the next election. This issue has come before the Parliament on several occasions now. On each occasion, the Parliament has confirmed the current definition of marriage in the Marriage Act. In order to facilitate a more permanent resolution, I totally support the proposition that it is best for this question to be put to the Australian people for this issue to be resolved …interrupted

FRAN KELLY: Even though the polls consistently show that the public are in favour of it, and now apparently, if free votes are granted, the numbers are there to pass this.

MATHIAS CORMANN: I don’t know where you get that information from in terms of what a vote in the Parliament would look like. The Coalition party room has determined a course of action. I fully support that course of action. That is the way that the Government will be proceeding.

FRAN KELLY: In the past you’ve been opposed to same-sex marriage, I assume that’s still your position. If the plebiscite returned a yes vote though, would you abide by that, the wishes of the people?

MATHIAS CORMANN: I support the current definition of marriage as it was enshrined in the Marriage Act by both parties just over ten years ago. If you go to a plebiscite and if you put this question to the Australian people for the Australian people to decide, then yes of course, the Parliament would have to abide by whatever judgement is made by the Australian people.

FRAN KELLY: Minister thank you very much for joining us on Breakfast.

MATHIAS CORMANN: Always good to talk to you.