Senator the Hon Mathias Cormann

HAMISH MACDONALD: The Turnbull Government will use today’s resumption of Parliament to start legislating key measures announced in this year’s Budget. But hopes of the speedy passage of the bank levy have hit a potential roadblock, with calls for the tax to also be applied to foreign banks. MPs are back in Canberra amid the fallout from the $165 million tax scam, which has rocked the tax office. Mathias Cormann is the Finance Minister and Deputy Senate Leader. He joins us from our Parliament House studio. Good morning to your Senator.

MATHIAS CORMANN: Good morning.

HAMISH MACDONALD: Let us start with this major tax fraud case. Is a separate investigation or inquiry needed to ensure the integrity of the ongoing investigations as some politicians have called for?

MATHIAS CORMANN: The investigation is ongoing. The work of the AFP and the ATO is ongoing and really what this case has proven is that the systems and the law enforcement framework that we have in place is working. We believe that the process should be allowed to take its course and to get to a conclusion.

HAMISH MACDONALD: Sure, but we are talking about a separate look at the integrity of those things. Many people must have doubts given that the Deputy Commissioner Michael Cranston facing these two charges of abusing his position was heading up tax envision investigations into wealthy individuals and multinational companies. How can anybody have faith in those investigations at this point?

MATHIAS CORMANN: The Australian Federal Police leads this investigation. The Australian Federal Police is absolutely beyond reproach and acts completely independently. We have absolute full confidence in the integrity and the capacity of the Australian Federal Police to conduct this investigation appropriately and it should be allowed to take its course.

HAMISH MACDONALD: Sure, but the pertinent question is whether you have absolute faith in the integrity of the ATO and those investigations.

MATHIAS CORMANN: We do have absolute confidence in the ATO. The ATO systems worked. What happened was not only detected, it is appropriately being investigated, it was stopped and appropriate action is now being taken. The Australian Federal Police is leading here a criminal investigation and that appropriately should be allowed to take its course.

HAMISH MACDONALD: Okay, let us talk about the bank levy or the bank tax. You have granted effectively a competitive advantage to foreign banks with operations in Australia with this tax. Are you open to remedying that by including them in this tax in a way that they are not currently?

MATHIAS CORMANN: The foreign banks were first encouraged into the Australian market for very good reasons by Paul Keating in order to ensure that we had increased competition in the banking system in Australia. That is still holds true. There is no foreign bank operating in Australia that is a major bank in Australia. No foreign bank in Australia is of a sufficient size to be considered a major bank in Australia. What we do have in Australia is four very strong and very profitable banks, which are stronger and more profitable courtesy of the market structure and the regulatory arrangements in place. To the extent that they are stronger and more profitable than they otherwise would be, we do not believe that it is unreasonable for taxpayers to get a small share of that additional profitability.

HAMISH MACDONALD: You have made that case very clear. But do you acknowledge that you are effectively giving these foreign banks a competitive advantage in this market by making the changes that you are?

MATHIAS CORMANN: We are working to ensure that customers get the best possible prices and the best possible services by making sure that smaller banks in Australia, that is regional banks, but it is also smaller foreign banks operating in Australia, by helping them compete with the stronger, dominant, more profitable banks. That is entirely in the public interest, which is why Paul Keating sometime back made such an effort to encourage foreign banks to come into the Australian market.

HAMISH MACDONALD: So you do acknowledge it and in fact that is part of the design of this levy?

MATHIAS CORMANN: We made an absolute deliberate decision and that has been a matter of public record since Budget night, we made an absolute deliberate decision to ensure that the smaller banks as part of this levy arrangement are in a better position to compete with the larger, dominant banks. It helps level the playing field for smaller banks to increase competitive tension. This also helps ensure that the major banks are not able to just pass on the cost of a levy that we believe they can absorb.

HAMISH MACDONALD: Sure, but Nick Xenophon though is saying this may be a pre-condition for him letting the whole thing go through the Senate. Are you ruling out even talking about including the foreign banks in this levy?

MATHIAS CORMANN: I have been very clear and the Treasurer has been very clear. The levy has been designed on purpose the way it has been. The Labor party on the night of the Budget came out to confirm that they would support the major bank levy the way we have put it forward. We know that Bill Shorten is all into the wibble wobble, but we hope that this time round he actually will show a bit of strength of character and stick to the commitments that they have made on Budget night.

HAMISH MACDONALD: And you do not see any merit in this suggestion being put forward by Nick Xenophon that raising an extra $800 million over the four years could be used to form a last resort compensation scheme for victims of these financial mismanagement and fraud issues?

MATHIAS CORMANN: We believe it is very important that we have a competitive banking system. A stable and strong, but also competitive banking system. We believe that it is only fair that the major banks who are more profitable than they otherwise would be courtesy of the market structure and regulatory arrangements in place in Australia, that they make a small and reasonable contribution towards Budget repair …interrupted

HAMISH MACDONALD: We have heard those lines, can I just get a straight answer on that question over last resort compensation scheme by introducing the foreign banks? Just a straight answer on that.

MATHIAS CORMANN: I have given you a straight answer. Our position is as reflected in the Budget. That is the position that we are putting to the Parliament. We expect that Labor as they have publically said will support the bank levy the way we have put it forward in the Budget.

HAMISH MACDONALD: So that is a no?

MATHIAS CORMANN: I cannot be clearer than that. We are putting forward our policy …interrupted

HAMISH MACDONALD: You could be, you just say no.

MATHIAS CORMANN: We are not supporting what Nick Xenophon is putting forward. We are putting forward what we have reflected in the Budget.

HAMISH MACDONALD: Okay, the Immigration Minister Peter Dutton has talked about Australia losing millions of dollars a year due to fake asylum seeker claims on the public purse. How much money is Australia wrongly giving to these asylum seekers who have not put forward their claims for protection?

MATHIAS CORMANN: There are about 7,500 asylum seekers that are part of the legacy case load, they were actually illegal maritime arrivals that came here during the period of the Labor Government. About 30,000 or so had yet to be processed when we came into Government. 7,500 of which are not engaging with us. There is an expense there. I will leave Peter Dutton to take people through the specifics.

HAMISH MACDONALD: We need to get some specifics about the figures though. We are being told that we are giving millions of dollars a year, that there are thousands of fake refugees. What are the numbers? You have the books tell us.

MATHIAS CORMANN: Indeed, 7,500 irregular maritime arrivals who are not engaging with us …interrupted

HAMISH MACDONALD: So you are saying that 7,500 are fake refugees? Is that what you are saying?

MATHIAS CORMANN: What I am saying to you is that there are 7,500. I have just precisely said …interrupted

HAMISH MACDONALD: 7,500 what?

MATHIAS CORMANN: 7,500 irregular maritime arrivals who arrived here during the period of the Labor Government, the Rudd Gillard Labor Government who are not engaging with the Government. I will it to Peter Dutton as the Minister for Immigration to talk through the specifics in relation to this.

HAMISH MACDONALD: So why is it a secret, how many of those are fake? If we are going to use this claim ‘fake refugees’, how many of them?

MATHIAS CORMANN: I will let you run the commentary. There is about…interrupted

HAMISH MACDONALD: It is not a commentary, it is a question. It is a straight question to a really big claim.

MATHIAS CORMANN: I am giving you a very straight answer. There were about 50,000 irregular maritime arrivals that arrived here during the period of the Rudd Gillard Labor Government. 30,000 of which we inherited as a legacy case load. We are working our way through that legacy case load as quickly and as swiftly as we possibly can. Those who say that they have come to Australia to seek asylum, it is not unreasonable for us to expect that they actually engage with the process, that they seek a temporary protection visa or other relevant visas …interrupted

HAMISH MACDONALD: Sure, I do not think anyone is questioning that though. It is just that we are being told that we are footing the bill for these people wrongly and you cannot tell us how much that bill is.

MATHIAS CORMANN: What I am saying to you is that you cannot make a judgement on whether they are entitled to be here or not entitled to be here if they are not engaging with the process. But if somebody, if you have got 7.5000 …interrupted

HAMISH MACDONALD: So then how do you know they are fake?

MATHIAS CORMANN: I think you are being entirely unreasonable in the way you are pursuing this line of questioning. 7,500 people who are refusing to participate in the process are clearly not doing the right thing by Australia. They are clearly taking advantage of the system here. They should be required to engage with the process.

HAMISH MACDONALD: Just on other measures included the Budget. You do not have much support it seems for 0.5 per cent increase in the Medicare levy for workers earning as littler $21,000 per annum.

MATHIAS CORMANN: You are quite wrong on that. You are actually quite wrong with that assertion. More than half of Labor’s Shadow Cabinet, more than half of Bill Shorten’s Shadow Cabinet supports doing the right thing by fully funding the National Disability Insurance Scheme, by increasing the Medicare levy by 0.5 per cent from 1 July 2019. We know that Bill Shorten always goes for the political games. He plays politics instead of doing what is right by our country. He should listen to the majority of his Shadow Cabinet and do the right thing.

HAMISH MACDONALD: Does that division within the Labor party that we are learning of today over the Labor party position on the Medicare levy give you increased hope of getting this through?

MATHIAS CORMANN: We will put forward the fair measure that we have reflected in the Budget. That is to increase the Medicare levy by 0.5 per cent from 1 July 2019. It means that the more you earn, the more you pay. The less you earn, the less you pay. If you are currently exempted from paying the Medicare levy, you will continue to be exempted. We will put it the Parliament. We will put it the Senate and we call on Bill Shorten to reflect on the national interest, the public interest instead of continuing his opportunistic political games.

HAMISH MACDONALD: Mathias Cormann, it is always a pleasure. Thank you very much for your time this morning.

MATHIAS CORMANN: Always good to talk to you.