Senator the Hon Mathias Cormann

PATRICIA KARVELAS: Finance Minister Mathias Cormann joins me now in our Parliament House studio, welcome.

MATHIAS CORMANN: Good to be here.

PATRICIA KARVELAS: So the Opposition insists there is still a question over Coalition MP Jason Falinski. Will you refer his case to the High Court?

MATHIAS CORMANN: No. Bill Shorten has just lost the plot. He has been found out. He has been misleading the Australian people for months now. He has been sanctimoniously lecturing everyone, suggesting that somehow the processes inside the Labor Party of vetting candidates are so amazing and better than anybody else’s. Well the truth is they were not. It has been known for some time that a number of his Members of the House of Representatives were sitting in the House of Representatives for months in breach of the Constitution. When it came to Liberal Members and Senators and there were legitimate questions in relation to their eligibility, they immediately took steps to either resign or refer themselves to the High Court. There are no other Members or Senators on our side of politics that have a problem. 

PATRICIA KARVELAS: So you do not think Jason Falinski needs to go to the High Court just to settle it so that everything is settled?

MATHIAS CORMANN: No. This is just Bill Shorten now casting around trying to fudge an issue that is a real problem for him, because it goes to his judgement and his character. He has misled people for months now and instead of just accepting…interrupted

PATRICIA KARVELAS: Well, he did refer, Kay Gallagher was referred and now they have taken action.

MATHIAS CORMANN: Well, he has, in the face of a very clear ruling again from the High Court in October last year, he refused to take action in relation to one MP in particular, Susan Lamb, who by her own admission was a dual citizen all the way through. What he is doing now, he is just trying to fudge a problem of his own making because he is clearly under a lot of internal pressure by his own people, who are telling us that they believe that Bill Shorten has seriously mismanaged this issue.

PATRICIA KARVELAS: His people are telling you this?

MATHIAS CORMANN: Well, his people, it is an open…interrupted

PATRICIA KARVELAS: You are saying that Labor MPs have said that to you?

MATHIAS CORMANN: It is an open secret around this building that Labor MPs feel that Bill Shorten has seriously mismanaged this issue.

PATRICIA KARVELAS: Does Section 44 need to be updated?

MATHIAS CORMANN: I am not personally persuaded that the Australian people disagree with the proposition that a Member of the Australian Parliament, a Member of the Federal Parliament, should be an Australian citizen only. I think that that is something that has been part of our Constitution ever since Federation and I would be surprised if there was a majority of people in a majority of seats that were in favour of change. 

PATRICIA KARVELAS: So there is going to be five by-elections if you count Tim Hammond as well. That is like a pretty significant election day. Tony Abbott says the Liberals should run a candidate in all of those by-elections. Will you?

MATHIAS CORMANN: Well, these are decisions for the Liberal…interrupted

PATRICIA KARVELAS: Do you think you should?

MATHIAS CORMANN: These are not decisions for me to make, these are decisions for the Liberal Party organisation to make. I would expect that, these are things that are considered right now by the relevant State Liberal Party organisations, I am sure in consultation with our Federal Director and others. I will let those people who have responsibility for those decisions make those decisions. 

PATRICIA KARVELAS: Let us get to the Budget because, well, we have a real Budget to talk about. Many lower and middle income earners would under your plan get a lump sum from July next year, but we know that you cannot get that through as it is. Tim Storer for instance, crucial Senator, you need him and Labor saying that they want it split. Will you split the Bill?

MATHIAS CORMANN: No, we will not split the Bill…interrupted

PATRICIA KARVELAS: No way?

MATHIAS CORMANN: No. We will not split the Bill.

PATRICIA KARVELAS: Okay, because the Treasurer was asked, I was watching him very carefully today at the National Press Club and he left room for the Bill to be split.

MATHIAS CORMANN: No he has not…interrupted

PATRICIA KARVELAS: Yes he has.

MATHIAS CORMANN: You are verballing the Treasurer…interrupted

PATRICIA KARVELAS: I heard him.

MATHIAS CORMANN: The Prime Minister, the Treasurer, myself, every Member of the Coalition, we are totally committed to the whole seven year tax reform package. We want to provide income tax relief to hardworking families around Australia, providing encouragement and reward for their efforts and helping them deal with cost of living pressures, prioritising low and middle-income earners in the first instance and address bracket creep. Bracket creep is a drag on economic growth and it is clearly good economic policy to address bracket creep. 

PATRICIA KARVELAS: But to ensure those people get that lump sum in July next year, there is a sense of urgency to get this through. So why not make sure that they get that and you can still argue for your broader package.

MATHIAS CORMANN: This is a question for Bill Shorten…interrupted

PATRICIA KARVELAS: No it is a question for you, it is your Bill.

MATHIAS CORMANN: No, this is a question for Bill Shorten. Will Bill Shorten stand in the way of income tax relief for low and middle income earners and…interrupted

PATRICIA KARVELAS: They are saying that the other part is unfair, they are saying that it is not progressive.

MATHIAS CORMANN: He is wrong. If he wants to decide to stand in the way of income tax relief for low and middle-income earners, he will have to face the Australian people.

PATRICIA KARVELAS: So will you though, because the Australian people, the lower and the middle-income earners will say, hang on a minute, you could find a way to deliver it for us next year and you are playing politics.

MATHIAS CORMANN: We are providing a sensible, responsible, affordable income tax reform package, which is good for hardworking families around Australia, which is good for the economy. We believe it is important for the whole package to be legislated. You are asking us here to give up on a package that we believe is the…interrupted

PATRICIA KARVELAS: Not give up, no I didn’t say give up. 

MATHIAS CORMANN: That is what you are suggesting. 

PATRICIA KARVELAS: I said ensure, no that does not, why does that give it up? I am saying make sure that the first bit that has a deadline is locked in for those people who are struggling. 

MATHIAS CORMANN: We think it is very important for the whole package to be passed in one go.

PATRICIA KARVELAS: Okay, you said that you would not split the business tax cuts and then you did.

MATHIAS CORMANN: That is not right. We actually…interrupted

PATRICIA KARVELAS: Yes, yes, you said the business tax cuts was a package and then you did a deal and you ensured that up to the $50 million turnover could get the business tax cuts. I know this, I watched.

MATHIAS CORMANN: I think you will find, I was there. I was there. I managed the process…interrupted

PATRICIA KARVELAS: I was there too. And so were all the voters.

MATHIAS CORMANN: I managed the process. In relation to the business tax cuts we were open in all of our engagements with the Crossbench from the word go to consider implementing the first three years of the company tax cuts in the first instance, because we knew it would deliver in full on 100 per cent of the commitment that we took to the 2016 election. We took a plan to the election and we were able to implement 100 per cent of that commitment in the first phase of the business tax cuts. But now, we are pursuing the remaining business tax cuts in full because they are now more urgent and more important. Since we passed the first three years, the Trump administration in the US has reduced business tax cuts to 21 per cent, France has announced a reduction of business tax cuts of 25 per cent. If we continue to disadvantage businesses around Australia compared to businesses in other parts of the world, forcing them to pay higher tax, we are disadvantaging Australian workers. 

PATRICIA KARVELAS: If you are just tuning in Finance Minister Mathias Cormann is my guest in our Parliament House studio. What is the year by year cost of your full income tax reform plan?

MATHIAS CORMANN: The cost of the income tax reform plan is $13.4 billion over the forward estimates. It is about $140 billion over the medium term.

PATRICIA KARVELAS: Why won’t you say what the year by year is?

MATHIAS CORMANN: Well we have published it in the usual way, consistent with all of the requirement of the Charter of Budget Honesty. That is the way…interrupted

PATRICIA KARVELAS: But why won’t you outline it? Because this has been an issue all day. For those who have not been following this lets just tell them, you have been asked all day and you will not say year by year how much it will cost. Why not?

MATHIAS CORMANN: Well, we have provided the appropriate information. We have provided Budget information about the cost over the forward estimates. We have provided quite openly and transparently the costs over the medium term to 2028-29. This is all just Labor Party political games.

PATRICIA KARVELAS: I do not know if it is because the ten-year plan will cost $140 billion over ten years. How much will that third final and most significant phase cost. What won’t you just outline the cost?

MATHIAS CORMANN: We have outlined the cost. Again…interrupted

PATRICIA KARVELAS: But you have not, you will not tell me. Not that part.

MATHIAS CORMANN: Well I will repeat it again. We have got a package which costs $13.4 billion over the forward estimates…interrupted

PATRICIA KARVELAS: Four years and then afterwards?

MATHIAS CORMANN: …and then $140 billion over the period to 2028-29. It provides income tax relief for hard working Australians prioritising low and middle-income earners. An Australian taxpayer on $30,000 of taxable income gets an 8.3 per cent tax cut every year over the next four years…interrupted 

PATRICIA KARVELAS: Okay, but you won’t provide the year by year rundown.

MATHIAS CORMANN: We are providing the usual information.

PATRICIA KARVELAS: The usual information is not year by year for those who are listening. I will let them know, it is not.

MATHIAS CORMANN: We have provided the usual information…interrupted

PATRICIA KARVELAS: The usual information is not transparent enough.

MATHIAS CORMANN: You are entitled to that view. We are providing…interrupted

PATRICIA KARVELAS: I think a lot of people have that view.

MATHIAS CORMANN: People across Australia, families across Australia are interested on whether the Parliament is going to give them the income tax relief that they are looking for to help deal with cost of living pressures, to help address bracket creep and to simplify the tax system. They are not interested in these political games of the Labor Party. 

PATRICIA KARVELAS: Okay, why should the Parliament commit to tax cuts beyond the forward estimates? That is beyond the four years, when you cannot tell us how much they will cost.

MATHIAS CORMANN: I never heard you ask that question when the Rudd and Gillard Governments locked in expenditure in the period beyond the forward estimates.

PATRICIA KARVELAS: You know what, you will find I did actually ask those questions. I was working at the Australian newspaper and man did I ask a lot of questions. I can tell you I asked a lot of questions. Now I am asking you because you are the Government. 

MATHIAS CORMANN: Well and we are being transparent about the cost over the forward estimates. We are being transparent about the cost…interrupted

PATRICIA KARVELAS: Not over the ten year period, and you…interrupted

MATHIAS CORMANN: We are, and…interrupted

PATRICIA KARVELAS: And you are locked in for seven years, you are asking the Parliament to fund something without detail.

MATHIAS CORMANN: Well I completely reject that. People across Australia want the Government to take a long-term view. We want all Australians to have the best possible opportunity to get ahead. We want families around Australia, today and into the future, to have the best possible opportunity to get ahead. We are able to afford income tax relief for hard-working families. We are able to get the Budget back into surplus while guaranteeing funding for all of the essential services that Australians expect, because of the hard work we have done, growing the economy more strongly, creating more jobs and controlling expenditure growth. This is now the opportunity to provide income tax relief to families and the people of Australia want their Parliament to act.

PATRICIA KARVELAS: Don’t they deserve transparency?

MATHIAS CORMANN: They are getting it. 

PATRICIA KARVELAS: Well, I do not know how much it is going to cost in the seventh year, you will not tell me, not year by year you will not.

MATHIAS CORMANN: We have provided all of the costings in the usual way, consistent with the requirements of the Charter of Budget Honesty.

PATRICIA KARVELAS: Maybe it should change.

MATHIAS CORMANN: Well, that is…interrupted

PATRICIA KARVELAS: If you keep doing these long-term plans, maybe it should change.

MATHIAS CORMANN: Actually, we are providing the information consistent with the requirements in the Budget Charter of Budget Honesty.

PATRICIA KARVELAS: Alright, let us talk about Newstart, because you did not raise Newstart. It is $40 a day, a lot of people saying it is unsustainable. All the business groups pretty much on board to say it should rise. So much so has this issue changed and transformed that even John Howard, former Liberal Prime Minister, very successful Prime Minister you would say and many people listening, here he is. 

JOHN HOWARD [EXCERPT]: Well I think it is, I was in favour of freezing it when it happened, but I think it is probably, the freeze is probably too long and I do. I tend to agree with that.

PATRICIA KARVELAS: Says that the freeze has been on too long.

MATHIAS CORMANN: Well I have not heard the question that was put to him, but let me just make very clear and your introduction to this question was wrong. It is not true to say that Newstart has not been increased for all this period. It is wrong to say that it has been frozen for all this period. Newstart Allowance gets indexed twice a year by CPI. On 20 March and on 20 September. So the proposition that somehow Newstart allowance has been frozen is wrong. When it comes to Newstart allowance, it is a transitional payment for people looking to get back into work. Our focus as a Government is on getting as many Australians on welfare back into work and we have been successful in moving 140,000 Australians off welfare…interrupted

PATRICIA KARVELAS: So there is no way you are willing to look at it, review it, think about it?

MATHIAS CORMANN: This is not meant to be a permanent ongoing payment. But even so it is indexed twice a year. It is indexed by CPI twice a year it has been indexed by CPI twice a year on an ongoing basis. Let me also say, and as a former welfare reporter you would also know this, most people on Newstart allowance receive welfare payments from a range of other sources. So the proposition that somehow this is the only welfare payment that people on Newstart rely on in generally not right. But the most important point is, the best thing that we can do for people on Newstart is to help them get into work and that is what we are focused on.

PATRICIA KARVELAS: Why have you cut the ABC by almost $84 million?

MATHIAS CORMANN: Well, the ABC over that three-year period is going to get $3.2 billion worth of taxpayer support. Over the last few decades, the ABC is one of a very small number of taxpayer funded organisations which has been exempt, for most of the last few decades, from the efficiency dividend that applies…interrupted

PATRICIA KARVELAS: No it has not. The ABC has had $254 million worth of budget cuts since 2014.

MATHIAS CORMANN: You will find that the efficiency dividend has been in place for decades. The ABC has been exempt from that efficiency dividend for most of that period…interrupted

PATRICIA KARVELAS: So $254? Okay.

MATHIAS CORMANN: You have asked a question if I may answer it. Every ABC interviewer has been very sensitive about this. The $84 million saving is equivalent to the efficiency dividend that applies to nearly all other taxpayer funded organisations over that same period. We believe that the ABC, like every other taxpayer funded organisation, has the opportunity to pursue operational efficiency, productivity improvements and that for the three year period when they receive $3.2 billion worth of funding, that they are able to identify $84 million of efficiencies.

PATRICIA KARVELAS: Mathias Cormann, that brings us to an end of our encounter here in this very small studio. Thanks for coming in.

MATHIAS CORMANN: Looking forward to next time.