Senator the Hon Mathias Cormann

BRIAN CARLTON: The Minister for Finance is partly responsible for putting the Budget together, delivered by Scott Morrison last night in Parliament. He is the Minister for Finance, Senator Mathias Cormann welcome to the show. How are you?

MATHIAS CORMANN: Good morning Brian. Good morning to your listeners.

BRIAN CARLTON: So it must be a little bit sad having delivered what is generally perceived to be a pretty good Budget and you have got his High Court decision that has derailed the news narrative a little bit. A bit annoying, isn’t it?

MATHIAS CORMANN: Well look, we focus on doing the job we were elected to do, to give it our best. Some events have happened outside of our control and we will just have to deal with these things as they happen. 

BRIAN CARLTON: The thing I think, Senator, that many Australians are struggling with at the moment is the concept that the Budget has gone 180 degrees in about four years. In terms of crisis to “hey wow we have got so much cash we can afford to give some of it back to you by way of a tax cut.”….interrupted

MATHIAS CORMANN: That is what happens with good Government. We inherited a weakening economy, rising unemployment and a rapidly deteriorating Budget position. When Bill Shorten and Chris Bowen lost Government, the Budget bottom line was deteriorating by three billion dollars a week. We implemented our plan for a stronger economy, for more jobs and to put the Budget back into the black. We have controlled expenditure. We have pursued reform to make our tax system more growth friendly, to get better access to export markets around the world for exporting businesses, investing in infrastructure, you name it. Now the results are there for all to see. We are making progress. The economic growth outlook is better. Employment growth is much better. The Budget is on track to a surplus by 2019-20. As of this year, we no longer have to borrow to fund the day-to-day expenses of Government.

BRIAN CARLTON: This is one thing that perhaps is not well understood by many Australians, the impact of a deficit Budget versus the impact of a surplus Budget. There is a very simplistic way of looking at it, where a surplus in effect delivers a profit to Government but that means that subsequent spending is done using that money that is already in the bank rather than having to go and borrow to do it. Essential things like hospitals and schools and all of that other stuff.

MATHIAS CORMANN: The previous Labor Government put us on an unsustainable spending growth trajectory, which we have more than halved. When you are on an unsustainable spending growth trajectory putting you on a trajectory to bigger and bigger deficits into the future, that means that you increase your debt year on year and you put more of a tax burden on future generations. We have been able to get on top of this and we are able to get the Budget back into surplus and to pay down debt by more than $230 billion over the next decade.

BRIAN CARLTON: How long do you see and there have been comments to this effect a couple of days ago from former Treasurer Peter Costello. How long do you think it will actually take to return Government’s debt to zero, Senator, how long?

MATHIAS CORMANN: Over the next decade we can get back to 3.8 per cent. We are peaking at 18.6 per cent as a share of the economy this financial year and then it is going down every year thereafter until we get to 3.8 per cent within the decade. That is then getting quite close to paying off Government net debt in total. We are reducing it by around 14.8 per cent over the next decade.

BRIAN CARLTON: One of the criticisms of the tax plan, the income tax changes and I do not necessarily concur with this but I just want to run it by you, is the sense that a more flat tax regime at income tax level is not a great idea. The numbers they are throwing around are, assuming you get all of these changes through the Parliament, which is a discussion we will have in a sec, from $41,000 annual income up to $200,000 under your change will attract that flat 32.5 per cent income tax. There are those who say that is unfair. What is your response to that?

MATHIAS CORMANN: It is not unfair. By relieving hard working families earning between $41,000 and $200,000, this is by 2024-25 by the way, by taxing them at 32.5 cents in the dollar as their top marginal rate, we encourage them to work harder, to do the best they can to help grow our economy. The more you tax, the less incentive there is for people to provide additional effort. In the end, this is about getting the balance right. We need to ensure that we collect the necessary resources for Government. We have to do it in a way that still enables the economy to be as strong as possible and jobs being created. In order to achieve that, we have to encourage people to work hard and to do the best they can. Having an appropriate tax rate is an important part of that.

BRIAN CARLTON: Is that the thinking underlining the decision not to increase Newstart payments, which were widely called for from very strange sections of the economy like the Business Council for example, calling for an increase to the Newstart. You have decided not to do that. Is that philosophically explained by your previous answer?

MATHIAS CORMANN: Newstart is a transitional welfare payment while people are out of work pending going back into work. It is not meant to be an ongoing permanent welfare payment, it is a transitional payment. Our focus is on getting people back from welfare into work. Since we have gotten into Government, we have been able to help 140,000 Australians off welfare into work. That is our priority. Incidentally, for most of the people on Newstart, that is not their only welfare payment. Most people on Newstart get a series of welfare payments from other sources. Some of the information that has been put out into the public domain is a bit misleading in that respect.

BRIAN CARLTON: There is also some criticism and again I do not disagree with the decisions to freeze foreign aid increases over the forwards. I guess you are listening to the polls there, because any number of polls coming back saying we spend vast amounts of money on questionable aid projects overseas when we now have charities running sponsor an Australian child living in poverty programs. You are not going to lose too much political skin there, but the Left will jump up and down about that, won’t they, in fact they already are.

MATHIAS CORMANN: We are spending as a Government, on behalf of taxpayers, four billion dollars a year on foreign aid. That is $16 billion over the four-year forward estimates. We think that in the fiscal circumstances that we are in, we are still in deficit this year and we are still in deficit next year the 2018-19 financial year. In the circumstances we are in, we think it is appropriate to maintain the level of foreign aid spending at the four billion dollar level until such time that we are back in a strong and sustainable surplus position.  

BRIAN CARLTON: Senator, if I could just segue way, obviously the detail of the Budget is significant and people will be pulling it apart for some time yet. Can we just flip over if you do not mind, to the High Court decision made this morning in the case of ACT Labor Senator, Katy Gallagher. As I mentioned, your colleagues Christian Porter and Christopher Pyne are currently holding a media conferred in Canberra where they have urged the Opposition Leader Bill Shorten to effectively make the phone call to each of these Members in question and I will name them, Susan Lamb, Justine Keay, Josh Wilson to resign today.

MATHIAS CORMANN: They must. There is nowhere left for Bill Shorten to hide. Bill Shorten has been using shifty language for months now, trying to mislead Australians into believing that somehow, just because as he suggests various Members of his have taken reasonable steps, that that was sufficient for them to be eligible to sit in the Federal Parliament under our Constitution. He knows that to be false. The reasonable steps excuse only applies in circumstances where countries make it impossible for you to get rid of their citizenship. That is not the case for the United Kingdom. The United Kingdom has a clear and plain process available for renunciation of their British citizenship. Everybody knows what it is. There is even the opportunity for an accelerated process. Various Members, including Justine Keay in the Tasmanian Seat of Braddon have left it either too late and not lodged their renunciation processes early enough. From memory, she actually said it was a deliberate decision…interrupted

BRIAN CARLTON: Yes it was, in fact Senator, she said it on this show and just by way of background, I am happy to tell you what she did do and what she did say. She, her late father was a UK citizen and out of, I guess, a sense that she wanted to maintain that contact beyond the grave, she wanted to hang onto the UK citizenship until it became painfully obvious that she had been elected to the Parliament and then the process really began to rescind it. So, as Anne Toomey, the constitutional lawyer was explaining on the telly last night, it is a process that many have used apparently over the years to just suck it and see. See whether they get the seat, if they do not then they go through the process of withdrawing the citizenship cancellation. Look…interrupted

MATHIAS CORMANN: That is inconsistent with the requirements under the Constitution…interrupted

BRIAN CARLTON: Absolutely.

MATHIAS CORMANN: I can well appreciate that certain circumstances are sad and I can be empathetic, but in the end, Fiona Nash, who left the Senate, her circumstances were sad. Stephen Parry, his circumstances were sad. In the end on our side of the Parliament, people have accepted it swiftly when it became obvious that there was an issue in terms of their eligibility under the Constitution, whereas Bill Shorten has tried to run this shifty language, hiding behind these assertions that somehow the Labor Party has got these amazing vetting processes. Well, Bill Shorten has been found out. There is nowhere left for him to hide and today he must do the honourable thing. He must require those three Labor Members of the House of Representatives to resign.

BRIAN CARLTON: If there are a series of by-elections required, Senator, is it likely that the Prime Minister, Malcolm Turnbull, will see this is an opportunity, potentially, off the back of some good Budget reviews, to go to an early election? Is that possible?

MATHIAS CORMANN: The general election is not due until the first half of next year and our expectation is that the general election will, take place in the first half of next year. But, this development today will cause a series of by-elections, at least three on top of the one that is already scheduled for the Federal Seat of Perth in Western Australia and that will take place in the ordinary course of events.

BRIAN CARLTON: Okay. You are obviously going to have some work to do in the Senate to bring the Crossbenchers on board with much of your Budget plan, notwithstanding support from the Labor Party. How successfully do you think you will be able to lobby the Crossbenchers, who are a tetchy bunch at best Senator, to sign off on your tax cuts particularly?

MATHIAS CORMANN: There is a choice here for Bill Shorten. Does he want to stand in the way of income tax relief for hard-working Australians…interrupted

BRIAN CARLTON: So you are hoping not to need the Crossbenchers here to get this through?

MATHIAS CORMANN: In the end, what we are hoping is that the Australian people will back in what is a sensible, a responsible, an affordable plan, which will deliver stronger growth, more jobs, which will help families around Tasmania and around Australia with their cost of living pressures. We hope that the Australian people will back it in and that that will put pressure on the Australian Parliament to back it in. If Bill Shorten does the wrong thing and stands in the way then the Australian people will have the opportunity to make their views known at the next election.

BRIAN CARLTON: For what it is worth, Senator, this is merely anecdotal but I have covered lots and lots of Budgets over the course of my broadcast career and invariably around about this stage, if there is an appearance of weakness in the Budget or a massive hole that can be exploited, my phones are running hot with Opposition Members trying to get on the radio to explain that to my listeners. That has not happened today, at all.

MATHIAS CORMANN: Let us take that as a positive indicator that we got it right.

BRIAN CARLTON: Appreciate your time this morning Senator, thank you.

MATHIAS CORMANN: Good to talk to you.