Senator the Hon Mathias Cormann

ROSS GREENWOOD: The Budget right now is in better shape than what it has been for perhaps the past five or six years. The second part about is also you have got a situation where Australia right now has got a whole bunch of potential tax cuts, sitting in the wings. Income tax cuts for individuals, in a package that the Government put together in the Budget this year. Then you have also got company tax cuts to extend them out to more companies over a longer period of time. They’re held up in the Senate right now. And when you actually look at the way in which that is delicately balanced, with of course the Senate really rocked around the place right now as a result of, say for example the One Nation Senator Brian Burston quitting the party after his feud with Pauline Hanson. And then you have got other situations such as people such as Fraser Anning joining the Katter party. You’ve got Tim Storer there. So it really is a bit of a hodge podge is the best way to describe it right now. One person who has to deal with that and try for the sake of his own portfolio get through all of this is the Finance Minister of Australia. Mathias Cormann, who is on line right now. Many thanks for your time as always Mathias. 

MATHIAS CORMANN: Good evening Ross.

ROSS GREENWOOD: You are also the Leader of the Senate, so you are basically in charge of trying to wrangle these crossbench Senators to get them onside to try and get tax cuts through. How are you going?

MATHIAS CORMANN: The only reason we are forced to deal with crossbench Senators is because Bill Shorten has made a reckless decision to put businesses in Australia and workers in Australia at a competitive disadvantage with businesses and workers in other parts of the world. Because, we have always got to remind ourselves, the reason we are pursuing a lower, more globally competitive business tax rate, is because we want businesses in Australia to continue to be able to successfully compete with businesses in other parts of the world. If we keep taxes in Australia high, when countries around the world are lowering the taxes imposed on their businesses, the people that we are putting at a disadvantage are workers in Australia. If we keep our taxes high, we are essentially helping businesses in other parts of the world take investment and jobs away from Australia. Nobody who cares about Australia’s future economic prosperity should be prepared to tolerate that. Labor has made a populist, self-serving political reckless decision, which in their heart of hearts they know to be against our national interest, against the interest of working families around Australia. But we are where we are, so yes, we have been engaging with the crossbench. I continue to have very good conversations with my colleagues on the Senate crossbench.  

ROSS GREENWOOD: Okay, the way I see it right now according to where people publicly appear to stand right now, is that the numbers look like 35, including the Coalition votes, are in favour. And there seem to be forty against, with maybe Derryn Hinch a little undecided. Is that they in which you are seeing it at the moment?

MATHIAS CORMANN: I do not want to speak for colleagues that have not publicly declared themselves. Certainly there are 35 Senators who have publicly declared that they support a globally more competitive business tax rate for Australia, so that businesses in Australia are not disadvantaged against businesses in other parts of the world. That means that I need to convince four more non-Government Senators to support the Government’s agenda. There are ten crossbench Senators. So far four have indicated that they would support our plan to lower business tax rates for all businesses in Australia. That means that out of the remaining six, I need to convince another four. 

ROSS GREENWOOD: Okay, so One Nation imploding, do you believe that this helps or hinders the Government’s program?

MATHIAS CORMANN: Our preference would have been for One Nation to stick to the agreement that we had reached earlier in the year. We did a lot of good work … interrupted 

ROSS GREENWOOD: How firm was that agreement out of interest?

MATHIAS CORMANN: It was a very firm agreement. I was about to say, Pauline Hanson and I personally, both of us personally did a lot of work, a lot of policy work, talking through the issues and exploring how we could find a consensus and an appropriate way forward. I believe that we landed in a place that was good for Australia. It would have delivered a globally more competitive tax rate for businesses in Australia, which would have helped us protect investment and jobs in Australia, which would have helped us generate stronger growth and more jobs into the future. There were a number of issues that were important to Senator Hanson and her team that we explored through that process. It was a very, very thorough process. It was a very good process. I had very good engagement with Senator Hanson. I was, I have said that on the public record, I was bitterly disappointed when a few months later she decided to walk away from what I thought was a very good agreement in the national interest. 

ROSS GREENWOOD: Tell me about One Nation, given your role as the Leader in the Senate. I notice Antony Green, the ABC’s political correspondent today indicated that 30 MPs have been elected to represent One Nation, six are current Members, 19 resigned in their first term, two were disqualified in the first term, only three lasted long enough to face re-election, two of those were defeated and only one One Nation MP has ever been re-elected. That does not sound like a coherent party to me. 

MATHIAS CORMANN: I am not a political commentator. I will leave that commentary to people like Antony Green. I am somebody who works with every individual Senator in the Senate who is prepared to work with me. I certainly work with every individual non-Government Senator on the crossbench, if and as required to ensure that the Government can get its agenda through the Senate. Our economic agenda is all about delivering stronger growth and more jobs so that families around Australia have the best possible opportunity to get ahead. If Labor and the Greens decide to oppose any part of our agenda, as they have with business tax cuts, as they have decided to do in large part with our personal income tax relief plan, then we need to find eight non-Government Senators on the crossbench to support us given that we do not have a majority in our own right. 

ROSS GREENWOOD: Okay, I want to pick you up on one other thing about the tax cuts because it is not only the company tax cuts, but there is now going to be the personal income tax cuts as well. The Reserve Bank Governor, Philip Lowe spoke last night, he appeared to almost endorse the Coalition Government’s income tax plans. Just have a listen to this. 

PHILIP LOWE [EXCERPT]: It will help with household budgets and I think that is what it is designed to do. I think if you were starting from first principles and saying well what type of tax system do we have to make it very attractive to invest, employ people and to innovate. You probably would not design the system we currently have. The society does not have the appetite I do not think for a whole scale rewriting of the tax code, so it is kind of an incremental process of moving it and this one step in this process, but it is just one step.

ROSS GREENWOOD: One step in the process. Is that the way you would view it or is this the grand tax reform the people have often wished for?

MATHIAS CORMANN: He is absolutely right. At every Budget and every Budget update we look at all of the policy settings on the revenue side, we look at the policy settings on the spending side and we make judgements on how we believe they can be improved to put Australia on a stronger economic and fiscal foundation for the future and to ensure we can sustainably fund all of the essential services Australians rely on. Of course we make judgements at every Budget and Budget update. Some people might want to have the one big bang, massive plan, which will never be legislated. What we have done is we have continuously worked to improve our tax system to make it more efficient, to make it more growth friendly and also to make it more equitable in substantial parts. Whether it was getting rid of the mining tax and the carbon tax to help make us more competitive internationally. Whether it was the instant asset write-off for small business to encourage them to invest more or whether it was the tax reforms to our superannuation arrangements, which were designed to make our tax system more equitable. Company tax cuts are critically important to ensure we protect investment and jobs and our future economic prosperity here in Australia. We are an open trading economy. We compete for capital investment with businesses around the world. We compete in markets around the world with businesses from other parts of the world. What has happened is that even a country like France, which is led by a centre left President has legislated to reduce their tax rate from 33 per cent to 25 per cent. The US has gone down to 21 per cent. The UK is going down to 17 per cent. The US is our biggest single foreign investor in Australia. Where do you think investors out of the US are going to go from here on in when they have a choice between Australia with a 30 per cent corporate tax rate or the US at a 21 per cent corporate tax rate. 

ROSS GREENWOOD: It is not a bad one. The final one I want to ask you about is the decision of the Remuneration Tribunal to award all public servants, Commonwealth public servants, plus also politicians a two per cent pay rise from the first of July this year. As the Minister for Finance and a man who counts the pennies in the Budget, are you happy with the two per cent pay rise to our public service?

MATHIAS CORMANN: It is an independent process for a reason and the remuneration tribunal makes these judgements independently. It is within the public sector payment framework. What I would also say Members of Parliament and senior public servants were subject over a number of years to a pay freeze as well … interrupted

ROSS GREENWOOD: There have been three years, 2014, 2015 and also 2016. The other pay rises since then have been two per cent per year. Here is the question, I spoke to David Leyonhjelm about this last night. He says it should be linked to performance and somehow you that should not be given a pay rise until you get the Budget back into surplus. That is only a year or so away, why didn’t you wait until then?

MATHIAS CORMANN: He can introduce some legislation to try and make that happen. 

ROSS GREENWOOD: In other words you are going to have to live off two per cent over that period of time. The Finance Minister always good with his time on the program here. Mathias Cormann, as always we appreciate it. 

MATHIAS CORMANN: Always good to talk to you.