Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
TICKY FULLERTON: Well let’s go back to the massive Moorebank infrastructure project in Sydney now. Finance Minister Mathias Cormann is in town for the kick off of construction and he joins me now. Minister, welcome there. You looked pretty happy today to me turning the sod there. $370 million from the Commonwealth, are you going to get the return you want?
MATHIAS CORMANN: Yes we will Ticky. Firstly, it is a very significant infrastructure project which will deliver significant economic benefits to Western Sydney, to New South Wales and indeed to Australia nationally. Over the next 30 years $11 billion in economic benefits. But more importantly it will improve our trading infrastructure, it will help us get our product to market at a lower cost including and in particular our products out of regional Australia. It will reduce congestion on Sydney roads and it will improve safety…interrupted
TICKY FULLERTON: It seems a very grand terrific project, but Chris Corrigan who I also spoke to today he made the point that in Switzerland where he is at home, they built a high speed railway through a mountain and they have actually finished it, we are just starting to put the shovel in the ground. When are we going to get better at actually delivering infrastructure?
MATHIAS CORMANN: To be fair I got into this job in late 2013. At the time essentially there were two competing projects, one smaller Commonwealth Government sponsored project, one larger private sector project in the same vicinity, but essentially two competing projects. The decisions we have made and what I have been very keen to ensure is that we have one integrated overall project of about 85 hectares which will be a world class logistics and infrastructure facility. Nearly 7,000 people from Western Sydney will be employed at that facility. It will help us move our product through the Port of Botany by shifting it from the road onto the rail track much more efficiently at a lower cost more safely. Today is a great day. Would it have been better if we got to this point more quickly? Yes, but I think this is really now a point of looking forward. Over the last two years or so we have made all of the decisions that needed to be made as swiftly as possible to get this project underway. That is why we were in a position to turn the first sod today.
TICKY FULLERTON: More broadly though with infrastructure. I mean that was an example where there were a lot of different moving parts and you brought them together. More broadly, this too many cooks argument has come back again with the Government launching this infrastructure financing unit. Brendan Lyon at Infrastructure Partnership Australia he said no we do not we just do not need that, there is no shortage of private debt or equity financing of infrastructure projects.
MATHIAS CORMANN: He is missing the point with the greatest of respect to him. Right now and every year, the Federal Government essentially spends by way of grants billions and billions of dollars on infrastructure. It is money that goes out the door and it is expended. What we are looking for is whether there are better ways to deploy that money that is made available by the Australian Government. Whether we can leverage more additional investment by using creative financing methods both from the private sector but also from state and local Government. It is really a matter of making sure that the resources that are deployed are deployed to maximum effect. We are in a fiscally constrained environment. We should always look at how we can get better bang for our buck and that is what we are trying to achieve through that process.
TICKY FULLERTON: So the Treasurer today hit out at business asking them to make the case better for tax cuts. Now, I am just trying to unpack what he actually means because we have had business leaders coming out quite consistently, people like Andrew McKenzie, many of the senior, senior members of the Business Council of Australia were in town the other week and putting quite convincing arguments I would have thought about how if lower company tax rates were brought in for the big end of town that actually we would start seeing growth and employment soon.
MATHIAS CORMANN: Well firstly I do not agree with your characterisation that the Treasurer hit out at business. You are quite right, the government works very closely with the business community to advance good economic policy and the public policy case… interrupted.
TICKY FULLERTON: He was bringing up the brand business, he was bringing up the brand of business which he did not think it was…interrupted.
MATHIAS CORMANN: …for tax cuts is overwhelming. A more competitive tax rate will help us boost investment, boost productivity, help business be more successful and helps them hire more Australians and pay them better wages over time. In order to facilitate the Government getting as much of its economic agenda through the Senate as possible, this is an ongoing process. The better we can achieve public buy-in and community support for what it is that we are trying to do, and the business community does play a very important role in this, the easier it will be to ultimately get this through the Parliament.
TICKY FULLERTON: But Mathias Cormann, you have been talked about as somebody who has been very effective at negotiating with the Senate. What does business need to do to get its message through?
MATHIAS CORMANN: It is not just a matter for business, it is a matter for all of us. Bill Shorten talks a lot about jobs, but what he does not seem to understand is that jobs do not grow on trees, jobs are created by successful, profitable businesses around Australia. So what we are saying and what we think the business community needs to continue to work with us on, is to make that argument into the community. That if we want individual Australians to be as successful as possible, if we want individual Australians to have the best possible opportunity to get ahead, we need the businesses that employ them to have the best possible opportunity to be successful. By bringing down the cost of doing business, by improving the business tax environment, we help business be more successful to invest more of their own money into their future success, which will help them hire more Australians and pay them higher wages. That is the case we need to continue to make, and the more the community accepts and agrees with that proposition, the easier it will be for us to get these reforms through the Parliament.
TICKY FULLERTON: Okay, can I move to property? APRA, Wayne Byres has said APRA’s job is not to look after property prices needs to look after the depositor and the stability of banks. What will Government do to cool the property market? Because there has been talk of changing capital gains tax concessions.
MATHIAS CORMANN: There is always a lot of talk and I have been on the record several times now pointing to what we said in the lead up to the last election, and I stand by what I have said in relation to this in the past… interrupted.
TICKY FULLERTON: So there won’t be any changes then?
MATHIAS CORMANN: We are not announcing the Budget today, we are announcing the Budget on the second Tuesday in May. What I would say to you is that, and as the Prime Minister has again said yesterday and as the Treasurer and I have repeatedly said is that to the extent that there is a housing affordability challenge, to the extent that there is an affordability challenge in relation to anything, it is because demand exceeds supply. If you want to sustainably improve the affordability of anything, you need to increase supply to ensure that you can meet demand. That is what the Reserve Bank Governor has again pointed to the other day, that is what any credible economist will tell you, and that is the reality.
TICKY FULLERTON: But it would seem to me that the Treasurer bringing the regulators together to look at the housing bubble, as the ASIC Chief has called it, it is almost as though the Government, its strategy now is to use the regulator to push it towards changing negative gearing, even at the margin. Because it is something that really you cannot tackle head on, having dug yourself into the ground there.
MATHIAS CORMANN: Well no, I completely disagree with the way you put that there. The regulators, and in particular APRA as the prudential regulator, have certain responsibilities, and they are fulfilling those responsibilities independently as is appropriate. They are not arms of the political level of Government. They are making these judgements independently, whether that is the Reserve Bank or whether that is the Australian Prudential Regulation Authority. The Government in the context of the Budget every year, looks at and considers all of the information, considers all of the facts and figures and all of the propositions in front of us, and we make judgements on the best way forward. We do that in the context of the economic plan that we took to the last election, the commitments that we made in the lead up to the last election and the next Budget will be delivered on the second Tuesday in May.
TICKY FULLERTON: There was thought of dipping into Super to actually help first home buyers. Now, were that to happen, won’t that actually exacerbate the housing market?
MATHIAS CORMANN: Well, again, you are going through speculation on speculation on speculation that I have been asked to comment on for weeks now. Clearly, if you have got an affordability issue that is caused by demand exceeding supply, if you take measures or if you take steps that boost demand further, you are not improving on the affordability challenge. That is self-evidently the case, so the answer to your question is yes.
TICKY FULLERTON: Okay. Finally, Minister, there is a lot of talk around the restructuring of the PRRT, the Petroleum Resource Rent Tax. Now, you are very concerned that whatever the restructure is, that overall you are going to keep the level of tax to GDP at some limit.
MATHIAS CORMANN: Well, it is not just me being concerned. The Government made a decision, as a Government, to impose a tax as a share of GDP cap in our Budget revenue forecasts. Our Budget revenue forecasts are based on an assumption that tax revenue as a proportion of GDP will not go past 23.9 per cent, and that is not me being concerned that is a Government position. Beyond that again, in the lead up to any Budget there is lots of speculation, there are lots of people making all sorts of suggestions about what we should and should not be doing. All will be revealed in the not too distant future, on the second Tuesday in May.
TICKY FULLERTON: Alright, we will be in that lock up. Finance Minister Mathias Cormann, thank you very much for your time.
MATHIAS CORMANN: Always good to talk to you.