EMMA ALBERICI: Now to discuss the week's political events in Canberra we're joined tonight by the Assistant Treasurer David Bradbury, he is in our Sydney studio, and in Perth by the Shadow Assistant Treasurer, Mathias Cormann.
Gentlemen, welcome to Lateline.
DAVID BRADBURY:
Good to be with you.
MATHIAS CORMANN:
Good to be with you.
ALBERICI:
Mathias Cormann, Budget week has ended with less talk of the current Treasurer and more of the previous one, Peter Costello. Rumour abounds in Canberra that Mr Costello still covets the Liberal leadership, would you welcome him back?
CORMANN:
Well, he's made it clear that he doesn't. I mean, Peter Costello is one of the giants of the Liberal Party. I mean, Peter Costello is somebody that I talk to regularly, I meet up with him, I try to catch up with him when I get through Melbourne to seek his advice and pick his brain about economic and fiscal policy matters.
He has been very generous to me and many others in the Coalition helping us with our course to defeat this bad Labor Government, but never has he mentioned to me any desire whatsoever to come back.
ALBERICI:
2012 is certainly shaping up as the year of political plain speaking, if you like. First it was your party giving its verdict on Kevin Rudd, now the Liberal Party are unleashing on their former treasurer. This must feel like a real gift for Labor?
BRADBURY:
Well look, I think it's great entertainment value. In a sense this is the clash of the Toorak titans. You've got the blue bloods, the big end of town traditional Liberal Party constituency going at each other at loggerheads.
I think the real issue here though is that Mathias can talk about Peter Costello's great record, but the real issue here is that this is actually an attempt to silence Peter Costello because he has been belling the cat on Tony Abbott, and the complete lack of economic credibility he has.
We saw in a Budget in reply speech last night, no commitment to a surplus, talk about $50 billion worth of savings, no mention about how he's going to do it other than the sort of peripheral mention of job cuts in the public service, that old chestnut that they keep wheeling out.
And what we see today from Tony Abbott is the man who blocked the SchoolKids bonus and then said he would support these initiatives to increase family payments even though they were linked to the Minerals Resource Rent Tax which he'd previous said he wouldn't support any expenditure linked to the tax.
We now see him backtracking and talking about ripping away payments from families. I think they're extraordinary scenes.
ALBERICI:
Mathias Cormann.
CORMANN:
The Labor Party has absolutely no credibility when it comes to budget management. Wayne Swan in the lead up to the last election when he wanted to make people believe that the Government would deliver an early surplus in 2012, 2013, promised us that this financial year, the deficit would be $10.4-billion.
What we found out on Tuesday was that in fact it is going to be $44.4-billion. That is a $34 billion deterioration in the budget bottom line just this financial year or a quadrupling of the deficit.
People across Australia instinctively know that the Labor Party cannot manage money, that the Labor Party in government always stuffs up our public finances and that it always comes down to the Coalition to fix up Labor's fiscal mess.
That is the way it's been in the past and that is of course the way it will have to be again in the future because Labor, of course, is on track to give us $145-billion worth of government net debt having come from a position that we left them of no government net debt whatsoever.
BRADBURY:
And you would make the point that our net debt is peaking at 9.6 per cent which is one tenth of the average of other advanced economies.
CORMANN:
You started with zero.
BRADBURY:
This is the sort of rubbish that we hear from the Liberal Party. Let's be clear about the strength of the Australian economy. The IMF has indicated that we are the standout performer, we're expected over the next two years to outstrip in terms of growth any of our competitors.
In addition to that, look at the economic fundamentals. Apart from the fact that we are returning the budget to surplus, which is a strong sign of our underlying strength, we've got unemployment at 4.9 per cent.
CORMANN:
Using every single accounting trick in the book.
BRADBURY:
Unemployment at 4.9 per cent, we have inflation contained, we have a record pipeline of investment of the scale that we've not seen before, $456-billion worth of investment in the resources sector alone. These are the signs of a strong economy.
For Mathias to say that the Labor Party doesn't have any credibility, this Government and this country stand tall on the international arena because of the strength of the economy, part of which relates to reforms of the last couple of decades, but a significant part of it is as a result of the efforts of this Government through the global financial crisis and now building a platform for growth into the future.
ALBERICI:
The Government let the business community down by not following through with the cut to company tax by 1 percentage point, so Australia's company tax rate remains 5 percentage points higher relative to other similar sized countries in the OECD.
In 2010 you said it was critical to lower company tax to increase Australia's competitiveness. Have you abandoned that now?
BRADBURY:
No, we haven't abandoned a cut to the company tax rate. We're working through
CORMANN:
Yes you have, you have have ...
BRADBURY:
Mathias, you've got no form, you've got no credibility on this issue. We have not ...
CORMANN:
Yes we do.
BRADBURY:
We have not abandoned a cut to the company tax rate but we're working through the Business Tax Working Group to try to achieve that outcome.
Can I make this point, I totally reject the suggestion that we've abandoned the cut to company tax. In fact ...
CORMANN:
But you have, it's not in the budget.
BRADBURY:
The only reason we're not progressing that measure is because Mathias and his lot have decided that they would not support a cut in the company tax rate.
The Liberal Party, for all of the traditional notions of supporting business and, in particular, small business, they voted against the measures we brought into effect which will provide the instant asset write-off for small businesses.
But they said that they would vote against the cut in the company tax rate. Now, on that particular measure they lined up side by side with the Greens, we weren't going to get this through the parliament so instead...
CORMANN:
You've never even tried.
BRADBURY:
Determined to spread the benefits of the mining boom in other respects, we've introduced a proposal in relation to loss carry-back, and we've made sure that we're able to spread the benefits by making payments to assist families right across the country.
ALBERICI:
You've decided to give that money away instead to families in cash handouts as you say. Is this Labor simply conceding that your days are numbered and you weren't going to win the votes of the business community anyway so you may as well woo your core constituency?
BRADBURY:
They're not cash handouts. The SchoolKids bonus is actually a refinement of the existing educational tax rebate policy. The funds ...
ALBERICI:
But they require no receipts, they could be spent on anything?
BRADBURY:
And this is one of the biggest insults to families ...
ALBERICI:
But it's the truth though, isn't it, it can be spent on anything?
BRADBURY:
As are all government assistance payments. So is what Tony Abbott saying, apart from the fact that he came out today and said the family payments are not safe under him, he did not confirm that family payments would remain at their existing or proposed levels.
ALBERICI:
Are they safe, Mathias Cormann? Are those family payments safe?
CORMANN:
Let me just make a couple of point points on the SchoolKids bonus ...
ALBERICI:
Are they safe. Can you just answer that question first up? Are those payments safe?
CORMANN:
What Tony Abbott has very clearly said is that obviously if we get rid of the carbon price, the carbon tax which is the best thing that we can do to help families with their cost of living pressures, then obviously you're going to have a look at what other compensation measures have been put in place by the Government.
But let me just make this point though, in relation to the SchoolKids bonus it was quite obscene, the speed at which Labor was desperately trying to get another $500 million worth of cash out of the door in the next six weeks out any proper parliamentary scrutiny, without any proper debate, they gagged the debate in the Senate in relation to that particular piece of legislation.
BRADBURY:
Give me a break. No, give me a break Mathias.
CORMANN:
The truth of the matter is the Government is borrowing money to give it away. They're spending money that they haven't got and of course the schoolchildren of Australia will be paying that money back eventually with interest.
That is, and just to go back to the whole issue of the company tax, the Labor Party was never committed to the company tax cut because earlier this year ...
BRADBURY:
Well, you were going to vote against it.
ALBERICI:
You did say you said you were going to vote against it, didn't you?
CORMANN:
Let me just make this point. Earlier this year the Labor Party introduced a package of 11 bills which included the mining tax and a series of promises that they had attached to the mining tax. It did not include the company tax cut. The company tax cut was a big absent measure, absent promise from that particular package of bills.
The Government is the Government. If they were seriously committed to the company tax cut they would have introduced it as part of the package of mining tax bills as they did with everything else. Now that's what they did when they pushed ahead with the means testing of the private health insurance rebate. That was in the Budget for three or four years before they eventually got it through the Parliament.
Now, in relation to the company tax cuts from a Coalition point of view, we've been very clear. We are in favour and we support modest company tax cuts. We will deliver modest company tax cuts after the next election. We will deliver them without a mining tax.
ALBERICI:
Well why were you adamant that you wouldn't pass this particular company tax cut?
CORMANN:
Well, because the Labor Party put forward a mining tax package which was fiscally reckless. The Labor Party put forward a mining tax package which would have left the budget worse off.
ALBERICI:
But that wouldn't have stopped you supporting a company tax cut?
CORMANN:
Well it's got to be done in an orderly, in a fiscally sustainable way. The point here is ...
ALBERICI:
So the Coalition would deliver company tax cuts?
CORMANN:
We have already said that. We're on the record as saying that we would deliver modest company tax cut without a mining tax, but the point here is look at what the Government's done in this budget.
They promised a whole series of things as part of the mining tax package. They've scrapped four of their promises in this budget, they've delayed two others.
Out of the 11 promises Labor originally attached to the mining tax, more than half have been scrapped or delayed. I mean, with Labor you can't ever look at what they say, you've got to look at what they do when they eventually get around to having to deliver on it.
ALBERICI:
Mathias Cormann, Tony Abbott says the Coalition is listening very carefully to the people of Australia.
CORMANN:
And we are.
ALBERICI:
Are they telling you to cut spending by $50 billion regardless of what the Australian economy looks like in 18 months time or whenever the election might well be held?
CORMANN:
The Australian people want a government that lives within its means. The Australian people want the government that spends less, that is less wasteful with spending of taxpayers' dollars so that we can tax less, so that we can focus on growing the economy more strongly, so that we can focus on improving our productivity growth which has been flatlining under the Labor Government, because something the Liberal Party understands, something the Coalition understands but Labor doesn't is that when our economy grows more strongly, not only is that good for economic prosperity as a nation but it is also actually good for government revenue.
It means that you end up with more government revenue without the need for all this new or increased Labor Party taxes. And of course that is exactly what a Coalition government would do. We would grow the economy more strongly so that we actually have more prosperity as a nation and we have more government revenue
BRADBURY:
How can you challenge our commitment to growth when this economy has grown 7 per cent from pre-GFC levels.
CORMANN:
Very simply, let me tell you why I challenge your commitment to growth.
BRADBURY:
No Mathias, you've had your go. You've had your go.
CORMANN:
You've asked me a question.
BRADBURY:
7 per cent larger today than pre-GFC. There is no advanced economy in the world that comes close to that. So don't come in and tell us that we're not committed to growth.
Ours is a growth strategy, but ours is also a strategy that says when the economy is going gangbusters in certain sectors we want to spread the benefits of the boom. That's what we're doing.
And as for this argument that somehow it would have been fiscally irresponsible for them to support the company tax cuts because they were linked to the mining tax. But now all of a sudden expenditure linked to the mining tax, they're telling us it's fiscally responsible to support that.
They've said that they will support loss carry-back, which is linked to the mining tax, they have said in equivocal terms that they will support the family payments increases, you know.
ALBERICI:
But now they say they will support the company tax cuts so it looks a bit disingenuous that you didn't try to introduce it in the parliament?
BRADBURY:
No, Tony Abbott said this. He said he supports company tax cuts but he wants to be in government to deliver them. He won't support Labor company tax cuts.
But if they were serious about providing tax relief to small businesses, they wouldn't have gone into the parliament and voted down our measures on instant asset write-off. This has delivered benefits for small business. Mathias went into the parliament. Mathias, you might explain why you went in and voted it down.
CORMANN:
Well, this is now your second question. I want to answer your first question why I query your commitment to economic growth. You're putting more and more lead into our saddle bag as a nation. You're putting the carbon tax and mining tax and more than 16,000 new regulations since you got into Government into our way. You are having a serious impact on our international competitiveness, productivity growth.
BRADBURY:
Tax is still lower. Tax is lower today as a proportion of GDP.
CORMANN:
We actually need to focus on increasing our international competitiveness, not actually undermining it. The carbon tax will, of course, have a significant impact on our international competitiveness, according to Treasury's modelling itself.
Between now and 2050 our economy will grow by $1 trillion less as a result of the carbon tax than it otherwise would. $1 trillion. That is effectively the whole GDP for the whole of Australia for a whole year. It effectively means that every Australian will have to work for nothing for a whole year to pay for the impact of the carbon tax.
BRADBURY:
That is just rubbish. That is rubbish.
CORMANN:
These are the facts. You are actually undermining our economic growth potential by putting too much unnecessary lead in our saddle bag, whether it's the carbon tax, the mining tax or too much regulation.
BRADBURY:
We didn't go into recession. The only advanced economy in the world that didn't go into recession. We've come out the back of the recession, the global financial crisis.
CORMANN:
You had a very strong starting position.
BRADBURY:
We've come out the back of the global financial crisis 7 per cent larger today. By mid-2014 we will be 16 per cent larger than we were back before the GFC. This is unmatched by any other advanced economy and you want to try and tell us that our economic management credentials should be brought into question?
ALBERICI:
We've run out of time, gentlemen. Thank you very much Mathias Cormann, David Bradbury.
BRADBURY:
Thank you.