It was quite a spectacle, when Liberal backbencher Ian Macdonald gave Mathias Cormann a viva voce in the Senate over the budget’s debt levy legislation – and then bluntly told the Finance Minister he’d failed the test.
The vote on the legislation – the first major budget measure before the Senate – was imminent and the outcome clear. Labor was not opposing; the measure was about to sail through without a division. But not before Cormann was to feel the heat.
On Monday, Macdonald and fellow Liberal Cory Bernardi had attacked the measure (each on different grounds). Macdonald followed up on Tuesday, by forcing Cormann to reply to his arguments.
Macdonald, from regional Queensland, frequently speaks his mind; within the government, his critics point to the fact he was dropped after the election from Abbott’s frontbench.
Cormann is one of the ministry’s most effective performers, tireless and never going off message. But in Parliament and often outside it he is used to being able to just repeat “the lines”, laced with constant references to the alleged evils of Labor. Suddenly, under relentless fire from one of his own, it all became harder.
Macdonald’s beef was that the debt levy on people with incomes over $180,000 was not also being imposed on companies. He’d made “many inquiries in the appropriate circumstances” but no one could explain to him this lack of burden sharing.
He raised a Singapore-based company with sugar mills in North Queensland, asking why its shareholders were not being asked to contribute to a debt crisis. “This is my question to the minister – why is it that individuals have to pay the surcharge but not companies that earn their living, earn their income, from Australia? It just does not make much sense to me.”
In reply to his “good friend and valued colleague”, Cormann pointed out that the Coalition had taken to the election policies to cut company tax by 1.5% and to impose a 1.5% levy on the 3000 biggest companies with taxable income above $5 million “as part of the introduction of a fair dinkum paid parental leave scheme”. There were planks in “our plan to build a stronger, more prosperous economy and create more jobs”.
“We do not think that it would help us in either building a stronger economy or repairing the budget if we increased company taxation in the way that Senator Macdonald has suggested.”
Macdonald declared that Cormann “still did not answer the question” – and promptly homed in on PPL.
“Minister, you cannot have it both ways.” If there was a debt crisis why were these companies earning more than $5 million (“which is a bit of an advance on $180,000”) not being asked to contribute? Why was a very generous PPL scheme being introduced when there was a debt crisis?
“You could easily divert the $5 billion that will be raised from the top 3000 companies to pay off Labor’s debt. That way, we perhaps may not need a three-year temporary levy on other Australians,” Macdonald said, raising the spectre of the PPL (which he thought a good goal for good times) returning us to the “age of entitlement”, which was supposed to be finished.
“Minister, I hope you can find something new that would convince me that I should support this bill. So far, I regret to say, you have not … We have a $5 billion bucket there that could be used to pay off Labor’s debt, and we are apparently not using that. We are engaging in what some – not necessarily me – call an age-of-entitlement allowance to certain individual Australians.”
He also hoped future governments, “be they of this persuasion or that persuasion”, would have “an honest tax system where additional money is raised and not this dodgy arrangement where we have a levy, not a tax, that is imposed on only a certain number of Australians and not on Australia’s wealthiest companies”.
Cormann was on a hiding to nothing. “I did do my absolute best to answer his previous questions as directly and relevantly as possible, but I will have another go.” But he was blunt: Macdonald’s company impost would “make it harder for us to grow”. As for the PPL, it was “an integral part of our economic strategy”.
Macdonald delivered his final judgement. “With the greatest of respect, can I just say that the arguments you raise really do not make sense. … I do appreciate, Minister, the answers you have given. They have not convinced me. But I really cannot take it much further.”
As far as Cormann and the government were concerned Macdonald had taken it a lot too far already. It was a more effective skewering than the opposition can usually manage. And that was apart from Macdonald, at the Coalition parties meeting earlier, asking Hockey to get modelling on the regional impact of reintroducing fuel excise indexation - which will be debated in the Senate soon.