Senator the Hon. Mathias Cormann
Minister for Finance
Date: Thursday, 19 September 2013
LYNDAL CURTIS: The Government has also abolished the Climate Commission and with the New South Wales Government given the go ahead for the first of the major road projects promised funding by the Coalition, WestConnex in Sydney.
The Prime Minister has asked his attorney-general to seek legal advice on moves by the ACT to legislate for same sex marriage and behind the scenes, the briefings for new ministers are continuing. One of those is the Finance Minister, Matthias Cormann. I spoke to him a short time ago.
Mathias Cormann, welcome to Capital Hill.
MATHIAS CORMANN: Good to be back.
LYNDAL CURTIS: Congratulations. Have you been buried in briefings now as the new Finance Minister?
MATHIAS CORMANN: Well we are now the Government. We were sworn in yesterday. This is my first full day in the job and yes, I have had a series of meetings with senior officials from the finance department going through the incoming government brief. We're focused on our agenda, calmly implementing our agenda, for a stronger more prosperous economy, to create more jobs, scrapping the carbon tax, scrapping the mining tax, bringing the budget back under control and, of course, building the roads of the twenty-first century.
You would have seen it today, the Prime Minister was in Sydney announcing our commitment to the WestConnex project so we have hit the ground running but yes, we've made a start but of course there's lots more work to do.
LYNDAL CURTIS: Will your role be the one traditionally given to a Finance Minister? Do you know exactly what duties you'll be performing?
MATHIAS CORMANN: Well, obviously, you know, I'm part of the economic team. Joe Hockey as the Treasurer leads that team and yes, I will have the same responsibilities as a usual Finance Minister has had in years gone by.
LYNDAL CURTIS: And preparation for saying no to your colleagues when it comes to budget razor gang meetings?
MATHIAS CORMANN: Well right now we're going through those briefings to make sure that we've got a very clear understanding of the lie of the land. There has been - as is a matter of public record - in the period from the budget to the pre-election economic and fiscal outlook a significant deterioration under Labor in the budget bottom line to the tune of about three billion dollars a week. There has been some further deterioration in the budget position over the forward estimates since that time and we're working our way through all of that as we speak.
LYNDAL CURTIS: Has that deterioration been of the same magnitude, about three billion dollars a week?
MATHIAS CORMANN: Well the short answer is no. It has not been of the same magnitude, but we are obviously working our way through all of the ins and outs of all of this and in good time as we've gone through proper process we will be making the relevant announcements. You'd be aware that as a matter of course by the end of September the final budget outcome for 2012/13 is due to come out so we are on track in relation to all of that.
LYNDAL CURTIS: The Prime Minister said this morning that the briefings he had showed the deterioration in the budget is not markedly different from the situation revealed in the pre-election economic and fiscal outlook. Is it fair to assume that you have not discovered, as John Howard and Peter Costello did when they came in, a great big budget black hole, just a position that is tracking as it had been since budget time?
MATHIAS CORMANN: Well over the years that Labor has been in government the budget continued to deteriorate from budget to budget updates and massively so in the eleven week period from May to August. It is true that as a result of the charter of budget honesty which John Howard and Peter Costello put in place that the quality of the information that was released by the Secretaries of Treasury and Finance was obviously significantly higher than what might have been in place in 1996.
But that is not to say that there hasn't been any change for some good reasons. There has been some - for some reasons that are eminently explainable - there have been some further shifts and of course we've got to work our way through that in a proper calm, careful and methodical way and that's what we're doing.
LYNDAL CURTIS: Having had some briefings so far, is it fair to say that the economic update produced by Treasury and Finance under that charter of budget honesty was pretty much the situation that it is now and there may have not been, as the Coalition said before the election, any reason to cast any doubt over those figures?
MATHIAS CORMANN: We've always said all throughout the campaign that we accept that the pre-election economic and fiscal outlook was the best professional judgement of the state of the budget at that point in time of the Secretaries of Treasury and Finance. We stand by what we said during the campaign in relation to this. But, as I've just mentioned, there has been some further deterioration for some, you know, reasonable reasons since that time and of course we're working our way through all of these things in a proper methodical way and, when we're ready to make some announcements, we'll do that.
LYNDAL CURTIS: You had declared - Tony Abbott had declared a budget emergency before the election. We had conversations about that during the election. Is it fair to say that the situation and the way you're responding to it is not exactly an emergency response, it's a slower response that in the end on your election figures you would leave the budget six billion dollars over four years better off?
MATHIAS CORMANN: Well let's be very clear, Labor in 2007 inherited a very strong budget position and they made a mess of things. They kept promising surplus budgets and they kept delivering deficit budgets.
LYNDAL CURTIS: They did have the global financial crisis early in their term.
MATHIAS CORMANN: Well - and in the lead up to the last election, which was well after the global financial crisis, they made all sorts of promises in relation to surplus budgets in 2012/13 and onwards and of course in the 2012/13 budget you might remember that former treasurer, Wayne Swan, proclaimed well after the global financial crisis that the deficit years are over and the surplus years are here and of course only to break that promise very shortly after that.
So what we've had under Labor is two-hundred-and-fifty billion dollars worth of accumulated deficits, a massive deterioration from what was promised in the lead up to the 2010 election to what the situation was in the lead up to the most recent election. Even just from the May 2011 budget to what happened in the lead up to this election there was deterioration in the budget bottom line in excess of one-hundred-and-seven billion dollars.
So what we've put forward in the lead up to the last election as part of our costings exercise is a careful and very well considered plan to start turning that situation around. We have of course released costings which show an improvement in the budget bottom line over the forward estimates to the tune of about six billion dollars, a reduction in government debt by about sixteen billion dollars. We are now underway of course working with Treasury and Finance in implementing that plan.
LYNDAL CURTIS: But you are, as Labor was doing, you're cautious not to hit the economy too hard with swinging spending cuts because of signs of some weakness in the economy?
MATHIAS CORMANN: Well our plan is to strengthen the economy. Our plan is for a stronger more prosperous economy and for more jobs. And of course the way we plan to achieve that is by scrapping the carbon tax which would not only reduce the cost of living, it will help reduce the cost of doing business and make us more competitive internationally. We'll be focused on improving productivity by cutting red tape costs for business by about a billion dollars a year.
We're focusing on a whole range of initiatives to strengthen the economy including and in particular boosting infrastructure spending, on productive infrastructure, on building the roads of the twenty-first century which is good in terms of easing traffic congestion across Australia, but which is also good in boosting productivity and as such boosting economic growth moving forward.
LYNDAL CURTIS: Coalition figures have been saying since the election that Australia is open again for business, figures, charts put out by the Reserve Bank show that investment, business investment in Australia is at about eighteen per cent of GDP. That's quite a high figure. In what way has Australia not been open for business?
MATHIAS CORMANN: Well over the last six years we had an anti-business government. We had a treasurer in Wayne Swan who attacked anyone who aspired to be successful quasi as if they were somehow a bad person. If you look at some of the anti-business...
LYNDAL CURTIS: But business has still been investing and mining investment in particular is in the tens of billions of dollars.
MATHIAS CORMANN: Well under the former government we had a lot of uncertainty, we had a lot of chopping and changing, we had a lot of bad process, we had a lot of additional taxes, a lot of additional red tape, more than twenty-one thousand new pieces of regulation. All of that was bad for the investment environment.
What we've said is that we will be a government that wants business to be successful. We are going to be a government that wants to create the conditions again for business to grow more strongly by cutting red tape, by scrapping taxes like the carbon tax and the mining tax, by pursuing our agenda to cut company tax by one point five per cent from 1 July 2015 and so on.
So we are very much, and we of course want to send a very clear message to business in Australia and to investors internationally that under the Coalition we'll have stable and good government, we will have an investment climate that is conducive to people actually investing more strongly again and, of course, pursuing those growth opportunities.
LYNDAL CURTIS: One final small question. Has any decision been made about when you are likely to release the mid-year economic update?
MATHIAS CORMANN: Look we're working our way through this in the normal course of events within government. What we do know of course is that as a matter of course the final budget outcome for 2012/13 is due in the next couple of weeks and that of course will happen in the normal course of events.