Senator the Hon. Mathias Cormann
Minister for Finance
Date: Sunday, 29 September 2013
KATHRYN ROBINSON: But first this morning on the eve of Tony Abbott's first visit to Jakarta as PM another tragedy at sea. Scores of asylum seekers are dead, many of them children. The Coalition's Boat Policy will no doubt dominate talks with Indonesia this week but will it threaten our relationship with our important neighbour and trading partner. We'll ask Mathias Cormann who is our guest this morning, good morning, as well as delve into the budget black hole that looms large for the country. And our panel today, Network Ten's political editor Hugh Riminton and editor of Business Spectator Jackson Hewett. Good morning to you all.
HUGH RIMINTON: Good morning.
JACKSON HEWETT: Good morning.
KATHRYN ROBINSON: Senator Cormann thank you for your time this morning. Can we begin with matters pertaining to the budget? We were told on Friday to expect a deterioration in the budget but there was little detail involved with that announcement. When will we see the numbers and the details?
MATHIAS CORMANN: Well the budget is in very bad shape. The budget position that we've inherited as we found out in the pre-election Economic and Fiscal Outlook in August is thirty billion dollars in deficit and yes, since the pre-election Economic and Fiscal Outlook there has been some further deterioration. The point to make here is in 2007 Labor inherited a very strong budget position; a twenty billion dollar surplus, no government net debt, fifty billion dollars worth of cash in the bank and of course the government in 2007 was collecting more than one billion dollars in net interest payments on the back of a positive net asset position.
When you fast-forward now to 2013, the position that we've inherited is a position of a thirty billion dollar deficit and growing, two hundred billion dollars worth of government net debt and growing, a gross debt heading for three hundred billion dollars and beyond and of course, the government is forced to pay about ten billion dollars in net interest payments to service the debt that was accumulated over the last six years, so…
KATHRYN ROBINSON: So Sen - so Senator back to the question, when will we see your numbers in the MYEFO because there's much conjecture surrounding it and will be handed down in January when most of the press gallery is away and Australia's on holidays with their minds elsewhere?
MATHIAS CORMANN: Well we haven't made a final decision on when the Mid-Year Economic and Fiscal Outlook will be released. We're currently taking advice. Obviously on the details of the deteriorating budget position but also on including and properly and formally including all of the commitments that we've made in the lead up to the election. Now what I would just point out is that the Charter of Budget Honesty Act actually explicitly provides for the release of the Mid-Year Economic and Fiscal Outlook by the end of January.
And we've got to remember - there has been of course a formal update in terms of the budget position in August which showed that in the period from the budget in May to the pre-election Economic and Fiscal Outlook in August, that the budget position deteriorated by about three billion dollars a week, now we are working…
JACKSON HEWETT: But Senator there's no change on the government's forecast - Labor Government's forecast at the time - so what other big ticket items would be in there?
MATHIAS CORMANN: Well there was – in the period from May to August – there clearly was a massive change compared to the Labor Government's forecast absolutely,…
JACKSON HEWETT: That's the - the pre-election forecast is the same?
MATHIAS CORMANN: So er what, what we of course did on Friday was release the final budget outcome for the 2012-13 financial year and what that shows is that instead of a one- point-five billion dollar surplus as was promised at budget time for the 2012-13 budget, we are - we have now got an eighteen-point-eight billion dollar deficit and that has really, that has been the story under Labor from budget to budget update, the position invariably significantly deteriorated and of course what we are now doing calmly, methodically and in a structured professional way is make the necessary decisions to start turning that around.
HUGH RIMINTON: Okay so let's be clear on this, are we still in a budget emergency?
MATHIAS CORMANN: We have inherited a budget in very bad shape and yes, the description of a budget emergency is an absolutely accurate description. But of course, what we need to do is we need to make sure that we make the necessary decisions in a calm, methodical and professional way and we are currently considering all of the relevant advice from treasury and finance and also of course making sure that all of the decisions that we've announced in the lead up to the election about strengthening our economy, creating more jobs and putting the budget back onto a believable pathway back to surplus are…
HUGH RIMINTON: Sure, sure, okay…
MATHIAS CORMANN: … and that we are in a position to reflect those in our budget update.
HUGH RIMINTON: I understand that and, and if there's a budget emergency then presumably the primary task is to get the budget back into the black as soon as you possibly can so why is there more talk about stimulus that we've heard this week?
MATHIAS CORMANN: Well firstly we absolutely will put the budget back into the black as soon as possible, and of course the whole centre of our policy argument in the lead-up to the election was that we needed to do more than the previous government was doing to strengthen our economy and to create more jobs, I mean clearly what we…
HUGH RIMINTON: In fact, but in fact you made almost no difference. Six million dollars over the forward estimates is as I say a rounding difference and you're talking now about stimulus. Can you talk to us more about what you're going to do to stimulate the economy to protect jobs and growth?
MATHIAS CORMANN: Well we will stimulate the economy by implementing the policies that we announced during the election, we will scrap the Carbon Tax which of course the Parliamentary Budget Office identified would create a growth dividend in terms of additional revenue for government of one-point-one billion dollars on the back of stronger economic growth as a result of scrapping the Carbon Tax. We'll be scrapping the Mining Tax, we'll be cutting red and green tape to release savings for business to the tune of one billion dollars a year and we'll also of course, be investing in key productivity enhancing infrastructure- infrastructure which will help us ease traffic congestion but also help us grow our productivity and as such grow our economy more strongly. We've identified in our pre-election costings about thirty one key projects at a cost of about eleven and a half billion dollars over the forward estimates, and when we up…
JAKCSON HEWETT: So Senator if you want to be an infrastructure government, will you issue infrastructure bonds then?
MATHIAS CORMANN: Well obviously we are currently going through all of those processes, considering all of the relevant advice and we will be making all of these decisions in good time. The point here is that we have clearly articulated during the election campaign which projects we would provide additional funding to because we would accelerate their progress or expand their scope and that comes at a cost of about eleven-and-a-half billion dollars over the forward estimates, six-point-one billion dollars of which comes out of existing funds in the Nation Building Program and we are making an additional commitment of four point six billion dollars over the forward estimates which was fully taken into account in our pre-election costings.
HUGH RIMINTON: Senator people living in capital cities are abuzz with the way that housing prices are extremely active at the moment, activity in the housing market is extremely active; a lot of this is investors, a lot of th em taking advantage of various shelters and tax advantages for investors and first home buyers are not so active in the market. Is there any argument that you would consider - are you indeed considering any arguments - for any tweaking of the levers to make it less attractive for investor in the fin - in the housing market?
MATHIAS CORMANN: Look our policy on the tax front has been very clear like - the changes that we will be making to taxation laws are that we'll scrap the carbon tax, we'll scrap the mining tax…
HUGH RIMINTON: Sure, sure got that so there'll be nothing…
MATHIAS CORMANN: …and we'll implement the one-point-five per cent company tax so.
HUGH RIMINTON: So, so to - so to be absolutely clear there is nothing in consideration that would affect any area of property investment in a taxation er framework?
MATHIAS CORMANN: We have no plans to make any changes to tax laws to address the sorts of issues that you are fleshing out and let me just say we actually - I don't share, we don't share the concerns that you've just articulated. We think that the market is well able to respond to any rises in house prices and indeed increases in the price of housing of course, will help to stimulate construction activity and other related activities in the economy which will be a good thing.
JACKSON HEWETT: Senator I want to ask you about the NBN, er one of the big questions is opening up to competition, is that your plan?
MATHIAS CORMANN: Well look the minister responsible for this area of course is Malcolm Turnbull who will continue to layout exactly what it is that we're doing. Our plan in relation to the NBN is to deliver faster, better broadband services more quickly, more affordably for taxpayers and more affordably for consumers and of course, you know we have already started implementing that plan and Malcolm Turnbull will have more to say about it as we go along.
KATHRYN ROBINSON: Senator Cormann, we have plenty more to talk about. We do need to take a short break.
KATHRYN ROBINSON: Welcome back to Meet The Press. Jump online and send us your feedback either on our Facebook page or with the Twitter #mtp10. Back now to Finance Minister Mathias Cormann; Mathias if I can take you to the asylum seeker issue, over the last forty-eight hours we've seen another tragedy unfolding at sea, scores are dead, many of them are children. On a personal front how does that make you feel when you see these lives lost at sea?
MATHIAS CORMANN: It is always tragic and deeply distressing when people lose their life at sea. Of course it is. And of course we have expressed our deepest sympathy to the families of those that were tragically lost.
KATHRYN ROBINSON: So are you then comfortable with the government's policy on how we find out as Australians, when these boats come to our shores or try to come to our store shores - and indeed when tragedy strikes. Are you comfortable with this culture of secrecy which it - which it has been labelled - when we're hearing reports from asylum seekers saying they were left floundering at sea for twenty four hours after contacting Australian authorities?
MATHIAS CORMAN: Well a couple of things here. Firstly, because it is so tragic and because it is so distressing when people lose their lives at sea is why we need to do everything we can to stop the boats. Now in order to stop the boats obviously we are running what is a military operation - Operation Sovereign Borders. Of course it is very important to make sure that that is done in a way that maximises our opportunity to stop the boats because as long as the boats keep coming, people sadly will continue to lose their lives. Now in relation to the specific events over the last forty-eight hours, the events occurred in an area that was under Indonesian jurisdiction.
Of course Australia did provide all appropriate assistance but all of the detail appropriately is dealt with by the Minister for Immigration Scott Morrison as part of his regular operational briefing which I understand will - will occur very soon.
HUGH RIMINTON: Senator what kind of military operation is it - what in fact emergency on our borders to use Tony Abbott's words just before the election is it when the General who's been put in charge has gone immediately on holiday and with great military speed we were unable to get to these people, or anywhere near them for twenty-four hours after they were signalling their dis - their distress?
MATHIAS CORMANN: Well I think that you're really going beyond my areas of responsibility and I would invite you to make sure that you put all of the questions that you are looking for answers for to Minister Morrison in the context of his regular briefing. But what I would…
HUGH RIMINTON: I think we'll get that next - next week.
MATHIAS CORMANN: What I would say though is, the reports in the media today that somehow the Australian government was notified on Thursday morning are incorrect. The first contact that we've had - and Minister Morrison has made that very clear in a statement that he released last night - was on Friday morning. It was a report that related to an event in the Indonesian Search and Rescue Zone and of course, all of the immediate action that was required was taken. In particular, Australian authorities immediately contacted Indonesian authorities and of course there was very close cooperation as is appropriate in those circumstances to deal with the unfolding event as quickly as possible.
JACKSON HEWETT: Senator given the release of the Climate Change Report from the Inter-governmental Panel on Climate Change saying that it's ninety-five per cent confident that it’s happening, there are a lot of you - er climate sceptics in Liberal Party and the Coalition - is there a change of view coming through as a result of that?
MATHIAS CORMANN: We've always said that we support the need for effective action on climate change. The problem is that Labor's Carbon Tax is not effective action on climate change. Labor's Carbon Tax hurts our economy, while pushing up the cost of living, without doing anything to reduce emissions. That is why we are totally committed to scrap the carbon tax and instead pursue effective action on climate change which is our direct action plan.
HUGH RIMINTON: Okay so with your direct action plan, given the new IPCC Report, is there any talk of perhaps extending contingency funding within the budget for extreme weather events that might be linked to climate change?
MATHIAS CORMANN: Well our commitment is to achieve a five per cent emissions reduction target by 2020. That is a bipartisan commitment. We're very confident that we will be able to achieve that…
HUGH RIMINTON: But that's not - that's not the question. The question is, is there need for further contingency funding for extreme weather events that doesn't relate to direct action?
MATHIAS CORMANN: Well that is not something that we have considered at this point and that is not something that I believe needs to be considered at this point. Obviously you know, these sorts of issues are worked through from time to time, but right now we are confident that we have the policies in place to deal with the challenges that come from climate change. We've always been very clear as a government and indeed also in Opposition, that we support effective action on climate change but what is currently in place - what was put in place by the previous government - is not that. What, what was put in place by the previous government is a set of policies, is a tax, which is hurting our economy, which is hurting families and pensioners…
HUGH RIMINTON: O - okay - I think…
MATHIAS CORMANN: …and we're just not doing anything…
HUGH RIMINTON: I think your arguments on the Carbon Tax have been well worked through. If I can ask you - because we're nearly out of time - one other question which is in your portfolio responsibility. As Finance Minister you are ultimately responsible for claims that federal politicians make against expenses. Do you think taxpayers should feel comfortable that three thousand dollars was spent by two Coalition frontbenchers - George Brandis now the Attorney General, and Barnaby Joyce the National's MP - to go to a mates wedding?
MATHIAS CORMANN: Well obviously all claims that are made by politicians you know - in terms of travel allowances and the like need to be made within entitlement. I don't know all the facts in relation to the events that were reported this morning. I understand obviously that Senator Brandis and Senator Joyce made a judgement at the time that the claims were within entitlement, but I gather that they will be having another look at those things and you know, if there is a need for change those changes will be made.
HUGH RIMINTON: Well one of the difficulties being a Senator, if there is found to be something wrong with what's gone on, that would fall to the Attorney General - the Attorney General is George Brandis - surely it's, it's not a reasonable system if someone's being ask to perhaps punish themselves?
MATHIAS CORMANN: Well I think that there are appropriate ways to deal with circumstances like this, but I think we're getting way ahead of ourselves here. You know, clearly claims that are made by politicians in terms of any type of public allowance need to be made within entitlement. At the time the judgement was that it was, if there is a change to this I'm sure that this will be worked through in the appropriate way, in the appropriate process and if there are conflicts along the way, I'm sure that they will be dealt with in the appropriate way as well.
KATHRYN ROBINSON: Okay, Senator we are out of time. Thank you very much for joining us on Meet The Press.