Senator the Hon. Mathias Cormann
Minister for Finance
Date: Thursday, 10 October 2013
LAURA JAYES: Hello and welcome to AM Agenda, I’m Laura Jayes and today Tony Abbott is in Brunei for the East Asia Summit, he’s held a number of bilateral meetings over the last meetings over the last week with his counterparts overseas and the latest is with the Japanese Prime Minister Shinzo Abe. He’s declared Japan our best friend in Asia, but here back home the Labor leadership contest is heating up with the caucus due to cast their vote at 4pm this afternoon. Later in the program we will be speaking to Bill Shorten, one of the Labor leadership contenders but joining me here first from Perth is the Finance Minister Mathias Cormann. Minister thanks so much for joining us so early.
MATHIAS CORMANN: Good to be here.
LAURA JAYES: First I want to ask you about the US Federal Government shutdown. The fiscal cliff is looming within days, can you just talk about the ramifications for Australia?
MATHIAS CORMANN: Look we don’t believe that it would substantially impact on the Australian economy. Ultimately we are confident that through the United States internal processes this issue will be resolved one way or the other.
LAURA JAYES: I also wanted to ask you about Tony Abbott’s comments overnight to the Japanese Prime Minister, he’s declared Japan our best friend in Asia but he has also said that the time has come for Japan to be a normal country operating under the same rules as other countries operate. What does he mean by that?
MATHIAS CORMANN: I haven’t caught up with the Prime Minister’s comments made overnight. It’s 5:30 in the morning here in Perth, I’m sure if and as required the Prime Minister will continue to expand on those comments.
LAURA JAYES: I also wanted to ask you about the WA Premier Colin Barnett who is in Beijing at the moment, now he has made some comments when it comes to the Foreign Investment Review Board, he says that at the moment the rules discriminate against China and are holding back investment in Australia. He says it needs to be corrected, do you agree?
MATHIAS CORMANN: Australia does not discriminate between countries. The Foreign Investment Review Board does not discriminate between countries and indeed the government doesn’t discriminate between countries when it comes to foreign investment. By way of principles, foreign investment is of course - always has been and will continue to be - very important for our economic development and for our economic growth moving forward. There are of course, depending on the size of the foreign investment, there are rules to assess and to make sure that the particular investment is not contrary to the national interest. Those rules apply in the same way across all countries. We are not proposing to make any changes to the national interest test. Of course if there is a foreign investment proposed from a state-owned enterprise, essentially all such investment proposals have to be assessed through the Foreign Investment Review Board process. But again that is not a situation that is unique to China, that is a situation that applies right across the board for well established reasons.
LAURA JAYES: But when you look at the rules, Colin Barnett has pointed out, for the United States and New Zealand, there is a $1 billion threshold for investment in Australia, but for China because most of the companies in China are state-owned, the threshold kicks in at $248 million. Now he said that China feels discriminated against, do you think that’s a fair comment or has that just come out of the blue?
MATHIAS CORMANN: It is not a fair observation because of course the rules are not designed for or against any particular country. Essentially, in relation to state-owned enterprises, quite appropriately given that there are some questions that needs to be assessed around the commercial nature of any particular investment and any particular business operation for example in the context of government ownership, then it is quite appropriate that there is a different level of assessment then there would be for a private company in a completely free market. Again, there can be no suggestion that there is any discrimination whatsoever between countries, but of course depending, if you do have a situation where state-owned enterprises, government owned enterprises, are pursuing investment opportunities then you have a different level of scrutiny and assessment, quite appropriately, to ensure that the particular investment is not contrary to our national interest interrupted
LAURA JAYES: Will this be a sticking point in trying to get a Free Trade Agreement sealed with China within 12 months, which is the timeframe Tony Abbott has put down. Will this be one of the major sticking points in that negotiation, do you think?
MATHIAS CORMANN: Well we are totally committed to achieve a Free Trade Agreement with China. We will be continuing to have those conversations in the appropriate way and I’m not going to be conducting those negotiations here with you this morning on Sky News AM Agenda.
LAURA JAYES: No but Australia is going to have to make some serious concessions here to keep that 12 month timeline?
MATHIAS CORMANN: Well let’s wait and see. Obviously we are totally committed to achieve the Free Trade Agreement within the 12 month timeline. We will be working very hard to ensure that can happen, but of course let’s just see what concessions are required if any.
LAURA JAYES: Yesterday we saw the IMF forecast below trend growth for Australia in 2014, but still an increase going from 2.3% to 2.8% between the years 2013-2014. Unemployment rate also to hit 6%, but looking at the numbers, it’s slightly better than what Treasury had forecast and its almost in line with the PEFO numbers, so isn’t this a bit of good news coming out of the IMF report?
MATHIAS CORMANN: Well you’re quite right. The numbers are broadly consistent with what was in the Pre-Election Economic and Fiscal Outlook so from that point of view it doesn’t come as a surprise to us. However, if you look at the trend in recent years, it has been a trend that has been deteriorating. Now the IMF numbers are on the basis of calendar years, the Treasury numbers are on the basis of financial years, so there are some slight swings and roundabouts as a result of that. But there is no doubt that the global economy and the economy here in Australia are facing a series of risks moving forward which is of course why it is so important that the Parliament supports our agenda for stronger growth and more jobs. That is why it is so important that the Parliament supports our agenda to scrap the carbon tax interrupted.
LAURA JAYES: Joe Hockey said yesterday in a statement that the Coalition would have to “appropriately manage the fiscal outlook”, does that mean more cuts or more stimulus ahead?
MATHIAS CORMANN: Well we have been very explicit in the lead up to the election. We believe that the economy needs our agenda for a stronger economy and more jobs. The economy right now needs us to implement our plans to scrap the carbon tax, to scrap the mining tax, to cut all of the unnecessary and costly red tape that Labor has imposed on our economy so we can unlock $1 billion worth of savings per annum for business. The economy needs us to restore the Australian Building and Construction Commission, the economy needs us to execute and implement our plan for productivity enhancing infrastructure. So we are very conscious of the fact that our economy is not in as strong a position as it could be and as it should be, which is of course why we’ve made all of the various promises we made in the lead up to the election.
LAURA JAYES: Just on the carbon tax, there was modelling published in the Australian Financial Review today that suggests that if the carbon tax is repealed before 2015, the Federal Government might be up for billions of dollars, but to $2 billion of compensation payments to business. Do you accept that and is that modelling correct?
MATHIAS CORMANN: We don’t accept that. Our position in relation to the carbon tax has been transparent for a very long time. Our intention is to scrap the carbon tax with effect from 1 July 2014. Let me just note here again this is of course a carbon tax that we were never meant to have because in the lead up to the 2010 election, every single member of the former government, every single member of the Labor Party campaigned on a promise that there would be no carbon tax under a government lead by Julia Gillard. We are now essentially just making sure that we go back to what was promised in the lead up to the previous election and what we have now promised for 2 elections in a row.
LAURA JAYES: Mathias finally, just on Holden, they have rejected it seems overnight a plan to boost exports, an export deal, if they don’t reconsider, will the Federal Government pull subsidies?
MATHIAS CORMANN: We’ll continue to have conversations with Holden and other stakeholders in the car industry and of course Ian Macfarlane as the Industry Minister is doing exactly that. Now from our point of view, by not proceeding with Labor’s disastrous fringe benefits tax changes hitting the car industry, by scrapping the carbon tax, by reducing red tape, we are already significantly boosting the competitiveness of the Australian car industry. The importance of course in moving forward is, if we are looking at ongoing support at least through a further transition period, there has got to be a plan to ensure that the car industry can be on a sustainable viable footing over the medium to long term. Of course strengthening their capacity to export cars produced and manufactured here in Australia is an important part of that.
LAURA JAYES: Mathias Cormann, Finance Minister joining us from Perth this morning where it is very early. We do appreciate it, we’ll speak to you soon.