Senator the Hon Mathias Cormann
Minister for Finance
DAVID LIPSON: G'day and welcome to the program, I'm David Lipson. It's been a big week in Federal politics. The rejection of a foreign takeover bid of GrainCorp and a major shift on schools funding, and next week a lot of attention turns to the Senate here in Canberra where it's crunch time for the carbon tax and the debt ceiling. To discuss all of this I'm joined now here in the Canberra studio by the Finance Minister Senator Mathias Cormann. Thanks for your time…
MATHIAS CORMANN: Good to be here.
DAVID LIPSON: …and great to have you in person. First to GrainCorp. Shares plummeted twenty-two per cent yesterday, but more broadly business is not happy with the decision it seems, the Australian Industry Group, the Business Council and also the foreign investment community. Has Joe Hockey's first sort of big decision sent the wrong message to business?
MATHIAS CORMANN: Well Joe Hockey assessed all of the issues and he made a judgement in the national interest. Now, the truth is whatever decision he made, somebody was going to be unhappy. But it's his job under the law to make those judgements. He made the judgement and he made it for the right reasons, and well that's where we are.
DAVID LIPSON: Isn't foreign investment exactly what Australia needs right now?
MATHIAS CORMANN: Australia absolutely needs foreign investment. We've always relied on foreign investment for our economic development. Foreign investment will be important moving forward. Out of a hundred-and-thirty-one applications for foreign investment that have come before Joe Hockey he has approved one-hundred-and-thirty of them. And of course, part of the reason, and he spelt that out in his statement of reasons that he released yesterday, part of the reason for the decision he made in relation to GrainCorp was exactly that, the importance of foreign investment and the importance to maintain public support for foreign investment into the future. So, he clearly had a responsibility to assess all of the issues, he did that and he made a judgement in the national interest and now we move forward.
DAVID LIPSON: That public support was diminished, you'd have to say, by the Nationals campaign against GrainCorp, or the takeover bid. Does that mean that if the Nationals make enough noise, enough threats in future, that the Government, that Joe Hockey would capitulate?
MATHIAS CORMANN: Well, firstly, Joe Hockey made a decision based on the way he assessed and saw the issues. But in terms of the views taken by Nationals and a number of rural Liberals for that matter too, they don't take those views out of fun. They take those views because they represent a view across their communities. And of course - you can't ignore community views entirely when you're a politician. You've got to actually take community views into account. That is of course what Joe Hockey reflected in his statement too. There is a strong - this has obviously been a contentious issue. There is a strong view in a large section of regional Australia and of course that was one of the concerns, the division and the lack of public support that might come if that particular application had been allowed to proceed.
DAVID LIPSON: Will this be a factor do you think when other global businesses consider Australia's risk profile?
MATHIAS CORMANN: Well, foreign investment applications are assessed on a case by case basis. You can't draw any conclusions from one decision in relation to other applications that would come before government. The Treasurer will make these judgements in the national interest every time these applications come before him and it really depends on the individual circumstances in any particular case.
DAVID LIPSON: Okay. Well, Qantas needs help as well. Would you consider easing foreign ownership restrictions? It seems like Tony Abbott's ruled that out.
MATHIAS CORMANN: Well there is a conversation to be had about whether the restrictions on Qantas in the Qantas Sale Act are still appropriate in a new competitive environment. You know, obviously the aviation industry globally is very competitive, has faced a series of challenges in recent years and of course has gone through a lot of change. The Qantas Sale Act and the restrictions on Qantas come from a different era and there is a conversation to be had as to whether they are still contemporary. If the view is that those restrictions should remain the way they are then obviously there is a price that comes with that and the community needs to be very conscious of that.
DAVID LIPSON: Do you have a personal view on that?
MATHIAS CORMANN: I'm a Minister in the Abbott Government I don't have personal views on these things. We consider these issues very carefully and methodically as a team.
DAVID LIPSON: I understand. So then, what about some of the other options, some form of government guarantee for example, like the banks had during the GFC?
MATHIAS CORMANN: Look, we want Qantas obviously to continue to be strong and to prosper. If there are proposals that are put before us we'll consider them and we'll make these judgements at the right time in the context of any proposals that come our way.
DAVID LIPSON: And the only other option being mooted at the moment is a partial buyback of Qantas, up to ten per cent.
MATHIAS CORMANN: I'm not going to start speculating on what the Government may or may not do in relation to a hypothetical request which isn't before us.
DAVID LIPSON: Okay. Just on schools, the Coalition insists that the same funding envelope will apply to school or education funding…
MATHIAS CORMANN: And it will.
DAVID LIPSON: … but since several states didn't sign up to Gonski, will those states be getting some of the funds from the states that did sign up. Will there be a reallocation?
MATHIAS CORMANN: Well a couple of points here. Firstly, Bill Shorten left the school funding system in a complete mess and Christopher Pyne is now sorting out the mess that Bill Shorten left behind. We are the national Government. Christopher Pyne is the national Education Minister. We have a responsibility to make sure that the school funding system is fair and truly national. What the previous government did, they signed up to a couple of deals and then ripped one-point-two billion dollars of funding away from schools in Western Australia, Queensland and the Northern Territory. That is not fair. We understand obviously that it's going to take a while to work through these issues. So what we've said is that yes, we are committed to the same funding envelope, as we said before the election. When it comes to school funding we are actually doing better than what Labor would have done, by putting an additional two-hundred-and-thirty million dollars on the table for 2014 in order to provide appropriate funding to all schools in all states while we're working our way through a more appropriate school funding formula moving forward.
DAVID LIPSON: That's in the first year, that two-hundred-and-forty million dollars.
MATHIAS CORMANN: Two-hundred-and-thirty million, yeah.
DAVID LIPSON: Two-hundred-and-thirty million dollars. After that, 2015 onwards, again will there be a reallocation from those states? Because they say there will, they say that the Commonwealth has indicated that they'll lose out, some of the money they were promised by Labor.
MATHIAS CORMANN: Well, Labor has ripped one-point-two billion dollars of school funding away from children in Western Australia, Queensland and the Northern Territory and they've entered some deals in relation to schools in New South Wales, Victoria, Tasmania and South Australia. Our responsibility as a national government is to make sure that we've got a school funding system that is truly national and that is fair nationally. So of course we're going to have to work our way through the implications of Bill Shorten's decision to rip one-point-two billion dollars of schools funding away out of the system.
So in order to give us some flexibility and some time to do that in an appropriate way, we've provided certainty for 2014 by putting an additional two-hundred-and-thirty million dollars on the table. That will give us the time to provide a more sustainable, a national and fair funding formula for the medium long term beyond that.
DAVID LIPSON: If there is a reduction in funding for some of those states that did sign up, will that come largely out of public schools? Because that's what the states say they've had indicated to them.
MATHIAS CORMANN: Well we don't accept that that's what the states have had indicated to them. What we are saying is we are doing exactly what we said we would do before the election. We are committed to the same school funding envelope that was put forward by the former government, in fact we're doing slightly better by putting an addition two-hundred-and-thirty million…
DAVID LIPSON: But are Catholic and independent schools protected under the legislation from that?
MATHIAS CORMANN: What we have said is that we will put an additional two-hundred-and-thirty million dollars on the table for 2014 and we will finalise a truly national and fair system for all schools in all states for the period beyond that. It will at least be within the same funding envelope that was put forward by the former government.
DAVID LIPSON: Okay, the debt ceiling comes to a crunch next week. Is it time to scrap it?
MATHIAS CORMANN: Well the first point to make here is that we are dealing with Labor's debt legacy. We're dealing with the debt trajectory that we've inherited from the Labor Party. By putting forward legislation to increase the debt ceiling to five-hundred billion dollars, we are doing the responsible thing in dealing with a very difficult situation that we've inherited from the former government. It's quite reckless and irresponsible for Bill Shorten, Chris Bowen and the Labor Party to stand in our way as we are fixing their problems. So that legislation is going back before the Senate early next week and Bill Shorten and Chris Bowen will have the opportunity to make a judgement in the national interest as to what should happen. Our approach to this is guided by a desire and by a responsible need to provide certainty and stability to the markets and to provide certainty and stability around the financing requirements of the Commonwealth. So we are not prepared to impose a debt ceiling where we know at the time of legislating the debt ceiling it will not be enough to cover the financing requirements of the Commonwealth over the forward estimates. So we are committed to ensure that the Commonwealth does not have to go back for another crack at lifting the debt ceiling over the forward estimates. That is the way Labor did it. They kept kicking the debt ceiling can down the road. They increased the debt ceiling from seventy-five to two hundred, to two-hundred-and-fifty to three-hundred billion dollars. In May at the time of the Budget Wayne Swan knew that by the end of the calendar year the three-hundred billion dollar debt ceiling that was legislated would be reached and exceeded, yet he did nothing to sort out the debt ceiling at that point in time, quite recklessly, quite irresponsibly.
DAVID LIPSON: So if I read you correctly, if Labor tries to block your attempts to raise the debt ceiling to five-hundred billion dollars, would you consider dealing with the Greens in order to scrap it entirely?
MATHIAS CORMANN: Well we've noted that the Greens have suggested that perhaps the debt ceiling should be scrapped in its entirety and what we've said is that we would be interested in exploring those discussions. If the Labor Party recklessly and irresponsibly tries to prevent us from lifting the debt ceiling to what is required to deal with their debt trajectory, their debt legacy, then we will have to look at other responsible options to get a majority in the Senate. If that is the option that's available and which will ensure that there is certainty and stability in financial markets and that there is certainty and stability around the requirements of the Commonwealth to finance its operations then we will look at that.
DAVID LIPSON: Okay. Well, Labor and the Greens also don't appear to be budging obviously on the carbon tax. Apart from saying pretty please to them, do you have any other tricks up your sleeve?
MATHIAS CORMANN: Well, Bill Shorten and the Labor Party went to the last election promising to scrap the carbon tax. That was after promising the election before that that there wouldn't be one. If Labor votes against the repeal of the carbon tax they're voting for higher electricity prices, they're voting against a $550 annual saving for families before Christmas, they're voting against strengthening our economy. Really what it would show is that Labor under Bill Shorten has not changed, that Bill Shorten is just a carbon copy of Julia Gillard and Kevin Rudd, that really he hasn't learnt the lessons of the last election, he hasn't listened to the Australian people who want the carbon tax gone.
DAVID LIPSON: You're stuck with it though, aren't you, if that's the position they take, until July at least?
MATHIAS CORMANN: Well, let's see what position they take. We know that Bill Shorten would like to scrap the carbon tax he's just too weak to stare down the Left in the Labor Party. He is going along with the position he's pursuing at the moment because he hasn't been able to get his way within the Labor Party. That might well change, who knows? Maybe Bill Shorten one day might stand up to the Left in the Labor Party in the national interest.
DAVID LIPSON: Senator Mathias Cormann, thanks for your time.
MATHIAS CORMANN: Good to talk to you.