Transcripts → 2014


Transcript of Interview - ABC Radio National - Drive with Waleed Aly

Senator the Hon Mathias Cormann
Minister for Finance


Date: Tuesday, 4 February 2014

SPC Ardmona, Future Fund

WALEED ALY: It was announced today by Finance Minister Mathias Cormann of course this is the other story surrounding the government today the story surrounding SPC and particularly Sharman Stone’s attack on her boss’s has been the other major story and I’m joined now by the Finance Minister Mathias Cormann to discuss these thank you very much for being there

MATHIAS CORMANN: Always good to be here.

WALEED ALY: I’ll come to the future fund in a moment but I should get your response to what Sharman Stone has being saying it’s quite extraordinary when a Member of Parliament labels her boss no less than the Prime Minister and then the Treasurer Joe Hockey by saying that they’ve been lying.

MATHIAS CORMANN: Well Sharman Stone is a passionate advocate for her community. I obviously disagree with her on her statements today. The Prime Minister, the Treasurer and others who have spoken on behalf of the government about the decision made in relation to SPC Ardmona have presented the facts. Suffice to say I don’t agree with Sharman in relation to this, but obviously we respect the fact that she is a passionate advocate for her constituency.    

WALEED ALY: When you say they presented the facts isn’t the whole point that they didn’t? That they completely misrepresented the facts which has prompted SPC Ardmona to come out today and lay the facts specifically on the table that were incorrectly stated.

MATHIAS CORMANN: Well I completely reject that. We don’t accept that. Essentially what was before us was a request for an individual business for a grant from the taxpayer. It’s a business that is wholly owned by Coca Cola Amatil, which has a very strong balance sheet, a $9 billion market capitalisation, more than $200 million in profits in the first 6 months of this financial year. They’ve got all of the cash reserves to make the whole investment into the restructure they say is necessary to take their business forward. In the circumstances, in particular at a time when the Commonwealth faces significant budget challenges, we don’t have the balance sheet or the cash reserves to make that sort of grant. The decision we made was entirely appropriate and we had all of the information in front of us, including incidentally representations from Sharman Stone as the local member. We made the decision that we considered to be the right decision in the circumstances.

WALEED ALY: Well there’s the decision that you made, but then there’s the reasoning that you’ve announced publicly and particularly looking at the EBA itself and saying that there are particular items in there that make this excessively and over generous which it seems is simply not true. The idea that they can cash in sick leave for instance, SPC Ardmona has now been forced to come out in public and say that’s not true, that was removed from the EBA in 2012.    

MATHIAS CORMANN: We did have before us the current EBA of SPC Ardmona. Incidentally both SPC and Coca Cola at various times told us that one of their challenges moving forward was to continue to improve productivity, including and in particular by improving workplace relations arrangements in the company. But look I’m not going to get into a tit for tat argument and go through the weeds on this in the media with SPC Ardmona. We had a request before us...well...

WALEED ALY: Well isn’t that the problem? You started by saying there were certain things in the EBA that weren’t actually there and none of us could verify that because we weren’t privy to the EBA and now SPC have come out and said no, these are not facts they are simply wrong. I mean if that’s the basis of the decision, and it was the primary basis that was put before us, what are we meant to make of that? 

MATHIAS CORMANN: Well the primary basis for the decision that was put before us was that Coca Cola Amatil as the owner of SPC Ardmona has got the balance sheet and the cash reserves to fund the restructure of the business that they think is necessary. Part of our consideration was the current workplace relations arrangements in that company, which the company itself tells us are not to the standard they would like to see in the future. Now the EBA can be reviewed by everyone. People can go and have a look at it. We stand by the assertions that we’ve made that were entirely accurate.  

WALEED ALY: Now all we have really is your assertion that they think that the EBA could be improved, they’re not saying that at the moment they’re saying that they’ve been assessing work practices for many months they’ve already made significant improvements in productivity, this is in their statement today. What I’m getting it is that it sounds like, and this is what Sharman Stones argument is, it sounds like the Government has laid the blame squarely on the workers and then on the company for negotiating a bad EBA and saying its over generous when it isn’t, and when the factors that they say actually lead to this part of their business being unprofitable are things that you could control and have nothing to do with the workers such as better controls on the way that foreign fruit is imported into Australia. I mean the thing they are asking you to do, apart from give them money, is deal with the dumping of cheap imported fruit and vegetable products onto the Australian market and I’m quoting here from countries which do not have anything like the stringent safety, labour and environmental standards that we do. And this particular is China and the EU now this is something I’ve heard nothing from the Government about while I have been heading about things that aren’t true like sick leave that can be cashed out and generous wet allowances where there’s been zero payments in that category in 2013.    

MATHIAS CORMANN: Well with all due respect you’re mixing up all sorts of issues. In relation to allegations of anti-dumping there are independent processes where these sorts of claims are properly assessed. As soon as these processes have come to a conclusion then there will be the relevant announcements in relation to that. That was not the issue that was before us last week. The only issue that was before us last week related to the request of an individual business for the Government to make an ad hoc grant from the taxpayer to that business to help them with a commercial investment and the company that made the request fundamentally has got the balance sheet and the cash reserves to look after their own needs when the Commonwealth after six years of bad mismanagement by the previous Labor government does not have the balance sheet to provide that sort of support.

WALEED ALY: Yeah we’ll see. I suspect they might...

MATHIAS CORMANN: Well we would have had to borrow the money in order to provide Coca Cola Amatil who has got a strong balance sheet with.. interrupted.

WALEED ALY: Yeah no I understand that point. They’ll make their decision; we’ll see what it is and well see what the consequences of it ultimately are. I want to talk about the Future Fund though, the appointment of Peter Costello, as I said, would’ve surprised nobody, it was a recommendation from a while ago that the previous government didn’t act on so no surprise that you did act on it. So the appointment is not controversial, the situation of the Fund is interesting though, the Future Fund chief investment officer David Neal this morning that high returns that have been enjoyed from assets might not be sustainable indefinitely. Do you have any concerns about that and what the Future Fund holds if I may put it that way?     

MATHIAS CORMANN: Well the Future Fund has been given a mandate by the Government and the Future Fund independently fulfils that mandate and makes the judgements as required in order to fulfil that mandate. I’m not going to second guess the specific investment decisions that are made by the Future Fund at any one point in time. That’s what they’re there to do. Obviously... interrupted

WALEED ALY: I think it’s a comment on the terrain that they’re in, though, and the fact that the returns they’ve been getting just aren’t sustainable because of the general environment.

MATHIAS CORMANN: Well it is a truism that returns vary over time. Obviously investments are made over the long term and there are going to be variations from year to year and that’s just a fact of life. Over the long term though, the Government has very clearly stated its expectations of the Future Fund and there is a mandate in place which the Future Fund is expected to fulfil and we’re very confident that under the strong and effective leadership of Peter Costello the Future Fund will continue to perform strongly in the years ahead.

WALEED ALY: Mathias Cormann always a joy to speak to you I always enjoy our robust exchanges thank you very much for speaking to me.

MATHIAS CORMAN: Same on my end. Good to talk to you.

WALLED ALY: I’m glad the feeling is mutual. Finance Minister Mathias Cormann speaking to us there on RN Drive.