Senator the Hon Mathias Cormann
Minister for Finance
Date: Thursday, 15 May 2014
MATTHEW ABRAHAM: Mathias Cormann is the Federal Finance Minister. He and Joe Hockey put this Budget together and he joins us now, Mathias Cormann, Minister, welcome to the program.
MATHIAS CORMANN: Good morning Matthew. Good morning David.
MATTHEW ABRAHAM: Minister, have you and the Prime Minister and the Treasurer now given up trying to argue that this Budget is not built on broken promises?
MATHIAS CORMANN: What we are doing since the Budget was delivered on Tuesday night is explain the decisions we have made and the reasons for those decisions. From our point of view, the Budget that we delivered on Tuesday is an honest Budget, it's a fair Budget, it's a Budget that does what we said we would do. It starts the Budget repair job and it starts implementing our plans to build a stronger more prosperous economy so everyone can get ahead.
MATTHEW ABRAHAM: Well, with respect, that wasn't the question. The question is have you given up trying to argue that this Budget is built on very clear broken election promises.
MATHIAS CORMANN: Well we don't accept that. We understand that some people will form that view...interrupted
MATTHEW ABRAHAM: How could they possibly form that view? If for instance the Prime Minister stood in front of a big billboard saying no cuts to health, no cuts to education, no cuts to the SBS, we won't increase taxes, and you've done all of that.
MATHIAS CORMANN: Well that's actually not true. In the lead up to the last election we very clearly said that we would keep the same funding envelope in place for health that was in place at the time of the last election and we are. In relation to education, we have in fact put $1.2 billion more into schools than Labor did, because at the time of the last election they ripped $1.2 billion out of schools in Western Australia, Queensland and the Northern Territory and we have put that back in. We never locked ourselves into the unsustainable spending growth trajectory that Labor had put in place beyond what were then the Budget forward estimates and what we are doing now in this Budget is to put a stop to Labor's unsustainable spending growth trajectory to make sure that over time, government can again live within its means.
MATTHEW ABRAHAM: How are people going to afford the co-payment to go to the doctors?
MATHIAS CORMANN: In this Budget we are asking all Australians to contribute...interrupted
MATTHEW ABRAHAM: Yes, yes, I know that they are being asked to contribute. The question is how are they going to afford to contribute?
MATHIAS CORMANN: Well we believe that $7 per visit is affordable and of course in relation to lower income earners there are safety nets in place. There is a limit where the co-payment will only apply for ten visits a year. So that is the maximum expense of $70 a year in those circumstances.
MATTHEW ABRAHAM: When Chris Uhlmann asked Joe Hockey that question, he said they can give up a packet of cigarettes. That's the equivalent of three co-payments, a bottle of beer. They are fairly insulting assumptions aren't they? That people that might struggle will be drinking alcohol and smoking cigarettes?
MATHIAS CORMANN: The very basic proposition is this. We do have a world-class health system in Australia, but the cost of that health system will make it unsustainable into the future for our children and grandchildren if we don't make some adjustments. What we are saying is that we want access to high quality healthcare to be affordable for everyone, but also to be affordable for the taxpayer over the medium to long term so that it can be sustainable, so that we can preserve what we have, at the level that we have it for the future.
MATTHEW ABRAHAM: The changes to unemployment benefits, the six months on, six months off, six months on rotation where if you haven't had previous employment and you start with no unemployment benefits for the first six months. You then qualify for six months if you haven't got a job and you have to do 25 hours a week work for the dole and after that six months, you're back on rations again, you're back on the no benefits and that merry-go-round continues. What's the point of that?
MATHIAS CORMANN: Well we think that young people who have a capacity to work, should work. We don't think that it is appropriate for young people to go straight from school on to the dole.
MATTHEW ABRAHAM: So there's an assumption there that people who can work, there are jobs for them to do. There's an assumption that they are just not doing them.
MATHIAS CORMANN: We believe that when you're young and you come out of school, you ought to earn or learn or work for the dole.
MATTHEW ABRAHAM: But is that the assumption?
MATHIAS CORMANN: Sorry?
MATTHEW ABRAHAM: Is that the assumption, that there are jobs there but they are just not doing them?
MATHIAS CORMANN: That there are jobs out there? Of course there are jobs. There are jobs out there.
MATTHEW ABRAHAM: So they are just lazy?
MATHIAS CORMANN: Well what we are saying is that young people shouldn't go straight from school onto welfare. Again, it is important to point out here too, I think that's been missed in the last few days as we've been talking through all of this, there are safeguards here too. People who are in particularly challenging circumstances whether they have mental health issues or other challenges, there are safety nets there so they are not going to be caught by this. But anybody who is healthy, who is well, who has got a capacity to work, they should accept a job going out of school rather than go straight from school onto welfare...interrupted
MATTHEW ABRAHAM: So there are jobs aren't there, they are just not taking them?
MATHIAS CORMANN: Well we believe that there are jobs out there...interrupted
MATTHEW ABRAHAM: How much modelling has been done on the social impact of these that these Budget measures have? For instance, there is speculation on the front page of the Australian today that unemployed women may get themselves pregnant because parents can't be kicked off the dole.
MATHIAS CORMANN: We have assessed all of the information about where we are, all of the information about where we are heading without corrective action. We had a whole series of options in front of us. We made some initial decisions and then we sought further advice...interrupted
MATTHEW ABRAHAM: Did your modelling predict that young unemployed women may get themselves pregnant?
MATHIAS CORMANN: Well I don't accept that that is what is going to happen. I mean people are going to be speculating left, right and centre about what they think will happen. We have made judgments on the basis of what we think is right.
MATTHEW ABRAHAM: Why wouldn't they? It is pretty easy to get pregnant.
MATHIAS CORMANN: Well perhaps. But we don't believe that that is a consequence of our policy.
MATTHEW ABRAHAM: And that didn't show up in your modelling?
MATHIAS CORMANN: Look we made decisions on the basis of what we think is right, on the basis of what we think will strengthen the country into the future.
MATTHEW ABRAHAM: Was there a warning in your modelling that that might happen?
MATHIAS CORMANN: Our modelling very clearly assessed how different people in different circumstances across Australia would be impacted by different decisions. And at the end of the day, we weighed all of that up and we made the best decision given the challenging fiscal circumstances that we find ourselves in after six year of bad government.
MATTHEW ABRAHAM: Did the modelling suggest that unemployed women may allow themselves to become pregnant so that they cannot be forced off the dole?
MATHIAS CORMANN: Well to be honest, we can go around and around, I don't accept your proposition.
MATTHEW ABRAHAM: Well, did this come up as a possibility?
MATHIAS CORMANN: Well we have assessed all sorts of information and all sorts of different options were considered.
MATTHEW ABRAHAM: So you don't know whether it is there or not?
MATHIAS CORMANN: Look, I am not going to go into this.
MATTHEW ABRAHAM: You're listening to the Federal Finance Minister Mathias Cormann here on 891 ABC Adelaide Breakfast. We will go to Judith in a moment from Yacka. It is 16 minutes to nine. Mathias Cormann, Minister, you grew up in a small village, a small town in Eastern Belgium, correct?
MATHIAS CORMANN: Indeed.
MATTHEW ABRAHAM: Your dad worked as a tuner in a local factory, he developed health problems, he became an alcoholic. He recovered from that which was a wonderful thing.
MATHIAS CORMANN: It was a great thing, yes.
MATTHEW ABRAHAM: You were one of four children during that terrible period where your mum had to support you. Four children under 10?
MATHIAS CORMANN: That' s right.
MATTHEW ABRAHAM: Wow. Now your household during that terrible time was sustained by a State disability pension and the support of a local church?
MATHIAS CORMANN: That's right.
MATTHEW ABRAHAM: How would your mother or father would have reacted if the State had said to them that you need to learn or earn?
MATHIAS CORMANN: Well, that is exactly what my family has done all the way through. And as a young person I can tell you that I started earning at a very young age and all the way through university and all the way...interrupted
MATTHEW ABRAHAM: According to your mother, the interview by Geoff Kitney of you, the profile, your mother would not be able to survive and you children would not have been able to survive as a family unit and remain intact without a State disability pension and the support of the local church. So a pension and charity. Correct?
MATHIAS CORMANN: Indeed. And we are not abolishing welfare. What we are doing...interrupted
MATTHEW ABRAHAM: Well, how would your family have done for that six months without money perhaps?
MATHIAS CORMANN: Well that is not actually the proposition that is on the table in this Budget. What we are doing in this Budget is making sure that the welfare support from government is targeted at those families most in need. Because we can't afford to stay on the spending growth trajectory that the Government is already on. We want to ensure that welfare support targeted at those families most in need continues to be sustainable into the future. Because that is what we must do.
MATTHEW ABRAHAM: So your families situation, you would have qualified for welfare under Abbott?
MATHIAS CORMANN: We would have actually. That is exactly right.
MATTHEW ABRAHAM: Okay. Let's go to Judith in Yacka. Hello Judith.
JUDITH: How are you? I am very concerned listening to this man speak. I am very concerned after having seen the Budget roll out and look, my heart is just bleeding for so many people at the moment who are going to be worrying themselves sick. I have actually worked in disability employment services which I left the industry because I found that I wasn't able to help the people who were trying to find employment. Now I was heartbroken by that decisions. I look at what this Budget is going to do to some of those people and I am horrified. Those people are living under the most extraordinary duress already. Many of them come from an environments where they don't have resources, they are talking about social networks and whatever. They don't have that.
MATTHEW ABRAHAM: Judith, you are calling from Yacka. Where's Yacka?
JUDITH: Mid north South Australia.
MATTHEW ABRAHAM: Are there any jobs out there?
JUDITH: Gosh no.
MATTHEW ABRAHAM: Mathias Cormann, what do you say to Judith?
MATHIAS CORMANN: Well people in particularly challenging situations are actually exempted from the particular rules that we have put in place to ensure young people are not going straight from school on to the dole. What we are saying is that people who have a capacity to work, who are healthy, who are young, they should work. They shouldn't go straight from school on to the dole. That is a very straightforward proposition and you know, if you are young and you haven't got children, incidentally that is another exemption, if you are parent with children, you are not going to be impacted by this particular change. But if you are young, if you are healthy and you are under 30 and you are single, you might want to consider to shift to where there is a job so you don't have to go straight on to the dole coming out of school.
MATTHEW ABRAHAM: Move from Yacka, move from your family, somewhere else?
MATHIAS CORMANN: Well absolutely.
MATTHEW ABRAHAM: And that is no problem?
MATHIAS CORMANN: Well if there is no opportunity to find a job where you are, rather than to go as a healthy, young person straight onto welfare, straight onto taxpayer funded dole support, you should go to where you can find a job.
MATTHEW ABRAHAM: Margaret from Daylesford. Hello Margaret.
MARGARET: Yeah hi. I am just quite worried about the proposed increase the possibility of university fees. We have a year 12 student. She is quite a capable, bright student. My husband and I are both middle income earners. I work part time. He works full time. We can't afford to pay her HECS upfront and I am just really concerned because I read that some university courses could be up to $200,000 and I don't know how she is going to pay that back.
MATTHEW ABRAHAM: Mathias Cormann, what do you say to Margaret?
MATHIAS CORMANN: Well what I am saying to Margaret is that in Australia we have a very good system where nobody has to pay the cost of their university education upfront. Everybody who wants to go to university can borrow 100 per cent of that cost from the taxpayer and only start paying it back at a concessional rate once they start to earn more than $50,000. So what we are trying to do is reform the higher education system is to allow universities to compete, allow universities to improve so that in the global context we actually can end up with universities that out there are able to take it up to the best universities in the world. Right now we don't have, here in Australia, a university in the top 20 and we should have. So by deregulating the fees for universities, some fees might go up for those degrees that are particularly attractive and that deliver significant incomes when students qualify. Other fees are likely to go down. But the good news in Australia is that any student that wants to go to university can borrow 100 per cent of that cost upfront and they don't have to pay it back until such time as they make a reasonable living.
MATTHEW ABRAHAM: Minister Mathias Cormann, Federal Finance Minister here on 891 Breakfast. Have you spent much time in South Australia?
MATHIAS CORMANN: I have, indeed.
MATTHEW ABRAHAM: And you have been out in Elizabeth?
MATHIAS CORMANN: No, I have not been to Elizabeth, no.
MATTHEW ABRAHAM: Do you know where it is?
MATHIAS CORMANN: I do.
MATTHEW ABRAHAM: You know it has very high unemployment?
MATHIAS CORMANN: Indeed.
MATTHEW ABRAHAM: And there are concerns about the General Motors Holden and the general car industry assistance package and the fact that may suffer a $400 million cut. What reassurance can you give people who may be worried about their future?
MATHIAS CORMANN: Well when you a talking about a cut, what we are doing in the Budget is facing up to the fact that Holden and Toyota and previously others have made announcements that they will not be proceeding with manufacturing of cars in Australia. So clearly there have been some adjustments over the medium to long term in terms of past subsidies that will not be continuing. Having said that, there are transitional arrangements in place and the Federal Government has been working with the South Australian and the Victorian State Governments and indeed Holden and Toyota to ensure that there are appropriate transitional arrangements in place.
MATTHEW ABRAHAM: Nick Xenophon says it was your decision to cut $400 million from that industry assistance will cost thousands of jobs. Will you revisit that?
MATHIAS CORMANN: Well, no we will not revisit that. Because if there are subsidies in the past for car manufacturers that are not continuing to manufacture cars, we are not going keep subsidies for those car manufacturers that are leaving in the Budget forever in a day.
MATTHEW ABRAHAM: No he was talking about helping them transition so they can keep going during this difficult time.
MATHIAS CORMANN: Well that is exactly what we are doing.
MATTHEW ABRAHAM: No he says you are cutting $400 million.
MATHIAS CORMANN: Well he is wrong if he is saying we are cutting things immediately. What we are doing is we are reflecting in the Budget the fact that a number of car manufacturers have announced that there no longer will manufacture cars in Australia and that subsidies that were in the Budget in the past, on the basis that they would continue into the future are now no longer required.
MATTHEW ABRAHAM: Minister you have only been in Australia since 1996?
MATHIAS CORMANN: That's right. I came here first in 1994 and I migrated here formally in 1996.
MATTHEW ABRAHAM: You love the place.
MATHIAS CORMANN: Yep.
MATTHEW ABRAHAM: And you didn't speak English at all for the first 20 years of your life?
MATHIAS CORMANN: That's right.
MATTHEW ABRAHAM: But you did master several languages, so you are a bright guy.
MATHIAS CORMANN: Well, I will leave that to you to judge.
MATTHEW ABRAHAM: Well, I will say that. Do you think though, this I think was a criticism levelled at you when you rolled Senator Ross Lightfoot for the Senate spot that has got you where you are today, you don't know as much about the Australian mindset and culture as perhaps other politicians who have either been born here or been here a lot longer because 1996 is not a long time.
MATHIAS CORMANN: Well I am one of many migrants in Australia and like many of my fellow migrants to Australia, many generations that have come here, I am doing my best every day to contribute, to help make my adopted country a better place. So at the end of the day, along with all of my colleagues in the Government, we will stand and fall in the judgments that people make about our performance and the value of our contribution every three years at an election.
MATTHEW ABRAHAM: Minister, thank you for joining us and being generous with your time on 891 Breakfast.
MATHIAS CORMANN: Good to talk to you.