Senator the Hon Mathias Cormann
Minister for Finance
Date: Saturday, 31 May 2014
DAVID LIPSON: Good day, welcome to the program, I'm David Lipson. Australia has long punched above its weight in science, you may already know we invented Wi-Fi, polymer bank notes and also developed the world's first effective flu treatment, but it's not necessarily thanks to science being well funded. We spend about half a percent of GDP on science research, the OECD is almost double that 0.8 per cent. South Korea, USA and Denmark of course spend much more and even though the Budget announcement of a Medical Research Future Fund paid for by the GP co-payment is being widely applauded, other areas of science are suffering budget cuts. There are fears that it will have long-lasting consequences, on the program today, we will speak to three of the country's top scientists to hear their concerns about the future of Australian Science, but first to the Finance Minister, Senator Mathias Cormann, who joins us from Perth, thanks for your time today, especially since science is not your portfolio, we don't have a dedicated Science Minister, those responsibilities were of course folded into the Industry Minister Ian MacFarlane's responsibilities', but we do appreciate your time
MATHIAS CORMANN: Who is doing an outstanding job in that area by the way,
DAVID LIPSON: So why was funding cut to the CSIRO in this Budget and other programmes as well?
MATHIAS CORMANN: Well David firstly when you are confronted with $123 billion in deficits over the forward estimates as we were, then clearly the only way you can repair the Budget sustainably is by spending less into the future. Now having said that we are still spending significant amounts of taxpayers' dollars on science and on organisations like the CSIRO. In fact $4.3 billion is invested in science and research over the forward estimates, including $3 billion for the CSIRO, $745 million this year and $3 billion over the forward estimates. The savings that we have achieved, or that we are targeting from the CSIRO are about 3 per cent of their total funding. When you are facing the sort of Budget mess that we have inherited, the only way that you can get that back on track is by asking everyone to make a contribution. If we didn't also ask organisations like the CSIRO to contribute, then others would have to carry a larger part of the burden, like pensioners, lower income earners and the like and that wasn't acceptable to us. We thought that it was important to spread the effort to repair the Budget as fairly and as equitably and as broadly as possible.
DAVID LIPSON: I do commend the Government for setting up the Medical Research Future Fund, which will be worth some $20 billion once it really gets going in a few years' time, but is it incoherent as your Liberal colleague Dennis Jensen has suggested to be, if you like, ring-fencing one area of medical research, of research, putting a boundary around medical research, funding it well, while cutting other areas of science. Because their needs to be cross-pollination when it comes to research.
MATHIAS CORMANN: David it is not incoherent at all. Dennis Jensen is a valued colleague of mine and he does understand science, but perhaps he needs to have a closer look at the financing arrangements. What we are doing with the Medical Research Future Fund is directing savings from recurrent spending in Health as well as revenue from the price signal to a capital fund that builds up over time, which incidentally helps us reduce our net debt position and only our earnings, our net earnings from that fund, will be directed into medical research into the future, which will start at about $20million in 2015-16 and build up to about $1 billion in additional funding for medical research into the future year on year. The key here is, we are putting a structure together that makes that doubling of funding for medical research self-sustaining because only the net earnings from the Medical Research Future Fund will be directed into that research. So what it means is that we have a sustainable basis from which to effectively double the level of investment into medical research into the future. The way we are doing it is by saving money, by spending less on a recurrent basis today and by channelling the revenue from the price signal in relation to access to medical services into that fund. That fund then builds up which actually has a positive impact on our balance sheet as it does that and we are only investing the earnings from that fund. It is a very smart way to ensure that increased funding for research is put onto a sustainable footing for the future.
DAVID LIPSON: In other areas of research, does the Government believe that private investment and philanthropy perhaps needs to step up and support Australian research?
MATHIAS CORMANN: We do think that there ought to be support for research from all sources, not just from the public sector, but also from the private sector. Obviously if you can attract private sector investment it does have beneficial impacts in terms of improving the discipline and the focus and I guess the commercial potential of research that is conducted. So absolutely we do believe that, but the broader point is really in the sort of Budget situation that we are in, you really have no choice but to take a more realistic view of what is affordable right now. There are a lot of meritorious causes that in an ideal world we would like to be able to pay for, but at the end of the day you can't keep spending money that you haven't got without getting yourself into trouble over time.
DAVID LIPSON: Okay we will return to science with our panel a little later in the program, but Mathias Cormann just while I have you, a few other questions more generally on the Budget, since we spoke a fortnight ago, are you any more confident that the government will be able to pass through the $21 billion of savings measures that Labor has lined up against? Do you think they will ultimately all pass through?
MATHIAS CORMANN: Well let's see. I can't obviously predict what the Labor Party will eventually do, as I can't predict what other parties represented in the Senate will do, but what I can note though is that when we last met the Labor Party was still saying they would be opposed, they would not support our Temporary Budget Repair Levy. Now they are supporting our Temporary Budget Repair Levy, because clearly they have accepted and they have realised, on reflection and having listened to our arguments I suspect, that it was the fair and appropriate way to go in the context of the budget mess that we have inherited from Labor.
DAVID LIPSON: Clive Palmer for example has hardened up his position, he says that he won't even talk to the Government.
MATHIAS CORMANN: All we can do David is to continue to explain the decisions that we have made, the reasons for those decisions and we are doing that calmly and carefully day in day out. There is no alternative to the Budget that we have delivered. We did face a budget in very bad shape. Even worse, we faced a spending growth trajectory that was completely unsustainable and that would have hurt the economy, hurt jobs over time if we hadn't taken corrective action. We are taking corrective action. We are doing it in the fairest possible way and at the end of the day people in the Senate will have to form their own judgements. But we will be putting the Budget to the Senate in the way that it was delivered.
DAVID LIPSON: The Education Minister, Christopher Pyne, is in the headlines again today over comments that he said to the non-government education sector, he said; "It is the Prime Minister's view that the Government has a particular responsibility for non-government schooling, that we don't have for State Government schooling." What does that mean?
MATHIAS CORMANN: Well it is the Prime Minister's view and it is the Government's view that we have an important responsibility for both government and non-government schools. If you look at our track record, we are investing $1.2 billion more in schools over the forward estimates than the previous government did. Because in the dying days of the previous Labor Government, they ripped $1.2 billion out of both government and non-government schools in Western Australia, Queensland and the Northern Territory, which we have put back in. Without any doubt, we have a significant responsibility for both government and non-government schools, but bearing in mind, government schools in Australia under our system of government are run by State Governments. They are State schools and that is very relevant in this context.
DAVID LIPSON: So does the Government believe that ultimately State's should take full control, not just running but funding public education?
MATHIAS CORMANN: State Governments are fully in control of running State schools. What we have already said is that in the context of the Federation White Paper, their ought to be a conversation about making sure that State Governments are truly responsible and accountable for their areas of responsibility. We do think that in our current federal system of government there is too much overlap in responsibilities, which dilutes proper lines of accountability, that there is too much waste and duplication as a result and that there are opportunities to improve our broader governance arrangements, which ultimately would help deliver better outcomes at a lower cost.
DAVID LIPSON: Finance Minister Mathias Cormann, we will have to leave it there. Thanks for your time.
MATHIAS CORMANN:Always good to talk to you.