Senator the Hon Mathias Cormann
Minister for Finance
CHRIS KENNY: We cross now live to Perth to catch up with Finance Minister Mathias Cormann. Thanks for joining us Minister.
MATHIAS CORMANN: Good to be here.
CHRIS KENNY: I want to ask you first up, what is the Government’s message to motorists who might be concerned about the reintroduction of indexation to fuel excise? Regular tax increases on petrol.
MATHIAS CORMANN: It is an important structural reform as part of our efforts to repair the Budget. As a result of the decision in 2001 to remove indexation of the fuel excise, the real value of the fuel excise has fallen from about 41.5 per cent to about 25 per cent. Given the challenges that we are facing and given the record investment that we are proposing in the Budget into productivity enhancing infrastructure, in particular road infrastructure, this is a necessary measure.
CHRIS KENNY: So the pain that it might cause motorists is worthwhile for the bigger Budget picture?
MATHIAS CORMANN: We have to put this into context. Indexation effectively will mean just about one cent a litre in additional fuel excise in the first year. We believe in the context of the Budget it is an important reform and none other than Craig Emerson, former senior Cabinet Minister in the Gillard and Rudd Governments suggested that it was a very good reform.
CHRIS KENNY: Why wouldn’t Joe Hockey simply make that case, it is a powerful case, it’s a sensible case, as you say people in the Labor Party, on the Labor side, have made it over the years. Why wouldn’t Joe Hockey just make that argument rather than get caught up in this silly argument suggesting that people if they are so poor, they don’t even have a car, that they will be escaping the tax increases and that other people because they don’t have a lot of money don’t drive very much anyway.
MATHIAS CORMANN: Joe Hockey is doing an outstanding job as Treasurer. I’m working with him very closely. I have seen him put his heart and soul into the Budget repair effort in order to put Australia on a stronger foundation for the future. None of us are robots. We are human beings and from time to time we make mistakes. With the benefit of hindsight, as the Treasurer has indicated on Friday, he realises that those comments were not that well chosen.
CHRIS KENNY: Political messaging is critical. There is a lot of ‘got-ya’ journalism around and a Coalition or conservative Treasurer is going to be very much in the gun especially when he is trying to deliver a tough Budget. I mean you can’t afford too many mishaps like that from the Treasurer can you?
MATHIAS CORMANN: Chris, I am not a commentator. I am part of a team, which is led by the Prime Minister. I am part of a team, an economic team, which is led exceptionally well by Joe Hockey. We found when we came into Government, a Budget that was in very bad shape. We inherited an economy growing below trend, rising unemployment, low consumer confidence, business investment which had plateaued and a debt and deficit disaster after six years of Labor government. They left behind not only $191 billon worth of accumulated deficits from their first five years in Government, but also another $123 billion in projected deficits in their last Budget with a spending growth trajectory that was manifestly unsustainable. Now there is no easy way to reduce that spending growth trajectory. There is no easy way to reduce payment growth by Government, but it is something that we have to do if we want to protect our living standards and if we want to build opportunity for the future.
CHRIS KENNY: Do you believe that you have made that case, that big picture Budget argument well enough to the public since the election? Obviously you made it strong enough in the lead up to the election because it was a landslide victory. But since the election, have you actually fumbled the public advocacy of that big picture Budget reform task that you and Joe Hockey and the Government are trying to tackle?
MATHIAS CORMANN: Chris, we always knew that this is going to be a marathon and not a sprint. The point here is, we inherited a debt and deficit disaster from the Labor Party. We are taking responsibility for cleaning up Labor’s mess. The real question here is why is Bill Shorten continuing to put politics ahead of the national interest? The question that he has to answer, the question that Bill Shorten has to answer, does he still believe that we need to put the Budget back into surplus? Is he still committed to a Budget surplus? if he is and he doesn’t like our plan to repair the Budget, how would he do it? We haven’t heard much from Bill Shorten about how he would fix the Budget. To the contrary. The Labor Party under Bill Shorten is even more reckless and more irresponsible than they were under Julia Gillard and Kevin Rudd, because right now the Labor Party is opposed and is voting against savings measures initiated by Labor under Julia Gillard and Kevin Rudd, banked by Labor under Julia Gillard and Kevin Rudd in their last Budget. Yet under Bill Shorten either he is too weak to impose his will when it comes to the national interest or he is just happy to play lazy populist politics, putting the national interest at risk.
CHRIS KENNY: I want to come back to that in a moment because that’s a crucial issue, but just before I leave this Budget sell if you like, I want to ask you about going back a few weeks ago, you’ve just talked then about how important it is to hammer this message, to argue this case to make sure you get these reforms through Parliament and you get the public support for that. Just a few weeks ago you were in the United States on the US Dialogue, important business of course but not on the main economic game, the main Budget game back here. The Treasurer, Joe Hockey was out of the country on holidays for a week. The Assistant Treasurer as we know has been forced to resign, has not been replaced. I mean have we seen enough effort, enough focus on pushing the message, that should be, that you want to be, the number one political message for the public at this time?
MATHIAS CORMANN: Chris, we give it our absolute best every single day. You’re right. We've been in Government now for nearly a year and I spent one week representing the Government in the United States after Parliament had risen for the Winter break. So I was there for the two very intensive first weeks of the new Senate. I’m not a commentator on my own performance, but what I can say to you is that as part of a team that is determined to repair the Budget, which is determined to fix and clean up the mess that the Labor Party has left behind, all of us are giving it our absolute best every single day to achieve our objectives.
CHRIS KENNY: I don’t doubt that, but the point I make with that sort of diary observation is that because of other commitments and other people doing this and that there was effectively no one from the economic team making the case there for a week or so at a crucial time. And this Assistant Treasurer position has not been filled. It is such an important role, an important area. How long can the Government afford to have that position vacant?
MATHIAS CORMANN: It is not vacant. I am acting as the Assistant Treasurer. I’ve been acting in that position for a little while now. I will continue to act as long as the issues in relation to Senator Sinodinos remain unresolved. So as far as I am concerned, this is a marathon, not a sprint. You might think that one week is a make or break. From our point of view this is an important debate and it is a debate that will play out over some time. Incidentally, there were about eight or nine frontbenchers from the Labor Party, appropriately, representing the Opposition at the American Australian Leadership Dialogue, so this is actually a very important bi-partisan engagement between Australia and the United States, so I wouldn’t minimise here the importance of what it is we were doing over there.
CHRIS KENNY: Indeed, our own David Speers was over there for Sky News and I’m probably a bit dark that I didn’t get a flag. I do want to get back onto what you were saying about the Labor Party. And just get back into that, I want to show viewers what your counterpart Tony Burke, the Labor Party Shadow Finance Minister had to say in part this morning on the ABC.
TONY BURKE: Well the first problem with the Budget, is it’s based on a false premise. It’s based on there being a Budget emergency, which there is not in Australia.
CHRIS KENNY: Well Finance Minister Mathias Cormann, there’s two points about that, one is this idea of a Budget emergency did you oversell that upon coming to Government? And secondly, Labor seem to not actually be conceding that there is any problem, I’ve used the term fiscal deniers. I mean you cannot deny that the Budget for some time now has been spending more than it’s earning and there must be a challenge for Government to get it back into surplus.
MATHIAS CORMANN: We’ve got to remember that the Labor Party inherited a Budget with no Government net debt, a $20 billion surplus and more than $50 billion in cash at the bank. In fact, in 2007 the Government was collecting more than $1 billion in net interest payments a year on the back of a positive net asset position. Now as I’ve said earlier, Labor delivered $191 billion in deficits in their first five Budgets, $123 billion in projected deficits in their last Budget, a trajectory taking us to $667 billion of Government gross debt within the decade and rising beyond that. Right now we are forced to pay, to pay, $1 billion a month just on the interest in relation to the debt the Labor Party has accumulated in Government. The problem is, if we don’t fix the unstainable spending growth trajectory that we’re on, if we don’t reduce Government payment growth, we will continue to add to the debt. What we’re doing effectively is borrowing from our children and grandchildren in order to fund our lifestyle today. There wouldn’t be a single parent that would think it was a good idea to put a proportion of your grocery bill onto your credit card every month, one month after the other, never pay any of it off, take out a second credit card to pay the interest on the first and then at the end of your life, hand over the lot to your children, because everybody would know that is bad yet that is exactly what the Australian Government is doing right now.
CHRIS KENNY: But this is the argument we know you need to make. It has been lost in the noise of late, what are you doing to try and get that debate back on track and of course to actually make compromises in the Senate. Everybody knows that you can’t get everything through the Senate and even people like Senator Cory Bernadi today have been making that statement of the obvious. Are you about to repackage your Budget measures? Make some sort of statement about how you are going to both message the Budget and reform it in the Senate and compromise it in the Senate?
MATHIAS CORMANN: Chris, this was always going to be a marathon and not a sprint. We will continue to do what we have done for the last three months or so and that is to continue to explain why it is that we need to repair the Budget. Why that is important, if we want to protect our living standards and if we want to build opportunity and prosperity for the future. We are realists, we do know that in the Senate we do not have a majority, the Government does not have a majority. That is not a new situation incidentally. For most of the last thirty years Governments have not had a majority in the Senate. It would ...interrupted
CHRIS KENNY: Sure, so you’re going to need to compromise. Look at something like the School Kids Bonus for instance. That was a scheme where parents had to apply for it and send in receipts effectively and get money back from the Government, very little money was going out, very few people were claiming it so Labor just made it a post-out cheque to just about everybody. Might you reform that back, so that it is a scheme that still exists but is more akin to what used to be there before Labor made it a broad payment to everybody?
MATHIAS CORMANN: This is a payment that the Labor Party attached to their failed mining tax. We were very clear in the lead up to the last election that we would scrap the mining tax and scrap all of the unfunded promises that Labor has attached to it, because they are unfunded promises. Right now the Government is forced to borrow that money only to give it away and then to ask our children and grandchildren to repay that with interest. That is not in their interests. That is not fair and that is not good economic and fiscal policy. That is why we have said, all the way through, that we would get rid of the mining tax and the unfunded promises that Labor recklessly and irresponsibly attached to them. Again, we do know that we do have to have conversations and we will continue to have conversations with crossbenchers. We need at least six Senators to join with the Government in order to get our legislation through. These conversations are ongoing and once we have a resolution you will find out about it.
CHRIS KENNY: Finally, the elephant in the room, to me the big paradox that creates a lot of trouble for you, both in the Parliament and in the public debate is of course the Paid Parental Leave scheme, because you are on about cutting taxes and this involves an extra tax on business. You are on about curbing entitlements and this involves a large new entitlement. Isn’t it time to actually, sure you can remain committed to the policy but suggest now is not the time to deliver it and at least delay that so that you are showing some sort of flexibility at some sort of willingness to compromise to try and get your other Budget measures through?
MATHIAS CORMANN: Chris, I know that you have been a long-standing critic of our fair dinkum Paid Parental Leave policy, but I will give you the same answer as I have given you every single time you have asked me this question before, and that is... interrupted
CHRIS KENNY: At some stage though, surely the Government’s go to concede that this is a paradox that hurts them. That it runs counter to all of your other arguments.
MATHIAS CORMANN: It is not a paradox and it doesn’t hurt us as a paradox. This is a central part of our plan to build a stronger, more prosperous economy. It is an important and central part of dealing with one of our key economic challenges, which is falling workforce participation levels in the context of an ageing population. We do need to lift female workforce participation. A fair dinkum Paid Parental Leave Scheme, which is fairly available to all women in particular income brackets, not just public servants who are able to access a replacement wage now, but also to women working in small businesses across Australia. It is an important part of our plan to build a stronger, more prosperous economy which in itself will help us repair our Budget.
CHRIS KENNY: Mathias Cormann thank you very much for joining us tonight on ViewPoint.
MATHIAS CORMANN: Always good to be here.
CHRIS KENNY: The Finance Minister live from Perth there. And let me make it clear I wanted to push him on that messaging business and what the government has done to coordinate it. I certainly wouldn’t suggest that Mathias Cormann is not a hard worker, apart from flying back and forth across the Nullarbor from week to week doing his very important job as Finance Minister. He then gets up at sort of 4:30, 5:00 o’clock in the morning to make himself available for Sky News so certainly working hard at the job. I’ll be back after the break with a great panel to kick around these issues.