Senator the Hon Mathias Cormann
Minister for Finance
Date: Monday, 24 November 2014
FRAN KELLY: The final sitting fortnight for this year begins today in the Federal Parliament today and the Abbott Government is facing the prospect of heading into Christmas with fairly large chunks of its first Budget still to be legislated. But the Coalition has scored a policy win with its sale of Medibank Private which debuts on the Stock Exchange tomorrow. The public float has been oversubscribed, allowing the Government to set a higher price for institutional investors. And that means it is going to raise close to $5.7 billion from this privatisation that is well above expectations. The Finance Minister Mathias Cormann joins us now. Minister good morning.
MATHIAS CORMANN: Good morning.
FRAN KELLY: I will come to the Medibank Private sale in a moment. If we could just kick off with this last sitting fortnight for the year. Universities Australia I noticed has written an open letter to all Senators urging the Higher Ed reforms be passed but with amendments. They want a smaller cut to the university Budget than the 20 per cent which has been proposed and also a lower interest rate on student loans. Are these compromises you are willing to consider?
MATHIAS CORMANN: We are committed to the Higher Education reforms. They are very important structural reforms in the interests of students and also as part of our plan to build a stronger, more prosperous economy. We have been talking to crossbench Senators for some time now in an attempt to find common ground and these conversations are continuing.
FRAN KELLY: You are the Finance Minister, would you be prepared to countenance something like a smaller cut to university funding to 20 per cent in the Budget and also they want $100 million structural adjustment fund to help regional campuses cope with deregulation. Would you be prepared to consider spending money in order to make money so to speak?
MATHIAS CORMANN: It is very important that the Higher Education reforms successfully pass the Senate this sitting fortnight. But I am not going to conduct discussions with crossbench Senators here on your program this morning Fran. We will continue to work with all crossbench Senators in order to find a common ground to pass what are very important structural reforms in the national interest.
FRAN KELLY: In terms of conducting conversations with the crossbench Senators, a couple of them have said today that you don't seem to be talking to them lately about the $7 Medicare co-payment measure. Is Senator Xenophon right when he says that notion of a co-payment has been placed on the back burner?
MATHIAS CORMANN: No, that is not right. We remain committed to all the Budget measures that we announced in the Budget in May. Of course, as you would expect us to do, we are progressing them in a sequential and prioritised way, taking into account the time of them coming into effect. You would remember that since 1 July this year, we have been able to deliver on our promise to scrap the Carbon Tax, we have been able to deliver on our promise to scrap the mining tax, we have been able to remove about $10 billion in costs over the forward estimates in unfunded promises that Labor had attached to the mining tax. We have been able to pass a series of savings measures in the Social Services portfolio. We are essentially just working in an orderly and methodical fashion through our to-do list and of course we will continue to progress those Budget measures one by one.
FRAN KELLY: You haven't been able to make much progress on the $7 Medicare co-payment. The Opposition has written to the Treasurer Joe Hockey asking for assurance that the Government won't try to get around the Parliament like you did with the re-indexation of petrol excise and push through the Medicare co-payment via regulation. Can you give Labor that assurance?
MATHIAS CORMANN: What I can assure everyone is that the Government remains committed to the measures that we announced in the Budget in May, because we are committed to building a stronger, more prosperous economy and to ensure that our Budget is on a sustainable foundation for the future. We inherited a debt and deficit disaster from the Labor Party. We have been working to repair the Budget mess that we have inherited and Labor of course recklessly and irresponsibly is opposing even their own savings, savings that they themselves initiated and banked in their last Budget. So in those circumstances, we continue to work to implement all of our Budget measures as efficiently as possible.
FRAN KELLY: But the change is bigger than that, bringing in a $7 co-payment, the Government surely wouldn't countenance trying to do that without the Senate signing off on it, would you?
MATHIAS CORMANN: We are focused on delivering the Budget measure that was announced in the Budget in May and that requires legislation. That legislation is due to come into effect on 1 July 2015, so we have a bit of time to work our way through that.
FRAN KELLY: The Government has got some of those measures through the Senate, that you were just talking about there, with the cooperation of the Palmer United Party. The Palmer United Party appears to be fracturing. Jacqui Lambie in all likelihood will quit the party and now Clive Palmer has accused Jacqui Lambie of being a plant of one of the major parties. Can you rule out the Liberal Party planting her?
MATHIAS CORMANN: I am not going to get myself into the middle of the Palmer United Party matters. That is a matter for them. She is most certainly not a plant on behalf of the Liberal Party.
FRAN KELLY: She's not?
MATHIAS CORMANN: Absolutely not.
FRAN KELLY: Is the fracturing of PUP, is that going to make things more difficult for the Government in the Senate? Make it close to unmanageable for you?
MATHIAS CORMANN: Well the situation is as it was before. We have got to continue to convince six Senators to support our legislation in circumstances where Labor and the Greens are opposed to our legislation. The circumstance we find ourselves in is that Labor is now under Bill Shorten opposing their own savings, savings that had been initiated under Kevin Rudd and Julia Gillard. Bill Shorten is not strong enough to convince Labor to keep supporting them. And we have a circumstance where the Greens under the leadership of Christine Milne are fighting for regular reductions in the real value of the excise on fuel. Christine Milne right now is fighting to ensure there is a windfall gain for big oil companies across Australia. That is the circumstance where of course we have to continue to work with crossbench Senators in the Senate and ensure we can convince six out of eight to support what we are putting forward.
FRAN KELLY: You couldn't convince enough Senators to pass your FOFA changes, your financial advice changes, they were overturned last week after Jacquie Lambie and Ricky Muir joined forces with Labor and the Greens. Will you continue to pursue these changes given large sections of the community don't want you to and it would seem that some of your own MP's are telling that you should leave it alone?
MATHIAS CORMANN: Well firstly over the last five months the Senate supported those changes twice. These are changes that we took to the last election and no colleague has approached me suggesting that they no longer support those changes which we took to the last election. Really what we are focused on is removing unnecessary and costly red tape which pushes up the cost of advice for people across Australia who are saving for their retirement.
FRAN KELLY: I know that that is your position but the Senate hasn't accepted it this time and some are suggesting that the Government looks to be siding with vested interests, banks and financial planners over the concerns of consumers and older Australians in particular. Are you concerned about the politics of this and is this going to force you either to back away from pushing changes through or to renegotiate with Senator Xenophon?
MATHIAS CORMANN: Fran I completely reject the assertion that we are siding with vested interests. Our focus is entirely on the public interest. Our focus is entirely on the interests of Australians saving for their retirement, because we don't want them to have to pay more out of their retirement savings for accessing advice than they should have to. Last week the Senate did vote to disallow the FOFA regulations, the legislation in relation to FOFA remains before the Senate. We will now, given what has happened last week, return to discussions with relevant crossbench Senators to see as to what extent there is common ground for sensible improvements. Our commitment ultimately is to ensure that we have got the right balance between strong consumer protections but also making sure that access to high quality advice for Australians remains as affordable as possible.
FRAN KELLY: It's a quarter to eight on Breakfast, our guest is the Finance Minister Mathias Cormann. Minister on the Medibank Private privatisation, it is the biggest float since the sale of Telstra, there has been strong interest from retail and institutional investors, it has been a success completely for the Government it would seem on this front. Is that going to embolden you to also look at selling off Australia Post or the Snowy Hydro or the Australian Rail Track Corporation?
MATHIAS CORMANN: We had, up until now, a policy to sell Medibank Private and that sale has now been successfully concluded. In the Budget last year we identified four other potential opportunities for sale, we have initiated scoping studies into the potential sale of the ASIC registry services, the Royal Australian Mint, Defence Housing Australian and Hearing Services Australia. Those scoping studies have not as of yet been received by the Government. Once they have been received we will consider them in the context of preparations for the next Budget. In relation to the other assets that you have mentioned, we have been on the record ruling out those particular privatisations, so no there is no such proposition on the table right now.
FRAN KELLY: In terms of the Medibank sale it is going to raise apparently around $5.7 billion, which is something like $1 billion higher than expectations. All the proceeds will be ploughed into infrastructure under the Government's Asset Recycling initiative. Don't you need the money to pay off debt given the debt and deficit crisis?
MATHIAS CORMANN: Part of repairing the Budget mess we have inherited from the Labor Party is to build a stronger, more prosperous economy. A central part of building a stronger, more prosperous economy is to invest in job creating, productivity enhancing infrastructure in the roads of the 21st century. We have said all the way through that that was a key part of our commitment and right from the word go we have always indicated that the proceeds from the sale of Medibank Private would be reinvested in productivity enhancing infrastructure, because stronger growth not only improves prosperity for everyone across Australia, it also leads to higher revenue for Government over time.
FRAN KELLY: Minister just finally, the ABC's Managing Director, Mark Scott, will today outline the ABC's response to the $254 million that you have sliced from the ABC Budget. Before the election the Prime Minister had said there would be no budget cuts for the ABC. Will the Government accept responsibility for the four to five hundred job losses we are expecting?
MATHIAS CORMANN: Right across the Government, under Government's of both persuasions Labor and Liberal/National for many, many years there have been efficiency dividends applied across the whole of the Government. Every agency, every taxpayer funded agency of Government is subject to an efficiency dividend every year. Only the ABC, the ABC was the only agency which since 1997/8 has not been subject to an efficiency dividend, which has been fully exempted from such an efficiency dividend. In our judgment, the ABC like any other taxpayer funded agency ought to be able to deliver efficiency dividends on a year to year basis. Now Labor in Government when they had applied the efficiency dividend across all other parts of Government never suggested that that was tantamount to imposing punitive cuts on Health, Education or other agencies where that applied under Labor as under the Coalition .
FRAN KELLY: Mathias Cormann, thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.