The Conversation – Michelle Grattan

Senator the Hon Mathias Cormann
Minister for Finance






Leadership, Budget

MICHELLE GRATTAN: Welcome to The Conversation’s politics podcast, I’m Michelle Grattan. Liberal’s MPs hoped the Government would consolidate over the summer. Instead they returned to Canberra next week, with the party divided, Tony Abbott’s leadership under pressure and calls for a spill. Finance Minister Mathias Cormann is one of the senior Ministers who has been out strongly defending his leader. Mathias Cormann, welcome to the podcast. 

MATHIAS CORMANN: Good to be back, happy new year. 

MICHELLE GRATTAN: And to you. Do you think there will be a mood for a spill in the party room next week, or will the critics back off.  

MATHIAS CORMANN: The Prime Minister enjoys the unanimous support of his Cabinet. I believe he enjoys the overwhelming support of the party room. There is no alternative candidate. Tony Abbott is a strong and effective Prime Minister. We have a job to do, which is to continue to build a stronger more prosperous economy, create more jobs and to ensure Australia is safe and secure. That is the job that we should be focusing on.  

MICHELLE GRATTAN: In a perverse sort of way though, if the critics did move next week, might not that actually help the Prime Minister? Couldn’t it clear the air?

MATHIAS CORMANN: Next week we will have a party room meeting, which will be the first time we will convene as a party room since late last year and it ...  interrupted 

MICHELLE GRATTAN: And this is of course the Liberal party room as well as the joint party room?

MATHIAS CORMANN: That’s right. It will be an opportunity for issues of concern to be raised. The party room is the right forum for any Member of Parliament who has feedback from the electorate, or who has issues in relation to the direction of the Government that they’re concerned about, they should raise in the party room. That’s where these issues can be resolved. 

MICHELLE GRATTAN: There was an effort by the Prime Minister to clear away what he described as barnacles before Christmas. There was quite a substantial reshuffle and that was reasonably well received. How did things deteriorate so badly over the summer?  

MATHIAS CORMANN: In 2014, we had to make some difficult though we would argue, necessary decisions to put Australia on a stronger foundation for the future. A number of those decisions were unpopular. We’ve had to make some adjustments in relation to some of our proposals on how best to proceed. Clearly this has had an impact on our popularity. The Prime Minister has talked to a lot of people over the break. He’s listened, he’s learned, he’s taken action. From my point of view, I believe it’s now important for all of us to get behind the Prime Minister and give the team, give the Government the best possible opportunity to do the best we can to put Australia on a better, stronger foundation for the future. 

MICHELLE GRATTAN: Despite whatever talking to people has occurred, we had an Essential poll out this week and it found that nearly three-quarters of people thought that the Prime Minister was out of touch with ordinary people and only 27 per cent thought he was trustworthy. How does the Government go about turning around those very fundamental perceptions?  

MATHIAS CORMANN: We obviously have some work to do and the Prime Minister on Monday in a very strong speech to the Press Club set out his plan for the year ahead, building on the progress we made last year. You have to remember, back in 2013, when we came into Government, we inherited a very challenging situation. The country, the economy, the Budget were all heading in the wrong direction. We had a weakening economy, rising unemployment, a rapidly deteriorating Budget position. In 2014 the economy was growing more strongly, jobs were growing more strongly. We had 600 jobs created across Australia a day. More than three times as many than the year before. We have made progress in repairing the Budget so I guess what I would say is we are heading in the right direction now as a country, as an economy and with the Budget. We have made progress. It is important to build on the progress we made last year and not to put that at risk. 

MICHELLE GRATTAN: As a Senator, you are perhaps somewhat less exposed to the public backlash against the Government than some of your Lower House colleagues. But what sort of feedback have you been getting personally from the electorate? 

MATHIAS CORMANN: We are all in this together. We are all focused on doing the job we were elected to do and that is to deliver on our commitments to build a stronger, more prosperous economy, create more jobs, help families and maintain our national security. Last year we made significant progress. We scrapped the carbon tax. We scrapped the mining tax. We reduced red tape costs for business by more than $2 billion a year. We started to roll out our massive infrastructure investment program. We finalised three significant Free Trade Agreements with China, Japan and South Korea. There is more work to be done, but it is important that right now we don’t make the same mistakes as the Labor party in Government in the previous administration. It is very important that we don’t become a carbon copy of the previous failed Labor administration. We owe it to the Australian people to be successful as a Government. The Australian people need this Government to be successful. So all of us need to just get beyond the issues that have arisen over these past few days and weeks, resolve the issues in the party room next week and then move forward as a strong and united force again and provide strong, good and stable Government. 

MICHELLE GRATTAN: On Monday when he was appearing at the National Press Club, Tony Abbott put the interesting and indeed rather provocative proposition that once the electorate choose a Prime Minister, elect a Government, dispatching him or her is a matter for the people rather than the party. Kevin Rudd argued the same sort of proposition in 2013. Do you agree with that? 

MATHIAS CORMANN: I don’t believe that it was a provocative thing for the Prime Minister to say at all...interrupted 

MICHELLE GRATTAN: Some of your colleagues do. 

MATHIAS CORMANN: The Labor party ended up using the Prime Ministership like a play thing for Labor factional bosses. That should never happen in Australia ever again. We in the Liberal party elected our leader in the lead up to the last election. We elected Tony Abbott as our leader in the lead up to the last election. The Australian people elected us into Government with Tony Abbott as our leader. They elected Tony Abbott as our Prime Minister. We are less than halfway through our first term in Government. We have made significant progress in implementing our agenda so far. There is more work to be done. In my judgment, Tony Abbott is a strong and effective Prime Minister. He deserves the opportunity to continue to lead the charge in implementing our agenda for stronger growth and more jobs and he deserves the opportunity to be accountable for our performance as a Government to the Australian people at the next election and to put forward our agenda for a second term. 

MICHELLE GRATTAN: When we think about what is happening federally and what happened in Queensland at the weekend, one wonders whether those who say that really the country becomes ungovernable in modern day politics and reform is nearly impossible without getting thrown out. Do you agree with that proposition? 

MATHIAS CORMANN: I am much more optimistic than that. I don’t believe that reform is impossible. There are certainly lessons to be learned from the experience in Queensland and I guess from the situation that we find ourselves in today as a Government. The answer is not to give up on reform. The answer is to find new and better ways to engage with the Australian people about the issues that we are seeking to address in the national interest. To explain the reasons why we are doing what we are doing and why what we are doing is necessary if we want to protect our living standards today and into the future and if we want to build better opportunities for our children and grandchildren.

MICHELLE GRATTAN: Now behind the scenes of all the colour and movement of the politics that we are seeing, the Budget preparation is presumably well under way by now.


MICHELLE GRATTAN: Will your Government’s second Budget be easier or harder to prepare than the first?

MATHIAS CORMANN: The second Budget will build on the progress that we made in our first Budget. What is our objective as a Government? Our objective as a Government is to build a stronger, more prosperous economy where everyone has the best possible opportunity to get ahead. This has involved getting rid of some bad Labor taxes, reducing red tape, rolling out infrastructure investment and a whole range of other things, but it has also involved the important task of Budget repair. Not only did we inherit a very bad starting position when we came into Government, we inherited a very bad forward trajectory. An unsustainable spending growth trajectory and an unsustainable debt growth trajectory. We can’t continue to underwrite our living standards, we can’t continue to pay for our daily living expenses by borrowing from our children and grandchildren. Because if we continue to live at the expense of our children and grandchildren we are forcing them to accept higher taxes or deeper cuts down the track in order to pay, not only for their day-to-day expenses, but for a significant share of ours with interest. That is not fair. It is not fair that we would continue to stay, for any longer than necessary, in a situation where we are funding a significant proportion of our day-to-day expenses at the expense of our children and grandchildren.

MICHELLE GRATTAN: Tony Abbott made it clear this week that the Budget won’t be as harsh on individual households as the last one was. Doesn’t this mean, given the Senate’s failure to pass some of the last Budget, that you will be backing off in fact on this task of budget repair that you say is so necessary?

MATHIAS CORMANN: That is not what the Prime Minister said. So in the first Budget we did put forward a lot of structural reform and contrary to media perceptions and contrary to what people might think, most of the Budget has actually been implemented and most of the Budget repair effort in last year’s Budget has actually been given effect to. There are a number of more high profile structural reforms such as the proposal to introduce a modest co-payment, such as our higher education reforms, that are still subject to ongoing conversations. But fundamentally, most of the Budget last year has been dealt with. We are still dealing with some of the savings measures incidentally out of Labor’s last budget, which Labor failed to legislate and which Labor under Bill Shorten now is opposing, because Bill Shorten is even more reckless and more irresponsible than Julia Gillard and Kevin Rudd were, but that is an aside. The truth is that in 2015 for our next Budget, the focus will be on strengthening economic growth, more jobs, helping families, maintaining our national security and in terms of making sure that the task of budget repair continues to be progressed, our commitment is that wherever there is a requirement for new spending on higher priority areas that that is offset, fully offset, by reductions in spending in comparatively lower priority areas. Beyond that, there won’t be the same requirement to make the same significant effort as we did in last years’ Budget.

MICHELLE GRATTAN: Doesn’t that amount though to going slowly on the repair job?

MATHIAS CORMANN: No it doesn’t. We have always said that we would get the Budget back into surplus as soon as possible, and as I have said in an interview with you before, as soon as is responsible. There is always a balance to be had. It is always important to get the right balance here to ensure that we continue to facilitate stronger growth, more jobs and that we ensure support for families is appropriately well targeted.

MICHELLE GRATTAN: The Prime Minister has talked much this week about more consultation, not just with the public but also with his own troops. Will there be more consultation with the backbench about the Budget than there was last year? When it comes to Budget framing, I would have thought that consultation is quite a tricky matter given the need to have confidentiality because you can’t give all the figures out to backbenchers and so on?

MATHIAS CORMANN: The Prime Minister made a number of announcements on Monday in his speech to the Press Club on how he will ensure that more consultation with the backbench happens as a matter of course. One of the proposals that he put forward, one of the measures he put forward, is regular meetings of the Cabinet with the Chairs of our backbench policy committees,. There are a number of other proposals. Essentially, over the last year we have operated under the same structure that was in place under the Howard Government. Tony Abbott has added further to that by making sure that there are further structural and systemic avenues for regular consultation and I am very confident that that will further improve our decision making.

MICHELLE GRATTAN: Obviously the Senate will again be critical to how the Government goes this year. We have seen Jacqui Lambie break with PUP last year. Do you think the crossbench might become even more fragmented in the months to come?

MATHIAS CORMANN: The problem is not the crossbench in the Senate. The problem is Labor. Labor under Bill Shorten is in complete denial about the state of the Budget and the state of the economy that they left behind. They created a complete mess over their six years in government. When it comes to the economy, they kept adding more and more lead into the saddle bag, through more new taxes, the carbon tax, the mining tax and the like. Making it harder for our economy to be as successful as we could be. More red tape and so on. In relation to the Budget, they ended up ramping up expenditure massively beyond what was affordable. At a time when revenues were falling on the back of lower commodity prices, lower terms of trade, the Labor Party decided to lock Australia in to significant additional increases in expenditure. Not just the crisis level spending in the wake of the GFC, but in the period beyond the forward estimates at the time of the last election, Labor locked in significant increases in expenditure which Labor knew were not affordable. Now we are trying to address those structural problems. Instead of being part of the solution, Bill Shorten is playing short term politics and in the end I believe that he will be found out and I think in the lead up to the next election, he will be found wanting. Because he says he is committed to a surplus. He says he is opposed to most of our savings measures. He is not telling us where he would cut or where he would increase taxes in order to make up the ground that has been lost under the six years of bad Labor Government in the past. 

MICHELLE GRATTAN: But nevertheless, given the polls and everything else, Bill Shorten is likely to hang tough for a good time yet. 

MATHIAS CORMANN: There is 18 months to go...interrupted 

MICHELLE GRATTAN: So you’ll be thrown back on having to try and get your measures through via those crossbenchers? 

MATHIAS CORMANN: There is no doubt that Bill Shorten right now is lazy. He believes that he doesn’t have to do the hard yards to get himself into a position to be competitive at the next election. There is no doubt about that. You don’t become Prime Minister of Australia, you don’t win Government at a federal level in Australia by just sliding in. You don’t just slide into the Prime Ministership in Australia. Bill Shorten eventually will be found out. 

MICHELLE GRATTAN: But surely the Government has to lift its game to force Bill Shorten into doing the hard yards? 

MATHIAS CORMANN: We have to lift our game in order to deliver better outcomes for the Australian people, in order to build a stronger, more prosperous economy. I don’t believe that Bill Shorten has the capacity to lift his game. I don’t believe that he has what it takes to convince Labor to do what needs to be done in order to put Australia on a stronger foundation for the future. 

MICHELLE GRATTAN: Mathias Cormann, you and the Government have some testing times ahead. We thank you for talking with us today and that is all from The Conversation’s politics podcast. Thanks to my producer Matt Dawson. I am Michelle Grattan. We will be back with you soon. 



Senator the Hon Mathias Cormann, Minister for Finance, Perth