5AA with Leon Byner

Senator the Hon Mathias Cormann
Minister for Finance






South Australian economy, Intergenerational Report, Higher Education Reforms

LEON BYNER: The Australian economy is in need of a restructure as unemployment has visited many communities at levels not seen for many years. This occurs as the mining boom slows, China restructures its economy, Europe falters, our manufacturing is almost extinct and we are having trouble breaking into hi-tech markets. To cap it off there are debates about the ability of our education system to compete with those countries that are now the manufacturing giants. South Australia is seriously considering going into the nuclear industry for the first time. It has been suggested that this holds rivers of gold in revenue and could transform our State. Meanwhile, South Australia has been the defence research and manufacturing base for Australia for over 70 years. But the current Federal Government doesn't seem to appreciate South Australia's historic strength, not just in ship building but in hi-tech weapon systems. The transformation funds used by Governments to take workers from the car industry to other sophisticated endeavours has not worked in the past and the same mistakes shouldn't simply be repeated with Holden. It also has to be said that SA has a deeply entrenched unemployment issue that has created generations of welfare dependency and none of the previous attempts to fix this have worked. So we need new and creative solutions and all of them need to take political courage which I don't know that we have seen recently. However, let's talk to the Federal Finance Minister Mathias Cormann. Mathias thanks for joining us today. First of all, how do you view South Australia compared with the rest of the Federation?

MATHIAS CORMANN: I was in South Australia last week. I think South Australia is a great State. It faces a few challenges at present, but all of us in the Federal Government want to see South Australia to be as successful as it possibly can be. We want everyone, every business in South Australia to be successful and reach its full potential.

LEON BYNER: That's a nice motherhood statement and good to hear.


LEON BYNER: Well I don't deny that. The question is, how?

MATHIAS CORMANN: I think it is important for South Australia to continue to diversify its economic base. That is self-evident. What we would like to see is for the South Australian State Government to work with us on ways to reduce the cost of doing business in South Australia and to help facilitate the growth of new industries for the future.

LEON BYNER: How would you like to see SA reduce the cost of doing business?

MATHIAS CORMANN: For starters, they should start working with us rather than working against us. Recent efforts where the State Government was running highly politicised partisan campaign ads against the Federal Government are not very conducive to working together for the best interest of people in South Australia and for the best interest of the State moving forward.

LEON BYNER: So okay, but again, how do you think, you're talking maybe about the $1 million campaign recently on this $190 council rebate, we will get to that shortly.


LEON BYNER: But in the meantime though, you said SA reducing the cost of doing business, how?

MATHIAS CORMANN: We have to improve productivity. We have to make sure we streamline approvals for various business activities moving forward. We have to make sure that we do everything we can to get the expansion of the Olympic Dam project off the ground. It is quite promising to have heard the South Australian Premier talk recently about wanting to pursue opportunities in relation to the nuclear industry. I think it will be good if the South Australian Government was a bit more constructive in engaging with us about the many opportunities that will come for South Australia from the procurement of the next generation of submarines, which will deliver significant opportunity for South Australia irrespective of the configuration that emerges in the context of how those submarines are procured. There is lots of opportunity really for the Federal Government and the State Government to work together for the benefit of South Australians. We are rolling out record investment in infrastructure into South Australia, $944 million for the North-South Road Corridor, which is all about improving freight transport productivity in Adelaide. So there are lots of things that we can work on together to help strengthen economic growth in South Australia.

LEON BYNER: There is one area where the Federal Government, according to Jamie Briggs, and the State Government are at odds here, and that is that our Treasurer wants to use money from an Asset Recycling Fund to fund part of the Southern, the Darlington project which is worth quite a bit of money. You guys are saying no. Are you going to stick to your guns on that?

MATHIAS CORMANN: There are a couple of principles here. There has got to be a sale of a State asset which qualifies in order for any State Government whether that is South Australia or any other State Government to be able to access incentive payments through the Asset Recycling Fund. Then there has to be reinvestment into genuinely, productivity enhancing economic infrastructure which helps strengthen economic growth. Jamie Briggs is actually responsible for that part of Government so whatever he says in relation to these matters will be very well informed. The key principle here is that we are wanting to pursue micro-economic reform which is encouraging States to sell assets which would perform better in private hands for the economy and also reinvest the capital that is released through that process into genuinely productivity enhancing, genuinely economy strengthening and job creating infrastructure for the future.

LEON BYNER: Do you actively encourage South Australia and the Government to pursue a nuclear waste facility that many suggest would be worth a lot of money. Would you actively support this?

MATHIAS CORMANN: I have been very encouraged by the Premier being prepared to have a conversation about what opportunities there are for South Australia in the context of a nuclear industry. South Australia has got the fantastic BHP Olympic Dam project at the heart of South Australia. They are a great and significant employer. I think that they could do even more into the future. I think that there are other opportunities for South Australia connected to the nuclear industry. There is a process underway now in South Australia which we will monitor with interest. If there are opportunities for us to support what the State Government is doing in that space, I am sure we will take them up.

LEON BYNER: So you do fully support not only an active debate. Because it has been suggested that this is the economic way out for South Australia's woes. Do you agree with that?

MATHIAS CORMANN: It is one opportunity to diversify South Australia's economic base. In terms of South Australia moving forward, in terms of putting South Australia on a stronger economic foundation for the future, diversifying the South Australian economic base is going to be very, very important. Whatever we can do working with the State Government in South Australia to bring that about we will.

LEON BYNER: Does the Abbott Government have a Plan B if the higher education reforms don't pass through the Parliament?

MATHIAS CORMANN: We are committed to the higher education reforms. These are very important reforms to ensure that our universities can compete with the best universities in the world. They are very important to ensure that our students in South Australia and across Australia can have access to the best possible university education. Don't take my word for it. We have got people like former Federal Labor Education Minister John Dawkins who is supportive. Former Labor Foreign Minister Gareth Evans supports our reforms, Peter Beattie has described our reforms as a no-brainer. I mean the Labor Party under the leadership of Bill Shorten right now is just playing politics. They are standing in the way of very important reforms for Australia.

LEON BYNER: Is the Coalition really prepared to follow through on the threat to cut research funding when you know as well as I do, I mean we are going to do something on this a bit later on, but in the last week we have had two major breakthroughs in science that have a global significance. One is the non-evasive use of other technology, rather than having to prick yourself with a needle if you're a diabetic to get your sugar reading, the other one which is very exciting is potential treatments for Alzheimer's. Would you seriously be as a Government saying to these people, we are going to be putting your funding on hold until we can get other reforms through, which the Senate will block?

MATHIAS CORMANN: We want to keep the research funding going. We want to keep the funding for the National Collaborative Research Infrastructure Scheme going. The problem is that the previous Labor Government defunded the National Collaborative Research Infrastructure Scheme. We made a decision on coming into Government to extend that funding by one year and Christopher Pyne as the Education Minister has worked very hard to identify funding in order to keep that very important scheme going. The problem is if we don't get the higher education reforms through the Parliament we don't get the measures through that are necessary in order to make that funding available. The important point to remember here is that Labor defunded the National Collaborative Research Infrastructure Scheme we want to keep the funding going, but ... interrupted

LEON BYNER: Mathias that may be the case, but you are in Government right now…


LEON BYNER: I think the controversy of this is that you are linking something which is of world beating significance, right you are linking something to an economic measure that actually has got very little to do with these breakthroughs except that you want to get the money from the privatisation if you like or the allowing the universities to compete which means you can put less money in and use that money for research. But nevertheless you are still holding over the Senators a spectre which I think is terribly unfair.

MATHIAS CORMANN: I don't think it is terribly unfair at all. It is just the reality. The reality is that there was no money in the Budget for it. Christopher Pyne found the money. In order to find money you have to free up some space elsewhere. We can't just print money in order to keep handing it out. What we have got to do is, if we want to spend more in a higher priority area, then we have to spend less on a comparatively lower priority area. That is the only way that you can continue to get yourself into a situation where the Budget gets back under control. Not only did we inherit a Budget that was deteriorating rapidly, we inherited a Budget where there was no money allocated at all for the National Collaborative Research Infrastructure Scheme into the future. We want to fix that, but the only way you can spend more on something that you think is important is if you spend less on something else. Where else would we get the money from?

LEON BYNER: This is a point because as we understand it, you are still spending more than you said you were going to, since you came to office.

MATHIAS CORMANN: In relation to what?

LEON BYNER: Government spending has increased.

MATHIAS CORMANN: Government spending increases but it increases by much less. We inherited a trajectory where spending was increasing by about 3.7 per cent above inflation, we have reduced that down to about 1 per cent above inflation on average per year over the forward estimates and 2.7 per cent over the decade. We inherited a situation and the Intergenerational Report showed that from the previous government where Federal spending as a share of the economy was heading to 37 per cent within a few decades. We have brought that down to about 31 per cent so far. We want to do more. The point is, you would have seen all of the difficult decisions that we have had to make so far, what the impact of those has been in terms of the public perception of our Government. There is more work to be done, there is no two ways about it, but we have made significant progress already.

LEON BYNER: Has the Prime Minister changed his tune on the so called China Bank, because I know he had initial concerns, he said so.

MATHIAS CORMANN: We were always keen to be a part of it, subject to certain conditions. We were very keen to ensure that it was a genuinely multilateral organisation and not just an instrument of one country's foreign policy arsenal. We were always keen to be part of an infrastructure investment bank that was genuinely multilateral across the Asian region. So there have been further conversations and we believe some of the changes that we have been looking for are emerging. There are obviously some decisions to be made and it will be a matter for the Treasurer and the Foreign Minister to explore that further if and when we are in the position to make relevant announcements.

LEON BYNER: Mathias you have been critical in this discussion this morning, very early on in the piece of the State governments willingness to spend over a million dollars on partisan political advertising, yet it is our understanding that your Government is about to do the same thing back.

MATHIAS CORMANN: We don't spend any money on party political advertising. We do invest in information about what it is the Government is doing and why. That is appropriate. But essentially what the South Australian Government has done, having made a complete mess of their own budget well before we became the Federal Government, they ran a partisan campaign against the Federal Government because we didn't think it was appropriate for the Federal Government to pay, to help pay, for State Government concessions. That was just completely inappropriate and no wonder they have made such a mess of their own Budget, because I now understand that they actually have to continue or will continue to fund those State concessions… interrupted

LEON BYNER: So the Feds are not about to conduct, because when we spoke to Jamie Briggs and others in your party, they have intimated that there will be a hit back campaign not dissimilar to which you have criticised. Not the case?

MATHIAS CORMANN: No we will not be running a partisan campaign, absolutely no way.

LEON BYNER: Hang on a minute, you are saying not partisan, but are you going to run an advertising campaign to counter what Labor have said?

MATHIAS CORMANN: In relation to what?

LEON BYNER: In relation to the $1.1 million they have spent on the business of pensioner concessions.

MATHIAS CORMANN: I am not aware of any campaign …interrupted

LEON BYNER: You're not aware of it?

MATHIAS CORMANN: I am running a campaign right now on your programme and it doesn't cost the taxpayer anything.

LEON BYNER: No. And it won't either.


LEON BYNER: Alright, Mathias, thank you for joining us. Federal Finance Minister Mathias Cormann with some very interesting revelations there this morning.


Senator the Hon Mathias Cormann, Minister for Finance, Perth