Senator the Hon Mathias Cormann
Minister for Finance
Date: Monday, 23 March 2015
MICHAEL ROWLAND: It is Federal Parliament’s last sitting week before the Government brings down its second Budget in May. The Finance Minister Mathias Cormann joins us from Parliament House. Mathias Cormann, good morning to you.
MATHIAS CORMANN: Good to be here.
MICHAEL ROWLAND: Federal Parliament is back today but normal business will be put to one side for condolence motions for the former Prime Minister Malcolm Fraser. What do you believe is his legacy to the country?
MATHIAS CORMANN: He has made a significant contribution both during his period in Parliament as well as since he left the Parliament. He was not only our Prime Minister for seven years but he was a very successful Education and Defence Minister and then he has made a significant contribution since he left the Parliament continuing to contribute to public debate.
MICHAEL ROWLAND: In his later years, of course, he resigned from the Liberal Party and was a very harsh critic of what the Liberal Party had become. Has that ever given you any pause for thought?
MATHIAS CORMANN: We make judgments based on the circumstances that we face today. As a former Prime Minister we always listened very carefully to what he had to say, but we still had to make judgments based on the circumstances that we face today and make the best possible decisions in our national interest. It is a matter of public record that we had differences of opinion in relation to a series of public policy matters. Today really though is a day to reflect on the sad passing and on the tremendous contribution that Malcolm Fraser has made to Australia over many, many decades.
MICHAEL ROWLAND: Would you describe Malcolm Fraser as a great Prime Minister?
MATHIAS CORMANN: I would absolutely describe him as a great Prime Minister. He is clearly a giant of Australian politics and today is an occasion for the Parliament to reflect on the contribution that he has made and on his sad passing.
MICHAEL ROWLAND: Okay, of course turning to politics now, you have been busy as Finance Minister preparing for the Government’s second Budget which is now seven weeks away. You are getting started already with at least one spending initiative. The $230 million announced this morning to help tackle homelessness. What is this one about?
MATHIAS CORMANN: The Labor Party cut funding to homelessness based organisations across Australia. That was never sustainable as a decision. So when we came into Government we extended it by 12 months and today what Scott Morrison is announcing is that pending a review of Federal-State responsibilities in this space, that we will extend funding for organisations providing services to homeless people across Australia with a particular emphasis on domestic violence by another two years.
MICHAEL ROWLAND: You have got one sitting week to go to tackle the billions of dollars, the $30 billion worth of Budget measures from last year still stuck in the Senate. Are you going to persist with that or fly the white flag there?
MATHIAS CORMANN: Last year we set out our plan to put the country on a stronger foundation for the future. All of the measures that we have put forward that we haven’t taken off the table continue to be on the table and continue to be pursued. We have made significant progress since this time last year. The Budget is now in a much better position. Economic growth has been strengthening all throughout 2014. Jobs growth has been strengthening and really this year’s Budget is going to be a matter of building on the progress that we have made last year and making sure that we continue to head in the right direction.
MICHAEL ROWLAND: Indeed the Prime Minister is promising this year’s Budget will in his words be a ‘dull one’. Has the Government gone soft on Budget reform?
MATHIAS CORMANN: Not at all. When you have a change of Government, the first Budget of a new Government is always very significant because it obviously involves a significant change of direction. We inherited a rapidly deteriorating Budget position, an economy which was weakening and rising unemployment and we’ve pursued our policy agenda to strengthen economic growth, to strengthen jobs growth and get the Budget back on track and back under control. Over the forward estimates, spending growth has been constrained to about 1 per cent above inflation, down from about 3.6 per cent under the previous Government. We have been able to constrain medium to long term spending growth down to 2.7 per cent so far, down from 3.7 per cent under the previous Government. There is more work to be done and we will do that in an orderly and methodical fashion. You have got to remember every Budget is a four year planning document. This year we have got one additional year coming into the forward estimates compared to of course the Budget last year. We will just continue to work in an orderly and methodical fashion to ensure that we put the country on the strongest possible foundation for the future.
MICHAEL ROWLAND: Yeah, that’s true, but the Government has also been well aware of the political damage, the huge political damage inflicted on it by that first Budget. Is this why the Prime Minister is essentially moving not to scare the horses so to speak with a Budget that won’t include big spending cuts?
MATHIAS CORMANN: In last year’s Budget we made a whole series of difficult, or we would say necessary decisions to put the country on a stronger foundation for the future. We were on an unsustainable spending and debt growth trajectory. We had to make decisions to get that under control. We have made significant progress. There is more work to be done and we will do that in an orderly and methodical fashion. A lot of the heavy lifting was done last year. If you look at the Intergenerational Report, what it showed is that if all the Budget measures that we put forward last year had been implemented, the Budget would have been in surplus, all other things being equal, for the whole period form 2019-20 all the way through to 2054-55. So we did try to do a lot in last year’s Budget. We have recognised that sometimes you can go faster by going a little bit more slowly. We are obviously conscious of the need to ensure that people across Australia are on board with the structural reforms that we are putting forward.
MICHAEL ROWLAND: The Prime Minister also says when he looks around the world at other countries he is relatively happy with a net debt of 50 to 60 per cent of GDP. Is that good enough?
MATHIAS CORMANN: That is not quite what he said. What he said was that under the previous Government we were on a forward trajectory taking the country to Government net debt of 122 per cent as a share of the economy. As a result of the decisions that the Parliament has agreed to, that we have put forward that the Parliament has agreed to, we are now; we have been able to halve that down to 60 per cent over the period to 2054-55. If all of the measures that we have put forward had been implemented, we would have paid off Government net debt in full by 2031 and we would be in a positive net asset position over the next four decades. The truth is that we remain committed to get the Budget back to surplus as soon as possible. We remain committed to put the country on a trajectory where we can live within our means and where we can pay off Government net debt as soon as possible.
MICHAEL ROWLAND: The Prime Minister has described those crossbenchers who you will still need to negotiate with to get second Budget measures through Parliament as ‘ferals’. Do you agree with that description?
MATHIAS CORMANN: He has not described Senate crossbenchers as that. That is actually not accurate. From where I sit, I work with all of my valued colleagues in the Senate to the best of my ability and there are a range of national conversations that take place in the Senate and I respect everybody’s right to make judgments as a Member of Parliament as they see fit.
MICHAEL ROWLAND: How did he describe the crossbenchers? Because that was a widely reported source from inside the party room that had the Prime Minister using that word.
MATHIAS CORMANN: You should not always accept everything as gospel that is reported. I can assure you that he did not describe crossbenchers in that fashion.
MICHAEL ROWLAND: Okay, we will leave it there. Finance Minister Mathias Cormann, thank you very much for your time.
MATHIAS CORMANN: Always good to talk to you.