Senator the Hon Mathias Cormann
Minister for Finance
Date: Monday, 4 May 2015
PAUL KENNEDY: Deloitte Access Economics has likened to it a horror story. Prime Minister Tony Abbott says it will be dull. With a week to go before the Treasurer hands down his second Budget, Finance Minister Mathias Cormann joins us now from Canberra. Minister Cormann thanks so much for your time. Which comparison do you like better for this year’s Budget, a Stephen King novel or that famous painting Scream?
MATHIAS CORMANN: Look it will be our plan to strengthen economic growth into the future and to strengthen job creation. It will be a responsible, fair and measured Budget. It will build on the progress that we have made since last year’s Budget in getting spending under control and putting Australia on a stronger foundation for the future.
PAUL KENNEDY: Now Deloitte Access Economics, were those figures accurate as you read them this morning in the report?
MATHIAS CORMANN: The Budget with all of the numbers will be released next Tuesday. But it is fair to say that since we came into Government we have faced some significant global economic headwinds. We have faced some unexpected challenges. No Government controls what happens to global commodity prices and when you have the price for a commodity like iron ore, which represents 21 per cent of our national export income, go from $120 a tonne when we came into Government to below $50 a tonne at some point, in the mid $50s now, that does have material implications for our Budget and we have been working our way through all of that. We have been focusing on all of the decisions that need to be made to ensure we are in the most resilient position possible, in the face of challenges coming our way and in the best possible position to take advantage of the opportunities in our region.
PAUL KENNEDY: Just for our viewers benefit, that report says that estimates revenues fall shy of the latest official estimates by $5.2 billion this financial year and by $10.8 billion in the next financial year. It also says deficits out to 2017- 18 will be almost $50 billion worse than expected in December. Do you agree with those figures?
MATHIAS CORMANN: I will let the Treasurer release the figures at Budget time next Tuesday. But what I would say is that at any one time and in any Budget there are things that are outside of our control and there are things that are within our control. What is in our control is what happens with expenditure. We have been focusing on reigning in spending, getting spending growth under control. We have been focusing on reducing spending as a share of the economy. We have been focusing on reducing the size of the deficit and on getting ourselves back to surplus as soon as possible, as part of a broader plan to strengthen economic growth and to strengthen job creation.
PAUL KENNEDY: I will just ask you about a couple of those things in a moment. But with those figures we're talking about now and those blowouts, we are also talking about flat wages growth which might make it harder for you to save money and might be significantly harder in that area. What is worrying you most about those things that you mentioned that perhaps are beyond your control? What is giving you the most headaches?
MATHIAS CORMANN: Global economic conditions in an economy like Australia's, which is trade exposed, which is export oriented, are always very relevant to our economic fortunes. That is why in the good times we have got to ensure we put ourselves in the strongest possible position to deal with the not so good times. That is why the Government is working very hard to get our Budget on a stronger foundation for the future, to ensure that we are resilient in the face of global economic challenges and that we are in the best possible position to take advantage of opportunities that no doubt will come our way in the months and years ahead in the Asia Pacific region in particular, which will generate most of the global economic growth in the years ahead.
PAUL KENNEDY: There is something that you can control and that is how you go about negotiating any changes, any policy announcements you make in the Budget. I just want to quote that report again, it says politics is cruelling the efforts at Budget repair and the repair task has grown but the appetite to tackle it has faltered. The Prime Minister has already said this is going to be a dull Budget. Does that mean you have lost the appetite to make potentially controversial policy announcements?
MATHIAS CORMANN: We have absolutely not lost the appetite at all to put Australia on the strongest possible foundation for the future. We are pursuing very important economic reform in that regard. I saw some comments by Bill Shorten this morning trying to lecture the Government on the need to be courageous on economic reform. Let me just say that Bill Shorten doesn’t have any credibility when it comes to lecturing on economic reform because he doesn’t even have the strength to get the Labor party to support their own savings, which they initiated and banked in their last Budget. So, the reason why there has been a level of difficulty in the Parliament is because both the Labor party and the Greens have taken a very reckless and destructive approach to Budget repair, not recognising the challenge they left behind. But despite all of that, we have made significant progress in getting the Budget in a stronger position than what it would have been if we hadn’t pursued the many reforms that we initiated last year.
PAUL KENNEDY: Making that statement and blaming the Labor party and the crossbenchers, isn’t that part of the problem with your previous Budget, that you weren’t able to negotiate as well as you should have?
MATHIAS CORMANN: The Budget is in a much stronger position now than it would have been if we hadn’t initiated and implemented many of the reforms that we put forward in the Budget last year. Yes, there are a number of unresolved issues from last year’s Budget and you will see in the Budget to be delivered next week our proposed approach to the way forward. At the end of the day it has always been thus, no Government in recent memory has had the control of the Senate as such, except for very short period between 2005 and 2007. So every Government usually has to negotiate with the Senate.
PAUL KENNEDY: What are you going to go differently? And I am wondering whether there are policy areas that you are going to maybe hope to use as leverage to get some changes through the Parliament and maybe leverage with those negotiations on other things that you haven’t yet been able to accomplish. Are you looking at it in that way and in framing some of your policies so that you can negotiate on other ideas?
MATHIAS CORMANN: We do believe that there are a range of very important investments we will be putting forward. We have already flagged that we will make a significant effort to help families access affordable, high quality childcare. But in order for the Government to be able to spend more on one area, which is important as part of our economic plan, then we will have to be able to identify and give effect to savings in other areas. So the message to the Labor party will be that, if you want to help us help families access more affordable, high quality childcare, then you also have to help us get some of those savings through the Parliament in relation to other areas.
PAUL KENNEDY: I thought that over the weekend when that announcement was made that that might be central to things. Just are you dropping other things along the way? The Australian is reporting this morning that fees on internet charges is something that has been dropped along the way.
MATHIAS CORMANN: I am not going to comment on Budget speculation. The Budget will be delivered next week and all will be revealed in terms of our plan for the next four years.
PAUL KENNEDY: Mathias Cormann, thank you so much for your time, we appreciate it.
MATHIAS CORMANN: Always good to talk to you.