Transcripts → 2015


ABC 720 Perth - Mornings with Geoff Hutchison

Senator the Hon Mathias Cormann
Minister for Finance


Date: Wednesday, 6 May 2015

Commonwealth Support for Infrastructure Projects in Western Australia

GEOFF HUTCHISON: In about 27 minutes from now the Prime Minister Tony Abbott, Finance Minister Mathias Cormann and both Colin Barnett and Mike Nahan will hold a Press Conference during which the Feds will hand over about half a billion dollars to WA to be spent on road funding infrastructure. A payment of acknowledgment it seems that the combined fall in iron ore prices and a diminishing share of the GST is hitting the State’s finances hard. I am joined by the Federal Finance Minister Mathias Cormann. Good morning to you Senator. 

MATHIAS CORMANN: Good morning Geoff. Good morning to your listeners. 

GEOFF HUTCHISON: What actually is coming WA’s way today? 

MATHIAS CORMANN: The story in the West Australian today captures it pretty well. Essentially what the Federal Government is doing is boosting our investment in infrastructure projects across Western Australia to the tune of just below $500 million. Effectively that helps maintain revenue for WA at the same level as if the GST revenue next year was maintained at this year’s relativity. 

GEOFF HUTCHISON: Okay, let’s go to those details, half a billion dollars for specifically targeted road funding projects, the Mitchell Freeway extensions from Burns Beach Road in Joondalup to Hester Avenue in Clarkson. Money for the North Link WA project, including $84 million for the Tonkin Highway, $54 million for the Swan Valley Bypass and an upgrade of the Reid Highway at Malaga Drive. How is the allocation determined? Who said you can have some money, but this is how it is to be spent? 

MATHIAS CORMANN: There was a discussion between the Prime Minister and the Premier and the State and Territory Premiers at COAG a few weeks ago, where the whole issue of GST sharing arrangements was discussed. There was a conversation there about how the current issue can best be addressed over the medium to long term. The Prime Minister and the Premiers agreed that the best way to resolve this over the long term was through the Federation White Paper. But in the meantime, we also said that we would work on a bilateral basis with the State Government here in Western Australia on how best to support WA through this current challenge given that both its GST revenue and its revenue from iron ore royalties are projected to fall sharply next financial year. So the WA Treasurer Mike Nahan and I sat down together and we worked through the specifics on how that could best be achieved and yesterday, the Prime Minister and the Premier reached a formal agreement. 

GEOFF HUTCHISON: Did Mike Nahan say we want more than $500 million? I think some of the reports were up to about $660 million. Was it you saying well you can have money but it has to be spent on roads? Or was that a shared point of view? 

MATHIAS CORMANN: So the $660 million figure related to WA’s expectation around what the impact of lower GST shares would be over two years. What we have said is, let’s deal with the impact in 2015-16 in the first instance and let’s cross the bridge in relation to the subsequent year once we know what the Commonwealth Grants Commission actually determines. In terms of the allocation of these additional resources to infrastructure projects, that was a common understanding between the Federal Government and the State Government that that was the best way to proceed. 

GEOFF HUTCHISON: Senator, are there strings attached?

MATHIAS CORMANN: This is a Federal Government contribution to important road infrastructure projects across Western Australia, which we believe will help boost economic growth across Western Australia and it is in recognition of what is happening with WA’s share of the GST and what is happening with iron ore royalty revenue right now and the fact that we recognise that there is a need for continued investment in economic infrastructure to boost jobs and boost opportunity. In terms of strings attached, we would like to see more microeconomic reform pursued by the State Government here in Western Australia. We are very confident that that will happen and in recent weeks you would have seen that a number of announcements have already been made and we believe that there will be some more announcements in coming weeks. 

GEOFF HUTCHISON: The Treasurer was fairly clear though when he’s talked about this in the past. He’s talk about the sale of power poles and wires, something Mike Nahan has said he won’t do. 

MATHIAS CORMANN: We want to see further microeconomic reform including some further asset sales where that is sensible. I guess what we have said is that if Western Australia was to proceed with some further sensible asset sale opportunities, such as the potential sale of the TAB, that that will enable Western Australia to access further federal incentive payments, because if the proceeds from any such sale are reinvested in job creating economic infrastructure, the Federal Government, through our Asset Recycling initiative, will provide additional funding support to help these projects get to fruition. 

GEOFF HUTCHISON: Do you agree though that the State Government has rather, not necessarily dragged its feet, but been hesitant to embrace these things. I’ve put it to Colin Barnett in the past and to Mike Nahan and I know next week we are likely to hear of the sale of the TAB, but the State Government under Colin Barnett does not want to go as quickly as the Treasurer would like the State Government to do. Now are there any conditions on this half a billion dollars that says ‘to get this money, you will do these things’?

MATHIAS CORMANN: The Treasurer and I are both on the public record as saying that we would like to see the Western Australian State Government be a bit more ambitious and have a bit more of a sense of urgency when it comes to pursuing microeconomic reform. On the basis of the conversation that I’ve been having with Mike Nahan, I’m very confident that there will be some further progress in coming weeks and that will be good for the Western Australian economy and it will be good for the national economy.

GEOFF HUTCHISON: My guest is Senator Mathias Cormann. Senator, some breaking news you might be curious about. Christine Milne has apparently just resigned as the leader of the Greens and won’t be contesting the next election. Does that come as a surprise?

MATHIAS CORMANN: That does come as a surprise. She certainly didn’t share her intentions with me, so that’s the first I’ve heard of it. 

GEOFF HUTCHISON: I wouldn’t have expected her to, but a response from you that she has pulled the pin?

MATHIAS CORMANN: When somebody brings their political career to a close, it’s always an opportunity to reflect on the contribution they’ve made. Christine Milne and I come from very different perspectives, but there is no doubt that she has been a passionate advocate for her cause and when somebody retires, or announces their imminent retirement, we wish them well. 

GEOFF HUTCHISON: We will get more information on this throughout the morning. Just returning to the issue at hand, where do you find half a billion dollars?

MATHIAS CORMANN: This comes out of our infrastructure budget and the specifics in terms of how all of the funding is put together and the offsets and the savings that we have identified in other areas, that will be part of the Budget that we release next Tuesday. 

GEOFF HUTCHISON: Okay. The last question, WA has in recent times been very safe Liberal heartland but recent opinion polls do suggest that several of those seats could disappear in a Federal Election next year. Is this a part payment for years of loyal support?

MATHIAS CORMANN: We have worked very hard to do the best we can to get a better deal for WA, to do the best we can to put Western Australia on a stronger foundation for the future. Getting rid of the mining tax, getting rid of the carbon tax, stopping the boats indeed are all things that were very important from a Western Australian point of view. Having said that, we don’t take anything for granted and we will continue to work hard and certainly today, as part of our efforts over a very long time as a WA Liberal team, as a team of Federal Liberal Members and Senators, to do the best we can to get the best possible deal for WA.

GEOFF HUTCHISON: How strongly have you argued federally for a better share of the GST for Western Australia because my recollection is that you have, given that your responsibility is to the national finances, you have been less keen to push the argument than others.

MATHIAS CORMANN: As a Minister in a national Government, absolutely my responsibility is to consider all of the legitimate perspectives from different parts of Australia and to be part of the team that makes judgements in the national interest. I believe that the judgement that we’ve made in relation to the announcement today is a judgement in the national interest. The Federal Government, the Australian Government, does recognise that for the share of the GST in any state to fall below 30 per cent is a problem. It is not something that is nationally sustainable, which is why the Prime Minister has addressed the issue through COAG. That is why the Prime Minister has indicated that it will be part of the conversation in the context of the Federation White Paper. These sorts of conversations take time. It is a matter ultimately where all of the states and territories have got to come on board and come up with a way forward that is nationally sustainable and nationally fair. But in the meantime, as a National Government, we believe what we are doing in providing additional support for important infrastructure projects in Western Australia is an important recognition of the particular challenges that Western Australia is facing at this point in time

GEOFF HUTCHISON: Thank you for talking to me this morning.

MATHIAS CORMANN: Always good to talk to you.