Senator the Hon Mathias Cormann
Minister for Finance
Date: Monday, 11 May 2015
VIRGINIA TRIOLI: Finance Minister Mathias Cormann joins us from Canberra. Mathias Cormann, good morning, thanks for taking time.
MATHIAS CORMANN: Good morning.
VIRGINIA TRIOLI: Just coming off the back of what Jenny Macklin told us a short time ago, if the Senate won't pass changes to Family Tax Benefit Part B, will you proceed in any case with this childcare and paid parental leave package?
MATHIAS CORMANN: We want to help families get into work and stay in work by getting better access to cheaper, simpler and more flexible childcare. Now that involves an additional investment of taxpayers' money and in order to be able to pay for it we've got to be able to make savings elsewhere. We have put forward a holistic families package. Obviously the detail and the specifics will be discussed through the Senate in the coming weeks and months, but the principle is that our additional investment in more affordable, more flexible, simpler childcare will have to be paid for by savings elsewhere in the social services portfolio.
VIRGINIA TRIOLI: So to stick with that issue, if the Labor Party won't come to the party and if you can't get that passed through the Senate, you'll continue with this policy which doesn't kick in for some time anyway, you'll just finds the cuts elsewhere?
MATHIAS CORMANN: The Labor Party will have to decide whether they want families to have better access to simpler, more affordable, more flexible childcare and whether they want to help families get into work and stay in work.
VIRGINIA TRIOLI: Well let me just jump in there. They're simply saying they won't do that, they don't they never have signed up to the freezing of Family Tax Benefit Part B. I want to get specific on that this morning. Are you this wedded to this new policy and the new spending associated with it that you'd go ahead with it even if you don't get that element through?
MATHIAS CORMANN: Let's see what Labor says in the next weeks and months. Last year…interrupted
VIRGINIA TRIOLI: Do you believe they'll change their mind?
MATHIAS CORMANN: Last year they said in the first 24 hours that they would be opposed to the Budget Repair Levy, then they voted for it and now they're vowing to keep it. The Labor Party has changed their minds on these things before...interrupted
VIRGINIA TRIOLI: Hang on, we've got to be careful about people changing their mind. Let's refer back to what Tony Abbott had to say originally about the paid parental leave scheme he used to pillory and used to criticise. Now he's abandoned his so called rolled gold one, the one that was his signature policy and gone with a new one. We better be careful about accusing people of changing their minds, no?
MATHIAS CORMANN: Bill Shorten has changed his mind.
VIRGINIA TRIOLI: The Government has changed its mind too Mathias Cormann, hasn't it?
MATHIAS CORMANN: Sure. I'm not disputing that at all and we've explained the reasons for it. The point here is that you can't make assertions on what Labor will or won't do on reflection in relation to our holistic families package. We believe we've got the balance right. We believe that the additional investment in more flexible, simpler and more affordable childcare is an important investment. It is now up to the Labor Party and other parties in the Senate to think whether they agree with us that it is important to help families with getting access to more affordable high quality childcare.
VIRGINIA TRIOLI: The Opposition also has been saying and Jenny Macklin repeated this this morning that you can do this. You can put together that kind of policy which fundamentally it does agree with, without cutting the Family Tax Benefit. In any case you're counting it twice Jenny Macklin went on to say. What's your response to that?
MATHIAS CORMANN: We're not counting it twice. That is Labor economics. That is how Labor delivered record deficit after record deficit. Labor and the Greens yesterday appeared to suggest we should put so called new money into this. The truth is the Government is in deficit. We inherited a Budget in significant deficit from the Labor Party. If we don't pay for this by identifying savings to pay for the additional spending we would have to pay for it by increasing the size of the deficit and that is not something we're prepared to do. We remain committed to getting the Budget back into surplus as soon as possible. We remain committed to putting the Budget on a credible pathway back to surplus.
VIRGINIA TRIOLI: Why are the childcare changes only starting in 2017/18?
MATHIAS CORMANN: We've made judgments based on both what is desirable and what is affordable. As you can see there is still a conversation to be had about making sure that all of the different components of the package can be put in place in an orderly and methodical fashion. This is a significant change. It will be a change for the better. It will be a change that will help families across Australia get into work, stay in work and be in work. We will take our time to ensure that all of this goes through the parliamentary process in an orderly fashion.
VIRGINIA TRIOLI: So this year then what's the narrative, what's the theme of this year's Budget, given that last year we were apparently in a Budget crisis? Where are we now?
MATHIAS CORMANN: We inherited a Budget in very bad shape from the Labor Party. Last year we made a significant effort getting the economy on a stronger foundation for the future, starting the work of budget repair. This year we'll be building on the progress that we've made since last year. We'll be focusing on stronger growth, more jobs, helping families and of course continuing the task of getting the Budget back on a more sustainable foundation for the future.
VIRGINIA TRIOLI: But you've still got a similar Budget position, you're $45 billion in deficit, which was the crisis of last year. If that fundamentally hasn't changed, how can the story or the picture or the narrative according to you be any more rosy?
MATHIAS CORMANN: I'm interested that you seem to know what is in the Budget tomorrow night. The Budget will be delivered by the Treasurer tomorrow night. Let's just see what the numbers are. The Government has been focused on implementing our plan to strengthen economic growth in the face of global economic headwinds. We have been focused on strengthening job creation across the economy. The economy has been growing more strongly and job creation has been performing more strongly than in the last 12 months of the previous Government. We have been focusing on getting spending growth under control, putting our spending growth trajectory on a more sustainable and more affordable trajectory for the future. Obviously the specifics of all of that will be released by the Treasurer tomorrow night.
VIRGINIA TRIOLI: Sure, but those economic headwinds you speak about. Not only are they not only better in some better in some senses, they're worse. We were just reporting a moment ago on China's growth slowing, continuing to slow over the next few years. We all know about the iron ore price. Given that you were speaking to us on this program in such alarmist terms last year and today you're not, doesn't it stretch credibility entirely in the Australian public that we should suddenly believe the story and picture is so different, particularly when you haven't even managed to get some of those key measures through the Senate?
MATHIAS CORMANN: We have been working for about 18 months now, implementing our plan to strengthen economic growth…interrupted
VIRGINIA TRIOLI: I understand you've been working but have you actually achieved it to the point where you can run this different line now?
MATHIAS CORMANN: It would be good to be able to answer one of your questions...interrupted
VIRGINIA TRIOLI: It's okay. We're just clarifying along the way.
MATHIAS CORMANN: This is a very important point because we have been facing additional global economic headwinds. The price of iron ore with iron ore representing about 21 per cent of our national export income, has been falling dramatically. But we have an economic plan, which is adaptable to changing circumstances and what we will show tomorrow is that we are on the right path now, that we are making progress. Whatever happens to global commodity prices would have happened whoever is in Government. We have focused on doing the best we can in relation to those areas that are under our direct control. We have been focusing on making sure that we get spending growth under control, that we put the Budget structurally on a more sustainable foundation for the future and the outcomes of all of that will become apparent in terms of the specific numbers in the Budget papers tomorrow night. But the important point here is the economy now is growing more strongly than what it was towards the end of the Labor Government. Jobs growth is now stronger than what it was towards the end of the Labor Government and the Budget is now heading in the right direction. So we have altered the bad trajectory we were on. We have been working to reverse the trajectory and we're making progress.
VIRGINIA TRIOLI: We'll leave it there. Thanks for your time today.
MATHIAS CORMANN: Always good to talk to you.