Senator the Hon Mathias Cormann
Minister for Finance
BEN DAVIS: Alright 4:10pm, Budget 2015 handed down last night. It’s been labelled the Goldilocks Budget. Not too harsh, not too soft. For me it smacks a bit like an election Budget. A Budget to keep us nice and warm and fuzzy. Feeling like that right now, but does it really protect us for that economic emergency we were preparing for, we were facing 12 months ago? Simon Cowan from the Institute of Independent Studies doesn’t seem to think so.
SIMON COWAN (EXCERPT): The deficit is likely to stay roughly where it is. The Government simply hasn’t done enough to try and reduce wasteful spending, to undertake the task of Budget repair still left over from last year.
BEN DAVIS: Well there we go, that was Simon last hour. Mathias Cormann, he’s the Finance Minister. Minister, good afternoon.
MATHIAS CORMANN: Good Afternoon.
BEN DAVIS: Is this Budget too soft?
MATHIAS CORMANN: No it isn’t. It’s the right Budget for the time. Importantly it builds on the progress we have made since last year’s Budget. If you look at the numbers, the deficit is continuing to fall year on year, both in dollar terms and as a share of the economy and we get back into surplus on the same timetable as in last year’s Budget. So, the proposition that you just had quoted, that somehow the Budget deficit is staying where it is, is actually wrong. The Budget deficit in 2015-16 is estimated to come in at $35 billion which is below market expectations and it is reducing every year of the forward estimates. Obviously we have faced additional global economic challenges over the last year and we have had to adapt our approach to take that into account. So we are focusing on strengthening the economy, creating more jobs and getting the Budget back to surplus as soon as possible, but in a way that is economically responsible.
BEN DAVIS: Those forward estimates, is what he was quoting and saying that you know, look they only go forward have a look in two years, and there’s a lot of conditions on those so that’s what his fear was, that it can stagnate and then move backwards but this Budget is very different from last year’s as you’ve just said. Is it an election Budget?
MATHIAS CORMANN: No it isn’t. It is a Budget that is focused on delivering on our next instalment of our economic plan for a stronger, more prosperous economy. When we came into Government, we inherited a weakening economy, rising unemployment and a Budget position that was rapidly deteriorating. We said that we would work to turn that around and we have. The economy is now strengthening, jobs growth is strengthening and the Budget is now heading in the right direction. Yes, the argument can be made that perhaps we should have done things more quickly here or there, but we are making progress, heading in the right direction and the Budget last night keeps the momentum going.
BEN DAVIS: So many people have asked, where’s the Budget emergency from last year?
MATHIAS CORMANN: We did inherit a Budget emergency when we came into Government because as I just mentioned, the Budget position…interrupted
BEN DAVIS: But that’s what Joe Hockey told us last year, that there was an emergency, we were in dire straits here, we needed to do something.
MATHIAS CORMANN: We were certainly facing a rapidly deteriorating Budget position and we did have to do something and we have been doing something. We have been implementing our responsible, long term plan for stronger growth to create more jobs and to get the Budget back on a more sustainable foundation for the future. We have made significant progress since last year. Economic conditions have become more challenging. We did have to write off about $90 billion in expected tax revenue on the back of principally significant falls in global commodity prices. No government controls what happens to global commodity prices, so you’ve got to adapt your approach to changing circumstances and that’s what we are doing.
BEN DAVIS: It’s a new positive outlook which is great for confidence and consumer confidence. That is a big key to any economy, confidence, isn’t it?
MATHIAS CORMANN: Yes, indeed, absolutely. That’s what we have done with our tax cut for small business. 96 per cent of all businesses across Australia will get a 1.5 per cent tax cut and will benefit from our instant asset write off initiative, enabling businesses to write off against their tax, investments of up to $20,000 in assets or equipment that will help them make their businesses more successful into the future. Help them employ more Australians. All of these things taken together are part of a well considered, carefully put together plan to strengthen growth and create more jobs.
BEN DAVIS: We are picking apart the Budget with the Finance Minister Mathias Cormann. Just on the instant hit for small businesses, I’d love to hear from a small business as you’ve gone out and taken that up. As of 7:30pm last night, a few tax breaks came your way. You can go out and spend, spend spend. Invest, invest, invest, have a go, as Joe Hockey said. I’d love to hear if have had a go. What have you bought? Is it all helping your business and the economy going around? Minister, the Senate confidence. We just heard about consumer confidence, but Senate confidence is the real kicker here and it’s something I did ask Simon Cowan from the Centre of Independent Studies. This is his take on the Senate and the sell there:
SIMON COWAN (EXCERPT): We see that the Senate got a lot of play, got a lot of political miles out of opposing many of the measures of the last Budget, particularly the crossbench. They are getting a lot of coverage from the fact that they’re not passing these Budget measures. I can’t see why they would change that strategy now.
BEN DAVIS: Is that a fair view Minister?
MATHIAS CORMANN: The question is not a question for the crossbench. The question is a question for Bill Shorten and the Labor party. They want to present themselves as the alternative government for Australia. If they don’t agree with our plan, what is their plan? Tomorrow, Bill Shorten will have the opportunity to explain where he would make savings and how we would get the Budget back on a more sustainable foundation for the future. Is it through spending cuts and if so, where? Or is it just through further tax increases targeting people saving for their retirement?
BEN DAVIS: You’ve got to expect the Opposition in the Senate aren’t going to be swayed your way, it’s the crossbenchers you’ve got to butter up and seduce to come across and play. How is that sell going?
MATHIAS CORMANN: When we were the opposition we actually supported many of the savings measures that the previous government put forward. In fact, in the 2013 Budget when Tony Abbott was the Leader of the Opposition then, he accepted all of the savings measures that the then Government put forward, holus bolus. Now the question for Bill Shorten really is whether he wants to focus on the national interest or just on his short term political self-interest.
BEN DAVIS: How is the relationship with the crossbenchers then? Have you started that sell?
MATHIAS CORMANN: I engage with the crossbench on a regular basis. Since the new Senate came into place on 1 July there are a whole range of important measures that went through. The carbon tax repeal, the mining tax repeal, a whole range of savings that were attached to getting rid of the mining tax…interrupted
BEN DAVIS: There was a whole bunch that hasn’t though.
MATHIAS CORMANN: And there are some issues that are subject to ongoing conversation and there are some things where the Government on reflection has changed its mind. We will continue to engage with the Senate, it has always been thus. Governments who haven’t had a majority in the Senate, which is most of the period of our history, have had to engage with crossbench Senators and with the opposition in order to get some of their important reforms through and that is what we will be doing.
BEN DAVIS: How are negotiations going? Where are we at? I mean it is past the first date stage isn’t it, are we at second base? Third base? Where are we going?
MATHIAS CORMANN: This second Budget was delivered last night. There is now going to be a process where in the Senate, the Budget will be scrutinised through a Senate Estimates process over the fortnight after next week…interrupted
BEN DAVIS: Has the sell been going on before last night though? Have you been wooing them beforehand?
MATHIAS CORMANN: We have conversations with crossbenchers all the time, but we obviously don’t develop the Budget with them no.
BEN DAVIS: The leaks or the sell or the push, whatever you want to call it, what we have been hearing for the past two months, we’ve been seeing almost on a bi or tri weekly basis about all the stuff that is in the Budget. That has got to be surely the strategy to butter them up and to let them know what is coming?
MATHIAS CORMANN: Well what we have done this time around and what I believe we have done better this time around than last time around is that we have consulted more widely, inside and outside the parliament on some of the key reforms that we were considering. That has certainly helped us make sure that all of the I’s were dotted and the t’s were crossed and that is why I believe some of the more significant reforms have been better received than last year.
BEN DAVIS: What would you call the centrepiece of the Budget then Minister? What is the big sell? The one that you are really pressing, not only to the Senate but to the public?
MATHIAS CORMANN: Well there are two centrepieces really, there is the jobs for families package which helps…interrupted
BEN DAVIS: There isn’t one that takes more than the other? Small business perhaps?
MATHIAS CORMANN: Well both of them are equally important so the two key centrepieces are the jobs for families package which helps families get access to simpler, more affordable and flexible childcare, to help them get into work, stay in work and be in work and there is the significant package helping small business be the most successful they can be as part of our strategy to strengthen growth.
BEN DAVIS: Alright, appreciate your time this afternoon. It has been a busy 24 hours and it is just beginning too. Mathias Cormann there, the Finance Minister, thank you.