Senator the Hon Mathias Cormann
Minister for Finance
Date: Wednesday, 13 May 2015
LEON BYNER: Let’s talk with Finance Minister, Mathias Cormann. Mathias good to have you on the program today. First of all, there is a fundamental point that I think needs to be made first and that is that not 12 months ago we were on a very dangerous Budget trajectory and okay, it might have been slightly improved but we’re still spending more than we’re getting from takes into taxation. When can that be addressed?
MATHIAS CORMANN: We are heading in the right direction. We are making progress. In the Budget we delivered last night we are projecting a return to surplus on the same timetable as what we projected last year. When we came into Government we were confronted with a weakening economy, rising unemployment and a Budget position that was rapidly deteriorating. We came into Government with a long term, responsible economic plan to strengthen growth, create more jobs and to get the Budget back into surplus as soon as possible and we’re making progress. The economy is strengthening, jobs growth is strengthening and the Budget is now heading in the right direction.
LEON BYNER: I want to be totally South Australian-centric here because that’s what people are interested in. For example, in WA, Northern Territory, Queensland, you’re putting a lot of money into infrastructure projects. How is South Australia better off under your Budget announced last night?
MATHIAS CORMANN: South Australia is going to get another 11 per cent boost in Federal funding next financial year, just short of a billion dollars next year and about $2.5 billion over the forward estimates. About 30 per cent additional federal funding into South Australia from the Federal Government over the current forward estimates.
LEON BYNER: Is that mainly GST?
MATHIAS CORMANN: That is a combination of federal payments, including the GST.
LEON BYNER: Now, there is a suggestion by our Treasurer that some of the funding for the Torrens to Torrens project has been withdrawn. Can you clarify this?
MATHIAS CORMANN: He is reckless and incompetent. We are totally committed to the Torrens project. We were keen to get cracking. We were keen to get cracking quickly, but the State Labor Government asked us to slow down because the State Labor Government wasn’t ready to proceed, because they were not ready to proceed with construction. We have received letters from the State Labor Government to the Federal Government asking us to slow down the roll out in cash for a project they were not ready to progress with at the speed we would have liked to see it progress. Instead of constantly playing politics. Instead of constantly trying to detract attention from his own incompetence and from the mess that he has made with the South Australian Budget, it would be much better for families and businesses across South Australia if the State Treasurer in South Australia started to work with the Federal Government rather than just constantly run partisan attacks. He is not working in the best interests of South Australia. He is just running partisan attacks again and again and again against the Federal Government.
LEON BYNER: You’re talking about creating new jobs, where are they going to come from?
MATHIAS CORMANN: What we’ve done yesterday is deliver our second instalment in our economic plan to strengthen growth and strengthen jobs creation. It is small business that is creating most of the jobs across our economy and that is why we have delivered a 1.5 per cent tax cut to small business. About 96 per cent of all small businesses will benefit from that and that is also why we have announced yesterday that any businesses which invests in assets and equipment of up to $20,000 from Budget night last night can immediately write that off, depreciate the value of that asset or that equipment rather than to have to do that over a longer period of time. That should be a significant boost, helping small businesses across Australia, including and in particular in South Australia to employ more people and to be more successful into the future.
LEON BYNER: What have you done for the growers of SA?
MATHIAS CORMANN: Growers of SA are businesses, just the same as any other business. Growers are one sector of the economy and they’ll be able to benefit from all of the measures we have put in place for small business.
LEON BYNER: So we’ve got chemist groups up $5, or 80c for pensioners, spending on medical research is down $1.3billion. Mathias, given that your Government has, in the rhetoric that you talk to Australia, you talk about: we have to develop being smart, we have to develop high end and value adding. How can we do that if you’re taking a big chunk out of something, and we’ve done pretty well in this country producing some wonderful medical breakthroughs, how do you justify knocking out $1.3billion in medical research?
MATHIAS CORMANN: We are boosting funding for medical research. We are continuing to build up a $20 billion Medical Research Future Fund, with all of the net earnings from that fund to be invested in medical research and over the next five or six years, Federal Government investment in medical research will double on a fiscally sustainable basis as a result of the decisions that we have made in last year’s Budget and in this year’s Budget.
LEON BYNER: So you’re arguing that everything that you’re doing and announcing at the moment is affordable?
MATHIAS CORMANN: Absolutely. If you look at the Budget bottom line we are on a credible pathway back to surplus. The deficit for the next financial year has come in well below market expectations at $35 billion and it is reducing to just under $7 billion by 2018/19 and we are projected to get back to surplus in 2019/20, which is the exact same timetable as in last year’s Budget.
LEON BYNER: I just want to clarify a few other things in the Budget. There was talk about a six month wait for the dole, that is now not going to happen, it is going to be a month wait for anybody under 25. But if you have got a tradie or a trainee who doesn’t earn a lot of money and suddenly things go ‘oopsy-whoop’ for them, they have got to wait four weeks, they have got no money.
MATHIAS CORMANN: Well we have provided a whole range of other supports for young people who are transitioning from school into the workforce and there are safeguards for vulnerable Australians and people with particular challenges. As a principle, we don’t think it is appropriate for young people to go straight from school onto the dole if we can avoid it. We do prefer that young people are encouraged after they leave school to either continue learning or to start earning and we are putting forward a whole series of new and additional supports to help young people with particular challenges to get into the workforce to actually be successful.
LEON BYNER: Now there is a big drop in foreign aid, in particularly Indonesia, down 40 per cent. How much money are we saving in foreign aid?
MATHIAS CORMANN: All of the savings in the foreign aid budget were announced in last year’s Budget and in the Mid-Year Economic and Fiscal Outlook before Christmas. What happened yesterday is that the Foreign Minister, Julie Bishop, has announced how the savings previously identified have been allocated to individual countries. She has made considered judgments having carefully assessed changes in circumstances for various economies that still receive aid from Australia. For example a range of countries that we have historically been paying to, are spending on foreign aid themselves. We made a judgment that if you have countries that are making foreign aid payments themselves then it doesn’t really make much sense for Australia to spend on aid into those countries that are spending on aid themselves. That is just one example. There are other examples where you have got economies that are performing strongly, that are growing strongly, where the needs are perhaps not the same as what they were 10 or 20 years ago. Well we need to make some adjustments moving forward to the way that we direct and target our foreign aid spend.
LEON BYNER: You are expecting to raise about $3 billion from the GST on Netflix and other online activities and I know that you are going to tax multinationals, some of whom at the moment are lucky to pay one per cent. When will this happen? Is this crackdown going to happen as of now?
MATHIAS CORMANN: The Treasurer has introduced legislation to the parliament yesterday, the multinational tax anti-avoidance laws. This is about giving the ATO increased powers so that where there are contrived arrangements, where multinationals are found to try and avoid tax in Australia through contrived arrangements, we want to give the ATO power to see through those contrived arrangements and to impose tax as if those arrangements weren’t in place. We have been cautious and conservative in terms of the way that we have assessed the likely revenue impact of that, but we are committed to getting every last dollar that is owed to the Australian people out of multinational companies generating profits in Australia.
LEON BYNER: Being totally SA centric, I would like to make this point because it has been one of contention. From this Budget that was announced last night, you’re telling us that there is about $977 million for SA over the next three years, $858,000 is in fact GST, which means it can be spent by the Government in any way they so choose. Is that correct?
MATHIAS CORMANN: That is exactly right. Just under a billion dollars in additional federal money is going to South Australia next financial year, it is an 11.4 per cent increase and over the forward estimates federal funding into South Australia is increasing by about 30 per cent.
LEON BYNER: And this is money that the Government, I suppose the word you would use would be a windfall, because it was money they weren’t expecting to get.
MATHIAS CORMANN: I don’t know what Tom Koutsantonis expects. It is very hard to figure out what he expects, but it is certainly an increase in federal funding for South Australia.
LEON BYNER: Alright, one other point. Getting this Budget through. Last time, you couldn’t do it. Do you think your chances are much better this time?
MATHIAS CORMANN: That’s not quite right. Last time we were able to get 80 per cent of all of our Budget measures through. There was a level of debate around some of the more controversial ones. What we have to remember, this time last year when the Budget was delivered, we still had the old Senate where Labor and the Greens had control of the Senate. The Senate changed on 1 July last year and there have been a range of discussions that have been successfully completed since then and then there are some discussions that are ongoing. That is business as usual. Australian Governments forever and a day have had to negotiate with the Senate in which they did not have majority support. We will continue to do that. We will work with the Senate. We believe we have a good plan which is in the national interest. We believe that we have a plan that is measured, that is responsible, that is fair and we look forward to the Senate working constructively with the Government in giving effect to it.
LEON BYNER: Finance Minister, thanks for joining us.
MATHIAS CORMANN: Always good to talk to you.