Senator the Hon Mathias Cormann
Minister for Finance
Date: Thursday, 13 August 2015
PHILIP CLARK: The Abbott Government’s $20 billion Medical Research Future Fund has cleared the Senate. This Fund of course as you know came to prominence tied with the proposal for a GP co-payment. Now that ran into trouble of course in the Parliament, never ever came to see the light of day. The GP co-payment was going to be used to fund what the Government at the time said would be one of the biggest medical research funds in the world. Now, the Fund itself and the proposal for it has continued on apace. It’s been amended in the Senate, but it will go back to the Reps, but it looks as though it may well emerge from the Parliament and see the light of day. Finance Minister, Senator Mathias Cormann is the lead Minister responsible for the legislation, he joins me this morning. Senator Cormann good morning.
MATHIAS CORMANN: Good morning Philip.
PHILIP CLARK: So the GP co-payment was going to pay for this. What’s going to pay for it now?
MATHIAS CORMANN: That is only partly true. The GP co-payment was supposed to be one of the funding sources for it. What we said in the 2014-15 Budget is that we would be contributing all of the savings in the health portfolio in the 2014-15 Budget to the Medical Research Future Fund until it reaches a balance of $20 billion. There is also about $1 billion in uncommitted funds from the Health and Hospitals Fund that are contributed to it. One of the .... interrupted
PHILIP CLARK: These are left over or unallocated savings from previous Labor health policies, is that right?
MATHIAS CORMANN: The previous Labor government abolished one of our capital funds and merged that into the Health and Hospitals Fund. There is about $1 billion left and we believe that setting up a capital fund to boost investment in medical research, right now is a comparatively higher priority, which is why we have initiated this landmark institution. But just going back to your original question. The GP co-payment was one of several savings. Now that saving as you know is not proceeding. But there are still quite a few efficiencies and savings in the health portfolio that are proceeding and we believe that we will be reaching the $20 billion target in about the same time, within about six years.
PHILIP CLARK: I suppose my question really gets to that point. Where is the new money coming from? You’re saying it’s going to come from what, bits and pieces of savings on the health budget.
MATHIAS CORMANN: This is not new money. These are savings that were identified in the 2014-15 Budget in May 2014. They are there for all to see. Over six years or thereabouts, they will add up to about $20 billion once you take the $1 billion in uncommitted funds from the Health and Hospitals Fund into account as well.
PHILIP CLARK: So in six years time it will reach $20 billion you’re saying and then will become self sustaining after that? Is that ...
MATHIAS CORMANN: It is self sustaining right from the beginning. What we’ve said is that we will not ever spend the capital. The capital will be preserved in perpetuity. We will be making disbursements from this year onwards. So there will be about $1 billion going into the Fund straight away. That generates interest payments. The net interest will be allocated to additional funding for medical research. Over the six year period, once it is fully capitalised, we expect that it will be able to contribute about $1 billion in additional funding for medical research every year moving forward, which doubles our current effort in Australia when it comes to medical research.
PHILIP CLARK: Who administers the Fund?
MATHIAS CORMANN: The Future Fund is the responsibility of the Treasurer and myself. On a day to day basis, I am responsible for the Future Fund. The Medical Research Future Fund is directly being managed by the Future Fund Board of Guardians, chaired by Peter Costello.
PHILIP CLARK: Okay, there have been arguments about its freedom to operate independently free of pet projects and indeed Ministerial direction ...interrupted
MATHIAS CORMANN: Apologies for interrupting you here, but you have to make a distinction here between the Fund which manages the investments in order to generate the best possible return given a certain risk profile and that is the responsibility of the Future Fund. What you are now talking about are the disbursements into medical research from the net earnings, which is a different process.
PHILIP CLARK: Correct.
MATHIAS CORMANN: What we have done and we have worked very closely and constructively with the Australian Greens in relation to this as well. In recent weeks and months we have been working to further strengthen the corporate governance structure and the integrity of these sorts of processes to ensure that there is an appropriate level of independence. So we do have in place now a Medical Research Future Fund advisory board, which will be made up of highly qualified, highly reputable representatives from the medical research community, but also from the philanthropic and consumer health community. They will be responsible for setting the research priorities and the strategy, which will be binding on the Minister. Beyond that what the intention would be is for us to use established disbursement processes through bodies like the National Health and Research Council and similar. We believe that the process we have ended up with has integrity, has appropriate levels of independence but also ensures that we are able to fill the strategic gaps in medical research across Australia that were identified in a review that was initiated by the previous government.
PHILIP CLARK: Finance Minister, Senator Mathias Cormann is our guest this morning. We’re talking about this passage of the medical research fund. What will be a significant fund even in world terms won’t it?
MATHIAS CORMANN: This will be one of, if not the largest capital fund as a basis to fund investment in medical research yes, public investment in medical research.
PHILIP CLARK: Yes and in that sense welcome news. It is eighteen past seven on this Thursday morning. Just before you go Senator Cormann and back on the marriage equality debate which has been put to bed for the life of this Parliament. There’s a suggestion that this plebiscite, which seems to be an ill defined promise, is this a pledge to have a plebiscite on the matter or just a suggestion that some time in the future something like that might happen.
MATHIAS CORMANN: What we did on Tuesday afternoon is confirm that the long standing Coalition policy in favour of the current definition of marriage as a union between a man and a woman would be maintained for this term of Parliament. We also flagged that in the lead up to the next election, we would be finalising an approach for the next term of Parliament. The Prime Minister already has indicated, and this comes out of our discussion in the party room, that our disposition is and our inclination is to put this proposition to the people.
PHILIP CLARK: But that’s not a commitment to do that?
MATHIAS CORMANN: We will be finalising our position between now and the election. But the important point here is this, I have been in the parliament now for about eight years and this issue has come to the parliament on several occasions. Every single time the parliament has confirmed the long standing position that marriage is a union between a man and a woman. We understand that in order to provide a more permanent resolution to this question that it might well be best to put this question to the Australian people.
PHILIP CLARK: But as I say, that’s not a commitment to do that?
MATHIAS CORMANN: This will be a matter that will be settled between now and the election.
PHILIP CLARK: Alright Senator Cormann, good to talk.
MATHIAS CORMANN: Good to talk to you.