Senator the Hon Mathias Cormann
Minister for Finance
DAVID SPEERS: Minister, thank you for your time. Can I just clarify was today just about listening for the Government or did you put forward some reform options to discuss as well.
MATHIAS CORMANN: Today was very much about listening. It was about understanding those areas where the leaders of the National Reform Summit had been able to achieve some consensus. I guess our big learning out of today is that there is a broad consensus that in Australia we need stronger growth, that we need to be more productive, that we need to be more innovative and that we need to be more competitive internationally.
DAVID SPEERS: And I want to go to those goals, but my understanding is that there were some scenarios worked through?
MATHIAS CORMANN: We touched on a range of areas when it comes to how we can strengthen the economy, how we can strengthen the opportunity for people to get ahead. We did talk about innovation particularly. We spent quite a bit of time on that. We did talk about how we can lift workforce participation, how we can improve arrangements for retirement incomes. We did go into some specific policy areas, but today from our point of view it was really a matter of listening and understanding better, those perspectives from the various leaders.
DAVID SPEERS: Did that also include some tax scenarios as well?
MATHIAS CORMANN: If your question is whether the Government today put some proposals on the table, no we didn’t. The Government today very much was in listening mode.
DAVID SPEERS: Did it facilitate the discussion? Was there talk about if we did this with the GST and that with income tax, what do you think about that?
MATHIAS CORMANN: That is not the way the conversation went. It was a very open, it was a very positive, it was a very constructive conversation. It was very much the leaders of the National Reform Summit reporting to us their perspectives on what Australia needs, where some of the challenges are, where some of the opportunities are. There will be next steps from here. What we agreed at the end of the meeting today is to keep the engagement going. There will be some more concrete steps in the weeks and months ahead.
DAVID SPEERS: Listening to the key players though, they’ve agreed they want growth, they want a more productive workforce, they want more innovation. Did you need a meeting to find that out?
MATHIAS CORMANN: It may sound obvious but it is quite important to actually get agreement on the fundamentals. There was some discussion around the possible avenues to achieve stronger growth, to achieve a more productive economy, to achieve better innovation. And so ...interrupted
DAVID SPEERS: Such as what?
MATHIAS CORMANN: It was a matter really of fleshing out the different perspectives. All of the individual participants in the conversation this morning have already been out there, will no doubt continue to be out there and put it eloquently in their own words. It is not for me to speak on their behalf. From the Government’s point of view, we found today’s exercise very valuable. This is the beginning of a process. There will be next steps. The objective is to ultimately refine our plan for stronger growth, more jobs and to ensure that across Australia in a fair way, everyone has the best possible opportunity to get ahead.
DAVID SPEERS: Now you touched on retirement incomes you mentioned, again my understanding is that pretty much everyone who was there agreed something needs to be done about the superannuation tax breaks.
MATHIAS CORMANN: Again, we didn’t put any specific proposals on the table. What our commitment was, was not to take anything off the table, to have an open conversation about the tax system overall and how the tax system can best contribute to stronger growth and...interrupted
DAVID SPEERS: But they all agreed on this didn’t they?
MATHIAS CORMANN: Everybody agreed that we need to keep everything on the table in terms of how can we facilitate stronger growth, a more productive economy, more innovation and...interrupted
DAVID SPEERS: I’m just asking about this specifically, on superannuation, there was agreement amongst everyone, not saying the Government, but all the groups that were there, all agreed something needs to happen on that?
MATHIAS CORMANN: There was agreement among everyone not to take anything off the table and to keep the conversation going. I know you are very keen for me to lock the Government into a particular course of action ...interrupted
DAVID SPEERS: Not the Government, just wanting you to confirm that everyone you spoke to today wants you to do something on this?
MATHIAS CORMANN: Everybody agrees and there is a variety of views I have got to say, but everybody agrees that we need to ensure that we have adequate retirement income arrangements; that people as they go through life, as they age, and as they approach retirement and move into retirement that they have the opportunity for adequate retirement income. How that is best achieved, that is a conversation that will continue in the next few weeks and months.
DAVID SPEERS: Well in the next few weeks and months, what do you need to land an all-encompassing tax reform and an economic package or do you go with something you can get agreement on, when you can get it?
MATHIAS CORMANN: I think there is a combination of the two. I think we will continue to have the conversation about the medium to long term opportunities. If there is an opportunity where there is consensus on a specific initiative of course you will take action if or when that occurs. Today was really the beginning of a process. It was a very good meeting and it is important that we let this meeting play out, the issues that were discussed during that meeting, to let them play out in the broader community, so that we can take the community as a whole with us, in terms of the need for certain actions to put the Australian economy on a stronger foundation for the future.
DAVID SPEERS: Let me ask you about higher education reforms. The Government’s today announced it is going to delay these reforms by another year until 2017. What impact will that have on the Budget?
MATHIAS CORMANN: You have asked me these sorts of questions in the past. We have a very orderly process when it comes to the fiscal impact of Government policy decisions between Budget and Budget updates. Our next Budget update is the Mid-Year Economic and Fiscal outlook, which will be released in December this year. Any decision that the Government makes that has an impact on the Budget bottom line has to be fully offset by a decision to make up any negative impact on the Budget bottom line. So ...interrupted
DAVID SPEERS: What does today’s decision cost?
MATHIAS CORMANN: That will all be revealed in an orderly fashion in the Mid-Year Economic and Fiscal Outlook, together with the alternative measures to ensure that the Budget bottom line doesn’t get negatively affected.
DAVID SPEERS: My reading of the Budget papers this year and last year suggested it was going to save about $400 million or nearly $400 million in the first year, so delaying it would cost?
MATHIAS CORMANN: Again, there are always swings and roundabouts in any Budget. There are always decisions that are made between Budgets and Budget updates. Between now and MYEFO, we will obviously be making the necessary decisions to ensure that any increased spending, or any reduced saving is reflected with increased savings in other areas.
DAVID SPEERS: Do you have to find other savings?
MATHIAS CORMANN: The situation has always been thus. Since the Budget there is a range of areas where there has been the need for higher priority expenditure or where there has been a change with the opportunity to save... interrupted
DAVID SPEERS: We spoke earlier this week, you’ve been critical of Labor for every Budget black hole they create and they made their higher education announcements, where’s the money coming from and yet you’re saving when you make a decision to delay this thing, you’ll let us know at some point in the future.
MATHIAS CORMANN: Not at some point in the future, at a very specific point and at the point when in the ordinary course of events our process is designed for that purpose and that is the Mid-year Economic and Fiscal Outlook in December. If we could do a deal now, I'm quite happy, if Bill Shorten and the Labor Party were to sign on the dotted line now, that they would come clean about the Budget bottom line impact of all of their unfunded spending decisions that they've made since the Budget and since the last election and they would reveal the bottom line impact of that in the middle of December this year, I would be very happy to wait until the middle of December for Bill Shorten to admit the extent of Labor's Budget black hole, which we know is $57 billion so far.
DAVID SPEERS: Tony Abbott today said he’s not surprised this delay has been necessary because of the Senate but disappointed, he’s disappointed that these higher ed changes have been delayed. Are you disappointed?
MATHIAS CORMANN: It is an important reform and Christopher Pyne as the former Minister for Education did an outstanding job in selling the need for the reform and selling the merits of it. But... interrupted
DAVID SPEERS: Not to the crossbench obviously.
MATHIAS CORMANN: Overwhelmingly, the higher education sector was on board with the reforms that Minister Pyne put forward. In the end if we want to have a world class university sector and of course we do, if we want students in Australia to have access to the best possible higher education, then we need to continue to go down this path. But it wasn’t realistic with January 2016 fast approaching to stick to the original timetable. That is the announcement that Senator Birmingham has made today. But the intention is to continue to pursue reforms which will help our university sector to be even more competitive internationally and continue to be among the best universities in the world and that is ultimately what we want to achieve.
DAVID SPEERS: More broadly, this was a centrepiece of your first Budget, your 2014 Budget. You are the last man standing who was part of that economic team as Finance Minister. But again, Tony Abbott today strongly defended that Budget, he said that it was bold, it was brave, but too gutsy for the Parliament. Do you agree with him on that or do you think you did actually bite off more than you can chew?
MATHIAS CORMANN: We’ve said this in the period between our first and our second Budget, that with the benefit of hindsight we tried to do too much at once in our first Budget. There is no doubt about that. By the same token, if you look at the progress that we’ve made in our first two years in Government, we are in a much stronger economic and in a much stronger fiscal position than we would have been if we had not pursued some of those important economic and fiscal reforms. Out of our Budgets and Budget updates so far, about 80 per cent of all Budget repair measures have been passed by the Parliament and have been implemented. About $85 billion worth of Budget improvements have been implemented since we came into Government. If we hadn’t done that, we would be in a worse position now than we are. Given some of the external challenges that we are facing right now with significant falls in our terms of trade, we would be in a less resilient position now if we hadn’t done some of those hard yards. The key for us from here is to keep building on the progress that we’ve made over the past few years and to keep putting ourselves on a better trajectory for the future. In the end it’s the forward trajectory that matters if you want to get to a better destination.
DAVID SPEERS: Final question, senior Liberal in WA, have there been many Liberal Party resignations in your state?
MATHIAS CORMANN: I think that the change has been well received. I think that the Government is performing well. There is no kidding ourselves, the sort of change that has occurred, going through that process, is traumatic and it is a difficult transition for some. But all of us who are in the Parliament, all of us who are in Government, we have a job to do. We have a responsibility to our country. We have a responsibility to provide good and effective government. As Liberals we have a responsibility to do everything we can as a team to win the next election. That’s what I’m dedicating myself to as part of the Turnbull Government, as part of the team. I would like to see Liberals around Australia joining with us in this very important mission.
DAVID SPEERS: And have there been any resignations in your state?
MATHIAS CORMANN: I’m actually not aware. To be really truthful I’m actually not aware.
DAVID SPEERS: Okay, and Tony Abbott, does he have a contribution to keep making to the Government?
MATHIAS CORMANN: Tony Abbott is somebody who has already made a tremendous and distinguished contribution to public life in Australia. I think that he has well and truly earned the right to make his own judgements as to how he feels he can best contribute into the future. I wish him all the very best. I think he has handled what was clearly a very difficult period for him personally. I think he has handled the last few weeks with a lot of distinction, with a lot of class. I wish him very well for the future.
DAVID SPEERS: Finance Minister, Mathias Cormann, thank you.
MATHIAS CORMANN: Good to talk to you.