Senator the Hon Mathias Cormann
Minister for Finance
DAVID SPEERS: Mathias Cormann welcome. Thank you for joining us here in Berlin. You come from German speaking Belgium. You obviously have an affinity with this part of the world. What does it mean for you today to see the ties between Australia and Germany strengthen in the way they have been
MATHIAS CORMANN: Germany is a very important country in the world. It is the fourth biggest economy in the world, the biggest economy in Europe. Europe as a bloc is still the biggest economy in the world and obviously Germany is a very important country at the heart of Europe. From my point of view as a Minister in the Australian Government with a German speaking background, it is a real privilege to be able to deploy my background for the benefit of Australia.
DAVID SPEERS: And you were asked to tap into this through the Germany Australia Advisory Council that a year ago was put together and today has handed its report to the two leaders. What are the key recommendations as far as you’re concerned?
MATHIAS CORMANN: The key conclusion that we reached is that there is a lot of opportunity to broaden, deepen and strengthen the relationship between Australia and Germany. We do historically have a friendly relationship. We do have in Australia nearly a million Australians with a German background, so there is a strong historical connection. But it is quite surprising, there wasn’t actually that much structural interaction between Australia and Germany at a strategic level ...interrupted
DAVID SPEERS: And now there will be?
MATHIAS CORMANN: One of the key recommendations out of our report, which has been adopted by the Prime Minster and by the German Chancellor is to have an annual, regular ‘two plus two’ dialogue, a dialogue between our foreign and defence ministers and the German foreign and defence minister. That will start in 2016 and will certainly give a lot of structure to the engagement on a strategic level between Australia and Germany.
DAVID SPEERS: The Prime Minister is also pretty keen to build on innovation links between Australia and Germany - Tony Abbott actually cut funding to NICTA, the national IT foundation hub in Australia, Malcolm Turnbull signalling that he will put some of that money back in.
MATHIAS CORMANN: Innovation of course in Australia will be the centrepiece of our economic success moving forward. There will be an innovation statement later this year before Christmas. Certainly Germany is very good at translating high quality research into successful commercial applications. In Australia we are very good at conducting high quality, world class research but perhaps we are not as good as we could be ...interrupted
DAVID SPEERS: And this body is important in doing that?
MATHIAS CORMANN: ...when it comes to translating that into commercial applications. We are looking, through the work that we have done with the Germans, to learn from the German experience about how we can better translate high level, high quality research into commercial applications.
DAVID SPEERS: This body though is one that Angela Merkel visited a year ago when she was in Australia, was it an embarrassment to be cutting the funding to it?
MATHIAS CORMANN: She did indeed and it is a successful part of the Australian research and development and commercial application that ...interrupted
DAVID SPEERS: Assuming it was your call partly to cut the funding though?
MATHIAS CORMANN: You can go to this. Today is a very exciting day. There is a lot of strengthening in cooperation that will be happening between Australia and Germany as a result of the work that we have been doing, including in relation to ICT – the information and communication technology area and it will be done through the CSIRO.
DAVID SPEERS: Germany is the powerhouse economy in Europe, you have spoken in the past about an idea of a Free Trade Agreement between Australia and Europe, the EU. How hard would that be though? What are the prospects of this actually happening?
MATHIAS CORMANN: Well we have been having a series of meetings with European institutions in recent months in particular with the European Commission. The European Commission in the middle of October identified Australia as one of the next countries with whom they would seek to negotiate a free trade agreement with. Australia is a trading nation. We want to increase the level of trade and Europe is a great opportunity for us. Having successfully negotiated free trade agreements with China, Japan and South Korea, Europe is certainly one of our next priorities and we are very hopeful that very soon there will be some announcements in relation to this.
DAVID SPEERS: You are off to the G20 with the Prime Minister tomorrow, you are representing the Treasurer there. A year ago in Brisbane at the G20, the key outcome was the commitment to boost global growth by 2% over 5 years. Since then though we have seen global growth coming off, not going up – its going down.
MATHIAS CORMANN: Well the objective in Brisbane was to boost global growth by 2% above business as usual. It was a very important achievement of the Australian presidency of the G20 in 2014, along with the establishment of the Global Infrastructure hub in Sydney. Of course G20 countries around the world representing about 85% of the global economy committed themselves to action plans in order to achieve that 2 per cent additional growth. If it wasn’t for that, we would probably be in a more challenging position.
DAVID SPEERS: Is it on track though, do you think?
MATHIAS CORMANN: I’m confident that all countries around the world in the G20 who made commitments to pursue actions and policies to boost growth are well on track
DAVID SPEERS: What about Australia’s commitments? They haven’t been fulfilled? Some have been scrapped.
MATHIAS CORMANN: A lot of our commitments have been fulfilled. Overwhelmingly our commitments are very much on track. Yes you will always see adjustments at the margins. Any Government will always respond to changing circumstances and that is certainly what we are doing.
DAVID SPEERS: Couple of issues back home, this story from the book written by Peter van Onselen, Wayne Errington, about the first Abbott/Hockey/Cormann Budget, the 2014 Budget, and this $80 billion, not receiving an increase of $80 billion in health and education, big issue at the time and according to the book, Tony Abbott did not want this appearing in the Budget documents, Joe Hockey inserted it in defiance to show that he was being tough on the spending front. Is that what happened? Is that your recollection?
MATHIAS CORMANN: You don’t expect me to talk about internal Cabinet and Expenditure Review Committee processes, but let me just make this point. We made a commitment in the lead-up to the 2013 election to keep the same funding envelope in place for health and for education over the then forward estimates, which we did, but we also made decisions in our first Budget that the spending promises, the unsustainable, unfunded and unaffordable spending growth that Labor locked in…interrupted
DAVID SPEERS: …okay…
MATHIAS CORMANN: ...No no, you have asked me the question…interrupted
DAVID SPEERS: …I know…
MATHIAS CORMANN: … No no no no, but I have to answer the question given you have asked me.
DAVID SPEERS: Okay, why was the $80 billion figure put in that glossy brochure?
MATHIAS CORMANN: What I am saying to you is that we inherited an unfunded, unaffordable, unsustainable, pie-in-the-sky spending growth trajectory in the period beyond the published forward estimates at the time of the last election.
DAVID SPEERS: Good idea to put the $80 billion in there?
MATHIAS CORMANN: We made a decision to put the funding growth from the Commonwealth on a more realistic, on a more affordable, more sustainable foundation. Now who made what decision in relation to which PR publication you know, to be frank, I don’t think that will add much to the conversation.
DAVID SPEERS: The point here, is the Budget overview…interrupted
MATHIAS CORMANN: I am sure that the commentators will dissect all of these things in great detail. Our consideration at the time was - how could we ensure that federal funding for health and education - and all areas across Government is on a sustainable foundation for the future.
DAVID SPEERS: And a final question on this whole tax debate going on back home, is there any sort of way you can assure people that no one will be worse off or is that a commitment you shouldn’t be making?
MATHIAS CORMANN: Well right now we are in an open minded conversation with the Australian people. We are in a good-faith conversation with the States and Territories, about how our tax system can be improved. Our focus is on stronger growth, better opportunity for people to get ahead and more jobs. We need a more growth friendly tax system. We haven’t reached any specific landing points yet as to what that would look like moving forward, but we are engaging in the conversation with an open mind.
DAVID SPEERS: Mathias Cormann, Finance Minister, thank you for joining us here in Berlin.
MATHIAS CORMANN: Always good to talk to you