ABC News24 – Chris Uhlmann

Senator the Hon Mathias Cormann
Minister for Finance






ICON, EU-Australia FTA, Future Submarine Project, MYEFO, tax reform

CHRIS UHLMANN: Mathias Cormann, welcome. 

MATHIAS CORMANN: Good to be here. 

CHRIS UHLMANN: Now, you have a scoping study which has looked into the sale of the Intra Government Communications Network. That’s the secure network through which communications travel between 88 different agencies, around 400 sites within Canberra. Are you considering its sale?

MATHIAS CORMANN: What we are considering is whether it is still appropriate for this service to be provided by the Government, given that there is a very broad, very deep and very sophisticated private sector market in place. This is essentially a telecommunications network within Government. It started off with one cable which was put in place by the Department of Foreign Affairs and Trade some 25-odd years ago, a 5 kilometre cable which has grown into 150,000 kilometres worth of fibre network cables all across Canberra. We think it is always important for Government from time to time to consider whether all of the activities that they are involved in within Government are still appropriately provided by Government or whether there is a more efficient and cost-effective way for particular services to be provided by the private sector. We commissioned a scoping study in the 2014/15 Budget. The scoping study report has been received and it is currently being considered by Government. There are some particular considerations here. This is a secure intra-Government communications network. The Government will carefully assess all of the pros and cons of the way things have been managed in the past to see what the best way is to manage these things in the future.

CHRIS UHLMANN: So, have you made a decision yet?

MATHIAS CORMANN: No, we haven't.

CHRIS UHLMANN: When might you make a decision?

MATHIAS CORMANN: In due course. The truth is that the report has been received. We are carefully assessing its recommendations and when we are in a position to make a decision we will do so.

CHRIS UHLMANN: Will national security considerations be part of that, because as you say, this is a secure network? It has up to protected level, I understand. In fact it is not encrypted between departments so that adds another layer there, at the moment you would you have to look at that if you handed that over to a private sector company and then of course there is the people who might bid for it?

MATHIAS CORMANN: These are all factors that we are carefully considering. Fundamentally, it is a telecommunications network that we are talking about. There were certainly various options in front of us. Since this network was first initiated, a previous government started off developing the NBN. We thought that there might potentially be a role here for the NBN. But these are all matters that are being considered and security considerations are part of that.

CHRIS UHLMANN: But a sale is still a live option?

MATHIAS CORMANN: The objective was never to pursue a sale as such. The objective was to look at how this service is best, most efficiently and most cost-effectively provided. It started off with a very small investment by a government department and it has developed over the last 25 years. We think it is important from time to time to ask the question. We have an open mind. We were not going into this process with a desperation to sell. We went into this process with a commitment to ensure that the way this network is currently managed is still the most appropriate way.

CHRIS UHLMANN :Now, to other matters, you have just returned from Europe and specifically you were on the trip to Germany. What are the opportunities that you think Australia is not taking an advantage of that it can take advantage of with Europe?

MATHIAS CORMANN: Europe is as a bloc still the biggest economy in the world. We did visit Germany the Prime Minister and I. Germany is the biggest economy in Europe, the fourth biggest economy in the world. Europe is the biggest foreign investor in Australia right now. Our biggest source of foreign direct investment is Europe. We do think there is an opportunity to strengthen the trade relationship further, to do more business with Europe and as such create more jobs in Australia. The Prime Minister was able to announce, with the President of the European Commission Jean-Claude Juncker and the President of the European Council Donald Tusk, the start of negotiations on a European-Australian Free Trade Agreement, which we believe will be the next exciting opportunity on top of the opportunity with India that Andrew Robb is also exploring.

CHRIS UHLMANN: Perhaps the biggest purchase that Australia is going to make, the Australian Government, at any time in the near further will be of submarines. Germany is one of the countries that is bidding for that, there is also France and Japan. Was that discussed on the trip?

MATHIAS CORMANN: There is a competitive evaluation process currently underway. You are right, there are three potential parties that are currently bidding for that opportunity, Japan, Germany and France. Yes, various representatives on our visit to Germany, as did other representatives from other countries, other relevant countries from France and Japan have raised the opportunity that this submarine procurement presents both as a trade opportunity as well as as a strategic opportunity.

CHRIS UHLMANN :One of the things that the German bid was very clear on was that they could in fact build those submarines here in Australia.

MATHIAS CORMANN: This is a procurement process that is currently underway. It is live. The bids as part of the competitive evaluation process are due to be submitted by the end of the month. There will be a proper technical assessment by Defence after that. The process will need to run its course to ensure that Australia gets the best possible submarines at the best possible price and subject to that, we want to maximise Australian industry involvement here in Australia.

CHRIS UHLMANN: Finally you are the Finance Minister, one of your big concerns always is revenue. At the moment wages are pretty flat, income tax is a big part of the Budget, you are heading towards the mid-year outlook, how is revenue looking as we head towards that outlook?

MATHIAS CORMANN: The update will be provided in the middle of December as part of the Mid-Year Economic and Fiscal Outlook. As Finance Minister, I do provide monthly financial statements, regular monthly updates on how we are tracking and right now ...interrupted

CHRIS UHLMANN: That last one was last week?

MATHIAS CORMANN: Yes, right now, expenditure is running below expectations and revenue is running slightly below expectations. Overall, our Budget position is slightly better than anticipated at Budget time. The full and formal and comprehensive update will be in the Mid-Year Economic and Fiscal Outlook in December.

CHRIS UHLMANN: And of course you are looking at other sources of revenue over time. The tax debate as we know is a live one and is still open. At what point do we expect we will see the finalisation of the Government's positions on those things? Is it later this year or next year?

MATHIAS CORMANN: What we are focused on is how we can make our tax system more growth friendly. Our focus is on growth and jobs. We have made certain changes to our tax system since our election to Government. We got rid of the mining tax and the carbon tax. We reduced company tax for small business. We are now looking at what other things we can do to make our tax system more growth friendly. Our focus is on whether we can improve the tax mix without increasing the overall tax burden in the economy. Early in the New Year I would expect to get a draft set of proposals in the form of a green paper to be publicly released.

CHRIS UHLMANN: Mathias Cormann, thank you. 

MATHIAS CORMANN: Always good to talk to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth