2GB – Money News

Senator the Hon Mathias Cormann
Minister for Finance
Special Minister of State






Budget, Senate voting reform

ROSS GREENWOOD: Welcome back to Money News right around the country. We have told you before, not only is the Government right now having to keep an eye on the election that is coming this year, but also it is very much got to keep an eye on the Budget. Now the Budget quite clearly will have to lay out the plan that will be put to the people at that Federal election. Even though the Government to date has been highly criticised for being bitsy, almost like there’s thought bubbles going all over the place. Is there a GST, is there not? Is negative gearing in it, is it not? Is superannuation going to be changed, is it not? What is going to happen here? It will have to be melded together and put together as a coherent plan not only to frame the Budget, but then also to go to the election as well. Now the other reason the Budget becomes so important is the last available date a double dissolution can be called is May 11. Now the Budget, our Finance Minister Senator Mathias Cormann today confirmed, is that the Budget will be handed down the day before that on the 10th May. The question is what could the trigger be? Well the first trigger was thought to be the creation of the Australian Building and Construction Commission but that has been pushed out to an inquiry that will not report back until 2 days after that. I think it is May 15. So what else could there be? Could it perhaps be the change to the Senate voting reform? Let’s go to our Finance Minister Mathias Cormann who is on the line. Many thanks for your time Mathias. 

MATHIAS CORMANN: Good evening. 

ROSS GREENWOOD: So do you believe, have you got the pressure of not only the Budget upon you, but also the pressure of the election coming?

MATHIAS CORMANN: There is an election due in the second half of this year in the ordinary course of events and it’s important for us to continue to provide good government and that includes putting another good Budget together. 

ROSS GREENWOOD: Okay, would you discount the fact that an election could be held in the first half of this year?

MATHIAS CORMANN: These are matters that are entirely for the Prime Minister to decide. My focus is on doing the best I can to help put Australia on the strongest possible economic and fiscal foundation for the future. 

ROSS GREENWOOD: Okay. You as the Finance Minister, you’re responsible for the bottom line, and given that you’ve had John Fraser, the Treasury Secretary come out and say that Government should spend no more than 25 per cent of GDP. He says to continue to spend more than 25 per cent of GDP long term starts to do damage. You on that basis, even this year, you should be finding some $14 billion in savings because the savings will be 25.9 per cent. You’re the Finance Minister, have you got the $14 billion in savings immediately available?

MATHIAS CORMANN: These sorts of targets need to be achieved over a period of time. What we’ve been doing since we came into Government, having inherited a deteriorating Budget forward trajectory, having focused on controlling expenditure growth after inheriting an unsustainable spending growth trajectory, what we are focusing on is to improve the Budget position over the forward estimates. If you look at spending as a share of GDP over the forward estimates, it’s projected to fall from 25.9 to 25.3 over the next four years. Our focus now is on making sure that happens and to improve the position further beyond that. 

ROSS GREENWOOD: You as the Finance Minister, you’ve got to be the hard man inside the Cabinet who says no to a lot of the other Ministers when they want things. Is it becoming more difficult because at some point, the hard decisions that need to be made are around welfare, they’re around health because they are the big key expenditure items. It’s hard to trim those without really taking a lot of political heat. 

MATHIAS CORMANN: We inherited a deteriorating Budget position on the back of unsustainable and unfunded spending growth locked into legislation by the previous Labor government…interrupted

ROSS GREENWOOD: But also by the previous Coalition Government it would be fair to say that as well. 

MATHIAS CORMANN: In the context of the GFC so-called, Labor locked in expenditure growth of 17 per cent above inflation, which was meant to be crisis level of expenditure. But that was locked in as the new base from which they further increased expenditure. In the lead up to the last election, when they already knew that revenue was likely to come in below expectations, because of what was happening with commodity prices for iron ore and the like, they locked in three major structural and permanent increases in expenditure for things like the NDIS, funding for state schools and funding for state hospitals in the period beyond the published forward estimates incidentally. These are the sorts of issues that we’ve worked our way through. These are the sorts of reasons why we need to ensure that spending growth is affordable in the economy and on a sustainable trajectory for the future. Now we haven’t done this from one day to the next. We’ve pursued structural reforms which start low and slow and build over time because our focus very much is on making sure that the spending growth trajectory comes in below revenue.   

ROSS GREENWOOD: Mathias, is it frustrating for you as the Finance Minister not to be able to be more pragmatic, especially in the Senate where there is some $30 billion worth of potential savings that are locked up. But of course you have to deal with crossbenchers at every step along the way. This is where the Senate voting reform has been put forward by the Prime Minister today. But from your point of view as the Finance Minister, do you sometimes find it frustrating that you could achieve better outcomes potentially, if you could get the legislation passed or is it one of those things that you have just got to shrug your shoulders and say ‘that’s our system?’

MATHIAS CORMANN: We certainly would like the Senate to pass our Budget measures to put the Budget on a sustainable and affordable foundation for the future. The main responsibility here is for the Labor party. The Labor party created the mess. The Labor party put our Budget on an unsustainable trajectory for the future. If Labor helped us fix the mess they left behind, we wouldn’t have to have a conversation about the views on any particular measure of crossbench Senators. So it’s the Labor party really which should take more responsibility for the problems that they have left behind. 

ROSS GREENWOOD: Mathias, does the deal with the Greens in regards to that Senate voting reform and they’ve agreed with you on this reform, does this mean that you, and the Government, believes that maybe the Greens will have more influence after the next Federal election. That perhaps even the Labor party vote is split and maybe, like in the UK, where the Scottish Nationals got a lot more votes, it really decimated the Labor party vote in that election, do you think similar things could happen here?

MATHIAS CORMANN: Firstly, a couple of things here, the proposal for Senate voting reform that we released today is a response to the recommendation of a cross-party Parliamentary Committee including Labor, Greens and Coalition Members of Parliament, which recommended certain improvements to the Senate voting system after the last election. We have conducted some further consultations and the proposal today is based on the recommendations and those consultations. Now in terms of the election result at the next election, that is entirely a matter for the Australian people to determine. Our objective and our intention with the reforms that we have put forward today are very much to empower individual voters to determine what happens to their preferences instead of having political parties through backroom deals, direct and channel preferences according to their wishes through the so-called group and individual voting tickets.

ROSS GREENWOOD: So what you are saying to me is that it is frustrating when you are in Government but you cannot really get through some of the legislation you think can make a big difference.

MATHIAS CORMANN: What I am saying is that it is very important that the result at an election, including and in particular the result for a Senate election, reflect the wishes of the Australian people. What we are trying to do with the reforms that we have announced today, which are reforms essentially recommended by a Committee of the Parliament, a cross-party Committee of the Parliament, based on unanimous recommendations of that Committee, the reforms that are being put forward today are all about empowering voters to ensure that they determine where their votes and where their preferences are allocated instead of having political parties channel preferences according to backroom deals.

ROSS GREENWOOD: So we have got Mathias Cormann, the Minister for Finance in Australia, he is busy trying to frame that Budget and probably keep a little bit of an eye out on the ballot box at the same time. Mathias always good to have you on the programme.

MATHIAS CORMANN: Always good to talk to you Ross.


Senator the Hon Mathias Cormann, Minister for Finance, Perth