Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Date: Tuesday, 22 March 2016
PETER VAN ONSELEN: Welcome to the program. Obviously not Kristina Keneally. Dr Craig Emerson instead. Good to have you aboard.
CRAIG EMERSON: Not Kristina Keneally but... interrupted
PETER VAN ONSELEN: No, but Doctor of economics that’s a useful one with our guest, we’re going to be talking to the Finance Minister Mathias Cormann very shortly. He’s in Sydney for Cabinet. They’ve got a lot to talk about now, because we’re on a campaign footing Craig Emerson. What do you think of this? I think it’s a good strategy and I think it is their best move, even if there is some messiness attached to it.
CRAIG EMERSON: The messiness is this, that the Government seems to have left the election timing in the hands of four Senators who are not fond of the Government because of the voting changes, which will wipe them out either... interrupted
PETER VAN ONSELEN: But they have only left it in their hands if they then turn around and pass the legislation, because they want them not to.
CRAIG EMERSON: Sure. So let’s call it novel. It’s a novel initiative to say the election will be on the second of July unless two of the four Senators change their pre-existing position, in which case the election won’t be on the second of July, it will be some time in... interrupted
PETER VAN ONSELEN: Either way, Malcolm Turnbull wins doesn’t he? Because he looks decisive after having made this move then he can crow about getting the ABCC legislation.
CRAIG EMERSON: Well if it’s about the legislation, he could say one way or the other that he’s going t get the bill, that’s right. But, there is a big issue here, and I’m not saying it’s a terrible mistake or anything, but anyone who asks, when will the election be, the answer is we don’t know. That includes the Prime Minister of Australia, so he has effectively called an election for a date yet to be determined.
PETER VAN ONSELEN: I don’t mind it though, but we will probably get to some of this when we talk to Mathias Cormann. Shall we bring him in now, there’s no point in dawdling, let’s talk to the Finance Minister now, as well as Deputy Leader in the Senate, also in charge of electoral matters of course as Special Minister of State now, Mathias Cormann, thanks for your company.
MATHIAS CORMANN: Good to be here.
PETER VAN ONSELEN: Let me ask you, off the bat and we’ll get to some of the issues around the possible election timing, the legislation, what will happen in the Senate when it is recalled in April, which all fit under your title of Deputy Leader in the second chamber, but first, Scott Morrison. Scott Morrison not knowing about this half an hour before it was announced. It looked messy at the very least doesn’t it? He’s the Treasurer after all.
MATHIAS CORMANN: I’ll leave the commentary to you. All of us in Government were working to a particular timetable, until the decision was made to change the timetable. That decision was made on Monday morning. That is now the revised timetable.
PETER VAN ONSELEN: Well if you leave the commentary to me I say it is messy, but let’s move into another area, someone that is not afraid to comment is Tony Abbott. He says that it is easy to campaign for the re-election of the Turnbull Government now, because very little has changed it is essentially the Abbott Government. Malcolm Turnbull says that’s not right, who do you believe?
MATHIAS CORMANN: As the Prime Minister has said, there is inevitably a lot of continuity. From the Prime Minister down, a whole number of us were senior members of the Abbott Government. Inevitably, there is a level of continuity. What people across Australia will be interested in when they pass judgement on who to support in the lead up to next election is assessing the plans of the respective teams for the next three years. The extent to which our past performance is relevant, is it will help inform people’s judgement on whether they trust that we will be able to deliver what we put forward as our plan for the next election.
PETER VAN ONSELEN: But Senator, as people do make those decisions, Malcolm Turnbull has also suggested just recently that Tony Abbott could well be a distraction. Do you agree with the Prime Minister?
MATHIAS CORMANN: I don’t think that that is what the Prime Minister said. What the Prime Minister has indicated is that Tony Abbott is a national figure. He is a former Prime Minister. He is entitled to express his views. We look forward to his support for the re-election of the Turnbull Government at the next election, because manifestly from where we sit, we consider that to be in the national interest. We are working our way through a very important economic transition from mining construction driven growth to broader drivers of growth. The Government is pursuing an important reform agenda, to help ensure that transition is as successful as possible. We look forward to Tony Abbott’s support in helping us achieve victory at the next election.
CRAIG EMERSON: Senator Cormann thanks for coming on the program. It will be a long election campaign, effectively the election campaign began yesterday. The history of long campaigns is not a happy one and one of the problems ... interrupted
PETER VAN ONSELEN: Especially for Mark Latham in 2004.
CRAIG EMERSON: Mark Latham, Bob Hawke in 1984, even the Labor campaign which effectively started on Australia Day in 2013 when Julia Gillard announced the election date. They are not really happy occasions. In that the media is always looking for a story, because they are dedicated to covering an election. If an election runs for many months, then the media runs out of stories and then starts looking for anything. It just seems to me, I don’t know whether you have reflected on the sort of challenge of keeping up the momentum over such a long period to an Australian public, which regardless of how people vote, is becoming very, very cynical and sick of Canberra.
MATHIAS CORMANN: The people across Australia have known for some time that there will be an election in the second half of this year. Nothing has changed. There will be an election in the second half of this year. The announcement that the Prime Minister made yesterday is very much focussed on our intention to advance a very important part of our productivity agenda. Namely, the re-establishment of the Australian Building and Construction Commission. We have set out how we believe that we can secure passage of that legislation. Our preference is for the Senate to pass that legislation over the next three sitting weeks. But if that doesn’t happen, there will be a double dissolution election on the 2nd of July, which is the constitutional method to resolve a deadlock between the two Houses of Parliament. It is an entirely straight forward process as set out in the Constitution.
CRAIG EMERSON: I accept that but there is a difference between an election year and an election campaign. Everyone knows in advance when the election year is, but this is now kicked off a campaign and the point I am making I guess, is that there is a certain weariness that comes in, which allows pre-obscure stories to dominate for days. You can have a candidate saying something out of line and the question becomes for days whether that candidate will be thrown out of the party, and I’m talking about the Coalition and Labor here. But anyway...
MATHIAS CORMANN: I’m not a tactical campaign commentator, I’m part of the Government focussed on implementing and pursuing a reform agenda to help strengthen the Australian economy, to create more jobs and to help achieve the most successful possible transition from resource investment and construction driven growth to broader drivers of growth.
PETER VAN ONSELEN: Can I ask you about that Senator, I mean obviously you are on preparation, ERC and all the rest of it, meeting and planning for the Budget. Do you think voters are going to be surprised, pleasantly surprised, with the extent of changes that are in the Budget. I’m not asking you to divulge them now, feel free to do so of course if you like, but do you think in broad terms, do you think people will be pleasantly surprised? There has been a kind of sense in the media that this is going to be a Budget that is not going to have much in it.
MATHIAS CORMANN: I’m not a commentator on the Budget. After the Budget I will provide information and explain why we have made certain policy decisions and why we think it is in the national interest to pursue a particular course of action. I will leave that sort of commentary about the Budget after the Budget to others. I am certainly not going to start to pre-emptively commentate on the Budget that hasn’t yet been delivered. What I will say is that all of the judgements that we are currently making are guided by our desire to ensure that we are the most successful we can be in transitioning from resource investment and construction driven growth to broader drivers of growth, through more diversified economic base. That is what we focus on every single day as we look through all of the public policy areas across the Budget.
CRAIG EMERSON: And that is the challenge for Australia, to make that transition successfully, but you talk about productivity and the building and the construction industry. The Productivity Commission has delivered a report which says that when the Australian Building and Construction Industry Commission was put in place, the subject of this double dissolution trigger, there was no change in productivity in the building industry. There’s a lot of building going on, is this the number one economic issue? That inefficiencies in the building industry? It just seems to be, from the point of view of the wider voting public, it seems to be a pretty narrow issue to focus on.
MATHIAS CORMANN: I disagree with the description that it is a narrow issue. The report that you reference was put together by a reviewer that was handpicked by Julia Gillard, the former Prime Minister.
CRAIG EMERSON: The Productivity Commission?
MATHIAS CORMANN: Let me just say that the review of all of the available evidence in relation to the Australian Building and Construction Commission, when it was in place, was that it delivered many billions of dollars in productivity improvements. Since it has been abolished in 2012, the level of industrial disputation in the construction industry has increased by 34 per cent. All of that drives up the cost of construction. About a million workers in this industry and responsible for about two thirds of the level of industrial disputation across Australia. If you look at what has come out of the Heyden Royal Commission, the level of lawlessness, corruption and quite frankly destructive, inappropriate and bad behaviour that hurts our economy, it is endless. It is one of the areas that we need to address in order to strengthen growth and put Australia on the strongest possible foundation for the future.
PETER VAN ONSELEN: But Senator, someone like me who now only doesn’t disagree with bringing back the ABCC but also says you’ve got a mandate for it because you actually campaigned on that quite clearly at the last election, but it’s still being obstructed. Why not nonetheless though, go that extra step and have a federal version of ICAC? That’s what a lot of people are suggesting is worth doing. If it is worth doing in the construction sector, isn’t it worth doing right across the board?
MATHIAS CORMANN: It’s a distraction run by those who want to kill this Australian Building and Construction Commission re-establishment. If you look at where the major problem is, if you look at where the real issue is that needs to be addressed, it is in the construction industry where the level of industrial disputation, the level of harm caused by lawlessness and corrupt behaviour, far exceeds anything in any other part of the economy.
PETER VAN ONSELEN: But in fairness though Senator, I mean that is true in terms of the information we have, but one of the reasons we know that is because of the Royal Commission into trade union activities. Had we had similar Royal Commissions into the banking sector, or the finance sector or wherever, there is every chance isn’t there that we would have the same plethora of information to be able to say, you know what, it’s worth having a cop on the beat right across the board. Not just in this one area where you rightly point out, we’ve got the information but it’s because of the Royal Commission.
MATHIAS CORMANN: Actually, I think that in relation to the construction industry, we knew of the level of lawlessness and corruption in that industry long before the Royal Commission did its work. The Royal Commission confirmed a lot of the well founded concerns that people across that important part of the economy have had for some time. By the way, I don’t believe that Labor is actually proposing the establishment of a broader Federal anti-corruption commission. I might be wrong on this, but my understanding is, I actually don’t believe that Bill Shorten is making the sort of suggestion that you are making.
PETER VAN ONSELEN: I’m not running Bill Shorten’s lines, I think both sides should take it up.
CRAIG EMERSON: You see we’ve just spent five minutes on the Building and Construction Commission and the construction union. The Australian public, do want to know about health, education, things that directly affect them. Now this is perfectly a matter for the Coalition to decide tactically, but if it spends the next several months talking about the construction industry, and say that is a really key issue for everyone, will people not look quizzically at the Government and say, well it doesn’t affect me, and whether the cost of a building is 5 per cent higher or lower has no relevance to me. But, you’re not talking my language, you’re not talking about the issues that concern us?
MATHIAS CORMANN: If the cost of building a house or building more generally is 5 per cent higher, it should concern people, because that has got an impact on our economic growth... interrupted
CRAIG EMERSON: Well hold on, the building and construction unions don’t go around building individual houses, they build high rise. You can’t blame surely, the cost of a house on... interrupted
MATHIAS CORMANN: It flows all the way through. The truth is, it flows through the economy, it flows through our capacity to grow. If we grow less there will be fewer jobs and there will be less opportunity for people to get ahead. To go back to your original question though, in relation to other issues like health and education, you yourself indicated that there will be a very long campaign. If it is on the 2nd of July, assuming that the Australian Building and Construction Commission legislation doesn’t pass the Senate, it will be seven weeks from the 11th of May onwards. There will be ample opportunity to canvas all of the important public policy issues including health and education. It is not going to be a campaign solely on one or two topics, but what we are saying, right now, as Peter Van Onselen rightly indicated, we took this proposal to re-establish the Australian Building and Construction Commission to the last election as an important part of our productivity agenda. We have been frustrated in the Senate over the last two and a half years. The Senate has sent it to three separate Senate committee inquiries, the same legislation, three separate senate committee inquiries and Labor has been filibustering every step of the way. We are now bringing this to a head and that is part of our push to advance our agenda.
CRAIG EMERSON: Would you, as Deputy Leader in the Senate consider an amended building and construction Bill, or must it be an unamended Bill in which case it becomes a trigger for a double dissolution.
MATHIAS CORMANN: It only becomes a trigger if it fails to pass or is rejected. What I have said this morning and what the responsible Minister Senator Cash has said, of course we will consider reasonable amendments. Of course we will negotiate in good faith. But the time for all of the procedural games that have been played in the last two and a half years is over. We now need to get on with it. There is a three week window within which our preference is to secure passage of this legislation to re-establish the Australian Building and Construction Commission. If reasonable amendments will help us secure passage, then that is our preference. If there is no capacity or no likelihood that agreement to reasonable amendments would help secure passage, then the course of action that the Prime Minister set out yesterday will be taken. Incidentally, what amendments go through the Senate is only relevant to the extent that there is agreement to these amendments and they are ultimately accepted by the House of Representatives.
CRAIG EMERSON: Well I think you would talk to the Prime Minister about it before deciding to accept the amendments or not.
MATHIAS CORMANN: Ultimately, what matters here in the constitutional context is whether any amendments that are agreed to by the Senate are acceptable to the House of Representatives. If the Bill is amended in a form not acceptable to the House of Representatives, then the deadlock between the houses of course continues.
CRAIG EMERSON: But if you don’t agree with them in the Senate, it’s hardly likely that the Prime Minster will say well... interrupted
PETER VAN ONSELEN: Well but I think his point is they could kick it back to the House of Representatives and still have a trigger in the Senate.
MATHIAS CORMANN: The Government is not in charge of its own destiny in the Senate. The Senate is able to impose amendments on the Government... interrupted
PETER VAN ONSELEN: If the trigger still stands Senator is that your point? The trigger still stands and then the House of Representatives will make a... interrupted
CRAIG EMERSON: There’s already a trigger by the way.
MATHIAS CORMANN: The point is, the very direct answer to your question is, yes we are happy entertain reasonable amendments. We are not happy to entertain amendments that fundamentally change the legislation. If the Government agrees to amendments because we consider them reasonable in the Senate, then the expectation will be that these will be acceptable in the House of Representatives. Your characterisation that somehow the Senate agreeing to amendments would remove the trigger is not accurate to the extent that whatever amendments the Senate decides irrespective of the Government is not actually all that relevant.
PETER VAN ONSELEN: What about wider IR reforms Senator? I accept the case that you have articulated for the ABCC being introduced, but what about wider IR reform that large components of the business community say is necessary?
MATHIAS CORMANN: That will be a matter for the Minister for Employment Senator Cash to outline in the next few weeks and months in the lead up to the next election.
PETER VAN ONSELEN: But is there any chance of it do you think? It’s always been something that the Coalition has been gun-shy of since 2007.
MATHIAS CORMANN: I’m not a commentator. I put my full trust and confidence in... interrupted
CRAIG EMERSON: You’re a Cabinet Minister.
MATHIAS CORMANN: I put my full trust and confidence in the responsible Minister who is Senator Cash.
PETER VAN ONSELEN: What about ideologically though, do you ideologically support wider IR reform?
MATHIAS CORMANN: Very good try Peter. As I have already indicated there is a Minister who is responsible for these matters and that is Senator Cash.
CRAIG EMERSON: Can we then change to a subject that is more directly in your portfolio and that is tax. What we know to this point is that changes in negative gearing are out, modest changes to superannuation are maybe on the table, but a GST is out. Now bracket creep looks to be not on the table any more. What we do know that is left, is that the Government is talking about a company tax cut and allowing the high income levy to expire with the expiry of the legislation. Isn’t it a massive marketing job to convince ordinary Australians that a tax cut for people above $180,000 and a company tax cut is actually good for them?
MATHIAS CORMANN: There is a lot of speculation there. I’m not going to add to the pre-Budget speculation. The Budget will be delivered on the 3rd of May... interrupted
CRAIG EMERSON: Are you sure?
MATHIAS CORMANN:... and when it is all out there, we will explain why we have made the judgements that we have made, and how we believe this will help the Australian economy successfully transition from resource investment and construction driven growth to broader drivers of growth and a more diversified economy. Everything between now and then is just speculation.
PETER VAN ONSELEN: Finance Minister Mathias Cormann we appreciate you joining us on To the Point, we’ll talk again soon. Thanks very much.
MATHIAS CORMANN: Always good to talk to you.