Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
FRAN KELLY: Much of the focus this week will be on the same sex marriage plebiscite when Federal Parliament resumes. The Labor party room is set to sink next year’s proposed plebiscite on marriage equality when it meets at caucus tomorrow. And the never ending search for Budget savings, back on the agenda following those grave warnings from Standard & Poors that Australia’s foreign debt has reached extreme levels. Mathias Cormann is the Finance Minister and the Deputy Government Leader in the Senate. Mathias Cormann, thank you very much for joining us.
MATHIAS CORMANN: Good to be here.
FRAN KELLY: Before we get to marriage equality if I could ask you about this warning by Standard & Poors. Australia’s foreign debt has hit extreme levels is the quote. $1.045 trillion in the year to June. That sounds a lot like Standard & Poors are preparing the ground to cut our AAA rating. Does it sound like that to you?
MATHIAS CORMANN: Firstly, all of the three major credit agencies have confirmed Australia’s AAA credit rating in recent times. When it comes to Australia’s foreign debt level, the story in The Australian today relates both to Government and private sector debt. A lot of the private sector debt goes into capital investment into our economy, under pinning our economic growth in the future. When it comes to Australian Government debt, we have always said that we need to repair our budget, we need to the debt and deficit legacy that we inherited from Labor under control. We are in a better position now than we would have been if we had not made many of the decisions to improve our budget bottom line and implemented those decisions over the last three years ...interrupted
FRAN KELLY: Can I just pick you up on that because the Government says this all the time, the agency, the Standard & Poors says the Government needs to find new savings yet annual government outlays have risen from $406 billion to $455 billion since you took office. So when you say we are in a better position...
MATHIAS CORMANN: That is in nominal terms. We are in a better position. The policy decisions that we have made have improved the budget bottom line and to 2026-27 by $220 billion so the decisions ...interrupted
FRAN KELLY: But debt and deficit has blown out.
MATHIAS CORMANN: When we came into Government we inherited a spending growth trajectory which was locked into legislation, which was locked into the Budget of the medium term by the previous Labor government. You might remember they made decisions to increase expenditure in years five and six outside the four year budget forward estimates period on things like Gonski, hospitals, NDIS and a range of other subjects. We have worked very hard to bring the spending growth trajectory down. Spending growth is lower than what it would have been ...interrupted
FRANK KELLY: Barely, barely lower.
MATHIAS CORMANN: $220 billion is pretty sizable. You might remember in the last sitting week we were able to bank a further $11 billion worth of budget improvements including in relation to measures that Labor had been opposing for a long time, but then in the middle of the election campaign was forced to finally support.
FRAN KELLY: Just to finish with Standard & Poors, the chairman of their sovereign ratings committee, John Chambers said Australia has one of the weakest external positions of the 130 sovereigns that we rate. Now you have been the Finance Minister for the past three and half years. It seems like the agency is unconvinced by your assurances that our fiscal position is strong and improving.
MATHIAS CORMANN: What you are talking about there is as I’ve indicated the level of private sector debt carried overseas ...interrupted
FRAN KELLY: Are you worried about that?
MATHIAS CORMANN: If it is invested in productivity and enhancing andin economy growing capital investments then that is a good thing. Australia has had a negative current account deficit since the 1970s. We are an importer of capital in order to invest in our future growth. That is very important that we continue to invest in our future growth.
FRAN KELLY: The pressure is on you though as Finance Minister and the Treasurer to find savings to bring down debt because the Treasurer Scott Morrison says interest rates have quote, exhausted their effectiveness when it comes to getting the economy going. The RBA pushed the official cash rate to such a low level basically the Treasurer is saying it is no longer stimulating the economy. Is that where we are at, that interest rate cuts make no difference now?
MATHIAS CORMANN: What the Treasurer was saying there was he was echoing comments made by the Governor of the Reserve Bank. 1.5 per cent official cash rate is very low, certainly by Australian standards ...interrupted
FRAN KELLY: So monetary policy has exhausted its effectiveness?
MATHIAS CORMANN: We went to the last election with a plan to strengthen growth and create more jobs. We went to the last election with a 10 year enterprise tax plan designed to improve productivity and over time increase real wages. We went to last election with an ambitious infrastructure investment program. All things designed to strengthen growth so that, among other things we would be able to generate more revenue for Government to fund the important services provided by Government.
FRAN KELLY: Talking about tax plans, it might help if taxpayers receive proper return on resource royalties. Australia, this is according to a Fairfax report will become the world’s biggest exporter of liquefied natural gas we know that within 5 years. But according to Fairfax just $800 million in royalties we will get from that from 2021 and they made the comparison with Qatar, another huge LNG or gas exporter will rake in more than $26 billion. Does this show our tax breaks are too generous? The petroleum resource rent tax is a joke.
MATHIAS CORMANN: I was very intrigued to read that report because the petroleum resource rent tax was introduced by Paul Keating as Treasurer in the period of the Hawke government ...interrupted
FRAN KELLY: Has it run its course?
MATHIAS CORMANN: And was the foundation of the minerals resource rent tax proposal that Wayne Swan and the Labor government put forward ...interrupted
FRAN KELLY: Well it’s your tax now, is it a joke?
MATHIAS CORMANN: We will always monitor the way these things develop. But the important point to make here is when it comes to attracting massive capital investment as we did when it comes to the Gorgon project, you cannot change the rules as you go along. Having said that we will monitor the way this develops ...interrupted
FRAN KELLY: Well do you agree through? I mean you are the Finance Minister, I’m sure you have had a look at it. Do you agree that even if the rules, if you cannot change the rules that these are dodgy contracts we have got with these major companies?
MATHIAS CORMANN: I do not agree with that, the way you have put it. I have learned that particular outfit has come up with all sorts of unsubstantiated statements in the past. So we will continue to assess carefully how these matters develop. But what I would say is that Australia becoming the largest exporter of LNG is a huge achievement. Having attracted the capital necessary in order to develop a project of that size internationally is a huge achievement. It is good for our economy. It is generating lots of jobs. It is important that Australia does receive a return. This is a tax policy framework, as I say, that was put in place by Paul Keating as Treasurer.
FRAN KELLY: You are listening to RN Breakfast, it is 18 minutes to 8. Our guest is the Federal Finance Minister Mathias Cormann. He is also the Deputy Leader of the Government in the Senate. Can I just ask you on another issue broadly, Gina Rhinehart’s bid for the S. Kidman cattle empire. $365 million offer which would give her two thirds of the Kidman empire, the Chinese company Shanghai CRED would have one third. So that is a significantly smaller take than previous Chinese dominated bids for Kidman that FIRB and the Treasurer knocked back. At first blush does this pass the national interest test?
MATHIAS CORMANN: It is not a matter for me to make judgement on the run. There is a process to be followed. It is going to be a matter for the Treasurer to assess. It is great if Kidman station of that national significance remains in majority Australian hands. But there are processes to be followed through. I will leave it to the Treasurer to do that in the orderly way.
FRAN KELLY: Nick Xenophon said that even if this, with Gina Rhinehart on board if this goes through, it does not extinguish the need for tighter foreign investment laws. Do you agree?
MATHIAS CORMANN: We do have an appropriate framework when it comes to foreign investment. Foreign investment is very important for economic development as a nation. We are an importer of capital. If we want to reach our full potential we do need to ensure that we can continue to attract foreign investment. We need to have a process in place to ensure that foreign investment is not contrary to the national interest. We do have such a framework in place. I think that that is a bit of a blanket statement there by Nick.
FRAN KELLY: There is a bit going on in the Senate this week. You are Deputy Leader of the Government in the Senate. The key vote this week, if the Government can bring it on this week is on marriage equality. The Labor party room, the caucus is likely to decide tomorrow to block the bill. This is the outcome that the conservative wing of the Liberal party including yourself would welcome isn’t it. You want there to be no marriage equality.
MATHIAS CORMANN: That is not right. We went to the last election with a commitment to put this question to the Australian people in the form of a plebiscite. I am totally committed, the Coalition is totally committed to delivering on the commitment that we made to the Australian people at the last election. Bill Shorten says that he is concerned about the length this debate is going to take. It will take longer if he decides to vote against the plebiscite and if he decides to deny the Australian people a say.
FRAN KELLY: Could this backfire on you? Are you worried about that as a strategist because the issue will not go away. It will inevitably re-emerge perhaps as a distraction at the next election with you guys having not delivered it.
MATHIAS CORMANN: Fran, this issue has come before the Parliament several times in the nine years that I have been in Parliament. Every time the Parliament has voted to re-confirm the current definition of marriage ...interrupted
FRAN KELLY: I think it is pretty clear that opinions have changed and the numbers are different now.
MATHIAS CORMANN: It is only reasonably recently that it was actually dealt with by the Parliament. The reason we went to the last election promising to put this to the Australian people is to facilitate a more permanent resolution of this issue. What we say to Bill Shorten is if he is concerned to get this issue dealt with, if he is interested in getting this issue dealt with, the most immediate way to resolve it once and for all is to put this question to the Australian people.
FRAN KELLY: You have not changed your views but it does seem as though a number of your colleagues have. Are you saying you are not convinced that if it went to a Parliamentary vote it would get passed?
MATHIAS CORMANN: What we went to the last election with is a commitment to put this question before the Australian people. That is what we are focused on. That is what we will be putting to the Australian Parliament.
FRAN KELLY: Just a couple of quick ones before we run out of time because there is a vote scheduled for the Senate today I believe on the CFA legislation. The changes to the Fair Work Act, which the Government says will protect emergency service workers such as the Victorian rural fire fighters from union influence. It looks as though you have got the support on the crossbench to pass this? Does that mean that you also think you will have the numbers to pass the Registered Organisations and the ABCC, the Bills which triggered the double dissolution?
MATHIAS CORMANN: Michaelia Cash, the Minister for Employment has been working very hard with the crossbench to put our case. We never take anything for granted. We are hopeful that legislation to protect the Country Fire Authority from a hostile union take over will pass. But let’s see what happens. We will work our way through the re-establishment of the Australian Building and Construction Commission and the Registered Organisations Commission legislation, one after the other. Our view is that all of those pieces of legislation should be passed.
FRAN KELLY: But do you think from the conversations that I am sure you have been having that you will not have to have a joint sitting of the Parliament to get those bills through?
MATHIAS CORMANN: I am not going to make any predictions or assumptions. We will just continue to work our way through these issues with all of the interested parties in the Senate.
FRAN KELLY: Can I just ask you finally as a senior member of the Australian Parliament, a senior member of the Australian Government, Donald Trump is under growing pressure after his disparaging and lewd comments about women. In your view is he a fit and proper person to be the President of The United States?
MATHIAS CORMANN: I am not going to give advice to people in The United States. I have made my personal views in relation to his comments very clear yesterday. They were outrageously inappropriate, they were offensive and should never have been made. He has apologised. It is a matter for people in The United States to make judgement on who they want to be their President.
FRAN KELLY: Is an apology good enough?
MATHIAS CORMANN: I have said what I have had to say.
FRAN KELLY: Mathias Cormann, thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.