Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 18 November 2016
ROSS GREENWOOD: Let’s now go to our Finance Minister, Mathias Cormann who quite clearly has to look at the balance sheet of Australia, the mid-year fiscal and economic outlook will be coming in the middle of December. Many thanks for your time Mathias. As always, appreciate it.
MATHIAS CORMANN: Good evening. Good evening to your listeners.
ROSS GREENWOOD: Just the first issue from the Trump election, the difference between Donald Trump and the Government here in Australia and in fact previous governments in Australia as well is that he has control now through the Republicans, the Senate, the House of Representatives and the White House. And so as a result can really issue policy and then push through and see it through both of those houses. It is a much more different thing here in Australia as a politician isn’t it?
MATHIAS CORMANN: Sure, governments in Australia for most of the past thirty plus years have not had majority support in the Senate. Governments in Australia, generally, have to negotiate their program through the Senate. That is right.
ROSS GREENWOOD: That being the case, as a politician, you must be frustrated by the fact that there would be good policy that does not get through our Senate, policy that would be sensible to help repair the balance sheet of Australia, help to fix our social services system, try and make fairness inside our economy and our community, but simply that you cannot get them through our Parliament. And that is really the problem that is hamstringing Australia if you like right now.
MATHIAS CORMANN: Frustration is not very productive. We have a plan to put the Australian economy on the strongest possible foundation for the future. We have a plan to get the Budget back into balance as soon as possible. We have a whole series of proposals that we put to the Parliament to give effect to our plan. We continue to explain why all of our many proposals are necessary and important and continue to make the case. We are making good progress. Sometimes we would like to get some measures through more quickly. But in the end, we are working within our system. We respect the result of the last election. The result of the last election gave us the Senate and the 45th Parliament that we now have to work with.
ROSS GREENWOOD: Tell me this, given that you have seen a tripling in coal prices, you’ve seen a doubling in iron ore prices over the past six to twelve months, this actually gives you an opportunity in this mid-year economic outlook and update statement to have a slightly different look to the Budget and even some of the forecasts when Australia actually starts to get itself back into surplus. Are those numbers going to come forward or do you have to be very conservative?
MATHIAS CORMANN: Firstly, there are always a lot of moving parts in any Budget and any Budget update. Our focus very much is on making sure that we improve our position as a result of the policy decisions we make. There are always external factors beyond our control. There have been external factors beyond our control that have detracted from revenue in recent years. Let’s see what the forecasts and what the assumptions are going to be in the half yearly Budget update. We will be waiting for the third quarter national accounts data to come in before we finalise our judgements on economic parameters and the like. We will make sure that all of the assumptions that are underpinning our revenue forecasts and the like are as realistic as possible, based on the best possible information and the best possible advice. The key focus though is that we need to ensure that as a result of the things that we control, as a result of the policy decisions we make on the spending and on the revenue side of the Budget that we continue to get ourselves in a more sustainable position for the future.
ROSS GREENWOOD: Alright, speaking of sustainable positions, is it sensible for the Government to effectively bail out the National Broadband Network to the tune of some $19.5 billion? You’ve placed a limit of $29.5 billion on how much the Government will put on. But the project is likely to cost $49 billion, which means that the money has to come from somewhere. Where does the money come from? And should it be taxpayers’ money?
MATHIAS CORMANN: Firstly, I don’t accept the description that we are bailing the NBN out. It has been known for a long time that the base case funding required for the full rollout for the NBN is about $49 billion, that there was $19.5 billion in remaining funding required. The alternative was that NBN would have sourced that funding from private debt markets. That would have all up been more expensive. The Government can borrow at a lower cost. What will happen here, because we are providing the loan on commercial terms to the NBN, this really is the most cost effective way for us to finalise the NBN rollout at the lowest possible cost to taxpayers. If we had pursued any other option it would have ended up costing us more.
ROSS GREENWOOD: Mathias, if someone is going to borrow money off me, $19.5 million thousand dollars, $19.5 billion dollars in this particular case, I want to be pretty happy that I was confident that the forecasts going forward were very much in my favour and I thought this thing was going to be self sufficient in its own right. As our Finance Minister putting the $19.5 billion into the NBN are you happy that their performance and whether NBN is actually hitting its targets right now?
MATHIAS CORMANN: Under the Coalition it is very important to note, that the NBN is on schedule. It is ahead of its revenue forecasts and it has met or exceeded all of its key rollout targets across the last two financial years. So we are very confident in terms of where NBN is at now as a result of the reform efforts that we have put in place over the last two years. We also know that the work has got to be completed. We have to complete the work at the lowest possible cost. Importantly, what we expect to happen is that by 2020-21, NBN would refinance this loan on the private debt market and fully repay that loan to the Commonwealth at that point and we will be repaid with interest.
ROSS GREENWOOD: So you will be repaid with interest. So in another words this is a loan on commercial terms that the Government is putting in. And without it I presume that the NBN would collapse because it wouldn’t have the funding.
MATHIAS CORMANN: It has always been known as part of the NBN Corporate Plan, that the NBN would require a further $19.5 billion to finalise the rollout. The question was how that additional funding requirement would be met. Would that be met by NBN borrowing money from private debt markets or the alternative way that we have opted for, which is for a Government loan on commercial terms. Our judgement is, that what we have decided to do provides the most cost effective way of finalising the NBN rollout. But down the track n 2020-21 the expectation is for the NBN to refinance that loan and to repay the Commonwealth in full.
ROSS GREENWOOD: Tell me, as our Finance Minister, are you happy with Australia’s fiscal situation right now.
MATHIAS CORMANN: I am happy that we are doing all that is required to get the Budget back on a sustainable foundation for the future. We are still working our way through the consequences of the many bad decisions that were made by the previous Labor government. We are still working to get our spending growth trajectory on a more sustainable foundation for the future. But we are heading in the right direction. We are on track. Right now, we are on track to get the Budget back into balance by 2020-21. That is what we continue to work on.
ROSS GREENWOOD: And look, just before I let you go, you are happy in the job aren’t you. Finance Minister, it suits you, you are happy with that job.
MATHIAS CORMANN: I love it.
ROSS GREENWOOD: You are not looking to, aspire to some other position anywhere are you?
MATHIAS CORMANN: I love the job I have got. I am giving it the best I can every single day.
ROSS GREENWOOD: Alright, because it is just something happened last night, and I don’t know whether you spotted it this or not but it was just something that somebody else thought about your job. Let me just play this, it comes from the Channel Nine program, Millionaire Hot Seat with Eddie Maguire. Just have a little listen to this.
EDDIE MCGUIRE: In February 2016, who became Australia’s Deputy Prime Minister. A, Eric Abetz. B, Mathias Cormann. C, George Brandis. D, Barnaby Joyce.
CONTESTANT: I am not too sure on this one. I think it was Mathias Cormann. B.
EDDIE MCGUIRE: Lock it in?
CONTESTANT: Yes please.
EDDIE MCGUIRE: Locked in. He would probably want to be. But it was no, you have got to be a Nationals party leader in the Coalition.
CONTESTANT: Oh no.
EDDIE MCGUIRE: It was Barnaby Joyce.
CONTESTANT: I thought it might have been Barnaby Joyce too. But no.
EDDIE MCGUIRE: The current leader of the Nationals party.
ROSS GREENWOOD: See, that is the problem you have got Mathias. You are not about to jump sides and go to the Nats and knock off Barnaby Joyce are you?
MATHIAS CORMANN: Obviously not. I missed this one. I hadn’t heard about this one. I like her thinking, but no I very much like the job I have got.
ROSS GREENWOOD: I tell you what, Mathias Cormann, good to have you on the program. The Finance Minister, tough job. There is no doubt about that.
MATHIAS CORMANN: Always good to talk to you.
ROSS GREENWOOD: We appreciate it as always.
MATHIAS CORMANN: See you bye.