Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
TOM TILLEY: Let’s go to the Finance Minister, Mathias Cormann, let’s see what he says about that comparison to Labor. Minister, thank you for joining us.
MATHIAS CORMANN: Good to be here.
TOM TILLEY: You are still in Government why is Labor running the Budget?
MATHIAS CORMANN: We are of course running the Budget and the Budget that we delivered last night will deliver stronger growth and better opportunities for young people across Australia. It will also make sure that by getting back into surplus on the timetable of 2020-21, that we will not be borrowing for much longer and imposing higher taxes on future generations of Australians.
TOM TILLEY: But it seems like you caved in to Labor on all the policy areas: Medicare, education, housing affordability, the banks, NDIS funding, public infrastructure investment.
MATHIAS CORMANN: Well I will let you run the political commentary. We made decisions based on what we felt was in the national interest, what we felt was in the public interest.
TOM TILLEY: But did you base it on Labor criticism?
MATHIAS CORMANN: Not at all. We made judgements based on all of the information in front of us and what we wanted to achieve, to put Australia on the strongest possible foundation and trajectory for the future.
TOM TILLEY: Your government came to power screeching about Labor’s spending problem. The debt and deficit disaster etc. etc. but you’re spending more than Julia Gillard relative to GDP. Under Kevin Rudd, at the height of the GFC, Government spending peaked at 26 per cent of GDP. It went down to 24 per cent under Gillard and here we are supposedly with rosier times ahead, we’re spending up to 25 per cent of GDP.
MATHIAS CORMANN: Well that is actually all quite wrong. When we came into government, the decisions that Labor had locked into legislation in terms of spending growth on NDIS…interrupted…if I may, you have asked me a question please let me answer the question. So all of the spending growth that Labor had locked into the Budget through legislation on NDIS, on schools, unfunded spending growth on schools, on hospitals and so on, that was locked into the forward trajectory. We inherited a spending growth of 3.7 per cent above inflation. We have reduced it to below 2 per cent. Spending when we came into government was heading to 26.5 per cent as a share of GDP and rising. We have arrested the increase and we are now bringing it down to 25 per cent which is just above the long term average of 24.8 per cent.
TOM TILLEY: Okay so you are at 25 per cent now and Kevin Rudd had it at 26 per cent but that was in a time of crisis.
MATHIAS CORMANN: Well again you are ignoring the fact that when Labor knew that they were about to lose the 2013 election, they locked in, in the period beyond the published forward estimates at the time, spending growth through legislation which was unfunded, which was unaffordable, which was unsustainable, an issue that we have had to deal with. Only in this Budget, for the first time, have we actually been able to fully fund the NDIS. We wanted to do it through savings. Not all of those savings were able to get through the Parliament so we had to make decisions to make that up through revenue measures.
TOM TILLEY: You have been in power since 2013. Almost four and a half years. How long are you going to keep blaming Labor for when it comes to debt?
MATHIAS CORMANN: The reality with policy decisions is that you make decisions today and they have an impact over the medium to long term, and in that same way, when Labor made decisions to lock in unaffordable and unfunded spending increases in 2012-2013, that is still having consequences today. But we are working our way through it. We are taking responsibility. We’re making the best possible decisions, the right decisions today to put Australia on a stronger trajectory for the future.
TOM TILLEY: Let’s talk about the levy on the big banks. Is it really as bad as it sounds? You are hitting them for a 6 basis point charge but through your corporate tax cuts, you’ll be giving them a 500 basis point tax cut. So really they’re going to be 494 basis points better off aren’t they?
MATHIAS CORMANN: Well we are not suggesting that it is bad. Again I’ll leave the commentary to you. What we are saying is that the $1.5 billion a year major bank levy is a fair and proportionate contribution for the major banks to make towards budget repair. Out of $30 billion worth of after-tax profits, $1.5 billion we believe is affordable for them and on top of it, it will actually contribute to an improvement in the competitiveness in the banking sector because the smaller banks and the non-banking financial institutions will have better opportunities to compete with the major banks.
TOM TILLEY: Minister, one really interesting big ticket item I’d love more detail on is the $1.5 billion you’re spending on apprenticeships, it is the Skills Australia Fund. What’s that all about and how will it work?
MATHIAS CORMANN: Well the way that it will work is that people who bring in foreign workers through relevant visa arrangements will have to pay a levy and that levy will go into a fund and that fund will provide additional support, to in particular as you say, apprenticeships and training.
TOM TILLEY: Okay and what will that support look like?
MATHIAS CORMANN: The specifics will be announced by my colleague, the Minister for Training in the not too distant future.
TOM TILLEY: You are listening to the Minister for Finance, Mathias Cormann. We will come back to him in just a moment.
Minister would you be happy to be drug tested before you receive your salary payments?
MATHIAS CORMANN: Absolutely. In many jobs around Australia employees are drug tested, because it is an important feature of occupational health and safety for their job. I would be absolutely prepared to be drug tested every single day. The objective with people on unemployment benefits is to get them back into work and if someone has got a health problem with drug addiction, then surely it is in that person’s interest for that to be detected and for them to be referred and channelled into appropriate treatment. So that is part of the plan to get them back into work as quickly as possible, these issues can be properly addressed.
TOM TILLEY: So if you are going to test more people and potentially reveal more problems, why wasn’t there more funding for drug rehabilitation?
MATHIAS CORMANN: There is very significant funding available for drug rehabilitation. What we are proposing to do here is a trial initially, covering about 5,000 people across Australia and all of the specifics will be announced in the not too distant future by the relevant Ministers.
TOM TILLEY: A lot of people who have these addiction problems are really battling in life. Why would you make life harder for them?
MATHIAS CORMANN: Well I completely reject that proposition that we will be making life harder for them. I would put it to you that we would make life better for them because we would be helping them address issues.
TOM TILLEY: That is the Minister for Finance. Might let him grab his phone, we will come back to him in a moment.
Let’s see what the Finance Minister has to say about the super savings plan, Mathias Cormann, the Super Saver Deposit Scheme for first home buyers is limited to just $30,000. The deposit for a Sydney apartment, if you are going to get up to 20 per cent, is $140,000. So is the $30,000 woefully inadequate?
MATHIAS CORMANN: Well again I’ll leave the commentary to you. We have put forward a proposal which is there for all to see. It is the best proposal that we were able to put together given all of the circumstances. The $30,000 cap is for individuals, so for a couple that is $60,000 of savings that are able to be put together tax advantageously through superannuation and we believe that it will be a significant help.
TOM TILLEY: But $30,000 out of $140,000 deposit?
MATHIAS CORMANN: Well it is better than the current situation where there is nothing.
TOM TILLEY: Better than nothing? Is that the best we can hope for?
MATHIAS CORMANN: Well I will leave the commentary to you.
TOM TILLEY: Okay well let’s compare it to the incentive you’re giving people that already own their homes that can sell them and put the money into super. You are giving them a tax cut for $300,000 if they sell the family home, it is encouraging them to downsize. It seems like you are preferencing people that are older and already own their home over younger people.
MATHIAS CORMANN: I disagree. We believe that the first owner savings account is a very attractive initiative for young people and yes, obviously the measure that we have put forward at the older Australians end, so to speak, will help increase supply to the housing market and that in itself will of course have price and affordability impacts.
TOM TILLEY: But won’t those people who sell their family home then have to buy another one and actually they’ll be buying potentially apartments and competing with first home buyers.
MATHIAS CORMANN: Well you are obviously yet to be convinced on the merits of our package. We believe interrupted…
TOM TILLEY: It is your job to convince me.
MATHIAS CORMANN: And we have been going through it for some time. The housing affordability package that we have put together is a very comprehensive package. It is principally and predominantly designed to increase the supply of housing. There is a whole range of initiatives in there, including the release of Commonwealth land in order to facilitate more houses being developed, there is a whole range of initiatives including the ones you have mentioned and we believe that all together it will help take pressure off housing affordability.
TOM TILLEY: So how much difference will it make, have you done the modelling?
MATHIAS CORMANN; With these sorts of things, there is always modelling done but obviously it will be a matter of seeing what works over the months and years ahead and making adjustments along the way.
TOM TILLEY: But we have got thousands of young people listening right now who are really frustrated that they cannot own a home, own their own homes and you’re talking about this taking time, starting very small, I mean a… (interrupted)
MATHIAS CORMANN: Well you are picking on little aspects one by one out of context. You have to look at the package in its entirety.
TOM TILLEY: They are still very small incentives. Where is the big revolutionary change in housing affordability.
MATHIAS CORMANN: Well as all of us have said, as the Treasurer has said, as I have said, there is no single magic bullet. If you are looking for a magic bullet, there is no such thing as a single magic bullet. What we have put forward is the most comprehensive housing affordability package ever delivered by any federal government. We believe it will make a significant positive difference. Let’s give it a chance.
TOM TILLEY: Minister, great to have you on the show, thanks for your time.
MATHIAS CORMANN: Always good to talk to you.