Territory FM – Mornings with Pete Butler

Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia






2017-18 Budget, Northern Territory, GST, City Deals, Higher Education

PETE BUTLER: I have in the studio with me the Minister for Finance, Deputy Leader of the Government in the Senate and Acting Minister for Revenue and Financial Services. That of course is the Senator the Honourable Mathias Cormann.

MATHIAS CORMANN: Good to be here.

PETE BUTLER: Senator good morning, is it your first time to Darwin?

MATHIAS CORMANN: No I have been here on many occasions, both officially and privately. I love Darwin. I love the Territory. I actually spent a week in East Arnhem Land with Tony Abbott two years ago, which was a particularly fantastic experience.

PETE BUTLER: That was when Tony came up stayed in a tent with floorboards on it and I think he had his own special uggboots to be able walk around it.


PETE BUTLER: Chief Minister Michael Gunner has come out saying that the Federal Government needs to stump up some cash and commit to that whole rhetoric around developing the North. From where I sit here and I listen to the industry leaders up here and business leaders, stakeholders, he is right. The Federal Budget last year delivered the Territory a fairly ungenerous $40 million in new funding for infrastructure. That was through the Asset Recycling Scheme, the CLP Government sold off our Territory insurance company and they leased out our port rather famously. This year we do not seem to be seeing much as well and we are looking at recalculated dividends from the GST of giving us about a $2 billion cut, that is over four years. How can the Federal Government claim that they are committed to developing the North when there has not really been any new money committed to the Territory’s infrastructure in this year’ Budget?

MATHIAS CORMANN: A couple of points here. Firstly, we as a Federal Government would like to do more with the Territory Government here in building infrastructure for the Northern Territory. In order to be able to do so, beyond the many projects that we are already investing in, several hundred millions of dollars are of course already being invested in infrastructure by the Federal Government here across the Territory. There is also significant investment in our defence infrastructure here across the Territory. We would like to do more. I have met with the Chief Minister in Canberra in February. I will be meeting him later this afternoon to have some further conversations. What I would say though is that funding into the Northern Territory across a whole range of important areas has actually increased quite significantly in this Budget. For example, funding for Northern Territory schools will be 15 per cent higher or $207 million higher than what it would have been according to the Budget position just before Christmas. We have put additional funding into Northern Territory schools. We have put additional funding into Northern Territory hospitals to the tune of about $150 plus million. In relation to the issue you raise on the GST, the Commonwealth Grants Commission issue. The Commonwealth Grants Commission operates independently. As a West Australian I know that, I am only too painfully aware of that. The Northern Territory in 2017-18 will get about $4.70 for every $1 in GST raised here. Western Australia will get 0.34 cents for every $1 raised in Western Australia. The Northern Territory will still get about 14 times as much as Western Australia out of the GST distribution per dollar raised locally. The other point that I needed to make. You talk about a $2 billion cut and I have seen that reported in the NT News and other places. The Commonwealth Grants Commission does not make a decision over a four year period. The Government here, the Territory Government here is making assumptions on what will happen into the future…interrupted.

PETE BUTLER: That is what Government’s do though…interrupted.

MATHIAS CORMANN: I am just correcting this because the Commonwealth Grants Commission has made a decision for 2017-18, that instead of getting $5.30 per $1 in GST raised in the Northern Territory that you would get $4.70 in GST sharing arrangement money. It is a significant cut in 2017-18 of about $257 million. We have made up some ground in other areas by significantly boosting the funding for schools in the Territory, funding for hospitals in the Territory, we would like to do more on infrastructure, we would like to do more in the defence space. I am here to have conversations with the Chief Minister and other stakeholders along those lines.

PETE BUTLER: I think with GST and I will just put this to you now, is it time that we start having this mature conversation about increasing GST? No one seems to want to touch it. I know it is not an election winner, it is not popular within election cycles. But isn’t it time we start having that conversation?

MATHIAS CORMANN: Well it is a matter of public record that in the lead up to last year’s Budget, the Federal Government did consider and assess this and we made a judgement in the end that it was not going to be the right thing for Australia to do. It was not going to deliver the growth dividend that sometimes people seem to think would come with it. Having said that, at a national level we have made decisions that actually increase the overall size of the GST pie. Everybody focuses on the share for every individual jurisdiction. But decisions for example, like lowering the threshold from which GST on overseas purchases is applied, that will increase the overall revenue raised, which means that it increases the resources available to States and Territories.

PETE BUTLER: Well we do not have time to get into it, there are questions around that with the cost to actually implement it, to police it and then the fact that some businesses like the EBay’s of the world will pull out of Australia. Again, I do not want to get bogged down in that. There are severe housing issues up here in Indigenous communities, you would be aware of that, you have spent time out there in Arnhem Land last year, of course that contributes to Indigenous disadvantage. Again, I have got to ask you, if the Coalition Government is committed to helping close the gap and to me it seems to be a recurring, very ugly motif that is passed between successive Governments almost just to get them re-elected again. I know that sounds cynical, it is easy for me to say that. But again there does not seem to be very much in the Federal Budget to help address this issue.

MATHIAS CORMANN: We have got around the Cabinet table my good friend and colleague Nigel Scullion, who is highly experienced and very much across all of the issues and who is a very strong advocate when it comes to putting the appropriate investment into effective programs to address all of these sorts of challenges with a view to close the gap. This is a difficult and complex area and nobody is going to be able to tell you that they have got all of the perfect answers. We are working very hard to make a tangible difference and Nigel Scullion is working very hard to put the right proposals and the right suggestions in front of us that we can support with Federal funding.

PETE BUTLER: Well it was encouraging to see some announcement of I think it was $30 million towards the Sea Ranger Program yesterday. So let us watch this space. A lot of talk around decentralising, Barnaby Joyce relocated the pesticides and veterinary mob into Armadale. We have seen the Australian Electoral Commission downsize I think and I may have these figures from about 13 to three staff up here, moving them over to Brisbane. Shouldn’t it be the other way around? Especially given the apathy of voters across Australia that if the statistics are correct at the last NT Election, five eighths, just over half of the Territorians bothered to turn out to vote.

MATHIAS CORMANN: With elections there are always temporary spikes in staffing arrangements depending on when and what elections are taking place, but I take your point. As a matter of principle, we are looking for opportunities to decentralise Federal Government operations where that makes sense. That is certainly something that as a Government we continue to explore. Here in the Northern Territory we do have a very strong defence presence across a whole range of communities and that has made a significant contribution to this economy as well as of course the importance from a national security point of view. The United States is going to increase their presence across this part of the world, which will be significant to the local economy. We are always looking for other opportunities to do more, so watch this space.

PETE BUTLER: Look I know you have had representations from people up here down in Canberra, especially around that defence thing, there is $20 billion slated over the next two decades. A lot of those projects are so big though that it is very hard for local companies to get engaged. So I will let other people, advocates, stakeholders have that conversation with you…interrupted.

MATHIAS CORMANN: My advice is that local companies are actually doing very well in relation to a lot of that defence work. For example, we are currently working on a very important project at the RAAF Base in Tindal, upgrading that as part of as our air capability enhancements. There is about $217 million of projects that have been let and $145 million of that has directly been awarded to local Northern Territory businesses. Even with the remainder, where the work has been awarded to businesses outside the Northern Territory, they are very much being urged and encouraged to work with local subcontractors to deliver a lot of that work.

PETE BUTLER: I want to have a chat to you about the City Deals. Nothing is coming Darwin’s way, Palmerston’s way, nor in Alice Springs. Crying out for money, crying out to be made beautiful or even better up here. We have seen it spent in Launceston, we have seen it spent up in Townsville and to be spent in Western Sydney. Now here is me being a little bit cynical, there are more votes to placate there, there is also a lot of middle voting ground, which is where both major Parties need to focus on to secure their votes. Why are we not seeing money up here? I will just let you know, you have said you have been up here before and you may know the answer to this, there are a lot of voters sitting on the seat now up here, sitting on the fence rather.

MATHIAS CORMANN: I do love this part of the world. I would tell you I think that is a bit unfair and unreasonable. One of the things that I will be doing while I am here is to sit down with the Chief Minister Michael Gunner and see what we as the Australia Government and the Northern Territory Government can to do together, including and in particular when it comes to City Deals. The way these deals work is that it is not something that we impose from on high and I do not think people in the Territory would like it if the Federal Government imposed projects from on high. It is something where we have to work in with the local Government in relation to their priorities, in relation to the priorities of the Community here in Darwin, the priorities as determined by the elected Government at a local level. That is what we are committed to do. We want to work with local Government, the Territory Government and identify the projects so that we can put a high quality City Deal together for Darwin in the same way that we have in other parts of the world. We are very committed to it.

PETE BUTLER: So again on this one watch this space.

MATHIAS CORMANN: I will be back. I will be back and we will be able to talk about the projects that have got up.

PETE BUTLER: Just finally before you go, I am sitting here at a university of course. I am very passionate around that, I know you are as well, with education. As reported in The Age just recently, universities will face a 7.5 per cent cut to their Commonwealth Grant Scheme was proposed from 2019, if they do not satisfy performance targets including retention, completion and student satisfaction. Face value, sounds like a good idea. Former Chair of Universities Australia Barney Glover, who was also a former Vice Chancellor up here I must mention, said that that 7.5 per cent cut will have an extraordinary impact on universities bottom line and would likely result in course cuts and staff cuts. He said the Government has taken a very punitive way of improving performance up here and then I will quote him “Australia has one of the best preforming systems in the world and we have got to be very careful before we launch into schemes that puts significant amounts of money at risk and tinker with a system that is in fact working very well.” Can I please ask you to comment on that?

MATHIAS CORMANN: Yeah sure of course. Firstly, there is no 7.5 per cent cut. There is a 2.5 per cent efficiency dividend, if you want to call it a cut, it is 2.5 per cent. The context is this, sometime ago now Julia Gillard as Education Minister in the period of the Rudd Government removed the student enrolment cap. So there is now a demand driven system when it comes to universities, when it comes to higher education. Student enrolments have increased by 31 per cent since that time. The revenue paid by the Commonwealth per student has continued to increase strongly. So overall funding going to universities has increased very, very strongly, much faster than the cost of providing the service. There have been some economies of scale for universities and in the environment we are in Budget wise, where we do have to find ways to live within our means, get our Budget back into surplus, we do not believe it is unreasonable for universities to pass on some of that efficiency they have been able to gain on the back of very significant increases in student numbers and significant increases in per student fees that they are attracting, that it is unreasonable for them pass some of that by way of efficiency dividend to taxpayers. Now 2.5 per cent, that is what we apply to the Public Service in Canberra by way of efficiency dividend as well so it is not an exorbitant percentage. 

PETE BUTLER: Senator Cormann, thank you very much for your time this morning.

MATHIAS CORMANN: Love talking to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth