Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
DAVID SPEERS: I am joined now by the Finance Minister Mathias Cormann. Thank you very much for your time this afternoon. Minister, let me start on the actual overall outcome here. So the deficit result is just over $33 billion. When you and then Treasurer Joe Hockey put together your first Budget, you projected a deficit for this very year we are talking about of $10.6 billion. So it has turned out to be three times that. Why? Why was the projection so far out?
MATHIAS CORMANN: You have to actually look, if you compare the payments in this final Budget outcome for 2016-17 with the payments that were projected in Labor’s last Budget, the 2013-14 Budget, the payments are actually $4.3 billion lower…interrupted.
DAVID SPEERS: I am just going to your projection, forget Labor. Your projection in 2014, you and Joe Hockey.
MATHIAS CORMANN: There have been a whole range of well documented global economic headwinds that we have had to accommodate. Over the years we have had to deal with very serious revenue write downs on the back of, in particular significantly lower global commodity prices for key commodity exports like iron ore, coal and so on. These are all things that we have well and truly documented in the past. If you look at what we projected in the 2016-17 Budget, what this shows, the 2016-17 final Budget outcome is the actual result, the actual performance compared to what was our plan when we released the 2016-17 Budget, which was made up of forecast and projections. Which is all you can do when you put your plan forward. I am quite bemused about Labor now saying that this was all expected and just minor. At the time we delivered the 2016-17 Budget, Labor was saying that our economic growth and employment growth forecasts were heroic and consequently that the revenue assumptions and the revenue forecasts were not going to be delivered. We have outperformed the forecast and the projections that were put forward at the time. Labor cannot have it both ways…interrupted.
DAVID SPEERS: Labor is saying there is a good dose of luck in here as well, I just want to ask you about that. They point to something like the National Disability Insurance Scheme, a slower transition of people onto that. That is not through your doing is it? That there has been a lower spend on the NDIS?
MATHIAS CORMANN: Well, there is a combination of things. Partly it is because there has been a lower than anticipated transition of participants into the NDIS, also there is a lower cost per eligible participant to a degree. If you look across the board, the biggest factor to the improvement is higher than anticipated revenue when we put the 2016-17 Budget together. To a large degree, at least in part that is because of stronger than anticipated growth, stronger than anticipated employment numbers and that just shows that Australia is making progress, that we continue to head in the right direction and that should give people confidence, that when we say that we are projecting a return to surplus by 2020-21, that that is achievable, that we are on track. If you compare to what we predicted when we delivered the 2016-17 Budget in May 2016, well we are actually delivering a better outcome, that is what this final Budget outcome shows. That should give people a lot of confidence about the way we are tracking now that we have stabilised the Budget mess that we have inherited from the Labor Party.
DAVID SPEERS: Let me ask you then about net debt. It has come in for that last financial year at $322 billion. It is 18.4 per cent of GDP which is the worst on record in Australia. Do today’s figures show that it is actually going to be any better or worse than your last forecast in the years ahead.
MATHIAS CORMANN: Well, the actual outcome in relation to net debt is slightly better than what was forecast at the 2016-17 Budget, so it is just over $2 billion better than anticipated…interrupted.
DAVID SPEERS: Still the worst ever though.
MATHIAS CORMANN: We have previously announced what the expected net debt trajectory would be and what we showed is that it is expected to peak next year and then starts to come down over the medium term to well below 10 per cent over the medium term…interrupted.
DAVID SPEERS: And when will it peak?
MATHIAS CORMANN: Over the medium term we get well below 10 per cent, that is the projection.
DAVID SPEERS: Okay, what is the peak next year?
MATHIAS CORMANN: That is as will be updated in the Mid-Year Economic and Fiscal Outlook later this year. We are expecting net debt to peak below 20 per cent.
DAVID SPEERS: But what dollar figure?
MATHIAS CORMANN: I haven’t got the precise figure in front of me now.
DAVID SPEERS: But it is pretty important what debt is going to peak at, obviously?
MATHIAS CORMANN: Sure and what I am talking to you about today is the final Budget outcome for 2016-17. I am not delivering you the half yearly Budget update which we will be delivering in December…interrupted.
DAVID SPEERS: Okay fair enough. Let me turn to the debate around gas. The Government is taking a pretty hard headed approach with the LNG exporters, demanding they now find 110 petajoules of gas to put back in the domestic market next year. Can I ask you, the ACCC has also yesterday issued an appropriate benchmark price for gas on the east coast. Some in the industry are a little curious about this, this appropriate benchmark price that has been put out. Is this a step towards regulating what the price has to be?
MATHIAS CORMANN: There is further advice being sought at present. The Prime Minister, the Energy Minister and the Treasurer will make further announcements in the not too distant future. At the moment, we are engaging with the industry, we are saying that if the industry does not come on board with increasing the domestic supply of gas, then we will be forced to take certain steps in relation to the volume of gas into the export market. That is a decision that we would have to make by 1 November, it should come into effect from 1 January 2018. We have been pleased that the market has already responded, that the supply of gas into the domestic market has actually already increased. In terms of the specifics in the Energy portfolio I am going to leave that to the relevant Ministers.
DAVID SPEERS: Fair enough, I am just asking. The Government once upon a time never would have contemplated intervening in the market in the way that it is. Would you go the next step, would you be comfortable Mathias Cormann with regulating prices in the gas market?
MATHIAS CORMANN: We are absolutely not using intervention in the market, in the export gas market as our first preference. What we are doing here is we are dealing with a real challenge where there has been insufficient supply of gas into the domestic market, which has driven up the price of gas, which has significantly increased the price of energy. We are focused on improving the reliability of energy supplies and making sure that energy supplies moving forward are as affordable as possible for businesses and consumers
DAVID SPEERS: But here is the thing, if the gas companies to divert this gas available to the market, they make it available but they say we are going to charge, $10, $15, $20 a gigajoule, would you regulate the price of gas?
MATHIAS CORMANN: David, as I have said to you before, I am not going to go into the specifics of what are portfolio responsibilities for the Minister for Resources and the Minister for Energy and…interrupted.
DAVID SPEERS: As a Liberal, you would have no problem with doing that?
MATHIAS CORMANN: As Liberals, all of us do not feel comfortable with intervening in this market, but we have made certain judgements in the public interest based on the challenges that we are facing when it comes to domestic gas supply on the East coast market, in the National Electricity Market. The Prime Minister has demonstrated strong leadership in relation to this and when relevant decisions have been made and I am not pre-empting any decisions here with you today, when relevant decisions have been made, the Prime Minister, the Deputy Prime Minister, the Minister for Energy and indeed the Treasurer will make relevant announcements.
DAVID SPEERS: Look, one more thing on the gas issue, I note that your colleague, the Resources Minister, the Deputy Prime Minister, Barnaby Joyce, on the issue of whether there should be more coal seam gas development, he has said farmers should get a percentage return from the wellhead, I know he has said this before, but he is now Resources Minister, is this Government policy? Is this your position as well, that farmers should get a cut when coal seam gas mining happens on their land?
MATHIAS CORMANN: Our position is that the States, in particular, New South Wales, Victoria and the Northern Territory should lift the moratorium on gas exploration and development because that is one of the reasons why there is a shortage in the supply of domestic gas and that is having an impact on electricity prices for families, it is having an impact on the access to affordable electricity for our businesses. So it undermines our international competitiveness that we haven’t got adequate supplies of domestic gas. The conversation on how that can best be achieved is an ongoing conversation and again, when relevant decisions have been made they will be announced.
DAVID SPEERS: But there has been no any Government position taken on whether farmers should be given a percentage to ease the political sensitivities around coal seam gas?
MATHIAS CORMANN: I have answered your question here. That is absolutely a valid and legitimate idea to be discussed…interrupted.
DAVID SPEERS: I am just asking whether it is Government policy. You sit in Cabinet, you are the Finance Minister, is it Government policy?
MATHIAS CORMANN: I have already indicated to you. If Government policy decisions have been finalised they will be announced by the relevant Minister.
DAVID SPEERS: Is that a yes or a no?
MATHIAS CORMANN: I will leave any announcements of Government policy in the Energy portfolio to the relevant Ministers.
DAVID SPEERS: Alright. Let me turn to a portfolio area that you hold currently, as the Acting Special Minister of State. The same sex marriage postal survey, can you tell me what the response rate is so far? In terms of those returning their postal ballots?
MATHIAS CORMANN: No. That is not something that I can do. That is something that the Australian Bureau of Statistics may decide to do at an appropriate time. But what I can say to you, that as I move around the community and talk to people from both sides of the argument incidentally, that there is, my impression is, that people are enthusiastically embracing the opportunity to have their say, to have their voices heard and my impression is that people are acting very swiftly in returning their survey forms back to the ABS, which is what we would encourage them to do. We want as many Australians as possible to participate in this process and to return their forms as soon as possible, but certainly no later than 7 November.
DAVID SPEERS: Okay I appreciate you want to leave it to the ABS to announce any formal numbers around the response rate, but you are happy, anecdotally, with the response rate so far?
MATHIAS CORMANN: I am very happy with the way this process is getting on. I am sensing that Australians are enthusiastically embracing this process and are returning their survey forms very swiftly, that is my impression talking to people in the community.
DAVID SPEERS: What sort of response rate are you hoping for? I know in the US voluntary voting there, they usually get under just 60 per cent voter turnout, is that what you would expect here roughly?
MATHIAS CORMANN: It will be what it will be. The last process that was conducted along similar lines was a postal vote on a voluntary basis to elect delegates to the Constitutional Convention in relation to the lead up to the referendum on whether or not we should become a republic. That delivered a participation rate of about 47 per cent. I would be quite keen for the participation rate to be somewhat higher than that, but in the end it will be what it will be. 100 per cent of Australians on the electoral roll and eligible to vote in an election have the opportunity to participate. So 100 per cent of all Australians eligible to vote at a Federal Election can participate in this process and I certainly would encourage as many of them as possible to take advantage of this opportunity.
DAVID SPEERS: There has been concerns around a number of things during this campaign. I just wanted to ask you about the text messages. There was a mass text that went out on the weekend from the Yes campaign, apparently there is one gone out today from some on the No side. Is there anything wrong with these text messages, legally or in terms of campaign rules here?
MATHIAS CORMAN: My advice from the Electoral Commissioner who is an independent Statutory Officer responsible for administering compliance with the relevant laws. My advice from the Electoral Commissioner, Tom Rogers, is that the text messages that have been circulated so far are consistent with the relevant authorisation requirements.
DAVID SPEERS: Final one I want to ask you on the whole argument on religious protections. What do you think personally Minister, does the Dean Smith Bill and the protections for Ministers not to have to carry out a same sex marriage ceremony, do they go far enough or would you want to see something beyond that?
MATHIAS CORMANN: First step first. The first step is that we need to listen to the Australian people as to whether or not the Australian people want the law to be changed to allow same sex couples to marry. If the answer to that question is yes, then there will be a Private Members Bill, which will be considered by the Parliament in the final sitting fortnight before Christmas and from a personal point of view, yes, I do believe that appropriately strong religious protections are important, the Prime Minister and the Opposition Leader have both said…interrupted.
DAVID SPEERS: Are they strong enough in the Dean Smith Bill?
MATHIAS CORMANN: I am not going to get into the specifics of a Bill before the Parliament until after we get the results of a survey that we do not yet have. What I would say to you, we made a deliberate decision to leave that decision until after we know from the Australian people as to whether or not they want the law to be changed at all. Let’s cross that bridge first. But what I can say, the Prime Minister, the Opposition Leader, a number of us have been very clear, should the Australian people say yes, the law should be changed to allow same sex couples to marry, then appropriately strong religious protections are going to be important to us and I am very confident that the Parliament will legislate appropriately strong religious protections in those circumstances.
DAVID SPEERS: Finance Minister and acting Special Minister of State, Mathias Cormann, appreciate your time this afternoon, thank you.
MATHIAS CORMANN: Always good to talk to you.