Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Thursday, 26 April 2018
PAULA KRUGER: The Finance Minister is Mathias Cormann and he joins us now. Senator good morning.
MATHIAS CORMANN: Good morning.
PAULA KRUGER: Now this hospital funding, isn’t it essentially an attempt to buy West Australian votes?
MATHIAS CORMANN: No this is a very important investment in WA hospital care. We have been talking with the State Government here in Western Australia over the last few months, asking them about the areas of demand pressure. This is one of the areas that they have identified, Joondalup Health Campus, Osborne Park Hospital and the Royal Perth Hospital.
PAULA KRUGER: But clearly the package, if all goes well, this package will gain you some support in WA, will win you some votes in this State?
MATHIAS CORMANN: We are focused on doing the right thing. When we came into Government, WA’s share of the GST was on track to fall below thirty cents in the dollar. We stopped, effectively, the drop in WA’s share of the GST by making top-up payments in each of the last three Budgets. So far we have committed $1.4 billion worth of top-up payments. In this year’s Budget, what we are announcing today, effectively lifts WA’s share of the GST to fifty cents in the dollar. That is still too low. We are still focused on a longer term solution, which we hope can be identified on the back of the work that the Productivity Commission is currently doing.
PETER BELL: So on that Senator Cormann, that meaningful change to the GST formula for the long term, the Productivity Commission has a report out already with some recommendations. Why do we have to wait any further?
MATHIAS CORMANN: The Productivity Commission’s final report is due to be released in the middle of May. What we have so far is a draft report, which was subject to further consultation. We have taken a very orderly approach to this. We have recognised that WA’s share of the GST is unfairly low. We are the first Government that actually at the Federal level, took action. We made the top-up payments in each of the last three Budgets and again in this year’s Budget. We have always recognised that this was only a short-term fix, it was not enough and the Productivity Commission work will guide the way for a longer-term resolution.
PETER BELL: What sort of commitment will you be making to the Productivity Commission’s recommendations?
MATHIAS CORMANN: I cannot pre-empt what the response will be before we have actually seen the recommendations. It is not possible to respond to recommendations that we have not seen yet.
PAULA KRUGER: But there is already some good recommendations out there from the interim report. Why can’t you be pre-emptive and act on those now?
MATHIAS CORMANN: Because we will wait for the final report and we think it is appropriate for us to form our view in response to the final report.
PAULA KRUGER: The Productivity report is not coming out until after the Budget, does that avoid losing votes in other states?
MATHIAS CORMANN: No. All throughout the year, at various times, various recommendations come to Government and the Government makes decision all throughout the year. Yes, at Budget time and at the time of the half-yearly Budget update all of that is brought together. But just because we are after the Budget, after the 8th of May does not mean we stop making decisions on future directions.
PETER BELL: Senator Cormann, when Labor promised $1.6 billion to Western Australia, Scott Morrison said West Australians deserved more than just a quick fix band aid solution. WA deserves a proper and lasting GST solution…interrupted
MATHIAS CORMANN: Well that is right.
PETER BELL: …How is this different from the $189 million for the hospitals today?
MATHIAS CORMANN: Firstly, we have already made $1.4 billion worth of top up payments so far. Bill Shorten without telling us where the money would come from is promising $1.6 billion at some point in the future. But he has essentially copied our short term fix and says that is all he will do. Bill Shorten has ruled out reforming the GST structurally, he has ruled out finding a longer term solution to the unfairness to WA’s share of the GST. He has essentially said all they will do is what we have done as a short term fix.
PAULA KRUGER: When it comes to coming up with these announcements and these strategies like funding the hospital. Do you work closely with the local State Governments in coordinating efforts to make sure that it is compatible with their Budget plans?
MATHIAS CORMANN: Yes we do. I think you will find that if you were to ask the Premier or the Treasurer or the Transport Minister or the Health Minister here, they will tell you that the Federal Government has worked closely with them in recent months. There will be further announcements to come. The announcement today is specifically in relation to hospital infrastructure and in relation to the allocation of funding from our GST top up payment this year. There will be further announcements in the next few days by the Prime Minister and the State Government here in relation to infrastructure for WA. You will find that we have worked very closely with the State Government here in Western Australia to ensure that the Federal and State priorities are properly aligned for Western Australia.
PETER BELL: Senator Cormann, why those three particular hospitals?
MATHIAS CORMANN: That is entirely based on the advice from the State Government here. In the conversations with the State Government over the last few months, these are the areas of highest need that they have identified with us. We were able to come to the party and say okay if that is your view and that is your judgement, then we are prepared to allocate the GST top-up payments for this year to those three projects.
PAULA KRUGER: Senator Cormann is it fair to say that many of those hospitals happen to be in marginal Federal Liberal seats here in Perth? There is nothing for regional Australia in there at the moment.
MATHIAS CORMANN: Again, there will be further announcements to come. What I would put to you is that the priorities when it comes to hospital infrastructure, the most pressing priorities, are based on advice from the State Labor Government here in Western Australia. So any suggestion in your question that these are political considerations, I would reject. It is very much based on what the local State Government here in Western Australia has said to us were their top priorities when it came to hospital infrastructure are.
PAULA KRUGER: So when you say further announcements to come, is there any hope for regional Australia in there?
MATHIAS CORMANN: I will let the Prime Minister and the Premier make relevant announcements at the right time.
PETER BELL: Senator Cormann, on another matter, we heard the Treasurer a short time ago discussing the Medicare levy. You have dumped the plan to increase it from two per cent to two and a half per cent, the idea was to fully fund the National Disability Insurance Scheme. Why have you abandoned that idea?
MATHIAS CORMANN: It was not able to get through the Parliament, that was clear. As the Treasurer has indicated, the economy today is stronger and the Budget position is stronger then what it was this time last year. The revenue inflows have been stronger than what they were this time last year or what they were projected to be this time last year. That is very clear when you look at the monthly financial statements that I release on a monthly basis. We have made the judgement that in all of the circumstances this was the right way forward.
PETER BELL: And clearly you are comfortable given that those longer term revenues are not locked in entirely, but you are comfortable with this decision?
MATHIAS CORMANN: Based on all the information in front of us about where the economy is at, where the Budget position is at, we believe that we can fully fund the NDIS without proceeding with the Medicare levy increase, that is right.
PAULA KRUGER: But can you appreciate that it is difficult for people working in the disability sector, when they do not have those guarantees around long term funding?
MATHIAS CORMANN: They do have a guarantee because what they can see under our Government compared to the previous Government is that we are projected to return to surplus by 2020-21 and to remain in surplus all the way through the medium term, which means that all of the funding commitments that we have made are fully funded.
PAULA KRUGER: But would that increase in the Medicare levy have given them more security?
MATHIAS CORMANN: What has happened since then is that revenue has been going up, the economy is stronger, the Budget position is stronger. The next updates in terms of the revenue projections and the bottom line projections will be in the Budget on the second Tuesday in May. What people will be able to see is that we are able to afford to fully fund the NDIS without proceeding with the Medicare levy increase, which was not able to get through the Parliament anyway. To leave something on the books that we do not have any prospect at all of legislating would not have given the disability sector any more certainty. What is giving them certainty is us making the necessary decisions on the savings and the revenue side of the Budget that actually can be implemented.
PAULA KRUGER: But you have found the money for this Budget and so you will have to go through that process of finding that for every other further down the track as opposed to giving them the long term security.
MATHIAS CORMANN: No, our Budget has both a four year estimates period in it and it has got a ten year projection. So it essentially gives people an indication over the medium term that our funding commitments are fully funded.
PAULA KRUGER: But could that money be used to pay down some of the nation’s debt instead?
MATHIAS CORMANN: Without getting too complicated, part of our revenue projections in our Budget imply future tax cuts because we have said that we would not let the tax burden in the economy go above 23.9 per cent as a share of GDP. If it was not for this, we would have to find tax cuts elsewhere. In all of the circumstances, we thought that this was a sensible thing to do.
PETER BELL: Let us talk about those income tax cuts, in the Australian Financial Review today it was reported that they will be set to start small and to be phased in over a decade. Do you have a response to that?
MATHIAS CORMANN: There is always a lot of speculation in the lead up to any Budget. The Budget will be delivered on the 8th of May. The Treasurer at 7:30 in the evening will stand up in the House of Representatives, as he does every year and all will be revealed at that time.
PAULA KRUGER: There is often a lot of speculation and there is often a few leaks as well. Anything you want to tell us today?
MATHIAS CORMANN: We have been talking today about the very important investment in WA hospitals on the back of our latest GST top up payment from the Federal Government.
PETER BELL: Senator Cormann we really appreciate your time. Thank you so much for coming in.
MATHIAS CORMANN: Always good to talk to you.