Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 9 May 2018
MICHAEL ROWLAND: Scott Morrison, the Federal Treasurer there. Good morning, I am live from the lawns of Parliament House with comprehensive coverage of Scott Morrison's third Federal Budget. Also key in preparing that document is the Federal Finance Minister, Mathias Cormann and he joins me now. Minister, a very good morning to you.
MATHIAS CORMANN: Good morning.
MICHAEL ROWLAND: The Government is billing itself as responsible economic managers and given all of this revenue that has been raining down on the Budget, an extra $35 billion over four years, about $19 billion this calendar year alone. Why not bring forward the surplus to next financial year instead of waiting for another two years?
MATHIAS CORMANN: We are working to a plan. We are working to a plan for stronger growth, for more jobs as well as making sure that we can guarantee funding for the essential services Australians rely on and to ensure Government lives within its means. The additional revenue that has been generated has been on the back of stronger economic growth. We want to keep the growth momentum going. We want to keep the employment growth momentum going, as well as getting the Budget back into surplus a year early. As of this financial year, we are no longer needing to borrow to fund the recurrent services of Government. Government net debt is peaking this financial year at 18.6 per cent, below what was a previously anticipated. We are projected to reduce Government net debt by more than $230 billion over the decade.
MICHAEL ROWLAND: Bringing that surplus forward means you could tackle that net debt figure much, much quicker.
MATHIAS CORMANN: We are tackling it rather quickly. We have turned a corner when it comes to Government net debt. As I say, peaking at 18.6 per cent as a share of GDP this financial year instead of 19.2 per cent next financial year. We are able to pay off more than $230 billion of Government net debt, bringing it down to just 3.8 per cent as a share of GDP within the decade.
MICHAEL ROWLAND: Billions of Australians will get what amounts to a $10 a week tax cut from next year. That really does not amount to much, do you think voters will be grateful for that, will reward the Turnbull Government for a tax cut of that size?
MATHIAS CORMANN: We have made decisions based on what is responsible, what is affordable. We have put together a seven-year plan to provide tax relief, prioritising low and middle-income earners. $530 a year for a single or more than $1,000 for a couple. That is a sizeable contribution, helping them with their cost of living pressures. That can pay the registration fee for the car or it can pay various other things that families have to deal with. This is part of a plan and it is what we can afford.
MICHAEL ROWLAND: People often do not think in yearly terms, often people are surviving on pay check from pay check and it comes down to $10 a week still, which is not a lot of money.
MATHIAS CORMANN: For those in the income bracket from $48,000 to $90,000 who are eligible for the top tax relief, they will receive that as a $530 lump sum. It will help them deal with their cost of living pressures.
MICHAEL ROWLAND: The Government is forecasting wages growth to pick up to about three and half per cent within a couple of years, it is hovering around the 2 percent figure at the moment. A lot of Australians have not had a wage rise for so long. Is that a fairly bold assumption in the Budget?
MATHIAS CORMANN: Our economic forecasts are broadly in line with those of the Reserve Bank and those of relevant international institutions like the International Monetary Fund. Some of our assumptions are slightly more conservative. We believe they are realistic and we believe that they are appropriate. In the last calendar year, more than 415,000 jobs were created in the economy. As employment growth strengthens, over time, you expect wages to pick up. In fact the data is showing wages growth has started to pick up. By implementing our plan for the economy and jobs we believe it will pick up by more.
MICHAEL ROWLAND: You have been in politics for a long time. You have been a student of politics I am figuring for a lot longer. When was the last time you saw a post-Budget voter bounce for any Federal Governments?
MATHIAS CORMANN: We are just focused on doing the right thing. We let others make judgments. We let the Australian people pass judgement on the work that we have done. We have reviewed all of the information, we reviewed all of the data and we have made judgements on the right way forward. We have made judgements on how best to strengthen the economy, create more jobs, make sure that all of the services Australians rely on can be fully funded and to make sure that Government lives within its mean.
MICHAEL ROWLAND: Finally, a question close to home, the Government is paused indexation of the ABC's funding for the next three years at a cost of $84 million. So a de facto cut to the ABC's budget. Why have you done that?
MATHIAS CORMANN: The ABC over that three year period will get more than $3.2 billion worth of funding. The ABC has been exempted from the efficiency dividend that applies to nearly all other taxpayer funded organisations for most of the last few decades. This is effectively equivalent to the efficiency dividend that applies to nearly all other Government taxpayer funded organisations.
MICHAEL ROWLAND: It is on top, though, of the ending of a $43 million tiered funding for news and current affairs and more than $200 million of cuts since 2014. It is a big price to pay.
MATHIAS CORMANN: Nearly all other Government taxpayer funded organisations have to find productivity improvements and operational efficiencies. We believe that the ABC, out of more than $3.2 billion is able to find more than $84 million worth of efficiencies.
MICHAEL ROWLAND: Okay, we will leave it there. Mathias Cormann, Finance Minister, thank you very much for joining News Breakfast.
MATHIAS CORMANN: Always good to talk to you.