Transcripts → 2018


ABC Radio National - Drive

Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia


Date: Tuesday, 25 September 2018

Final Budget Outcome, Australia Day, ABC Managing Director

PATRICIA KARVELAS: The Morrison Government has been delivered its third piece of good economic news in as many weeks. A reduced Budget deficit and an earlier than forecast return to surplus. Lower than expected welfare spending, higher company profits and growing employment mean that the deficit has fallen to just over $10 billion. It has been reported that the Government been abandoning a self-imposed rule to offset any new spending with savings measures ahead of what is certain to be a difficult federal election. Mathias Cormann is the Finance Minister and joins us on RN Drive. Welcome back.

MATHIAS CORMANN: Good to be back.

PATRICIA KARVELAS: Growing employment and surging company profits are key drivers of this very strong result but wage growth remains slow. The Government bottom line is better off, but ordinary Australians don’t have more money in their pocket so for them is there much to celebrate here?

MATHIAS CORMANN: More Australians are in work now as a result of our plan for stronger growth and more jobs. More than a million new jobs have been created since we were elected in September 2013. 350,000 new jobs over the 2017-18 financial year. You have to remember that when we came into Government, we were confronted by a weakening economy, rising unemployment and a rapidly deteriorating Budget positon. Rising unemployment and the lessening in competition for workers which comes with that was driving lower wage outcomes than would have been possible with stronger employment growth. Now that we have got strong employment growth and an unemployment rate at 5.3 per cent and the excess supply in the labour market continues to reduce, we would expect wages to grow more strongly into the future. In the last quarter of 2017-18 they picked up slightly to 0.6 per cent.

PATRICIA KARVELAS: So basically we are all paying more tax, so that is why the economy and your Budget is doing better isn’t it? Essentially.

MATHIAS CORMANN: When you have 2.7 per cent employment growth instead of 1.5 per cent employment growth as was anticipated when we delivered the 2017-18 Budget, then having more people in paid work means more people pay personal income tax and yes you collect more revenue. When you have more profitable companies off the back of stronger growth, they pay more corporate tax. The Tax Office having strengthened its compliance activities has also contributed to a stronger than anticipated outcome when it comes to company tax revenue. That is a good thing. A stronger economy is not only good in terms of creating more jobs and better opportunities for Australian families to get ahead, it does deliver stronger revenue without the need to increase taxes, which helps to fund the important services provided by Government. It also means that we are now spending less on welfare, as fewer Australians rely on income support, then would have been the case if employment had not grown as strongly as it has.

PATRICIA KARVELAS: Lower spending on welfare for pensioners, the disabled and the unemployed has helped of course, is that because the actual need for that welfare has been reduced or is it just because you have changed the thresholds for accessing those benefits. 

MATHIAS CORMANN: The Final Budget Outcome is essentially performance against Budget. It is not a reflection of policy decisions. It is a reflection of how we have tracked against expectations. When it comes to the National Disability Insurance Scheme for example, our forecast at the time of the 2017-18 Budget was that about 240,500 Australians would access that service. As it turns out only 187,000 Australians accessed that service. The cost per Australian accessing that service has been less than anticipated. It is not the result of a Government decision, it is the result of performance under a demand driven program. If you have stronger demand than anticipated, then you end up paying more, if you have less demand than anticipated, you pay less. Across the income support areas for the unemployed and the like, on the back of a stronger labour market, our welfare payments are less in those areas than would have otherwise been the case. In relation to aged pensioners, the Labor measure to increase the pension age to 67 years of age, continues to have an impact beyond what was anticipated at the time.

PATRICIA KARVELAS: If the Government’s own rule to offset spending with savings measures has helped deliver this result, then isn’t it risky to abandon it?

MATHIAS CORMANN: We are not abandoning it …interrupted

PATRICIA KARVELAS: Would a responsible Government focus on eliminating the deficit rather than throwing money at voters ahead of an election then?

MATHIAS CORMANN: Our fiscal strategy remains the same. I know that there is always a lot of speculation. We have had a Budget, which was delivered in May. The next Budget update will be before Christmas, the mid-year economic and fiscal outlook. In that Budget update, all of the movements, up and down, which invariably happen between Budget updates will be reconciled as is always the case.

PATRICIA KARVELAS: So you are saying that there is not a removal of the rule? So that means for instance this $4.5 billion of extra funding for independent schools, you are going to find 4.5 billion in savings?

MATHIAS CORMANN: There has been no change in the fiscal strategy …interrupted

PATRICIA KARVELAS: So you are going to find, I just want to nail this down, $4.5 billion in savings now?

MATHIAS CORMANN: As we always say, every single year, prior to every single Budget update, all of the movements in between Budgets and Budget updates will be updated and reconciled in the mid-year and economic fiscal outlook. 

PATRICIA KARVELAS: But that is not an answer to my question.

MATHIAS CORMANN: It is an answer to... interrupted


MATHIAS CORMANN: The fiscal strategy remains the same. It is published in the Budget. We have not made any changes to our fiscal strategy…interrupted

PATRICIA KARVELAS: On that really specific question, $4.5 billion in extra funding for independent schools, you are going to find $4.5 billion in savings to pay for it?

MATHIAS CORMANN: And as I have indicated to you and as I have answered over the last five years in response to similar questions, there are always a lot of movements in between Budgets and Budget updates. All of that gets reconciled in an orderly methodical fashion in the half yearly Budget update before Christmas.

PATRICIA KARVELAS: Okay, so just in common people language, Mathias Cormann, you will find the savings, $4.5 billion to pay for this?

MATHIAS CORMANN: We will provide an update in terms of all of the different policy decisions and their fiscal impact in the half yearly Budget update before Christmas …interrupted

PATRICIA KARVELAS: So if you are going to spend more, are you going to find savings somewhere else to pay for it?

MATHIAS CORMANN: That is the fiscal rule that we are working towards.

PATRICIA KARVELAS: You are going to stick to that fiscal rule?

MATHIAS CORMANN: That fiscal rule has not changed. 

PATRICIA KARVELAS: So you will definitely not spend extra money, you are going to find savings wherever you are spending money?

MATHIAS CORMANN: I could not have been any clearer.

PATRICIA KARVELAS: I just want to be absolutely crystal clear.

MATHIAS CORMANN: The fiscal strategy is published in the Budget and performance against Budget will be updated in the half-yearly Budget update before Christmas. The effect of all of the policy decisions will be updated in the Budget. Our fiscal rule remains that any spending increases have to be paid for with savings.

PATRICIA KARVELAS: Okay, so you will not abandon a strategy of cuts for extra spending before the election?

MATHIAS CORMANN: There has been no change to the fiscal strategy.

PATRICIA KARVELAS: It has been reported that there has been a change.

MATHIAS CORMANN: That sounded to me like speculation, as you often have …interrupted

PATRICIA KARVELAS: I am asking the questions.

MATHIAS CORMANN: When you say it has been reported, it has not been reported on behalf of the Government. There has been a level of pre-MYEFO speculation in the same way that there is pre-Budget speculation.  

PATRICIA KARVELAS: Yes there is and you are saying that that is wrong, that speculation?

MATHIAS CORMANN: What I am saying is there has been no change to the fiscal strategy of the Government. That we will, as we always do, provide the update in the half-yearly Budget update, both in terms of the changes in parameters as well as the fiscal impact of policy decisions up and down.

PATRICIA KARVELAS: The Prime Minister Scott Morrison has floated the idea of a national day to recognise Indigenous people, but the ABC understands that would not be a public holiday. Is that right?

MATHIAS CORMANN: What the Prime Minister has said is that firstly, Australia Day is important. It is a day that should unite all Australians. We should have a conversation on whether we could appropriately recognise the significant contributions and achievements of Indigenous Australians through a national Indigenous celebration, a celebratory day. That is something that we are now having a conversation about. There will be a level of consultation with Indigenous Australians, with states and territories and other stakeholders. Let’s see where that takes us.

PATRICIA KARVELAS: Do you support the idea?

MATHIAS CORMANN: I think it is worthwhile having the conversation. I certainly strongly support a proposition that Australia Day should continue to be celebrated on 26 January.

PATRICIA KARVELAS: Yeah but I am asking you about the other date not Australia Day. 

MATHIAS CORMANN: I support that we pursue the opportunity to appropriately recognise the outstanding contributions and achievements of Indigenous Australians. Of course I do.

PATRICIA KARVELAS: The former Prime Minister Tony Abbott has spoken out against this idea. What do you make of that? He is the Special Envoy on Indigenous affairs, why isn’t there unity on this?

MATHIAS CORMANN: We are having a conversation.

PATRICIA KARVELAS: So, he is allowed to have an alternative view when there is a conversation because it is not policy, is that right?

MATHIAS CORMANN: There is no Government measure. What the Prime Minister has done is pointed to the importance of Australia Day as a day that unites all Australians and floating the idea of whether there is an appropriate way that we can acknowledge, in our national calendar, our Indigenous people. Let’s see where the conversation takes us.

PATRICIA KARVELAS: Just finally, were you surprised by the sacking of the ABC’s Managing Director Michelle Guthrie?

MATHIAS CORMANN: I was not aware of it before it happened if that is your question. I do not have any exposure to it. I do not have any visibility over it. It was a decision made by the Board, independently, at arm’s length from the Government and so it is a matter for the Board.

PATRICIA KARVELAS: Mathias Cormann, thank you for your time.

MATHIAS CORMANN: Always good to talk to you.