Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
TOM CONNELL: Well joining me now for this topic and a few others as well, Mathias Cormann, the Finance Minister. Minister, thanks very much for your time this morning. Just to start on this Cabinet leak, do you agree with the decision that has happened here? Would it have hurt our relations with our Pacific neighbours?
MATHIAS CORMANN: I am not going to go into Cabinet deliberations. The Australian Government is always focused on making sure that we have the strongest best possible relationship with our Pacific neighbours and with countries around the world.
TOM CONNELL: So that sort of decision, these workers really rely on Australia don’t they. A decision that would undermine Pacific workers coming to Australia would hurt.
MATHIAS CORMANN: We are always mindful to make sure that we have the best possible relationship with our Pacific neighbours. That particular program is very popular. But by the same token we are also very conscious of the fact that there is a need across the agricultural sector for more workers.
TOM CONNELL: We will see what is announced there. Yesterday of course you announced certainly a much improved Budget result for last financial year. Considering what we’re seeing broadly over the last couple of years with tax receipts, welfare payments down, is there a genuine chance we will get to surplus a year early?
MATHIAS CORMANN: The most recent Budget forecast was delivered in May. That predicted a return to balance by 2019-20 and building into stronger surpluses from 2020-21 onwards. The next update will be delivered just before Christmas in the half yearly budget update, the Mid-Year Economic and Fiscal Outlook. That is when the Government makes its next updated forecasts available. What we did yesterday was deliver a report on our actual performance for the one financial year, the 2017-18 financial year against Budget. What that shows is that compared to the forecasts of a $29.4 billion deficit in 2017-18 when we delivered the Budget, we have been able to bring that down to just $10.1 billion. The smallest deficit in ten years. The best bottom line result in ten years.
TOM CONNELL: There is a lot of people generally saying right now that we might actually, finally be on the cusp of another budget surplus. But just reflecting on the five years which you spoke about yesterday. Did you ever think as Finance Minister you would oversee doubling of the net debt before you could turn this around?
MATHIAS CORMANN: We inherited a deteriorating budget trajectory from the Labor party. When we came into Government we inherited a weakening economy, rising unemployment, a rapidly deteriorating Budget trajectory. The net debt position is much better than it would have been if we had not implemented our plan for a stronger economy, more jobs and to repair the Budget. You have to remember over its six years in government, every Final Budget Outcome except one under Labor was significantly worse than what was forecast. What the last two Final Budget Outcomes show is that we have turned the corner. That as a result of our good economic and fiscal management the situation is now very sustainably and in a sustained fashion on an improving trajectory. We had a $4 billion improvement on the forecasts for the 2016-17 financial year. Now a $19.3 billion improvement against forecasts for the 2017-18 financial year. All of the fundamentals are strong. A stronger economy, stronger employment growth is delivering stronger revenue flows without the need to increase taxes. With more Australians in paid work, we can spend less on welfare.
TOM CONNELL: The other issue though, is the size of those surpluses, actually paying down debt. You did have previously this rule that any new spending would be offset by savings elsewhere. Is that concrete rule now gone?
MATHIAS CORMANN: No. I do not know where all this speculation comes from. The rule remains precisely the same. We have operated under the same rule for the whole period that we have been in Government. The fiscal strategy remains the same. On debt, I should say, at the end of the 2017-18 financial year, the Government net debt position was $13 billion better, Government net debt was $13 billion lower, than what was anticipated when we delivered the 2017-18 Budget.
TOM CONNELL: So on that then, if the rule still remains, are there going to be offset savings announced for the extra education spend and the GST as well?
MATHIAS CORMANN: That is what we always do. As I have indicated to you earlier in the program, the next update is the half yearly budget update, the Mid-Year Economic and Fiscal Outlook. That is when all of the movements up and down in the Budget will be reconciled. That is what always happens. We do not provide a running update. We provide an update on our Budget forecasts twice a year. Once in the Budget in May and then the second time in the half yearly Budget update before Christmas and that is what we will do this year.
TOM CONNELL: So that MYEFO, just to clarify Minister, will have commensurate savings for new spends including, as I mentioned GST and also education?
MATHIAS CORMANN: That is the fiscal strategy that we are working towards. That is exactly right.
TOM CONNELL: Alright, there you go, well thanks for that clarification. I want to ask as well just about this possible new day for Indigenous Australians. Could this include as well a public holiday because business seems concerned about that already?
MATHIAS CORMANN: I think that people are getting way ahead of themselves. The most important point is that Australia Day should continue to be celebrated on 26 January. It should be a day that brings all Australians together, that unites us in celebrating everything that is great about our country and yes, also reflecting on some of the challenges that we have faced throughout our history. But what the Prime Minister indicated was that he felt and I agree with him, that it was appropriate for us to have a national conversation on whether through a dedicated national day or some other means, we could appropriately commemorate and mark the significant contribution to our country by Indigenous Australians. This is early days. There are a lot of conversations to be had, consultations with Indigenous Australians, State Governments, other stakeholders and indeed business. Let us see where that takes us.
TOM CONNELL: But just on that, I understand really in the process, I am not asking to drill down on too much detail, if there is not a public holiday and it is seen as an alternative for Indigenous people compared to Australia Day, it would feel like a lesser day wouldn’t it?
MATHIAS CORMANN: You are now inviting me to provide commentary in relation to something that has not been settled. I will resist that because I do not think it would be helpful to provide a hypothetical comment in relation to a hypothetical position, which has not been determined.
TOM CONNELL: Mathias Cormann always good to chat, thank you for your time.
MATHIAS CORMANN: Always good to talk to you.