Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
DAVID SPEERS: Joining me this morning ahead of it all is the Finance Minister and the Government’s Senate Leader, Mathias Cormann. A very good morning to you, thank you for joining me.
MATHIAS CORMANN: Good morning.
DAVID SPEERS: Let’s start with what is in the papers this morning and in fact it has now been confirmed by the Government, this $125 one-off payment, an energy assistance payment. Tell me about how that will work and what the thinking is behind it.
MATHIAS CORMANN: Well the thinking behind it is that it will give cost of living pressure relief to pensioners and other welfare recipients, other eligible welfare recipients and it will help them meet the cost of their power bills. Over the last five and a half years we have worked very hard to get the Budget back into a stronger position. We were looking at how we were tracking in 2018-19 and it was obvious to us that we could afford making that contribution to assist pensioners and other eligible welfare recipients with this one-off additional energy supplement.
DAVID SPEERS: We were told of course last year by the Government that its National Energy Guarantee would get power bills down by $150. That policy of course hit the wall. We were then told other policies would help get power bills down. Is this a concession that you have not been able to deliver enough on power bills?
MATHIAS CORMANN: Well we have been able to drive power prices down but there is much further to go there. We have an objective to reduce power prices by 25 to 30 per cent across all of the National Electricity Market regions by 2021. There is a whole range of policies that we are pursuing and implementing, but as we have said there is a transition underway and given that we have fiscal capacity in 2018-19 to make this payment, which costs the Budget about $285 million, we made a judgement that it was appropriate to do so.
DAVID SPEERS: But do you take my point that the Government’s talked a lot about getting power bills down. After two terms in office, you really have not been able to do that. Not enough, anyway.
MATHIAS CORMANN: Well I disagree. Power prices are much lower than they would have been if we had not abolished Labor’s Carbon Tax. Power prices are much lower than they would be in the future if Bill Shorten was able to implement his 45 per cent Emissions Reduction Target. Beyond that we have pursued a whole range of policies to increase supply of energy into the electricity market, but also to protect consumers and to ensure that we address some of the bad market behaviour by relevant companies through legislation that we hope to pass, certainly after the next election.
DAVID SPEERS: Now, will you also be offering bigger or faster tax cuts in Tuesday’s Budget?
MATHIAS CORMANN: The Budget will be delivered on the second of April. Not much further to go. Two more sleeps David and all of the detail will be revealed at that time. Just as a general point, we have already legislated $144 billion worth of income tax relief for hardworking families through the Parliament last year. We will always focus on making sure that Australians, hard-working Australians, get to keep as much of their money that they have earned as possible, that the Government only takes what is necessary to fund the services that Australians rely on and this is no different in this year’s Budget. We look for opportunities to provide cost of living relief, cost of living pressure relief, but also to ensure that Australians have the right incentive and the right reward for effort.
DAVID SPEERS: Well if there is to be further tax cuts and obviously today’s announcement on the one-off payments that are going out the door as well, can I ask, how affordable is this? Understandably, there has been a revenue surge thanks to higher iron ore prices, but as you well know, we have seen in the past, you get a temporary boost in revenue but then a permanent commitment is made on spending it and the Budget suffers as a result. So can you tell us just generally, how sustainable is the programme you are going to lay out this week?
MATHIAS CORMANN: We have been able to get the Budget back onto a stronger, improving foundation and trajectory for the future. In the first few years on coming into Government, we had to write down revenue by more than $180 billion compared to the revenue forecasts that we inherited and based on forecast assumptions that were not realistic. Our forecasting assumptions, you mentioned iron ore and you know our forecasting assumptions are very realistic, very cautious, very responsible. If you look at our performance over the last few financial years, after we have been able to stabilise the detreating position that we inherited from Labor, is that in 2016-17 and 2017-18, the two last financial years for which there are final Budget outcomes, our actual performance against Budget was materially better than what was forecast at Budget time, principally on the back of stronger economic growth performance, stronger employment growth performance and controlling the expenditure growth trajectory into the future. We make judgements all the time on what is affordable, what is responsible, our objective is and has been for some time to get the Budget back into surplus as soon as possible. The Treasurer on Tuesday will be delivering a surplus Budget and if you look at our most recent half yearly Budget update, you will see that from 2019-20 onwards, our forecast and our projections are for a surplus to be maintained all the way through the medium term over the next decade. So we will make judgements based on what is affordable and responsible.
DAVID SPEERS: What about for the current financial year that we are in, will we see a surplus delivered?
MATHIAS CORMANN: Well again, the most recent update in terms of 2018-19, was in the half yearly Budget update. That showed that the deficit had reduced all the way down to $5.2 billion, the lowest deficit in a very, very long time. As we have forecast for some time now, we are forecasting a surplus for 2019-20. The specific numbers in terms of this financial year and next financial year and beyond will be delivered on Tuesday.
DAVID SPEERS: Should we expect to see a surprise surplus for this year?
MATHIAS CORMANN: Again, I will let the Treasurer deliver the Budget on Tuesday…interrupted
DAVID SPEERS: Fair enough, but back to the point though, if there is any…interrupted
MATHIAS CORMANN: … That will include an update on 2019-20.
DAVID SPEERS: If there is any revenue windfall, given we got record debt levels, shouldn’t that money go to paying off the debt, given the global economic headwinds and so on?
MATHIAS CORMANN: I completely reject this description of revenue windfall. We have managed the Budget much more prudently than our predecessors and we have made some more realistic assumptions. It is true, that our track record in more recent times, compared to Labor is that the final outcomes, compared to forecast have been better, but we have always got to make sure that we get the balance right. We have to ensure that our tax policy settings enable stronger growth into the future. That there is the right incentive and reward for effort to encourage Australians to stretch themselves by letting them keep as much of their own money as possible, while also making sure that Australians have, as appropriate, appropriate support in terms of cost of living pressures. That’s what we are focussing on. We are also focussing on making sure that all of the funding on essential services that Australians rely on is on a fiscally sustainable foundation and trajectory for the future and after all of that we want to ensure that Government lives within its means, structurally lives within its means and that we can get back to a surplus of one per cent as a share of GDP as soon as possible.
DAVID SPEERS: The payment that has been announced today, does that need to pass through, do you need legislation to pass through the Parliament to authorise that?
MATHIAS CORMANN: Yes.
DAVID SPEERS: So you will need the Senate to sit is that correct?
MATHIAS CORMANN: Well the Senate is sitting this week.
DAVID SPEERS: Right, so you would be able to pass through that and whatever else needs to be passed through before the election?
MATHIAS CORMANN: The Government’s intention is to ensure that this additional energy supplement is passed as swiftly as possible so that it can be delivered to 2.4 million pensioners and a whole series of other eligible welfare recipients across Australia in the 2018-19 financial year, that is right.
DAVID SPEERS: Okay, I am just leading to the question of when you think the election might be called. It is just a few short sitting days this week and obviously a lot to do. Do you expect it will be your last chance to bed down whatever you need to through Parliament?
MATHIAS CORMANN: The timing of the election is a matter for the Prime Minister. I will leave that to him to announce that at the appropriate time. At this stage we are focused on what is in front of us. We have a Parliamentary sitting week this week, including two Senate sitting days before we go into Senate Estimates. We are scheduled to have two days of Senate Estimates this week and then another week of Senate Estimates next week and that is what I am currently focused on, making sure that we are ready for all of that.
DAVID SPEERS: Okay, it sounds like you will have enough time to get that through, what you need to in terms of those payments that need to get out the door before the election. Can I turn to…interrupted
MATHIAS CORMANN: That is what the Government is going to be proposing to the Senate, that is right.
DAVID SPEERS: Yeah okay. Can I turn to One Nation? Back in 2017, you were involved in organising the preference deal with One Nation for the State Election there in Western Australia and defended it after the election. The Liberals lost that election of course. What is your view now on the Prime Minister’s call this week to put One Nation below Labor?
MATHIAS CORMANN: Well firstly, I 100 per cent support the Prime Minister’s call and secondly that is not an accurate characterisation of what happened back in 2017. Back in 2017, the state campaign in Western Australia made certain judgements and made certain approaches and somewhere along the way I was asked to help connect people. Your characterisation goes somewhat beyond that…interrupted
DAVID SPEERS: Alright, no, no that is fair, but you did defend it after the event?
MATHIAS CORMANN: Sure, well I was asked questions about it and I explained what the rationale was at a local state level in Western Australia at the time. I 100 per cent support the commitment that the Prime Minister made earlier this week to put One Nation behind the Labor Party, but what I would also say, this is a question now for Bill Shorten. What will he do to the Greens? The Greens want to junk our alliance with the United States, which has underpinned our national security for decades and decades. They want to introduce death taxes, they want to do all sorts of terrible things. Will Bill Shorten put the Greens behind the Liberal Party or does he actually support these terrible policies that the Greens are pushing? These reckless and irresponsible policies undermining our national security and undermining our economic security that the Greens are pushing.
DAVID SPEERS: But for the Liberal Party, what was the tipping point for you at least when it comes to putting One Nation below Labor? Was it the material in the Al Jazeera story that came out during the week? Was it some of the anti-Muslim stuff before that? What was the actual reason for this?
MATHIAS CORMANN: This has been a live conversation for some time. We have reached a landing. I might just add that if you look at the last election in the context of Senate voting reforms, you will find that we did not issue any preferences at all to One Nation in any state at the last election and in the election to come, given that under the new Senate voting arrangements, parties only have to issue six preferences above the line or 12 preferences below the line. That is the situation in the Senate that we have been in for some time. In terms of the decision in relation to the House of Representatives, it has always been a pretty academic conversation because Liberal Party and Labor Party preferences are not distributed in the ordinary course of events, but it is an important message for us to send, as it is an important message for Bill Shorten to send to the community that he does not support the reckless and irresponsible agenda prosecuted by the Greens. The Greens who want to junk our alliance with the United States, who want to bring back death taxes and who want to do all sorts of other nasty things that would harm the Australian economy and harm the Australian people.
DAVID SPEERS: Final question Mathias Cormann, how important will this week be and the Budget and the way it is sold for the Government’s election hopes?
MATHIAS CORMANN: We are working very hard to ensure the economy can be as strong as possible, that more jobs are being created, that Australian families have the best possible opportunity to get ahead. When we came into Government, we inherited from the Labor Party a weakening economy, rising unemployment and a rapidly deteriorating Budget position, to the point where Labor could no longer afford to pay for some of the key essential services Australians rely on, such as affordable access to high quality medicines. We are now in a position where the economy is stronger, employment growth is stronger, the unemployment rate is much lower than it was and our Budget is in an improving position, which means that we can afford to fund all of the essential services Australians rely on, including significant access to high quality medicines for patients all around Australia. This is our next instalment of our plan for a stronger economy, more jobs and a Budget that is strong and sustainable and our message to the Australian people will be, we are heading in the right direction. This is not the time to change direction. This is not the time to take risks with a high taxing, anti-business, class warfare Labor leader, who would make the economy weaker and who would make Australians poorer.
DAVID SPEERS: Finance Minister Mathias Cormann, look forward to talking you on the other side of the Budget at some point. Appreciate your time this morning, thank you.
MATHIAS CORMANN: Always good to talk to you.