PETER VAN ONSELEN:
Let’s now have a chat to our special guest today, the Finance Minister joining us live out of Perth, Senator Mathias Cormann, thanks very much for your company.
MATHIAS CORMANN:
Good morning Peter. Good morning to the panel.
PETER VAN ONSELEN:
There is some suggestion that Australia Post is in some trouble. 900 jobs due to be shed this week. It may at some stage need an injection of money from the Government. You obviously own it, no change of heart about selling it? How open are you going to let Australia Post be to become a money sack for the Government?
MATHIAS CORMANN:
Australia Post is obviously facing some structural challenges. Job losses are always disappointing. The truth is that Australians write fewer letters and clearly that is going to have some impact on Australia Post as a business. Having said that in the Australian economy as a whole about 106,000 new jobs were added to the economy including 79,000 full time jobs in the first four months of this year. So the economy as a whole is clearly on track even though Australia Post does face some structural adjustments on the back of the fact that consumer preferences are changing.
PETER VAN ONSELEN:
Any chance that the Government would allow for the privatisation of Australia Post?
MATHIAS CORMANN:
We said very clearly recently, we’ve considered the Commission of Audit recommendation in that regard and we don’t think that this is the time to proceed with that sort of privatisation, in particular and including because of the structural challenges Australia Post is facing...interrupted
PETER VAN ONSELEN:
But would you take a look at it ahead of the next election? I hear what you’re saying that’s the response in the here and now but is the Government open to considering it perhaps in the second term?
MATHIAS CORMANN:
Well I am not going to rule out what may or may not happen in the future, but right now we have made a decision that it is not sensible to proceed with the possible sale of Australia Post. You would be aware that in the Budget we announced four further scoping studies into further potential sales, the potential sale of Defence Housing Australia, the potential sale of the Royal Australian Mint, the potential sale of the ASIC registry services and the potential sale of Australian Hearing. So in relation to Australia Post we don’t think that this is the time to consider this. In fact we have ruled out proceeding with a potential sale or even studying a potential sale of Australia Post at this point in time.
ADAM CREIGHTON:
Just on the sale of Medibank Private Minister. I want to ask you how will you ensure that it is not sold off too cheaply? And the reason I ask that is because the British Government of course sold the Royal Mail last year and they ended up selling it for one and a half billion pounds less than the market actually valued it at and the Government seems to have chosen a sale method that is very similar to what the British Government chose. That is that you have chosen a range of investment banks and my concern is that those investment banks won’t have the goals of taxpayers in mind when they are advising it.
MATHIAS CORMANN:
We are going through an orderly and methodical process when it comes to the sale of Medibank Private. We don’t think that there is any public policy reason for the Government in 2014 to continue to own and run a private health fund. Private health insurance is a highly competitive business with about 34 health insurance funds. It is a well regulated, well functioning market and of course Medibank Private right now operates like a truly commercial business in that highly competitive market. Now we have gone through the process in relation to the scoping study, we very clearly laid out the objectives for our sale and there are a number of objectives. One is that we want to ensure that any sale continues to strengthen competition in the market. We want to ensure that service levels in particular across rural and regional Australia are not compromised. We want to ensure that Medibank employees are treated fairly and we want to minimise residual risk for the Commonwealth on behalf of taxpayers post sale. Having taken all of these objectives into account, we want to maximise net proceeds for, we want to maximise the net return from that sale. Now we are obviously very focused on that final objective in particular. That is why we’ve said we would only proceed with the sale subject to market conditions, that is if we are confident that we are able to achieve an appropriate return for taxpayers.
TROY BRAMSTON:
Minister, just moving onto the selling of the Budget, this week former Prime Minister John Howard appeared at the National Press Club with Bob Hawke and John Howard said that there should be no trouble selling a tough Budget provided that it is perceived in the community as being fair and that toughness is I guess absorbed by the wider community. Why do you think the Budget has been so difficult to sell particularly when even John Howard concedes I guess that the selling of the Budget hasn’t gone as well the Government would have hoped?
MATHIAS CORMANN:
Well we never thought it was going to be sold in a day or a couple of weeks. This was always going to be a marathon rather than a sprint. It was never going to be easy to sell the necessary decisions to adjust the unsustainable spending growth...interrupted
PETER VAN ONSELEN:
Minister, can I ask you why though? Can I ask you why because it draws comparisons to Peter Costello’s, some would say, tougher Budget in 1996 which did immediately result in a bounce in the polls, so what’s the difference between the two?
MATHIAS CORMANN:
It was a very different set of circumstances at the time. When we came into Government, we inherited an economy growing below trend, rising unemployment, consumer confidence which was low, business investment which had plateaued and a Budget in very bad shape with $123 billion of projected deficits, on top of $191 billion of deficits in Labor’s first five Budgets and government debt heading for $667 billion...interrupted
PETER VAN ONSELEN:
But Peter Costello said that what he inherited was worse for the times. I mean, he wrote that in one of his opinion articles. That the level of debt then if you factor in adjustments since was worse.
MATHIAS CORMANN:
Except that the spending promises that Labor recklessly and irresponsibly and presumably for political reasons made in the period beyond the forward estimates, the massive unfunded pie in the sky spending promises in years five and six and beyond that were never published in any Budget paper were dramatically higher than what they were at that time. If we hadn’t taken corrective action, the spending growth trajectory that we inherited would have taken us to spending as a share of GDP of 26.5 per cent in 23-24. Government spending was on track to increase from $409 billion this year to $690 billion in 23-24. Now if Labor still agrees with the proposition that Budgets should be balanced, that government should live within its means, then that would have meant that all other things being equal, without taking corrective action on the spending side that we would have had to massively increase taxes, which would hurt the economy, which would cost jobs, which is not something that we thought would have been the responsible course of action, which is why we’ve said well we have got to reduce the level of spending growth. Now when you do that obviously, you are going to impact on people that receive payments from government, people that otherwise would have received stronger increases, the States indeed would have received stronger increases in payments from government, even though they weren’t funded by the previous government, properly funded on a sustainable basis, they are going to be disappointed.
PETER VAN ONSELEN:
But it is also fair to say that if it was a reckless, unsustainable rise in spending by Labor which I think a lot of people would probably concur with you on, it was equally reckless in the full knowledge of that ahead of the election to make the kind of promises that there will be no cuts X, Y and Z that were rattled off in that at five minutes to midnight interview by the Prime Minister on SBS. I mean there was two elements of recklessness: Labor’s projected spending and the now Prime Minister’s promise not to do anything about it in all these policy scripts.
MATHIAS CORMANN:
I disagree with that. We said we would keep the same funding envelope in place for health over the forward estimates at the time of the last election and we are. We said we would keep the same funding envelope in place in relation to schools funding, like the so called Gonski funding over the first four years and we are. In fact we are doing better than Labor was going to do because we have put $1.2 billion in funding for schools in Western Australia, Queensland and the Northern Territory that Kevin Rudd and Bill Shorten ripped out of schools in those States just before the election, we have put that back in. What we have done in the Budget is pursue structural reforms and structural savings, which start low and slow and build over time and we have complemented that with a series of immediate efforts where we are asking everybody across the community to contribute, to put us back into a stronger starting position as we repair the Budget. Peter, If we want to protect our living standards, if we want to build better opportunity and a stronger economy from a more sustainable foundation then there is no way past the Budget that we have delivered and indeed the Labor Party, despite jumping up and down and criticising this, that and whatever, they haven’t actually come up with another plan. Our plan is the only plan that is on the table. They are not even supporting their own savings measures that they initiated and banked in their last Budget. They are even opposing $5 billion of their own savings measures that they put forward in their last Budget...interrupted
ADAM CREIGHTON:
Just in terms of these savings measures, some of the specifics, it seems increasingly likely that the FTB changes and the co-payment for instance will not get through the Senate or at the very least they will have to be watered down. If that is what actually turns out to be the case, isn’t that basically an admission that the Budget won’t be in surplus again by 2018 and the Government is going to have to find other savings measures?
MATHIAS CORMANN:
Well Adam, let’s see what happens. I wouldn’t make these sorts of assumptions. A couple of weeks ago Bill Shorten and the Labor Party were saying that there was absolutely no way ever that Labor would support our Temporary Budget Repair Levy and of course now we know that they are. My experience having been in the Senate not for that long, but for a seven year period, is that immediately in the days and weeks that follow a Budget, all sorts of people say all sorts of things and then on reflection and as the particular proposition works its way through the parliament and perhaps is presented to the Senate a first time and a second time, people progressively change their mind.
PETER VAN ONSELEN:
But the big unknown of course, when it goes to the Senate, the new Senate, is what the Palmer United Party are going to do, perhaps someone should grab a bite to eat with Clive Palmer and find out what is going on. I mean, what is the expectation of the Coalition in terms of your capacity to deal with Clive Palmer? It looks like there is incredible animosity there with some of the disgraceful things for example that he had to say about the Prime Minister’s Chief of Staff. How are you going deal with such a loose cannon in the Senate?
MATHIAS CORMANN:
The comments that Clive Palmer made in relation to Peta Credlin, who is an outstanding individual, who does a great job for the Government and for the country, I mean they were outrageous and out of line and he has apologised for that which was appropriate. Now having said that, obviously, we will work with everyone represented in the Parliament courteously, constructively and positively and we will continue to make the argument as to why the judgments that we’ve made in the Budget are the judgments that had to be made in order to protect our living standards and build opportunity and prosperity for the future. This is not going to be something that is going to be resolved in a day or a couple of weeks, this is going to take a little while and we will continue to be engaged in the process and continue to patiently explain why it is that we are doing what we are doing and why that is in the national interest.
TROY BRAMSTON:
Minister can I just ask about this GP co-payment? This is an idea that appears to be friendless across the political spectrum and even the leading advocate for it Terry Barnes who is of course a former Howard government health adviser, he says that it has been poorly designed, it has been badly sold and he says that it won't pass the Senate in its current form. I'm not aware of any of the crossbench who have said they would be prepared to support it so are you now prepared to concede that to get this measure through, to have any hope of getting anything like that measure through, you are going to have to dramatically change it?
MATHIAS CORMANN:
No I'm not prepared to concede that. We will be putting all of the Budget measures to the Parliament in the form that they were delivered. What is the objective with the co-payment? This is all about making sure that our world class health system continues to be sustainable over the medium to long term, continues to be sustainable for our children and grandchildren. We want to ensure that patients across Australia can continue to have timely and affordable access to high quality care and that that particular care is also affordable for the taxpayer. You say that the proposition of a co-payment is friendless, well Jenny Macklin as the head of the National Health Strategy... interrupted
PETER VAN ONSELEN:
More than 20 years ago in fairness...
MATHIAS CORMANN:
... in the Hawke government...
PETER VAN ONSELEN:
What were you doing 20 years ago? It's a long time ago. It's ridiculous. It's utterly ridiculous. And it cost Bob Hawke his leadership as well.
MATHIAS CORMANN:
I tell you why it is not ridiculous. Because what Bob Hawke and his Deputy Prime Minister and Health Minister were doing at the time was good public policy. What they were saying at the time in terms of the needs to make Medicare sustainable for the future is still accurate. You say that's years ago. Well Andrew Leigh the Shadow Assistant Treasurer made comments very recently. He only changed his mind when it became politically too difficult inside the Labor Party to pursue this.
PETER VAN ONSELEN:
So why didn't John Howard introduce a co-payment over eleven years of conservative government? What political courage was he lucking that was so important in 1991 that he didn't go back to it as an important area for health?
MATHIAS CORMANN:
I can't comment about the judgments that were made in the Howard years. I wasn't part of that government. I came in as a Senator for Western Australia at the tail end of the Howard Government, in the final six months. I will focus on explaining the reasons why we have made the judgments that we did in our Budget and really our focus is on making sure that the important support that Medicare provides in terms of making sure that access to quality health care is available and affordable, available in a timely fashion, that continues to be affordable for taxpayers over the medium to long term. That is a very important thing for us to do.
TROY BRAMSTON:
Minister can I just ask you about the GP co-payment? I actually spoke to Brian Howe, the Health Minister from 1991, during the week, he wrote a piece in the Australian about it, he actually said that Jenny Macklin...interrupted
MATHIAS CORMANN:
I read it.
TROY BRAMSTON:
Well if you did read it you would know that Jenny Macklin had actually advised him against it so that’s one myth I guess that’s been busted. But the other thing that Brian Howe said very interestingly was that the GP co-payment revenue would go back into the Medicare system as part of an overall reform. Now what one of your critics in the terms of Terry Barnes has actually said you’re actually not doing that with the proposed co-payment revenue, you’re putting it into a Medical Research Fund. So how do you maintain the argument that the revenue raised from the GP co-payment will actually make the immediate, primary health care system more sustainable when there’s actually no money going into the primary health care system?
MATHIAS CORMANN:
Firstly, there’s a contradiction there by talking about immediate and more sustainable. The focus in making things more sustainable by definition focuses on the medium to long term. The reason we are investing the revenue from the co-payment and also the savings and the efficiencies that are able to be achieved through the health system into the Medical Research Future Fund is, by building up $20 billion of capital, which will be available in perpetuity, we will be providing a sustainable funding base for a significant increase in funding for medical research. Funding for medical research, doubling funding for medical research by 2022-23 does offer the prospect and the promise of better services to deal with medical issues and deal with disease, but also in the end, hopefully, help us achieve these sorts of treatments in a more cost effective way into the future. It is an investment in future high quality health care on a more sustainable basis.
PETER VAN ONSELEN:
Alright you’re watching Australian Agenda, we’re speaking to the Finance Minister, Senator Mathias Cormann. We’ll be back after the break. A lot more to discuss, including the elephant in the room, not Clive Palmer, Malcolm Turnbull. Back in a moment.
[BREAK]
PETER VAN ONSELEN:
Welcome back, you’re watching Australian Agenda where Adam Creighton, Troy Bramston and I are speaking to the Finance Minister, joining us live out of WA, Senator Mathias Cormann.
Senator, I wanted to ask you about the carbon tax if I can. I was speaking to a very senior member of the business community during the week who wants the carbon tax scrapped but complained to me that part of the issue here is that politics around the date of the scrapping needing to be 1 July even though the reality of when the legislation is eventually passed post the new Senate, being some time later than that. However long that might be, whether that’s a week or a month or whatever. Their complaint to me was that the difficulty here is that it makes it quasi-retrospective and administratively incredibly complicated and difficult for business because there is some regulatory requirement that carbon tax collected would need to be paid back in certain sectors from the date at which the implementation has happened, wherever that is, versus the start date, which is a political start date of 1 July. What’s your response to that?
MATHIAS CORMANN:
It’s not a political start date. It is the start date that based on the advice, all of the advice that is available to us works the best. Indeed we’ve been on the record for a very long time to say that we want the carbon tax gone by 1 July. We are hopeful that the Senate will share our judgment very soon after. All of the advice available to us is that that is administratively easily feasible.
PETER VAN ONSELEN:
Well see the argument that was put to me was that 1 July would have been ideal had the Senate not blocked, as it has, the removal of the carbon tax prior to now. But with it being delayed this business person was simply making the point that the best way to do it would be to tie the end date of the carbon tax to the point at which the legislation was able to be passed that would simplify things for business. Does the Government have any truck for that?
MATHIAS CORMANN:
Firstly, it is true that it would have been better if the carbon tax had already been abolished. Indeed if Labor had acted consistent with the commitments they made in the lead up to the last election when they asserted that they had already removed the carbon tax that would have been better for everyone. But we’ve got to deal with the situation where we are. It is not an ideal situation given Labor continues to try and impose a carbon tax on the economy, which is bad for the economy, bad for jobs, bad for cost of living pressures and doesn’t do anything for the environment... interrupted
PETER VAN ONSELEN:
But is there any flexibility in the Government to tie whenever you get the legislation passed to that being the point at which the carbon tax is abolished to avoid this difficulty for business of having to pay back carbon tax particularly in the energy sector?
MATHIAS CORMANN:
No and we don’t believe that there is such difficulty. All of the advice available to us is that 1 July 2014, even if the legislation is passed shortly thereafter, is the best possible date from which to have the abolition of the carbon tax take effect.
ADAM CREIGHTON:
I just have a question Minister on the 167,000 strong public service. The Enterprise Agreements that relate to most of the service I think they come to an end at the end of this month. So I’m wondering what sort of pay rises the Government is seeking to give the service over the next few years and that’s in light of the fact that they’ve received 3 per cent, which is above inflation every single year for the past few years. And the private sector wages as we know from this week, they are now falling in real terms. So in those circumstances what is reasonable to give the public sector in pay rises?
MATHIAS CORMANN:
Adam, it is our Leader in the Senate, Senator Eric Abetz who is responsible for negotiating these arrangements and you wouldn’t be surprised to hear me say that I will not be conducting these negotiations on his behalf here on your show on Sunday morning.
PETER VAN ONSELEN:
What’s in the Budget though? What does the Budget forecast for pay rises for the public service?
MATHIAS CORMANN:
Again, I’m not going to be going into that sort of detail here on your show this morning. I will let Eric Abetz as the Minister responsible conduct those negotiations in the appropriate way. In the way it has always been done in the past and that is by directly negotiating with the relevant parties.
ADAM CREIGHTON:
Well just a quick follow up question on the same issue, the Government’s promised to retire 16,500 public servants over the next few years. I’m just wondering at what stage is that process and which departments will they mainly fall in? And then finally at what level will these cuts mainly fall? Because we know from the Commission of Audit that the public sector is massively top heavy so I’m just concerned that these 16,500 will simply be a reduction in graduate intake and we will still have all of the highly paid public servants at the top.
MATHIAS CORMANN:
Firstly you’re right that in the Budget we’ve made very clear that the size of the public service will be reducing by 16,500. It's important to note here that 14,500 of those public service staff reductions are as a result of decisions that were made by the previous Government in their last Budget in the Economic Statement just before the election and as a result of other policy decisions the previous Government made just before the election. There are actually only 2,000 additional staff reductions that are as a direct result of decisions that we made in the Budget and overwhelmingly those are as a direct result of removing functions or merging government bodies. For example, we’ve merged AusAid into DFAT last year and that is leading to a series of job reductions, we are looking at scrapping the mining tax which has been a commitment that’s been on our books for a long time, effective 1 July 2014. That will help us reduce the number of Tax Officers by 130, just removing the mining tax will help us scrap 130 positions in relation to people that used to be responsible for administering the mining tax, that are currently responsible for administering the mining tax. There are examples like that across the board. Overwhelmingly, what we’ve tried to do as a Government is look at the functions, look at opportunities for efficiencies, look at opportunities to merge or abolish bodies that weren’t delivering value for money for taxpayers and that is where we’re trying overwhelmingly to achieve those additional 2,000 staff reductions.
TROY BRAMSTON:
Minister, can I jump in and ask you a two-part question about Clive Palmer this week. There was some controversy that was kicked off by him having a dinner with Malcolm Turnbull. The first question is would you ever consider having dinner with Clive Palmer? And the second one is how do you actually deal with Clive Palmer given that he probably represents a greater political threat to the Coalition because he’s a breakout on the populist right, but you still need his support to get Budget measures past. So he’s a political threat, but you need his support to pass the Budget. So how would you deal with him and would you consider having dinner with him?
MATHIAS CORMANN:
Well in the appropriate circumstances of course I would have dinner with Clive Palmer, particularly if it’s in the context of getting good public policy through the Senate. Now how to deal with Clive Palmer? Well Clive Palmer is a Member of Parliament, he’s a leader of a Party. His Party has got three Senators represented in the Senate with another that is closely aligned to that particular Party. So, clearly we will engage with them in the battle of ideas, we will engage with them in the conversation about why we believe the judgments we’ve made in the Budget are the right judgments for Australia. No doubt they will engage with it from their point of view. Now at the end of the day we’ve got to make judgments as a Parliament and we’ve got to make judgments in the Senate about the national interest and we’re hopeful…interrupted
PETER VAN ONSELEN:
But would you follow the protocol that the Prime Minister laid out at the party room a few weeks back? That if you want to engage with Clive Palmer you should go through the Leader of the House if dealing with Clive Palmer, or indeed dealing with PUP more broadly through the Leader in the Senate Eric Abetz.
MATHIAS CORMANN:
If I were to deal with Clive Palmer about legislation that is coming to Parliament whether that is over dinner or whether that is in another forum over coffee whatever, then of course I will do that as a part of an organised team effort. I mean, you’d expect me to do that. I suspect that your question relates to the dinner that Malcolm Turnbull had and that was not part of an organised effort to negotiate or discuss legislation, that was a social dinner.
TROY BRAMSTON:
Minister have you had any discussions yet with any Palmer United Party Senators about the Budget?
MATHIAS CORMANN:
Me personally? No.
PETER VAN ONSELEN:
Broadly on this space of Malcolm Turnbull and his reaction to comments both on air and in print by Andrew Bolt as well as Alan Jones. Was Malcolm Turnbull entirely within his rights to respond the way he did?
MATHIAS CORMANN:
Malcolm Turnbull is an outstanding Minister, he’s a committed member of a united team. Malcolm is big enough to talk for himself when it comes to defending and justifying his actions, but let me just say that the story last week, you said at the beginning I think in your editorial that it was a bit of a ‘storm in a teacup’ and I certainly agree with your assessment on that. The Government continues to get on with the important job of implementing the policies to build a stronger more prosperous economy to ensure that everyone has the opportunity to get ahead. We’re not going to get distracted by these sorts of sideshows.
PETER VAN ONSELEN:
Sideshows though that for some reason Andrew Bolt and Alan Jones thought were important enough to raise in the first place. Were they doing the Government a disservice?
MATHIAS CORMANN:
Peter, I’m not a commentator on commentators. You’re a commentator and I think that if somebody were to suggest that you do one thing or another because somebody in Government or in the Opposition is putting you up to it, I think you’d take great offence to that. I’m not going to put myself in a position where, as a Minister in the Abbott Government, I’m becoming a commentator on commentators. That is not my job and that is not what I’m going to do.
PETER VAN ONSELEN:
But it’s unhelpful to the sale of the Budget, this whole process. Not suggesting that they are doing it on behalf of anyone, but simply the raising of leadership tensions via commentators normally more sympathetic than not to the conservative side is a distraction.
MATHIAS CORMANN:
Peter I’m not going to be a commentator on commentators. It is not a commentator’s job to be helpful or unhelpful to the Government, it’s a commentator’s job I suspect to call it as they see it. From our point of view, we are a strong and united Government. Malcolm Turnbull is doing an exceptional job in sorting out the mess that Labor left behind with the NBN. I work very closely with Malcolm on a number of issues including the NBN and of course the Government’s commitment to roll out our e-Government policy. He’s a very hard working, very effective, very team focused member of the Abbott Government and as far as I’m concerned, we’re just getting on with the job.
ADAM CREIGHTON:
Can I just ask you about the cost of the G20 meetings that Australia is hosting this year. It’s been reported that the cost is more than $450 million for the Australian Government. So I’m just asking what you would say to people out there who might say that this doesn’t offer value for money to taxpayers. Secondly, what is your central aim or hope to emerge from this series of Australian G20 meetings later this year?
MATHIAS CORMANN:
Well we had a meeting of G20 Finance Ministers and heads of Central Banks in Sydney earlier this year hosted by Joe Hockey and of course at that meeting they reached a consensus to implement policies to drive economic growth two per cent ahead of what would be business as usual over a five year period. Now the G20 countries represent about 85 per cent of the world’s economy. So obviously for G20 Finance Ministers and G20 Governments to be able to co-ordinate their actions in order to drive stronger economic growth, it's particularly important for a country like Australia. Our economy is trade exposed, the stronger the global economy, the stronger our opportunities to grow our economy more strongly. So of course it’s in our national interest to be actively involved. That was the view of the previous Labor Government, appropriately I might say, and that is the view of this Government. Being able to host all of those world leaders in Australia, not once but on a number of occasions, whether it’s the Finance Ministers and Central Bankers or the Head of Governments which will happen later this year, that is a great opportunity for Australia, it will be a great opportunity to not only showcase Australia, but also to drive an economic reform agenda across the world, which will help deliver tangible benefits for Australia in terms of jobs and growth.
TROY BRAMSTON:
Minister, if I could just go briefly back to Clive Palmer. There was a story in the Weekend Australian published yesterday that suggested that the Queensland Premier and Deputy Premier had some concerns about Clive Palmer’s business activities and that he is at risk of an investigation by Queensland’s Corruption Commission. Do you share those concerns, that Clive Palmer might be scathing close to a formal investigation about allegations of corruption?
MATHIAS CORMANN:
I’ll let those processes in Queensland take their course as they must according to Queensland laws and regulatory arrangements. We are obviously working with everyone represented in Parliament at face value. We are dealing with everyone in the Australian Parliament based on what we think is necessary in the national interest when it comes to pursuing economic and social reform and we will do so with all of the members represented in the Parliament by the Palmer United Party.
PETER VAN ONSELEN:
I want to take you to another policy area before we run out of time Senator Cormann. I want to ask you about higher education. Now it’s a major platform of reform. Christopher Pyne is undertaking some pretty totemic adjustments with the deregulation of the higher education system, it’s getting a mixed reaction within the sector, but one thing that a lot of students are concerned about including former students is what they see is the retrospectivity of some of the changes to the repayments of HECS, adjusting it from CPI to the bond rate. Why is that good policy adjustment?
MATHIAS CORMANN:
Firstly the bond rate is still a discount compared to what you would have to pay if you took out a loan in the private sector. Adjusting the interest rate on your loan is not a retrospective change, because it doesn’t change in relation to your past repayments or in relation to your past arrangement. It only changes prospectively and as far as the interest rate is concerned from 1 June 2016. So I don’t agree with the proposition that it is a retrospective change.
PETER VAN ONSELEN:
But just on that, anyone that currently has a HECS debt into the future, the repayment structure of that will see it move to the bond rate from the CPI. In that sense when they took out that debt, when they studied in university there has been an adjustment to the process of paying that back from when they signed up to when they started.
MATHIAS CORMANN:
That adjustment will only take place prospectively at some time in the future. Your proposition is that if you sign up as a citizen to Australia coming in from overseas on a particular tax rate, that tax rate should never change. That’s just not a realistic proposition. What we’re saying is...interrupted
PETER VAN ONSELEN:
It’s not quite analogous though because one involves personal debt the other is a wider ambit within a social democracy.
MATHIAS CORMANN:
Indeed, in relation to debt there is nothing unusual about the basic proposition and indeed it is consistent with what the terms and conditions are when the HECS-HELP debt was taken out that there can be adjustments from time to time to the interest rate arrangements. The interest rate adjustment that we are proposing in this Budget still means that there will be a significant concession compared to what the market interest rate would be if you like.
TROY BRAMSTON:
Minister, can I ask you about your future plans in politics. I was talking to a number of Coalition MPs last week who all indicated to me that you’re one of the Government’s strongest supporters. And that led me to remember a profile piece ...
MATHIAS CORMANN:
I’m pleased of that, I’m pleased to be a strong supporter... interrupted
PETER VAN ONSELEN:
I think you mean performer...
TROY BRAMSTON:
Performer, yes, sorry. But there was some speculation I guess in a Fairfax profile of you just before the Budget where you had been interviewed and talked about possibly looking at a lower house seat. Are you actually considering a move to the lower house from Western Australia?
MATHIAS CORMANN:
Let me give you a very clear answer. The answer is no. I made a very conscious decision that in my view, I can best contribute to our country by being a representative for the great State of Western Australia in the Australian Senate. That is where I am that is where I will be and from time to time people speculate ...interrupted
PETER VAN ONSELEN:
So to borrow Alan Jones’ rhetoric under no circumstances, repeat the words after me, or is your rhetoric more akin to Malcolm Turnbull’s on this?
MATHIAS CORMANN:
No, I am very happy to say that under no circumstances will I shift from the Senate to the House of Representatives. I’m very, very clear on where I believe that I can best contribute as part of the Coalition team and that is in the Senate.
TROY BRAMSTON:
Well can I ask you how it is going doing two jobs in the Ministry at the moment being Assistant Treasurer also as well as also being Finance Minister. Would you like the Prime Minister to make an appointment for a new Assistant Treasurer I guess conceding now that its very unlikely that Arthur Sinodinos would make it back to the front bench?
MATHIAS CORMANN:
These are entirely matters for the Prime Minister. The Prime Minister has asked me to do a job. I’m doing it to the best of my ability, working doing the best I can every day and that is what I’ll continue to do until such time as there is a change to those arrangements. That’s not a matter for me.
PETER VAN ONSELEN:
Well its a matter for the Prime Minister whether Arthur Sinodinos comes back or not. But on this program a couple of weeks ago, your colleague Joe Hockey said that he was absolutely convinced that Arthur Sinodinos would be back. Are you as convinced?
MATHIAS CORMANN:
Yes I’m convinced, absolutely. Arthur Sinodinos is an outstanding contributor. He’s a great individual. We all very much look forward to him coming back to the front bench as soon as possible.
PETER VAN ONSELEN:
You’ve been very generous with your time, just one last question on the deficit levy if I can. Part of the rationale for bringing it in was the pain, courtesy albeit as you say because of Labor’s profligate spending, had to be equally shared when it came to getting the Budget back into surplus. If the Senate blocks a multitude of measures at the other end of the socio-economic spectrum, which means its perhaps no longer being equally shared, would the Government consider a rethink on the size of the deficit levy or is that set in stone even if it ceases to be equally shared?
MATHIAS CORMANN:
Peter, that is a highly hypothetical question. I don’t accept the premise of your question. As far as we’re concerned, we’ll be putting the Budget to the Senate that Australia needs. We will be arguing very strongly for all of the measures in the Budget to be passed by the Senate. If that were not to be the case, well we’ll cross that bridge when we get there.
PETER VAN ONSELEN:
But is it leaving the room open for an adjustment to the deficit levy?
MATHIAS CORMANN:
No Peter. That is a very good try. We’re putting all of the measures in the Budget to the Senate and we will expect the Senate to pass all of the measures in the Budget. The Budget that we delivered is the Budget Australia needs if we are to protect our living standards and if we are to build better opportunity and a stronger economy for the future.
PETER VAN ONSELEN:
I realise I’m asking you another question now, but it is an interesting question though that you’ve got a deliberate balance that you’ve come up with as a team in the Budget to try to share relatively equally in your view the approach that has to be taken. If the Senate carves out that equal sharing does it force the Government into a bit of a rethink into the way it prioritising things?
MATHIAS CORMANN:
I don’t accept that that is what the Senate will do. So that is where we have to agree to disagree. Whatever way you ask this, I’m going to give you the same answer and you’re going to say that I’m becoming boring, but you’re asking me the same question. So we’re putting the Budget to the Senate that in our judgement Australia needs and we expect the Senate to pass the Budget. It is the only plan on the table to fix the Budget mess that we’ve inherited from the previous government.
PETER VAN ONSELEN:
Alright. We’ll have to get you back on once we know that the Senate are going to do. As I say, you have been very generous with your time. Finance Minister Mathias Cormann thanks very much for your company.
MATHIAS CORMANN:
Thank you.