Senator the Hon Mathias Cormann

KATHRYN ROBINSON: But first this morning his boss is dealing with an international crisis threatening our military and trade arrangements with Indonesia. His colleague, Treasurer Joe Hockey, warns we have less than three weeks to lift the debt ceiling before facing a US style government shutdown. Our guest today is Finance Minister Mathias Cormann and our panel, News Corp's National Economics Editor Jessica Irvine and National Political Reporter for News Corp, Lanai Scarr. Good morning to you all. Senator, Tony Abbott has been depicted on the front page of an Indonesian newspaper overnight in a very lewd situation. To you, is are these relations with Indonesia sinking to a new unmanageable low?

MATHIAS CORMANN: We are totally focused on building and strengthening our relationship with Indonesia. Obviously there has been some strain in recent days as a result of media coverage. The Prime Minister has been very clear in expressing his very strong commitment to continue to strengthen our relationship with Indonesia. It's a relationship that is important for both our countries. We have expressed regret for the embarrassment caused by the media reports in recent days, but it is really a matter from our point of view of looking forward.

KATHRYN ROBINSON: But what is your reaction to this newspaper cover?

MATHIAS CORMANN: Look I'm not going to commentate media coverage in Indonesia. Our focus is on strengthening our relationship with Indonesia. It is a very important relationship for both of our countries and the last thing that I'm interested in doing is being a commentator. 

LANAI SCARR: Senator, do you think Tony Abbott has handled this in the best way possible? Why didn’t he pick up the phone on the very first day that media broke about - news broke about this issue? I mean he was so intent on trying to get Julia Gillard and Kevin Rudd to pick up the phone to their international counterparts, shouldn’t he have done more?

MATHIAS CORMANN: The Prime Minister has handled this in the absolutely appropriate way completely focused on our national interest. Whatever way you look at this, this is no doubt one of the more challenging periods in our relationship, but our focus is on strengthening our relationship moving forward and that's what we are getting on with doing.

JESSICA IRVINE: If you really want to strengthen the relationship, I'd have to put it to you that you're failing. Quite clearly, this relationship has not been strengthened in the last few weeks. If we want to look at how we should conduct our diplomatic affairs, we do have a precedent for this situation which was when it was found out that the US had tapped the phone of Angela Merkel and Obama picked up the phone and he said sorry. What is the harm in just saying sorry? Why are we dancing around with regret, why aren’t we just sorry?

MATHIAS CORMANN: Well we're dealing with this situation in an Australian way according to our judgements as to what is in our national interest. That is what the Prime Minister is doing, that is what he will continue to do. Of course all of us in the national interest strongly support our Prime Minister's efforts in this regard.

LANAI SCARR: How is this going to affect every day Australians? I mean are you confident Australians travelling to Bali or elsewhere in Indonesia are going to be safe?

MATHIAS CORMANN: Yes I am.

JESSICA IRVINE: Well you've mentioned that this is a very important relationship for us not only diplomatically but economically. We've already had Agriculture Minister Barnaby Joyce has now cancelled a trip to Indonesia where he was going to talk about Indonesia investing and taking about 100,000 heads of cattle as exports. What are the economic consequences of this?

MATHIAS CORMANN: Well what he has done, he hasn’t cancelled, he has deferred and of course that trip will still take place. The trade relationship with Indonesia will strengthen into the future, but of course right now there are a number of issues to resolve. The Prime Minister has written to the President of Indonesia in the last few days as he said he would. Let’s just continue to work through this process of fixing the relationship from where it is moving forward, strengthening the relationship from where it is moving forward, rather than to continue to look backwards.

LANAI SCARR: What implications do you think this is going to have for the Bali Nine and more pressingly Schappelle Corby, who’s parole is up in a couple of days?

MATHIAS CORMANN: Look I think you are well and truly stretching my area of responsibility now. I came here to talk about economic matters and budget matters and these sorts of issues. This is very much outside my area of responsibility. I will let the Prime Minister and the Foreign Minister and others continue to comment on these matters, that are obviously of a sensitive nature, as appropriate.

LANAI SCARR: You are a Cabinet Minister though, so you obviously are aware of all the considerations that are going on in the Government.

MATHIAS CORMANN: Well indeed I am, with responsibility for the finance portfolio and these are matters which are very much in the province of the Prime Minister’s and the Foreign Minister’s area of responsibility. Given the very important and sensitive nature of these issues I will let them comment on these matters as appropriate.

KATHRYN ROBINSON: Senator I can assure you that we will be going to issues pertaining to your portfolio, but if we can just stick with something a little bit more broader in this segment, in asylum seekers and border protection. How is it conceivable that Operation Sovereign Borders is still going to work given the Indonesian Government has said they are no longer cooperating with us on that issue?

MATHIAS CORMANN: Well we are totally committed to stopping the boats. We have inherited a situation at our borders from the previous government that was in a mess. There are many facets to Operation Sovereign Borders. Obviously it is preferable for strong cooperation with Indonesia to be part of the implementation of our policy there, but there are many facets to Operation Sovereign Borders. We will continue to do everything we can to stop the boats as we said we would do in the lead up to the last election.

KATHRYN ROBINSON: Do you think we'll see more boats now as a result of this relationship breakdown with Indonesia?

MATHIAS CORMANN: I am not going to speculate on this. Our focus is on strengthening our relationship with Indonesia and getting the situation back into a position where we are working together strongly in our mutual interests to stop the boats, because it is not in Indonesia’s interest, as it is not in our interest for the boats to keep coming.

KATHRYN ROBINSON: But if you look at the numbers alone. I think since September there was something like one-thousand-one-hundred-and-fifty people who were stopped getting on boats in Malaysia, Sri Lanka and Indonesia, the bulk coming from Indonesia. That was [inaudible] disrupted due to Indonesian authorities on the ground there.

MATHIAS CORMANN: You’re quite right that since the election there has been a significant reduction in the number of boats arriving on our shores and we will continue to do everything we can to further accelerate that trend of stopping the boats. Our determination is to stop the boats. We will do everything we can to make sure that happens and obviously strengthening our relationship with Indonesia moving forward is part of that.

LANAI SCARR: You’re obviously in control of the budget bottom line though. Are you making contingency plans though for the fact that we may have to accommodate more asylum seekers?

MATHIAS CORMANN: Well our budget estimates will be updated in the usual way in the mid-year economic and fiscal outlook. Obviously we're looking right across government right now as to what the various pressures on the budget are that we have inherited from the previous government. We'll make the best judgement in an orderly fashion and we will provide the update in the usual way at the mid-year economic and fiscal outlook.

KATHRYN ROBINSON: Okay we are out of time for this break but do stay with us, we will have more with Finance Minister Mathias Cormann.

[COMMERCIAL BREAK]

You're watching Meet the Press, jump online and give us your thoughts via our Facebook page or with the Twitter hash tag, MTP10. Back now to our guest today, Finance Minister, Mathias Cormann. Senator, there are reports in the papers today that suggests former PMs are asking, requesting more perks. In Julia Gillard and Kevin Rudd’s case, they want not one office, but two offices. Is it right?  Does a former PM need two offices?

MATHIAS CORMANN: Well look, I let them work that out through the usual process. I'm not going to go for some gratuitous political shots here. I'm sure that this is going to be sorted out in an appropriate fashion that...

KATHRYN ROBINSON: Well as Finance Minister, two offices, they enjoy a six-figure pension. Is it fiscally responsible to be signing off on something like this?

MATHIAS CORMANN: Well obviously we don’t think they do need two offices. I mean, these things are currently being worked through and you know once it’s finalised we will let you know what the final arrangement is.

KATHRYN ROBINSON: Okay, thank you.

JESSICA IRVINE: Minister, you're refreshingly good at succinct answers, so I've got a yes or no question for you, which is does Australia still have a budget emergency as you suggested in opposition. Do we have a budget emergency?

MATHIAS CORMANN: Yes we do. We inherited a budget in very bad shape from the Labor Party. A thirty-billion dollar deficit at the time of the election and deteriorating, net debt heading for two-hundred-billion dollars, gross debt heading beyond - well beyond three-hundred-billion dollars on the PEFO figures and of course, the trend that we inherited was a deteriorating trend. What Labor has suggested at various times is that somehow there wasn't an emergency because we weren’t dealing with things in the panicked, chaotic fashion that they would have in the past.

Yes - so the short answer is yes, we’re dealing with a budget emergency, but we’re dealing with it in a methodical, orderly, purposeful fashion and of course the mid-year economical fiscal outlook will be a very clear indication on where the true state of the budget is at, once we’ve taken all of the hidden problems into account that we've found out about since the election.

JESSICA IRVINE: So when will you be releasing the mid-year update?

MATHIAS CORMANN: Well as we've indicated, we will be releasing it before Christmas. We’re currently working our way through it. We are keen to ensure that the revenue data in particular is as accurate as possible, which is why we want the September national accounts data reflected in the mid-year economic and fiscal outlook. That will come out in early December. So then there are some processes to go through after that and as soon as possible, once we've gone through all of that, MYEFO will be ready for release.

JESSICA IRVINE: So a budget emergency, we need to do something about it, economic update in December. Will there be nasties in that December update, because if there's an emergency you need to do something about it and it seems like the Government is ruling out quite a lot of things. No changes to super taxes, no changes to health and education spending, not increasing the aged pension. There's going to need to be cuts. Where are you going to get them from and are we going to see them in December?

MATHIAS CORMANN: Well, we’re going through a proper orderly process. We've already started to implement the savings measures that we've taken to the last election, that's one. We've also ensured that there is some appropriate scrutiny over the discretionary grants spending that Labor engaged in in the shadow of the election. That's going on as we speak. Furthermore, we have of course announced the Commission of Audit, which has the job of identifying opportunities for structural efficiencies over the medium to long term, which is going to report to us by the end of January with its interim report and by the end of March with a final report. The Commission of Audit very much will look at the size, scope and efficiency of government and we will reflect the recommendations from the Commission of Audit that we accept in the 2014/15 Budget. So if you want to look at it at a high level, the mid-year economic and fiscal outlook will clearly articulate the problem that we have inherited from Labor’s last budget and the 2014/15 budget will be our plan, the first Coalition budget will be our plan, to fix the budget emergency that we have inherited from the Labor Party.

LANAI SCARR: One of the key things that still needs to occur is the raising of the debt ceiling. If you don’t get that passed, are we going to be facing a US style government shutdown?

MATHIAS CORMANN: Well, we’re dealing again with a mess that we have inherited from the previous government. There is one more week until the Senate comes back to sit and consider the debt ceiling legislation again. I guess that's one more week for Bill Shorten and Chris Bowen and the Labor Party to consider the national interest in this. The Labor Party over their six years in government kept kicking the debt can down the road. They came back every year or so on, increasing the debt ceiling from seventy-five to two hundred billion to two-hundred-and-fifty-billion to three-hundred-billion. At the time of the last Budget, Labor knew that the legislated debt limit would not be sufficient to meet the requirements – the financing requirements of the Commonwealth just for this calendar year. They knew then that by the end of this calendar year, they would reach and exceed the legislated debt ceiling. That was quite reckless and irresponsible the way they dealt with this, not legislating to increase the debt ceiling at that time. So we are doing what needs to be done responsibly to provide the debt ceiling that is required to fund the operations of government over the forward estimates. That is the responsible course of action and we call on the Labor Party to stop this political posturing and to start putting the national interest first.

LANAI SCARR: But is it a possibility that we could face a government shut down?

MATHIAS CORMANN: Well I'm not prepared to entertain that thought. We are going to put the legislation back to the Senate to increase the debt ceiling to five hundred billion dollars which is the responsible course of action. We call on the Labor Party to reflect on the national interest over the next week and to support that legislation when it comes back to the Senate in an unamended form.

LANAI SCARR: Another thing that's been in the headlines this week is the retirement age. The Coalition has ruled out raising the retirement age, but there's still not been anything said about accessing equity in people’s homes. What are you going to do about that?  Is that a possibility?

MATHIAS CORMANN: Well the Productivity Commission made certain recommendations. The Coalition doesn't have a policy to increase the retirement age. The Productivity Commission is an adviser to government and of course they are independent and free to express their view. We are conscious of the fact that there are fiscal pressures that come with the aging of the population. Of course that's why we have a Commission of Audit consider the issues around size, scope and efficiency of government so that we can position ourselves for that in the best possible way. Our intention is to reflect our approach to these sorts of challenges in the 2014/15 Budget.

KATHRYN ROBINSON: Just finally Senator, if we can take you to the Senate where it’s responsible - a lot of legislation is to be passed, the carbon tax being one of them. If it’s defeated there twice, giving you the trigger for a double dissolution, given that we’re in a budget emergency, would you be happy with sending Australians back to the polls?

MATHIAS CORMANN: Well again, our preference is that Labor respects the vote of the Australian people. Our preference is that Bill Shorten and the Labor Party accept the verdict at the last election. People at the last election voted against higher electricity prices. They voted for scrapping the carbon tax. They voted for strengthening our economy by not imposing the world’s largest economy wide – carbon tax on our economy. So Bill Shorten and Labor should let us implement the agenda that the Australian people voted for. So again, I between now and the end of June we think that there's a lot of water to go under the bridge and there's lots of opportunity for Bill Shorten to remind himself of the national interest.

KATHRYN ROBINSON: So you won't rule out that Australians could head back to the polls over this issue?

MATHIAS CORMANN: We will do whatever needs to be done in order to implement our commitment at the last election to scrap the carbon tax. That will achieve a saving of five-hundred-and-fifty dollars a year on average for Australian families. It will also of course help make Australian business more competitive again by bringing down the cost of doing business. So we will do what needs to be done, but Bill Shorten should stop being in denial about the last result.

KATHRYN ROBINSON: Alright, Senator Cormann, thank you very much for your time today on Meet the Press, we appreciate it very much.

MATHIAS CORMANN: Always good to be here.