Senator the Hon Mathias Cormann

CHRIS UHLMANN: The Abbott Government’s Commission of Audit will be released today. Its 86 recommendations are expected to call for a complete rethink of the way the Government does business, demanding swingeing cuts to the public service and float radical reforms to service delivery. But this is just the first act in a play of three parts. Act one reaches its crescendo today as the Government makes its case for significant painful change to restore the nation’s finances. The next comes in a fortnight when we see how the Coalition responds in its first Budget. And then the longest and the hardest act of all selling it to a sceptical electorate, wrestling change through the Senate and holding its nerve all the way to election day 2016. That won’t be easy. Beyond the external outcry, there’s already disquiet in Coalition ranks. So the tax increases and the National Party is enraged that cutting the diesel tax rebate is a live option.

One of those charged with plotting the Coalition’s course is Mathias Cormann, the Finance Minister.

Well Mathias Cormann what’s the main message of this Commission of Audit?

MATHIAS CORMANN: What the Commission of Audit report will show is that the spending growth trajectory that we have inherited from Labor is unsustainable and has to be addressed. After the last election we inherited a Budget with $123 billion worth of projected deficits and government debt heading for $667 billion, unless we take corrective action. What the Commission of Audit report shows is that Labor’s spending trajectory actually continues to deteriorate beyond the forward estimates.

CHRIS UHLMANN: So the Commission of Audit will show that everything you’ve been saying over the last three years, the cynical might say, well that’s a surprise.

MATHIAS CORMANN: The Commission of Audit has done a very important job. One, they did quantify and very specifically and scientifically quantify the fiscal challenge that we’re facing as a nation. They have also come up with a whole series of recommendations on how we can make the necessary structural reforms and structural savings in order to repair the Budget.

CHRIS UHLMANN: Can we go to those spending cuts? Tax increases is something you said you would not do.

MATHIAS CORMANN: What the Commission of Audit is recommending is structural reform of the Budget, structural savings. The Government in the Budget will pursue structural reforms and structural savings. The good thing about structural savings is that they build over time and they will help put us back onto a believable path back to surplus. However, structural savings start low and build over time. There is a need for an immediate, special effort to put the country into a stronger position to start the Budget repair job ahead of us. So the decision we are considering at the moment is how best to ensure that special, immediate effort is spread as fairly, as equitably as possible across all sections of the community.

CHRIS UHLMANN: Tax increases, who gets the tax increases, when do they start, how long do they run, who pays?

MATHIAS CORMANN: You wouldn’t be surprised to hear me say that I will not be delivering the Budget here on your show this morning. I will leave that to the Treasurer, Joe Hockey on the second Tuesday in May. What I can say though... interrupted

CHRIS UHLMANN: Sure, you wouldn’t be surprised to hear me say that you promised before the last election that there would be no surprises and no excuses. One of the surprises is that you are putting taxes up, you said you wouldn’t.

MATHIAS CORMANN: We’re not making any excuses. What we’re doing is making judgements that in our view are in the best interest of the country. We’re not doing any of this out of fun. We’re not considering any of these measures because it gives us any pleasure. We’re doing it because in our judgement we need to consider some of these things to strengthen the country. Now, just to go to the specifics though. If we want to repair the Budget and if we think that we need to make a special, immediate effort before structural savings can properly kick in, then there’s two ways you can do it. You can cut spending or you can increase your revenue. In terms of cutting spending, that necessarily is targeted at those that receive Government payments... interrupted.

CHRIS UHLMANN: It falls on the poor...

MATHIAS CORMANN: ... now if we were to do, as Bill Shorten appears to be suggesting and that is exclusively focus on spending then what he is really asking us to do is to force lower income families to carry the whole burden of the Budget repair job ahead of us. What he is really asking us to do is force lower income families to pay the full price of dealing with the debt legacy and the deficit legacy that Labor has left behind. Now higher income earners, the only way we can effectively ensure that higher income earners carry their fair share of the burden is through well targeted, time limited measures through the tax system.

CHRIS UHLMANN" Looking at the spending cuts though, do you appreciate that at the moment everybody who gets a dollar in welfare from the Government is now concerned be they a pensioner, be they a disability pensioner, be they someone on unemployment benefits?

MATHIAS CORMANN: What we need to do is we need to ensure that we get spending growth under control. The spending growth trajectory that we have inherited is not sustainable. So that needs to be addressed. But structural reform, structural savings will build over time. They start low and build over time and they will help bring us back onto a believable path back to surplus. In the short term though, there is a need for an immediate effort. It would be a special and time limited effort. Our commitment and our objective is to ensure that effort is spread as fairly and as equitably across the whole community as possible. Now the only way to ensure that higher income earners do their fair share of the heavy lifting is by having a very close look at what sensible, well targeted, time-limited adjustments we might be able to make through the tax system.

CHRIS UHLMANN: Alright, what about businesses that get money from the Government, by way of concessions and I’m thinking in one instance of the diesel fuel tax rebate that mining companies get.

MATHIAS CORMANN: Again, I’m not going to get into individual measures today. The point here is that today we will be releasing the Commission of Audit report. It will show the significant fiscal challenge that we face over the medium to long term. It will include a whole range of recommendations and of course the Budget on the second Tuesday in May will be the first instalment of the Government’s response to that report. Things will continue on from there.

CHRIS UHLMANN: Finance Minister Mathias Cormann.