Senator the Hon Mathias Cormann

GARY ADSHEAD: Well let's get in to what came out last night in the Federal Budget. Mathias Cormann is the Finance Minister and he joins me on the line now, thank you for your time Minister.

MATHIAS CORMANN: Morning.

GARY ADSHEAD: How many promises have you broken to produce this Budget?

MATHIAS CORMANN: We have delivered an honest Budget, we believe we delivered a fair Budget and we have delivered a Budget that kept faith with the promises that we made before the last election. The most fundamental promise that we made is that we would build a stronger economy and repair the Budget mess that we inherited from our predecessors and last night we put a stop to the unsustainable spending growth trajectory that we have inherited from our predecessors.

GARY ADSHEAD: But you can't have your cake and eat it, surely Minister. You can't come to office, on the back of saying you wouldn't put up taxes and so on and not remember that when there was a broken promise by Julia Gillard you guys were slaying her every which way you could. You can't have it both ways. You are going to have to cop that you have broken promises.

MATHIAS CORMANN: Taxes as a share of GDP will be lower over the forward estimates than what they would have been under Labor, consistent with what we said at the last election. What we have done and we are absolutely prepared to take responsibility for this, having assessed all the information, having assessed the information about where we were and were we would be heading if we didn't take corrective action, we did decide that we needed both structural reforms and structural savings which start low and slow and build over time, but that we also needed an immediate special effort to get our country and to get our Budget back on track. What we are asking people to do, right across the community, is to help us, to contribute. Essentially we have decided we needed to spread the immediate, that short term special effort as fairly and as equitably across the whole community as possible, the only way that you can do that in relation to higher income earners is by measures through the tax system. So we have, as part of the Budget, introduced a temporary Budget Repair Levy. Effectively that is a two per cent increase in the top marginal tax rate for three years, because we think that is the only way we can ensure that people right across the community will help us get the Budget and help us get the country back on track.

GARY ADSHEAD: The Medical Research Endowment Fund was obviously one of the visionary aspects of this Budget, where did it come from and why do we need it?

MATHIAS CORMANN: Well it is a very exciting initiative. It is obviously a significant investment in our future healthcare, in high-quality healthcare that we want future generations to be able to benefit from. What we are doing here is, we made a commitment in the lead up to the last election to maintain health funding as it was at the time of the last election and we are doing that. At the same time we do think it is important to ensure that spending in health, like in every other portfolio is as efficient and is as well-targeted as possible. There are opportunities for savings and there are opportunities to better manage the limited health dollar by sending some price signals. What we have said in order to keep faith with our commitments is that all of that revenue and all of the savings that are generated from those measures will be invested into this Medical Research Future Fund. It will build up a capital base of $20 billion over the next six years and all of the earnings from that fund will be directed into Medical Research that will double, in time, our current effort in this area. We are hopeful that Australian researchers will be able to help find cures for things like Cancer or help find treatments and cures for Alzheimer's, Dementia, you name it and that is of course an investment in future high-quality health care in Australia and around the world.

GARY ADSHEAD: Do you see any irony in how you are going about it? In other words you are putting a financial hurdle in peoples way of going to the Doctor to raise money for something that may be, something that might cure or resolve illnesses. Do you see any irony in the way that you are going about it?

MATHIAS CORMANN: We are asking people to contribute to help build a better future. So what we are doing in the short term is achieve a shift from spending on consumption to investment. The ultimate objective is to ensure that our world class health care system is sustainable into the future. That patients across Australia can continue to have access to affordable high quality healthcare and that high quality health care is also affordable for taxpayers, that it is sustainable. So what we are doing over the next six years is to make structural adjustments to the spending flows on day-to-day healthcare by taking some of the savings we are receiving and putting them into a longer term investment. Over time that will help us make our healthcare funding framework more sustainable.

GARY ADSHEAD: Can I ask you, yesterday as an example, when we were doing sort of pre-Budget chats on the station. We spoke to three people, qualified people, who had been trying to get work for months. What is it that makes you think someone under the age of 30, who loses their job, can immediately find work and therefore be excluded from any unemployment benefit for 6 months under your Budget?

MATHIAS CORMANN: Well what we need to do in order to ensure that everyone has the opportunity to get ahead, we need to build a stronger economy. Fixing the Budget mess is an important part of that. Getting rid of the Carbon Tax and the Mining Tax is an important part of that. Scrapping unnecessary and costly red tape is an important part of that. But fundamentally, we don't think it is appropriate for young people to go straight from school to the dole. What we think, a better circumstance, a better situation, a better proposition for young people is to either earn or learn. If there is a need for welfare support after an appropriate waiting period then that is available, but we don't think that it is appropriate for a young person, with a capacity to work, with a capacity to earn or learn, to immediately just go from school to the dole.

GARY ADSHEAD: Okay you're stripping the States of billions in health and education funding and you know that's been painted in WA in the last State Budget here, won't you be forcing the State Government to make massive cuts in both those areas?

MATHIAS CORMANN: Well what we're doing is continuing to increase funding and spending for the States in health and education. It's the States and Territories that are responsible for running hospitals and schools. The Federal Government will continue to increase its contribution but we are doing it on a more sustainable basis. The spending growth trajectory that Labor had locked in beyond the budget forward estimates, beyond the period that was immediately obvious at the time of the last election. It was completely unaffordable, it was completely unsustainable. Those of us who have responsibility here in Canberra have had to make some tough decisions to ensure that spending growth is sustainable into the future and of course we would expect State and Territory Governments across Australia to do the same.

GARY ADSHEAD: Alright. Can you explain the decision to axe the Seniors Supplement as part of this Budget?

MATHIAS CORMANN: Well the Seniors Supplement was literally just a giveaway for non-pension seniors. The previous government introduced things like the School Kids Bonus and the Seniors Supplement which was borrowing money to give it away. We can't afford to borrow money to give it away, which is why we're not continuing with this sort of spending. We've got to remember that if we continue to fund our consumption through debt and deficit, we're forcing our children and grandchildren to pay for our consumption today and to pay for it with interest, which means that we would be reducing their opportunity down the track, because we're imposing costs on them that we are not prepared to carry for our own consumption today. That is not fair and that is not reasonable. That is why we are absolutely committed to put our Budget back onto a sustainable footing to make sure that our generation today pays for its own consumption, that we carry our own weight and that we don't expect our children and grandchildren to pay for our cost of living today with interest down the track.

GARY ADSHEAD: So realistically, where does the Paid Paternity Scheme, when you've just given that spiel, where does that sit in all that argument?

MATHIAS CORMANN: Well it is a very important economic...interrupted

GARY ADSHEAD: Is it where Tony Abbott sort of snookered you a bit and all the promises not to put up taxes?

MATHIAS CORMANN: Gary you've asked the question and I'm very happy to answer it. It's a very important economic and social reform. One of the structural challenges that we face as a nation, in the context of an ageing population, is that our workforce participation rates are dropping. So the proportion of people working and paying taxes to fund the various social and welfare services is falling. We need to lift workforce participation, in particular female workforce participation. In order to be able to do that, we need to do two things: We need to have a fair dinkum Paid Parental Leave Scheme to ensure women remain better connected to the workforce at a time when they are having babies and we need better childcare arrangements. Now in relation to childcare arrangements, we currently have a Productivity Commission review that is underway and that will make recommendations on how we can make improvements there and the Paid Parental Leave Scheme is a very important part of our strategy to ensure that we can have higher workforce participation by women.

GARY ADSHEAD: Alright, how's the sell going so far do you think?

MATHIAS CORMANN: Well we're doing our best, we're doing our best. We've worked very hard to put a Budget together that we think is fair and which will help build a stronger economy. Now obviously it is important to engage with people right across Australia to explain what it is that we are doing and why we are and why we think it is in the national interest.

GARY ADSHEAD: Alright I think you and Mr Hockey make a lovely couple on the front page of The Australian newspaper today.

MATHIAS CORMANN: Thank you.

GARY ADSHEAD: One for the wall there Minister. Thanks very much for joining us.

MATHIAS CORMANN: Good to talk to you.