Senator the Hon Mathias Cormann

MICHAEL ROWLAND: Now we are joined now by Finance Minister Mathias Cormann. Minister, good morning to you.

MATHIAS CORMANN: Good Morning.

MICHAEL ROWLAND: We have lots of voters watching this program this morning how can you now defend to them those promises you may made before the election not to make changes to health and education, no nasty surprises given what we saw unfold in the Budget last night.

MATHIAS CORMANN: The Budget that Joe Hockey delivered last night was an honest Budget, it was a fair Budget and it was a Budget that did keep faith with the promises we made before the last election. In relation to health and education we said we would keep the same funding envelope in place that was in the Budget at the time before the election and we are doing that. We are achieving some well-targeted efficiencies in the health system and we are reinvesting those into the health system. In relation to education we are actually doing better than Labor. We put $1.2 billion back into the school system before Christmas that Labor had ripped out just before the election in relation to schools in Queensland, Western Australia and the Northern Territory.

MICHAEL ROWLAND: But in health and education you are taking $80 billion from the States and Territories over the next 10 years, how is that not a cut?

MATHIAS CORMANN: Well what we are doing beyond the forward estimates at the time of the last election is put the Federal funding trajectory on a more sustainable footing. Labor hid a lot of the funding growth, the spending growth in the period beyond the forward estimates at the time of the election. That was never sustainable. It could never be afforded. Government ultimately has to live within its means. Government ultimately cannot spend money it hasn’t got. It cannot spend more money than it raises in revenue.

MICHAEL ROWLAND: Voters also heard Tony Abbott say there would be no new taxes, no higher tax collections without an election but at the same time we again have this debt levy on high-income earners and the rise in the fuel excise and you say of course that the larger promise was getting the Budget back into surplus, but that argument really doesn’t pass the pub test, does it Mathias Cormann?

MATHIAS CORMANN: The most fundamental promise we made in the lead up to the last election was that we would build a stronger economy and that we would repair the Budget mess that we inherited and we are doing that in the Budget that Joe Hockey delivered last night.

In relation to taxes, yes, having assessed all of the information in front of us, having assessed all of the options to address the Budget mess that we inherited, we made a judgement that in order to spread the effort fairly and equitably, the additional effort to get us back into a stronger position that we would ask everyone to contribute, that we would ask everyone, including higher income earners, to help our country by making a special effort to bring the Budget back on track.

MICHAEL ROWLAND: So circumstances have changed and you are quite happy to be held accountable for those broken promises?

MATHIAS CORMANN: We have made a judgement that we think is in the national interest. We have made a judgement that we think is right and for the right reasons. At the next election people will be able to pass their judgement on whether they think that we got this right.

MICHAEL ROWLAND: I want to talk about the Paid Parental Leave scheme, of course as you know one of the Government’s, one of Tony Abbott’s signature policies. Not a line item in the Budget last night. It popped up in this thing called the Contingency Reserve Fund. Is the Government still committed to the Paid Parental Leave scheme?

MATHIAS CORMANN: We are absolutely committed to it. As we said in the lead up to the last election, the Paid Parental Leave scheme that we are putting in place would come into effect on 1 July 2015. There is still some detailed work to be finalised in terms of its interaction, for example, with State and Territory schemes and as we work through that transition, as soon as all of that policy implementation related work has been finalised the numbers will be published in legislation and in future Budget updates.

MICHAEL ROWLAND: Why wasn’t it published last night?

MATHIAS CORMANN: That is not unusual prior to having finalised all of the aspects of an implementation plan that you keep that sort of funding profile in the Contingency Reserve. That is what we did in relation to all of our election commitments in the Mid-Year Economic and Fiscal Outlook incidentally. Obviously given that the Paid Parental Leave scheme is to come into effect from 1 July 2015, we still have quite a bit of time to get all of that detail sorted.

MICHAEL ROWLAND: The Treasurer last night says the Budget is one about all of us sharing the pain. All of us putting our noses to the wheel in the interest of getting the economy back on track, but a lot of people representing poorer Australians and disadvantaged Australians are saying this morning they are representing an undue share of the burden. What do you say to that argument?

MATHIAS CORMANN: What the Treasurer actually said is that we were asking every Australian to contribute to help build a stronger country and to put Australia on a stronger footing for the future. Because the objective that we are pursuing is we want to build an Australia with a stronger, more prosperous, more resilient economy where everyone, everyone has the opportunity to get ahead. That was what last night’s Budget was all about.

MICHAEL ROWLAND: And you are going to face some challenges in the Senate getting various measures through, we had Clive Palmer on the show only about half an hour ago saying that his Senators will oppose both the co-payment to visit GP’s and the debt tax. Are you worried about some revenue measures not surviving the Senate?

MATHIAS CORMANN: Well let’s see what happens. What we will do over the next few days and weeks and months is make the case as to why the Budget that we delivered last night is the Budget that Australia needs and we will work with everyone that is represented in the Senate to get good policy for Australia passed through our parliament.

MICHAEL ROWLAND: Have you got a fall back option though? Because Clive Palmer and for that matter the Labor Party and the Greens on other issues are quite firm in their opposition to a number of your Budget measures.

MATHIAS CORMANN: I have been in the Senate now for 7 years and I have seen all sorts of arguments run in the immediate aftermath of a Budget and then on reflection people change their mind. We are hopeful and we will work with all Senators represented in the Australian Senate to get good policy legislated.

MICHAEL ROWLAND: Joe Hockey was clearly intimating last night that there could be further pain, further cuts to come in subsequent Budgets, is this the first of a series of horror budgets? Bad Budgets here in Canberra?

MATHIAS CORMANN: What we have done in this Budget is initiate significant structural reforms, structural savings to put us back on to a sustainable track to get the Budget back on track, but it was the first step in an ongoing effort. We are not quite back into surplus, we are just short of surplus in the final year of the forward estimates. So clearly yes, there will be another effort required and it will build on the strong foundation in this first Budget.

MICHAEL ROWLAND: Lots of cuts across a range of sectors. I wanted to ask you about one very close to home for us, the Australia Network, the ABC’s international service has been axed at a time when audience numbers are growing. It is seen as many as a great form of public diplomacy by a public broadcaster. Why has the Government taken the axe to the Australian Network?

MATHIAS CORMANN: Because we didn’t think it was good value for money and we did not think that it was the best way to promote Australian diplomacy in the region. We think there are better ways to achieve the Government’s foreign policy objectives.

MICHAEL ROWLAND: Which better ways are they?

MATHIAS CORMANN: I will let Julie Bishop, the Foreign Minister, address all of that in detail.

MICHAEL ROWLAND: You have an idea though.

MATHIAS CORMANN: Indeed Julie Bishop has had quite a bit to say about how we can better promote Australia’s interest in the region rather than through the Australian Network and I am sure she is going to put some more detail out around all of that.

MICHAEL ROWLAND: Mathias Cormann thank you very much for joining us this morning on News Breakfast.

MATHIAS CORMANN: Good to be here.