Senator the Hon Mathias Cormann

SANDY ALOISI: Well Premiers across the country, with the sole exception of WA's Colin Barnett are united in opposition to Budget cuts. And poll today show the public equally united in rejecting the Abbott- Hockey economic formula. One of the chief architects of the Budget strategy is the Finance Minister, Mathias Cormann, he's speaking here to Marius Benson.

MARIUS BENSON: Mathias Cormann, good morning.

MATHIAS CORMANN: Good morning Marius.

MARIUS BENSON: The Premiers don't like it. The voters don't like it. Are you prepared to change Budget provisions apart from any changes that might be forced in the Senate?

MATHIAS CORMANN: The Budget that we delivered last week is the Budget that Australia needs in order to deal with the debt and deficit legacy that we inherited from Labor. It was never going to be easy and we have asked everyone to contribute to help put Australia on a stronger footing for the future again.

MARIUS BENSON: So the Premiers are wrong and the voters are wrong?

MATHIAS CORMANN: This is week one after the Budget was delivered. We clearly still have a lot of explaining to do, but this is a marathon not a sprint. We are very determined to ensure that we put Australia and our Budget back onto a sustainable footing. That's what we were elected to do and that's what we will be doing.

MARIUS BENSON: The Premiers want an urgent meeting before July 1. The Prime Minister has said no. Are you prepared to reconsider holding that meeting?

MATHIAS CORMANN: There is no need for urgent meetings. What we have done in the period four years from now is put our funding growth trajectory for health and education on a more sustainable footing. Kevin Rudd and Julia Gillard were splashing money around left, right and centre, including directed at the States, money they didn't have. The spikes in spending that Labor locked into the period beyond the forward estimates at the time of the last election were never affordable. The Premiers at the time ought to have understood that what Labor was promising on the never-never was not affordable. All we're doing is making sure that the ongoing growth in funding from the Commonwealth for hospitals and schools is affordable and realistic.

MARIUS BENSON: But you and the Premiers seem to be living in two completely different worlds on this issue. Because you say this only affects the forward estimates, that's three or four years hence. The Premiers say this will close beds in 43 days. Take Steve Ciobo, your colleague said the truth is that we are providing in net terms more money to the States. It's completely chalk and cheese, the Premiers' view and your view.

MATHIAS CORMANN: The Premiers have a particular perspective on this, but the facts are that the States are getting $9 billion more over the forward estimates than before, including a $4 billion windfall in GST revenue. Perhaps if they start looking through some of the detail a bit more closely they'll get to appreciate that. It is true that in the period beyond the forward estimates that we inherited from Labor, so from 2017-18 onwards in particular, that we have put the funding growth trajectory for health and education on a more sustainable footing, as we said we would do in the lead up to the last election. We also said that in the interests of certainty and predictability that we would stick to the funding envelope that we inherited at the time of the last election. In education we actually did much better, we put $1.2 billion of funding for schools in Western Australia and Queensland and the Northern Territory that Labor had ripped out of the system back into it. But beyond the forward estimates period that we inherited at the time of the last election, we needed to make sure that spending would be more sustainable and that is exactly what we are doing.

MARIUS BENSON: Overwhelmingly, the public believes that you have broken promises. Do you still maintain you have broken no promise with this Budget?

MATHIAS CORMANN: Look, we are doing our absolute best to keep faith with all of the commitments that we took to the last election. Certainly, all of the policy commitments that we took to the last election we are delivering in full.

MARIUS BENSON: Are you saying that you are doing your best not to break promises? Are you claiming that you have broken no promises?

MATHIAS CORMANN: All of the policy commitments that we took to the last election, we are delivering in full in this Budget.

MARIUS BENSON: Well what about apart from policy commitments when the Prime Minister, the then Opposition leader said to the Australian public you will get tax cuts without new taxes. Has that promise been kept?

MATHIAS CORMANN: The promise actually at the time was that we would get rid of the carbon tax and we would keep the...interrupted

MARIUS BENSON: No, no that was a verbatim quote from Tony Abbott from March 2012. Was that to be ignored?

MATHIAS CORMANN: Not at all, people will be getting tax cuts...interrupted

MARIUS BENSON: Was it kept?

MATHIAS CORMANN: Well indeed. We are funding income tax cuts without a carbon tax. We are funding company tax cuts without a mining tax. All of that is proceeding as promised. The truth of the matter is we inherited a very challenging situation, years of debts and deficits, a spending growth trajectory that was unsustainable. Right now, as a result of the situation that we inherited, we have to borrow $1 billion a month just to fund the interest on the debt that Labor has accumulated. The equivalent for a household is to be putting all of your groceries onto your credit card and then get a second credit card just to pay for your interest on your first credit card. That is the situation that we inherited from the Labor party.

MARIUS BENSON: Three voters in four think that they will be worse off as a result of this Budget. Fair enough you could argue because you said there would be pain. But what an overwhelming majority believes is that the Budget is unfair, that it is hitting mid and low income earners harder than high income earners. That a family on $100,000 when you look at the loss of benefits and taxes is paying as much as someone on $250,000. It is inequitable. Do you agree?

MATHIAS CORMANN: We are asking everyone to contribute...interrupted

MARIUS BENSON: But not equally is the point that the voters see.

MATHIAS CORMANN: We are asking everyone to contribute and we are seeking to spread the effort as fairly and as equitably as possible across the board.

MARIUS BENSON: The voters say you have failed to spread it fairly, for example the impost on low and middle income earners, the loss of benefits and the new levies are permanent whereas the levy on people earning over $180,000 vanishes in three years. Why make it only a temporary impost on the best off?

MATHIAS CORMANN: Well people earning more than $180,000 a year are also paying more than $60,000 a year in tax and that will be ongoing. Now the truth is over the medium to long term, we need to build a stronger, more prosperous, more resilient economy where everyone has an opportunity to get ahead. And of course, ensuing that taxes and tax rates are competitive is an important part of that. In terms of spending, obviously if you reduce government spending to make it more sustainable then people that are going to be impacted by that are those that receive government payments. But what we are doing is putting in place the foundations to get ourselves back into a more sustainable position. We are focused on the national interest and strengthening Australia for the future. If we were just focused on our self interest, our political self interest and populism then obviously that would be much easier. But we are making the hard decisions and we are pursuing the hard decisions because in our judgement that is in the best interest of Australia.

MARIUS BENSON: Senator Cormann, thank you very much.

MATHIAS CORMANN: Always good to talk to you.