Senator the Hon Mathias Cormann

LYNDAL CURTIS: While the Treasurer told morning radio several times the Government would never give up on its Budget measures, the Government is conceding it can't get them through in the way it wants. With the Senate opposed to billions of dollars of controversial social security changes such as making young unemployed people wait six months before getting the dole, the Government is going to try to pass what it can and leave the rest for later.

JOE HOCKEY (EXCERPT): The bottom line is if you can win a battle you take that victory, but you never give up on the war. You never give up on doing what is right for the country.

MATHIAS CORMANN (EXCERPT): What the Government has said is let's get on with the things that we agree on and let's deal with the matters that require further discussion through a separate process and separate legislation.

JOE HOCKEY (EXCERPT): You never give up Chris, because ultimately this means that we can afford the quality of life we have in Australia and live within our means and we should never give up on that.

MATHIAS CORMANN (EXCERPT): The Government remains firmly committed to all of the Budget measures that we outlined in the Budget. We remain firmly committed to progress all of those measures through the Senate. We are doing so in an orderly and methodical fashion. We are doing so in a sequential and prioritised way.

Nothing is on the backburner. The Senate has been very productive since Labor and the Greens lost control of the Senate on 1 July. In the first fortnight we were able to repeal the carbon tax as promised. In the second fortnight we were able to repeal the mining tax as promised.

JOE HOCKEY (EXCERPT): We are working through every single one. We don't give up on good policy, we don't give up on doing what is right to address the legacy Labor left.

MATHIAS CORMANN (EXCERPT): Let me just repeat again, we remain committed to all of the Budget measures that were part of the Budget in May.

JOE HOCKEY (EXCERPT): We're on track, but I never give up.

LYNDAL CURTIS: Social security is the immediate legislative challenge for the Government, because it has been debated in the Senate. The legislation includes changes to the indexation of pensions, cuts to family payments and the move to make young people wait six months before receiving unemployment benefits. The Opposition has vowed to oppose these changes, but says there are other measures it will support if the Government agrees to split the legislation.

JENNY MACKLIN (EXCERPT): If they present the measures that we've indicated we will support, then of course we'll stick to our word. But if they include cuts to the pension or any of the other measures I have highlighted that we oppose, we will vote it down.

LYNDAL CURTIS: To discuss this I was joined in the studio a short time ago by the Finance Minister Mathias Cormann. Mathias Cormann, welcome to Capital Hill.

MATHIAS CORMANN: Good to be back.

LYNDAL CURTIS: If I could just get you, are you going to split the social security Bills into their component parts to allow you to get through this week the things that you can get through?

MATHIAS CORMANN: What we're doing is to bank all of the savings that we can bank because there is a majority of support in the Senate, as quickly as we can.

LYNDAL CURTIS: So what parts are those, what can you get through?

MATHIAS CORMANN: There is a list of savings measures which come to about $2.7 billion over the forward estimates, which Labor has indicated they would support. There is a particular measure which comes to about $1 billion in savings that the Greens have indicated to the Government they would support. So that is $3.7 billion over the estimates out of a total of about $12 billion...interrupted

LYNDAL CURTIS: And what is the Greens' measure?

MATHIAS CORMANN: The Greens have indicated to us that they are happy to support the measure to cease the seniors supplement for Commonwealth seniors' health care cardholders...interrupted

LYNDAL CURTIS: And that's one Labor opposes?

MATHIAS CORMANN: That is as we understand it. I don't really want to talk for Labor and the Greens. But the point here is this, the Government is committed to all of our Budget measures. We're committed to pass all of our Budget savings, but obviously as part of the usual process in the Senate, as soon as there is a majority on the floor of the Senate for a particular set of savings, then we as the Government will seek to give effect to those savings as quickly as possible.

LYNDAL CURTIS: Joe Hockey, the Treasurer was on radio this morning on AM saying several times that the Government would never give up, yet you are conceding you have to split the bills. Does this mean you still want to get those measures you can't get through now through the Parliament at some point in the future?

MATHIAS CORMANN: We could not have been more clear. We remain committed to all of our Budget measures, but of course if there is support for some measures from Labor we will work with Labor to pass those measures. If there is support from the Greens we will of course join with the Greens to pass those savings measures. And everything else will be reintroduced as part of separate legislation, which will be subject to further discussions with all parties represented in the Senate. But the key is that once you reach agreement on certain measures let's get on with the measures that we have reached agreement on and let's continue the conversation in relation to those measures where we have not yet reached agreement.

LYNDAL CURTIS: And is this the attitude you will take with other pieces of legislation, say health changes or education changes that you will split bills up where you can in order to get through the things you can get through?

MATHIAS CORMANN: Our objective is very clear. We want to repair the Budget mess that Labor left behind. We have made significant progress already in passing Budget measures through the Parliament. There is still some work to be done, in particular in relation to structural reforms. Most of those structural reforms don't take effect until 2015, 2016 and beyond and so there is time to continue to have some further conversations. From our point of view we are focussed on making progress, we are focussed on continuing to head in the right direction and we will, whenever there is an opportunity to bank a saving because there is a consensus across the Senate that that should happen, then we will proceed with that, of course.

LYNDAL CURTIS: What convinces you that you will eventually be able to get some of these measures like the six month wait for the dole through the Parliament when you haven't been able to convince enough senators to get them through in the months you've had since the Budget?

MATHIAS CORMANN: We have got a lot through the Parliament since the Senate has changed on 1 July. Ever since Labor and the Greens have lost control of the Senate, the Senate has become very productive. In the first fortnight we got the Carbon Tax repeal through the Parliament, as promised. In the second fortnight we got the mining tax repeal and $50 billion in savings over the next decade through the Parliament. We have passed most of the Budget...interrupted

LYNDAL CURTIS: You have got many billions of dollars of measures you can't get through now, what convinces you...

MATHIAS CORMANN: Well, you say that but how do you know that? Essentially most of the savings that haven't gone through are not yet due to get into effect, so...interrupted

LYNDAL CURTIS: So what makes you so sure you will be able to convince people before those savings are due to come in to force, bank them?

MATHIAS CORMANN: What makes you think we can't?

LYNDAL CURTIS: Well you haven't been able to so far.

MATHIAS CORMANN: We haven't actually reached a point yet where we have had to. So this is the point, we are continuing to go through an orderly and methodical process, dealing with Budget measures sequentially, one after the other. And obviously we prioritise those Budget measures that are about to come into effect or have already come into effect on 1 July 2014. Those things that are due to come into effect later in 2015, 2016 or beyond can be dealt with in an orderly fashion between now and whenever they come into effect.

LYNDAL CURTIS: Are you prepared to consider modifying some of those measures that the Senate believes are too harsh like the six month wait for the dole?

MATHIAS CORMANN: We have said for some time and nothing has changed here, that we are committed to all of our Budget measures, but we also understand the Government hasn't got a majority in the Senate and that we might have to make an adjustment here or an adjustment there in order to facilitate passage of these measures through the Senate. The point here is, that if you look at the progress that we have made since the Budget was delivered in May, we have made significant progress. Most of the Budget has gone through. The structural reforms that haven't yet gone through by and large do not come into effect for some time and we have got the opportunity to keep working through those measures.

LYNDAL CURTIS: So will the way you are dealing with the social security legislation not come at any cost to the Budget?

MATHIAS CORMANN: The measures that are being supported, we will realise those savings and the measures that are yet, that are still subject to conversation where we're yet to reach a landing point, it is too early to speculate on what the fiscal impact will be if any.

LYNDAL CURTIS: Given that you do have some holes in the Budget you need to fill particularly with the likely commitment to Iraq, the extra money for security, the possibility of compensation for the Home Insulation Program, will the mid-year economic update turn into something of a mini Budget?

MATHIAS CORMANN: It won't be a mini Budget, it will a half yearly update on our 2014/15 Budget. But you are quite right there are a range of well publicised areas where there has been a need for additional expenditure, most notably, $630 million in additional spending on our national security to ensure that we keep Australia safe. So in the context of the Mid Year Economic and Fiscal Outlook, it is right to say we will need to identify some additional savings in order to make up for some of the additional expenditure, because if you spend more and you don't save more, then you just keep adding to the deficit and to the debt and we want to repair the Budget, not add to the deficit and to the debt.

LYNDAL CURTIS: Mathias Cormann, thank you very much for your time.

MATHIAS CORMANN: Always good to be here.