Senator the Hon Mathias Cormann

MATHIAS CORMANN: Strong economic growth in Western Australia in recent years has delivered significant benefits to our national economy as well as to WA. In particular, strongly growing export revenue out of WA on the back of increasing iron ore production and record prices for our iron ore has boosted the size of the national pie, delivering benefits right across Australia. However it also has had implications for WA’s share of the GST, as some of the increase in WA’s iron ore royalty income was shared nationally through GST sharing arrangements. The problem now though is that while royalty income in WA is falling on the back of falling iron ore prices, WA’s share of the GST continues to be assessed as if iron ore prices remained high. We recognise that this is a real issue and this is why we have asked the independent Commonwealth Grants Commission as part of its scheduled GST methodology review for 2015 to consider this issue and give advice to the Government in time for consideration for our next Budget. There are broader issues around horizontal fiscal equalisation that will be considered as part of the Federation White Paper review process and this is not something that is part of the direction that was given by the Treasurer in recent days.  

JOURNALIST: There is still no guarantees though is there. I mean the Grants Commission might decide that the status quo should remain.

MATHIAS CORMANN: We have asked the independent Commonwealth Grants Commission as part of its scheduled review to consider what we consider to be a legitimate issue. In recent years, strongly growing royalty revenue for Western Australia has had implications for WA’s share of the GST, as some of the increase in their royalty income was shared nationally through GST sharing arrangements. However, the problem now and it is a problem that we recognise is that iron ore prices have had significant and unexpected falls, but the WA share of the GST continues to be assessed as if the iron ore price remained high. That is a real issue. It is an issue that we recognise. It is an issue that we’ve asked the Commonwealth Grants Commission to provide us with advice on in time for us to be able to consider that advice before the next Budget.  

JOURNALIST: Are you confident that WA’s share in the GST will increase?

MATHIAS CORMANN: As iron ore prices fall sadly one of the flow on effects of lower income from iron ore production for Western Australia means that over time, the GST share for WA will increase. That is the way the system operates ordinarily. The reason I say sadly is because the reason it increases is because our economy here in Western Australia is growing less strongly than what it was before. So all other things being equal, lower income from iron ore royalties will mean higher revenue as the share of the GST for Western Australia increases. The problem is that it will take some time for that to work its way through the system. What the Treasurer has done by asking for advice from the Commonwealth Grants Commission is ask whether there needs to be some recognition of the fact that right now while Western Australia is missing out on revenue on the back of significant and unexpected falls in the price for iron ore that they are still having their GST relativity assessed as if iron ore prices remained high. There is a question as to whether consideration of the impact of lower iron ore prices needs to be brought forward.

JOURNALIST: It’s because of that three year time lag isn’t it? It’s because of recognising that iron ore prices have dropped now and bringing that forward as opposed to having an impact in three year’s time? 

MATHIAS CORMANN: That is the issue that we have asked the Commonwealth Grants Commission to consider and provide advice to the Government on.

JOURNALIST: And won’t that mean the Eastern States lose money?

MATHIAS CORMANN: In recent years and that is what I’ve said in my opening remarks, the size of the national pie has grown significantly on the back of stronger economic growth here in Western Australia, on the back of strong growth in export revenue generated out of Western Australia in the context of increasing iron ore production and record prices for our iron ore commodities. In recent years, Western Australia has shared it’s royalty revenue nationally through the GST sharing arrangements as is appropriate. But moving forward there has to be some consideration of whether falling iron ore prices need to be considered more swiftly given the implications it has in terms of revenue volatility for the state of Western Australia. 

JOURNALIST: Labor has just won an election in Victoria. You’ve got elections in New South Wales and Queensland coming up. It's  bound to be an issue where they say, look bugger you WA, you had the good times and you wasted them.

MATHIAS CORMANN: I’m here speaking for the national Government. The national Government’s responsibility is to consider all of the legitimate views and aspirations from right across Australia and to make judgements in the national interest. To make judgements that are nationally fair. At this stage, all we have done is ask for advice from the independent Commonwealth Grants Commission about how best to recognise the revenue volatility that is the result of significant and unexpected falls in the price for iron ore here in Western Australia. Let’s see what advice comes back and the Government will make a decision at that time. 

JOURNALIST: So can the Eastern States stop this from happening? 

MATHIAS CORMANN: This is a matter at this stage, for the Commonwealth Grants Commission to consider. Once the Commonwealth Grants Commission has made its recommendations, the national Government will make a decision in the national interest in the ordinary course of events.

JOURNALIST: When you’ve been asked about this issue in the past you’ve been fairly silent on the issue. Christian Porter seems to be leading the charge in Canberra. Are you now taking the credit for other people’s work?

MATHIAS CORMANN: This is not a matter of taking credit. When you’re a Minister in the national Government you consider issues nationally as part of a team nationally. You make sure that you consider all of the issues that are brought forward by people from right across Australia. Liberal Members and Senators from Western Australia have put forward, very strongly, the views and aspirations of people here in Western Australia. The national Government considers all issues from right across Australia and makes judgements on what is in the national interest.

JOURNALIST: To what extent does it factor in, or will the Government factor in, that Western Australia contributes to the infrastructure for nationally important projects such as LNG projects but Western Australia doesn’t get that much of the royalty from LNG? Just as an example.

MATHIAS CORMANN: The issue before us today is the fact that the Treasurer has asked for advice from the Commonwealth Grants Commission as part of their scheduled 2015 GST methodology review, very specifically about the implications from significant and unexpected falls in the price of iron ore and the implications that has for GST relativities for Western Australia given that the WA share of the GST continues to be assessed on the basis of higher prices some time in the past. Broader issues in relation to the GST, broader issues in relation to the tax system as a whole, broader issues in relation to horizontal fiscal equalisation will have to be considered as part of the Federation and Tax White Paper review processes.

JOURNALIST: Can I ask about the latest Newspoll, which shows the Coalition’s vote on two party preferred basis has slumped in all States except for WA. Can you tell us why that is and what you’ll be doing to turn that around next year? 

MATHIAS CORMANN: We’re not focused on the polls. We’re focused on making decisions in the national interest. We’ve had to make some difficult but necessary decisions in order to put Australia on a stronger foundation for the future. We are quietly hopeful that over time people across Australia will accept and respect that we’ve made the right decisions to take Australia forward. That we’ve made the right decisions to build a stronger, more prosperous economy where everyone can get ahead. 

JOURNALIST: Given the Liberals continuing popularity in Western Australia, will there be pressure on David Johnston to stand down and vacate his Senate seat for somebody who might want to have a go?  

MATHIAS CORMANN: I’ve got no comments in relation to that whatsoever. 

JOURNALIST: New Years’ Eve is just a few days away, do you have advice for people I guess, with the latest terror alert, what they should be worried about, or not be worried about this New Year’s Eve?

MATHIAS CORMANN: My message to everyone for New Year’s Eve is to have fun but keep safe.

JOURNALIST: Has the Government wasted money on higher education ads? Less than a quarter of voters have actually seen them.

MATHIAS CORMANN: Not at all. Our Government is spending way less on advertising than the previous government. The previous government spent half a billion dollars on government advertising during their period in government. We’ve significantly scaled that back. What we’re doing is, we’re making sure that people across Australia have proper information about what our reforms for the higher education sector are seeking to achieve. 

JOURNALIST: They’re a bit ineffective though weren’t they? The research showed that many didn’t actually know what they were about.

MATHIAS CORMANN: I don’t accept that characterisation. It is still early days. There is still a way to go. The campaign has only just started. 

JOURNALIST: Do you believe a terror attack is likely on New Year’s Eve anywhere in Australia at this point?

MATHIAS CORMANN: The Prime Minister the other day has made some statements about the fact that there is a heightened threat environment in Australia now. That is why we have made some of the decisions we have made in recent months. That is why we have boosted resources for our national security agencies. That is why we have passed legislation through the Parliament to boost powers for our national security agencies. Our commitment is to do everything we can to keep Australians safe and secure. Right now there is an elevated threat environment.

JOURNALIST: Should the general public be taking precautions?

MATHIAS CORMANN: The general public should be alert but not alarmed, to continue with their day to day life but if they see something untoward they should make contact with the relevant agencies or they should ring the National Security Hotline on 1800 123 400.

JOURNALIST: What about the returned ISIS fighters living in Queensland? Is there concerns about what they might be up to over there over the new year’s period?

MATHIAS CORMANN: We are concerned about the increased threat level in Australia today. That is why we have significantly boosted the resources for our national security agencies. That is why we have passed legislation through the Parliament to boost the powers of our national security agencies. We are doing our best to ensure that Australians are safe and secure, but there is always a risk. 

JOURNALIST: So do people need to be alarmed? Or what do you think? People are quite worried hearing this happening, especially after what happened in Sydney.

MATHIAS CORMANN: People should be alert but they should not be alarmed. We should continue to live our daily lives. But if anyone sees anything untoward happening they should contact the National Security Hotline on 1800 123 400.

JOURNALIST: You say you’re not concerned with federal polls but the recent one does show that Mr Abbott’s popularity is not increasing amongst women. Is that not a concern for you? 

MATHIAS CORMANN: Mr Abbott is doing an outstanding job as Prime Minister, leading a strong, united team. He is leading our efforts to build a stronger, more prosperous economy and to build a safe and secure Australia. We have had to make, over the last twelve months, some difficult but necessary decisions. That has had an impact, but we will continue to press ahead and make the right decisions in our national interest. Over time, we are quietly confident that people across Australia will accept and respect that we have made the right decisions to put Australia on a stronger foundation for the future.  

JOURNALIST: Is he still, do you think he should still be the Minister for Women though?  

MATHIAS CORMANN: The Prime Minister is an outstanding leader of our Government. The portfolio allocation is entirely a matter for the Prime Minister. 

JOURNALIST: Figures show the biggest job losses are in Coalition held seats. What would you have to say about that? 

MATHIAS CORMANN: We are in a much stronger position across Australia now than we would have been if hadn’t made some of the decisions like the decision to scrap the carbon tax, scrap the mining tax, boosting investment and boosting competitiveness, the decision to cut red tape costs for business by more than $2 billion, the decision to boost infrastructure investment to record levels across Australia, the decision to finalise three free trade agreements with Japan, South Korea and China, boosting opportunities for businesses right across Australia and boosting jobs across Australia in the process. Yes, we faced some global economic headwinds over the last twelve months, but our economy has actually performed quite strongly over the last twelve months. 2.7 per cent economic growth over the last twelve months compared to 1.9 per cent growth the year before. Jobs growth three times the rate than the year before. But yes, there is much more work to be done. We are on to it. We will continue to do what needs to be done to build a stronger more prosperous economy for Australia and to make sure that people right across Australia, wherever they live have the best possible opportunity to get ahead. 

JOURNALIST: But unemployment overall has gone up though?

MATHIAS CORMANN: Jobs growth over the last twelve months has run at three times the rate of the year before, but it hasn’t been enough yet to absorb population growth that is true. That is why ...  interrupted 

JOURNALIST: A lot of that is part time jobs too aren’t they?

MATHIAS CORMANN: That is actually not right. That moves around from quarter to quarter. You’re quite right that in the most recent quarter the largest chunk of additional jobs was in part time jobs. But in the previous quarter the largest chunk was in full time jobs. Whatever way you look at it, over the last twelve months employment numbers have grown at more than three times the rate of the twelve months before. Yes we have faced some challenges in the context of global economic headwinds, but we are in a much stronger position than we would have been if we had not scrapped the carbon tax, if we had not scrapped the mining tax, if we had not reduced red tape costs for business by more than $2 billion, if we had not made environmental approvals for projects worth about $1 trillion, if we had not finalised free trade agreements, if we had not boosted infrastructure investment. All of these decisions that we have made over the last twelve months have had a significant impact on our capacity to grow our economy more strongly. We are confident that in 2015, that will continue to deliver dividends right across Australia, that it will continue to drive stronger jobs growth right across Australia. 

JOURNALIST: One thing the carbon tax did do was reduce emissions. Greg Hunt released information pretty close to Christmas, quietly I should add that carbon emissions had gone down by a record amount in the second year of the carbon tax.

MATHIAS CORMANN: Emissions were falling before the carbon tax came in to effect. We were meeting our Kyoto targets well before the carbon tax came into effect. The truth is that over the last two years the economy has grown below trend. Below trend growth means that emissions will be lower than they otherwise would have been. Truth is that our direct action policy, which was legislated by the Parliament will ensure that we achieve our emissions reduction targets for the future.