Senator the Hon Mathias Cormann

FRAN KELLY: Talk of a leadership challenge within the Government this week has faded due in part to today’s Fairfax poll which shows the Government making strong gains on Labor. That is despite a very difficult week last week for the Prime Minister. In a bid to sure up his still shaky position though, Tony Abbott is widely expected to dump this week the deeply unpopular $5 Medicare co-payment and possibly also the six month waiting list for young people to claim the dole. Also this week a further troop deployment to Iraq and the release of the long awaited Inter-generational Report which will show that net debt will equal half the entire Australian economy within 20 years unless tough action is taken. The Finance Minister Mathias Cormann is in our Parliament House studios. Minister, welcome back to Breakfast. 

MATHIAS CORMANN: Good morning. 

FRAN KELLY: The Fairfax Ipsos poll shows that the Government is back within striking distance of Labor at 51-49, two party preferred. How much more time does that give Tony Abbott? 

MATHIAS CORMANN: What it shows is that when we focus on the issues that matter to the Australian people our position in the community improves. We were elected to put Australia on a stronger foundation for the future, to implement the policies required to strengthen the economy, create more jobs, help families and to ensure Australia is safe and secure. Whenever we focus exclusively on those responsibilities our position improves.

FRAN KELLY: One interpretation of this poll is that voters are returning to the Government, supporting the Government because they have actually have already made up their minds that Tony Abbott’s mind is up and Malcolm Turnbull will soon be Prime Minister. What do you think of that interpretation? Does that bolster the case for a change for a leadership switch sooner rather than later? 

MATHIAS CORMANN: I don't agree with that. The Australian people want their elected Prime Minister to be given a fair go. We were elected in 2013 to strengthen the economy, create more jobs and to ensure Australia is safe and secure. We inherited a very challenging situation from our predecessors. We have made significant progress in turning that situation around, but there is much more work to be done. In the meantime we just focus on the job at hand, do the best we can every day to strengthen the foundation for Australia for the future.

FRAN KELLY: And yet can you ignore the fact that support in these polls, and this is not the only poll where this occurs, but in this poll today, Malcolm Turnbull as preferred leader is more than double the support for Tony Abbott, 39 to 19 per cent according to the Ipsos Fairfax poll. Which also suggests doesn't it that Liberal voters are coming around to the idea of Prime Minister Malcolm Turnbull. With those kinds of figures why wouldn’t the party room be looking to switch leaders?

MATHIAS CORMANN: I am not a commentator on the polls. Malcolm Turnbull is an outstanding senior Minister in the Abbott Government. He has made a tremendous contribution over the first half of our first term in Government and I am very confident he will continue to make an outstanding contribution over the second part of our period in Government. We are a very good team. We have a job to do. We are focused on the job that we were elected to do and that is to put Australia on a stronger foundation for the future.

FRAN KELLY: So you say the proof in these polls is that getting on with the business of Government is what the voters want and yet since the attempted leadership spill three weeks ago, the Prime Minister has sacked Philip Ruddock as Whip, there has been ongoing confusion over the submarine fleet and what is actually happening there with the tender, the Prime Minister’s hostile attack on the Gillian Triggs in the Parliament which some in your party room didn’t like and were quite vocal about that. I mean, all things considered, why do you still support Tony Abbott?

MATHIAS CORMANN: I don't agree with your characterisation of these various events. For example, I don’t believe that there is any confusion whatsoever when it comes to the procurement of the next generation of submarines. We are going through an orderly ...interrupted 

FRAN KELLY: Well some in your party room seem confused by it. 

MATHIAS CORMANN: We are going through an orderly and methodical process through a competitive evaluation process, which over the next 10 months will assess the comparative strengths and weaknesses of the various options that are on the table. In particular, the option to procure submarines either in partnership with a company in Japan or Germany or France. That will go through a proper process. At the end of that process, the Government will make a judgement in the national interest, focused on procuring the best possible submarines at the best possible price to achieve the best possible national security outcome for Australia. It is really pretty straight forward.

FRAN KELLY: You’re a senior frontbencher the Abbott Government. We heard another of your colleagues Andrew Robb earlier on AM basically describing the leaking that has been going on, spurious leakers by an elusive band of unnamed colleagues and then he said that they should pull their heads in. Do you agree with that?

MATHIAS CORMANN: All of us should focus on the job that we were elected to do, and that is to do the best we can to put Australia on a stronger foundation for the future, to ensure that we address the challenges that we inherited from our predecessors to ensure that we do the best we can to strengthen economic growth, to create more jobs and to ensure Australia is safe and secure. That is what everyone in the Government is doing and should be doing.

FRAN KELLY: Just before I leave the leadership, is there a test emerging, a timeline emerging of the NSW State election? Over the weekend Newspoll showed that NSW Libs should win but with a loss of about 17 seats. If the loss is anymore than that, will it be time to consider the Federal leadership?

MATHIAS CORMANN: Mike Baird is a very good Premier. He is leading a very good team with a strong plan for New South Wales. That campaign is clearly fought on State issues. From where I sit, I wish Mike Baird all the very best. In terms of the Federal Government, our next election is due in the second half of 2016 and by that time we will be accountable to the Australian people for our performance in our first term and we will be putting forward in the lead up to that election our second term agenda with our proposals to put Australia on a stronger foundation for the future over the medium to long term.

FRAN KELLY: It is 19 to eight. We are speaking with the Federal Finance Minister Mathias Cormann. Minister, the Prime Minister has really been dropping strong hints that the Government is planning to dump the $5 GP co-payment. Is it about to be surgically removed?

MATHIAS CORMANN: The Health Minister Sussan Ley has been consulting with the medical profession and other stakeholders over the last few months. Our commitment remains absolutely and very strongly to protect Medicare for the long term, to ensure Medicare remains sustainable and affordable for taxpayers over the medium to long term. Health Minister Ley will be reporting to the Cabinet and to the party room over the next little while about her progress with those consultations and some decisions will be made at the end of that process.

FRAN KELLY: It would present quite a problem to you as the Finance Minister wouldn’t it? Where would you find the $3.5 billion that that co-payment was forecast to raise?

MATHIAS CORMANN: Since we came into Government in 2013 we have made significant process when it comes to repairing the Budget. We are now in a much stronger position than we would have been if we hadn’t made many of the decisions that have already been given effect to. Depending on what happens as a result of the consultations that Minister Ley has gone through, we will have to make some further adjustments in other areas in order to continue to head in the right directions. Let’s cross that bridge if and when we get there.

FRAN KELLY: So you’re saying you don’t need to cut as deeply as you thought you would in the first Budget, because it’s just three more sitting weeks until the May Budget. There are other measures still not passed, highly contentious. For example, the higher education changes and the six month waiting period for the dole for young people on the dole. Are you saying the Budget can afford without the money raised by those measures?

MATHIAS CORMANN: What I’m saying is we need to continue to head in the right direction. We need to continue to work to strengthen the economy, create more jobs and to repair the Budget is a key element of our strategy to strengthen the Australian economy. Having said that, we live in the real world and we will always focus on what is achievable over what is 100 per cent desirable. We will continue to work through the process. We will continue to work with stakeholders, with all of the Members and Senators represented in the Australian Parliament to come up with the best way forward. That is our responsibility. 

FRAN KELLY: Is the Government prepared though to not only just dump the $5 co-payment, but is also prepared to dump the six month waiting period for the dole and the higher education changes?

MATHIAS CORMANN: Again, you’re sort of getting ahead of yourself a bit. Minister Ley has been conducting consultations in relation to the GP co-payment. She will be reporting back about the outcomes of those consultations through the various fora of the party, including the party room, and some decisions will be made at the end of that process. As far as the higher education reforms are concerned, they are very widely supported, important reforms. Most of the universities are in favour of them, many the…interrupted

FRAN KELLY: Most of the Senators aren’t.

MATHIAS CORMANN: Senior former Labor Cabinet Ministers have come out strongly in support of those very important reforms. You say most of the Senators aren’t. Before Christmas, four out of the six cross bench Senators that we need in order to get that legislation through the Senate supported the higher education reforms. We need to convince two more and that work is continuing. It’s very important to remember, the higher education reforms are there to ensure that we can have the best universities in the world, here in Australia. That our students can have the benefit of the best possible university education here in Australia. These are very, very important reforms for universities, for students and for our future as a nation moving forward and we remain totally committed to them. 

FRAN KELLY: Minister, the Treasurer Joe Hockey will release the Inter-generational Report on Thursday, according to figures leaked over the weekend, Australia’s net debt will represent 50 per cent of the entire economy within a decade, unless tough action is taken. If you dump the Medicare co-payment, if you possibly pare back the higher ed changes, doesn’t that suggest the Prime Minister is shying away from the structural reforms that is needed to address that debt issue all for the sake of saving his job?

MATHIAS CORMANN: We’re not shying away from the structural reforms necessary to put Australia on a stronger foundation for the future …interrupted

FRAN KELLY: You are going to drop the Medicare co-payment that you said was a crucial structural reform before?

MATHIAS CORMANN: As I say, you can try and characterise this whatever way you want. We remain committed to do everything we need to do to put Australia on a stronger foundation for the future. The situation that we inherited from the Labor party is that we were on a trajectory that was going to take us to very, very high levels of debt over an extended period, which would progressively weaken our economy and which would weaken our capacity to create more jobs. So that is one of the things that we inherited that we do need to turn around and we are making significant progress. Yes there is more work to be done but we are now on the right trajectory where Labor left us the wrong trajectory when they lost government. 

FRAN KELLY: And just very briefly, Labor will today apparently unveil a policy to crack down on multinational shifting billions of dollars overseas so they can’t minimise their tax liabilities. Labor says it will save the Budget $2 billion over three years. The Government has talked a lot about this, why is it so hard to make big global companies pay their fair share of tax?

MATHIAS CORMANN: Labor talks a lot but they didn’t actually do much in government. In government, they announced a whole range of measures which Treasury told us on coming into Government were un-implementable. When it came for example to ensure that big global multinational companies generating profits here in Australia didn’t get excessive tax subsidies for expenditure on research and development, the policy that Labor themselves initiated in government, when it came to the Parliament, they opposed it. All of the evidence in terms of what Labor does is that they don’t take protecting our tax base all that seriously in practice. They just make a lot of political noise about it. We are actually just getting on with the job of making the necessary changes to ensure that profitable companies pay their fair share of tax here in Australia consistent with our tax laws. 

FRAN KELLY: Mathias Cormann, thank you very much for joining us. 

MATHIAS CORMANN: Always good to talk to you.