Senator the Hon Mathias Cormann

MICHAEL BRISSENDEN: Senior Cabinet Ministers have discussed the possibility of calling a snap election as frustrations grow with the Senate. Earlier this week, the Senate knocked back for a second time the Government’s plan to deregulate universities. It has emerged that the discussion about a double dissolution election occurred during a leadership group meeting on Monday morning and apparently at a Cabinet dinner that night. A spokesman for the Prime Minister has told the ABC that the Government intends to run its full term. Well joining me now to discuss this and the Budget is Finance Minister Mathias Cormann. Senator Cormann, good morning.

MATHIAS CORMANN: Good to be back.

MICHAEL BRISSENDEN: Have you been involved in discussions around the possibility of a double dissolution election?

MATHIAS CORMANN: No, I have not been involved in any such discussions. The discussions that I have been involved in is how we need to continue to implement our plans to strengthen the economy, create more jobs, help families and ensure that Australia is safe and secure.

MICHAEL BRISSENDEN: Clearly someone has been involved in these discussions because the reports are certainly being leaked, aren’t they?

MATHIAS CORMANN: I’m not a speculator, I am not a commentator. All I can say is that we have a job to do. We are focused on doing the job we were elected to do and that is to put Australia on a stronger foundation for the future. We are just over halfway through our first term. The next election is not due until the second half of 2016 and our intention is to serve our full term.

MICHAEL BRISSENDEN: And it would be crazy brave at the moment wouldn’t it given the way the polls are. It could also produce a Senate that is even more difficult for you?

MATHIAS CORMANN: I think that it would be crazy brave to do anything other than to focus on the job at hand, which is to do the best we can to put Australia on a stronger foundation for the future.

MICHAEL BRISSENDEN: Can we talk about the Senate then because clearly you have still got problems there? And the Prime Minister certainly doesn’t seem to be good with the politics of the Senate, but you do have a reputation for reaching out to some of them. Has the Government taken the wrong approach with the crossbench?

MATHIAS CORMANN: Governments who didn’t have the majority in the Senate in their own right have always had to work hard to get particular legislation through the Senate ...interrupted 

MICHAEL BRISSENDEN: Well, exactly and other Governments who have had these problems have been a bit more successful in doing it. 

MATHIAS CORMANN: Eventually, but not necessarily at first or not even necessarily in their second attempt. The previous government had to put various contentious pieces of legislation to the Senate three or four times. It took the previous government two or three years in relation to some of their more debated issues to get them through the Parliament. There is nothing new under the sun really. We are doing what previous governments have done that don't have a majority in the Senate. We have got a particular circumstance in the Senate, where the crossbench is much larger than what it has been in the past. But we are focussed on engaging in the conversations, explaining what the Government is doing and why and why what we are proposing to do is important to protect our living standards and to strengthen our foundations for the future.

MICHAEL BRISSENDEN: So far that hasn’t been, well, it has been spectacularly unsuccessful and you are left with a position where your failure to get the 2014 Budget through has compounded your Budget problems and left you with an even more difficult fiscal position, hasn’t it?

MATHIAS CORMANN: I disagree with that. We have made significant progress in 2014. We inherited in 2013 an economy which was weakening, rising unemployment, a Budget position that was rapidly deteriorating. As a result of some of the measures and some of the legislation we got through, like getting rid of the carbon tax, getting rid of the mining tax, which incidentally delivered $50 billion in savings over the decade.... interrupted

MICHAEL BRISSENDEN: But also immediately cut the....

MATHIAS CORMANN: The economy is now strengthening, jobs growth is strengthening, the Budget position, the Budget is in a much stronger position now than it was and than it would have been if we stayed on the same trajectory that Labor put us on.

MICHAEL BRISSENDEN: Can I just stop you there. Because from the 2013-14 Mid-Year Economic forecast through to the May Budget, you handed out $45 billion of new spending over the four years of the forward estimates and you haven’t got a lot of savings measures through the Senate. Where do you make up the shortfall? 

MATHIAS CORMANN: That is actually not right. We have got most of our savings measures through the Senate. If we look at the trajectory we were on under Labor, we were heading for a deficit of 12 per cent as a share of the economy over the next few decades. We have been able to halve that. We are on track to Budget balance and we remain committed to get the Budget back into surplus as soon as possible, so that we can ensure that the important benefits and services provided by Government remain affordable and sustainable in the economy over the long term and indeed forever.

MICHAEL BRISSENDEN: You have to concede you have lost revenue through those initiatives, cutting the mining tax and other things like that.

MATHIAS CORMANN: No. The mining tax was a complete and utter failure. The mining tax was actually one of the reasons why we find ourselves in the structural problem that we are currently dealing with. The Labor Party put in a tax which didn’t raise any revenue ...interrupted

MICHAEL BRISSENDEN: My point is the structural problems are getting worse.

MATHIAS CORMANN: ...which was based on an assumption that the terms of trade would remain at record highs which was never going to happen and Labor had committed all of the money they thought the mining tax would raise to unfunded spending promises. It is unbelievable that us getting rid of the mining tax actually helped improve the Budget position significantly. How can you get rid of a tax and improve the Budget position by $50 million over a 10 year period? That is because only the Labor party can come up with a new tax which didn’t raise any money. 

MICHAEL BRISSENDEN: In the last couple of weeks, you have dumped the $3.6 billion in Medicare charges, you have been left with $105 million in car industry assistance you have reinstated and there is $12 billion in blocked welfare cuts from last year’s Budget. So the Budget bottom line position is not...interrupted 

MATHIAS CORMANN: That is actually not all right. Taking the issue of car industry assistance, clearly the Automotive Transformation Scheme abolition wasn’t going to go through the Senate. But what we also realised was that as a result of decisions in the marketplace by Holden, Toyota and Ford it was very obvious that most of the savings would be realised without legislation. So the situation changed. There no longer was the same need to get legislation through in relation to that. We were then focussed on prioritising our effort in the Senate on those areas where we could make the most difference. The reality is though, while there is a lot of focus on those areas where there has been disagreement, there is not enough focus on all those many areas where we have actually made significant progress. The Budget is now in a much stronger position than it was this time last year or indeed than it would have been if we hadn’t made the very difficult and necessary decisions that we have made over the last year.

MICHAEL BRISSENDEN: The other reality is that Government revenues are falling isn’t that true? Commodity prices have slipped 27 per cent since the last Labor Budget and iron ore fell a further five per cent overnight. So you are going to have to revise your forecasts down even further?

MATHIAS CORMANN: It is certainly true that revenues have fallen in the context of falling terms of trade and falling commodity prices. The important point here is that that would have happened whoever was in Government. That is not something that any Australian Government controls. The key here is that the previous government when confronted with falling commodity prices decided to ramp up expenditure beyond the period of the then Budget forward estimates by more, locking in more permanent spending increases at a time of falling revenues, whereas we are working to get spending growth under control.

MICHAEL BRISSENDEN: Can I just quickly ask you and finally, are you concerned about – the concerns that are emerging within the public service about the mixed messages that you are sending. Bureaucrats say that they are confused about what you want to achieve and you can hardly blame them really can you? Because it was a Budget emergency a couple of years ago and now you're saying it is all okay? 

MATHIAS CORMANN: I don’t think that there are any confused messages at all. We inherited a very challenging Budget position. We have worked very hard to get the Budget into a stronger position into the future. We have made a lot of progress. We are now heading in the right direction. Have we made as much progress as we would have liked? No, not yet. There is more work to be done. But the important thing is to keep heading in the right direction, to focus on getting spending growth under control and to get the Budget back to surplus as soon as possible, but also in a way that is responsible. 

MICHAEL BRISSENDEN: Senator Cormann, thanks very much for joining us.  

MATHIAS CORMANN: Always good to talk to you.