Senator the Hon Mathias Cormann

RAFAEL EPSTEIN: Senator Mathias Cormann has finished his Budget. It is at the printers. Tomorrow, we get to find out the final numbers. Minister, thanks for joining us. 

MATHIAS CORMANN: Good to be here. 

RAFAEL EPSTEIN: Just on the childcare package first, it’s generally been applauded but the people who miss out are the stay-at-home mums. Why do they miss out? 

MATHIAS CORMANN: The focus with this package is to help families get into work, be in work and stay in work. It is part of our economic plan to strengthen growth, strengthen opportunity and help families balance family work challenges. That is what we are doing here. There is a lot of support for families that is provided by Government. We spend about $20 billion worth in Family Tax Benefit payments and that will continue. But we made a judgement that it was very important to help families access simpler, more affordable, more flexible childcare. To help families get into work, stay in work and essentially deal with family/work balance pressures. 

RAFAEL EPSTEIN: The tax benefit that is being cut was introduced by the former Prime Minister John Howard specifically for mothers who chose not to work. The National party are very upset. Would you concede that women who choose to stay home and look after their children are losing out at the expense of women who decided they want to or need to work? 

MATHIAS CORMANN: That’s not quite right. You’re talking here about a measure from last year’s Budget and what we have put together this year is a holistic families package. It is true that we are prioritising a particular initiative which helps families get access to more affordable childcare, but which is also good for the economy and for the country. When it comes to stay-at-home mums, there is a significant level of taxpayer support. We value, of course, the choice that parents will make. We value the very important role that mothers play that choose to stay-at-home to look after their children full time. However, the judgement that the Government has made is that once the youngest child turns six and the kids are all at school, that parents and families do have a choice about whether or not to go back to work and that that is an appropriate time to re-balance some of that Government support. 

RAFAEL EPSTEIN: The childcare package is more generous than that recommended by the Productivity Commission. Is it all paid for by savings like the Family Tax Benefit Part B or is there some additional spending to help pay for it? 

MATHIAS CORMANN: I am not sure why you are linking it just to that single measure. What we have said is that all of the additional spending involved in boosting childcare support and all of the additional spending involved in providing simpler, more affordable, more flexible childcare to parents is fully offset by savings elsewhere in the Budget. We have put forward a holistic families package which includes additional spending and additional savings. So the point that we have made all the way through is that we can’t spend more unless we also save more. There are some savings measures that are still on our books from last year’s Budget and there will be some other sensible and responsible savings measures in this year’s Budget. 

RAFAEL EPSTEIN: Another saving is around paid parental leave. There is a lot of good arguments both for and against various versions of paid parental leave. It is just that, you went to two elections promising more paid parental leave. Now there is less paid parental leave for some people. Is that consistent? 

MATHIAS CORMANN: We were actually very explicit in the lead up to the last election that we would stop the double-dipping when it comes to paid parental leave arrangements. Right now, most women across Australia can access one paid parental leave arrangement, some women can access two paid parental leave arrangements. Some families are able to access paid parental leave at the full replacement wage and then on top of that, the taxpayer funded scheme provided by the Government. The point that we’re making is that is not really fair. We think that all women should be able to access at least one paid parental leave scheme but if you do have a more generous paid parental leave arrangement through your employer, whether that’s through the private sector or the public sector, then really you ought to be making a choice. 

RAFAEL EPSTEIN: But one was supposed to be not based on the other. The Government website and this explicit version or the specific intention of the policy introduced by Labor was not for one to be a replacement for the other. They are supposed to be complimentary. 

MATHIAS CORMANN: That is maybe what the Labor party thinks is a good idea but what I’m saying to you is in the lead up to the last election we were very explicit when we said that we would stop the double dipping. I, myself personally, explained all throughout the campaign, day in, day out, that if the Coalition was elected that we would stop the double dipping when it comes to paid parental leave arrangements, because we don’t think it’s fair and reasonable for some people to be able to access two schemes when most people are only able to access one scheme. 

RAFAEL EPSTEIN: So it’s not inconsistent with your promise for generous leave to cut it back for others?

MATHIAS CORMANN: We were very explicit in saying before the last election that we would stop the double dipping. 

RAFAEL EPSTEIN: Senator Mathias Cormann is with me. He is the Finance Minister, he, the Treasurer, the Prime Minister and others have a big day with the Budget tomorrow. Senator you will have seen the commentary from Peter Costello the former Treasurer. He says that he doubts if he will see a Budget surplus in his lifetime. Will the Abbott Government ever deliver a surplus?

MATHIAS CORMANN: We are focused on delivering a surplus as soon as possible and we’re doing it in a way that is economically responsible. We have a plan to strengthen economic growth, to strengthen jobs creation and opportunity for everyone and we are also focused on putting the Budget back on a credible path to surplus. 

RAFAEL EPSTEIN: I suppose the question is whether it’s credible. The former Treasurer says you would need a one per cent for 15 years just to pay off the current debt. Is he right, that no one in Parliament will deliver a surplus?

MATHIAS CORMANN: Well we will be releasing the Budget tomorrow night and all of the numbers will be there for all to see. The point is this, we have an economic plan. It is a plan that is adaptable to changing economic conditions. I think that everyone across Australia pretty well understands that over the last 12 to 18 months there have been some significant changes in global economic conditions, the price of iron ore has fallen dramatically. It went from $120 a tonne when we came into Government to $60 tonne in our Mid-Year Economic and Fiscal Outlook before Christmas and it has fallen further since then. Given that iron ore represents about 21 per cent of our national export income, that has had significant implications through the economy. The good news is that we have continued to focus on controlling the things that we can control, getting spending growth under control and putting our spending trajectory on a more sustainable foundation for the future. Whoever is the Government, whether it is a Labor government, whether it is a Coalition Government with Joe Hockey and myself in the economic team or whether it is a Coalition Government with Peter Costello or Nick Minchin as the economic team. Whoever is in Government, nobody would have been able to influence or control what happens to global commodity prices. The key is that …interrupted.

RAFAEL EPSTEIN: When Wayne Swan quoted falling commodity prices, it was a budget emergency and the debt was at $18 billion. Now it’s a lot more and it doesn’t seem to be a budget emergency anymore? Maybe you’re criticism around Wayne Swan’s commodity price excuses were not fair?

MATHIAS CORMANN: Well no Rafael, that is actually quite wrong. The problem is when Labor was in government the iron ore price peaked at $180 a tonne and it was still at $120 when they lost government. The problem with Labor was, at a time when they knew that our terms of trade were coming off, at a time when they knew that revenue was coming in below forecast, they decided to ramp up expenditure by more structurally and permanently into the future, in particular in the period beyond the published forward estimates. The point that we made at the time was the point that we are making now is that Australia as an export orientated, as a trade exposed economy, is exposed to global economic dynamics and what happens to our terms of trade matters to us more than many other economies. The problem with Labor’s approach to the Budget was that at a time when our terms of trade were coming off, at a time when everybody knew that commodity prices were starting to come down, instead of being more responsible, a bit more constrained in terms of additional spending commitments, Labor locked in further significant expenditure growth into the future. That is what we are now trying to get under control.

RAFAEL EPSTEIN: Your complaint was that they should’ve been able to manage spending. They complained revenue was the problem, you’re now complaining about revenue. Is that fair?

MATHIAS CORMANN: The circumstance is very different. Labor’s revenue was still based on very high commodity prices. Over five of the six years of Labor government they had the best terms of trade in 140 years here in Australia. The problem is that towards the tail end of the Labor period in government the terms of trade were starting to come off and they decided to ramp up expenditure by more beyond what was affordable. That was what we were pointing to at the time and that is what we have been working to address since we came into Government in September 2013.

RAFAEL EPSTEIN: I understand your time is short. Just one final question. The Treasurer is announcing some measures around foreign multinationals and tax avoidance. Without too much detail, the Singapore marketing hubs that some of the miners use to minimise tax. Will the new measures address that problem?

MATHIAS CORMANN: There are about 30 odd companies that we believe have put in tax arrangements which are contrived to avoid taxes in Australia, that are due to be paid in Australia and what the Treasurer will do tomorrow is introduce legislation to strengthen our anti-avoidance provisions with a particular focus on anti-avoidance by multinational companies. We do believe that that will be a very important initiative to protect the integrity of our revenue base.

RAFAEL EPSTEIN: I understand but it is around buying one in one thing and selling it to another? Some of the tech companies, some of the mining companies. Will it address that issue?

MATHIAS CORMANN: That is the issue that we are focused on but in a general sense what we are focused on is whenever a company is entering into contrived arrangements with the explicit purpose to avoid tax here in Australia that is otherwise due to be paid in Australia, we will be giving ourselves the tools to address that and to pursue the revenue that should be paid in Australia. We will be looking at putting in place penalties to essentially ensure that the revenue base here in Australia is appropriately protected.

RAFAEL EPSTEIN: Senator Mathias Cormann is the Finance Minister in Tony Abbott’s Federal Government. Senator, thanks so much for your time. 

MATHIAS CORMANN: Always good to talk to you.